Exhibit 10.3


 





 


May 1,
2009


 


Home Loan Center, Inc.


163
Technology Drive


Irvine,
CA 92618


Attn:
Rian Furey, Senior Vice President


Email:
Rian.Furey@lendingtree.com


 


Re:           Transactions Terms Letter
for Master Repurchase Agreement


 


Ladies
and Gentlemen:


 


This
Transactions Terms Letter is made and entered into, as of the date set forth
above, by and between Bank of America, N.A. (“Buyer”) and Home Loan Center, Inc.
(“Seller”). This Transactions Terms Letter supplements the Master Repurchase
Agreement (the “Agreement”) by and between Buyer and Seller.  In the event there exists any inconsistency
between the Agreement and this Transactions Terms Letter, the latter shall be
controlling notwithstanding anything contained in the Agreement to the
contrary.  All capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Agreement. This Transactions Terms Letter supercedes all
previous Transactions Terms Letters and amendments as of the Effective Date.


 


Effective Date:                                                                                                                                                                  May 1, 2009


 


Expiration Date:                                                                                                                                                            Expiring on April 30, 2010


 


Aggregate Transaction Limit:                                                                                    Fifty Million Dollars ($50,000,000)


 


Financial Covenants:                                                                                                                                Seller shall maintain the following financial
covenants:


 


(a)                Minimum
Tangible Net Worth (calculated per HUD guidelines): $44,000,000; excluding any
net deferred tax assets.


 


(b)               Minimum
Liquidity: Seller to maintain unrestricted cash or unrestricted Cash
Equivalents in a minimum amount equal to 15% of Seller’s Tangible Net Worth,
inclusive of the Over/Under Account Balance. 
By way of example but not limitation, cash in escrow and/or impound
accounts shall not be included in this calculation.  Available draws from Seller’s warehouse or
repurchase facilities will be included in the Minimum Liquidity calculation.


 


(c)                Maximum
ratio of Total Liabilities and Warehouse Credit (Warehouse Credit is inclusive
of outstandings on warehouse lines, repurchase facilities or other off balance
sheet financing) to Tangible Net Worth: 4:1. (excluding the Early Purchase
Program with Buyer)


 


(d)               Net
Income:  Seller shall show positive
pre-tax net income, on a quarterly basis.


 


(e)                Seller
shall not add additional mortgage financing facilities (including warehouse,
repurchase, purchase or off-balance sheet facilities) without prior written
notification to Buyer.


 


(f)                  Payment
of Dividends: Seller may, without the prior written consent of Buyer, pay
dividends to its shareholders, members, partners or owners provided that (i) a
Potential 


 


	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  



 

















 


Default
or an Event of Default is not existing and will not occur as a result thereof, (ii) the
amount of dividends do not exceed 100% of Seller’s pre-tax net income for the
prior fiscal year if such dividends are declared and paid within 105 days after
the end of Seller’s prior fiscal year, and (iii) the amount of dividends
do not exceed 100% of Seller’s then current, pre-tax net income for the current
fiscal year if such dividends are declared and paid 106 days or more after
the end of Seller’s prior fiscal year.


 


Other Covenants:                                                                                                                                                  Seller shall maintain the following other
covenants:


 


(a)          To help ensure that Seller has adequate approved investors for mortgage
loans originated by Seller, Seller shall become and remain an approved client
of Bank of America Home Loans Correspondent Lending (“Correspondent Lending”)
and enter into an assignment of trade, direct trade, commitment or similar
agreement with Correspondent Lending to sell at least 50% of the mortgage loans
originated by Seller per quarter to Correspondent Lending for the term of the
Agreement.  Such agreement shall also
provide for a pair off fee of 37.5 basis points on the difference between the
required volume and actual volume of mortgage loans sold to Correspondent
Lending.


 


(b)         If the financial or other material covenants of Seller under any
current, future or modified third party warehouse, repurchase, financing,
guaranty or similar agreement are, or become, more favorable to Buyer than the
equivalent covenants under the Agreement, Seller shall promptly notify Buyer
and Buyer shall have the right, in its sole discretion, to modify the Agreement
to include such covenants.  Further, at
the request of Buyer, Seller shall promptly provide Buyer with its financial
covenants and any other covenants that Buyer deems material under any such
current, future or modified third party agreement.


