Document:

Exhibit
10.1

 

FIRST
AMENDMENT TO 

WAREHOUSING CREDIT AND SECURITY

AGREEMENT

 

FIRST AMENDMENT TO
WAREHOUSING CREDIT AND SECURITY AGREEMENT (this “Amendment”) dated as of
May 28, 2004, between MORTGAGEIT, INC., a New York corporation (“Borrower”)
and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (“Lender”).

 

A.                                   Borrower
and Lender have entered into a revolving mortgage warehousing facility with a
present Warehousing Commitment Amount of $100,000,000 which is evidenced by a
Promissory Note dated August 1, 2003 (the “Note”), and by a
Warehousing Credit and Security Agreement dated as of August 1, 2003 (as
the same may have been and may be amended or supplemented, the “Agreement”).

 

B.                                     Borrower
has requested that Lender extend the Warehousing Maturity Date of the Agreement
and consent to a proposed merger, and Lender has agreed to such extension and
proposed merger, subject to the terms and conditions of this Amendment.

 

NOW, THEREFORE, the
parties to this Amendment agree as follows:

 

1.                                       Subject
to Borrower’s satisfaction of the conditions set forth in Section 8, the
effective date of this Amendment is June 24, 2004 (“Effective Date”).

 

2.                                       Unless
otherwise defined in this Amendment, all capitalized terms have the meanings
given to those terms in the Agreement. 
Defined terms may be used in the singular or the plural, as the context
requires.  The words “include,”
“includes” and “including” are deemed to be followed by the phrase “without
limitation.”  Unless the context in
which it is used otherwise clearly requires, the word “or” has the inclusive
meaning represented by the phrase “and/or.” 
References to Sections and Exhibits are to Sections and Exhibits of this
Amendment unless otherwise expressly provided.

 

3.                                       Article 1
of the Agreement is amended and restated in its entirety as set forth in Article 1
attached to this Amendment.  All
references in the Agreement and other Loan Documents to Article 1
(including each and every Section in Article 1) are deemed to
refer to the new Article 1.

 

4.                                       Article 8
of the Agreement is amended and restated in its entirety as set forth in Article 8
attached to this Amendment.  All
references in the Agreement and other Loan Documents to Article 8
(including each and every Section in Article 8) are deemed to
refer to the new Article 8.

 

5.                                       Article 12
of the Agreement is amended and restated in its entirety as set forth in Article 12
attached to this Amendment.  All
references in the Agreement and other Loan Documents to Article 12
(including each and every Section in Article 12) are deemed to
refer to the new Article 12.

 

6.                                       Exhibit
E to the Agreement is amended and restated in its entirety as set forth in Exhibit
E to this Amendment.  All references
in the Agreement and the other Loan Documents to Exhibit E are deemed to
refer to the new Exhibit E.

 

 

7.                                       Section 8.3(a) of the Agreement prohibits Borrower from
consolidating, merging or entering into any analogous reorganization or
transaction with any Person without the prior written consent of Lender.  Borrower has requested that the Lender
consent to its merger (the “Merger”) with MIT Acquisition Corp., a
wholly-owned subsidiary of MortgageIt Holdings, Inc., a Maryland corporation (“Holdings”),
with Borrower as the surviving entity. 
Lender hereby consents to the Merger. 
The consent granted above is limited to the specific transaction
described above and is not a consent to any other transaction.  Borrower agrees to deliver to Lender, prior
to consummation of the Merger, all agreements, documents and instruments
governing or evidencing the Merger.

 

8.                                       Borrower must
deliver to Lender (a) two executed copies of this Amendment, and (b) a $350
document production fee.

 

9.                                       Borrower
represents, warrants and agrees that (a) there exists no Default or Event of
Default under the Loan Documents, (b) the Loan Documents continue to be the
legal, valid and binding agreements and obligations of Borrower, enforceable in
accordance with their terms, as modified by this Amendment, (c) Lender is not
in default under any of the Loan Documents and Borrower has no offset or
defense to its performance or obligations under any of the Loan Documents, (d)
except for changes permitted by the terms of the Agreement, Borrower’s
representations and warranties contained in the Loan Documents are true, accurate
and complete in all respects as of the Effective Date and (e) there has been no
material adverse change in Borrower’s financial condition from the date of the
Agreement to the Effective Date.

 

10.                                 Except
as expressly modified, the Agreement is unchanged and remains in full force and
effect, and Borrower ratifies and reaffirms all of its obligations under the
Agreement and the other Loan Documents.

 

11.                                 This
Amendment may be executed in any number of counterparts, each of which will be
deemed an original, but all of which shall together constitute but one and the
same instrument.

 

IN WITNESS WHEREOF,
Borrower and Lender have caused this Amendment to be duly executed on their
behalf by their duly authorized officers as of the day and year above written.

 

 

	
   

  	
  MORTGAGEIT, INC.,

  
	
   

  	
  a New York corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN R. CUTI

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: 

  	
  Secretary and General
  Counsel

  	
   

  
	
   

  	
  RESIDENTIAL FUNDING
  CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JASON MITCHELL

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Director

  	
   

  
						

 

 

 

 

 

WAREHOUSING
CREDIT AND SECURITY

AGREEMENT

 

 

BETWEEN

 

MORTGAGEIT,
INC.,

a New York corporation

 

AND

 

RESIDENTIAL
FUNDING CORPORATION,

a Delaware corporation

 

Dated
as of August 1, 2003

 

 

TABLE
OF CONTENTS

 

	
  1.

  	
   

  	
  THE CREDIT

  	
   

  
	
   

  	
  1.1.

  	
   

  	
  The
  Warehousing Commitment

  	
   

  
	
   

  	
  1.2.

  	
   

  	
  Expiration of Warehousing
  Commitment

  	
   

  
	
   

  	
  1.3.

  	
   

  	
  Warehousing
  Note

  	
   

  
	
  2.

  	
   

  	
  PROCEDURES FOR OBTAINING ADVANCES

  	
   

  
	
   

  	
  2.1.

  	
   

  	
  Warehousing
  Advances

  	
   

  
	
  3.

  	
   

  	
  INTEREST, PRINCIPAL AND FEES

  	
   

  
	
   

  	
  3.1.

  	
   

  	
  Interest

  	
   

  
	
   

  	
  3.2.

  	
   

  	
  Interest Limitation

  	
   

  
	
   

  	
  3.3.

  	
   

  	
  Principal Payments

  	
   

  
	
   

  	
  3.4.

  	
   

  	
  Buydowns

  	
   

  
	
   

  	
  3.5.

  	
   

  	
  Warehousing
  Commitment Fees

  	
   

  
	
   

  	
  3.6.

  	
   

  	
  Loan Package Fees, Wire Fees, Warehousing
  Fees

  	
   

  
	
   

  	
  3.7.

  	
   

  	
  Miscellaneous
  Fees and Charges

  	
   

  
	
   

  	
  3.8.

  	
   

  	
  Overdraft Advances

  	
   

  
	
   

  	
  3.9.

  	
   

  	
  Method of
  Making Payments

  	
   

  
	
  4.

  	
   

  	
  COLLATERAL

  	
   

  
	
   

  	
  4.1.

  	
   

  	
  Grant of Security Interest

  	
   

  
	
   

  	
  4.2.

  	
   

  	
  Maintenance of Collateral Records

  	
   

  
	
   

  	
  4.3.

  	
   

  	
  Release
  of Security Interest in Pledged Loans and Pledged Securities

  	
   

  
	
   

  	
  4.4.

  	
   

  	
  Collection
  and Servicing Rights

  	
   

  
	
   

  	
  4.5.

  	
   

  	
  Return of Collateral at
  End of Warehousing Commitment

  	
   

  
	
   

  	
  4.6.

  	
   

  	
  Delivery of
  Collateral Documents

  	
   

  
	
  5.

  	
   

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
  5.1.

  	
   

  	
  Initial Advance

  	
   

  
	
   

  	
  5.2.

  	
   

  	
  Each Advance

  	
   

  
	
   

  	
  5.3.

  	
   

  	
  Force Majeure

  	
   

  
	
  6.

  	
   

  	
  GENERAL
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
  6.1.

  	
   

  	
  Place of
  Business

  	
   

  
	
   

  	
  6.2.

  	
   

  	
  Organization;
  Good Standing; Subsidiaries

  	
   

  
	
   

  	
  6.3.

  	
   

  	
  Authorization
  and Enforceability

  	
   

  
	
   

  	
  6.4.

  	
   

  	
  Approvals

  	
   

  
	
   

  	
  6.5.

  	
   

  	
  Financial Condition

  	
   

  
	
   

  	
  6.6.

  	
   

  	
  Litigation

  	
   

  
	
   

  	
  6.7.

  	
   

  	
  Compliance with Laws

  	
   

  
	
   

  	
  6.8.

  	
   

  	
  Regulation U

  	
   

  
	
   

  	
  6.9.

  	
   

  	
  Investment Company Act

  	
   

  
	
   

  	
  6.10.

  	
   

  	
  Payment of Taxes

  	
   

  
	
   

  	
  6.11.

  	
   

  	
  Agreements

  	
   

  
	
   

  	
  6.12.

  	
   

  	
  Title to
  Properties

  	
   

  
	
   

  	
  6.13.

  	
   

  	
  ERISA

  	
   

  
	
   

  	
  6.14.

  	
   

  	
  No Retiree Benefits

  	
   

  
	
   

  	
  6.15.

  	
   

  	
  Assumed Names

  	
   

  
	
   

  	
  6.16.

  	
   

  	
  Servicing

  	
   

  

 

 

	
  7.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
  7.1.

  	
   

  	
  Payment of
  Obligations

  	
   

  
	
   

  	
  7.2.

  	
   

  	
  Financial
  Statements

  	
   

  
	
   

  	
  7.3.

  	
   

  	
  Other Borrower Reports

  	
   

  
	
   

  	
  7.4.

  	
   

  	
  Maintenance
  of Existence; Conduct of Business

  	
   

  
	
   

  	
  7.5.

  	
   

  	
  Compliance
  with Applicable Laws

  	
   

  
	
   

  	
  7.6.

  	
   

  	
  Inspection
  of Properties and Books; Operational Reviews

  	
   

  
	
   

  	
  7.7.

  	
   

  	
  Notice

  	
   

  
	
   

  	
  7.8.

  	
   

  	
  Payment of Debt, Taxes and Other Obligations

  	
   

  
	
   

  	
  7.9.

  	
   

  	
  Insurance

  	
   

  
	
   

  	
  7.10.

  	
   

  	
  Closing Instructions

  	
   

  
	
   

  	
  7.11.

  	
   

  	
  Subordination
  of Certain Indebtedness

  	
   

  
	
   

  	
  7.12.

  	
   

  	
  Other
  Loan Obligations

  	
   

  
	
   

  	
  7.13.

  	
   

  	
  ERISA

  	
   

  
	
   

  	
  7.14.

  	
   

  	
  Use of
  Proceeds of Warehousing Advances

  	
   

  
	
  8.

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
  8.1.

  	
   

  	
  Contingent Liabilities

  	
   

  
	
   

  	
  8.2.

  	
   

  	
  Pledge
  of Servicing Contracts

  	
   

  
	
   

  	
  8.3.

  	
   

  	
  Restrictions
  on Fundamental Changes

  	
   

  
	
   

  	
  8.4.

  	
   

  	
  Subsidiaries

  	
   

  
	
   

  	
  8.5.

  	
   

  	
  Deferral
  of Subordinated Debt

  	
   

  
	
   

  	
  8.6.

  	
   

  	
  Loss of Eligibility

  	
   

  
	
   

  	
  8.7.

  	
   

  	
  Accounting Changes

  	
   

  
	
   

  	
  8.8.

  	
   

  	
  Leverage Ratio

  	
   

  
	
   

  	
  8.9.

  	
   

  	
  Minimum Tangible Net Worth

  	
   

  
	
   

  	
  8.10.

  	
   

  	
  Minimum Liquid Assets

  	
   

  
	
   

  	
  8.11.

  	
   

  	
  Operating
  Losses

  	
   

  
	
   

  	
  8.12.

  	
   

  	
  Distributions
  to Shareholders

  	
   

  
	
   

  	
  8.13.

  	
   

  	
  Transactions with Affiliates

  	
   

  
	
   

  	
  8.14.

  	
   

  	
  Recourse
  Servicing Contracts

  	
   

  
	
  9.

  	
   

  	
  SPECIAL
  REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL

  	
   

  
	
   

  	
  9.1.

  	
   

  	
  Special
  Representations and Warranties Concerning Eligibility as Seller/Servicer of
  Mortgage Loans

  	
   

  
	
   

  	
  9.2.

  	
   

  	
  Special Representations and
  Warranties Concerning Warehousing Collateral

  	
   

  
	
   

  	
  9.3.

  	
   

  	
  Special Affirmative
  Covenants Concerning Warehousing Collateral

  	
   

  
	
   

  	
  9.4.

  	
   

  	
  Special
  Negative Covenants Concerning Warehousing Collateral

  	
   

  
	
  10.

  	
   

  	
  DEFAULTS; REMEDIES

  	
   

  
	
   

  	
  10.1.

  	
   

  	
  Events of Default

  	
   

  
	
   

  	
  10.2.

  	
   

  	
  Remedies

  	
   

  
	
   

  	
  10.3.

  	
   

  	
  Application
  of Proceeds

  	
   

  
	
   

  	
  10.4.

  	
   

  	
  Lender
  Appointed Attorney-in-Fact

  	
   

  
	
   

  	
  10.5.

  	
   

  	
  Right of Set-Off

  	
   

  
	
  11.

  	
   

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  11.1.

  	
   

  	
  Notices

  	
   

  
	
   

  	
  11.2.

  	
   

  	
  Reimbursement Of
  Expenses; Indemnity

  	
   

  
	
   

  	
  11.3.

  	
   

  	
  Financial Information

  	
   

  
	
   

  	
  11.4.

  	
   

  	
  Terms Binding
  Upon Successors; Survival of Representations

  	
   

  
	
   

  	
  11.5.

  	
   

  	
  Assignment

  	
   

  
	
   

  	
  11.6.

  	
   

  	
  Amendments

  	
   

  
	
   

  	
  11.7.

  	
   

  	
  Governing Law

  	
   

  
	
   

  	
  11.8.

  	
   

  	
  Participations

  	
   

  

 

 

	
   

  	
  11.9.

  	
   

  	
  Relationship of
  the Parties

  	
   

  
	
   

  	
  11.10.

  	
   

  	
  Severability

  	
   

  
	
   

  	
  11.11.

  	
   

  	
  Consent to Credit References

  	
   

  
	
   

  	
  11.12.

  	
   

  	
  Counterparts

  	
   

  
	
   

  	
  11.13.

  	
   

  	
  Headings/Captions

  	
   

  
	
   

  	
  11.14.

  	
   

  	
  Entire Agreement

  	
   

  
	
   

  	
  11.15.

  	
   

  	
  Consent to Jurisdiction

  	
   

  
	
   

  	
  11.16.

  	
   

  	
  Waiver of Jury Trial

  	
   

  
	
   

  	
  11.17.

  	
   

  	
  Waiver of Punitive, Consequential, Special or
  Indirect Damages

  	
   

  
	
  12.

  	
   

  	
  DEFINITIONS

  	
   

  
	
   

  	
  12.1.

  	
   

  	
  Defined Terms

  	
   

  
	
   

  	
  12.2.

  	
   

  	
  Other
  Definitional Provisions; Terms of Construction

  	
   

  

 

 

EXHIBITS

 

	
  Exhibit A

  	
  Request for Advance
  Against Eligible Loans

  
	
   

  	
   

  
	
  Exhibit B

  	
  Procedures and
  Documentation for Warehousing Mortgage Loans

  
	
   

  	
   

  
	
  Exhibit C

  	
  Schedule of
  Servicing Portfolio

  
	
   

  	
   

  
	
  Exhibit D

  	
  Subsidiaries

  
	
   

  	
   

  
	
  Exhibit E

  	
  Compliance Certificate

  
	
   

  	
   

  
	
  Exhibit F

  	
  Schedule of Lines
  of Credit

  
	
   

  	
   

  
	
  Exhibit G

  	
  Assumed Names

  
	
   

  	
   

  
	
  Exhibit H

  	
  Eligible Loans and
  Other Assets

  
	
   

  	
   

  
	
  Exhibit I

  	
  Collateral Operations
  Fee Schedule

  
	
   

  	
   

  
	
  Exhibit J

  	
  Commitment Summary
  Report

  

 

 

WAREHOUSING
CREDIT AND SECURITY AGREEMENT

 

WAREHOUSING
CREDIT AND SECURITY AGREEMENT, dated as of August 1,
2003 between MORTGAGEIT, INC., a New York corporation (“Borrower”), and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (“Lender”).

 

A.                                   Borrower
has requested certain financing from Lender.

 

B.                                     Lender
has agreed to provide that financing to Borrower subject to the terms and conditions
of this Agreement.

 

C.                                     Subject
to Borrower’s satisfaction of the conditions set forth in Article 5, the “Closing
Date” for the transactions contemplated by this Agreement is the date set
forth as the Closing Date on the signature page to this Agreement.

 

NOW, THEREFORE, the
parties to this Agreement agree as follows:

 

THE CREDIT

 

1.1.                            The Warehousing Commitment

 

On the terms and subject
to the conditions and limitations of this Agreement, including Exhibit H,
Lender agrees to make Warehousing Advances to Borrower from the Closing Date to
the Business Day immediately preceding the Warehousing Maturity Date, during
which period Borrower may borrow, repay and reborrow in accordance with the
provisions of this Agreement. Lender has no obligation to make Warehousing
Advances in excess of the Warehousing Commitment Amount.  While a Default or Event of Default exists,
Lender may refuse to make any additional Warehousing Advances to Borrower.  All Warehousing Advances under this
Agreement constitute a single indebtedness, and all of the Collateral is
security for the Warehousing Note and for the performance of all of the
Obligations.  If the initial Warehousing
Advance has not been made within 90 days after the Closing Date, the
Warehousing Commitment and Lender’s obligation to make Warehousing Advances to
Borrower under this Agreement will automatically terminate, and all Obligations
(including any Obligations arising under Section 11.2) will automatically
become due and payable, without presentment, demand or other Notice or
requirements of any kinds, all of which Borrower expressly waives.

 

1.2.                            Expiration of Warehousing Commitment

 

The Warehousing
Commitment expires on the earlier of (“Warehousing Maturity Date”):
(a) September 28, 2004, as such date may be extended in writing by
Lender, in its sole discretion, on which date the Warehousing Commitment will
expire of its own term and the Warehousing Advances will become due and payable
without the necessity of Notice or action by Lender; and (b) the date the
Warehousing Commitment is terminated and the Warehousing Advances become due
and payable under Section 10.2.

 

1.3.                            Warehousing Note

 

Warehousing Advances are
evidenced by Borrower’s promissory note, payable to Lender on the form
prescribed by Lender (“Warehousing Note”). The term “Warehousing Note”
as used in this 

 

1

 

Agreement includes all
amendments, restatements, renewals or replacements of the original Warehousing
Note and all substitutions for it. All terms and provisions of the Warehousing
Note are incorporated into this Agreement.

 

 

End
of Article 1

 

2

 

PROCEDURES FOR OBTAINING ADVANCES

 

2.1.                            Warehousing Advances

 

To obtain a Warehousing
Advance under this Agreement, Borrower must deliver to Lender either a
completed and signed request for a Warehousing Advance on the then current form
approved by Lender, or an Electronic Advance Request, together with a list of
the Mortgage Loans for which the request is being made and a signed RFConnects
Pledge Agreement sent by facsimile (“Warehousing Advance Request”), not
later than (i) in the case of Electronic Advance Requests, 2:30 p.m. on the
Business Day, and (ii) in all other cases, 1 Business Day before the Business
Day on which Borrower desires the Warehousing Advance. Subject to the delivery
of a Warehousing Advance Request and the satisfaction of the conditions set
forth in Sections 5.1 and 5.2, Borrower may obtain a Warehousing Advance
under this Agreement upon compliance with the procedures set forth in this
Section and in the applicable Exhibit B, including delivery to
Lender of all required Collateral Documents. Lender’s current form of
Warehousing Advance Request is set forth in Exhibit A. Upon not
less than 3 Business Days’ prior Notice to Borrower, Lender may modify its form
of Warehousing Advance Request, RFConnects Pledge Agreement and any other
Exhibit or document referred to in this Section to conform to current
legal requirements or Lender practices and, as so modified, those Exhibits and
documents will become part of this Agreement.

