EX-10.1






July 20, 2005



Encore Credit Corp., Bravo Credit Corporation and ECC Capital Corporation


1833 Alton Parkway


Irvine, CA 92606



Attn: William Moffatt



Re: Commitment Letter for Revolving Credit and Security Agreement



Ladies and Gentlemen:



This Commitment Letter is made and entered into, as of the date set forth above, by and between
Countrywide Warehouse Lending, a California corporation (“Lender”) Encore Credit Corp., Bravo
Credit Corporation and ECC Capital Corporation (collectively “Borrower”). This Commitment Letter
supplements the Revolving Credit and Security Agreement (the “Agreement”) by and between Lender and
Borrower. In the event there exists any inconsistency between the Agreement and this Commitment
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 Commitment Letter supercedes and replaces
any other Commitment Letter or amendments as of the Effective Date.



Effective Date:


July 20 2005



Term:


One (1) year, maturing on July 19, 2006



Aggregate Credit Limit:


Five Hundred Million Dollars ($500,000,000), $1,000,000 of the Aggregate Credit Limit shall be for
the exclusive use


of Bravo Credit Corporation $1,000,000 of the Aggregate Credit Limit shall be for the exclusive use
of ECC Capital Corporation, but will remain the obligations of Encore Credit Corp., Bravo Credit
Corporation and ECC Capital Corporation. Borrower shall be obligated to verify that the exclusive
limit for ECC Capital Corporation is adhered to prior to requesting an advance



Credit-Off Feature:


Additional $250,000,000 uncommitted. In order to qualify for Credit Off, a loan must:




	 	1.	 	Be in Tranche A, A-1 or B of Schedule 1;






	 	2.	 	Advance Rate shall be the lower of 100.50%; or 97.50% of mark-to-market; or 97.50% of
commitment price;






	 	3.	 	Have collateral delivered and accepted by Lender or an approved custodian;






	 	4.	 	Be allocated to a security(ies) to be underwritten by Countrywide Securities Corporation
(”CSC”) or a whole loan trade sold to CSC;






	 	5.	 	Borrower has provided Lender with a current whole loan market price from CSC;






	 	6.	 	Borrower has provided Lender with evidence of a hedge instrument on the financed loans, in a
form acceptable to Lender;






	 	7.	 	Any related due diligence by CSC has been completed;






	 	8.	 	Have other documents delivered to Lender or its designee as may be required by Lender;






	 	9.	 	In addition, interest and all other fees will continue to accrue until the final purchase
price is paid. Margin over 30 day LIBOR shall be .75%. Noncompliant and default loans are not
eligible for the Credit Off Feature.





Financial Covenants:


The ongoing availability of the Agreement is subject to the maintenance of the following financial
covenants:




	 	(a)	 	Minimum Tangible Net Worth of ECC Capital Corporation: $300,000,000 plus 80% of any new
equity.






	 	(b)	 	Minimum Liquidity: Borrower to maintain cash or cash equivalents, meeting the investment
quality requirements as defined in the Agreement, in a minimum amount equal to Thirty Million
($30,000,000), inclusive of the Over/Under Account Balance.






	 	(c)	 	Maximum ratio of Total Liabilities and Warehouse Debt (Warehouse Debt is inclusive of
outstandings on warehouse lines, repurchase facilities or other off balance sheet financing to
Tangible Net Worth) (excluding the related liability, asset and equity in CMO investments):
20:1 (excluding Credit Off and Countrywide’s Early Purchase Program).






	 	(d)	 	Net Income: Borrower shall show positive pre-tax net income when combining any two (2)
calendar quarters.





Other Covenants:


The ongoing availability of credit under the Agreement is subject to Borrower’s compliance with all
other covenants


in the Agreement, including, without limitation;




	 	(i)	 	Not making any material changes to its secondary marketing, underwriting, third party
origination and interest rate risk management practices without the prior consent of Lender.






	 	(ii)	 	in the event any loan allocated to a security(ies) underwritten and priced by CSC is removed
from such allocation for adverse investment quality for the related security, Borrower shall
be required to payoff such loan from Lender’s line of credit. If Borrower fails to comply
with such obligations, Lender shall not be required or deemed to have released its security
interest in such loan(s) and Lender shall have the right to direct CSC to offset from the
purchase proceeds from such security(ies) any amounts required to be paid by Borrower under
this section.





Advance Request Deadline (upon receipt by Lender of all requirements):


1:00 p.m. (Pacific time). Lender will use best efforts on wire requests received through 2:00 p.m.
(Pacific Time),


Advance requests received after 2:00 PM Pacific time shall be subject to a additional fee of $25.00
per Advance.



