Exhibit 10.72

 

EXECUTION

 

 

MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT

 

among

 

PENNYMAC LOAN SERVICES, LLC,

Seller

PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC,

Guarantor

 

and

 

BANK OF AMERICA, N.A.,
Purchaser

 

Dated as of August 13, 2014

 

 

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TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

Section 1.

 

Definitions

 

2

 

 

 

 

 

Section 2.

 

Procedures for Purchases of Participation Certificates; Facility Fee

 

14

 

 

 

 

 

Section 3.

 

Takeout Commitments

 

15

 

 

 

 

 

Section 4.

 

Holdback Amount

 

15

 

 

 

 

 

Section 5.

 

Issuance of Securities

 

16

 

 

 

 

 

Section 6.

 

Servicing of the Mortgage Loans; Events of Default

 

17

 

 

 

 

 

Section 7.

 

Transfers of Participation Certificates and Securities by Purchaser

 

21

 

 

 

 

 

Section 8.

 

Record Title to Mortgage Loans; Intent of Parties; Security Interest

 

21

 

 

 

 

 

Section 9.

 

Representations and Warranties

 

22

 

 

 

 

 

Section 10.

 

Covenants of Seller

 

26

 

 

 

 

 

Section 11.

 

Over/Under Account

 

31

 

 

 

 

 

Section 12.

 

Term

 

33

 

 

 

 

 

Section 13.

 

Set-Off

 

33

 

 

 

 

 

Section 14.

 

Indemnification

 

33

 

 

 

 

 

Section 15.

 

Exclusive Benefit of Parties; Assignment

 

33

 

 

 

 

 

Section 16.

 

Amendments; Waivers; Cumulative Rights

 

34

 

 

 

 

 

Section 17.

 

Execution in Counterparts

 

34

 

 

 

 

 

Section 18.

 

Effect of Invalidity of Provisions

 

34

 

 

 

 

 

Section 19.

 

Governing Law

 

34

 

 

 

 

 

Section 20.

 

Notices

 

34

 

 

 

 

 

Section 21.

 

Entire Agreement

 

34

 

 

 

 

 

Section 22.

 

Costs of Enforcement

 

35

 

 

 

 

 

Section 23.

 

Intent

 

35

 

 

 

 

 

Section 24.

 

Full Recourse

 

36

 

 

 

 

 

Section 25.

 

Examination and Oversight by Regulators

 

36

 

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Section 26.

 

Consent to Service

 

36

 

 

 

 

 

Section 27.

 

Construction

 

36

 

 

 

 

 

Section 28.

 

Further Assurances

 

36

 

 

 

 

 

EXHIBITS

 

 

 

 

 

 

 

 

 

Exhibit A

 

Participation Certificate

 

 

 

 

 

 

 

Exhibit B

 

Trade Assignment

 

 

 

 

 

 

 

Exhibit C

 

Document List

 

 

 

 

 

 

 

Exhibit D

 

Reserved

 

 

 

 

 

 

 

Exhibit E

 

Assignment

 

 

 

 

 

 

 

Exhibit F

 

Form of Confirmation

 

 

 

 

 

 

 

Exhibit G

 

Seller’s and Guarantor’s Officer’s Certificate (Initial Purchase Date)

 

 

 

 

 

 

 

Exhibit H

 

Seller’s Officer’s Certificate (Each Purchase Date)

 

 

 

 

 

 

 

Exhibit I

 

Form of Servicer Notice

 

 

 

 

 

 

 

Exhibit J

 

Form of Request for Temporary Increase

 

 

 

 

 

 

 

Annex A

 

Purchaser, Seller and Guarantor Notices

 

 

 

 

 

 

 

Annex B

 

Responsible Officers of Seller and Guarantor

 

 

 

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MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT

 

This is a MORTGAGE LOAN PARTICIPATION PURCHASE AND SALE AGREEMENT (this
“Agreement”), dated as of August 13, 2014, among Bank of America, N.A.
(“Purchaser”), PennyMac Loan Services, LLC (“Seller”) and Private National
Mortgage Acceptance Company, LLC (“Guarantor”).

 

PRELIMINARY STATEMENT

 

Seller desires to sell to Purchaser from time to time all of Seller’s beneficial
right, title and interest in and to designated pools of fully amortizing first
lien residential Mortgage Loans eligible in the aggregate to back Securities,
and the servicing rights relating thereto, with the terms described in related
Takeout Commitments, each in the form of a 100% undivided beneficial ownership
interest evidenced by a Participation Certificate.

 

Purchaser desires and may, in its sole discretion, purchase such Participation
Certificates from Seller in accordance with the terms and conditions set forth
in this Agreement.  Seller, subject to the terms hereof, will cause (a) the
Related Mortgage Loans to back a GNMA Security issued by Seller and guaranteed
by GNMA, a FNMA Security issued and guaranteed by FNMA, or a FHLMC Security
issued and guaranteed by FHLMC and (b) Delivery of such GNMA Security, FNMA
Security, or FHLMC Security by GNMA, FNMA, or FHLMC, respectively, to Purchaser
or its designee in exchange for the Related Participation Certificate, which
GNMA Security, FNMA Security or FHLMC Security, as applicable, will be purchased
by the Takeout Investor.

 

Purchaser’s willingness to purchase any Participation Certificate evidencing a
beneficial interest in the Related Mortgage Loans and the servicing rights
related thereto is at the sole discretion of Purchaser and based on Purchaser’s
expectation, in reliance upon Seller’s representations and warranties herein,
that (a) such Mortgage Loans in the aggregate, constitute a pool or pools of
mortgage loans that are eligible to back a Security, (b) such Mortgage Loans are
sufficient for Seller to issue and GNMA to guarantee the GNMA Security, FNMA to
issue and guarantee a FNMA Security, or FHLMC to issue and guarantee a FHLMC
Security, as applicable, (c) such Security will be issued in the amount and with
the terms described in the related Takeout Commitment, and (d) Purchaser will
receive Delivery of such Security on the specified Anticipated Delivery Date.

 

The amount of the Purchase Price to be paid by Purchaser to Seller with respect
to each Participation Certificate will be calculated on the expectation of
Purchaser, based upon the representations and warranties of Seller herein, that
Purchaser will receive Delivery of the Security to be backed by the Related
Mortgage Loans on the specified Anticipated Delivery Date, and that failure to
receive such Delivery will result in a material decrease in the market value of
the Participation Certificate and the Related Mortgage Loans considered as a
whole.  During the period from the purchase of a Participation Certificate to
Delivery of the related Security, Purchaser expects to rely entirely upon Seller
to subservice or cause the Subservicer to subservice the Related Mortgage Loans
for the benefit of Purchaser, it being acknowledged that the continued
effectiveness of Seller’s Approvals during such period constitutes an essential
factor in the calculation by Purchaser of the Purchase Price paid to Seller for
the Related Participation Certificate and that loss of such Approvals by Seller
would result in a material decrease in the market value of the Participation
Certificate and the Related Mortgage Loans considered as a whole.

 

In consideration of the mutual promises and agreements herein contained the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

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Section 1.                                           Definitions.

 

Capitalized terms used but not defined herein shall have the meanings set forth
in the Custodial Agreement.  As used in this Agreement, the following terms
shall have the following meanings:

 

“1934 Act”:  The Securities Exchange Act of 1934, as amended from time to time.

 

“Ability to Repay Rule”:  12 CFR 1026.43(c).

 

“Accepted Servicing Practices”: With respect to any Related Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Related Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located and in a manner at
least equal in quality to the servicing Seller or Seller’s designee provide to
the Related Mortgage Loans which they own in their own portfolio and consistent
with the applicable Agency Guide.

 

“Accrued Interest”: With respect to each Security related to a Participation
Certificate, an amount equal to the product obtained by multiplying (a) the
number of days in the period beginning on the related Issuance Date to but not
including the Anticipated Delivery Date for the related Security, (b) the rate
of interest to be borne by the related Security, and (c) the aggregate principal
amount of the Related Mortgage Loans, and dividing such number by three hundred
and sixty (360).

 

“Act of Insolvency”:  With respect to Seller or any Affiliate of Seller:
(i) becoming insolvent or admitting in writing its inability to pay its debts as
they come due, or the commencement of a voluntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future
federal or state bankruptcy, insolvency or similar law, or the consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official or of any substantial
part of its property or the making of an assignment for the benefit of creditors
or the failure generally to pay debts as such debts become due or the taking of
action in furtherance of any of the foregoing; (ii) a petition or a proceeding
shall have been filed or commenced against the Seller or such Affiliate seeking
(a) a decree or order for relief in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future
federal or state bankruptcy laws or similar law, as now or hereafter in effect,
(b) the appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Seller or such Affiliate or of any
substantial part of its property, or (c) the winding up or liquidation of the
affairs of the Seller or such Affiliate and such petition or proceeding shall
not have been dismissed for a period of thirty (30) consecutive days, or an
order or decree for relief against the Seller or such Affiliate shall be entered
in any such proceeding; (iii) the making or offering by Seller or such Affiliate
of a concession with its creditors or a general assignment for the benefit of
creditors; (iv) the Seller or such Affiliate shall (a) either fail or admit in
writing its inability to pay or discharge its debts or obligations generally as
they become due or mature, (b) admit in writing its inability to, or intention
not to, perform any of its material obligations, or (c) voluntarily suspend
payment of any of its debts or obligations as they become due or mature; (v) any
Governmental Authority or agency or any person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the property of Seller or of any of its Affiliates, or shall
have taken any action to displace the management of Seller or of any of its
Affiliates or to curtail its authority in the conduct of the business of Seller
or of any of its Affiliates; or (vi) the audited annual financial statements of
the Seller or such Affiliate or the notes thereto or other opinions or
conclusions stated therein shall be qualified or limited by reference to the
status of the Seller as a “going concern” or a reference of similar import or
shall indicate that the Seller has a negative Net Worth or is insolvent.

 

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“Adjusted Tangible Net Worth”:  (a) The sum of (i) Net Worth and
(ii) Subordinated Debt, minus (b) intangibles, goodwill and receivables from
Affiliates.

 

“Affiliate”:  With respect to any Person, any “affiliate” of such Person, as
such term is defined in the Bankruptcy Code; provided, however, that in respect
of Seller or Guarantor the term “Affiliate” shall only refer to wholly-owned
subsidiaries of Guarantor or Seller and shall not include Bank of America, N.A.,
BlackRock, Inc. or Highfields Capital Investments, LLC.

 

“Affiliate Fund”:  With respect to Seller and Guarantor, any investment vehicle
that is under the management of PNMAC Capital Management LLC.

 

“Agency Guide”:  The FHLMC Guide, the FNMA Guide, or the GNMA Guide, as
applicable.

 

“Agency Program”:  The FHLMC Program, the FNMA Program, or the GNMA Program, as
applicable.

 

“Aggregate Purchase Price”:  As of any date of determination, an amount equal to
the aggregate outstanding Purchase Price for all Participation Certificates then
owned by Purchaser and subject to the terms of this Agreement.

 

“Aggregate Transaction Limit”:  As defined in the Pricing Side Letter.

 

“Anticipated Delivery Date”:  With respect to a Security, the date specified in
the related Form HUD 11705 (Schedule of Subscribers), Fannie Mae Form 2014
(Delivery Schedule) or FHLMC Form 939 (Settlement and Information Multiple
Registration Form), as applicable, on which it is anticipated that Delivery of
the Security by the Applicable Agency will be made.

 

“Applicable Agency”: GNMA, FNMA, or FHLMC, as applicable.

 

“Applicable Percentage”: As defined in the Pricing Side Letter.

 

“Approvals”:  With respect to Seller, the approvals obtained by the Applicable
Agency, or HUD in designation of Seller as a GNMA-approved issuer, a
GNMA-approved servicer, a FHA-approved mortgagee, a VA-approved lender, a
FNMA-approved lender or a FHLMC-approved Seller/Servicer, as applicable, in good
standing.

 

“Approved Investor”:  Any of Fannie Mae, Freddie Mac, Ginnie Mae or a member of
MBS Clearing Corporation that is either an approved counterparty of Purchaser or
its Affiliates or otherwise acceptable to Purchaser in its sole discretion, who
will purchase Securities pursuant to a Takeout Commitment.

 

“Assignee”:   As defined in Section 7.

 

“Assignment of Mortgage”:   An assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the beneficial interest in the Mortgage to the Purchaser.

 

“Bankruptcy Code”:  The United States Bankruptcy Code of 1978, as amended from
time to time.

 

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“Business Day”:  Any day other than (a) a Saturday or Sunday and (b) a day on
which the New York Stock Exchange, the Federal Reserve Bank of New York or the
Custodian is authorized or obligated by law or executive decree to be closed.

 

“Capital Lease Obligations” means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.

 

“Cash Equivalents”:  (a) Securities with maturities of ninety (90) days or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of ninety (90) days or less from the
date of acquisition and overnight bank deposits of Purchaser or of any
commercial bank having capital and surplus in excess of $500,000,000 and a
rating of at least BBB- by S&P or Baa3 by Moody’s, (c) repurchase obligations of
Purchaser or of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than seven days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-1 or the
equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in
either case maturing within ninety (90) days after the day of acquisition,
(e) securities with maturities of ninety (90) days or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody’s, (f) securities with maturities of ninety (90) days or
less from the date of acquisition backed by standby letters of credit issued by
Purchaser or any commercial bank satisfying the requirements of clause (b) of
this definition or (g) shares of money market, mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a) through
(f) of this definition.

 

“Collateral”:  As defined in Section 8(c).

 

“Confirmation”:  A written confirmation of Purchaser’s intent to purchase a
Participation Certificate, which written confirmation shall be substantially in
the form attached hereto as Exhibit F.

 

“Custodial Account”:  As defined in Section 6(c).

 

“Custodial Agreement”:  The Amended and Restated Custodial Agreement, dated as
of the date hereof, among Seller, Purchaser and Custodian as amended,
supplemented or otherwise modified from time to time.

 

“Custodian”:  Deutsche Bank National Trust Company (which, under the appropriate
circumstances, may include FHLMC as Custodian) and its permitted successors
under the Custodial Agreement.

 

“Daily Holdback Reduction Amount”:  As defined in the Pricing Side Letter.

 

“Defective Mortgage Loan”:  With respect to a Participation Certificate, a
Related Mortgage Loan that is not in Strict Compliance with the GNMA Program,
FNMA Program, or FHLMC Program, as applicable.

 

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“Delivery”:  (i) With respect to any Security issued by GNMA, when Purchaser is
registered as the registered owner of such Security on GNMA’s central registry
and (ii) with respect to any Security issued by FNMA or FHLMC, the later to
occur of (a) the issuance of the related Security and (b) the transfer of all of
the right, title and ownership interest in that Security to Purchaser or its
designee.

 

“Discount Rate”:  With respect to each Participation Certificate, a discount
rate determined as of the related Purchase Date equal to (i) One-Month LIBOR,
plus (ii) the Applicable Percentage.

 

“Effective Date”: August 13, 2014.

 

“Electronic Agent”: As defined in Section 2 of the Electronic Tracking
Agreement.

 

“Electronic Tracking Agreement”: The Amended and Restated Electronic Tracking
Agreement, dated as of the date hereof, among the Purchaser, the Seller, the
Electronic Agent and MERS, as the same shall be amended, supplemented or
otherwise modified from time to time.

 

“Events of Default”:  As defined in Section 6(e).

 

“Expiration Date”: The earlier of (i) January 30, 2015, (ii) at Purchaser’s
option, upon the occurrence of an Event of Default, and (iii) the date on which
this Agreement shall terminate in accordance with the provisions hereof or by
operation of law.

 

“Facility Fee”:  As defined in the Pricing Side Letter.

 

“FDIA: Title 12 United States Code, Section 1811 et seq., as amended from time
to time.

 

“FHA”:  The Federal Housing Administration or any successor thereto.

 

“FHA Loan”:  A Mortgage Loan which is the subject of an FHA Mortgage Insurance
Contract.

 

“FHA Mortgage Insurance Contract”:  The contractual obligation of the FHA
respecting the insurance of a Mortgage Loan.

 

“FHLMC” or “Freddie Mac”:  Freddie Mac or any successor thereto.

 

“FHLMC as Custodian”:  With respect to FHLMC Participation Certificates, the
circumstances in which Seller elects to appoint FHLMC (as opposed to some other
third party as permitted by the FHLMC Guide) as Custodian for the FHLMC Mortgage
Loans subject to the FHLMC Participation Certificates to be purchased by
Purchaser hereunder.

 

“FHLMC Guide”:  The Freddie Mac Sellers’ and Servicers’ Guide, as such guide may
hereafter from time to time be amended.