 

 

End
of Article 2

 

1

 

INTEREST, PRINCIPAL AND FEES

 

3.1.                            Interest

 

3.1
(a)                Except
as otherwise provided in this Section, Borrower must pay interest on the unpaid
amount of each Warehousing Advance from the date the Warehousing Advance is
made until it is paid in full at the Interest Rate specified in Exhibit H.

 

3.1
(b)               As
long as no Default or Event of Default exists, Borrower is entitled to receive
a benefit in the form of an “Earnings Credit” on the portion of the
Eligible Balances maintained in time deposit accounts with a Designated Bank,
and Borrower is entitled to receive a benefit in the form of an “Earnings
Allowance” on the portion of the Eligible Balances maintained in demand
deposit accounts with a Designated Bank. Any Earnings Allowance will be used
first and any Earnings Credit will be used second as a credit against
Miscellaneous Fees and Charges (including Designated Bank Charges), Warehousing
Fees, Wire Fees, Warehousing Commitment Fees, Loan Package Fees, and any other
fees payable under this Agreement, and may be used, at Lender’s option, to
reduce accrued interest. Any Earnings Allowance not used during the month in
which the benefit was received will be accumulated and must be used within 6
months of the month in which the benefit was received. As long as no Default or
Event of Default exists, any Earnings Credit not used during the month in which
the benefit was received will be used to provide a cash benefit to Borrower.
Any Earnings Credit retained by Lender as a result of a Default or Event of
Default will be applied to the payment of Borrower’s Obligations in the order
Lender determines in its sole discretion. The Earnings Credit and the Earnings
Allowance for any month will be determined by Lender in its sole discretion and
Lender’s determination of those amounts is conclusive and binding absent
manifest error. In no event will the benefit received by Borrower exceed the
Depository Benefit.

 

Either party to this
Agreement may terminate the benefits provided for in this
Section effective immediately upon Notice to the other party, if the
terminating party determines (which determination is conclusive and binding on
the other party, absent manifest error) at any time that any applicable law,
rule, regulation, order or decree or any interpretation or administration of
such law, rule, regulation, order or decree by any governmental authority
charged with its interpretation or administration, or compliance by such party
with any request or directive (whether or not having the force of law) of any
such authority, makes it unlawful or impossible for the party sending the
Notice to continue to offer or receive the benefits provided for in this
Section. No Notice is required for a termination of benefits as a result of a
Default or Event of Default.

 

3.1
(c)                Lender
computes interest on the basis of the actual number of days in each month and a
year of 360 days (“Accrual Basis”). 
Borrower must pay interest monthly in arrears, not later than 9 days
after the date of Lender’s invoice or, if applicable, 2 days after the date of
Lender’s account analysis statement, commencing with the first month following
the Closing Date and on the Warehousing Maturity Date.

 

3.1
(d)               If,
for any reason Borrower repays a Warehousing Advance on the same day that it
was made by Lender, Borrower agrees to pay to Lender an administrative fee
equal to 1 day of interest on that Warehousing Advance at the Interest Rate
that would otherwise be applicable under Exhibit H.  Borrower must pay all administrative fees
within 9 days after the date of Lender’s invoice or, if applicable, within 2
days after the date of Lender’s account analysis statement.

 

1

 

3.1
(e)                After
an Event of Default occurs and upon Notice to Borrower by Lender, the unpaid
amount of each Warehousing Advance will bear interest at the Default Rate until
paid in full.

 

3.1
(f)                  Lender
will adjust the rates of interest provided for in this Agreement as of the
effective date of each change in the applicable index. Lender’s determination
of such rates of interest as of any date of determination are conclusive and
binding, absent manifest error.

 

3.2.                            Interest Limitation

 

Lender does not intend,
by reason of this Agreement, the Warehousing Note or any other Loan Document,
to receive interest in excess of the amount permitted by applicable law. If
Lender receives any interest in excess of the amount permitted by applicable
law, whether by reason of acceleration of the maturity of this Agreement, the
Warehousing Note or otherwise, Lender will apply the excess to the unpaid
principal balance of the Warehousing Advances and not to the payment of
interest. If all Warehousing Advances have been paid in full and the Warehousing
Commitment has expired or has been terminated, Lender will remit any excess to
Borrower. This Section controls every other provision of all agreements
between Borrower and Lender and is binding upon and available to any subsequent
holder of the Warehousing Note.

 

3.3.                            Principal Payments

 

3.3
(a)                Borrower
must pay Lender the outstanding principal amount of all Warehousing Advances on
the Warehousing Maturity Date.

 

3.3 (b)               Except as otherwise
provided in Section 3.1, Borrower may prepay any portion of the
Warehousing Advances without premium or penalty at any time.

 

3.3
(c)                Borrower
must pay to Lender, without the necessity of prior demand or Notice from
Lender, and Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account for, the amount of any outstanding Warehousing
Advance against a specific Pledged Asset upon the earliest occurrence of any of
the following events:

 

(1)                                  One
(1) Business Day elapses from the date a Warehousing Advance was made if the
Pledged Loan to be funded by that Warehousing Advance is not closed and funded.

 

(2)                                  Ten
(10) Business Days elapse without the return of a Collateral Document delivered
by Lender to Borrower under a Trust Receipt for correction or completion.

 

(3)                                  On
the date on which a Pledged Loan is determined to have been originated based on
untrue, incomplete or inaccurate information or otherwise to be subject to
fraud, whether or not Borrower had knowledge of the misrepresentation,
incomplete or incorrect information or fraud, on the date on which Borrower
knows, has reason to know, or receives Notice from Lender, that (A) one or
more of the representations and warranties set forth in Article 9 were
inaccurate or incomplete in any material respect on any date when made or
deemed made, or (B) Borrower has failed to perform or comply with any
covenant, term or condition set forth in Article 9.

 

(4)                                  On
the date the Pledged Loan or a Lien prior to the Mortgage securing repayment of
the Pledged Loan is defaulted and remains in default for a period of 60 days or
more.

 

2

 

(5)                                  Upon
the sale, other disposition or prepayment of any Pledged Asset or, with respect
to a Pledged Loan included in an Eligible Mortgage Pool, upon the sale or other
disposition of the related Agency Security.

 

(6)                                  One
(1) Business Day immediately preceding the date scheduled for the foreclosure
or trustee sale of the premises securing a Pledged Loan.

 

(7)                                  If
the outstanding Warehousing Advances against Pledged Loans of a specific type
of Eligible Loan exceed the aggregate Purchase Commitments for that type of
Eligible Loan.

 

3.3
(d)               Upon
telephonic or written Notice to Borrower by Lender, Borrower must pay to
Lender, and Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account for, the amount of any outstanding Warehousing
Advance against a specific Pledged Asset upon the earliest occurrence of any of
the following events:

 

(1)                                  For
any Pledged Loan, other than an Aged Mortgage Loan, the Standard Warehouse
Period elapses and, for any Aged Mortgage Loan, the Aged Warehouse Period
elapses.

 

(2)                                  Forty-five
(45) days elapse from the date a Pledged Loan was delivered to an Investor or
Approved Custodian for examination and purchase or for inclusion in a Mortgage
Pool, without the purchase being made or an Eligible Mortgage Pool being
initially certified, or upon rejection of a Pledged Loan as unsatisfactory by
an Investor or Approved Custodian.

 

(3)                                  Seven
(7) Business Days elapse from the date a Wet Settlement Advance was made
against a Pledged Loan without receipt by Lender of all Collateral Documents
relating to the Pledged Loan.

 

(4)                                  Three
(3) Business Days after the mandatory delivery date of the related Purchase
Commitment if the specific Pledged Loan or the Pledged Security backed by that
Pledged Loan has not been delivered under the Purchase Commitment prior to such
mandatory delivery date, or on the date the related Purchase Commitment expires
or is terminated, unless, in each case, the Pledged Loan or Pledged Security is
eligible for delivery to another Investor under a comparable Purchase
Commitment.

 

(5)                                  With
respect to any Pledged Loan, any of the Collateral Documents, upon examination
by Lender, are found not to be in compliance with the requirements of this
Agreement or the related Purchase Commitment.

 

3.3
(e)                In
addition to the payments required by Sections 3.3(a), 3.3(c) and 3.3(d),
if the principal amount of any Pledged Loan is prepaid in whole or in part
while a Warehousing Advance is outstanding against the Pledged Loan, Borrower
must pay to Lender, without the necessity of prior demand or Notice from
Lender, and Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account for, the amount of the prepayment, to be applied
against the Warehousing Advance.

 

3.3
(f)                  The
proceeds of the sale or other disposition of Pledged Assets must be paid
directly by the Investor to the Cash Collateral Account. Borrower must give
Notice to Lender in writing or by telephone or by RFConnects Delivery to Lender
(and if by telephone, followed promptly by written Notice) of the Pledged
Assets for which proceeds have been received. Upon receipt of Borrower’s
Notice, Lender will apply any proceeds

 

3

 

deposited into the Cash
Collateral Account to the payment of the Warehousing Advances related to the
Pledged Assets identified by Borrower in its Notice, and those Pledged Assets
will be considered to have been redeemed from pledge. Lender is entitled to
rely upon Borrower’s affirmation that deposits in the Cash Collateral Account
represent payments from Investors for the purchase of the Pledged Assets specified
by Borrower in its Notice. If the payment from an Investor for the purchase of
Pledged Assets is less than the outstanding Warehousing Advances against the
Pledged Assets identified by Borrower in its Notice, Borrower must pay to
Lender, and Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account in, an amount equal to that deficiency. As long as
no Default or Event of Default exists, Lender will return to Borrower any
excess payment from an Investor for Pledged Assets.

 

3.3
(g)               Lender
reserves the right to revalue any Pledged Loan.  Borrower must pay to Lender, without the necessity of prior
demand or Notice from Lender, and Borrower authorizes Lender to cause the
Funding Bank to charge Borrower’s Operating Account for, any amount required
after any such revaluation to reduce the principal amount of the Warehousing
Advance outstanding against the revalued Pledged Loan to an amount equal to the
Advance Rate for the applicable type of Eligible Loan multiplied by the Fair
Market Value of the Mortgage Loan.

 

3.4.                            Buydowns

 

Borrower may prepay a
portion of the Warehousing Advances outstanding against Prime Mortgage Loans (a
“Buydown”) upon Notice to Lender not later than (a) 1:00 p.m. on the
Business Day immediately preceding the Business Day on which Borrower desires
to make a Buydown in the amount of $10,000,000 or more or (b) 1:00 p.m. on the
Business Day on which Borrower desires to make a Buydown in an amount less than
$10,000,000.  Each Buydown must be in an
amount not less than $5,000, and Buydowns may not exceed the aggregate
principal balance of the Warehousing Advances outstanding against Prime
Mortgage Loans.  A Buydown is a
reduction in the aggregate amount of the Warehousing Advances outstanding
against Prime Mortgage Loans, but does not represent the prepayment of any
particular Warehousing Advance, and does not entitle Borrower to the release of
any Collateral.  Lender may apply
Buydowns to reduce interest payable by Borrower on outstanding Warehousing
Advances in any order that Lender determines in its sole discretion.  Unless a Default or Event of Default exists,
Borrower may reborrow all or any portion of a Buydown upon Notice to Lender not
later than (m) 1:00 p.m. on the Business Day immediately preceding the Busines
Day on which borrower desires to reborrow $10,000,000 or more or (n) 1:00 p.m.
on the Business Day that Borrower desires to reborrow an amount less than
$10,000,000.  If Lender receives
Buydowns or a combination of Buydowns and payments of Warehousing Advances that
exceed the aggregate principal balance of the Warehousing Advances outstanding
against Prime Mortgage Loans (an “Excess Buydown”), as long as no
Default or Event of Default exists, Borrower may reborrow all or any portion of
an Excess Buydown upon Notice to Lender not later than (y) 1:00 p.m. on the
Business Day immediately preceding the Business Day on which Borrower desires
to reborrow $10,000,000 or more or (z) 1:00 p.m. on the Business Day that
Borrower desires to reborrow an amount less than $10,000,000.   Alternatively, Lender may, in its sole
discretion, re-advance to Borrower all or any portion of an Excess Buydown by
causing the Funding Bank to credit the Operating Account in that amount.  Lender has no obligation to pay or otherwise
provide to Borrower any interest, dividends or other benefits on an Excess
Buydown.

 

3.5.                            Warehousing Commitment Fees

 

Borrower must pay Lender
a fee (“Warehousing Commitment Fee”) in the amount set forth in Exhibit
I.  The Warehousing Commitment Fee
is payable quarterly in advance. On the Closing Date, Borrower must pay the
prorated portion of the Warehousing Commitment Fee due from the

 

4

 

Closing Date to the last
day of the current Calendar Quarter. After the Closing Date, Borrower must pay
the Warehousing Commitment Fee within 9 days after the date of Lender’s invoice
or, if applicable, within 2 days after the date of Lender’s account analysis
statement. If the date set forth in clause (a) of the definition of
Warehousing Maturity Date occurs on a day other than the last day of a Calendar
Quarter, Borrower must pay the prorated portion of the Warehousing Commitment
Fee due from the beginning of the then current Calendar Quarter to and
including that date. Borrower is not entitled to a reduction in the amount of
the Warehousing Commitment Fee if (a) the Warehousing Commitment Amount is
reduced or (b) the Warehousing Commitment is terminated at the request of
Borrower or as a result of an Event of Default. If the Warehousing Commitment
terminates at the request of Borrower or as a result of an Event of Default,
Borrower must pay, on the date of termination, a Warehousing Commitment Fee on
the Warehousing Commitment Amount in effect immediately prior to termination,
for the period from the date of termination to and including the date set forth
in clause (a) of the definition of Warehousing Maturity Date on the date
of such termination. Lender’s determination of the Warehousing Commitment Fee
for any period is conclusive and binding, absent manifest error.

 

3.6.                            Loan Package Fees, Wire Fees, Warehousing Fees

 

At the time of each
Warehousing Advance against an Eligible Loan, Borrower will incur a loan
package fee (“Loan Package Fee”) and a wire fee (“Wire Fee”).
Loan Package Fees and Wire Fees may, at Lender’s discretion, be billed
separately or combined into a single warehousing fee (“Warehousing Fee”).  Borrower must pay all Loan Package Fees,
Wire Fees or Warehousing Fees in the amount set forth in Exhibit I
within 9 days after the date of Lender’s invoice or, if applicable, within 2
days after the date of Lender’s account analysis statement.

 

3.7.                            Miscellaneous Fees and Charges

 

Borrower must reimburse
Lender for all Miscellaneous Fees and Charges. 
Borrower must pay all Miscellaneous Fees and Charges within 9 days after
the date of Lender’s invoice or, if applicable, within 2 days after the date of
Lender’s account analysis statement.

 

3.8.                            Overdraft Advances

 

If, under the
authorization given by Borrower in the Funding Bank Agreement or pursuant to
this Agreement, Lender debits Borrower’s Operating Account or directs the
Funding Bank to honor an item presented against the Operating Account or
against the Check Disbursement Account, and that debit or direction results in
an overdraft, Lender may make an additional Warehousing Advance to fund that
overdraft (“Overdraft Advance”). 
Borrower must pay (a) the outstanding amount of any Overdraft Advance,
within 1 Business Day after the date of the Overdraft Advance, and (b) interest
on the amount of the Overdraft Advance, at a rate per annum equal to the Bank
One Prime Rate plus 2%, within 9 days after the date of Lender’s invoice or, if
applicable, within 2 days after the date of Lender’s account analysis statement.

 

3.9.                            Method of Making Payments

 

3.9
(a)                Unless
otherwise specified in this Agreement, Borrower must make all payments under
this Agreement to Lender by the close of business on the date when due unless
the date is not a Business Day. If the due date is not a Business Day, payment
is due on, and interest will accrue to, the next Business Day. Borrower must
make all payments in United States dollars in immediately available funds
transferred by wire to accounts designated by Lender.

 

5

 

3.9
(b)               Borrower
authorizes Lender to cause the Funding Bank to charge Borrower’s Operating
Account for any interest or fees due and payable to Lender on or after the 9th
day after the date of Lender’s invoice or, if applicable, on or after the 2nd
day after the date of Lender’s account analysis statement, without the
necessity of prior demand or Notice from Lender.

 

3.9
(c)                While
a Default or Event of Default exists, Borrower authorizes Lender to cause the
Funding Bank to charge Borrower’s Operating Account for any Obligations due and
payable to Lender, without the necessity of prior demand or Notice from Lender.

 

 

End
of Article 3

 

6

 

COLLATERAL

 

4.1.                            Grant of Security Interest

 

As security for the
payment of the Warehousing Note and for the performance of all of Borrower’s
Obligations, Borrower grants a security interest to Lender in all of Borrower’s
right, title and interest in and to the following described property (“Collateral”):

 

4.1
(a)                All
amounts advanced by Lender to or for the account of Borrower under this
Agreement to fund a Mortgage Loan until that Mortgage Loan is closed and those
funds disbursed.

 

4.1
(b)               All
Mortgage Loans, including all Mortgage Notes, Mortgages and Security Agreements
evidencing or securing those Mortgage Loans, that are delivered or caused to be
delivered to Lender (including delivery to a third party on behalf of Lender),
or that otherwise come into the possession, custody or control of Lender (including
the possession, custody or control of a third party on behalf of Lender) for
the purpose of pledge or in respect of which Lender has made a Warehousing
Advance under this Agreement (collectively, “Pledged Loans”).

 

4.1
(c)                All
Mortgage-backed Securities that are created in whole or in part on the basis of
Pledged Loans or that are delivered or caused to be delivered to Lender (including
delivery to a third party on behalf of Lender), or that otherwise come into the
possession, custody or control of Lender (including the possession, custody or
control of a third party on behalf of Lender) or that are registered by
book-entry in the name of Lender (including registration in the name of a third
party on behalf of Lender), in each case for the purpose of pledge, or in
respect of which a Warehousing  Advance
has been made by Lender under this Agreement (collectively, “Pledged
Securities”).

 

4.1
(d)               All
private mortgage insurance and all commitments issued by the VA or FHA to
insure or guarantee any Mortgage Loans included in the Pledged Loans; all
Purchase Commitments held by Borrower covering Pledged Loans or Pledged
Securities, and all proceeds from the sale of Pledged Loans or Pledged
Securities to Investors pursuant to those Purchase Commitments; and all
personal property, contract rights, servicing rights or contracts and servicing
fees and income or other proceeds, amounts and payments payable to Borrower as
compensation or reimbursement, accounts, payments, intangibles and general
intangibles of every kind relating to Pledged Loans, Pledged Securities,
Purchase Commitments, VA commitments or guaranties, FHA commitments, private
mortgage insurance and commitments, and all other documents or instruments
relating to Pledged Loans and Pledged Securities, including any interest of
Borrower in any fire, casualty or hazard insurance policies and any awards made
by any public body or decreed by any court of competent jurisdiction for a
taking or for degradation of value in any eminent domain proceeding as the same
relate to Pledged Loans.

 

4.1
(e)                All
escrow accounts, documents, instruments, files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting
records (including all information, records, tapes, data, programs, discs and
cards necessary or helpful in the administration or servicing of the
Collateral) and other information and data of Borrower relating to the
Collateral.

 

4.1
(f)                  All
cash, whether now existing or acquired after the date of this Agreement,
delivered to or otherwise in the possession of Lender, the Funding Bank or
Lender’s agent, bailee or custodian or designated on the books and records of
Borrower as assigned and pledged

 

1

 

to Lender, including all
cash deposited in the Cash Collateral Account, the Check Disbursement Account
and the Wire Disbursement Account.

 

4.1
(g)               All
Hedging Arrangements related to the Collateral (“Pledged Hedging
Arrangements”) and Borrower’s accounts in which those Hedging Arrangements
are held (“Pledged Hedging Accounts”), including all rights to payment
arising under the Pledged Hedging Arrangements and the Pledged Hedging
Accounts, except that Lender’s security interest in the Pledged Hedging
Arrangements and Pledged Hedging Accounts applies only to benefits, including
rights to payment, related to the Collateral.