 


(c)          Delinquency Covenant.  If,
in any two consecutive fiscal quarters of Seller, the delinquency rate for
first-lien residential mortgage loans originated by Seller and sold to
Correspondent Lending is greater than one hundred and fifty percent (150%) of
the average delinquency rate for first-lien residential mortgages sold by all
clients of Correspondent Lending, Buyer may immediately terminate the
Agreement.


 


(d)         Loss Mitigation Covenant. 
Seller agrees that, if (a) the sum total of all outstanding amounts
owed by Seller to Correspondent Lending at the end of a calendar quarter is
equal to or greater than eighty percent (80%) of Seller’s Tangible Net Worth or
(b) with respect to fifty percent (50%) or more of the outstanding
amounts, the  average number of days the
outstanding amounts have been outstanding exceeds 120 days, then, in either the
case of (a) or (b), Buyer may immediately suspend Transactions under the
Agreement and Correspondent Lending may immediately cease purchasing mortgage
loans from Seller.


 


(e)          Seller shall not have any undisputed receivables aged over sixty (60)
days.


 


	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  



 


2

















 


Facility Fee:                                                                                                                                                                                25 basis points, with 50% of the total fee
due prior to the Effective Date.  The
remaining fee shall be payable in two equal installments over the next two (2) quarters.
Upon early termination of the Agreement by Seller, the entire Facility Fee will
be due and owing.  The fee is payable
based on Aggregate Transactions Limit only and will be prorated in the event of
increases unless any of the following occur.


(i)             Termination
is Permissible due to Buyer’s breach of the Agreement;


(ii)          Buyer
alters any material terms of the Agreement whether permitted or not; or


(iii)       Buyer
elects to increase any fees or charges related to the Agreement.


 


Unused Facility Fees:                                                                                                                             For any given calendar quarter, Seller’s
average outstanding Transactions must be greater than or equal to 75% of the
Aggregate Transaction Limit, otherwise Seller shall pay Buyer 25 basis points
(0.25%) times the unused portion of the Aggregate Transaction Limit,
annualized. For the purposes of this calculation, outstanding Transactions
shall include EPP Loans under Seller’s EPP Addendum with Buyer.


 


Transaction Request Deadline:                                                                            2:00 p.m. (Pacific time).


 


Deadline
for Daily Receipt


Of Purchase Advices by Buyer:                                                                        2:00 p.m. (Pacific time).


 


Minimum Over/Under


Account Balance:                                                                                                                                                 $1,875,000 (minimum of 150 basis points of
the combined Aggregate Transaction Limit and the Outstanding Loan Limit set
forth within Seller’s EPP Addendum); Seller to be entitled to interest on a
monthly basis thereon at an annual rate of LIBOR plus the Type A Margin over 30
day LIBOR spread on the positive monthly average Over/Under Balance for
whatever portion is equal to or lesser than 1/5 of the average monthly outstanding
Transactions for such month and; Seller to be entitled to interest on a monthly
basis at an annual rate of LIBOR minus twenty five (25) basis points (0.25%) on
the positive monthly average Over/Under Balance for whatever portion is greater
than 1/5 of the average monthly outstanding Transactions for such month.  For the purpose of this calculation, average
outstanding Transactions shall include EPP Loans under Seller’s EPP Addendum
with Buyer.  “LIBOR” shall mean the
greater of (i) the daily rate per annum for one-month U.S. dollar
denominated deposits as offered to prime banks in the London interbank market
or (ii) 2%, as applicable.


 


Eligible Loans:                                                                                                                                                                  Each loan shall comply with Buyer’s and
Correspondent Lending’s eligibility guidelines on their respective websites,
and no loan shall be more than 30 days past its original funding date or
contractually delinquent 30 days or more. 
These guidelines are subject to change at Buyer’s sole discretion.


 


	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of America,
  N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  



 


3

















 


Loans
to Officers, Directors,


Owners and Guarantors:                                                                                                               Transactions for a loan to be made to an
officer, director, senior manager or owner of Seller or any guarantor (if applicable)
shall be subject to the prior approval of Buyer and such Transaction
requirements as determined in Buyer’s sole discretion.