 

“FHLMC Mortgage Loan”:  With respect to any FHLMC Participation Certificate or
any FHLMC Security, a mortgage loan that is in Strict Compliance with the
eligibility requirements specified for the applicable FHLMC Program described in
the FHLMC Guide.

 

“FHLMC Participation Certificate”:  With respect to the FHLMC Program, a
certificate, in the form of Exhibit A, issued by Seller and authenticated by
Custodian, evidencing the 100% undivided beneficial ownership interest in the
Mortgage Loans that are either (a) set forth on a copy of the

 

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FHLMC Form 1034 (Fixed-Rate Custodial Certification Schedule) attached to such
Participation Certificate or (b) identified on a computer tape compatible with
Selling System as belonging to the mortgage loan pool described in such
Participation Certificate.

 

“FHLMC Program”:  The FHLMC Home Mortgage Guarantor Program or the FHLMC FHA/VA
Home Mortgage Guarantor Program, as described in the FHLMC Guide.

 

“FHLMC Security”:  A modified pass-through mortgage-backed participation
certificate, evidenced by a book-entry account in a depository institution
having book-entry accounts at the Federal Reserve Bank of New York, issued and
guaranteed, with respect to timely payment of interest and ultimate payment of
principal, by FHLMC and backed by a pool of FHLMC Mortgage Loans, in
substantially the principal amount and with substantially the other terms as
specified with respect to such FHLMC Security in the related Takeout Commitment,
if any.

 

“Fidelity Insurance” means insurance coverage with respect to employee errors,
omissions, dishonesty, forgery, theft, disappearance and destruction, robbery
and safe burglary, property (other than money and securities) and computer fraud
in an aggregate amount acceptable to Seller’s regulators.

 

“FNMA” or “Fannie Mae”: Fannie Mae or any successor thereto.

 

“FNMA Guide”:  The Fannie Mae MBS Selling and Servicing Guide, as such guide may
hereafter from time to time be amended.

 

“FNMA Mortgage Loan”:  With respect to any FNMA Participation Certificate or any
FNMA Security, a mortgage loan that is in Strict Compliance with the eligibility
requirements specified for the applicable FNMA Program described in the FNMA
Guide.

 

“FNMA Participation Certificate”:  With respect to the FNMA Program, a
certificate, in the form of Exhibit A, issued by Seller and authenticated by
Custodian, evidencing the 100% undivided beneficial ownership interest in the
Mortgage Loans set forth on Fannie Mae Form 2005 (Schedule of Mortgages).

 

“FNMA Program”:  The FNMA Guaranteed Mortgage-Backed Securities Programs, as
described in the FNMA Guide.

 

“FNMA Security”:  An ownership interest in a pool of FNMA Mortgage Loans,
evidenced by a book-entry account in a depository institution having book-entry
accounts at the Federal Reserve Bank of New York, in substantially the principal
amount and with substantially the other terms as specified with respect to such
FNMA Security in the related Takeout Commitment, if any.

 

“GAAP”:  Generally accepted accounting principles as in effect from time to time
in the United States of America and applied on a consistent basis.

 

“GNMA”:  Government National Mortgage Association or any successor thereto.

 

“GNMA Guide”:  The GNMA Mortgage-Backed Securities Guide I or II, as such guide
may hereafter from time to time be amended.

 

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“GNMA Mortgage Loan”:  With respect to any GNMA Participation Certificate or any
GNMA Security, a mortgage loan that is in Strict Compliance with the eligibility
requirements specified for the applicable GNMA Program in the applicable GNMA
Guide.

 

“GNMA Participation Certificate”:  With respect to the GNMA Program, a
certificate, in the form of Exhibit A, issued by Seller and authenticated by
Custodian, evidencing the 100% undivided beneficial ownership interest in the
Mortgage Loans set forth on the Form HUD 11706 (Schedule of Pooled Mortgages).

 

“GNMA Program”:  The GNMA Mortgage-Backed Securities Programs, as described in a
GNMA Guide.

 

“GNMA Security”: A fully-modified pass-through mortgage-backed certificate
guaranteed by GNMA, evidenced by a book-entry account in a depository
institution having book-entry accounts at the Federal Reserve Bank of New York
and backed by a pool of Mortgage Loans, in substantially the principal amount
and with substantially the other terms as specified with respect to such
Security in the related Takeout Commitment.

 

“Governmental Authority”:  Any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions over Seller, Guarantor or
Purchaser, as applicable.

 

“Guarantee”:  As to any Person, any obligation of such Person directly or
indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise); provided that the term
“Guarantee” shall not include (i) endorsements for collection or deposit in the
ordinary course of business, or (ii) obligations to make servicing advances for
delinquent taxes and insurance or other obligations in respect of a Mortgaged
Property, to the extent required by Purchaser.  The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith.  The terms
“Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.

 

“Guarantor”: Private National Mortgage Acceptance Company, LLC, in its capacity
as guarantor under the Guaranty.

 

“Guaranty”: The Amended and Restated Guaranty, dated as of the date hereof, by
Guarantor in favor of the Purchaser, as the same shall be amended, supplemented
or otherwise modified from time to time, pursuant to which Guarantor fully and
unconditionally guarantees the obligations of Seller hereunder.

 

“Holdback Amount”:  As defined in the Pricing Side Letter.

 

“HUD”:  United States Department of Housing and Urban Development or any
successor thereto.

 

“Indebtedness”:  For any Person:  (a) obligations created, issued or incurred by
such Person for borrowed money (whether by loan, the issuance and sale of debt
securities or the sale of Property to another Person subject to an understanding
or agreement, contingent or otherwise, to

 

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repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business, so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person; (e) Capital Lease Obligations of such Person;
(f) obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (g) Indebtedness of others Guaranteed by such
Person; (h) all obligations of such Person incurred in connection with the
acquisition or carrying of fixed assets by such Person; and (i) Indebtedness of
general partnerships of which such Person is a general partner.

 

“Indemnified Party”:  As defined in Section 14.

 

“Issuance Date”:  With respect to a Security, the first day of the month in
which the Security is issued.

 

“Lien”:  Any mortgage, lien, pledge, charge, security interest or similar
encumbrance.

 

“Liquidity”:  As of any date of determination, the sum of (a) Seller’s
unrestricted and unencumbered cash and Cash Equivalents and (b) the balance in
the Over/Under Account exclusive of funds held due to a Margin Deficit or Margin
Call (each as defined in the Master Repurchase Agreement). By way of example but
not limitation, cash in escrow and/or impound accounts shall not be included in
this calculation.

 

“Losses”:  Any and all losses, claims, judgments, damages, liabilities, costs or
expenses (including lost interest and reasonable attorney’s fees) imposed on,
incurred by or asserted against any Person specified.

 

“Master Repurchase Agreement”:  That certain Master Repurchase Agreement, dated
as of March 17, 2011, among Seller, Guarantor and Purchaser, together with all
amendments, modifications, supplements, restatements and replacements thereof.

 

“Material Adverse Effect”:  Any of the following: (a) A material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of Seller, Guarantor or any
Affiliate that is a party to any Program Document taken as a whole; (b) a
material impairment of the ability of Seller, Guarantor or any Affiliate that is
a party to any Program Document to perform under any Program Document and to
avoid any Event of Default; (c) a material adverse effect upon the legality,
validity, binding effect or enforceability of any Program Document against
Seller, Guarantor or any Affiliate that is a party to any Program Document;
(d) a material adverse effect on the marketability, collectability, value or
enforceability of a material portion of the Related Mortgage Loans or Securities
purchased by Purchaser hereunder; or (e) a material adverse effect on the
Approvals of Seller, in each case as determined by Purchaser in its sole good
faith discretion.

 

“MERS”: Mortgage Electronic Registration Systems, Inc., a Delaware corporation,
or any successor in interest thereto.

 

“MERS Mortgage Loan”:  Any Mortgage Loan as to which the related Mortgage or
Assignment of Mortgage, has been recorded in the name of MERS, as agent for the
holder from time to

 

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time of the Mortgage Note and which is identified as a MERS Mortgage Loan on the
related schedule attached to the Related Participation Certificate.

 

“MIN”: The mortgage identification number of Mortgage Loans registered with MERS
on the MERS System.

 

“Minimum Over/Under Account Balance”:  As of any date of determination, the
balance required to be maintained by Seller in the Over/Under Account under the
Master Repurchase Agreement; provided that if the Master Repurchase Agreement is
no longer in effect as of such date, the Minimum Over/Under Account Balance
shall be zero or as otherwise agreed among the parties.

 

“Moody’s”: Moody’s Investors Service, Inc., and any successor thereto.

 

“More Favorable Agreement”:  As defined in Section 10(k).

 

“Mortgage”:  A mortgage, deed of trust or other security instrument, securing a
Mortgage Note.

 

“Mortgage Loan”:  A GNMA Mortgage Loan, a FNMA Mortgage Loan or a FHLMC Mortgage
Loan.

 

“Mortgage Note”:  The promissory note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.

 

“Mortgaged Property”:  The real property securing repayment of the debt
evidenced by a Mortgage Note.

 

“Mortgagor”:  The obligor or obligors on a Mortgage Note, including any person
who has assumed or guaranteed the obligations of the obligor thereunder.

 

“Net Income”: For any period and any Person, the net income of such Person for
such period as determined in accordance with GAAP.

 

“Net Worth”:  With respect to any Person, an amount equal to, on a consolidated
basis, such Person’s stockholder equity (determined in accordance with GAAP).

 

“One-Month LIBOR”:  The daily rate per annum (rounded to four (4) decimal
places) for one-month U.S. dollar denominated deposits as offered to prime banks
in the London interbank market, as published on the Official ICE LIBOR Fixings
page by Bloomberg or in the Wall Street Journal as of the date of determination;
provided, that if Purchaser determines that any law, regulation, treaty or
directive or any change therein or in the interpretation or application thereof,
or any circumstance materially and adversely affecting the London interbank
market, shall make it unlawful, impractical or commercially unreasonable for
Purchaser to purchase Participation Certificates as contemplated by this
Agreement using One-Month LIBOR, then Purchaser may select an alternative rate
of interest or index in its discretion.

 

“Over/Under Account”:  That account maintained by Purchaser, as described in
Section 11 and in the Master Repurchase Agreement.

 

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“Participation Certificate”:  A GNMA Participation Certificate, a FNMA
Participation Certificate or a FHLMC Participation Certificate, as applicable,
that is purchased by Purchaser under this Agreement.

 

“Person”:  An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.

 

“Potential Default”:  The occurrence of any event or existence of any condition
that, but for the giving of notice, the lapse of time, or both, would constitute
an Event of Default.

 

“Present Value Adjustment Amount”: With respect to each Participation
Certificate, an amount equal to the product of (a) the number of days in the
period beginning on the related Purchase Date to but not including the
Anticipated Delivery Date for the related Security, and (b) the daily
application of the applicable Discount Rate, determined as of the related
Purchase Date, to the result of (x) (i) the related Trade Principal, less
(ii) the Holdback Amount, divided by (y) 360.

 

“Pricing Side Letter”: The Pricing Side Letter, dated as of the date hereof,
among Seller, Guarantor and Purchaser, as amended, supplemented or otherwise
modified from time to time.

 

“Program Documents”:  This Agreement, the Custodial Agreement, the Electronic
Tracking Agreement, the Guaranty, the Participation Certificates, the Pricing
Side Letter, any Servicing Agreement together with the related Servicer Notice
and all other agreements, documents and instruments entered into by Seller and
Purchaser, in connection herewith or therewith with respect to the transactions
contemplated hereunder.

 

“Property”: Any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible.

 

“Purchase Date”:  With respect to a Participation Certificate, the date on which
Purchaser elects to purchase such Participation Certificate.

 

“Purchase Price”:  With respect to each Participation Certificate, a price
determined as of the related Purchase Date equal to the sum of (i) the related
Trade Principal, plus (ii) the related Accrued Interest, minus (iii) the related
Present Value Adjustment Amount, minus (iv) related hedging costs, if any, which
are mutually agreed-upon by the Purchaser and Seller.

 

“Purchase Price Adjustment Amount”: With respect to each Participation
Certificate, an amount equal to the product of (a) the number of days in the
period beginning on the related Purchase Date to but not including the
Settlement Date for the related Security, and (b) the daily application of the
applicable Discount Rate, determined as of the related Purchase Date, to be the
result of (x) (i) the related Trade Principal, less (ii) the Holdback Amount,
divided by (y) 360.

 

“Purchaser”: Bank of America, N.A. and its successors in interest, including,
but not limited to, any lender, designee or assignee to whom a Participation
Certificate or a Security shall be pledged or assigned.

 

“QM Rule”:  12 CFR 1026.43(e).

 

“Qualified Mortgage”: A Related Mortgage Loan that satisfies the criteria for a
“qualified mortgage” as set forth in the QM Rule.

 

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“Rebuttable Presumption Qualified Mortgage”: A Qualified Mortgage with an annual
percentage rate that exceeds the average prime offer rate for a comparable
mortgage loan as of the date the interest rate is set by 1.5 or more percentage
points for a first-lien Related Mortgage Loan or by 3.5 or more percentage
points for a subordinate-lien Related Mortgage Loan.

 

“Related Credit Enhancement”:  As defined in Section 8(c).

 

“Related Mortgage Loan”:  A Mortgage Loan in which a Participation Certificate
evidences the 100% undivided beneficial ownership interest.

 

“Related Participation Certificate”:  The Participation Certificate relating to
a pool of Mortgage Loans.

 

“Reporting Date”:  The 5th day of each month or, if such day is not a Business
Day, the next succeeding Business Day.

 

“Request for Temporary Increase”:  As defined in Section 2(f).

 

“Responsible Officer”:  As to any Person, the chief executive officer or, with
respect to financial matters, the chief financial officer or treasurer of such
Person.  The Responsible Officers of Seller and Guarantor as of the date hereof
are listed on Annex B hereto.

 

“S&P”:  Standard and Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.

 

“Safe Harbor Qualified Mortgage”: A Qualified Mortgage with an annual percentage
rate that does not exceed the average prime offer rate for a comparable mortgage
loan as of the date the interest rate is set by 1.5 or more percentage points
for a first-lien Related Mortgage Loan or by 3.5 or more percentage points for a
subordinate-lien Related Mortgage Loan.

 

“SEC”:  The Securities Exchange Commission or any successor thereto.

 

“Security”: A GNMA Security, a FNMA Security or a FHLMC Security, as applicable.

 

“Security Issuance Failure”:  Failure of the Security to be issued for any
reason including but not limited to Seller’s failure to perform any of its
obligations under this Agreement or any other Program Document or failure to
perform in Strict Compliance with the related Agency Program.

 

“Seller”:  The meaning set forth in the preamble, and shall refer to Seller in
its capacity as seller of Participation Certificates and Seller in its capacity
as subservicer hereunder, as the context shall require.

 

“Selling System”:  The FHLMC automated system by which sellers and servicers of
mortgage loans to FHLMC transfer mortgage summary and record data or mortgage
accounting and servicing information from their computer system or service
bureau to FHLMC, as more fully described in the FHLMC Guide.

 

“Servicer Notice”:  The notice acknowledged by the Subservicer which is
substantially in the form of Exhibit I hereto.

 

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“Servicing Agreement”:  If the Related Mortgage Loans become subserviced by any
subservicer that is not Purchaser, an Affiliate of Purchaser, or Seller, in each
case, the agreement with the third party subservicer, in form and substance
acceptable to Purchaser.

 

“Servicing Records”:  With respect to a Related Mortgage Loan, the related
servicing records, including but not limited to any and all servicing
agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of such Related Mortgage Loan.

 

“Settlement Date”:  The date specified in a Takeout Commitment upon which the
related Security is scheduled to be delivered, against payment, to the specified
Takeout Investor, which date shall be no later than forty-five (45) days
following the Purchase Date in respect of the underlying Participation
Certificate.

 

“Strict Compliance”: Compliance of Seller and the Related Mortgage Loans with
the requirements of the GNMA Guide, FNMA Guide, or FHLMC Guide, as applicable
and as amended by any agreements between Seller and the Applicable Agency,
sufficient to enable Seller to issue and GNMA to guarantee or FNMA or FHLMC to
issue and guarantee a Security; provided, that until copies of any such
agreements between Seller and FNMA, FHLMC or GNMA, as applicable, have been
provided to Purchaser by Seller and agreed to by Purchaser, such agreements
shall be deemed, as between Seller and Purchaser, not to amend the requirements
of the GNMA Guide, FNMA Guide, or FHLMC Guide, as applicable.