Deadline for daily receipt of funds and Purchase Advices by Lender:


1:00 p.m. (Pacific time).



Commitment Fee:


Due annually, 12.5 basis points, payable in quarterly installments, with the first installment due
prior to the Effective Date. The entire commitment fee is due even in the event of termination by
Borrower. The fee is payable based on Aggregate Credit Limit only and will be prorated in event of
increases



Unused Facility Fees:


Waived



Minimum Over/Under Account Balance:


$2,500,000 plus 0.50% of the outstanding Advances under Credit-Off Feature. (Borrower to be
entitled to interest thereon at LIBOR plus 0.75%. on the Minimum Over/Under Account Balance);



Eligible Loan:



Prior to each Advance and for so long as a mortgage loan is pledged to Lender, each such mortgage
loan will satisfy Lender’s eligibility criteria, including, but not limited to:




	 	(a)	 	Each mortgage loan will be in compliance with all representations and warranties contained in
the Agreement;






	 	(b)	 	No mortgage loan will be more than 30 days past its original funding date and no loan will be
contractually delinquent 30 days or more;






	 	(c)	 	No mortgage loan will be subject to either HOEPA requirements or any similar state or local
“high cost” law or regulation;






	 	(d)	 	Eligible property types are Single Family Residence, Condominium, Townhouse, Planned Urban
Development (PUD) and multiple unit properties of 2-4 units; ineligible property types
include co-op, mobile home, land, commercial and multi units of 5+units, or otherwise not
eligible per agency guidelines.






	 	(e)	 	Each mortgage loan will conform in all material respects to Borrower’s underwriting
guidelines, which shall be provided to, and approved by, Lender;






	 	(f)	 	No more than 5% of the aggregate outstanding balance will consist of mortgage loans with a
manufactured dwelling property type and no such mortgage loan will have an LTV in excess of
85%;






	 	(g)	 	No more than 5% of the aggregate outstanding balance will consist of mortgage loans having
credit grades of C- or D;






	 	(h)	 	No loan shall have a FICO score, on the primary borrower, of less than 500, other than as
indicated in Tranche A-1;






	 	(i)	 	No mortgage loan shall have an LTV or CLTV in excess of 100%;






	 	(j)	 	No more than 3% of the aggregate outstanding balance will consist of mortgage loans that are
stated income investment property;






	 	(k)	 	No loan shall have an overall debt-to-income ratio in excess of 55.0%;






	 	(l)	 	No mortgage loan will have an original principal balance in excess of $1,000,000, subject to
the restrictions of Tranche B in Schedule 1;





There will be no adverse selection with respect to mortgage loans delivered hereunder and that the
characteristics with respect to, but not limited to, note rate distribution, LTV, loan grade,
credit score and geographic distribution shall be consistent with the characteristics of Borrower’s
overall loan production.



Reporting requirements:


Financial Reports: Borrower to provide Lender with Interim financials together with all other
financial information requested by Lender no more than forty five (45) days following the last day
of the previous quarter end. Borrower to provide Lender with audited financials together with all
other financial information requested by Lender no more than ninety (90) days following the last
day of the fiscal year.



Borrower will provide Lender (a) an electronic data format as required but not more than weekly of
mortgage loans financed with Lender (data elements to be agreed upon). And (b) trade confirmations
and settlement schedules relating to Borrowers whole loan sale and securitization transactions
which include mortgage loans financed with Lender.



Reimbursement of Expenses:


Borrower shall reimburse Lender for certain out-of-pocket expenses under the following
circumstances:




	 	(a)	 	Due Diligence Fee: Borrower to reimburse Lender on a quarterly basis for all direct expenses
incurred in connection with any ongoing due diligence or monitoring under the facility
including, without limitation contract underwriting services, which shall not exceed $25,000
per quarter.






	 	(b)	 	Amendment Fee: A fee of $2,500 will be charged for any future amendments to the Credit
Agreement, Commitment Letter, personal guarantee or other required legal documents.





Guarantors:


None



1



Please acknowledge your agreement to the terms and conditions of this Commitment 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.



Sincerely,



Countrywide Warehouse Lending



By: Riju Walia


Name            Riju Walia


Title: 1st VP Credit & Compliance


Date:



Agreed to and Accepted by:



Encore Credit Corp.



By: W. E. Moffatt


Name            William E. Moffatt


Title: Treasurer


Date: July 22, 2005



Bravo Credit Corporation



By: W. E. Moffatt


Name            William E. Moffatt


Title: Treasurer


Date: July 22, 2005



ECC Capital Corporation



By: W. E. Moffatt


Name            William E. Moffatt


Title: Treasurer


Date: July 22, 2005




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