 

4.1
(h)               All
cash and non-cash proceeds of the Collateral, including all dividends,
distributions and other rights in connection with, and all additions to,
modifications of and replacements for, the Collateral, and all products and
proceeds of the Collateral, together with whatever is receivable or received
when the Collateral or proceeds of Collateral are sold, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or involuntary,
including all rights to payment with respect to any cause of action affecting
or relating to the Collateral or proceeds of Collateral.

 

4.2.                            Maintenance of Collateral Records

 

As long as the Warehousing
Commitment is outstanding or there remain any Obligations to be paid or
performed under this Agreement or under any other Loan Document, Borrower must
preserve and maintain, at its chief executive office and principal place of
business or in a regional office approved by Lender, or in the office of a
computer service bureau engaged by Borrower and approved by Lender and, upon
request, make available to Lender the originals, or copies in any case where
the originals have been delivered to Lender or to an Investor, of the Mortgage
Notes, Mortgages and Security Agreements included in Pledged Loans,
Mortgage-backed Securities delivered to Lender as Pledged Securities, Purchase
Commitments, and all related Mortgage Loan documents and instruments, and all files,
surveys, certificates, correspondence, appraisals, computer programs, tapes,
discs, cards, accounting records and other information and data relating to the
Collateral.

 

4.3.                            Release of Security Interest in Pledged Loans and
Pledged Securities

 

4.3 (a)                Except as provided
in Section 4.3(b), Lender will release its security interest in the
Pledged Loans only against payment to Lender of the Release Amount in
connection with those Pledged Loans. If Pledged Loans are transferred to a pool
custodian or an Investor for inclusion in a Mortgage Pool and Lender’s security
interest in the Pledged Loans included in the Mortgage Pool is not released
before the issuance of the related Mortgage-backed Security, then that
Mortgage-backed Security, when issued, is a Pledged Security, Lender’s security
interest continues in the Pledged Loans backing that Pledged Security and
Lender is entitled to possession of the Pledged Security in the manner provided
in this Agreement.

 

4.3
(b)               If
Pledged Loans are transferred to an Approved Custodian and included in an
Eligible Mortgage Pool, Lender’s security interest in the Pledged Loans
included in the Eligible Mortgage Pool will be released upon the delivery of
the Agency Security to Lender (including delivery to or registration in the
name of a third party on behalf of Lender) and that Agency Security is a
Pledged Security.  Lender’s security
interest in that Pledged Security will be released only against payment to
Lender of the Release Amount in connection with the Mortgage Loans backing that
Pledged Security.

 

4.3
(c)                Lender
has the exclusive right to possession of all Pledged Securities or, if Pledged
Securities are issued in book-entry form or issued in certificated form and
delivered to a

 

2

 

clearing corporation (as
that term is defined in the Uniform Commercial Code of Minnesota) or its
nominee, Lender has the right to have the Pledged Securities registered in the
name of a securities intermediary (as that term is defined in the Uniform
Commercial Code of Minnesota) in an account containing only customer securities
and credited to an account of Lender. Lender has no duty or obligation to
deliver Pledged Securities to an Investor or to credit Pledged Securities to
the account of an Investor or an Investor’s designee except against payment for
those Pledged Securities. Borrower acknowledges that Lender may enter into one
or more standing arrangements with securities intermediaries with respect to
Pledged Securities issued in book entry form or issued in certificated form and
delivered to a clearing corporation or its designee, under which the Pledged
Securities are registered in the name of the securities intermediary, and
Borrower agrees, upon request of Lender, to execute and deliver to those
securities intermediaries Borrower’s written concurrence in any such standing
arrangements.

 

4.3
(d)               If no
Default or Event of Default occurs, Borrower may redeem a Pledged Loan or
Pledged Security from Lender’s security interest by notifying Lender of its
intention to redeem the Pledged Loan or Pledged Security from pledge and either
(1) paying, or causing an Investor to pay, to Lender, for application as a
prepayment on the principal balance of the Warehousing Note, the Release Amount
in connection with the Pledged Loan or the Pledged Loans backing that Pledged
Security, or (2) delivering substitute Collateral that, in addition to
being acceptable to Lender in its sole discretion, will, when included with the
remaining Collateral, result in a Warehousing Collateral Value of all
Collateral held by Lender that is at least equal to the aggregate outstanding
Warehousing Advances.

 

4.3
(e)                After
a Default or Event of Default occurs, Lender may, with no liability to Borrower
or any Person, continue to release its security interest in any Pledged Loan or
Pledged Security against payment of the Release Amount for that Pledged Loan or
for the Pledged Loans backing that Pledged Security.

 

4.3
(f)                  The
amount to be paid by Borrower to obtain the release of Lender’s security
interest in a Pledged Loan (“Release Amount”) will be (1) in
connection with the sale of a Pledged Loan by Borrower, the payment required in
any bailee letter pursuant to which Lender ships that Pledged Loan to an
Investor, Approved Custodian, pool custodian or other party, (2) in connection
with the sale of a Pledged Loan by Lender while an Event of Default exists, the
amount paid to Lender in a commercially reasonable disposition of that Pledged
Loan and (3) otherwise, until an Event of Default occurs, the principal amount
of the Warehousing Advance outstanding against the Pledged Loan.

 

4.4.                            Collection and Servicing Rights

 

4.4
(a)                If
no Event of Default exists, Borrower may service and receive and collect
directly all sums payable to Borrower in respect of the Collateral other than
proceeds of any Purchase Commitment or proceeds of the sale of any
Collateral.  All proceeds of any
Purchase Commitment or any other sale of Collateral must be paid directly to
the Cash Collateral Account for application as provided in this Agreement.

 

4.4
(b)               After
an Event of Default, Lender or its designee is entitled to service and receive
and collect all sums payable to Borrower in respect of the Collateral, and in
such case (1) Lender or its designee in its discretion may, in its own
name, in the name of Borrower or otherwise, demand, sue for, collect or receive
any money or property at any time payable or receivable on account of or in
exchange for any of the Collateral, but Lender has no obligation to do so,
(2) Borrower must, if Lender requests it to do so, hold in trust for the
benefit of Lender and immediately pay to Lender at its office designated

 

3

 

by Notice, all amounts
received by Borrower upon or in respect of any of the Collateral, advising
Lender as to the source of those funds and (3) all amounts so received and
collected by Lender will be held by it as part of the Collateral.

 

4.5.                            Return of Collateral at End of Warehousing
Commitment

 

If (a) the Warehousing
Commitment has expired or been terminated, and (b) no Warehousing Advances,
interest or other Obligations are outstanding and unpaid, Lender will release
its security interest and will deliver all Collateral in its possession to
Borrower at Borrower’s expense. Borrower’s acknowledgement or receipt for any
Collateral released or delivered to Borrower under any provision of this
Agreement is a complete and full acquittance for the Collateral so returned,
and Lender is discharged from any liability or responsibility for that
Collateral.

 

4.6.                            Delivery of Collateral Documents

 

4.6
(a)                Lender
may deliver documents relating to the Collateral to Borrower for correction or
completion under a Trust Receipt.

 

4.6
(b)               If no
Default or Event of Default exists, upon delivery by Borrower to Lender of
shipping instructions pursuant to the applicable Exhibit B, Lender
will deliver the Mortgage Notes evidencing Pledged Loans or Pledged Securities,
together with all related loan documents and pool documents previously received
by Lender under the requirements of the applicable Exhibit B, to the
designated Investor or Approved Custodian or to another party designated by
Borrower and acceptable to Lender in its sole discretion.

 

4.6
(c)                If a
Default or Event of Default exists, Lender may, without liability to Borrower
or any other Person, continue to deliver Pledged Loans or Pledged Securities,
together with all related loan documents and pool documents in Lender’s
possession, to the applicable Investor, or Approved Custodian or to another
party acceptable to Lender in its sole discretion.

 

 

End
of Article 4

 

4

 

CONDITIONS PRECEDENT

 

5.1.                            Initial Advance

 

Lender’s obligation to
make the initial Warehousing Advance, is subject to the satisfaction, in the
sole discretion of Lender, of the following conditions precedent:

 

5.1
(a)                Lender
must receive the following, all of which must be satisfactory in form and
content to Lender, in its sole discretion:

 

(1)                                  The
Warehousing Note and this Agreement duly executed by Borrower.

 

(2)                                  Borrower’s
articles or certificate of incorporation, together with all amendments, as
certified by the Secretary of State of New York, Borrower’s bylaws, together
with all amendments, certified by the corporate secretary or assistant
secretary of Borrower,  and certificates
of good standing dated within 60 days of the date of this Agreement, together
with a certification from the Franchise Tax Board or other state tax authority
stating that Borrower is in good standing with the Franchise Tax Board or such
state tax authority, if applicable.

 

(3)                                  A
resolution of the board of directors of Borrower authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents, each Warehousing
Advance Request and all other agreements, instruments or documents to be
delivered by Borrower under this Agreement.

 

(4)                                  A
certificate as to the incumbency and authenticity of the signatures of the officers
of Borrower executing this Agreement and the other Loan Documents.

 

(5)                                  Assumed
Name Certificates dated within 30 days of the date of this Agreement for any
assumed name used by Borrower in the conduct of its business.

 

(6)                                  Fiscal
year-end financial statements of Borrower (and, if applicable, Borrower’s
Subsidiaries, on a consolidated basis) containing a balance sheet as of
December 31, 2002 and related statements of income, changes in
stockholders’ equity and cash flows for the period ended on that date, all in
reasonable detail and prepared in accordance with GAAP applied on a basis
consistent with prior periods and accompanied by (A) an opinion as to those
financial statements in form and substance satisfactory to Lender and prepared
by independent certified public accountants of recognized standing acceptable
to Lender and (B) any management letters, management reports or other
supplementary comments or reports delivered by those accountants to Borrower or
its board of directors.

 

(7)                                  Interim
financial statements of Borrower (and, if applicable, Borrower’s Subsidiaries,
on a consolidated basis) containing a balance sheet as of March 31, 2003,
and a related statement of income, for the period ended on that date prepared
in accordance with GAAP applied on a basis consistent with Borrower’s most
recent audited financial statements.

 

(8)                                  A
favorable written opinion of counsel to Borrower, addressed to Lender and dated
as of the date of this Agreement, covering such matters as Lender may
reasonably request.

 

1

 

(9)                                  Uniform
Commercial Code, tax lien and judgment searches of the appropriate public
records for Borrower that do not disclose the existence of any prior Lien on
the Collateral other than in favor of Lender or as permitted under this Agreement.

 

(10)                            Copies
of the certificates, documents or other written instruments that evidence
Borrower’s eligibility described in Section 9.1, all in form and substance satisfactory to Lender.

 

(11)                            Copies
of Borrower’s errors and omissions insurance policy or mortgage impairment
insurance policy, and blanket bond coverage policy, or certificates in lieu of
policies, showing compliance by Borrower as of the date of this Agreement with
the provisions of Section 7.9.

 

(12)                            A
fully-executed Funding Bank Agreement and evidence that all accounts into which
Warehousing Advances will be funded have been established at the Funding Bank.

 

(13)                            One or more agreements among Borrower, Lender
and Fannie Mae in which Fannie Mae agrees to send all cash proceeds of Mortgage Loans sold by Borrower to Fannie Mae to the
Cash Collateral Account, each in form and substance satisfactory to Lender.

 

(14)                            Receipt
by Lender of any fees due on the date of this Agreement.

 

5.1
(b)               If,
as of the date of this Agreement, Borrower has any indebtedness for borrowed
money to any of its directors, officers, shareholders or Affiliates,  which indebtedness has a term of more than 1
year or is in excess of $25,000, the Person to whom Borrower is indebted must
have executed a Subordination of Debt Agreement, on the form prescribed by
Lender; and Lender must have received an executed copy of that Subordination of
Debt Agreement, certified by the corporate secretary or assistant secretary of
Borrower to be true and complete and in full force and effect as of the date of
the Warehousing Advance.

 

5.1
(c)                Borrower
must not have incurred any material liabilities, direct or contingent, other
than in the ordinary course of its business, since the Audited Statement Date.

 

5.2.                            Each Advance

 

Lender’s obligation to
make the initial and each subsequent Warehousing Advance is subject to the
satisfaction, in the sole discretion of Lender, as of the date of each Warehousing
Advance, of the following additional conditions precedent:

 

5.2
(a)                Borrower
must have delivered to Lender the Warehousing Advance Request and Collateral
Documents required by, and must have satisfied the procedures set forth in,
Article 2 and the Exhibits described in that Article. All items delivered
to Lender must be satisfactory to Lender in form and content, and Lender may
reject any item that does not satisfy the requirements of this Agreement or of
the related Purchase Commitment.

 

5.2
(b)               Lender
must have received evidence satisfactory to it as to the making or continuation
of any book entry or the due filing and recording in all appropriate offices of
all financing statements and other instruments necessary to perfect the
security interest of Lender in the Collateral under the Uniform Commercial Code
or other applicable law.

 

2

 

5.2
(c)                The
representations and warranties of Borrower contained in Article 6 and
Article 9 must be accurate and complete in all material respects as if
made on and as of the date of each Warehousing Advance.

 

5.2
(d)               Borrower
must have performed all agreements to be performed by it under this Agreement,
and after giving effect to the requested Warehousing Advance, no Default or
Event of Default will exist under this Agreement.

 

Delivery
of a Warehousing Advance Request by Borrower will be deemed a representation by
Borrower that all conditions set forth in this Section have been satisfied
as of the date of the Warehousing Advance.

 

5.3.                            Force Majeure

 

Notwithstanding
Borrower’s satisfaction of the conditions set forth in this Agreement, Lender
has no obligation to make a Warehousing Advance if Lender is prevented from
obtaining the funds necessary to make a Warehousing Advance, or is otherwise
prevented from making a Warehousing Advance as a result of any fire or other casualty,
failure of power, strike, lockout or other labor trouble, banking moratorium,
embargo, sabotage, confiscation, condemnation, riot, civil disturbance,
insurrection, act of terrorism, war or other activity of armed forces, act of
God or other similar reason beyond the control of Lender.  Lender will make the requested Warehousing
Advance as soon as reasonably possible following the occurrence of such an
event.

 

 

End
of Article 5

 

3

 

GENERAL REPRESENTATIONS AND WARRANTIES

 

Borrower represents and
warrants to Lender, as of the date of this Agreement and as of the date of each
Warehousing Advance Request and the making of each Warehousing Advance, that:

 

6.1.                            Place of Business

 

Borrower’s chief
executive office and principal place of business is 33 Maiden Lane, New York,
NY, 10038.

 

6.2.                            Organization; Good Standing; Subsidiaries

 

Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, and has the full legal power and authority to own its
property and to carry on its business as currently conducted. Borrower is duly
qualified as a foreign corporation to do business and is in good standing in
each jurisdiction in which the transaction of its business makes qualification
necessary, except in jurisdictions, if any, where a failure to be in good
standing has no material adverse effect on Borrower’s business, operations,
assets or financial condition as a whole. For the purposes of this Agreement, good
standing includes qualification for all licenses and payment of all taxes
required in the jurisdiction of its incorporation and in each jurisdiction in
which Borrower transacts business. Borrower has no Subsidiaries except as set
forth on Exhibit D, which sets forth with respect to each
Subsidiary, its name, address, jurisdiction of organization, each state in
which it is qualified to do business, and the percentage ownership of its capital
stock by Borrower.  Each of Borrower’s
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, and has the full legal power and
authority to own its property and to carry on its business as currently
conducted.

 

6.3.                            Authorization and Enforceability

 

Borrower has the power
and authority to execute, deliver and perform this Agreement, the Warehousing
Note and other Loan Documents to which Borrower is party and to make the
borrowings under this Agreement. The execution, delivery and performance by
Borrower of this Agreement, the Warehousing Note and the other Loan Documents
to which Borrower is party and the making of the borrowings under this
Agreement, and the Warehousing Note, have been duly and validly authorized by
all necessary corporate action on the part of Borrower (none of which actions
has been modified or rescinded, and all of which actions are in full force and
effect) and do not and will not (a) conflict with or violate any provision of
law, of any judgments binding upon Borrower, or of the articles of
incorporation or by-laws of Borrower, or (b) conflict with or result in a
breach of, constitute a default or require any consent under, or result in or
require the acceleration of any indebtedness of Borrower under any agreement,
instrument or indenture to which Borrower is a party or by which Borrower or
its property may be bound or affected, or result in the creation of any Lien
upon any property or assets of Borrower (other than the Lien on the Collateral
granted under this Agreement). This Agreement, the Warehousing Note and the
other Loan Documents constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or other such laws affecting the enforcement
of creditors’ rights.

 

6.4.                            Approvals

 

The execution and
delivery of this Agreement, the Warehousing Note and the other Loan Documents
and the performance of Borrower’s obligations under this Agreement, the Warehousing
Note and the other Loan Documents and the validity and enforceability of this

 

1

 

Agreement, the Warehousing
Note and the other Loan Documents do not require any license, consent, approval
or other action of any state or federal agency or governmental or regulatory
authority other than those that have been obtained and remain in full force and
effect.

 

6.5.                            Financial Condition

 

The balance sheet of
Borrower (and, if applicable, Borrower’s Subsidiaries, on a consolidated basis)
as of each Statement Date, and the related statements of income, cash flows and
changes in stockholders’ equity for the fiscal period ended on each Statement
Date, furnished to Lender, fairly present the financial condition of Borrower
(and, if applicable, Borrower’s Subsidiaries) as at that Statement Date and the
results of its operations for the fiscal period ended on that Statement Date.
Borrower had, on each Statement Date, no known material liabilities, direct or
indirect, fixed or contingent, matured or unmatured, or liabilities for taxes,
long-term leases or unusual forward or long-term commitments not disclosed by,
or reserved against in, those financial statements, and at the present time
there are no material unrealized or anticipated losses from any loans, advances
or other commitments of Borrower except as previously disclosed to Lender in
writing. Those financial statements were prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved. Since the
Audited Statement Date, there has been no material adverse change in the
business, operations, assets or financial condition of Borrower (and, if
applicable, Borrower’s Subsidiaries), nor is Borrower aware of any state of
facts that (with or without notice or lapse of time or both) would or could
result in any such material adverse change.

 

6.6.                            Litigation

 

There are no actions,
claims, suits or proceedings pending or, to Borrower’s knowledge, threatened or
reasonably anticipated against or affecting Borrower or any Subsidiary of
Borrower in any court or before any arbitrator or before any government
commission, board, bureau or other administrative agency that, if adversely
determined, may reasonably be expected to result in a material adverse change
in Borrower’s business, operations, assets or financial condition as a whole,
or that would affect the validity or enforceability of this Agreement, the Warehousing
Note or any other Loan Document.

 

6.7.                            Compliance with Laws

 

Neither Borrower nor any
Subsidiary of Borrower is in violation of any provision of any law, or of any
judgment, award, rule, regulation, order, decree, writ or injunction of any
court or public regulatory body or authority that could result in a material
adverse change in Borrower’s business, operations, assets or financial
condition as a whole or that would affect the validity or enforceability of
this Agreement, the Warehousing Note or any other Loan Document.

 

6.8.                            Regulation U

 

Borrower is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock, and no
part of the proceeds of any Warehousing Advance made under this Agreement will
be used to purchase or carry any Margin Stock or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock.

 

6.9.                            Investment Company Act

 

Borrower is not an
“investment company” or controlled by an “investment company” within the
meaning of the Investment Company Act.

 

2

 

6.10.                     Payment of Taxes

 

Borrower and each of its
Subsidiaries has filed or caused to be filed all federal, state and local
income, excise, property and other tax returns that are required to be filed
with respect to the operations of Borrower and its Subsidiaries, all such
returns are true and correct and Borrower and each of its Subsidiaries has paid
or caused to be paid all taxes shown on those returns or on any assessment, to
the extent that those taxes have become due, including all FICA payments and
withholding taxes, if appropriate. The amounts reserved as a liability for
income and other taxes payable in the financial statements described in
Section 6.6 are sufficient for payment of all unpaid federal, state and
local income, excise, property and other taxes, whether or not disputed, of
Borrower and its Subsidiaries accrued for or applicable to the period and on
the dates of those financial statements and all years and periods prior to
those financial statements and for which Borrower and its Subsidiaries may be
liable in their own right or as transferee of the assets of, or as successor
to, any other Person. No tax Liens have been filed and no material claims are
being asserted against Borrower, any Subsidiary of Borrower or any property of
Borrower or any Subsidiary of Borrower with respect to any taxes, fees or
charges.