 

“Subordinated Debt”:  Indebtedness of Seller which is (i) unsecured, (ii) as to
which no part of the principal of such Indebtedness is required to be paid
(whether by way of mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the date which is one year following the
Expiration Date and (iii) as to which the payment of the principal of and
interest on such Indebtedness and other obligations of Seller in respect of such
Indebtedness are subordinated to the prior payment in full of the principal of
and interest (including post-petition obligations) on the transactions under the
Master Repurchase Agreement and hereunder and all other obligations and
liabilities of Seller to Purchaser hereunder on terms and conditions approved in
writing by Purchaser and all other terms and conditions of which are
satisfactory in form and substance to Purchaser.

 

“Subservicer”:  Any subservicer approved by Purchaser in its sole discretion,
which may be Seller or its permitted successors and assigns.

 

“Subsidiary”:  With respect to any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.

 

“Successor Servicer”:  An entity with the necessary Approvals, as the
circumstances may require, and designated by Purchaser, in conformity with
Section 6(f), to replace Seller as issuer and subservicer, mortgagee or
seller/servicer of the Related Mortgage Loans or the Securities related thereto.

 

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“Takeout Commitment”:  A fully executed trade confirmation from the Approved
Investor to Seller confirming the details of a forward trade between the
Approved Investor and Seller with respect to one or more Securities relating to
a Participation Certificate, which trade confirmation shall be enforceable and
in full force and effect, and shall be validly and effectively assigned to
Purchaser pursuant to a Trade Assignment, and relate to pools of Related
Mortgage Loans that satisfy the “good delivery standards” as more particularly
set forth in Section 3 hereof.

 

“Temporary Increase”:  As defined in Section 2(f).

 

“Test Period”:  Any calendar quarter.

 

“Total Liabilities”: As of any date of determination, the sum of (a) the total
liabilities of Seller on any given date of determination, to be determined in
accordance with GAAP consistent with those applied in the preparation of
Seller’s financial statements, plus (b) to the extent not already included under
GAAP, the total aggregate outstanding amount owed by Seller under any
repurchase, refinance or other similar credit arrangements, plus (c) to the
extent not already included under GAAP, any “off balance sheet” repurchase,
refinance or other similar credit arrangements, less (d) non-recourse debt.

 

“Trade Assignment”:  A letter substantially in the form of Exhibit B.

 

“Trade Price”:  The price (expressed as a percentage of the initial principal
amount of the Security, as specified in the related Takeout Commitment) equal to
100% of the Applicable Agency TBA trade price.

 

“Trade Principal”:  An amount equal to the product of (a) the Trade Price and
(b) the initial principal amount of the related Security, as specified in the
related Takeout Commitment.

 

“Underwriting Guidelines”:  The standards, procedures and guidelines of Seller
for underwriting Mortgage Loans, which are set forth in the written policies and
procedures of Seller, the Fannie Mae Single-Family Selling and Servicing Guide,
the Freddie Mac Single-Family Seller/Servicer Guide or the underwriting
guidelines relating to VA Loans or FHA Loans and such other guidelines as are
identified and approved in writing by Purchaser.

 

“VA”:  United States Department of Veterans Affairs or any successor thereto.

 

“VA Loan”:  A Mortgage Loan which is the subject of a VA Loan Guaranty Agreement
as evidenced by a loan guaranty certificate, or a Mortgage Loan which is a
vendor loan sold by the VA.

 

“VA Loan Guaranty Agreement”:  The obligation of the United States to pay a
specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen’s Readjustment Act, as
amended.

 

“Warehouse Lender”:  Any lender providing financing to Seller for the purpose of
originating or aggregating Mortgage Loans, which prior to the Purchase Date has
a security interest in such Mortgage Loans as collateral for the obligations of
Seller to such lender.

 

“Warehouse Lender’s Release”:  A warehouse lender’s release in substantially the
form set forth in the Custodial Agreement.

 

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Section 2.                                           Procedures for Purchases of
Participation Certificates; Facility Fee.

 

(a)                                 Purchaser may, in its sole discretion from
time to time until the Expiration Date, but shall have no obligation to,
purchase one or more Participation Certificates from Seller; provided, that the
conditions set forth in Sections 10(a)(viii) and (x) shall have been satisfied
and the Aggregate Purchase Price of such Participation Certificates owned by
Purchaser at any given time shall not exceed the Aggregate Transaction Limit;
provided further, that no Potential Default or Event of Default exists.  In
connection with Purchaser’s purchase of any such Participation Certificate,
Seller, on behalf of Purchaser, shall arrange for the Delivery to Purchaser of a
Security backed by the Related Mortgage Loans, which Security shall be subject
to a Takeout Commitment.  The purchase of any Participation Certificate shall be
subject to (i) the receipt by Purchaser of the documents listed in Exhibit C
from Seller, in form and substance satisfactory to Purchaser, together with such
other information as Purchaser may reasonably request, (ii) the execution of the
Custodial Agreement relating to the Participation Certificate by Seller and
Custodian and the Electronic Tracking Agreement relating to the Related Mortgage
Loans by Seller, MERS and Electronic Agent, and delivery thereof to Purchaser,
(iii) Purchaser’s determination that it has satisfactorily completed its due
diligence review of Seller’s operations, business, financial condition and
underwriting and origination of the Related Mortgage Loans, which review may be
conducted by Purchaser from time to time, (iv) the receipt by Purchaser of
Seller’s wire instructions, in form and substance satisfactory to Purchaser and
(v) no Affiliate Fund being in default under any Indebtedness of such Affiliate
Fund with Purchaser or any of Purchaser’s Affiliates.  In accordance with the
provisions of the Electronic Tracking Agreement, the Seller shall, at its sole
cost and expense, (1) cause each Related Mortgage Loan with respect to which a
Participation Certificate is to be sold to the Purchaser on a Purchase Date, the
Mortgage for which is recorded in the name of MERS, to be designated a MERS
Mortgage Loan and (2) cause the Purchaser to be designated an Associated Member
(as defined in the MERS Procedure Manual attached as Exhibit B to the Electronic
Tracking Agreement) with respect to each such MERS Mortgage Loan. 
Notwithstanding the satisfaction of the conditions specified in this
Section 2(a) or anything else herein or in any other Program Document to the
contrary, Purchaser is not obligated to purchase any Participation Certificate
offered to it hereunder.

 

(b)                                 If Purchaser elects to purchase any
Participation Certificate, Purchaser shall pay (i) to Seller, or (ii) upon the
receipt of a Warehouse Lender’s Release, to the applicable Warehouse Lender, on
the Purchase Date, the amount of the Purchase Price (less the Holdback Amount)
for such Participation Certificate upon receipt of a duly executed and properly
completed original Participation Certificate; provided that, if the Purchase
Price (less the Holdback Amount) is insufficient to pay the release amount due
to the Warehouse Lender, Seller shall remit to Purchaser the difference between
the Purchase Price (less the Holdback Amount) and such release amount and
Purchaser shall remit the full release amount to the Warehouse Lender. 
Effective upon execution and delivery of such Participation Certificate to
Purchaser, Seller hereby assigns to Purchaser all of Seller’s right, title and
interest in and to such Participation Certificate and a 100% undivided
beneficial interest in the Related Mortgage Loans.  In the event that Purchaser
does not transmit such payment, (i) any Participation Certificate delivered by
Custodian to Purchaser in anticipation of such purchase shall automatically be
null and void, and (ii) Purchaser will not consummate the transactions
contemplated in the applicable Trade Assignment.

 

(c)                                  The terms and conditions of the purchase of
each Participation Certificate shall be as set forth in this Agreement.  Each
Participation Certificate shall be deemed to incorporate, and Seller shall be
deemed to make as of the applicable dates specified in Section 9, for the
benefit of Purchaser and each Assignee of such Participation Certificate, the
representations and warranties set forth in Section 9.

 

(d)                                 Purchaser shall provide a Confirmation to
Seller on or before the Purchase Date or as soon as practicable after the
Purchase Date.  In the event of any conflict between the terms of a Confirmation
and this Agreement, the Confirmation shall prevail.

 

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(e)                                  For the avoidance of any doubt, it is
hereby understood and agreed that Purchaser’s purchase of the beneficial
ownership interest in and to Related Mortgage Loans, as evidenced by a
Participation Certificate, shall include all of the servicing rights relating to
such Mortgage Loans.

 

(f)                                   Seller may request a temporary increase of
the Aggregate Transaction Limit (a “Temporary Increase”) by submitting to
Purchaser an executed request for Temporary Increase in the form of Exhibit J
hereto (a “Request for Temporary Increase”), setting forth the requested
increased Aggregate Transaction Limit, the effective date and time of such
Temporary Increase and the date and time on which such Temporary Increase shall
terminate.  Purchaser may from time to time, in its sole and absolute
discretion, consent to such Temporary Increase, which consent shall be in
writing as evidenced by Purchaser’s delivery to Seller of a countersigned
Request for Temporary Increase.  At any time that a Temporary Increase is in
effect (and only for such time as such Temporary Increase is in effect), the
Aggregate Transaction Limit and, if applicable, the Minimum Over/Under Account
Balance, shall be increased by the amount of the Temporary Increase for all
purposes of this Agreement and all calculations and provisions relating to the
Aggregate Transaction Limit, and, if applicable, the Minimum Over/Under Account
Balance, shall refer to such increased amount.

 

(g)                                  Seller shall pay to Purchaser in
immediately available funds, a non-refundable Facility Fee.  The Facility Fee
shall be deemed due, earned and payable in full on the Effective Date and if
this Agreement is renewed, thereafter on or before the anniversary of such date.
Upon the early termination of this Agreement, all unpaid installments of the
entire Facility Fee will be due and owing and no portion of the Facility Fee
shall be refunded. Furthermore, the Facility Fee will be prorated in the event
of an increase of the Aggregate Transaction Limit.  The Facility Fee shall be
withdrawn from the Seller’s Over/Under Account.

 

Section 3.                                           Takeout Commitments.

 

Seller hereby assigns to Purchaser, free of any security interest, lien, claim
or encumbrance of any kind, Seller’s rights under each Takeout Commitment to
deliver the Security specified therein to the related Takeout Investor and to
receive the purchase price therefor from such Takeout Investor.  Subject to
Purchaser’s rights hereunder, Purchaser agrees that it will satisfy the
obligation under the Takeout Commitment to deliver the Security to the Takeout
Investor on the Settlement Date specified therein.  Seller understands that, as
a result of this Section 3 and each Trade Assignment, Purchaser will succeed to
the rights and obligations of Seller with respect to each Takeout Commitment
subject to a Trade Assignment, and that in satisfying each such Takeout
Commitment, Purchaser, will stand in the shoes of Seller and, consequently, will
be acting as a non-dealer in exercising its rights and fulfilling its
obligations assigned pursuant to this Section 3 and each Trade Assignment.

 

Seller hereby acknowledges that, in order for Purchaser to satisfy the “good
delivery standards” of the Securities Industry and Financial Markets Association
(“SIFMA”) as set forth in the SIFMA Uniform Practices Manual and SIFMA’s Uniform
Practices for the Clearance and Settlement of Mortgage Backed Securities and
other Related Securities, in each case, as amended from time to time, Purchaser
must deliver each Trade Assignment to the related Takeout Investor no later than
seventy-two (72) hours prior to settlement of the related Security.  Seller
hereby acknowledges and agrees to deliver each Trade Assignment to Purchaser no
later than 1:00 p.m. (Eastern Time) on the date on which such seventy-two (72)
hour period commences.

 

Section 4.                                           Holdback Amount.

 

(a)                                 Subject to the terms of this Agreement,
Purchaser shall pay to Seller the Holdback Amount for each Participation
Certificate that Purchaser elects to purchase hereunder.  The

 

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Holdback Amount with respect to a Participation Certificate shall be paid by
Purchaser to Seller as provided in Section 4(b) below.

 

(b)                                 Subject to Section 5(b) and the Purchaser’s
right of set-off set forth in Section 13, the Holdback Amount relating to each
Participation Certificate shall be paid by Purchaser to Seller not later than
the Settlement Date of the related Security; provided, that on the date of any
such payment to the Seller, the Holdback Amount shall be (i) reduced by the
positive difference (if any) between the Purchase Price Adjustment Amount and
the Present Value Adjustment Amount with respect to such Participation
Certificate or (ii) increased by the positive difference (if any) between the
Present Value Adjustment Amount and the Purchase Price Adjustment Amount with
respect to such Participation Certificate.  Notwithstanding any provision hereof
to the contrary, no Holdback Amount shall be owed by Purchaser to Seller upon
issuance of any Security in the circumstances contemplated in Section 6(f) or if
the related Security shall not be issued as a result of a Security Issuance
Failure.  No exercise by Purchaser of its rights under this Section 4(b) shall
relieve Seller of responsibility or liability for any breach of this Agreement.

 

(c)                                  Upon exercise by Purchaser of its remedies
under Section 6(f), Purchaser’s obligation to pay and Seller’s right to receive
any portion of the Holdback Amount relating to such Mortgage Loans shall
automatically be canceled and become null and void; provided, that such
cancellation shall in no way relieve Seller or otherwise affect the obligation
of Seller to indemnify and hold Purchaser harmless as specified in Section 14. 
At no time shall Seller have any beneficial interest in the servicing rights
with respect to Related Mortgage Loans while the related Participation
Certificate is outstanding.

 

Section 5.                                           Issuance of Securities.

 

(a)                                 (i)  In connection with the purchase of a
Participation Certificate, Seller shall instruct (and, if Seller fails to
instruct, then Purchaser may instruct) Custodian to deliver to the Applicable
Agency, the documents listed in Exhibit 16-A, 16-B or 16-C of the Custodial
Agreement, as applicable, in respect of the Related Mortgage Loans, in the
manner and at the time set forth in the Custodial Agreement.  Seller shall
thereafter promptly deliver to the Applicable Agency any and all additional
documents requested by the Applicable Agency to enable the Applicable Agency to
make Delivery to Purchaser of a Security backed by such Mortgage Loans on the
related Anticipated Delivery Date.  Seller shall not revoke such instructions to
Custodian and shall not revoke its instructions to the Applicable Agency to make
Delivery to Purchaser or its designee of a Security backed by such Mortgage
Loans.

 

(ii)                                  Seller shall notify Purchaser, not later
than 12:00 noon, Eastern Time, on the second (2nd) Business Day prior to the
applicable Settlement Date (a) of the amount of any change in the principal
amount of the Mortgage Loans backing each such Security related to such
Settlement Date and (b) with respect to FHLMC Securities, the FHLMC mortgage
loan pool number applicable to each Security to which such Settlement Date
relates.  Upon Delivery of such Security to Purchaser or its designee, Purchaser
shall cease to have any interest under such Participation Certificate and in
exchange shall have a 100% ownership interest in the related Security.  It is
understood and agreed that for so long as Seller is subservicing, or is causing
any third party Subservicer to subservice, Related Mortgage Loans, Seller shall
retain only bare legal title (and not an equitable interest) in all such
Mortgage Loans (other than MERS Mortgage Loans) for the sole purpose of
subservicing such Mortgage Loans on a servicing-released basis.

 

(b)                                 If Delivery of a Security backed by the
Mortgage Loans evidenced by a Participation Certificate purchased hereunder has
not occurred by 12:00 noon (Eastern Time), on the related Settlement Date as a
result of a Security Issuance Failure, then subject to the exercise by Purchaser

 

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of its rights set forth in Section 4(c), the Holdback Amount relating to such
Participation Certificate shall be reduced on each day during the period from
the Settlement Date to (but not including) the earlier of (x) the date of
Delivery of such Security, and (y) the date of satisfaction of the obligations
of Seller pursuant to the exercise by Purchaser of any remedial election
authorized by this Section 5, by an amount equal to the Daily Holdback Reduction
Amount.  The Holdback Amount (as reduced by the applicable Daily Holdback
Reduction Amounts) relating to such Participation Certificate, if any, shall not
be payable until the end of the period specified in the preceding sentence.