 


Reporting requirements:                                                                                                                Financial Reports & Officer’s
Certificate:  Seller shall deliver to Buyer, within thirty
(30) days after the end of each month, financial statements of Seller,
including statements of income and changes in shareholders’ equity (or its
equivalent) for such month and the related balance sheet as at the end of such
month, all in reasonable detail acceptable to Buyer and certified by the chief
financial officer of Seller, subject, however, to year-end audit adjustments.
Together with such financial statements, Seller shall deliver an officer’s
certificate substantially in a form to be provided by Buyer, which shall
include funding and production volume reports for the previous month.


 


Annual Reports:  Seller shall deliver to Buyer, within ninety
(90) days after the end of each fiscal year of Seller, audited financial
statements of Seller, including statements of income and changes in
shareholders’ equity for such fiscal year and the related balance sheet as at
the end of such fiscal year, all in reasonable detail acceptable to Buyer and
certified by the chief financial officer of Seller stating, at a minimum, that
the financial statements fairly present the financial condition and results of
operations of Seller as of the end of, and for, such year.


 


                                                                                                                                                                                                                                                Government Insuring Reports: 
Seller shall provide Buyer within thirty (30) days after the end of each
quarter, or as requested by Buyer, the following government insuring reports
(including 15 month history):


(a)          Loans
Originated - Current Defaults and Claims Reported — United States (from FHA
Connection):


·                  Output option: all loans


·                  Performance period: current period


·                  All insured single family loans with a
beginning amortization within the last two years


(b)         HUD
Pipeline/Uninsured Query:


·                  Date
range: use default


·                  Sort
by: originating ID in ascending order


(c)          Indemnification
Query:


·                  Date range: last five years


·                  Sort by: case # in descending order


 


(d)         Late
Endorsement Query:


·                  Loan status: Active, claimed


·                  Date range: last two year period


·                  Sort by: # days closing to Endr pkg Rcvd in
descending order


 


                                                                                                                                                                                                                                                Hedging Report:  Upon
Buyers request, Seller shall deliver to Buyer within 2 business days a loan and
rate lock position report and hedge report containing product level pricing and
interest rate sensitivity analysis (shocks) or as requested by Buyer (data
elements to be agreed upon).


 


	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  



 


4

















 


 


If
requested by Buyer, Seller shall provide to Buyer within five (5) days of
such request, in a form reasonably acceptable to Buyer, a detailed aging report
of all outstanding loans on warehouse/ purchase/ repurchase facilities, and
detail of all uninsured government loans.


 


Reimbursement of Expenses:                                                                                        Seller shall reimburse Buyer for certain
costs and expenses as follows:


 


(a)          Amendments:  Buyer reserves the right to
charge a fee for any future amendments to the Agreement, Transactions Terms
Letter, EPP Addendum, guaranty, covenant violation notices, or any other
required legal document.  The amendment
fee shall be waived for any future amendments or modifications requested by
Seller regarding increases to the Aggregate Transaction Limit.


 


	
  Fees:

  	
   

  	
  Wire
  Transfer Fee:

  	
   

  	
  $10.00
  per Transaction

  
	
   

  	
   

  	
  File
  Fee:

  	
   

  	
  $30.00
  per Transaction

  
	
   

  	
   

  	
  Shipping
  Fee:

  	
   

  	
  $15.00
  per Transaction for all investors other than Bank of America, N.A.; and

  
	
   

  	
   

  	
   

  	
   

  	
  $0.00
  for all Bank of America loans

  
	
   

  	
   

  	
  Non
  compliant Fee:

  	
   

  	
  $25.00

  
	
   

  	
   

  	
  Wet
  Deficiency Fee:

  	
   

  	
  $10.00
  per day

  
	
   

  	
   

  	
  Other
  Fees:

  	
   

  	
  As
  set forth within Schedule 1 hereto

  



 


Buyer’s Guidelines,


Policies and Procedures:                                                                                                              The terms and conditions of this Transactions
Terms Letter and the Agreement shall be subject to Buyer’s guidelines, policies
and procedures, as may be changed from time to time.  Buyer may communicate changes to its
guidelines, policies and procedures to Seller via Buyer’s website, email or in
writing.


 


Guarantors:                                                                                                                                                                                  Lending Tree, LLC, Tree.com, Inc., and
LendingTree Holdings, Inc.