 

6.11.                     Agreements

 

Neither Borrower nor any
Subsidiary of Borrower is a party to any agreement, instrument or indenture or
subject to any restriction materially and adversely affecting its business,
operations, assets or financial condition, except as disclosed in the financial
statements described in Section 6.6. 
Neither Borrower nor any Subsidiary of Borrower is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement, instrument, or indenture which default
could result in a material adverse change in Borrower’s business, operations,
properties or financial condition as a whole. No holder of any indebtedness of
Borrower or of any of its Subsidiaries has given notice of any asserted default
under that indebtedness, and no liquidation or dissolution of Borrower or of
any of its Subsidiaries and no receivership, insolvency, bankruptcy, reorganization
or other similar proceedings relative to Borrower or of any of its Subsidiaries
or any of its or their properties is pending, or to the knowledge of Borrower,
threatened.

 

6.12.                     Title to Properties

 

Borrower and each
Subsidiary of Borrower has good, valid, insurable and (in the case of real
property) marketable title to all of its properties and assets (whether real or
personal, tangible or intangible) reflected on the financial statements
described in Section 6.6, except for those properties and assets that
Borrower has disposed of since the date of those financial statements either in
the ordinary course of business or because they were no longer used or useful
in the conduct of Borrower’s or the Subsidiary’s business. All of Borrower’s
properties and assets are free and clear of all Liens except as disclosed in
Borrower’s financial statements.

 

6.13.                     ERISA

 

Each Plan is in
compliance with all applicable requirements of ERISA and the Internal Revenue
Code and with all material applicable rulings and regulations issued under the
provisions of ERISA and the Internal Revenue Code setting forth those
requirements, except where any failure to comply would not result in a material
loss to Borrower or any ERISA Affiliate. All of the minimum funding standards or
other contribution obligations applicable to each Plan have been satisfied. No
Plan is a defined-benefit pension plan subject to Title IV of ERISA, and
there is no Multiemployer Plan.

 

3

 

6.14.                     No Retiree Benefits

 

Except as required under
Section 4980B of the Internal Revenue Code, Section 601 of ERISA or
applicable state law, neither Borrower nor, if applicable, any Subsidiary is
obligated to provide post-retirement medical or insurance benefits with respect
to employees or former employees.

 

6.15.                     Assumed Names

 

Borrower does not
originate Mortgage Loans or otherwise conduct business under any names other
than its legal name and the assumed names set forth on Exhibit G.
Borrower has made all filings and taken all other action as may be required
under the laws of any jurisdiction in which it originates Mortgage Loans or
otherwise conducts business under any assumed name. Borrower’s use of the
assumed names set forth on Exhibit G does not conflict with any other
Person’s legal rights to any such name, nor otherwise give rise to any
liability by Borrower to any other Person. 
Borrower may amend Exhibit G to add or delete any assumed names
used by Borrower to conduct business. 
An amendment to Exhibit G to add an assumed name is not effective
until Borrower has delivered to Lender an assumed name certificate in the
jurisdictions in which the assumed name is to be used, which must be
satisfactory in form and content to Lender, in its sole discretion.  In connection with any amendment to delete a
name from Exhibit G, Borrower represents and warrants that it has ceased
using that assumed name in all jurisdictions.

 

6.16.                     Servicing

 

Exhibit C
is a true and complete list of Borrower’s Servicing Portfolio. All of Borrower’s
Servicing Contracts are in full force and effect, and are unencumbered by Liens
other than Liens disclosed in Exhibit C. No default or event that,
with notice or lapse of time or both, would become a default, exists under any
of Borrower’s Servicing Contracts.

 

 

End
of Article 6

 

4

 

AFFIRMATIVE COVENANTS

 

As long as the Warehousing
Commitment is outstanding or there remain any Obligations to be paid or
performed under this Agreement or under any other Loan Document, Borrower must:

 

7.1.                            Payment of Obligations

 

Punctually pay or cause
to be paid all Obligations, including the Obligations payable under this
Agreement and under the Warehousing Note, in accordance with their terms.

 

7.2.                            Financial Statements

 

Deliver to Lender:

 

7.2
(a)                As
soon as available and in any event within 30 days after the end of each month,
including the last month of Borrower’s fiscal year, an interim statement of
income of Borrower (and, if applicable, Borrower’s Subsidiaries, on a
consolidated basis) for the immediately preceding month and for the period from
the beginning of the fiscal year to the end of that month, and the related
balance sheet as at the end of the immediately preceding month, all in
reasonable detail, subject, however, to year-end audit adjustments.

 

7.2
(b)               As
soon as available and in any event within 90 days after the end of each fiscal
year of Borrower, fiscal year-end statements of income, changes in stockholders’
equity and cash flow of Borrower (and, if applicable, Borrower’s Subsidiaries,
on a consolidated basis) for that year, and the related balance sheet as of the
end of that year (setting forth in comparative form the corresponding figures
for the preceding fiscal year), all in reasonable detail and accompanied by (1)
an opinion as to those financial statements in form and substance satisfactory
to Lender and prepared by independent certified public accountants of
recognized standing acceptable to Lender and (2) any management letters,
management reports or other supplementary comments or reports delivered by
those accountants to Borrower or its board of directors.

 

7.2
(c)                Together
with each delivery of financial statements required by this Section, a
Compliance Certificate substantially in the form of Exhibit E.

 

7.2
(d)               Copies
of all regular or periodic financial and other reports that Borrower files with
the Securities and Exchange Commission or any successor governmental agency or
other entity.

 

7.3.                            Other Borrower Reports

 

Deliver to Lender:

 

7.3 (a)                If Borrower has a
Servicing Portfolio, then as soon as available and in any event within 30 days
after the end of each month, a consolidated report (“Servicing Portfolio
Report”) as of the end of the month, as to all Mortgage Loans the servicing
rights to which are owned by Borrower (specified by investor type, recourse and
non-recourse) regardless of whether the Mortgage Loans are Pledged Loans. The
Servicing Portfolio Report must indicate which Mortgage Loans (1) are
current and in good standing, (2) are more than 30, 60 or 90 days past
due, (3) are the subject of pending bankruptcy or foreclosure

 

1

 

proceedings, or
(4) have been converted (through foreclosure or other proceedings in lieu
of foreclosure) into real estate owned by Borrower.

 

7.3
(b)               As
soon as available and in any event within 30 days after the end of each month,
a consolidated loan production report as of the end of that month, presenting
the total dollar volume and the number of Mortgage Loans originated and closed
or purchased during that month and for the fiscal year-to-date, specified by
property type and loan type.

 

7.3
(c)                As
soon as available and in any event within 30 days after the end of each month,
a commitment summary and pipeline report, substantially in the form of Exhibit
J, as of the end of that month.

 

7.3
(d)               Unless
the Funding Bank has previously provided Lender with a copy of the Funding
Bank’s monthly statement for the Check Disbursement Account, as soon as
available and in any event within 30 days after the end of each month, a copy
of that monthly statement.

 

7.3
(e)                Within
30 days after the end of each month, a report as of the end of that month
detailing all requests that Borrower repurchase Mortgage Loans from an Investor
or out of an Eligible Mortgage Pool for which Borrower has determined it is
legally obligated to honor pursuant to the applicable written agreements
between Borrower and the requesting party, including the status of each such
request and any indemnification or similar agreement to which Borrower is a
party in connection with any such request.

 

7.3
(f)                  Other
reports in respect of Pledged Assets, including copies of purchase
confirmations issued by Investors purchasing Pledged Loans from Borrower, in
such detail and at such times as Lender in its discretion may reasonably
request.

 

7.3
(g)               With
reasonable promptness, all further information regarding the business,
operations, properties or financial condition of Borrower as Lender may
reasonably request, including copies of any audits completed by HUD, Ginnie
Mae, Fannie Mae or Freddie Mac.

 

7.4.                            Maintenance of Existence; Conduct of Business

 

Preserve and maintain its
corporate existence in good standing and all of its rights, privileges,
licenses and franchises necessary or desirable in the normal conduct of its
business, including its eligibility as lender, seller/servicer and issuer
described under Section 9.1; conduct its business in an orderly and
efficient manner; maintain a net worth of acceptable assets as required for
maintaining Borrower’s eligibility as lender, seller/servicer and issuer
described under Section 9.1; and make no material change in the nature or
character of its business or engage in any business in which it was not engaged
on the date of this Agreement.

 

7.5.                            Compliance with Applicable Laws

 

Comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, a breach of which could result in a material adverse
change in Borrower’s business, operations, assets, or financial condition as a
whole or on the enforceability of this Agreement, the Warehousing Note, any
other Loan Document or any Collateral, except where contested in good faith and
by appropriate proceedings.

 

2

 

7.6.                            Inspection of Properties and Books; Operational
Reviews

 

Permit Lender or any
Participant (and their authorized representatives) to discuss the business,
operations, assets and financial condition of Borrower and its Subsidiaries
with Borrower’s officers, agents and employees, and to examine and make copies
or extracts of Borrower’s and its Subsidiaries’ books of account, all at such
reasonable times as Lender or any Participant may request. Provide its
accountants with a copy of this Agreement promptly after its execution and
authorize and instruct them to answer candidly all questions that the officers
of Lender or any Participant or any authorized representatives of Lender or any
Participant may address to them in reference to the financial condition or
affairs of Borrower and its Subsidiaries. Borrower may have its representatives
in attendance at any meetings held between the officers or other
representatives of Lender or any Participant and Borrower’s accountants under
this authorization. Permit Lender or any Participant (and their authorized
representatives) access to Borrower’s premises and records for the purpose of
conducting a review of Borrower’s general mortgage business methods, policies
and procedures, auditing its loan files and reviewing the financial and
operational aspects of Borrower’s business.

 

7.7.                            Notice

 

Give prompt Notice to
Lender of (a) any action, suit or proceeding instituted by or against
Borrower or any of its Subsidiaries in any federal or state court or before any
commission or other regulatory body (federal, state or local, domestic or
foreign), which action, suit or proceeding has at issue in excess of $250,000,
or any such proceedings threatened against Borrower or any of its Subsidiaries
in writing containing the details of that action, suit or proceeding;
(b) the filing, recording or assessment of any federal, state or local tax
Lien against Borrower, or any of its assets or any of its Subsidiaries;
(c) an Event of Default; (d) a Default that continues for more than 4
days; (e) the suspension, revocation or termination of Borrower’s
eligibility, in any respect, as lender, seller/servicer or issuer as described
under Section 9.1; (f) the transfer, loss, nonrenewal or termination
of any Servicing Contracts to which Borrower is a party, or which is held for
the benefit of Borrower, and the reason for that transfer, loss, nonrenewal or
termination; (g) any Prohibited Transaction with respect to any Plan,
specifying the nature of the Prohibited Transaction and what action Borrower
proposes to take with respect to it; and (h) any other action, event or
condition of any nature that could lead to or result in a material adverse
change in the business, operations, assets or financial condition of Borrower
or any of its Subsidiaries.

 

7.8.                            Payment of Debt, Taxes and Other Obligations

 

Pay, perform and
discharge, or cause to be paid, performed and discharged, all of the
obligations and indebtedness of Borrower and its Subsidiaries, all taxes, assessments
and governmental charges or levies imposed upon Borrower or its Subsidiaries or
upon their respective income, receipts or properties before those taxes,
assessments and governmental charges or levies become past due, and all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, could
become a Lien or charge upon any of their respective properties or assets.
Borrower and its Subsidiaries are not required to pay, however, any taxes,
assessments and governmental charges or levies or claims for labor, materials
or supplies for which Borrower or its Subsidiaries have obtained an adequate
bond or insurance or that are being contested in good faith and by proper
proceedings that are being reasonably and diligently pursued and for which
proper reserves have been created.

 

7.9.                            Insurance

 

Maintain blanket bond
coverage and errors and omissions insurance or mortgage impairment insurance,
with such companies and in such amounts as satisfy prevailing requirements

 

3

 

applicable to a lender,
seller/servicer and issuer described under Section 9.1, and liability
insurance and fire and other hazard insurance on its properties, in each case
with responsible insurance companies acceptable to Lender, in such amounts and
against such risks as is customarily carried by similar businesses operating in
the same location. Within 30 days after Notice from Lender, obtain such
additional insurance as Lender may reasonably require, all at the sole expense
of Borrower. Copies of such policies must be furnished to Lender without charge
upon request of Lender.

 

7.10.                     Closing Instructions

 

Indemnify and hold Lender
harmless from and against any loss, including reasonable attorneys’ fees and
costs, attributable to the failure of any title insurance company, agent or
attorney to comply with Borrower’s disbursement or instruction letter relating
to any Mortgage Loan. Lender has the right to pre-approve Borrower’s choice of
title insurance company, agent or attorney and Borrower’s disbursement or
instruction letter to them in any case in which Borrower intends to obtain a
Warehousing Advance against the Mortgage Loan to be created at settlement or to
pledge that Mortgage Loan as Collateral under this Agreement. In any event,
Borrower’s disbursement or instruction letter must include the following
language:

 

A warehouse lender has a
security interest in any amounts advanced by it to fund this mortgage loan and
in the mortgage loan funded with those amounts.  You must promptly return any amounts advanced by the warehouse
lender and not used to fund this mortgage loan.  If the mortgage loan does not close and disburse within 24 hours
of receipt of funds, the closing agent must contact MIT Lending and return the
wire to the warehouse lender from whom funds were delivered.  All funds wired are to be held in trust
until such time as the corresponding mortgage loan is recorded and funds are
disbursed.

 

7.11.                     Subordination of Certain Indebtedness

 

Cause any indebtedness of
Borrower for borrowed money to any shareholder, director, officer or Affiliate
of Borrower, which indebtedness has a term of more than 1 year or is in excess
of $25,000, to be subordinated to the Obligations by the execution and delivery
to Lender of a Subordination of Debt Agreement, on the form prescribed by
Lender, certified by the corporate secretary of Borrower to be true and
complete and in full force and effect.

 

7.12.                     Other Loan Obligations

 

Perform all material
obligations under the terms of each loan agreement, note, mortgage, security
agreement or debt instrument by which Borrower is bound or to which any of its
property is subject which involves obligations, in the aggregate, in excess of
$250,000, and promptly notify Lender in writing of a declared default under or
the termination, cancellation, reduction or nonrenewal of any of its other
lines of credit or agreements with any other lender. Exhibit F is a
true and complete list of all such lines of credit or agreements as of the date
of this Agreement. Borrower must give Lender at least 30 days Notice before
entering into any additional lines of credit or agreements with a commitment of
$1,000,000 or more.

 

7.13.                     ERISA

 

Maintain (and, if
applicable, cause each ERISA Affiliate to maintain) each Plan in compliance
with all material applicable requirements of ERISA and of the Internal Revenue
Code and with all applicable rulings and regulations issued under the
provisions of ERISA and of the Internal Revenue Code, and not (and, if
applicable, not permit any ERISA Affiliate to), (a) engage in any

 

4

 

transaction in connection
with which Borrower or any ERISA Affiliate would be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Internal Revenue Code, in either case in an amount
exceeding $25,000 or (b) fail to make full payment when due of all amounts
that, under the provisions of any Plan, Borrower or any ERISA Affiliate is
required to pay as contributions to that Plan, or permit to exist any
accumulated funding deficiency (as such term is defined in Section 302 of
ERISA and Section 412 of the Internal Revenue Code), whether or not
waived, with respect to any Plan in an aggregate amount exceeding $25,000.

 

7.14.                     Use of Proceeds of Warehousing Advances

 

Use the proceeds of each
Warehousing Advance solely for the purpose of funding Eligible Loans and
against the pledge of those Eligible Loans as Collateral.

 

 

End
of Article 7

 

5

 

NEGATIVE COVENANTS

 

As long as the Warehousing
Commitment is outstanding or there remain any Obligations to be paid or
performed, Borrower must not, either directly or indirectly, without the prior
written consent of Lender:

 

8.1.                            Contingent Liabilities

 

Assume, guarantee,
endorse or otherwise become contingently liable for the obligation of any
Person except by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business, and except for obligations
arising in connection with the sale of Mortgage Loans with recourse in the
ordinary course of Borrower’s business.

 

8.2.                            Pledge of Servicing Contracts

 

Pledge or grant a
security interest in any existing or future Servicing Contracts of Borrower other
than to Lender, or omit to take any action required to keep all of Borrower’s
Servicing Contracts in full force and effect.

 

8.3.                            Restrictions on Fundamental Changes

 

8.3 (a)                Consolidate, merge
or enter into any analogous reorganization or transaction with any Person.

 

8.3 (b)               Amend or otherwise
modify Borrower’s articles of incorporation or by-laws.

 

8.3 (c)                Liquidate, wind up
or dissolve (or suffer any liquidation or dissolution).

 

8.3
(d)               Cease
actively to engage in the business of originating or acquiring Mortgage Loans
or make any other material change in the nature or scope of the business in
which Borrower engages as of the date of this Agreement.

 

8.3
(e)                Sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one
transaction or a series of transactions) all or any substantial part of
Borrower’s business or assets, whether now owned or acquired after the Closing
Date, other than, in the ordinary course of business and to the extent not
otherwise prohibited by this Agreement, sales of (1) Mortgage Loans, (2)
Mortgage-backed Securities and (3) Servicing Contracts.

 

8.3
(f)                  Acquire
by purchase or in any other transaction all or substantially all of the
business or property of, or stock or other ownership interests of, any Person.

 

8.3
(g)               Permit
any Subsidiary of Borrower to do or take any of the foregoing actions.

 

8.4.                            Subsidiaries

 

Form or acquire, or
permit any Subsidiary of Borrower to form or acquire, any Person that would
thereby become a Subsidiary.

 

1

 

8.5.                            Deferral of Subordinated Debt

 

Pay any Subordinated Debt
of Borrower in advance of its stated maturity or, after a Default or Event of
Default under this Agreement has occurred, make any payment of any kind on any
Subordinated Debt of Borrower until all of the Obligations have been paid and
performed in full and any applicable preference period has expired.

 

8.6.                            Loss of Eligibility

 

Take any action that
would cause Borrower to lose all or any part of its status as an eligible
lender, seller/servicer or issuer as described under Section 9.1.

 

8.7.                            Accounting Changes

 

Make, or permit any
Subsidiary of Borrower to make, any significant change in accounting treatment
or reporting practices, except as required by GAAP, or change its fiscal year
or the fiscal year of any Subsidiary of Borrower.

 

8.8.                            Leverage Ratio

 

Permit Borrower’s
Leverage Ratio at any time to exceed 20 to 1.

 

8.9.                            Minimum Tangible Net Worth

 

Permit Borrower’s
Tangible Net Worth at any time to be less than $17,500,000.

 

8.10.                     Minimum Liquid Assets

 

Permit Borrower’s Liquid
Assets at any time to be less than $2,000,000.

 

8.11.                     Operating Losses

 

Permit Borrower (and its
Subsidiaries, on a consolidated basis) to have any calendar quarter of net
operating losses.

 

8.12.                     Distributions to Shareholders

 

Declare or pay any
dividends or otherwise declare or make any distribution to Borrower’s
shareholders (including any purchase or redemption of stock) if a Default or
Event of Default exists or would occur as a result of the dividend or
distribution.

 

8.13.                     Transactions with Affiliates

 

Excluding Permitted
Affiliate Transactions, directly or indirectly (a) make any loan, advance,
extension of credit or capital contribution to any of Borrower’s Affiliates,
(b) sell, transfer, pledge or assign any of its assets to or on behalf of
those Affiliates, (c) merge or consolidate with or purchase or acquire
assets from those Affiliates, or (d) pay management fees to or on behalf
of those Affiliates.

 

2

 

8.14.                     Recourse Servicing Contracts

 

Acquire or enter into
Servicing Contracts under which Borrower must repurchase or indemnify the
holder of the Mortgage Loans as a result of defaults on the Mortgage Loans at
any time during the term of those Mortgage Loans.

 

 

End
of Article 8

 

3

 

SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL

 

9.1.                            Special Representations and Warranties
Concerning Eligibility as Seller/Servicer of Mortgage Loans

 

Borrower represents and
warrants to Lender, as of the date of this Agreement and as of the date of each
Warehousing Advance Request and the making of each Warehousing Advance, that
Borrower is approved and qualified and in good standing as a lender,
seller/servicer or issuer, as set forth below, and meets all requirements
applicable to its status as:

 

9.1
(a)                A
HUD-approved mortgagee, eligible to originate, purchase, hold, sell and service
FHA fully insured Mortgage Loans.