 

(c)                                  If a breach by Seller of this Agreement
results in any Related Mortgage Loan being a Defective Mortgage Loan on the
Purchase Date of the related Participation Certificate, Purchaser in its sole
discretion may require Seller to, upon receipt of notice from Purchaser of its
exercise of such right, either (x) immediately repurchase Purchaser’s beneficial
ownership interest in such Defective Mortgage Loan by remitting to Purchaser the
allocable amount paid by Purchaser for such beneficial interest plus accrued
interest at the rate specified in the related Mortgage Note on the principal
amount thereof from the date of Purchaser’s purchase of such Participation
Certificate to the date of such repurchase together with any Losses suffered by
Purchaser relating to such repurchase (including, without limitation, any Losses
incurred by Purchaser resulting from adjustments to the trade required by the
Takeout Investor), or (y) deliver to Custodian a Mortgage Loan eligible to back
such Security in exchange for such Defective Mortgage Loan, which newly
delivered Mortgage Loan shall be in all respects acceptable to Purchaser in
Purchaser’s sole discretion, and such newly delivered Mortgage Loan will
thereupon become one of the Related Mortgage Loans relating to the Participation
Certificate.  If the aggregate principal balance of any Mortgage Loans that are
accepted by Purchaser pursuant to clause (y) of the immediately preceding
sentence is less than the aggregate principal balance of any Defective Mortgage
Loan that is being replaced by such Mortgage Loan, Seller shall remit with such
Mortgage Loan to Purchaser an amount equal to the difference between the
aggregate principal balance of the new Mortgage Loan accepted by Purchaser and
the aggregate principal balance of the Defective Mortgage Loan being replaced
thereby plus accrued interest on such Defective Mortgage Loan at the rate
specified in the related Mortgage Note on the principal amount thereof from the
Purchase Date of Purchaser’s purchase of such Participation Certificate to the
date of substitution.  If any Related Mortgage Loan becomes thirty (30) or more
days past due with respect to the first scheduled monthly payment due Purchaser
after the date on which such Related Mortgage Loan was originated and prior to
the Anticipated Delivery Date, Seller shall repurchase the beneficial interest
in such Related Mortgage Loan as if it were a Defective Mortgage Loan upon
direction by Purchaser given no later than one hundred twenty (120) days after
the Purchase Date.

 

(d)                                 No exercise by Purchaser of its rights under
this Section 5 shall relieve Seller of responsibility or liability for any
breach of this Agreement.

 

Section 6.                                           Servicing of the Mortgage
Loans; Events of Default.

 

(a)                                 Upon payment of the Purchase Price (subject
to Section 4), Purchaser shall own a 100% undivided beneficial interest in the
servicing rights related to the Related Mortgage Loans and all source files,
documents, agreements and papers related to servicing the Related Mortgage Loans
and shall own all derivative information created by Seller or other third party
used or useful in servicing such Mortgage Loans.  Seller and Purchaser each
agrees and acknowledges that a 100% undivided beneficial interest in Related
Mortgage Loans shall be sold to Purchaser on a servicing released basis, subject
to the termination rights provided in this Agreement, including, without
limitation, Section 6(f) of this Agreement, and that Purchaser is engaging, and
Purchaser does hereby engage, Seller to provide, or cause a third party
Subservicer to provide, subservicing of each Related Mortgage Loan for the
benefit of Purchaser (and any other registered holder of the related
Participation Certificate) on the Purchase Date

 

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for each transaction.  Seller shall have no further servicing obligations or
duties to Purchaser under the terms of this Agreement with respect to the
Related Mortgage Loans upon issuance of the Security.

 

For so long as a Participation Certificate is outstanding, Seller shall neither
assign, encumber or pledge its obligation to subservice the Related Mortgage
Loans in whole or in part, nor delegate its rights or duties under this
Agreement to any Person other than a Subservicer, without the prior written
consent of Purchaser, the granting of which consent shall be in the sole
discretion of Purchaser.  Seller hereby acknowledges and agrees that
(i) Purchaser is entering into this Agreement in reliance upon Seller’s
representations as to the adequacy of its financial standing, servicing
facilities, personnel, records, procedures, reputation and integrity, and the
continuance thereof; and (ii) Seller’s engagement hereunder to provide mortgage
servicing for the benefit of Purchaser (and any other registered holder of the
Participation Certificate) is intended by the parties to be a “personal service
contract” and Seller is hereunder intended by the parties to be an “independent
contractor”.

 

(b)                                 Seller shall, and shall cause any third
party Subservicer to, subservice and administer the Related Mortgage Loans
relating to a Participation Certificate on behalf of Purchaser in accordance
with Accepted Servicing Practices.  Neither Seller nor any Subservicer shall
have the right to modify or alter the terms of any Related Mortgage Loan or
consent to the modification or alteration of the terms of any Related Mortgage
Loan except in Strict Compliance with the related Agency Program.  Seller shall,
and shall cause any third party Subservicer to, at all times maintain accurate
and complete records of its servicing of the Related Mortgage Loans, and
Purchaser may, at any time during Seller’s business hours on reasonable notice,
examine and make copies of such Servicing Records.  Seller agrees that Purchaser
is the 100% beneficial owner of all Servicing Records relating to the Related
Mortgage Loans.  Seller covenants to hold such Servicing Records for the benefit
of Purchaser and to safeguard such Servicing Records and to deliver them
promptly to Purchaser or its designee (including the Custodian) at Purchaser’s
request or otherwise as required by operation of this Section 6.  In addition,
if Delivery of a Security is not made to Purchaser on or before the Anticipated
Delivery Date, Seller shall deliver to Purchaser monthly reports regarding the
status of those Related Mortgage Loans for which a Security has not yet been
issued, which reports shall include, but shall not be limited to, a description
of those Related Mortgage Loans in default for more than thirty (30) days, and
such other circumstances with respect to any Related Mortgage Loans (whether or
not such Related Mortgage Loans are included in the foregoing list) that could
materially adversely affect any of such Related Mortgage Loans, Purchaser’s
beneficial interest in such Related Mortgage Loans or the collateral securing
any of such Related Mortgage Loans.  Seller shall deliver such a report to
Purchaser every thirty (30) days until (i) Delivery of the related Security to
Purchaser or (ii) the exercise by Purchaser of any remedial election pursuant to
Section 5.  In no event shall Seller delegate any of its subservicing duties
hereunder to any other Person without first obtaining the prior written consent
of Purchaser.

 

(c)                                  Seller, as servicer, shall establish and
maintain with Purchaser a separate custodial account (the “Custodial Account”)
entitled “PennyMac Loan Services, LLC Custodial Account, for the benefit of Bank
of America, N.A. and its assignees under the Mortgage Loan Participation
Purchase and Sale Agreement dated as of August 13, 2014” and shall promptly
deposit into such account in the form received, with any necessary endorsements,
all collections received in respect of the Related Mortgage Loans relating to
Participation Certificates purchased by Purchaser hereunder.

 

(d)                                 Amounts deposited in the Custodial Account
with respect to any Related Mortgage Loan relating to Participation Certificates
purchased by Purchaser hereunder shall be held for the benefit of Purchaser and
shall be released only as follows:

 

(i)                                     Except as otherwise provided in
Section 6(d)(ii), upon either (x) the Settlement Date (unless there is a
Security Issuance Failure) or (y) if earlier, on the date required

 

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by the Applicable Agency Guide, amounts deposited in the Custodial Account shall
be released to Seller.  Notwithstanding the foregoing, all amounts relating to
Participation Certificates purchased by Purchaser hereunder and deposited in the
Custodial Account shall be released to Seller upon the Settlement Date of the
related Security (unless there is a Security Issuance Failure) only if, and to
the extent that, there are no amounts due and payable to Purchaser hereunder. 
The amounts paid to Seller (if any) pursuant to this Section 6(d)(i) shall
constitute the sole compensation of the Seller or the related third party
Subservicer, as applicable, for subservicing the Related Mortgage Loans as
provided in this Section 6.

 

(ii)                                  If Successor Servicer takes delivery of
such Mortgage Loans either under the circumstances set forth in Section 6(f) or
otherwise, all amounts deposited in the Custodial Account shall be paid to
Purchaser promptly upon such delivery.

 

(iii)                               If a Security is not issued solely as a
result of a Security Issuance Failure during the month in which the related
Settlement Date occurs, in any period thereafter during which Seller or a third
party Subservicer remains as subservicer, all amounts deposited in the Custodial
Account shall be released only in accordance with Purchaser’s written
instructions.

 

(e)                                  Purchaser (or any other registered holder
of the Related Participation Certificate) shall be entitled to (i) retain all
Holdback Amounts in accordance with Section 4, and all amounts on deposit in the
Over/Under Account in accordance with Section 11, (ii) declare all amounts
payable by Seller to Purchaser hereunder to be immediately due and payable,
(iii) effect termination of Seller’s subservicing rights and obligations
respecting the affected Related Mortgage Loans as provided in Section 6(f),
(iv) take possession of the Related Mortgage Loans, including any records that
pertain thereto, (v) proceed against Seller for any deficiencies,
(vi) liquidate, terminate and accelerate this Agreement and all transactions
hereunder, and (vii) pursue any other rights and/or remedies available at law or
in equity against Seller, upon the occurrence of any of the following
circumstances or events (“Events of Default”):

 

(i)                                     any failure by Seller to remit to
Purchaser (or other registered holder of the Participation Certificate) when due
any payment required to be made under the terms of this Agreement or such
Participation Certificate; or

 

(ii)                                  failure by Seller or Guarantor, as
applicable, duly to observe or perform in any material respect (a) Seller’s
covenants in Section 10(j), or (b) any of Seller’s or Guarantor’s other
covenants or agreements set forth in this Agreement or in any other Program
Document which, in the case of this clause (b), continues unremedied for a
period of five (5) Business Days (or such longer period provided in the relevant
notice to Seller) after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to Seller or Guarantor,
as applicable, by Purchaser; or

 

(iii)                               any representation, warranty or
certification made or deemed made herein or in any other Program Document by
Seller or any certificate furnished to Purchaser pursuant to the provisions
thereof, shall prove to have been false or misleading in any material respect as
of the time made or furnished; or

 

(iv)                              a breach by Guarantor of any material
representation, warranty or covenant set forth in the Guaranty or any other
Program Document, any “event of default” by Guarantor under the Guaranty, any
repudiation of the Guaranty by Guarantor, or if the Guaranty is not enforceable
against Guarantor; or

 

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(v)                                 an Act of Insolvency shall have occurred
with respect to Seller, Guarantor or any Affiliate thereof; or

 

(vi)                              Seller ceases to meet the qualifications for
maintaining all Approvals, such Approvals are revoked or such Approvals are
materially modified; or

 

(vii)                           Seller attempts to assign its right to servicing
compensation hereunder or to resell an ownership interest in a Related Mortgage
Loan in a manner inconsistent with the terms hereof, or Seller attempts without
the consent of Purchaser to sell or otherwise dispose of all or substantially
all of its property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
thereof (to other than a subservicer); or

 

(viii)                        a Material Adverse Effect shall have occurred with
respect to Seller or any of its Affiliates; or

 

(ix)                              Seller’s membership in MERS is terminated for
any reason or Seller shall fail to enter into the Electronic Tracking Agreement
with the Purchaser; or

 

(x)                                 Seller, Guarantor or Affiliates thereof
shall be in default under (A) any Indebtedness of Seller, Guarantor or any
Affiliate with Purchaser or any of its Affiliates; (B) any Indebtedness, in the
aggregate, in excess of $1 million of Seller, Guarantor or any Affiliate
thereof, which default (x) involves the failure to pay a matured obligation, or
(y) permits the acceleration of the maturity of obligations by any other party
to or beneficiary with respect to such Indebtedness, or (C) any other contract
or contracts, in the aggregate in excess of $1 million to which Seller,
Guarantor or any Affiliate thereof is a party which default (x) involves the
failure to pay a matured obligation, or (y) permits the acceleration of the
maturity of obligations by any other party to or beneficiary of such contract;
or

 

(xi)                              A Responsible Officer of Seller or Guarantor
shall admit its inability to, or its intention not to, perform any of Seller’s
obligations or Guarantor’s obligations hereunder or the Guaranty or Purchaser
reasonably believes that Seller or Guarantor is unable to perform fully when
such performance will become due any obligation on Seller’s or Guarantor’s part
to any broker, dealer, bank or other financial institution in respect of a
transaction involving securities, commodities or other instruments not then due
(regardless of whether Purchaser has any right, title or interest therein); or

 

(xii)                           in the event of a Security Issuance Failure.

 

(f)                                   Purchaser, in its sole discretion, may
terminate Seller’s rights and obligations as subservicer of the affected Related
Mortgage Loans and require Seller to deliver the related Servicing Records to
Purchaser or its designee upon the occurrence of (i) an Event of Default,
(ii) Seller’s failure to comply with any of its obligations set forth in
Section 5(c), or (iii) Seller’s breach of Sections 9(a)(x) or 9(b)(ix), by
delivering written notice to Seller requiring such termination.  For the
avoidance of doubt, any termination of the Seller’s rights as subservicer of the
affected Related Mortgage Loans by the Purchaser as a result of clauses (i),
(ii) or (iii) of the foregoing sentence shall be deemed part of an exercise of
the Purchaser’s rights to cause the liquidation, termination or acceleration of
this Agreement.  Such termination shall be effective upon Seller’s receipt of
such written notice; provided, that Seller’s subservicing rights shall be
terminated immediately upon the occurrence of any event described in
Section 6(e)(iv), regardless of whether notice of such event shall have been
given to or by Purchaser or Seller.  Upon any such termination, all authority
and power of Seller respecting its rights to subservice

 

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and duties under this Agreement relating thereto, shall pass to and be vested in
the Successor Servicer appointed by Purchaser and Purchaser is hereby authorized
and empowered to transfer such rights to subservice the Related Mortgage Loans
for such price and on such terms and conditions as Purchaser shall reasonably
determine; provided, that to the extent the Applicable Agency proceeds to issue
a Security with respect to the Related Mortgage Loans, Purchaser shall convey
the servicing rights and the rights to subservice such Mortgage Loans in
accordance with such Applicable Agency’s instructions.  Seller shall promptly
take such actions and furnish to Purchaser such documents that Purchaser deems
necessary or appropriate to enable Purchaser to obtain a Security backed by such
Mortgage Loans or to enforce such Mortgage Loans, as appropriate, and shall
perform all acts and take all actions so that the Related Mortgage Loans and all
files and documents relating to such Mortgage Loans held by Seller, together
with all escrow amounts relating to such Mortgage Loans, are delivered to
Successor Servicer, including but not limited to preparing, executing and
delivering to the Successor Servicer any and all documents and other
instruments, placing in the Successor Servicer’s possession all Servicing
Records pertaining to such Mortgage Loans and doing or causing to be done, all
at Seller’s sole expense.  To the extent that the approval of the Applicable
Agency is required for any such sale or transfer, Seller shall fully cooperate
with Purchaser to obtain such approval.  All amounts paid by any purchaser of
such rights to service or subservice the Related Mortgage Loans shall be the
property of Purchaser.  The subservicing rights required to be delivered to
Successor Servicer in accordance with this Section 6(f) shall be delivered free
of any servicing rights in favor of Seller or any third party (other than
Purchaser) and free of any title, interest, lien, encumbrance or claim of any
kind of Seller other than bare legal title to the Mortgage Loans.  No exercise
by Purchaser of its rights under this Section 6(f) shall relieve Seller of
responsibility or liability for any breach of this Agreement.

 

Section 7.                                           Transfers of Participation
Certificates and Securities by Purchaser.  Purchaser may, in its sole discretion
and without the consent of Seller, assign all of its right, title and interest
or grant a security interest in any Participation Certificate and the related
servicing rights, each Security in respect thereof of which Delivery is made to
Purchaser and all rights of Purchaser under this Agreement (including, but not
limited to, the Custodial Account) in respect of such Participation Certificate
and such Security, to any person (an “Assignee”), subject only to an obligation
on the part of the Assignee to deliver each such Security to the Takeout
Investor or to Purchaser to permit Purchaser or its designee to make delivery
thereof to the Takeout Investor.  Assignment by Purchaser of a Participation
Certificate and the related servicing rights as provided in this Section 7 will
not release Purchaser from its obligations otherwise under this Agreement.

 

Without limitation of the foregoing, an assignment of a Participation
Certificate and the related servicing rights to an Assignee, as described in
this Section 7, shall be effective upon delivery of the Participation
Certificate to the Assignee or its designee, together with a duly executed
Assignment substantially in the form of Exhibit E (with a copy to Seller).

 

Section 8.                                           Record Title to Mortgage
Loans; Intent of Parties; Security Interest.

 

(a)                                 From and after the issuance and delivery of
the Related Participation Certificate, and subject to the remedies of Purchaser
in Section 5, Seller or Subservicer as subservicer shall remain the last named
payee or endorsee of each Mortgage Note and the mortgagee or assignee of record
of each Mortgage (except with respect to any MERS Mortgage Loan) and shall
retain only bare legal title (and not an equitable interest) in the Related
Mortgage Loan, all for the benefit of Purchaser for the sole purpose of
facilitating the subservicing of such Mortgage Loan and the issuance of a
Security backed by such Mortgage Loan.  Where Seller has appointed FHLMC as
Custodian, the parties hereto acknowledge that the Mortgage Notes acquired
hereunder have been deposited with FHLMC to facilitate the issuance of FHLMC
Securities with respect thereto and that prior to such issuance FHLMC is holding
such Mortgage Notes as Custodian for Purchaser.

 

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(b)                                 Seller shall maintain a complete set of
books and records for each Related Mortgage Loan which shall be clearly marked
to reflect the beneficial ownership interest in each Related Mortgage Loan of
the holder of the Related Participation Certificate.  Seller shall notify MERS
of the beneficial ownership interest of Purchaser in each MERS Mortgage Loan
through the MORNET system or any other comparable system acceptable to MERS.