 


Please
acknowledge your agreement to the terms and conditions of this Transactions
Terms Letter by signing in the appropriate space below and returning a copy of
the same to the undersigned. Facsimile signatures shall be deemed valid and
binding to the same extent as the original. 
Buyer shall have no obligation to honor the terms and conditions of this
Transactions Terms Letter if Seller fails to fully execute and return this
document to Buyer within thirty (30) days after the date of issuance.


 


 


	
  Sincerely,

  	
   

  	
  Agreed
  to and Accepted by:

  
	
   

  	
   

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  Home Loan Center, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Blair Kenny

  	
   

  	
  By:

  	
  /s/ Rian Furey

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Blair
  Kenny

  	
   

  	
  Name:

  	
  Rian Furey

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior
  Vice President

  	
   

  	
  Title:

  	
  Senior Vice President

  



 


	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  



 


5

















 


SCHEDULE 1


(Eligible Mortgage Loans)


 


	
   

  	
   

  	
  Type

  Sublimit

  	
   

  	
  Margin over 30

  day LIBOR (B)

  	
   

  	
  Type Purchase Price

  Percentage (A)

  	
   

  	
  Maximum

  Dwell Time

  	
   

  	
  Transaction

  Requirements

  
	
  Type
  A:

  Conventional Conforming Mortgage Loans (Agency eligible 1st mortgages with Full/Alt doc
  types only)

  	
   

  	
  100%

  	
   

  	
  2.25

  	
   

  	
  97

  	
   

  	
  30 days

  	
   

  	
  None

  
	
  Type
  B:

  Government Mortgage Loans and Bond Loans (1st mortgages only)

  	
   

  	
  100%

  	
   

  	
  2.25

  	
   

  	
  97

  	
   

  	
  30 days

  	
   

  	
  None

  
	
  Type
  C:

  Jumbo Mortgage Loans  (1st mortgages only, maximum loan
  amounts to $1,000,000)

  	
   

  	
  10%

  	
   

  	
  2.25

  	
   

  	
  95

  	
   

  	
  30 days

  	
   

  	
  Rate Lock and CLUES or Prior Approval

  
	
  Noncompliant
  Mortgage Loans

  	
   

  	
  7%

  	
   

  	
  2.00 over the initial margin

  	
   

  	
  See schedule 2

  	
   

  	
  Additional 45 days

  	
   

  	
   

  
	
  Wet
  Mortgage Loans

  	
   

  	
  40%,  increasing
  to 60% for the first and last five (5) calendar days of each month

  	
   

  	
  Non-compliant or default spreads, if applicable, over the initial
  margin

  	
   

  	
  Buyer reserves the right to reduce the value of Wet Mortgage Loans to
  zero if the loan is beyond the Maximum Dwell Time

  	
   

  	
  7 business days

  	
   

  	
   

  



 






(A) The Purchase Price shall be calculated and
equal to multiplying the unpaid principal balance times the lesser of (i) the
Type Purchase Price Percentage times the lesser of par, takeout price or
current market price or; (ii) 98% of the takeout price or current market
price or fair market value.


(B)        For the purpose of calculating the Margin over
30 day LIBOR, “LIBOR” shall mean the greater of (i) the daily rate per
annum for one-month U.S. dollar denominated deposits as offered to prime banks
in the London interbank market or (ii) 2%, as applicable.


 


·                  All
Transactions are to the closing table.


·                  Delegated
underwriting status does not satisfy the Transaction Requirements contained
herein.


·                  Transaction
Requirement Definitions and Doc Type Definitions are set forth on Buyer’s
website.


·                  All
loan amounts, FICO scores, LTV/CLTV, and document types shall meet
Correspondent Lending guidelines.


 


SCHEDULE
2


Noncompliant Mortgage
Loans (Applicable to dry Transactions only)


 




	
  Days over Maximum Dwell

  Time

  	
   

  	
  Reduction in Value of

  Purchased Asset

  	
   

  
	
  1 to 15 Days

  	
   

  	
  10

  	
   

  
	
  16 to 30
  Days

  	
   

  	
  20

  	
   

  
	
  31 to 45
  Days

  	
   

  	
  30

  	
   

  
	
  Investor
  Rejects

  	
   

  	
  30

  	
   

  






 


	
   

  	
   

  	
  Acknowledged:

  
	
   

  	
   

  	
  Home Loan
  Center, Inc.:

  
	
   

  	
   

  	
  Bank of
  America, N.A.:

  
	
  Version:
  04-09

  	
   

  	
   

  



 


6