 

9.1
(b)               A
Fannie Mae-approved seller/servicer of Mortgage Loans, eligible to originate,
purchase, hold, sell and service Mortgage Loans to be sold to Fannie Mae.

 

9.1
(c)                A
Freddie Mac-approved seller of Mortgage Loans, eligible to originate, purchase,
hold and sell Mortgage Loans to be sold to Freddie Mac.

 

9.1
(d)               A
VA-approved mortgagee and a lender in good-standing under the VA loan guarantee
program, eligible to originate, purchase, hold, sell and service VA-guaranteed
Mortgage Loans.

 

9.1
(e)                A
Lender-approved seller/servicer of Mortgage Loans, eligible to originate,
purchase, hold, sell and service Mortgage Loans to be sold to Lender.

 

9.2.                            Special Representations and Warranties
Concerning Warehousing Collateral

 

Borrower represents and
warrants to Lender, as of the date of this Agreement and as of the date of each
Warehousing Advance Request and the making of each Warehousing Advance, that:

 

9.2
(a)                Borrower
has not selected the Collateral in a manner so as to affect adversely Lender’s
interests.

 

9.2
(b)               Borrower
is the legal and equitable owner and holder, free and clear of all Liens (other
than Liens granted under this Agreement), of the Pledged Loans and the Pledged
Securities. All Pledged Loans, Pledged Securities and related Purchase
Commitments have been duly authorized and validly issued to Borrower, and all
of the foregoing items of Collateral comply with all of the requirements of
this Agreement, and have been and will continue to be validly pledged or
assigned to Lender, subject to no other Liens.

 

9.2
(c)                Borrower
has, and will continue to have, the full right, power and authority to pledge
the Collateral pledged and to be pledged by it under this Agreement.

 

9.2
(d)               Each
Mortgage Loan and each related document included in the Pledged Loans
(1) has been duly executed and delivered by the parties to that Mortgage
Loan and that related document, (2) has been made in compliance with all
applicable laws, rules and regulations (including all laws, rules and
regulations relating to usury), (3) is and will continue to be a legal,
valid and binding obligation, enforceable in accordance with its

 

1

 

terms, without setoff,
counterclaim or defense in favor of the mortgagor under the Mortgage Loan or
any other obligor on the Mortgage Note and (4) has not been modified,
amended or any requirements of which waived, except in writing that is part of
the Collateral Documents.

 

9.2
(e)                Each
Pledged Loan is secured by a Mortgage on real property and improvements located
in one of the states of the United States or the District of Columbia.

 

9.2
(f)                  Unless
Third Party Originated Loans are permitted, each Pledged Loan has been closed
or will be closed and funded with the Warehousing Advance made against it.

 

9.2
(g)               Except
for open-ended Second Mortgage Loans, each Mortgage Loan has been fully
advanced in the face amount of its Mortgage Note.

 

9.2
(h)               Each
First Mortgage Loan is secured by a First Mortgage on the real property and
improvements described in or covered by that Mortgage.

 

9.2
(i)                   Each
First Mortgage Loan has or will have a title insurance policy, in ALTA form or
equivalent, from a recognized title insurance company, insuring the priority of
the Lien of the Mortgage and meeting the usual requirements of Investors purchasing
those Mortgage Loans.

 

9.2
(j)                   Each
Second Mortgage Loan is secured by a Second Mortgage on the real property and
improvements described in or covered by that Mortgage.

 

9.2
(k)                To
the extent required by the related Purchase Commitment or by Investors
generally for similar Mortgage Loans, each Second Mortgage Loan has or will
have a title insurance policy, in ALTA form or equivalent, from a recognized
title insurance company, insuring the priority of the Lien of the Mortgage and
meeting the usual requirements of Investors purchasing those Mortgage Loans.

 

9.2
(l)                   Each
Mortgage Loan has been evaluated or appraised in accordance with Title XI
of FIRREA.

 

9.2
(m)             The
Mortgage Note for each Pledged Loan is (1) payable or endorsed to the order of
Borrower, (2) an “instrument” within the meaning of Article 9 of the
Uniform Commercial Code of all applicable jurisdictions and (3) is denominated
and payable in United States dollars.

 

9.2
(n)               No
default has existed for 60 days or more under any Mortgage Loan included in the
Pledged Loans.

 

9.2
(o)               No
party to a Mortgage Loan or any related document is in violation of any
applicable law, rule or regulation that would impair the collectibility of the
Mortgage Loan or the performance by the mortgagor or any other obligor of its
obligations under the Mortgage Note or any related document.

 

9.2
(p)               All
fire and casualty policies covering the real property and improvements
encumbered by each Mortgage included in the Pledged Loans (1) name and
will continue to name Borrower and its successors and assigns as the insured
under a standard mortgagee clause, (2) are and will continue to be in full
force and effect and (3) afford and will continue to afford insurance
against fire and such other risks as are usually insured against in the broad
form of extended coverage insurance generally available.

 

2

 

9.2
(q)               Pledged
Loans secured by real property and improvements located in a special flood
hazard area designated as such by the Director of the Federal Emergency
Management Agency are and will continue to be covered by special flood
insurance under the National Flood Insurance Program.

 

9.2
(r)                  Each
Pledged Loan against which a Warehousing Advance is made on the basis of a
Purchase Commitment meets all of the requirements of that Purchase Commitment,
and each Pledged Security against which a Warehousing Advance is outstanding
meets all of the requirements of the related Purchase Commitment.

 

9.2
(s)                Pledged
Loans that are intended to be exchanged for Agency Securities comply or, prior
to the issuance of the Agency Securities will comply, with the requirements of
any governmental instrumentality, department or agency issuing or guaranteeing
the Agency Securities.

 

9.2
(t)                  Pledged
Loans that are intended to be used in the formation of Mortgage-backed
Securities (other than Agency Securities) comply with the requirements of the
issuer of the Mortgage-backed Securities (or its sponsor) and of the Rating
Agencies.

 

9.2
(u)               The
original assignments of Mortgage delivered to Lender for each Pledged Loan are
in recordable form and comply with all applicable laws and regulations
governing the filing and recording of such documents.

 

9.2
(v)               None
of the mortgagors, guarantors or other obligors of any Pledged Loan is a Person
named in any Restriction List and to whom the provision of financial services
is prohibited or otherwise restricted by applicable law.

 

9.2
(w)             No
Pledged Loan delivered to Lender is a Discontinued Loan.

 

9.2
(x)                 Each
Pledged Loan secured by real property to which a Manufactured Home is affixed
will create a valid Lien on that Manufactured Home that will have priority over
any other Lien on the Manufactured Home, whether or not arising under
applicable real property law.

 

9.3.                            Special Affirmative Covenants Concerning
Warehousing Collateral

 

As long as the Warehousing
Commitment is outstanding or there remain any Obligations to be paid or
performed under this Agreement or under any other Loan Document, Borrower must:

 

9.3
(a)                Warrant
and defend the right, title and interest of Lender in and to the Collateral
against the claims and demands of all Persons.

 

9.3
(b)               Service
or cause to be serviced all Pledged Loans in accordance with the standard
requirements of the issuers of Purchase Commitments covering them and all
applicable HUD, Fannie Mae and Freddie Mac requirements, including taking all
actions necessary to enforce the obligations of the obligors under such
Mortgage Loans. Service or cause to be serviced all Mortgage Loans backing
Pledged Securities in accordance with applicable governmental requirements and
requirements of issuers of Purchase Commitments covering them. Hold all escrow
funds collected in respect of Pledged Loans and Mortgage Loans backing Pledged
Securities in trust, without commingling the same with non-custodial funds, and
apply them for the purposes for which those funds were collected.

 

3

 

9.3
(c)                Execute
and deliver to Lender with respect to the Collateral those further instruments
of sale, pledge, assignment or transfer, and those powers of attorney, as
required by Lender, and do and perform all matters and things necessary or
desirable to be done or observed, for the purpose of effectively creating,
maintaining and preserving the security and benefits intended to be afforded
Lender under this Agreement.

 

9.3
(d)               Notify
Lender within 2 Business Days of any default under, or of the termination of,
any Purchase Commitment relating to any Pledged Loan, Eligible Mortgage Pool,
or Pledged Security.

 

9.3
(e)                Promptly
comply in all respects with the terms and conditions of all Purchase
Commitments, and all extensions, renewals and modifications or substitutions of
or to all Purchase Commitments. Deliver or cause to be delivered to the
Investor the Pledged Loans and Pledged Securities to be sold under each
Purchase Commitment not later than the mandatory delivery date of the Pledged
Loans or Pledged Securities under the Purchase Commitment.

 

9.3
(f)                  Compare
the names of every mortgagor, guarantor and other obligor of every Mortgage
Loan, together with appropriate identifying information concerning those
Persons obtained by Borrower, against every Restriction List, and make certain
that none of the mortgagors, guarantors or other obligors of any Mortgage Loan
is a Person named in any Restriction List and to whom the provision of
financial services is prohibited or otherwise restricted by applicable law.

 

9.3
(g)               Prior
to the origination by Borrower of any Mortgage Loans for sale to Fannie Mae,
enter into an agreement among Borrower, Lender and Fannie Mae, pursuant to
which Fannie Mae agrees to send all cash proceeds of Mortgage Loans sold by
Borrower to Fannie Mae to the Cash Collateral Account.

 

9.3
(h)               Prior
to the origination by Borrower of any Mortgage Loan to be registered on the
MERS system, obtain the approval of Lender and enter into an Electronic
Tracking Agreement.

 

9.4.                            Special Negative Covenants Concerning Warehousing
Collateral

 

As long as the Warehousing
Commitment is outstanding or there remain any Obligations to be paid or
performed, Borrower must not, either directly or indirectly, without the prior
written consent of Lender:

 

9.4
(a)                Amend
or modify, or waive any of the terms and conditions of, or settle or compromise
any claim in respect of, any Pledged Loans or Pledged Securities.

 

9.4
(b)               Sell,
transfer or assign, or grant any option with respect to, or pledge (except
under this Agreement and, with respect to each Pledged Loan or Pledged
Security, the related Purchase Commitment) any of the Collateral or any
interest in any of the Collateral.

 

9.4
(c)                Make
any compromise, adjustment or settlement in respect of any of the Collateral or
accept other than cash in payment or liquidation of the Collateral.

 

 

End
of Article 9

 

4

 

DEFAULTS; REMEDIES

 

10.1.                     Events of Default

 

The occurrence of any of
the following is an event of default (“Event of Default”):

 

	
  10.1 (a)

  	
  Borrower fails to pay
  the principal of any Warehousing Advance when due, whether at stated
  maturity, by acceleration, or otherwise; or fails to pay any installment of
  interest on any Warehousing Advance within 9 days after the date of Lender’s
  invoice or, if applicable, within 2 days after the date of Lender’s account
  analysis statement; or fails to pay, within any applicable grace period, any
  other amount due under this Agreement or any other Obligation of Borrower to
  Lender.

  
	
   

  	
   

  
	
  10.1 (b)

  	
  Borrower or any of its
  Subsidiaries fails to pay, or defaults in the payment of any principal or
  interest on, any other indebtedness or any contingent obligation within any
  applicable grace period; breaches or defaults with respect to any other
  material term of any other indebtedness or of any loan agreement, mortgage, indenture
  or other agreement relating to that indebtedness, if the effect of that
  breach or default is to cause, or to permit the holder or holders of that
  indebtedness (or a trustee on behalf of such holder or holders) to cause,
  indebtedness of Borrower or its Subsidiaries in the aggregate amount of $50,000
  or more to become or be declared due before its stated maturity (upon the
  giving or receiving of notice, lapse of time, both, or otherwise).

  
	
   

  	
   

  
	
  10.1 (c)

  	
  Borrower fails to
  perform or comply with any term or condition applicable to it contained in
  Sections 7.4 or 7.14 or in any Section of Article 8.

  
	
   

  	
   

  
	
  10.1 (d)

  	
  Any representation or
  warranty made or deemed made by Borrower under this Agreement, in any other
  Loan Document or in any written statement or certificate at any time given by
  Borrower, other than the representations and warranties set forth in
  Article 9 with respect to specific Pledged Loans, is inaccurate or
  incomplete in any material respect on the date as of which it is made or
  deemed made.

  
	
   

  	
   

  
	
  10.1 (e)

  	
  Borrower defaults in
  the performance of or compliance with any term contained in this Agreement or
  any other Loan Document other than those referred to in Sections 10.1(a),
  10.1(c) or 10.1(d) and such default has not been remedied or waived within 30
  days after the earliest of (1) receipt by Borrower of Notice from Lender
  of that default, (2) receipt by Lender of Notice from Borrower of that
  default or (3) the date Borrower should have notified Lender of that
  default under Section 7.7(c) or 7.7(d).

  
	
   

  	
   

  
	
  10.1 (f)

  	
  An “event of default”
  (however defined) occurs under any agreement between Borrower and Lender
  other than this Agreement and the other Loan Documents.

  
	
   

  	
   

  
	
  10.1 (g)

  	
  A case (whether
  voluntary or involuntary) is filed by or against Borrower or any
  Subsidiary  of Borrower  under any applicable bankruptcy,
  insolvency or other similar federal or state law; or a court of competent
  jurisdiction appoints a receiver (interim or permanent), liquidator,
  sequestrator, trustee, custodian or other officer having similar powers over
  Borrower or any Subsidiary of Borrower, or over all or a substantial part of
  their respective properties or assets; or Borrower or any Subsidiary of
  Borrower (1) consents to the appointment of or possession by a receiver
  (interim or permanent), liquidator, sequestrator, trustee, custodian or other
  officer having similar powers over Borrower or any Subsidiary of Borrower, or
  over all or a substantial part of their

  

 

1

 

	
   

  	
  respective properties
  or assets, (2) makes an assignment for the benefit of creditors, or
  (3) fails, or admits in writing its inability, to pay its debts as those
  debts become due.

  
	
   

  	
   

  
	
  10.1 (h)

  	
  Borrower fails to
  repurchase Mortgage Loans for which Borrower has determined it is legally
  obligated to repurchase pursuant to the applicable written agreements with
  respect to any such Mortgage Loans, if such obligations in the aggregate
  exceed $500,000.

  
	
   

  	
   

  
	
  10.1 (i)

  	
  Any money judgment,
  writ or warrant of attachment or similar process involving an amount in
  excess of $250,000 is entered or filed against Borrower or any of its
  Subsidiaries or any of their respective assets and remains undischarged,
  unvacated, unbonded or unstayed for a period of 30 days or 5 days before the
  date of any proposed sale under that money judgment, writ or warrant of
  attachment or similar process.

  
	
   

  	
   

  
	
  10.1 (j)

  	
  Any order, judgment or
  decree decreeing the dissolution of Borrower is entered and remains
  undischarged or unstayed for a period of 20 days.

  
	
   

  	
   

  
	
  10.1 (k)

  	
  Borrower purports to
  disavow the Obligations or contests the validity or enforceability of any
  Loan Document.

  
	
   

  	
   

  
	
  10.1 (l)

  	
  Lender’s security
  interest on any portion of the Collateral becomes unenforceable or otherwise
  impaired.

  
	
   

  	
   

  
	
  10.1 (m)

  	
  A material adverse
  change occurs in Borrower’s financial condition, business, properties,
  operations or prospects, or in Borrower’s ability to repay the Obligations.

  
	
   

  	
   

  
	
  10.1 (n)

  	
  Any Lien for any taxes,
  assessments or other governmental charges (1) is filed against Borrower
  or any of its property, or is otherwise enforced against Borrower or any of
  its property, or (2) obtains priority that is equal to or greater than
  the priority of Lender’s security interest in any of the Collateral.

  
	
   

  	
   

  
	
  10.1 (o)

  	
  Larry Lewis ceases to
  be the Chief Operating Officer of Borrower, unless a successor acceptable to
  Lender in its sole discretion has been appointed Chief Operating Officer of
  Borrower within 60 days of the date on which Larry Lewis ceases to be the
  Chief Operating Officer of Borrower.

  
	
   

  	
   

  
	
  10.2.

  	
  Remedies

  
	
   

  	
   

  
	
  10.2 (a)

  	
  If an Event of Default
  described in Section 10.1(g) occurs with respect to Borrower, the Warehousing
  Commitment will automatically terminate and the unpaid principal amount of
  and accrued interest on the Warehousing Note and all other Obligations will
  automatically become due and payable, without presentment, demand or other
  Notice or requirements of any kind, all of which Borrower expressly waives.

  
	
   

  	
   

  
	
  10.2 (b)

  	
  If any other Event of
  Default occurs, Lender may, by Notice to Borrower, terminate the Warehousing
  Commitment and declare the Obligations to be immediately due and payable.

  
	
   

  	
   

  
	
  10.2 (c)

  	
  If any Event of Default
  occurs, Lender may also take any of the following actions:

  
	
   

  
	
   

  	
  (1)                                  Foreclose
  upon or otherwise enforce its security interest in any Lien on the Collateral
  to secure all payments and performance of the Obligations in any manner
  permitted by law or provided for in the Loan Documents.

  
			

 

2

 

	
   

  	
  (2)                                  Notify
  all obligors under any of the Collateral that the Collateral has been
  assigned to Lender (or to another Person designated by Lender) and that all
  payments on that Collateral are to be made directly to Lender (or such other
  Person); settle, compromise or release, in whole or in part, any amounts any
  obligor or Investor owes on any of the Collateral on terms acceptable to
  Lender; enforce payment and prosecute any action or proceeding involving any
  of the Collateral; and where any Collateral is in default, foreclose on and
  enforce any Liens securing that Collateral in any manner permitted by law and
  sell any property acquired as a result of those enforcement actions.

  
	
   

  	
   

  
	
   

  	
  (3)                                  Prepare
  and submit for filing Uniform Commercial Code amendment statements evidencing
  the assignment to Lender or its designee of any Uniform Commercial Code
  financing statement filed in connection with any item of Collateral.

  
	
   

  	
   

  
	
   

  	
  (4)                                  Act,
  or contract with a third party to act, at Borrower’s expense, as servicer or
  subservicer of Collateral requiring servicing, and perform all obligations
  required under any Collateral, including Servicing Contracts and Purchase
  Commitments.

  
	
   

  	
   

  
	
   

  	
  (5)                                  Require
  Borrower to assemble and make available to Lender the Collateral and all
  related books and records at a place designated by Lender.

  
	
   

  	
   

  
	
   

  	
  (6)                                  Enter
  onto property where any Collateral or related books and records are located
  and take possession of those items with or without judicial process; and
  obtain access to Borrower’s data processing equipment, computer hardware and
  software relating to the Collateral and use all of the foregoing and the
  information contained in the foregoing in any manner Lender deems necessary
  for the purpose of effectuating its rights under this Agreement and any other
  Loan Document.

  
	
   

  	
   

  
	
   

  	
  (7)                                  Before
  the disposition of the Collateral, prepare it for disposition in any manner
  and to the extent Lender deems appropriate.

  
	
   

  	
   

  
	
   

  	
  (8)                                  Exercise
  all rights and remedies of a secured creditor under the Uniform Commercial
  Code of Minnesota or other applicable law, including selling or otherwise
  disposing of all or any portion of the Collateral at one or more public or
  private sales, whether or not the Collateral is present at the place of sale,
  for cash or credit or future delivery, on terms and conditions and in the
  manner as Lender may determine, including sale under any applicable Purchase
  Commitment. Borrower waives any right it may have to prior notice of the sale
  of all or any portion of the Collateral to the extent allowed by applicable
  law. If notice is required under applicable law, Lender will give Borrower
  not less than 10 days’ notice of any public sale or of the date after which
  any private sale may be held. Borrower agrees that 10 days’ notice is
  reasonable notice. Lender may, without notice or publication, adjourn any
  public or private sale one or more times by announcement at the time and
  place fixed for the sale, and the sale may be held at any time or place
  announced at the adjournment. In the case of a sale of all or any portion of the
  Collateral on credit or for future delivery, the Collateral sold on those
  terms may be retained by Lender until the purchaser pays the selling price or
  takes possession of the Collateral. Lender has no liability to Borrower if a
  purchaser fails to pay for or take possession of Collateral sold on those
  terms, and in the case of any such failure, Lender may sell the Collateral
  again upon notice complying with this Section.