 

(c)                                  Purchaser and Seller confirm that the
transactions contemplated herein are intended to be sales of the Participation
Certificates by Seller to Purchaser rather than borrowings secured by the
Participation Certificates.  In the event, for any reason, any transaction is
construed by any court or regulatory authority as a borrowing rather than as a
sale, Seller and Purchaser intend that Purchaser or its Assignee, as the case
may be, shall have a perfected first priority security interest in Seller’s
interest in the Participation Certificates, all of the servicing rights with
respect to the Related Mortgage Loans, the Custodial Account and all amounts on
deposit therein, the Related Mortgage Loans subject to each Participation
Certificate, all documents, records (including, without limitation, Servicing
Records and copies of all documentation in connection with the underwriting and
origination of any Related Mortgage Loan that evidences compliance with the
Ability to Repay Rule and the QM Rule), instruments and data evidencing the
Related Mortgage Loans and the servicing thereof, the Securities to be issued as
contemplated hereunder and all proceeds thereof, the Takeout Commitments, any
funds of the Seller at any time deposited or held in the Over/Under Account and
the proceeds of any and all of the foregoing (collectively, the “Collateral”),
free and clear of adverse claims.  In any case, Seller hereby grants to
Purchaser or its Assignee, as the case may be, a first priority security
interest in and lien upon the Collateral, free and clear of adverse claims. 
This Agreement shall constitute a security agreement, the Custodian shall be
deemed to be an independent custodian for purposes of perfection of the security
interest herein granted to Purchaser, and Purchaser or each such Assignee shall
have all of the rights of a secured party under applicable law.  Without
limiting the generality of the foregoing and for the avoidance of doubt, if any
determination is made that the servicing rights with respect to the Related
Mortgage Loans were not sold by Seller to Purchaser or that that such servicing
rights are not an interest in the Related Mortgage Loans and are severable from
the Related Mortgage Loans despite Purchaser’s and Seller’s express intent
herein to treat them as included in the purchase and sale transaction, Seller
hereby expressly pledges, assigns and grants to Purchaser a continuing first
priority security interest in and lien upon the servicing rights and all
documentation and rights to receive documentation related to such servicing
rights and the servicing of each of the Related Mortgage Loans (the “Related
Credit Enhancement”).  The Collateral and Related Credit Enhancement is hereby
pledged as further security for Seller’s obligations to Purchaser hereunder.

 

(d)                                 Upon request of Purchaser, Seller shall
prepare and deliver to MERS an Assignment of Mortgage from MERS to Purchaser or
its designee.  Upon due execution by MERS, Seller shall cause such Assignment of
Mortgage to be recorded in the public land records upon request of Purchaser.

 

Section 9.                                           Representations and
Warranties.

 

(a)                                 Each of Seller and Guarantor hereby
represents and warrants to Purchaser as of the date hereof and with respect to
the Related Mortgage Loans as of the date of each issuance and delivery of a
Participation Certificate that:

 

(i)                                     The consideration received by Seller
upon the sale of each Participation Certificate will constitute reasonably
equivalent value and fair consideration for the beneficial ownership interest in
the Mortgage Loans evidenced by that Participation Certificate;

 

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(ii)                                  Each of Seller and Guarantor has been duly
organized and is validly existing as a limited liability company in good
standing under the laws of the State of Delaware;

 

(iii)                               Each of Seller and Guarantor is duly
licensed or is otherwise qualified in each jurisdiction in which it transacts
business for the business which it conducts and is not in default of any
applicable federal, state or local laws, rules and regulations unless, in either
instance, the failure to take such action is not reasonably likely (either
individually or in the aggregate) to cause a Material Adverse Effect and is not
in default of such state’s applicable laws, rules and regulations.  Seller has
the requisite power and authority and legal right to originate and purchase
Related Mortgage Loans (as applicable) and to own, sell and grant a lien on all
of its right, title and interest in and to the Related Mortgage Loans.  Each of
Seller and Guarantor has the requisite power and authority and legal right to
execute and deliver, engage in the transactions contemplated by, and perform and
observe the terms and conditions of, this Agreement and each Program Document;

 

(iv)                              Each of Seller and Guarantor has all requisite
corporate or other power, and has all governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted, except where the lack of such
licenses, authorizations, consents and approvals would not be reasonably likely
to have a Material Adverse Effect;

 

(v)                                 Each of Seller and Guarantor has all
necessary corporate or other power, authority and legal right to execute,
deliver and perform its obligations under each of the Program Documents, as
applicable.  This Agreement and the Program Documents have been (or, in the case
of Program Documents not yet executed, will be) duly authorized, executed and
delivered by Seller and Guarantor, all requisite or other corporate action
having been taken, and each is valid, binding and enforceable against Seller and
Guarantor in accordance with its terms except as such enforcement may be
affected by bankruptcy, by other insolvency laws, or by general principles of
equity;

 

(vi)                              No consent, approval, authorization or order
of, registration or filing with, or notice to any Governmental Authority or
court is required under applicable law in connection with the execution,
delivery and performance by Seller or Guarantor of this Agreement and the
Program Documents;

 

(vii)                           Seller has not sold, assigned, transferred,
pledged or hypothecated any interest in any Participation Certificate or Related
Mortgage Loan (except to any Warehouse Lender which provides a Warehouse
Lender’s Release) to any person other than Purchaser, and upon delivery of a
Participation Certificate to Purchaser, Purchaser will be the sole owner
thereof, free and clear of any lien, claim or encumbrance;

 

(viii)                        Neither this Agreement nor any representations and
warranties or information relating to Seller that Seller has delivered or caused
to be delivered to Purchaser, including, but not limited to, all documents
related to this Agreement, each other Program Document or Seller’s financial
statements, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements made therein or herein in light
of the circumstances under which they were made, not misleading.  Since the
furnishing of such documents or information, there has been no change, nor any
development or event involving a prospective change that would render any of
such documents or information untrue or misleading in any material respect;

 

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(ix)                              There is no action, proceeding or
investigation pending with respect to which either Seller or Guarantor has
received service of process or, to the best of Seller’s or Guarantor’s knowledge
threatened against it before any court, administrative agency or other tribunal
(A) asserting the invalidity of this Agreement, any transaction or any Program
Document, (B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any Program Document, (C) makes a claim
individually in an amount greater than $5,000,000 or in an aggregate amount
greater than $10,000,000, (D) which requires filing with the Securities and
Exchange Commission in accordance with the 1934 Act or any rules thereunder or
(E) which might materially and adversely affect the validity of the Related
Mortgage Loans or the performance by it of its obligations under, or the
validity or enforceability of, this Agreement or any Program Document;

 

(x)                                 Seller is an FHA-approved mortgagee and a
VA-approved lender. Seller is also approved by Fannie Mae as an approved
seller/servicer, Freddie Mac as an approved seller/servicer, GNMA as an approved
issuer to the extent previously approved and, to the extent necessary, approved
by the Secretary of Housing and Urban Development pursuant to Sections 203 and
211 of the National Housing Act.  In each such case, Seller is in good standing,
with no event having occurred or Seller having any reason whatsoever to believe
or suspect will occur prior to the issuance of the Security or the consummation
of the Takeout Commitment, as the case may be, including, without limitation, a
change in insurance coverage which would either make Seller unable to comply
with the eligibility requirements for maintaining all such applicable approvals
or require notification to the Applicable Agency or to the Department of Housing
and Urban Development, FHA or VA.  Should Seller for any reason cease to possess
all such applicable approvals, or should a change in insurance coverage require
notification to the Applicable Agency or to the Department of Housing and Urban
Development, FHA, or VA, Seller shall so notify Purchaser immediately in
writing.  Subservicer has adequate financial standing, servicing facilities,
procedures and experienced personnel necessary for the sound servicing of
mortgage loans of the same types as may from time to time constitute Related
Mortgage Loans and in accordance with Accepted Servicing Practices;

 

(xi)                              The Custodian is an eligible custodian under
each Agency Guide and each Agency Program, and is not an Affiliate of Seller;
and

 

(xii)                           The Agreement, each other Program Document, any
other document contemplated hereby or thereby and each transaction have not been
entered into fraudulently by Seller hereunder or the Custodian, or with the
intent to hinder, delay or defraud any creditor or Purchaser.

 

(b)                                 Seller hereby represents and warrants to
Purchaser with respect to each Related Mortgage Loan as of the date of the
Purchase Date in respect of the Related Participation Certificate that:

 

(i)                                     Such Mortgage Loan was, immediately
prior to the sale to Purchaser of the Related Participation Certificate, owned
solely by Seller, is not subject to any lien, claim or encumbrance (other than
the lien of a Warehouse Lender), including, without limitation, any such
interest pursuant to a loan or credit agreement for warehousing mortgage loans,
and was originated and serviced in accordance with all applicable law and
regulations, including without limitation the Federal Truth-in-Lending Act, the
Real Estate Settlement Procedures Act, regulations issued pursuant to any of the
aforesaid, and any and all rules, requirements, guidelines and announcements of
the Applicable Agency, and, as applicable, the FHA and VA, as the same may be
amended from time to time;

 

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(ii)                                  The improvements on the land securing such
Mortgage Loan are and will be kept insured at all times by responsible insurance
companies reasonably acceptable to Purchaser against fire and extended coverage
hazards under policies, binders or certificates of insurance with a standard
mortgagee clause in favor of Seller and its assigns, providing that such policy
may not be canceled without prior notice to Seller.  Any proceeds of such
insurance shall be held in trust for the benefit of Purchaser.  The scope and
amount of such insurance shall satisfy the rules, requirements, guidelines and
announcements of the Applicable Agency, and shall in all cases be at least equal
to the lesser of (A) the principal amount of such Mortgage Loan or (B) the
maximum amount permitted by applicable law, and shall not be subject to
reduction below such amount through the operation of a coinsurance, reduced rate
contribution or similar clause;

 

(iii)                               Each Mortgage is a valid first lien on the
Mortgaged Property and is covered by an attorney’s opinion of title acceptable
to the Applicable Agency or by a policy of title insurance on a standard ALTA or
similar lender’s form in favor of Seller and its assigns, subject only to
exceptions permitted by the applicable Agency Program.  Seller shall hold for
the benefit of Purchaser such policy of title insurance, and, upon request of
Purchaser, shall immediately deliver such policy to Purchaser or to the
Custodian on behalf of Purchaser;

 

(iv)                              To the extent applicable, such Mortgage Loan
is either insured by the FHA under the National Housing Act, guaranteed by the
VA under the Servicemen’s Readjustment Act of 1944 or is otherwise insured or
guaranteed or eligible to be insured or guaranteed in accordance with the
requirements of the applicable Agency Program and is not subject to any defect
that would prevent recovery in full or in part against the FHA, VA or other
insurer or guarantor, as the case may be;

 

(v)                                 Such Mortgage Loan is in Strict Compliance
with the requirements and specifications (including, without limitation, all
representations and warranties required in respect thereof) set forth in the
applicable Agency Guide;

 

(vi)                              Such Mortgage Loan conforms in all respects
with all requirements of the Takeout Commitment applicable to the Security to be
backed by such Mortgage Loan.  Each Takeout Commitment is valid and enforceable
and Seller has no knowledge that Takeout Investor will not be able to perform
under the terms of such Takeout Commitment;

 

(vii)                           With respect to each MERS Mortgage Loan, a MIN
has been assigned by MERS and such MIN is accurately provided on the schedule of
Mortgage Loans attached to the Related Participation Certificate;

 

(viii)                        With respect to each MERS Mortgage Loan, Seller
has not received any notice of liens or legal actions with respect to such
Mortgage Loan and no such notices have been electronically posted by MERS;

 

(ix)                              To the extent applicable, each Mortgage Loan
is being serviced by a mortgage sub-servicer having all Approvals necessary to
make such Mortgage Loan eligible to back a GNMA Security, FNMA Security, or
FHLMC Security, as applicable;

 

(x)                                 Each Mortgage Loan is eligible for sale to
the Applicable Agency, and fully complies with all of the terms and conditions,
including any covenants, representations and warranties, in the applicable
Agency Guide;

 

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(xi)                              No servicing agreement (other than any
Servicing Agreement) has been entered into with respect to the Mortgage Loan, or
any such servicing agreement has been terminated and there are no restrictions,
contractual or governmental, which would impair the ability of Purchaser or
Purchaser’s designees from servicing the Mortgage Loans;

 

(xii)                           The Purchase Price of the Participation
Certificate to which such Mortgage Loan relates, when added to the Aggregate
Purchase Price, does not exceed, the Aggregate Transaction Limit;

 

(xiii)                        Each Mortgage Loan satisfies the following
criteria:

 

(1)                                 Such Mortgage Loan is a Qualified Mortgage;

 

(2)                                 Such Mortgage Loan is accurately identified
in writing to Purchaser as either a Safe Harbor Qualified Mortgage or a
Rebuttable Presumption Qualified Mortgage;

 

(3)                                 Prior to the origination of such Mortgage
Loan, the related originator made a reasonable and good faith determination that
the related Mortgagor would have a reasonable ability to repay such Mortgage
Loan according to its terms, in accordance with, at a minimum, the eight
underwriting factors set forth in 12 CFR 1026.43(c)(2);  and

 

(4)                                 Such Mortgage Loan is supported by
documentation that evidences compliance with the Ability to Repay Rule and the
QM Rule; and

 

(xiv)                       There is no action, suit or proceeding instituted by
or against or threatened against Seller in any federal or state court or before
any commission or other regulatory body (federal, state or local, foreign or
domestic) that questions or challenges the compliance of any Mortgage Loan (or
the related underwriting) with the Ability to Repay Rule or the QM Rule.

 

The representations and warranties of Seller in this Section 9 are unaffected by
and supersede any provision in any endorsement of any Related Mortgage Loan or
in any assignment with respect to such Mortgage Loan to the effect that such
endorsement or assignment is without recourse or without representation or
warranty.

 

Section 10.                                    Covenants of Seller.  Each of
Seller and Guarantor hereby covenants and agrees with Purchaser for so long as
any Participation Certificate remains outstanding as follows:

 

(a)                                 Seller or Guarantor shall furnish to
Purchaser (x) promptly, copies of any material and adverse notices (including,
without limitation, notices of defaults, breaches, Potential Defaults or
potential breaches) and any material financial information that is not otherwise
required to be provided by Seller or Guarantor hereunder which is given to
Seller’s lenders, (y) immediately, notice of the occurrence of any Event of
Default hereunder or default or breach by Seller, Guarantor or Subservicer of
any obligation under any Program Document or any material contract or agreement
of Seller, Guarantor or Subservicer or the occurrence of any event or
circumstance that such party reasonably expects has resulted in, or will, with
the passage of time, result in, a Material Adverse Effect or an Event of Default
or such a default or breach by such party and (z) the following:

 

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(i)                                     As soon as available and in any event
within forty (40) calendar days after the end of each calendar month, the
unaudited consolidated balance sheets of Guarantor and its consolidated
Subsidiaries and the unaudited balance sheet of Seller, each as at the end of
such period and the related unaudited consolidated statements of income for
Guarantor and its consolidated Subsidiaries and Seller for such period and the
portion of the fiscal year through the end of such period, accompanied by a
certificate of a Responsible Officer of Guarantor or Seller, as applicable,
which certificate shall state that said consolidated financial statements or
financial statements, as applicable, fairly present in all material respects the
consolidated financial condition or financial condition, as applicable, and
results of operations of Guarantor and its consolidated Subsidiaries or Seller,
as applicable, in accordance with GAAP, consistently applied, as at the end of,
and for, such period (subject to normal year-end adjustments);

 

(ii)                                  As soon as available and in any event
within forty (40) calendar days after the end of each calendar quarter, the
unaudited consolidated cash flow statements of Guarantor and its consolidated
Subsidiaries and the unaudited cash flow statements of Seller, each as at the
end of such period and the portion of the fiscal year through the end of such
period, accompanied by a certificate of a Responsible Officer of Guarantor or
Seller, as applicable, which certificate shall state that said consolidated
financial statements or financial statements, as applicable, fairly present in
all material respects the consolidated financial condition or financial
condition, as applicable, and results of operations of Guarantor and its
consolidated Subsidiaries or Seller, as applicable, in accordance with GAAP,
consistently applied, as at the end of, and for, such period (subject to normal
year-end adjustments);

 

(iii)                               As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Guarantor and Seller, the
consolidated balance sheets of Guarantor and its consolidated Subsidiaries and
the balance sheet of Seller, each as at the end of such fiscal year and the
related consolidated statements of income and retained earnings and of cash
flows for Guarantor and its consolidated Subsidiaries and Seller for such year,
setting forth in each case in comparative form the figures for the previous
year, accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion and the scope of
audit shall be acceptable to Purchaser in its sole discretion, shall have no
“going concern” qualification and shall state that said consolidated financial
statements or financial statements, as applicable, fairly present the
consolidated financial condition or financial condition, as applicable, and
results of operations of Guarantor and its respective consolidated Subsidiaries
or Seller, as applicable, as at the end of, and for, such fiscal year in
accordance with GAAP;

 

(iv)                              Such other prepared statements that Purchaser
may reasonably request;

 

(v)                                 Promptly, and in any event within ten
(10) days after service of process on any of the following, give to Purchaser
notice of all litigation, actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are threatened or
pending) or other legal or arbitrable proceedings affecting Seller, Guarantor or
any of their Subsidiaries or affecting any of the Property of any of them before
any Governmental Authority that (i) questions or challenges the validity or
enforceability of any of the Program Documents or any action to be taken in
connection with the transactions contemplated hereby, (ii) makes a claim
individually in an amount greater than $5,000,000 or in an aggregate amount
greater than $10,000,000, (iii) which, individually or in the aggregate, if
adversely determined, could be reasonably likely to have a Material Adverse
Effect or (iv) questions or challenges compliance of any Related Mortgage Loan
with the Ability to Repay Rule or QM Rule. On each Reporting Date, Seller and
Guarantor, as applicable, will provide to Purchaser a litigation docket listing
all

 

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litigation, actions, suits, arbitrations, investigations (including, without
limitation, any of the foregoing which are threatened or pending) or other legal
or arbitrable proceedings affecting Seller, Guarantor or any of their
Subsidiaries or affecting any of the Property of any of them before any
Governmental Authority. Seller and Guarantor, as applicable, will promptly
provide notice of any judgment, which with the passage of time, could cause an
Event of Default hereunder, the filing, recording or assessment of any material
federal, state or local tax lien against it, or any of its assets;

 

(vi)                              Promptly upon becoming aware thereof (but in
no event later than three (3) Business Days after becoming aware), written
notice, in a reasonable detail of:

 

(1)                                 The occurrence of any Potential Default or
any Event of Default;

 

(2)                                 Any Related Mortgage Loan that is or becomes
a Defective Mortgage Loan;

 

(3)                                 Any Approved Investor threatens to set off
any amounts owed by Seller to such Approved Investor exceeding $250,000 in the
aggregate against the purchase proceeds owed by the Approved Investor to
Purchaser;

 

(4)                                 Upon Seller becoming aware of any
termination or threatened termination by any Applicable Agency of the Custodian
as an eligible custodian;

 

(vii)                           As soon as available, and in any event within
thirty (30) days of receipt, copies of relevant portions of all final written
Applicable Agency, FHA, VA, Governmental Authority and investor audits,
examinations, evaluations, monitoring reviews and reports of its operations
(including those prepared on a contract basis) which provide for or relate to
(i) material corrective action required, (ii) material sanctions proposed,
imposed or required, including without limitation notices of defaults, notices
of termination of approved status, notices of imposition of supervisory
agreements or interim servicing agreements, and notices of probation,
suspension, or non-renewal, or (iii) “report cards,” “grades” or other
classifications of the quality of Seller’s operations;

 

(viii)                        If applicable, copies of any 10-Ks, 10-Qs,
registration statements and other “corporate finance” SEC filings (other than
8-Ks) by Guarantor, Seller or any Affiliate, within 5 Business Days of their
filing with the SEC; provided, that, Guarantor, Seller or any Affiliate will
provide Purchaser with a copy of the annual 10-K filed with the SEC by
Guarantor, Seller or their Affiliates, no later than 90 days after the end of
the year;

 

(ix)                              Any other event, circumstance or condition
that has resulted, or has a possibility of resulting, in a Material Adverse
Effect with respect to Seller or Subservicer;

 

(x)                                 Any change in Seller’s chief executive
office or change in its jurisdiction of organization from the jurisdiction;
provided, that Seller has provided Purchaser 30 days’ prior written notice of
such change;

 

(xi)                              From time to time such other information
regarding the financial condition, operations, or business of Seller or
Guarantor as Purchaser may reasonably request;

 

(xii)                           Prior to the first Purchase Date hereunder and
at the request of Purchaser at any time thereafter:

 

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(1)                                 A copy of an Officer’s Certificate in the
form attached hereto as Exhibit G together with (1) the certificate of formation
of Seller and Guarantor and any amendments thereto, certified by the Secretary
of State of Seller’s and Guarantor’s state of incorporation, (2) a copy of
Seller’s and Guarantor’s operating agreement, together with any amendments
thereto, and (3) a copy of the resolutions adopted by Seller’s and Guarantor’s
Board of Directors authorizing Seller and Guarantor to enter into this Agreement
and the Custodial Agreement and authorizing one or more of Seller’s and
Guarantor’s officers to execute the documents related to this Agreement and the
Custodial Agreement.

 

(2)                                 An opinion of Seller’s and Guarantor’s
counsel as to such matters as Purchaser may reasonably request (including,
without limitation, with respect to Purchaser’s first priority lien on and
perfected security interest in the Related Mortgage Loans, a no material
litigation, non-contravention, enforceability and corporate opinion with respect
to Seller and Guarantor, an opinion with respect to the inapplicability of the
Investment Company Act to Seller and Guarantor, an opinion that this Agreement
constitutes a “securities contract” within the meaning of the Bankruptcy Code
and an opinion that no transaction constitutes an avoidable transfer under
Section 546(e) of the Bankruptcy Code), in form and substance acceptable to
Purchaser and from nationally recognized counsel acceptable to Purchaser.

 

(3)                                 Evidence that all other actions necessary
or, in the opinion of Purchaser, desirable to perfect and protect Purchaser’s
interest in the Related Mortgage Loans and other Collateral have been taken,
including, without limitation, duly executed and filed Uniform Commercial Code
financing statements on Form UCC-1.

 

(xiii)                        Prior to the first Purchase Date and each
subsequent Purchase Date hereunder, Seller shall have paid to Purchaser that
portion of the Facility Fee that is due and owing.

 

(xiv)                       On each Purchase Date hereunder, Seller shall
provide to Purchaser an Officer’s Certificate in the form attached hereto as
Exhibit H.

 

(xv)                          Together with the financial statements required to
be delivered pursuant to Section 10(a)(i),  Section 10(a)(ii) and
Section 10(a)(iii), Seller shall deliver to Purchaser an Officer’s Certificate
in the form of Exhibit D to the Master Repurchase Agreement. Seller’s obligation
to provide such Officer’s Certificate shall be waived for such periods during
which Seller shall be a party to a Master Repurchase Agreement with Purchaser
and shall be in compliance with Seller’s obligations under Section 17(b) of such
Master Repurchase Agreement.

 

(xvi)                       On each Purchase Date hereunder, Seller shall
provide to Purchaser a schedule identifying each Related Mortgage Loan as either
a Safe Harbor Qualified Mortgage or a Rebuttable Presumption Qualified Mortgage,
as applicable.

 

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(b)                                 Neither Seller nor any Affiliate thereof
will acquire at any time any Participation Certificate or any other economic
interest in or obligation with respect to any Related Mortgage Loan except for
the subservicing rights relating thereto and bare legal title to the Related
Mortgage Loans.

 

(c)                                  [Reserved].

 

(d)                                 Seller will be solvent at all relevant times
prior to, and will not be rendered insolvent by, any sale of a Participation
Certificate to Purchaser.

 

(e)                                  Seller will not sell any Participation
Certificate to Purchaser with any intent to hinder, delay or defraud any of
Seller’s creditors.

 

(f)                                   Seller shall take all necessary actions to
maintain its Approvals at all times during the term of this Agreement.  If, for
any reason, Seller ceases to maintain such Approvals, Seller shall so notify
Purchaser immediately.

 

(g)                                  Seller will comply in all material respects
with all laws, rules and regulations to which it is or may become subject.

 

(h)                                 Seller shall, upon request of Purchaser,
promptly execute and deliver to Purchaser all such other and further documents
and instruments of transfer, conveyance and assignment, and shall take such
other action as Purchaser may require more effectively to transfer, convey,
assign to and vest in Purchaser and to put Purchaser in possession of the
property to be transferred, conveyed, assigned and delivered hereunder and
otherwise to carry out more effectively the intent of the provisions under this
Agreement.

 

(i)                                     The Seller is a member of MERS in good
standing and current in the payment of all fees and assessments imposed by MERS,
and has complied with all rules and procedures of MERS.  In connection with the
assignment of any Related Mortgage Loan registered on the MERS System, the
Seller agrees that at the request of the Purchaser it will, at the Seller’s own
cost and expense, cause the MERS System to indicate that a beneficial interest
in such Mortgage Loan has been transferred to the Purchaser in accordance with
the terms of this Agreement by including in MERS’ computer files (a) the code in
the field which identifies the specific owner of the Related Mortgage Loans and
(b) the code in the field “Pool Field” which identifies the series in which such
Mortgage Loans were sold.  The Seller further agrees that it will not alter
codes referenced in this paragraph with respect to any Related Mortgage Loan at
any time that such Mortgage Loan is subject to this Agreement, and the Seller
shall retain its membership in MERS at all times during the term of this
Agreement.

 

(j)                                    (a)                                
Adjusted Tangible Net Worth.  Seller shall maintain an Adjusted Tangible Net
Worth of at least $200,000,000.

 

(b)                                 Total Liabilities to Adjusted Tangible Net
Worth Ratio.  On and after December 31, 2012, Seller’s ratio of Total
Liabilities to Adjusted Tangible Net Worth shall not exceed 10:1.

 

(c)                                  Maintenance of Liquidity.  Seller shall
maintain a Liquidity of not less than $20,000,000.

 

(d)                                 Maintenance of Profitability.  Seller shall
not permit, for any Test Period, Net Income for such Test Period, before income
taxes for such Test Period and distributions made during such Test Period, to be
less than $1.00.

 

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(k)                                 Seller, Guarantor and Purchaser each agree
that should Seller, Guarantor or any Affiliate thereof enter into a repurchase
agreement, warehouse facility, guaranty or similar credit facility with any
Person other than Purchaser or an Affiliate of Purchaser which by its terms
provides any of the following (each, a “More Favorable Agreement”):

 

(1)  more favorable terms with respect to any guaranties or financial covenants,
including without limitation covenants covering the same or similar subject
matter set forth in Sections 10(j) and 10(l) hereof; or

 

(2)  a requirement that Seller has added or will add any Person other than
Purchaser or an Affiliate of Purchaser as a loss payee under Seller’s Fidelity
Insurance;

 

then the Seller shall provide the Purchaser with prompt notice of such more
favorable terms contained in such More Favorable Agreement and the terms of this
Agreement shall be deemed automatically amended to include such more favorable
terms contained in such More Favorable Agreement, such that such terms operate
in favor of Purchaser or an Affiliate of Purchaser; provided, that in the event
that such More Favorable Agreement is terminated, upon notice by Seller to
Purchaser of such termination, the original terms of this Agreement shall be
deemed to be automatically reinstated.  Seller, Guarantor and Purchaser further
agree to execute and deliver any new guaranties, agreements or amendments to
this Agreement evidencing such provisions, provided that the execution of such
amendment shall not be a precondition to the effectiveness of such amendment,
but shall merely be for the convenience of the parties hereto.  Promptly upon
Seller, Guarantor or any Affiliate thereof entering into a repurchase agreement
or other credit facility with any Person other than Purchaser, Seller or
Guarantor, as applicable, shall deliver to Purchaser a true, correct and
complete copy of such repurchase agreement, loan agreement, guaranty or other
financing documentation.

 

(l)                                     If a Potential Default has occurred and
is continuing, neither Seller nor Guarantor shall pay any dividends with respect
to any capital stock or other equity interests in such entity, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of Seller
or Guarantor.

 

(m)                             [Reserved].

 

(n)                                 Seller shall deliver to Purchaser, with
reasonable promptness upon Purchaser’s request: (i) copies of any reports
related to the Participation Certificates and the Related Mortgage Loans,
(ii) copies of all documentation in connection with the underwriting and
origination of any Related Mortgage Loan that evidences compliance with the
Ability to Repay Rule and the QM Rule, as applicable, and (iii) any other
information in Seller’s possession related to the Participation Certificates and
the Related Mortgage Loans.

 

Section 11.                                    Over/Under Account.

 

(a)                                 Seller shall at all times maintain a balance
in the Over/Under Account of not less than the Minimum Over/Under Account
Balance.  The Over/Under Account shall be used to assist in settling Seller’s
payment obligations to Purchaser under this Agreement.  Purchaser shall not be
required to segregate and hold funds deposited by or on behalf of Seller in the
Over/Under Account separate and apart from Purchaser’s own funds or funds
deposited by or held for others.  Upon the occurrence of a Potential Default or
an Event of Default, Purchaser shall have the right to increase the Minimum
Over/Under Account Balance Seller is required to maintain in the Over/Under
Account by giving notice to Seller thereof.  If Seller fails to deposit funds in
the Over/Under Account to comply with any such required increase within the time
frame required by Purchaser, Purchaser shall have the right to retain in

 

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the Over/Under Account any amounts received by Purchaser on behalf of Seller or
otherwise credited to the Over/Under Account to comply with any such required
increase, including, without limitation, any purchase proceeds received by
Purchaser from any Takeout Investor pursuant to Section 3.  Purchaser shall not
be liable to Seller for any costs, losses or damages arising from or relating to
the increase of the Minimum Over/Under Account Balance that Seller is required
to maintain in the Over/Under Account or retention of excess funds by Purchaser
to comply with any such increase.  For the sake of clarity, only one Over/Under
Account shall be maintained by Purchaser for Seller in connection with this
Agreement and the Master Repurchase Agreement, if any, and such Over/Under
Account shall be subject to the terms of this Agreement as well as the Master
Repurchase Agreement, if any.(b)       Within one (1) Business Day of
Purchaser’s receipt of a payment from Seller or a Takeout Investor, Purchaser
shall credit to the Over/Under Account all amounts received by it that exceed
those amounts then due to Purchaser in accordance with this Agreement. 
Purchaser shall make available to Seller by posting on its warehouse lending
website within one (1) Business Day following any such credit to the Over/Under
Account, or as soon thereafter as is reasonably possible, a statement that
details the amounts so credited by Purchaser to the Over/Under Account.

 

(c)                                  If any amount credited to the Over/Under
Account creates a balance in excess of the Minimum Over/Under Account Balance
required pursuant to Section 11(a) above, provided that no Potential Default or
Event of Default has occurred and is continuing, Seller may submit a written
request to Purchaser for return or payment of such excess funds.  If any such
request is received by Purchaser prior to 1:00 p.m. (New York City time) on a
Business Day, Purchaser shall use commercially reasonable efforts to wire such
requested excess funds to Seller by the end of such Business Day and in no event
no later than two (2) Business Days after Purchaser’s receipt of such request. 
Notwithstanding anything contained in this Section 11(c) to the contrary,
Purchaser reserves the right to reject any request for excess funds from the
Over/Under Account if Purchaser determines that such excess funds shall be used
to satisfy Seller’s outstanding obligations under this Agreement or are subject
to other rights as provided in this Agreement.

 

(d)                                 Purchaser may, from time to time and without
separate authorization by Seller or notice to Seller, withdraw funds from the
Over/Under Account to settle amounts owed in accordance with the terms of this
Agreement or to otherwise satisfy Seller’s obligations under this Agreement,
including, without limitation (i) to reimburse itself for any reasonable costs
and expenses incurred by Purchaser in connection with this Agreement, as
permitted herein, and (ii) in the exercise of Purchaser’s or its Affiliates’
rights under Section 13.

 

(e)                                  If, at any time, Seller fails to maintain
in the Over/Under Account the Minimum Over/Under Account Balance as required
hereunder, in addition to any other rights and remedies that Purchaser may have
against Seller, Purchaser shall have the right to immediately stop purchasing
Participation Certificates from Seller until the time that funds are deposited
into or held in the Over/Under Account to comply with such Minimum Over/Under
Account Balance requirements hereunder. Without limiting the generality of the
foregoing, it is understood and agreed that should the balance in the Over/Under
Account become negative, Seller will continue to owe Purchaser accrued interest
as provided herein.

 

(f)                                   Any funds of Seller at any time deposited
or held in the Over/Under Account, whether such funds are required to be
deposited and held in the Over/Under Account pursuant to this Section 11 or
otherwise, are hereby pledged by Seller as security for its obligations under
this Agreement, and Seller hereby grants a security interest in such funds to
Purchaser, and such pledge and security interest shall be considered “a security
agreement or other arrangement or other credit enhancement” that is “related to”
the Agreement and transactions hereunder within the meaning of Bankruptcy Code
Sections 101(38A)(A) and 741(7)(A)(xi).