  
	
   

  	
   

  
	
   

  	
  (9)                                  Instead
  of or in conjunction with exercising the power of sale authorized by
  Section 10.2(c)(8), Lender may proceed by suit at law or in equity to
  collect all amounts due on the Collateral, or to foreclose Lender’s Lien on
  and sell all or any portion of the Collateral pursuant to a judgment or
  decree of a court of competent jurisdiction.

  

 

3

 

	
   

  	
  (10)                            Proceed
  against Borrower on the Warehousing Note.

  
	
   

  	
   

  
	
   

  	
  (11)                            Retain
  all excess proceeds from the sale or other disposition of the Collateral, and
  apply them to the payment of the Obligations under Section 10.3.

  

 

	
  10.2 (d)

  	
  Lender will incur no
  liability as a result of the commercially reasonable sale or other
  disposition of all or any portion of the Collateral at any public or private
  sale or other disposition. Borrower waives (to the extent permitted by law)
  any claims it may have against Lender arising by reason of the fact that the
  price at which the Collateral may have been sold at a private sale was less
  than the price that Lender might have obtained at a public sale, or was less
  than the aggregate amount of the outstanding Warehousing Advances, accrued
  and unpaid interest on those Warehousing Advances, and unpaid fees, even if
  Lender accepts the first offer received and does not offer the Collateral to
  more than one offeree. Borrower agrees that any sale of Collateral under the
  terms of a Purchase Commitment, or any other disposition of Collateral
  arranged by Borrower, whether before or after the occurrence of an Event of
  Default, will be deemed to have been made in a commercially reasonable
  manner.

  
	
   

  	
   

  
	
  10.2 (e)

  	
  Borrower acknowledges
  that Mortgage Loans are collateral of a type that is the subject of widely
  distributed standard price quotations and that Mortgage-backed Securities are
  collateral of a type that is customarily sold on a recognized market.
  Borrower waives any right it may have to prior notice of the sale of Pledged
  Securities, and agrees that Lender may purchase Pledged Loans and Pledged
  Securities at a private sale of such Collateral.

  
	
   

  	
   

  
	
  10.2 (f)

  	
  Borrower specifically
  waives and releases (to the extent permitted by law) any equity or right of
  redemption, stay or appraisal that Borrower has or may have under any rule of
  law or statute now existing or adopted after the date of this Agreement, and
  any right to require Lender to (1) proceed against any Person,
  (2) proceed against or exhaust any of the Collateral or pursue its
  rights and remedies against the Collateral in any particular order, or
  (3) pursue any other remedy within its power. Lender is not required to
  take any action to preserve any rights of Borrower against holders of
  mortgages having priority to the Lien of any Mortgage or Security Agreement
  included in the Collateral or to preserve Borrower’s rights against other
  prior parties.

  
	
   

  	
   

  
	
  10.2 (g)

  	
  Lender may, but is not
  obligated to, advance any sums or do any act or thing necessary to uphold or
  enforce the Lien and priority of, or the security intended to be afforded by,
  any Mortgage or Security Agreement included in the Collateral, including
  payment of delinquent taxes or assessments and insurance premiums. All
  advances, charges, costs and expenses, including reasonable attorneys’ fees
  and disbursements, incurred or paid by Lender in exercising any right, power
  or remedy conferred by this Agreement, or in the enforcement of this
  Agreement, together with interest on those amounts at the Default Rate, from
  the time paid by Lender until repaid by Borrower, are deemed to be principal
  outstanding under this Agreement and the Warehousing Note.

  
	
   

  	
   

  
	
  10.2 (h)

  	
  No failure or delay on
  the part of Lender to exercise any right, power or remedy provided in this
  Agreement or under any other Loan Document, at law or in equity, will operate
  as a waiver of that right, power or remedy. No single or partial exercise by
  Lender of any right, power or remedy provided under this Agreement or any
  other Loan Document, at law or in equity, precludes any other or further
  exercise of that right, power, or remedy by Lender, or Lender’s exercise of
  any other right, power or remedy. Without limiting the foregoing, Borrower
  waives all defenses based on the statute of limitations to the extent
  permitted by law. The remedies provided in this Agreement and the other Loan

  

 

4

 

	
   

  	
  Documents are
  cumulative and are not exclusive of any remedies provided at law or in
  equity.

  
	
   

  	
   

  
	
  10.2 (i)

  	
  Borrower grants Lender
  a license or other right to use, without charge, Borrower’s computer
  programs, other programs, labels, patents, copyrights, rights of use of any
  name, trade secrets, trade names, trademarks, service marks and advertising
  matter, or any property of a similar nature, as it pertains to the
  Collateral, in advertising for sale and selling any of the Collateral and
  Borrower’s rights under all licenses and all other agreements related to the
  foregoing inure to Lender’s benefit until the Obligations are paid in full.

  

 

10.3.                     Application of Proceeds

 

Lender may apply the
proceeds of any sale, disposition or other enforcement of Lender’s Lien on all
or any portion of the Collateral to the payment of the Obligations in the order
Lender determines in its sole discretion. From and after the indefeasible
payment to Lender of all of the Obligations, any remaining proceeds of the
Collateral will be paid to Borrower, or to its successors or assigns, or as a
court of competent jurisdiction may direct. If the proceeds of any sale,
disposition or other enforcement of the Collateral are insufficient to cover
the costs and expenses of that sale, disposition or other enforcement and
payment in full of all Obligations, Borrower is liable for the deficiency.

 

10.4.                     Lender Appointed Attorney-in-Fact

 

Borrower appoints Lender
its attorney-in-fact, with full power of substitution, for the purpose of
carrying out the provisions of this Agreement, the Warehousing Note and the
other Loan Documents and taking any action and executing any instruments that
Lender deems necessary or advisable to accomplish that purpose. Borrower’s
appointment of Lender as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, Lender may give
notice of its Lien on the Collateral to any Person, either in Borrower’s name
or in its own name, endorse all Pledged Loans or Pledged Securities payable to
the order of Borrower, change or cause to be changed the book-entry
registration or name of subscriber or Investor on any Pledged Security, prepare
and submit for filing Uniform Commercial Code amendment statements with respect
to any Uniform Commercial Code financing statements filed in connection with
any item of Collateral  or receive,
endorse and collect all checks made payable to the order of Borrower
representing payment on account of the principal of or interest on, or the
proceeds of sale of, any of the Pledged Loans or Pledged Securities and give
full discharge for those transactions.

 

10.5.                     Right of Set-Off

 

If Borrower defaults in
the payment of any Obligation or in the performance of any of its duties under
the Loan Documents, Lender may, without Notice to or demand on Borrower (which
Notice or demand Borrower expressly waives), set-off, appropriate or apply any
property of Borrower held at any time by Lender, or any indebtedness at any
time owed by Lender to or for the account of Borrower, against the Obligations,
whether or not those Obligations have matured.

 

 

End
of Article 10

 

5

 

MISCELLANEOUS

 

11.1.                     Notices

 

Except where telephonic
or facsimile notice is expressly authorized by this Agreement, all
communications required or permitted to be given or made under this Agreement
(“Notices”) must be in writing and must be sent by manual delivery,
overnight courier or United States mail (postage prepaid), addressed as follows
(or at such other address as may be designated by it in a Notice to the other):

 

	
  If to Borrower:

  	
   

  	
  MORTGAGEIT, INC.

  33 Maiden Lane

  New York, NY  10038

  Attention: Larry Lewis, Chief Operating Officer

  Facsimile: (212) 651-4691

  
	
   

  	
   

  	
   

  
	
  If to Lender:

  	
   

  	
  Residential Funding
  Corporation

  7501 Wisconsin Avenue

  Bethesda, MD  20814

  Attention: Jason Mitchell, Director

  Facsimile: (301) 215-6288

  

 

All periods of Notice
will be measured from the date of delivery if delivered manually or by
facsimile, from the first Business Day after the date of sending if sent by
overnight courier or from 4 days after the date of mailing if sent by United
States mail, except that Notices to Lender under Article 2 and
Section 3.3(f) shall be deemed to have been given only when actually
received by Lender. Borrower authorizes Lender to accept Borrower’s bailee
pledge agreements,  Warehousing Advance
Requests, shipping requests, wire transfer instructions and security delivery
instructions transmitted to Lender by facsimile or RFConnects Delivery, and
those documents, when transmitted to Lender by facsimile or by RFConnects
Delivery, have the same force and effect as the originals.

 

11.2.                     Reimbursement Of Expenses; Indemnity

 

Borrower must:
(a) pay Lender a document production fee in connection with the
preparation and negotiation of this Agreement in an aggregate amount not to
exceed $25,000 at any time; (b) pay such additional documentation
production fees as Lender may require and all out-of-pocket costs and expenses
of Lender, including reasonable fees, service charges and disbursements of counsel
to Lender (including allocated costs of internal counsel), in connection with
the amendment, enforcement and administration of this Agreement, the Warehousing
Note, and other Loan Documents, the making, repayment and payment of interest
on the Warehousing Advances and the payment of all other Obligations under Loan
Documents; (c) indemnify, pay, and hold harmless Lender and any other
holder of the Warehousing Note from and against, all present and future stamp,
documentary and other similar taxes with respect to the foregoing matters and
save Lender and any other holder of the Warehousing Note harmless from and
against all liabilities with respect to or resulting from any delay or omission
to pay such taxes; and (d) indemnify, pay and hold harmless Lender and all
of its Affiliates, officers, directors, employees or agents and any subsequent
holder of the Warehousing Note (collectively called the “Indemnitees”)
from and against all liabilities, obligations, losses, damages, penalties,
judgments, suits, costs, expenses and disbursements of every kind or
nature  (including the reasonable fees
and disbursements of counsel to the Indemnitees (including allocated costs of
internal counsel) in connection with any investigative, administrative or
judicial proceeding, whether or not the

 

1

 

Indemnitees have been
designated as parties to such proceeding) that may be imposed upon, incurred by
or asserted against such Indemnitees in any manner relating to or arising out
of this Agreement, the Warehousing Note, or any other Loan Document or any of
the transactions contemplated by this Agreement, the Warehousing Note and the
other Loan Documents, including against all liabilities, obligations, losses,
damages, penalties, judgments, suits, costs, expenses and disbursements of
every kind or nature (including the reasonable fees and disbursements of
counsel to the Indemnitees (including allocated costs of internal counsel) in
connection with any investigative, administrative or judicial proceeding,
whether or not the Indemnitees have been designated as parties to such
proceeding) arising from any breach of Sections 9.2(v) or 9.3(f) or the making
of any Mortgage Loan in which any mortgagor, guarantor or other obligor is a Person
named in any Restriction List and to whom the provision of financial services
is prohibited or otherwise restricted by applicable law (“Indemnified
Liabilities”), except that Borrower has no obligation under this Agreement
with respect to Indemnified Liabilities arising from the gross negligence or
willful misconduct of any such Indemnitees. To the extent that the undertaking
to indemnify, pay and hold harmless as set forth in the preceding sentence may
be unenforceable because it is violative of any law or public policy, Borrower
must contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them. The agreement of Borrower
contained in this Article survives the expiration or termination of this
Agreement and the payment in full of the Warehousing Note. Attorneys’ fees and
disbursements incurred in enforcing, or on appeal from, a judgment under this
Agreement are recoverable separately from and in addition to any other amount
included in such judgment, and this clause is intended to be severable from the
other provisions of this Agreement and to survive and not be merged into such
judgment.

 

11.3.                     Financial Information

 

All financial statements
and reports furnished to Lender under this Agreement must be prepared in
accordance with GAAP, applied on a basis consistent with that applied in
preparing the financial statements as at the end of and for Borrower’s most
recent fiscal year (except to the extent otherwise required to conform to good
accounting practice).

 

11.4.                     Terms Binding Upon Successors; Survival of
Representations

 

The terms and provisions
of this Agreement are binding upon and inure to the benefit of Borrower, Lender
and their respective successors and assigns. All of Borrower’s representations,
warranties, covenants and agreements survive the making of any Warehousing
Advance, and except where a longer period is set forth in this Agreement,
remain effective for as long as the Warehousing Commitment is outstanding or
there remain any Obligations to be paid or performed.

 

11.5.                     Assignment

 

Borrower cannot assign
this Agreement. Lender may at any time, without Notice to or the consent of
Borrower, transfer or assign, in whole or in part, its interest in this
Agreement and the Warehousing Note along with Lender’s security interest in any
of the Collateral, and any assignee of Lender may enforce this Agreement, the Warehousing
Note and its security interest in the Collateral assigned.

 

2

 

11.6.                     Amendments

 

Except as otherwise
provided in this Agreement, this Agreement may not be amended, modified or
supplemented unless the amendment, modification or supplement is set forth in
writing signed by both Borrower and Lender.

 

11.7.                     Governing Law

 

This Agreement and the
other Loan Documents are governed by the laws of the State of Minnesota,
without reference to its principles of conflicts of laws.

 

11.8.                     Participations

 

Lender may at any time
sell, assign or grant participations in, or otherwise transfer to any other
Person (“Participant”), all or part of the Obligations. Without limiting
Lender’s exclusive right to collect and enforce the Obligations, Borrower
agrees that each participation will give rise to a debtor-creditor relationship
between Borrower and the Participant, and Borrower authorizes each Participant,
upon the occurrence of an Event of Default, to proceed directly by right of
setoff, banker’s lien, or otherwise, against any assets of Borrower that may be
held by that Participant. Borrower authorizes Lender to disclose to prospective
and actual Participants all information in Lender’s possession concerning
Borrower, this Agreement and the Collateral.

 

11.9.                     Relationship of the Parties

 

This Agreement provides
for the making and repayment of Warehousing Advances by Lender (in its capacity
as a lender) and Borrower (in its capacity as a borrower), for the payment of
interest on those Warehousing Advances and for the payment of certain fees by
Borrower to Lender. The relationship between Lender and Borrower is limited to
that of creditor and secured party on the part of Lender and of debtor on the
part of Borrower. The provisions of this Agreement and the other Loan Documents
for compliance with financial covenants and the delivery of financial
statements and other operating reports are intended solely for the benefit of
Lender to protect its interest as a creditor and secured party. Nothing in this
Agreement creates or may be construed as permitting or obligating Lender to act
as a financial or business advisor or consultant to Borrower, as permitting or
obligating Lender to control Borrower or to conduct Borrower’s operations, as
creating any fiduciary obligation on the part of Lender to Borrower, or as
creating any joint venture, agency, partnership or other relationship between
Lender and Borrower other than as explicitly and specifically stated in the
Loan Documents. Borrower acknowledges that it has had the opportunity to obtain
the advice of experienced counsel of its own choice in connection with the
negotiation and execution of the Loan Documents and to obtain the advice of
that counsel with respect to all matters contained in the Loan Documents,
including the waivers of jury trial and of punitive, consequential, special or
indirect damages contained in Sections 11.16 and 11.17, respectively.  Borrower further acknowledges that it is
experienced with respect to financial and credit matters and has made its own
independent decisions to apply to Lender for credit and to execute and deliver
this Agreement.

 

11.10.              Severability

 

If any provision of this
Agreement is declared to be illegal or unenforceable in any respect, that
provision is null and void and of no force and effect to the extent of the
illegality or unenforceability, and does not affect the validity or
enforceability of any other provision of the Agreement.

 

3

 

11.11.              Consent
to Credit References

 

Borrower consents to the
disclosure of information regarding Borrower and its Subsidiaries and their
relationships with Lender to Persons making credit inquiries to Lender. This
consent is revocable by Borrower at any time upon Notice to Lender as provided
in Section 11.1.

 

11.12.              Counterparts

 

This Agreement may be
executed in any number of counterparts, each of which will be deemed an
original, but all of which together constitute but one and the same instrument.

 

11.13.              Headings/Captions

 

The captions or headings
in this Agreement and the other Loan Documents are for convenience only and in
no way define, limit or describe the scope or intent of any provision of this
Agreement or any other Loan Document.

 

11.14.              Entire
Agreement

 

This Agreement, the Warehousing
Note and the other Loan Documents represent the final agreement among the
parties with respect to their subject matter, and may not be contradicted by
evidence of prior or contemporaneous oral agreements among the parties. There
are no oral agreements among the parties with respect to the subject matter of
this Agreement, the Warehousing Note and the other Loan Documents.

 

11.15.              Consent to Jurisdiction

 

AT THE OPTION OF LENDER,
THIS AGREEMENT, THE WAREHOUSING NOTE AND THE OTHER LOAN DOCUMENTS MAY BE
ENFORCED IN ANY STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA. BORROWER
CONSENTS TO THE JURISDICTION AND VENUE OF THOSE COURTS, AND WAIVES ANY
OBJECTION TO THE JURISDICTION OR VENUE OF THOSE COURTS, INCLUDING THE OBJECTION
THAT VENUE IN THOSE COURTS IS NOT CONVENIENT. ANY SUCH SUIT, ACTION OR
PROCEEDING MAY BE COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON BORROWER
BY FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO BORROWER AT ITS ADDRESS LAST KNOWN TO LENDER. BORROWER’S CONSENT
AND AGREEMENT UNDER THIS SECTION DOES NOT AFFECT LENDER’S RIGHT TO
ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER
JURISDICTION OR COURT. IN THE EVENT BORROWER COMMENCES ANY ACTION IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, LENDER AT ITS OPTION MAY HAVE THE CASE TRANSFERRED TO A STATE OR
FEDERAL COURT WITHIN THE STATE OF MINNESOTA OR, IF A TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, MAY HAVE BORROWER’S ACTION DISMISSED WITHOUT
PREJUDICE.

 

11.16.              Waiver of Jury Trial

 

BORROWER AND LENDER EACH
PROMISES AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT
BY A JURY, AND FULLY WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY
SUCH RIGHT NOW EXISTS OR ARISES AFTER THE DATE OF THIS AGREEMENT. THIS WAIVER
OF THE RIGHT TO TRIAL BY JURY IS

 

4

 

SEPARATELY GIVEN,
KNOWINGLY AND VOLUNTARILY, BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO TRIAL BY JURY WOULD
OTHERWISE APPLY. LENDER AND BORROWER ARE EACH AUTHORIZED AND DIRECTED TO SUBMIT
THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO
TRIAL BY JURY. FURTHER, BORROWER AND LENDER EACH CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE OTHER PARTY, INCLUDING THE OTHER PARTY’S
COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF ITS REPRESENTATIVES
OR AGENTS THAT THE OTHER PARTY WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
TRIAL BY JURY.

 

11.17.              Waiver of
Punitive, Consequential, Special or Indirect Damages

 

BORROWER WAIVES ANY RIGHT
IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES FROM
LENDER OR ANY OF LENDER’S AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH
RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY BORROWER AGAINST LENDER OR ANY OF LENDER’S AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY MATTER ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.  THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN
BY BORROWER, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR
WHICH THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES
WOULD OTHERWISE APPLY.  LENDER IS
AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS
CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES.

 

 

End
of Article 11

 

5

 

DEFINITIONS

 

12.1.                     Defined Terms

 

Capitalized terms defined
below or elsewhere in this Agreement have the following meanings or, as
applicable, the meanings given to those terms in Exhibits to this Agreement:

 

“Accrual Basis”
has the meaning set forth in Section 3.1(c).

 

“Advance Rate”
means, with respect to any Eligible Loan, the Advance Rate set forth in Exhibit H
for that type of Eligible Loan.

 

“Affiliate” means,
when used with reference to any Person, (a) each Person that, directly or
indirectly, controls, is controlled by or is under common control with, the
Person referred to, (b) each Person that beneficially owns or holds,
directly or indirectly, 5% or more of any class of voting Equity Interests of
the Person referred to, (c) each Person, 5% or more of the voting Equity
Interests of which is beneficially owned or held, directly or indirectly, by
the Person referred to, and (d) each of such Person’s officers, directors,
joint venturers and partners.  For these
purposes, the term “control” (including the terms “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of the
Person in question.

 

“Aged Mortgage Loans”
means Mortgage Loans against which a Warehousing Advance has been outstanding
for longer than the Standard Warehouse Period, provided that Aged Mortgage
Loans are permitted for such type of Mortgage Loan.

 

“Aged Warehouse Period”
means the maximum number of days a Warehouse Advance against Aged Mortgage
Loans of a particular type may remain outstanding as set forth in Exhibit H.