 

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Section 12.                                    Term.  This Agreement shall
continue in effect until terminated as to future transactions by written
instruction signed by either Seller or Purchaser and delivered to the other;
provided, that no termination will affect the obligations hereunder as to any of
the Participation Certificates then outstanding hereunder or any Security not
yet delivered to the related Takeout Investor.

 

Section 13.                                    Set-Off.  In addition to any
rights and remedies of Purchaser hereunder and by law, Purchaser shall have the
right, without prior notice to Seller or Guarantor, any such notice being
expressly waived by Seller and Guarantor to the extent permitted by applicable
law to set-off and apply against any obligation from Seller, Guarantor or any
Affiliate thereof to Purchaser or any of its Affiliates any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other obligation (including to return excess margin), credits, cash,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by or due from Purchaser or any Affiliate thereof to or for the credit or
the account of Seller, Guarantor or any Affiliate thereof.  Purchaser agrees
promptly to notify Seller or Guarantor after any such set off and application
made by Purchaser; provided that the failure to give such notice shall not
affect the validity of such set off and application.

 

Section 14.                                    Indemnification.  Each of Seller
and Guarantor agrees to hold Purchaser and each of its respective Affiliates and
their officers, directors, employees, agents and advisors (each, an “Indemnified
Party”) harmless from and indemnify each Indemnified Party (and will reimburse
each Indemnified Party as the same is incurred) against all liabilities, losses,
damages, judgments, costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) of any kind which may be imposed on,
incurred by, or asserted against any Indemnified Party relating to or arising
out of this Agreement, any Program Document or any transaction contemplated
hereby or thereby resulting from anything other than the Indemnified Party’s
gross negligence or willful misconduct.  Each of Seller and Guarantor also
agrees to reimburse each Indemnified Party for all reasonable expenses in
connection with the enforcement of this Agreement and the exercise of any right
or remedy provided for herein, and any Program Document, including, without
limitation, the reasonable fees and disbursements of counsel.  Seller’s and
Guarantor’s agreements in this Section 14 shall survive the expiration or
termination of this Agreement.  Each of Seller and Guarantor hereby acknowledges
that its obligations hereunder are recourse obligations of Seller and Guarantor
and are not limited to recoveries each Indemnified Party may have with respect
to the Related Mortgage Loans.  Each of Seller and Guarantor also agrees not to
assert any claim against Purchaser or any of its Affiliates, or any of their
respective officers, directors, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive damages arising
out of or otherwise relating to the facility established hereunder, the actual
or proposed use of the proceeds of the transactions, this Agreement or any of
the transactions contemplated thereby.  THE FOREGOING INDEMNITY AND AGREEMENT
NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE
(BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.

 

Section 15.                                    Exclusive Benefit of Parties;
Assignment.  This Agreement is for the exclusive benefit of the parties hereto
and their respective successors and assigns and shall not be deemed to give any
legal or equitable right to any other person, including the Takeout Investor and
Custodian.  Except as provided in Section 7, no rights or obligations created by
this Agreement may be assigned by either party hereto without the prior written
consent of the other party.

 

Any Person into which Seller may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which Seller shall be
a party, or any Person succeeding to the business of Seller, shall be the
successor of Seller hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding

 

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Section 16.                                    Amendments; Waivers; Cumulative
Rights.  This Agreement may be amended from time to time only by written
agreement of Seller and Purchaser.  Any forbearance, failure or delay by either
party in exercising any right, power or remedy hereunder shall not be deemed to
be a waiver thereof, and any single or partial exercise by either party of any
right, power or remedy hereunder shall not preclude the further exercise
thereof.  Every right, power and remedy of either party shall continue in full
force and effect until specifically waived by such party in writing.  No right,
power or remedy shall be exclusive, and each such right, power or remedy shall
be cumulative and in addition to any other right, power or remedy, whether
conferred hereby or hereafter available at law or in equity or by statute or
otherwise.

 

Section 17.                                    Execution in Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.  The parties agree that this Agreement, any documents to be
delivered pursuant to this Agreement and any notices hereunder may be
transmitted between them by email and/or by facsimile. The parties intend that
faxed signatures and electronically imaged signatures such as .pdf files shall
constitute original signatures and are binding on all parties. The original
documents shall be promptly delivered, if requested.

 

Section 18.                                    Effect of Invalidity of
Provisions.  In case any one or more of the provisions contained in this
Agreement should be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein or therein shall in no way be affected, prejudiced or disturbed thereby.

 

Section 19.                                    Governing Law.  THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

 

EACH OF SELLER AND GUARANTOR HEREBY WAIVES TRIAL BY JURY.  EACH OF SELLER AND
GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY COURT
OF THE STATE OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING TO THE PROGRAM
DOCUMENTS IN ANY ACTION OR PROCEEDING.  EACH OF SELLER AND GUARANTOR HEREBY
SUBMITS TO, AND WAIVES ANY OBJECTION IT MAY HAVE TO, EXCLUSIVE PERSONAL
JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY
DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS.

 

Section 20.                                    Notices.  Any notices, consents,
elections, directions and other communications given under this Agreement shall
be in writing and shall be deemed to have been duly given when telecopied or
delivered by overnight courier to, personally delivered to, or on the third day
following the placing thereof in the mail, first class postage prepaid to, the
parties hereto at the related address provided pursuant to Section 20 or to such
other address as either party shall give notice to the other party pursuant to
this Section.  Notices to any Assignee shall be given to such address as the
Assignee shall provide to Seller in writing.

 

Section 21.                                    Entire Agreement.  This Agreement
and the other Program Documents contain the entire agreement between the parties
hereto with respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements between them, oral or written, of any nature
whatsoever with respect to the subject matter hereof.

 

34

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Section 22.                                    Costs of Enforcement.

 

(a)                                 In addition to any other indemnity specified
in this Agreement, Seller agrees to pay as and when billed by Purchaser all of
the out-of pocket costs and expenses incurred by Purchaser in connection with
(i) the development, preparation, and execution of this Agreement, any other
related document or any other documents prepared in connection herewith or
therewith including without limitation, (A) all the reasonable fees,
disbursements and expenses of counsel to Purchaser and (B) all the due
diligence, inspection, testing and review costs and expenses incurred by
Purchaser in connection herewith or therewith, and (ii) the development,
preparation, and execution of any amendment, supplement or modification to, and
enforcement of this Agreement, any other related document or any other documents
prepared in connection herewith or therewith, the consummation, monitoring and
administration of the transactions contemplated hereby and thereby including,
without limitation, (A) all the reasonable fees, disbursements and expenses of
counsel to Purchaser and (B) all the due diligence, inspection, testing and
review costs and expenses incurred by Purchaser with respect to the Related
Mortgage Loans under this Agreement.

 

(b)                                 If Seller fails to pay when due any such
costs, expenses or other amounts payable by it under this Agreement (including,
without limitation, reasonable fees and expenses of counsel and indemnities),
such amount may be paid on behalf of Seller by Purchaser, in its sole discretion
and Purchaser shall be entitled to withdraw from the Over/Under Account or
retain from payments made by Seller or a Takeout Investor, or set off against
any amounts to be paid to Purchaser.  Seller shall remain liable for any such
payments made by Purchaser on behalf of Seller and any deficiency remaining
after any such withdrawal, retention or set-off.  No such payment by Purchaser
shall be deemed a waiver of any of Purchaser’s rights under this Agreement.

 

(c)                                  In addition to any other indemnity
specified in this Agreement, in the event of a breach by Seller of this
Agreement, the Custodial Agreement, a Participation Certificate or a Takeout
Commitment, Seller agrees to pay the reasonable attorneys’ fees and expenses of
Purchaser and/or any Assignee incurred as a consequence of such breach.

 

Section 23.                                    Intent.

 

(a)                                 Seller and Purchaser recognize that each
sale of a Participation Certificate under this Agreement is a “securities
contract” and a “master netting agreement” as those terms are defined in
Section 741 and Section 101(38A)(A) of the Bankruptcy Code, respectively, and a
“qualified financial contract” as that term is defined in the FDIA, and that the
pledge of the Related Credit Enhancement in Section 8(c) hereof constitutes “a
security agreement or other arrangement or other credit enhancement” that is
“related to” the Agreement and transactions hereunder within the meaning of
Sections 101(38A)(A) and 741(7)(A)(xi) of the Bankruptcy Code.  Seller and
Purchaser further recognize that the beneficial interest in the Related Mortgage
Loans evidenced by a Participation Certificate shall constitute an “interest in
a mortgage loan” as that term is used in Section and 741(7)(A)(i) of Bankruptcy
Code.

 

(b)                                 It is understood that the Purchaser shall
have the right to liquidate, terminate and accelerate, or exercise any other
remedies permitted upon the occurrence of any Event of Default, and that such
liquidation, termination and acceleration rights constitute contractual rights
to liquidate, terminate and accelerate the transactions under a “securities
contract” and a “master netting agreement” as described in Section 555 and
Section 561 of the Bankruptcy Code, respectively, and a “qualified financial
contract” as described Section 1821(e)(8)(A)(i) of the FDIA.

 

(c)                                  The parties hereto agree and acknowledge
that if a party hereto is an “insured depository institution,” as such term is
defined in the FDIA, then each transaction hereunder is a

 

35

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“qualified financial contract,” as that term is defined in the FDIA and any
rules, orders or policy statements thereunder (except insofar as the type of
assets subject to such transaction would render such definition inapplicable).

 

(d)                                 It is understood that this Agreement
constitutes a “netting contract” as defined in and subject to Title IV of the
Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and
each payment entitlement and payment obligation hereunder shall constitute a
“covered contractual payment entitlement” or “covered contractual payment
obligation,” respectively, as defined in and subject to FDICIA.

 

Section 24.                                    Full Recourse.  The obligations
of Seller from time to time to pay all amounts due under this Agreement shall be
full recourse obligations of Seller.

 

Section 25.                                    Examination and Oversight by
Regulators.  Seller agrees that the transactions with Purchaser under this
Agreement may be subject to regulatory examination and oversight by one or more
Governmental Authorities.  Seller shall comply with all requests made by
Purchaser to assist Purchaser in complying with regulatory requirements imposed
on Purchaser.

 

Consent to Service

 

Section 26.                                    Consent to Service.  Each party
irrevocably consents to the service of process by registered or certified mail,
postage prepaid, to it at its address provided pursuant to Section 20.

 

Section 27.                                    Construction.  The headings in
this Agreement are for convenience only and are not intended to influence its
construction.  References to Sections, Exhibits and Annexes in this Agreement
are to the Sections of and Exhibits and Annexes to this Agreement.  The Exhibits
and Annexes are part of this Agreement.  In this Agreement, the singular
includes the plural, the plural the singular, and the words “and” and “or” are
used in the conjunctive or disjunctive as the sense and circumstances may
require.

 

Section 28.                                    Further Assurances.  Seller and
Purchaser each agree to execute and deliver to the other such reasonable and
appropriate additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.

 

[signature page follows]

 

36

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IN WITNESS WHEREOF, Purchaser, Seller and Guarantor have duly executed this
Agreement as of the date and year set forth on the cover page hereof.

 

 

 

BANK OF AMERICA, N.A., Purchaser

 

 

 

 

 

 

By:

/s/ Adam Robitshek

 

 

Name: Adam Robitshek

 

 

Title: Vice President

 

 

 

 

 

PENNYMAC LOAN SERVICES, LLC, Seller

 

 

 

 

 

 

By:

/s/ Pamela Marsh

 

 

Name: Pamela Marsh

 

 

Title: Executive Vice President, Treasurer

 

 

 

 

 

PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC, Guarantor

 

 

 

 

 

 

By:

/s/ Pamela Marsh

 

 

Name: Pamela Marsh

 

 

Title: Executive Vice President, Treasurer

 

Signature Page to Mortgage Loan Participation Purchase and Sale Agreement

 

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Exhibit A

 

PARTICIPATION CERTIFICATE

 

POOL NO. (or FHLMC CONTRACT NO.):

 

This Participation Certificate evidences a one hundred percent (100%) undivided
beneficial ownership interest in (including the right to receive the payments of
principal of and interest on) the Mortgage Loans (the “Participation”)
identified:

 

(Check Box)

 

o

(a)

Form HUD 11706 (Schedule of Pooled Mortgages);

 

 

 

o

(b)

Fannie Mae Form 2005 (Schedule of Mortgages); or

 

 

 

o

(c)

FHLMC Form 1034 (Fixed-Rate Custodial Certification Schedule) or Selling System
computer tape.

 

The Participation has been sold to Purchaser pursuant to the terms of that
certain Mortgage Loan Participation Purchase and Sale Agreement, dated as of
August 13, 2014 (the “Agreement”) among PennyMac Loan Services, LLC, as Seller,
Private National Mortgage Acceptance Company, LLC, as Guarantor, and Bank of
America, N.A., as Purchaser.  Capitalized terms used but not defined herein
shall have the meanings set forth in the Agreement, the terms of which are
hereby incorporated by reference and made a part of this Participation
Certificate.

 

Upon Delivery of the related Security to Purchaser or its Assignee, Purchaser’s
beneficial ownership interest in the Mortgage Loans evidenced in this
Participation Certificate shall terminate in exchange for such Security, and
this Participation Certificate shall be void and of no further effect.

 

This Participation Certificate may be amended only by a written agreement
between Seller and Purchaser.

 

 

 

PENNYMAC LOAN SERVICES, LLC

 

 

 

 

 

 

By:

 

 

Its:

 

 

Date:

 

 

A-1

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AGGREGATE PRINCIPAL BALANCES OF THE MORTGAGE LOANS (GIVING EFFECT TO PAYMENTS
MADE AS OF               ,         ): $                                        

 

 

Hereby authenticated by Deutsche Bank National Trust Company pursuant to the
Custodial Agreement (May not be applicable for FHLMC)

 

 

 

 

 

By:

 

 

Its:

 

Date:

 

A-2

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Exhibit B

 

TRADE ASSIGNMENT

 

(“Takeout Investor”)
(Address)

 

Attention:               
Fax No.:

 

Dear Sirs:

 

Attached hereto is a correct and complete copy of your confirmation of
commitment (the “Commitment”), trade-dated                 ,         , to
purchase $           of     %        year,

 

(Check Box)

 

o

Government National Mortgage Association;

 

 

o

Federal National Mortgage Association; or

 

 

o

Federal Home Loan Mortgage Corporation.

 

mortgage-backed pass-through securities (“Securities”) at a purchase price of
                       from                    on (insert Settlement Date).  Our
intention is to assign $           of this Commitment’s full amount, which
assignment shall be effective and shall be fully enforceable by the assignee on
the Settlement Date.  This is to confirm that (i) the form of this assignment
conforms to the SIFMA guidelines, (ii) the Commitment is in full force and
effect, (iii) effective as of the Settlement Date, the Commitment is hereby
assigned to Bank of America, N.A. (“BANA”), whose acceptance of such assignment
is indicated below, (iv) you will accept delivery of such Securities directly
from BANA, (v) you will pay BANA for such Securities, (vi) effective as of the
Settlement Date and provided the Securities have been issued, BANA is obligated
to make delivery of such Securities to you in accordance with the attached
Commitment and (vii) effective as of the Settlement Date and provided the
Securities have been issued, you have released Seller from its obligation to
deliver the Securities to you under the Commitment.  Payment will be made
“delivery versus payment (DVP)” to BANA in immediately available funds.

 

If you have any questions, please call                     at (      )
      -         immediately or contact him by fax at (      )       -        .

 

 

Very truly yours,

 

 

 

PENNYMAC LOAN SERVICES, LLC

 

 

 

 

 

By:

 

 

Title:

 

Date:

 

B-1

--------------------------------------------------------------------------------

 

Agreed to:

 

 

 

BANK OF AMERICA, N.A.

 

 

 

 

 

By:

 

 

Title:

 

 

Date:

 

 

 

Provided the Securities have been issued, notice of delivery and confirmation of
receipt will be the obligations of BANA.  Prompt notification of incorrect
information or rejection of the trade assignment should be made to [          ].

 

B-2

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Exhibit C

 

DOCUMENT LIST

 

Seller shall deliver or cause to be delivered the following documents to
Purchaser:

 

(i)                                     the fully completed, executed and
authenticated Participation Certificate together with the certifications of the
Custodian provided by Section 3(b) of the Custodial Agreement;

 

(ii)                                  a Trade Assignment (unless Purchaser is
the Takeout Investor) together with either (a) a copy of a Takeout Commitment
with respect to the Security to be backed by the Mortgage Loans evidenced by
such Participation Certificate or (b) a letter from Seller confirming the
details of such Takeout Commitment;

 

(iii)                               a Warehouse Lender’s Release from any
warehouse lender having a security interest in the Related Mortgage Loans; and

 

(iv)                              a transaction request, together with a
schedule listing the Related Mortgage Loans, which schedule contains such
information as Purchaser may reasonably request.

 

C-1

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Exhibit D

 

RESERVED

 

D-1

--------------------------------------------------------------------------------

 

Exhibit E

 

ASSIGNMENT

 

FOR VALUE RECEIVED the undersigned hereby sell(s) and assign(s) and
transfer(s) unto

 

(Please print or typewrite name and address, including postal zip code of
assignee)

 

an undivided Participation Interest Equal to          % of the beneficial
interest in the Mortgage Loans relating to the within Participation Certificate,
Pool No. (FHLMC Contract No.)          , Pass-Through Rate         , Discount
            and hereby authorize(s) the transfer of registration of such
interest to assignee.

 

 

[Assignor]

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

Dated:

 

 

 

E-1

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Exhibit F

 

FORM OF CONFIRMATION

 

TO:                           [SELLER]

[ADDRESS]

 

DATE: [DATE]

 

RE:                           Confirmation of Purchase of a  beneficial interest
in

Mortgage Loans relating to a Participation Certificate

 

Bank of America, N.A. (“Purchaser”) is pleased to confirm its agreement to
purchase and your agreement to sell a 100% undivided, beneficial interest in the
Mortgage Loans relating to a Participation Certificate relating to the
contract/pool number [(GN/FN/FH Contract/Pool Number)] referred to herein (the
“Pool”), pursuant to the Mortgage Loan Participation Purchase and Sale
Agreement, dated as of August 13, 2014 (the “Agreement”), among Purchaser,
PennyMac Loan Services, LLC (“Seller”) and Private National Mortgage Acceptance
Company, LLC (“Guarantor”), under the following terms and conditions.

 

Pool No. (or FHLMC Contract No.)

Applicable Agency

Purchase Date

Anticipated Delivery Date

Settlement Date

Applicable Agency TBA trade price

Trade Price

Purchase Price:

Holdback Amount

Face Amount of the Security

 

F-1

--------------------------------------------------------------------------------

 

Solely for purposes of the purchase of this Pool, the Purchaser and Seller agree
that the definition of “Holdback Amount” shall be modified to read as follows:
“An amount equal to 3.00% of the Trade Principal, subject to reduction as
provided in Section 4(b) and Section 5(b) of the Agreement.”

 

Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed in the Agreement.

 

 

Very truly yours,

 

 

 

BANK OF AMERICA, N.A.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

Agreed and Consented by:

 

 

 

PENNYMAC LOAN SERVICES, LLC

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

F-2

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Exhibit G

 

[SELLER’S][GUARANTOR’S] OFFICER’S CERTIFICATE

 

I,                       , hereby certify that I am the duly elected
                             of [                                      ], a
[                    ] [corporation][limited liability company]
(“[Seller][Guarantor]”), and further certify, on behalf of [Seller][Guarnator]
as follows:

 

(1)                                 Attached hereto as Attachment I is a true
and correct copy of the articles of incorporation and by-laws of
[Seller][Guarnator] as are in full force and effect on the date hereof.

 

(2)                                 Attached hereto as Attachment II is a
Certificate of Good Standing of [Seller][Guarnator], issued by the Secretary of
the State of [                ] dated               ,         . No event has
occurred since               ,          which has affected the good standing of
Seller under the laws of the State of [                ].

 

(3)                                 Each person who, as an officer or
attorney-in-fact of [Seller][Guarnator], signed (a) the Mortgage Loan
Participation Purchase and Sale Agreement, dated as of August 13, 2014 (as
amended, supplemented or otherwise modified from time to time, the “Agreement”),
by and among PennyMac Loan Services, LLC, Private National Mortgage Acceptance
Company, LLC and Bank of America, N.A. (the “Purchaser”); [(b) the Amended and
Restated Custodial Agreement, dated as of August 13, 2014 (as amended,
supplemented or otherwise modified from time to time, the “Custodial
Agreement”), by and among PennyMac Loan Services, LLC, Purchaser and Deutsche
Bank National Trust Company;] and (c) any other document delivered prior hereto
or on the date hereof in connection with transactions contemplated in the
Agreement was, at the respective times of such signing and delivery, and is as
of the date hereof, duly elected or appointed, qualified and acting as such
officer or attorney-in-fact, and the signatures of such persons appearing on
such documents are their genuine signatures.

 

(4)                                 Attached hereto as Attachment III is a true
and correct copy of the resolutions duly adopted by the board of directors of
[Seller][Guarnator] on                     ,          (the “Resolutions”) with
respect to the authorization and approval of the transactions contemplated in
the Agreement; said Resolutions have not been amended, modified, annulled or
revoked and are in full force and effect on the date hereof.

 

(5)                                 All of the representations and warranties of
[Seller][Guarnator] contained in the Agreement were true and correct in all
material respects as of the date of the Agreement and are true and correct in
all material respects as of the date hereof.

 

(6)                                 [Seller][Guarnator] has performed all of its
duties and has satisfied all the material conditions on its part to be performed
or satisfied pursuant to the Agreement on or prior to the date hereof.

 

(7)                                 There are no actions, suits or proceedings
pending or, to my knowledge, threatened, against or affecting
[Seller][Guarnator] which, if adversely

 

G-1

--------------------------------------------------------------------------------

 

determined either individually or in the aggregate, would adversely affect
[Seller’s][Guarnator’s] obligations under the Agreement or the Custodial
Agreement.

 

(8)                                 No proceedings that could result in the
liquidation or dissolution of [Seller][Guarnator] are pending or contemplated.

 

(9)                                 Incumbency of Officers.  The below named
persons have been duly elected or appointed, and have been duly qualified as
officers of [Seller][Guarnator] holding the respective office below set opposite
his or her name, and the signature below set opposite his or her name is his or
her genuine signature.

 

Name

 

Office

 

Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement.

 

IN WITNESS WHEREOF, I have hereunto signed my name and on behalf of
[Seller][Guarnator].

 

Dated:                        ,    

 

 

 

[                                      ]

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

I,                                       ,                     of
                            , hereby certify that
                                 is the duly elected, qualified and acting
                               of                      and that the signature
appearing above is the genuine signature of such person.

 

IN WITNESS WHEREOF, I have hereunto signed my name.

 

Dated:                              ,

 

 

[                                      ]

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

G-2

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Exhibit H

 

SELLER’S OFFICER’S CERTIFICATE

 

I,                       , hereby certify that I am the duly elected
                             of PennyMac Loan Services, LLC, a Delaware limited
liability company (“Seller”), and further certify, on behalf of Seller as
follows:

 

(1)                                 There has been no change in the certificate
of formation and limited liability company operating agreement of Seller since
the date such documents were provided to the Purchaser and such documents are in
full force and effect on the date hereof.

 

(2)                                 No event has occurred since the date of the
last good standing certificate of Seller provided to the Purchaser which has
affected the good standing of Seller under the laws of the State of Delaware.

 

(3)                                 All of the representations and warranties of
Seller contained in Section 9(a) of the Mortgage Loan Participation Purchase and
Sale Agreement, dated as of August 13, 2014 (as amended, supplemented or
otherwise modified from time to time, the “Agreement”), by and among Seller,
Private National Mortgage Acceptance Company, LLC (“Guarantor”) and Bank of
America, N.A. (“Purchaser”), are true and correct in all material respects as of
the date hereof and all of the representations and warranties of Seller
contained in Section 9(b) of the Agreement are true and correct in all material
respects as to the Related Mortgage Loans subject to the Participation
Certificate being sold to Purchaser on the date hereof.

 

(4)                                 Seller has performed all of its duties and
has satisfied all the material conditions on its part to be performed or
satisfied pursuant to the Agreement on or prior to the date hereof.

 

(5)                                 There are no actions, suits or proceedings
pending or, to my knowledge, threatened, against or affecting Seller which, if
adversely determined either individually or in the aggregate, would adversely
affect Seller’s obligations under the Agreement or the Custodial Agreement.

 

(6)                                 No proceedings that could result in the
liquidation or dissolution of Seller are pending or contemplated.

 

(7)                                 Each Mortgage Loan that is subject to a
Participation Certificate to be sold to the Purchaser on the date hereof was
originated by Seller or purchased from an approved originator previously
approved by the Purchaser not more than sixty (60) days prior to the date
hereof.  No Related Mortgage Loan was rejected for purchase or financing by any
third party.

 

All capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement.

 

H-1

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, I have hereunto signed my name and on behalf of Seller.

 

Dated:                        ,

 

 

PENNYMAC LOAN SERVICES, LLC

 

 

 

 

 

 

By:

 

 

Name

 

Title:

 

H-2

--------------------------------------------------------------------------------

 

I,                                       ,                     of
                            , hereby certify that
                                 is the duly elected, qualified and acting
                               of                      and that the signature
appearing above is the genuine signature of such person.

 

IN WITNESS WHEREOF, I have hereunto signed my name.

 

Dated:                        ,   

 

 

 

PENNYMAC LOAN SERVICES, LLC

 

 

 

 

 

 

By:

 

 

Name

 

Title:

 

H-3

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Exhibit I

 

FORM OF SERVICER NOTICE AND ACKNOWLEDGEMENT

 

[Date]

 

[                              ], as Servicer

[ADDRESS]

Attention:

 

 

 

Re:                             Mortgage Loan Participation Purchase and Sale
Agreement, dated as of August 13, 2014 (as amended from time to time, the
“Purchase Agreement”), by and among Bank of America, N.A. (“Purchaser”),
PennyMac Loan Services, LLC (“Seller”) and Private National Mortgage Acceptance
Company, LLC (“Guarantor”).

 

Ladies and Gentlemen:

 

[                                              ] (“Servicer”) is servicing
certain mortgage loans for Seller pursuant to that certain [Subservicing
Agreement], dated as of [              ] (the “Servicing Agreement”) between
Servicer and Seller.  Pursuant to the Purchase Agreement among Purchaser, Seller
and Guarantor, Servicer is hereby notified that Seller may from time to time
sell to Purchaser participation certificates evidencing a beneficial interest in
certain mortgage loans which are currently being serviced by Servicer pursuant
to the terms of the Servicing Agreement.

 

Section 1.  Direction Notice.  (a) Upon receipt of notice from Purchaser (a
“Direction Notice”) in which Purchaser shall identify the mortgage loans the
beneficial interest of which is evidenced by participation certificates sold to
Purchaser under the Purchase Agreement (the “Mortgage Loans”), Servicer shall
segregate all amounts collected on account of such Mortgage Loans, hold them in
trust for the sole and exclusive benefit of Purchaser, and remit such
collections in accordance with Purchaser’s written instructions.  Further,
Servicer shall follow the instructions of Purchaser with respect to the Mortgage
Loans, and shall deliver to Purchaser any information with respect to the
Mortgage Loans as reasonably requested by Purchaser.

 

(b) Notwithstanding any contrary information which may be delivered to the
Servicer by Seller, Servicer may conclusively rely on any information delivered
by Purchaser, and Seller shall indemnify and hold the Servicer harmless for any
and all claims asserted against it for any actions taken in good faith by the
Servicer in connection with the delivery of such information.

 

Section 2.  No Modification of the Servicing Agreement.  Without the prior
written consent of Purchaser exercised in Purchaser’s sole discretion, Servicer
shall not agree to (a) any material modification, amendment or waiver of the
Servicing Agreement; (b) any termination of the Servicing Agreement or (c) the
assignment, transfer, or material delegation of any of its rights or obligations
under the Servicing Agreement.

 

Section 3.  Right of Termination.  Purchaser shall have the right to terminate
the Servicer’s rights and obligations to service the Mortgage Loans under the
Servicing Agreement in accordance with the terms thereof.  Any fees due to the
Servicer (a) in connection with any termination shall be paid by Seller and
(b) incurred following receipt of a Direction Notice shall be paid by Purchaser
to the extent that such fees relate to the Mortgage Loans that are subject to
the Servicing Agreement.  Seller and the

 

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Servicer shall cooperate in transferring the servicing with respect to such
Mortgage Loans to a successor servicer appointed by Purchaser in its sole
discretion.

 

Section 4.  Notices. All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder in writing
shall be mailed (first class, return receipt requested and postage prepaid) or
delivered in person or by overnight delivery service or by facsimile, addressed
to the respective parties hereto at their respective addresses set forth below
or, as to any such party, at such other address as may be designated by it in a
notice to the other:

 

Any notices to Purchaser should be delivered to the following addresses:

 

Bank of America, N.A.

One Bryant Park — 11th floor

Mail Code: NY1-100-11-01

New York, New York 10036

Attention: Eileen Albus, Director — Mortgage Finance

Telephone: (646) 855-0946

Facsimile: (646) 855-5050

Email: Eileen.Albus@baml.com

 

and

 

Bank of America, N.A.
4500 Park Granada

Mail Code: CA7-910-02-38

Calabasas, California 91302

Attention: Adam Gadsby, Managing Director

Telephone: (818) 225-6541

Facsimile: (213) 457-8707

Email: Adam.Gadsby@baml.com

 

Any notices to Servicer should be delivered to the following addresses:

 

[                       ]

 

Any notices to Seller should be delivered to the following addresses:

 

PennyMac Loan Services, LLC

6101 Condor Drive

Moorpark, CA 93021

Attention: Pamela Marsh/Kevin Chamberlain

Phone Number: (805) 330-6059/(818) 746-2877

E-mail: pamela.marsh@pnmac.com;

kevin.chamberlain@pnmac.com

 

Section 5.  Counterparts.  This agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall together constitute one and the same instrument.

 

Section 6.  Entire Agreement; Severability.  This agreement shall supersede any
existing agreements between the parties containing general terms and conditions
for the servicing of the Mortgage

 

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Loans.  Each provision and agreement herein shall be treated as separate and
independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision or
agreement.

 

Section 7.  Governing Law; Jurisdiction; Waiver of Jury Trial.  (a) This
agreement and the rights and obligations of the parties hereunder shall be
construed in accordance with and governed by the laws of the State of New York,
without regard to principles of conflicts of laws (other than Section 5-1401 of
the New York General Obligations Law).

 

(b) All legal actions between or among the parties regarding this agreement,
including, without limitation, legal actions to enforce this agreement or
because of a dispute, breach or default of this agreement, shall be brought in
the federal or state courts located in New York County, New York, which courts
shall have sole and exclusive in personam, subject matter and other jurisdiction
in connection with such legal actions. The parties hereto irrevocably consent
and agree that venue in such courts shall be convenient and appropriate for all
purposes and, to the extent permitted by law, waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same.  The parties hereto further irrevocably
consent and agree that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to its address set forth
in Section 4, and that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction.

 

(c) The parties hereto hereby irrevocably waive, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this agreement or the transactions contemplated
hereby or thereby.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by
their respective officers thereunto duly authorized as of the day and year first
above written.

 

 

 

BANK OF AMERICA, N.A., as Purchaser

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

PENNYMAC LOAN SERVICES, LLC, as Seller

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

[                              ], as Servicer

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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Exhibit J

 

FORM OF REQUEST FOR TEMPORARY INCREASE

 

[Date]

 

Bank of America, N.A.
One Bryant Park, 11th floor
New York, New York 10036
NY1-100-11-01
Attention:  Eileen Albus

 

Re:                             The Mortgage Loan Participation Purchase and
Sale Agreement, dated as of August 13, 2014 (the “Agreement”), among Bank of
America, N.A. (“Purchaser”), PennyMac Loan Services, LLC (“Seller”) and Private
National Mortgage Acceptance Company, LLC (“Guarantor”)

 

Ladies and Gentlemen:

 

In accordance with Section 2(f) of the Agreement, Purchaser hereby consents to a
Temporary Increase of the Aggregate Transaction Limit as further set forth
below:

 

Amount of Temporary Increase:  $                                            .

 

Effective date and time:  [dd/mm/yyyy at       :         .m.]

 

Termination date and time:  [dd/mm/yyyy at       :         .m.]

 

On and after the effective date and time indicated above and until the
termination date and time indicated above, the Aggregate Transaction Limit shall
be increased by the amount of the Temporary Increase indicated above for all
purposes of the Agreement and all calculations and provisions relating to the
Aggregate Transaction Limit shall refer to the Aggregate Transaction Limit as so
increased.  Unless otherwise terminated pursuant to the Agreement, this
Temporary Increase shall terminate on the termination date and time indicated
above.  Upon the termination of this Temporary Increase, the Aggregate
Transaction Limit shall be reduced by the amount of the Temporary Increase.

 

All terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to such terms in the Agreement.

 

[signature page follows]

 

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PENNYMAC LOAN SERVICES, LLC, Seller

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Agreed and Consented by:

 

 

 

 

 

 

 

BANK OF AMERICA, N.A., Purchaser

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

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