 

“Agency Security”
means a Mortgage-backed Security issued or guaranteed by Fannie Mae, Freddie
Mac or Ginnie Mae.

 

“Agreement” means
this Warehousing Credit and Security Agreement, either as originally executed
or as it may be amended, restated, renewed or replaced.

 

“Appraised Property
Value” means with respect to an interest in real property, the then current
fair market value of the real property and any improvements on it as of recent
date determined in accordance with Title XI of FIRREA by a qualified
appraiser who is a member of the American Institute of Real Estate Appraisers
or other group of professional appraisers.

 

“Approved Custodian”
means a pool custodian or other Person that Lender deems acceptable, in its
sole discretion, to hold Mortgage Loans for inclusion in a Mortgage Pool or to
hold Mortgage Loans as agent for an Investor that has issued a Purchase
Commitment for those Mortgage Loans.

 

“Audited Statement
Date” means the date of Borrower’s most recent audited financial statements
(and, if applicable, Borrower’s Subsidiaries, on a consolidated basis)
delivered to Lender under this Agreement.

 

“Bank One” means
Bank One, National Association, or any successor bank.

 

1

 

“Bank One Prime Rate”
means, as of any date of determination, the highest prime rate quoted by Bank
One and most recently published by Bloomberg L.P. If the prime rate for Bank
One is not quoted or published for any period, then during that period the term
“Bank One Prime Rate” means the highest prime rate published in the most recent
edition of The Wall Street Journal in its regular column entitled “Money
Rates.”

 

“Borrower” has the
meaning set forth in the first paragraph of this Agreement.

 

“Business Day” means
any day other than Saturday, Sunday or any other day on which national banking
associations are closed for business.

 

“Buydown” has the
meaning set forth in Section 3.4.

 

“Calendar Quarter”
means the 3 month period beginning on each January 1, April 1,
July 1 or October 1.

 

“Cash Collateral
Account” means a demand deposit account maintained at the Funding Bank in
Lender’s name and designated for receipt of the proceeds of the sale or other
disposition of Collateral.

 

“Check Disbursement
Account” means a demand deposit account maintained at the Funding Bank in
Borrower’s name and under the control of Lender for clearing checks written by
Borrower to fund Mortgage Loans funded by Warehousing Advances.

 

“Closing Date” has
the meaning set forth in the Recitals to this Agreement.

 

“Collateral” has
the meaning set forth in Section 4.1.

 

“Collateral Documents”
means, with respect to each Mortgage Loan, (a) the Mortgage Note, the
Mortgage and all other documents including, if applicable, any Security
Agreement, executed in connection with or relating to the Mortgage Loan;
(b) as applicable, the original lender’s ALTA Policy of Title Insurance or
its equivalent, documents evidencing the FHA Commitment to Insure, the VA
Guaranty or private mortgage insurance, the appraisal, the Regulation Z
statement, the environmental assessment, the engineering report, certificates
of casualty or hazard insurance, credit information on the maker of the
Mortgage Note, the HUD-1 or corresponding purchase advice; (c) any other
document listed in Exhibit B; and (d) any other document that
is customarily desired for inspection or transfer incidental to the purchase of
any Mortgage Note by an Investor or that is customarily executed by the seller
of a Mortgage Note to an Investor.

 

“Committed Purchase
Price” means for an Eligible Loan (a) the dollar price as set forth in
the Purchase Commitment or, if the price is not expressed in dollars, the
product of the Mortgage Note Amount multiplied by the price (expressed as a
percentage) as set forth in the Purchase Commitment for the Eligible Loan, or
(b) if the Eligible Loan is to be used to back an Agency Security, an
amount equal to the product of the Mortgage Note Amount multiplied by the price
(expressed as a percentage) as set forth in the Purchase Commitment for the
Agency Security.

 

“Compliance
Certificate” means a certificate executed on behalf of Borrower by its chief
financial officer or its treasurer or by another officer approved by Lender,
substantially in the form of Exhibit E.

 

“Credit Score”
means a mortgagor’s overall consumer credit rating, represented by a single
numeric credit score using the Fair, Isaac consumer credit scoring system,
provided by a credit repository acceptable to Lender and the Investor that
issued the Purchase Commitment covering the related Mortgage Loan (if a
Purchase Commitment is required by Exhibit H).

 

2

 

“Debt” means
(a) all indebtedness or other obligations of a Person (and, if applicable,
that Person’s Subsidiaries, on a consolidated basis) that, in accordance with
GAAP, would be included in determining total liabilities as shown on the
liabilities side of a balance sheet of that Person on the date of
determination, plus (b) all indebtedness or other obligations of that
Person (and, if applicable, that Person’s Subsidiaries, on a consolidated
basis) for borrowed money or for the deferred purchase price of property or
services. For purposes of calculating a Person’s Debt, Subordinated Debt due
more than 6 months after the Warehousing Maturity Date may be excluded from
that Person’s indebtedness.

 

“Default” means
the occurrence of any event or existence of any condition that, but for the
giving of Notice or the lapse of time, would constitute an Event of Default.

 

“Default Rate”
means, for any Warehousing Advance, the Interest Rate applicable to that Warehousing
Advance plus 4% per annum. If no Interest Rate is applicable to a Warehousing
Advance, “Default Rate” means, for that Warehousing Advance, the highest
Interest Rate then applicable to any outstanding Warehousing Advance plus 4%
per annum.

 

“Depository Benefit”
means the compensation received by Lender, directly or indirectly, as a result
of Borrower’s maintenance of Eligible Balances with a Designated Bank.

 

“Designated Bank”
means any bank designated by Lender as a Designated Bank, but only for as long
as Lender has an agreement under which Lender receives Depository Benefits from
that bank.

 

“Designated Bank
Charges” means any fees, interest or other charges that would otherwise be
payable to a Designated Bank in connection with Eligible Balances maintained at
the Designated Bank, including deposit insurance premiums, service charges and
any other charges that may be imposed by governmental authorities from time to
time.

 

“Discontinued Loan”
has the meaning set forth in the GMAC-RFC Client Guide.

 

“Earnings Allowance”
has the meaning set forth in Section 3.1(b).

 

“Earnings Credit”
has the meaning set forth in Section 3.1(b).

 

“Electronic Advance
Request” means an electronic transmission through RFConnects Delivery
containing the same information as Exhibit A to this Agreement.

 

“Electronic Tracking
Agreement” means an Electronic Tracking Agreement, on the form prescribed
by Lender, among Borrower, Lender, MERS and MERSCORP, Inc.

 

“Eligible Balances”
means all funds of or maintained by Borrower (and, if applicable, Borrower’s
Subsidiaries) in demand deposit or time deposit accounts at a Designated Bank,
minus balances to support float, reserve requirements and any other reductions
that may be imposed by governmental authorities from time to time.

 

“Eligible Loan”
means a Single Family Mortgage Loan that satisfies the conditions and
requirements set forth in Exhibit H.

 

“Eligible Mortgage
Pool” means a Mortgage Pool for which (a) an Approved Custodian has
issued its initial certification, (b) there exists a Purchase Commitment
covering the Agency Security to be issued on the basis of that certification
and (c) the Agency Security will be delivered to Lender.

 

3

 

“Equity Interests”
means all shares, interests, participations or other equivalents, however,
designated, of or in a Person (other than a natural person), whether or not
voting, including common stock, membership interests, warrants, preferred
stock, convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more of the foregoing.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974 and all rules and regulations
promulgated under that statute, as amended, and any successor statute, rules,
and regulations.

 

“ERISA Affiliate”
means any trade or business (whether or not incorporated) that is a member of a
group of which Borrower is a member and that is treated as a single employer
under Section 414 of the Internal Revenue Code.

 

“Event of Default”
means any of the conditions or events set forth in Section 10.1.

 

“Excess Buydown”
has the meaning set forth in Section 3.4.

 

“Exchange Act” means
the Securities Exchange Act of 1934 and all rules and regulations promulgated
under that statute, as amended, and any successor statute, rules, and
regulations.

 

“Exhibit B”
means Exhibit B, as applicable to the type of Eligible Loan against
which a Warehousing Advance is to be made.

 

“Fair Market Value”
means, at any time for an Eligible Loan or a related Agency Security (if the
Eligible Loan is to be used to back an Agency Security) as of any date of
determination, (a) the Committed Purchase Price if the Eligible Loan is
covered by a Purchase Commitment from Fannie Mae or Freddie Mac or the Eligible
Loan is to be exchanged for an Agency Security and that Agency Security is
covered by a Purchase Commitment from an Investor, or (b) otherwise, the
market price for such Eligible Loan or Agency Security, determined by Lender
based on market data for similar Mortgage Loans  or Agency Securities and such other criteria as Lender deems
appropriate in its sole discretion.

 

“Fannie Mae” means
Fannie Mae, a corporation created under the laws of the United States, and any
successor corporation or other entity.

 

“FHA” means the
Federal Housing Administration and any successor agency or other entity.

 

“FHA Mortgage Loan”
means an FHA-insured Mortgage Loan included in the Pledged Loans.

 

“FICA” means the
Federal Insurance Contributions Act and all rules and regulations promulgated
under that statute, as amended, and any successor statute, rules and
regulations.

 

“FIRREA” means the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 and all
rules and regulations promulgated under that statute, as amended, and any
successor statute, rules, and regulations.

 

“First Mortgage”
means a Mortgage that constitutes a first Lien on the real property and
improvements described in or covered by that Mortgage.

 

“First Mortgage Loan”
means a Mortgage Loan secured by a First Mortgage.

 

“Freddie Mac”
means the Federal Home Loan Mortgage Corporation, a corporation created under
the laws of the United States, and any successor corporation or other entity.

 

4

 

“Funding Bank”
means Bank One or any other bank designated by Lender as a Funding Bank.

 

“Funding Bank
Agreement” means a letter agreement on the form prescribed by Lender
between the Funding Bank and Borrower authorizing Lender’s access to the
Operating Account and the Check Disbursement Account.

 

“GAAP” means
generally accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and in statements and pronouncements of the
Financial Accounting Standards Board, or in opinions, statements or
pronouncements of any other entity approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.

 

“Ginnie Mae” means
the Government National Mortgage Association, an agency of the United States
government, and any successor agency or other entity.

 

“GMAC-RFC Client Guide”
means the applicable loan purchase guide issued by Lender, as the same may be
amended or replaced.

 

“Government Mortgage
Loan” means a closed-end First Mortgage Loan that is either HUD/FHA insured
(other than a HUD 203(K) Mortgage Loan or a Title I Mortgage Loan) or VA
guaranteed.

 

“Hedging Arrangements”
means, with respect to any Person, any agreements or other arrangements
(including interest rate swap agreements, interest rate cap agreements and
forward sale agreements) entered into to protect that Person against changes in
interest rates or the market value of assets.

 

“High LTV Mortgage
Loan” has the meaning set forth in Exhibit H.

 

“HUD” means the
Department of Housing and Urban Development, and any successor agency or other
entity.

 

“HUD 203(K) Mortgage
Loan” means an FHA-insured closed-end First Mortgage Loan to an individual
obligor the proceeds of which will be used for the purpose of rehabilitating
and repairing the related single family property, and which satisfies the
definition of “rehabilitation loan” in 24 C.F.R. 203.50(a).

 

“Indemnified
Liabilities” has the meaning set forth in Section 11.2.

 

“Indemnitees” has
the meaning set forth in Section 11.2.

 

“Interest Rate”
means, for any Warehousing Advance, the floating rate of interest specified for
that Warehousing Advance in Exhibit H.

 

“Interim Statement
Date” means the date of the most recent unaudited financial statements of
Borrower (and, if applicable, Borrower’s Subsidiaries, on a consolidated basis)
delivered to Lender under this Agreement.

 

“Internal Revenue Code”
means the Internal Revenue Code of 1986, Title 26 of the United States
Code, and all rules, regulations and interpretations issued under those
statutory provisions, as amended, and any subsequent or successor federal
income tax law or laws, rules, regulations and interpretations.

 

5

 

“Investment Company
Act” means the Investment Company Act of 1940 and all rules and regulations
promulgated under that statute, as amended, and any successor statute, rules,
and regulations.

 

“Investor” means
Fannie Mae, Freddie Mac or a financially responsible private institution that
Lender deems acceptable, in its sole discretion, to issue Purchase Commitments
with respect to a particular category of Eligible Loans.

 

“Lender” has the
meaning set forth in the first paragraph of this Agreement.

 

“Leverage Ratio”
means the ratio of a Person’s Debt to Tangible Net Worth. For purposes of
calculating a Person’s Leverage Ratio, Debt arising under Hedging Arrangements,
to the extent of assets arising under those Hedging Arrangements, may be
excluded from that Person’s Debt.

 

“LIBOR” means, for
each week, the rate of interest per annum that is equal to the arithmetic mean
of the U.S. Dollar London Interbank Offered Rates for 1 month periods of
certain U.S. banks as of 11:00 a.m. (London time) on the first Business Day of
each week on which the London Interbank market is open, as published by
Bloomberg L.P. If those interest rates are not offered or published for any
period, then during that period LIBOR means the London Interbank Offered Rate
for 1 month periods as published in The Wall Street Journal in its regular
column entitled “Money Rates” on the first Business Day of each week on which
the London Interbank market is open.

 

“Lien” means any
lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance
of any kind (including any conditional sale or other title retention agreement,
any lease in the nature of such an agreement and any agreement to give any
security interest).

 

“Liquid Assets”
means the following assets owned by a Person (and, if applicable, that Person’s
Subsidiaries, on a consolidated basis) as of any date of determination: (a)
unrestricted and unencumbered cash, (b) funds on deposit in accounts with any
bank located in the United States (net of the aggregate amount payable under
all outstanding and unpaid checks, drafts and similar items drawn by a Person
against those accounts), (c) investment grade commercial paper, (d) money
market funds, and (e) marketable securities, plus, in the case of Borrower and
in the absence of a Default or Event of Default, (f) the amount of any Buydowns
and Excess Buydowns.

 

“Loan Documents”
means this Agreement, the Warehousing Note, any agreement of Borrower relating
to Subordinated Debt, and each other document, instrument or agreement executed
by Borrower in connection with any of those documents, instruments and
agreements, as originally executed or as any of the same may be amended,
restated, renewed or replaced.

 

“Loan Package Fee
“ has the meaning set forth in Section 3.6.

 

“Loan-to-Value Ratio”
means, for any Mortgage Loan, the ratio of (a) the maximum amount that may
be borrowed under the Mortgage Loan (whether or not borrowed) at the time of
origination, plus the Mortgage Note Amounts of all other Mortgage Loans secured
by senior or pari passu Liens on the related property, to (b) the
Appraised Property Value of the related property.

 

“Manufactured Home”
means a structure that is built on a permanent chassis (steel frame) with the
wheel assembly necessary for transportation in one or more sections to a
permanent site or semi-permanent site.

 

“Margin Stock” has
the meaning assigned to that term in Regulation U of the Board of Governors of
the Federal Reserve System, as amended.

 

6

 

“MERS” means
Mortgage Electronic Registrations Systems, Inc. and any successor entity.

 

“Miscellaneous Fees
and Charges” means the Collateral Operations Fees set forth on Lender’s fee
schedule attached as Exhibit I and all miscellaneous disbursements,
charges and expenses incurred by or on behalf of Lender for the handling and
administration of Warehousing Advances and Collateral, including costs for
Uniform Commercial Code, tax lien and judgment searches conducted by Lender,
filing fees, charges for wire transfers and check processing charges, charges
for security delivery fees, charges for overnight delivery of Collateral to
Investors, recording fees, Funding Bank service fees and overdraft charges and
Designated Bank Charges.  Upon not less
than 3 Business Days’ prior Notice to Borrower, Lender may modify the
Collateral Operations Fees set forth in Exhibit I to conform to current
Lender practices and, as so modified, the revised Exhibit I will become
part of this Agreement.

 

“Mortgage” means a
mortgage or deed of trust on real property that is improved and substantially
completed (including real property to which a Manufactured Home has been
affixed in a manner such that the Lien of a mortgage or deed of trust would
attach to the Manufactured Home under applicable real property law).

 

“Mortgage-backed
Securities” means securities that are secured or otherwise backed by
Mortgage Loans.

 

“Mortgage Loan”
means any loan evidenced by a Mortgage Note and secured by a Mortgage and, if
applicable, a Security Agreement.

 

“Mortgage Note”
means a promissory note secured by one or more Mortgages and, if applicable,
one or more Security Agreements.

 

“Mortgage Note Amount”
means, as of any date of determination, the then outstanding and unpaid
principal amount of a Mortgage Note (whether or not an additional amount is
available to be drawn under that Mortgage Note).

 

“Mortgage Pool”
means a pool of one or more Pledged Loans on the basis of which a
Mortgage-backed Security is to be issued.

 

“Multiemployer Plan”
means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, to
which either Borrower or any ERISA Affiliate of Borrower has any obligation
with respect to its employees.

 

“Notices” has the
meaning set forth in Section 11.1.

 

“Obligations”
means all indebtedness, obligations and liabilities of Borrower to Lender and
Lender’s Subsidiaries (whether now existing or arising after the date of this
Agreement, voluntary or involuntary, joint or several, direct or indirect,
absolute or contingent, liquidated or unliquidated, or decreased or
extinguished and later increased and however created or incurred), including
Borrower’s obligations and liabilities to Lender under the Loan Documents and
disbursements made by Lender for Borrower’s account.

 

“Operating Account”
means a demand deposit account maintained at the Funding Bank in Borrower’s
name and designated for funding that portion of each Eligible Loan not funded by
a Warehousing Advance made against that Eligible Loan and for returning any
excess payment from an Investor for a Pledged Loan or Pledged Security.

 

“Overdraft Advance”
has the meaning set forth in Section 3.8.

 

7

 

“Participant” has
the meaning set forth in Section 11.8.

 

“Permitted Affiliate
Transactions” means, subject to all terms, conditions and provisions of
this Agreement, transactions between Borrower and its Affiliates in connection
with (i) the securitization, sale, hypothecation or pledge of certain assets of
Borrower (other than any item of Collateral) or its Affiliates and/or (ii)
hedging activities involving Borrower and certain of its Affiliates.

 

“Person” means and
includes natural persons, corporations, limited liability companies, limited
liability partnerships, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions of
those governments.

 

“Plan” means each
employee benefit plan (whether in existence on the date of this Agreement or
established after that date), as that term is defined in Section 3 of
ERISA, maintained for the benefit of directors, officers or employees of
Borrower or any ERISA Affiliate.

 

“Pledged Assets”
means, collectively, Pledged Loans and Pledged Securities.

 

“Pledged Hedging
Accounts” has the meaning set forth in Section 4.1 (g).

 

“Pledged Hedging
Arrangements” has the meaning set forth in Section 4.1 (g).

 

“Pledged Loans”
has the meaning set forth in Section 4.1(b).

 

“Pledged Securities”
has the meaning set forth in Section 4.1(c).

 

“Prime Mortgage Loan”
has the meaning set forth in Exhibit H.

 

“Prohibited
Transaction” has the meanings set forth for such term in Section 4975
of the Internal Revenue Code and Section 406 of ERISA.

 

“Purchase Commitment”
means a written commitment, in form and substance satisfactory to Lender,
issued in favor of Borrower by an Investor under which that Investor commits to
purchase Mortgage Loans or Mortgage-backed Securities.

 

“Rating Agency”
means any nationally recognized statistical rating organization that in the
ordinary course of its business rates Mortgage-backed Securities.

 

“Release Amount”
has the meaning set forth in Section 4.3(f).

 

“Restriction List”
and “Restriction Lists” means each and every list of Persons to whom the
Government of the United States prohibits or otherwise restricts the provision
of financial services.  For the purposes
of this Agreement, Restriction Lists include the list of Specifically
Designated Nationals and Blocked Persons established pursuant to Executive
Order 13224 (September 23, 2001) and maintained by the Office of Foreign
Assets Control, U.S. Department of the Treasury, current as of the day the
Restriction List is used for purposes of comparison in accordance with the
requirements of this Agreement.

 

“RFC Mortgage Loan”
means a Mortgage Loan covered by a Purchase Commitment issued by Lender.

 

8

 

“RFConnects Delivery”
means Lender’s proprietary service to support the electronic exchange of
information between Lender and Borrower, including Warehousing Advance
Requests, shipping requests, payoff requests, wire transfer instructions,
security delivery instructions, activity reports and exception reports.

 

“RFConnects Pledge
Agreement” means an agreement (on the then current form prescribed by
Lender) granting Lender a security interest in Mortgage Loans for which
Borrower has requested Warehousing Advances using RFConnects Delivery.

 

“Second Mortgage”
means a Mortgage that constitutes a second Lien on the real property and
improvements described in or covered by that Mortgage.

 

“Second Mortgage Loan”
means a Mortgage Loan secured by a Second Mortgage.

 

“Security Agreement”
means a security agreement or other agreement that creates a Lien on personal
property, including furniture, fixtures and equipment, to secure repayment of a
Mortgage Loan.

 

“Servicing Contract”
means, with respect to any Person, the arrangement, whether or not in writing,
under which that Person has the right to service Mortgage Loans.

 

“Servicing Portfolio”
means, as to any Person, the unpaid principal balance of Mortgage Loans
serviced by that Person under Servicing Contracts, minus the principal balance
of all Mortgage Loans that are serviced by that Person for others under
subservicing arrangements.

 

“Servicing Portfolio
Report” has the meaning set forth in Section 7.3(a).

 

“Single Family
Mortgage Loan” means a Mortgage Loan secured by a Mortgage on improved real
property on which is located a 1-to-4 family residence.

 

“Standard Warehouse
Period” means, for any Mortgage Loan, the maximum number of days a
Warehousing Advance against that type of Mortgage Loan, other than against an
Aged Mortgage Loan, may remain outstanding, as set forth in Exhibit H.

 

“Statement Date”
means the Audited Statement Date or the Interim Statement Date, as applicable.

 

“Sublimit” means
the aggregate amount of Warehousing Advances (expressed as a dollar amount or
as a percentage of the Warehousing Commitment Amount) that is permitted to be
outstanding at any one time against a specific type of Eligible Loan.

 

“Subordinated Debt”
means (a) all indebtedness of Borrower for borrowed money that is
effectively subordinated in right of payment to all present and future
Obligations either (1) under a Subordination of Debt Agreement on the form
prescribed by Lender or (2) otherwise on terms acceptable to Lender, and
(b) solely for purposes of Section 8.5, all indebtedness of Borrower
that is required to be subordinated by Sections 5.1(b) and 7.11.

 

“Subprime Mortgage
Loan” has the meaning set forth in Exhibit H.

 

“Subsidiary” means
any corporation, partnership, association or other business entity in which
more than 50% of the shares of stock or other ownership interests having voting
power for the election of directors, managers, trustees or other Persons
performing similar functions is at the time owned or controlled by any Person
either directly or indirectly through one or more Subsidiaries of that Person.

 

9

 

“Tangible Net Worth”
means the excess of a Person’s (and, if applicable, that Person’s Subsidiaries,
on a consolidated basis) total assets over total liabilities as of the date of
determination, each determined in accordance with GAAP applied in a manner
consistent with the financial statements referred to in Section 5.1 (a)(6),
plus that portion of Subordinated Debt due more than 6 months after the
Warehousing Maturity Date.  For purposes
of calculating a Person’s Tangible Net Worth, advances or loans to shareholders,
directors, officers, employees or Affiliates, investments in Affiliates, assets
pledged to secure any liabilities not included in the Debt of that Person,
intangible assets, those other assets that would be deemed by HUD to be
non-acceptable in calculating adjusted net worth in accordance with its
requirements in effect as of that date, as those requirements appear in the
“Consolidated Audit Guide for Audits of HUD Programs,” and other assets Lender
deems unacceptable, in its sole discretion, must be excluded from that Person’s
total assets.

 

“Third Party
Originated Loan” means a Mortgage Loan originated and funded by a third
party (other than with funds provided by Borrower at closing to purchase the
Mortgage Loan) and subsequently purchased by Borrower.

 

“Title I Mortgage Loan”
means an FHA co-insured closed-end First Mortgage Loan or Second Mortgage Loan
that is underwritten in accordance with HUD underwriting standards for the
Title I Property Improvement Program set forth in, and that is reported for
insurance under, the Mortgage Insurance Program authorized and administered
under Title I of the National Housing Act of 1934, as amended, and the
regulations related to that statute.

 

“Trust Receipt”
means a trust receipt in a form approved by and under which Lender may deliver
any document relating to the Collateral to Borrower for correction or
completion.

 

“Warehousing Advance”
means a disbursement by Lender under Section 1.1.

 

“Warehousing Advance
Request” has the meaning set forth in Section 2.1.

 

“Warehousing
Collateral Value” means, as of any date of determination, (a) with
respect to any Eligible Loan, the lesser of (1) the amount of any
Warehousing Advance made, or that could be made, against such Eligible
Loan  under Exhibit H or
(2) an amount equal to the Advance Rate for the applicable type of
Eligible Loan  multiplied by the Fair
Market Value of such Eligible Loan; (b) if Eligible Loans have been
exchanged for Agency Securities, the lesser of (1) the amount of any
Warehousing Advances outstanding against the Eligible Loans backing the Agency
Securities or (2) an amount equal to the Advance Rates for the applicable
types of Eligible Loans backing the Agency Securities multiplied by the Fair
Market Value of the Agency Securities; and (c) with respect to cash, the
amount of the cash.

 

“Warehousing
Commitment” means the obligation of Lender to make Warehousing Advances
to  Borrower under Section 1.1.

 

“Warehousing
Commitment Amount” means $100,000,000

 

“Warehousing
Commitment Fee” has the meaning set forth in Section 3.5.

 

“Warehousing Fee”
has the meaning set forth in Section 3.6.

 

“Warehousing Maturity
Date” has the meaning set forth in Section 1.2.

 

“Warehousing Note”
has the meaning set forth in Section 1.3.

 

10

 

“Weighted Average Committed
Purchase Price” means the weighted average of the Committed Purchase Prices
of the unfilled Purchase Commitments (expressed as a percentage) for Mortgage
Loans or Mortgage-backed Securities of the same type, interest rate and term.

 

“Wet Settlement
Advance” means with respect to any Warehousing Advance, the time from the
date the Warehousing Advance is made until the date of Lender’s receipt of the
Collateral Documents required by Article 2 and the Exhibits and documents
referenced in that Article.

 

“Wire Disbursement
Account” means a demand deposit account maintained at the Funding Bank in
Lender’s name for clearing wire transfers requested by Borrower to fund
Warehousing Advances.

 

“Wire Fee” has the
meaning set forth in Section 3.6.

 

12.2.                     Other Definitional Provisions; Terms of
Construction

 

12.2
(a)          Accounting
terms not otherwise defined in this Agreement have the meanings given to those
terms under GAAP.

 

12.2
(b)         Defined
terms may be used in the singular or the plural, as the context requires.

 

12.2
(c)          All
references to time of day mean the then applicable time in Chicago, Illinois,
unless otherwise expressly provided.

 

12.2
(d)         References
to Sections, Exhibits, Schedules and like references are to Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise expressly provided.

 

12.2
(e)          The words
“include,” “includes” and “including” are deemed to be followed by the phrase
“without limitation.”

 

12.2
(f)            Unless
the context in which it is used otherwise clearly requires, the word “or” has
the inclusive meaning represented by the phrase “and/or.”

 

12.2
(g)         All
incorporations by reference of provisions from other agreements are
incorporated as if such provisions were fully set forth into this Agreement,
and include all necessary definitions and related provisions from those other
agreements. All provisions from other agreements incorporated into this
Agreement by reference survive any termination of those other agreements until
the Obligations of Borrower under this Agreement and the Warehousing Note are
irrevocably paid in full and the Warehousing Commitment is terminated.

 

12.2
(h)         All
references to the Uniform Commercial Code shall be deemed to be references to
the Uniform Commercial Code in effect on the date of this Agreement in the
applicable jurisdiction.

 

12.2
(i)             Unless
the context in which it is used otherwise clearly requires, all references to
days, weeks and months mean calendar days, weeks and months.

 

End
of Article 12

 

End
of Document

 

11Exhibit 10.2

 

SECOND AMENDMENT TO

WAREHOUSING CREDIT AND SECURITY

AGREEMENT

 

SECOND AMENDMENT
TO WAREHOUSING CREDIT AND SECURITY AGREEMENT (this “Amendment”) dated as
of August 30, 2004, between MORTGAGEIT, INC., a New York corporation (“Borrower”)
and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (“Lender”).

 

A.                                   Borrower
and Lender have entered into a revolving mortgage warehousing facility with a
present Warehousing Commitment Amount of $100,000,000 which is evidenced by a
Promissory Note dated August 1, 2003 (the “Note”), and by a Warehousing
Credit and Security Agreement dated as of August 1, 2003 (as the same may
have been and may be amended or supplemented, the “Agreement”).

 

B.                                     Borrower
has requested that Lender extend the Warehousing Maturity Date of the Agreement
and amend certain other terms of the Agreement, and Lender has agreed to such
extension and amendments , subject to the terms and conditions of this
Amendment.

 

NOW, THEREFORE,
the parties to this Amendment agree as follows:

 

1.                                       Subject
to Borrower’s satisfaction of the conditions set forth in Section 9, the
effective date of this Amendment is August 31, 2004 (“Effective Date”).

 

2.                                       Unless
otherwise defined in this Amendment, all capitalized terms have the meanings
given to those terms in the Agreement. 
Defined terms may be used in the singular or the plural, as the context
requires.  The words “include,”
“includes” and “including” are deemed to be followed by the phrase “without
limitation.”  Unless the context in
which it is used otherwise clearly requires, the word “or” has the inclusive
meaning represented by the phrase “and/or.” 
References to Sections and Exhibits are to Sections and Exhibits of this
Amendment unless otherwise expressly provided.

 

3.                                       Article
1 of the Agreement is amended and restated in its entirety as set forth in Article
1 attached to this Amendment.  All
references in the Agreement and other Loan Documents to Article 1
(including each and every Section in Article 1) are deemed to refer to
the new Article 1.

 

4.                                       Article
8 of the Agreement is amended and restated in its entirety as set forth in Article
8 attached to this Amendment.  All
references in the Agreement and other Loan Documents to Article 8
(including each and every Section in Article 8) are deemed to refer to
the new Article 8.

 

5.                                       Article
12 of the Agreement is amended and restated in its entirety as set forth in
Article 12 attached to this Amendment. 
All references in the Agreement and other Loan Documents to Article
12 (including each and every Section in Article 12) are deemed to
refer to the new Article 12.

 

6.                                       Exhibit
E to the Agreement is amended and restated in its entirety as set forth in Exhibit
E to this Amendment.  All references
in the Agreement and the other Loan Documents to Exhibit E are deemed to
refer to the new Exhibit E.

 

 

7.                                       Exhibit
H to the Agreement is amended and restated in its entirety as set forth in Exhibit
H to this Amendment.  All references
in the Agreement and the other Loan Documents to Exhibit H are deemed to
refer to the new Exhibit H.

 

8.                                       Borrower
has failed to comply with Section 8.8 of the Agreement for failing to comply
with the Leverage Ratio covenant for the fiscal months ended May 31, 2004 and
June 30, 2004.  Failure to comply with
this covenant constitutes an Event of Default pursuant to Section 10.1(c) of
the Agreement.

 

Borrower has requested
that Lender waive its rights and remedies with respect to the above-described
Event of Default.  Lender agrees to
waive its rights and remedies with respect to the above-described Event of
Default; provided, however, that this waiver is limited to the
specific Event of Default described above and is not intended and will not be
construed to be a waiver of any future Default or Event of Default of Section
8.8 of the Agreement or any existing or future Default or Event of Default
under any other provision of the Agreement.

 

Borrower
represents, warrants and agrees that (a) there exists no other Event of Default
under the Loan Documents, (b) the Loan Documents continue to be the legal,
valid and binding agreements and obligations of Borrower enforceable in
accordance with their terms, as modified herein, (c) Lender is not in default
under the Agreement or any of the Loan Documents and Borrower has no offset or
defense to its performance or obligations under the Agreement or any of the
Loan Documents, (d) the representations contained in the Agreement and Loan
Documents remain true and accurate in all respects, (e) the Agreement and Loan
Documents are unchanged and remain in full force and effect and (f) there has
been no material adverse change in Borrower’s financial condition from the date
of the Agreement to the Effective Date.

 

BORROWER IS NOTIFIED THROUGH THIS AMENDMENT THAT LENDER
REQUIRES STRICT COMPLIANCE BY BORROWER OF ALL TERMS, CONDITIONS AND PROVISIONS
OF THE AGREEMENT AND LOAN DOCUMENTS.

 

The waiver of
Lender under this Amendment may not be construed as establishing a course of
conduct on the part of Lender upon which Borrower may rely at any time in the
future, and Borrower expressly waives any right to assert any claim to such
effect at any time.

 

9.                                       Borrower must
deliver to Lender (a) two executed copies of this Amendment, and (b) a $350
document production fee.

 

10.                                 Except
as expressly modified, the Agreement is unchanged and remains in full force and
effect, and Borrower ratifies and reaffirms all of its obligations under the
Agreement and the other Loan Documents.

 

11.                                 This
Amendment may be executed in any number of counterparts, each of which will be
deemed an original, but all of which shall together constitute but one and the
same instrument.

 

IN WITNESS
WHEREOF, Borrower and Lender have caused this Amendment to be duly executed on
their behalf by their duly authorized officers as of the day and year above written.

 

 

	
   

  	
  MORTGAGEIT, INC.,

  
	
   

  	
  a New York corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN R. CUTI

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Secretary and General Counsel

  
	
   

  	
   

  
	
   

  	
  RESIDENTIAL FUNDING CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JASON MITCHELL

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Director

  

 

 

 

 

 

WAREHOUSING CREDIT AND SECURITY

AGREEMENT

 

 

BETWEEN

 

MORTGAGEIT, INC.,

a New York corporation

 

AND

 

RESIDENTIAL FUNDING CORPORATION,

a Delaware corporation

 

Dated as of August
1, 2003

 

 

TABLE OF CONTENTS

 

	
  1.

  	
   

  	
  THE CREDIT

  	
   

  
	
   

  	
  1.1.

  	
   

  	
  The Warehousing Commitment

  	
   

  
	
   

  	
  1.2.

  	
   

  	
  Expiration of
  Warehousing Commitment

  	
   

  
	
   

  	
  1.3.

  	
   

  	
  Warehousing
  Note

  	
   

  
	
  2.

  	
   

  	
  PROCEDURES FOR
  OBTAINING ADVANCES

  	
   

  
	
   

  	
  2.1.

  	
   

  	
  Warehousing Advances

  	
   

  
	
  3.

  	
   

  	
  INTEREST,
  PRINCIPAL AND FEES

  	
   

  
	
   

  	
  3.1.

  	
   

  	
  Interest

  	
   

  
	
   

  	
  3.2.

  	
   

  	
  Interest Limitation

  	
   

  
	
   

  	
  3.3.

  	
   

  	
  Principal
  Payments

  	
   

  
	
   

  	
  3.4.

  	
   

  	
  Buydowns

  	
   

  
	
   

  	
  3.5.

  	
   

  	
  Warehousing Commitment Fees

  	
   

  
	
   

  	
  3.6.

  	
   

  	
  Loan
  Package Fees, Wire Fees, Warehousing Fees

  	
   

  
	
   

  	
  3.7.

  	
   

  	
  Miscellaneous Fees and
  Charges

  	
   

  
	
   

  	
  3.8.

  	
   

  	
  Overdraft
  Advances

  	
   

  
	
   

  	
  3.9.

  	
   

  	
  Method of Making Payments

  	
   

  
	
  4.

  	
   

  	
  COLLATERAL

  	
   

  
	
   

  	
  4.1.

  	
   

  	
  Grant of Security Interest

  	
   

  
	
   

  	
  4.2.

  	
   

  	
  Maintenance of
  Collateral Records

  	
   

  
	
   

  	
  4.3.

  	
   

  	
  Release
  of Security Interest in Pledged Loans and Pledged Securities

  	
   

  
	
   

  	
  4.4.

  	
   

  	
  Collection and Servicing
  Rights

  	
   

  
	
   

  	
  4.5.

  	
   

  	
  Return of Collateral at End of
  Warehousing Commitment

  	
   

  
	
   

  	
  4.6.

  	
   

  	
  Delivery of
  Collateral Documents

  	
   

  
	
  5.

  	
   

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
  5.1.

  	
   

  	
  Initial
  Advance

  	
   

  
	
   

  	
  5.2.

  	
   

  	
  Each
  Advance

  	
   

  
	
   

  	
  5.3.

  	
   

  	
  Force
  Majeure

  	
   

  
	
  6.

  	
   

  	
  GENERAL REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
  6.1.

  	
   

  	
  Place
  of Business

  	
   

  
	
   

  	
  6.2.

  	
   

  	
  Organization;
  Good Standing; Subsidiaries

  	
   

  
	
   

  	
  6.3.

  	
   

  	
  Authorization
  and Enforceability

  	
   

  
	
   

  	
  6.4.

  	
   

  	
  Approvals

  	
   

  
	
   

  	
  6.5.

  	
   

  	
  Financial Condition

  	
   

  
	
   

  	
  6.6.

  	
   

  	
  Litigation

  	
   

  
	
   

  	
  6.7.

  	
   

  	
  Compliance with Laws

  	
   

  
	
   

  	
  6.8.

  	
   

  	
  Regulation
  U

  	
   

  
	
   

  	
  6.9.

  	
   

  	
  Investment Company Act

  	
   

  
	
   

  	
  6.10.

  	
   

  	
  Payment
  of Taxes

  	
   

  
	
   

  	
  6.11.

  	
   

  	
  Agreements

  	
   

  
	
   

  	
  6.12.

  	
   

  	
  Title
  to Properties

  	
   

  
	
   

  	
  6.13.

  	
   

  	
  ERISA

  	
   

  
	
   

  	
  6.14.

  	
   

  	
  No
  Retiree Benefits

  	
   

  
	
   

  	
  6.15.

  	
   

  	
  Assumed
  Names

  	
   

  
	
   

  	
  6.16.

  	
   

  	
  Servicing

  	
   

  

 

 

	
  7.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
  7.1.

  	
   

  	
  Payment of Obligations

  	
   

  
	
   

  	
  7.2.

  	
   

  	
  Financial Statements

  	
   

  
	
   

  	
  7.3.

  	
   

  	
  Other Borrower Reports

  	
   

  
	
   

  	
  7.4.

  	
   

  	
  Maintenance
  of Existence; Conduct of Business

  	
   

  
	
   

  	
  7.5.

  	
   

  	
  Compliance
  with Applicable Laws

  	
   

  
	
   

  	
  7.6.

  	
   

  	
  Inspection
  of Properties and Books; Operational Reviews

  	
   

  
	
   

  	
  7.7.

  	
   

  	
  Notice

  	
   

  
	
   

  	
  7.8.

  	
   

  	
  Payment
  of Debt, Taxes and Other Obligations

  	
   

  
	
   

  	
  7.9.

  	
   

  	
  Insurance

  	
   

  
	
   

  	
  7.10.

  	
   

  	
  Closing Instructions

  	
   

  
	
   

  	
  7.11.

  	
   

  	
  Subordination
  of Certain Indebtedness

  	
   

  
	
   

  	
  7.12.

  	
   

  	
  Other Loan
  Obligations

  	
   

  
	
   

  	
  7.13.

  	
   

  	
  ERISA

  	
   

  
	
   

  	
  7.14.

  	
   

  	
  Use of
  Proceeds of Warehousing Advances

  	
   

  
	
  8.

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
  8.1.

  	
   

  	
  Contingent
  Liabilities

  	
   

  
	
   

  	
  8.2.

  	
   

  	
  Pledge of Servicing
  Contracts

  	
   

  
	
   

  	
  8.3.

  	
   

  	
  Restrictions
  on Fundamental Changes

  	
   

  
	
   

  	
  8.4.

  	
   

  	
  Subsidiaries

  	
   

  
	
   

  	
  8.5.

  	
   

  	
  Deferral of
  Subordinated Debt

  	
   

  
	
   

  	
  8.6.

  	
   

  	
  Loss of Eligibility

  	
   

  
	
   

  	
  8.7.

  	
   

  	
  Accounting
  Changes

  	
   

  
	
   

  	
  8.8.

  	
   

  	
  Leverage Ratio

  	
   

  
	
   

  	
  8.9.

  	
   

  	
  Minimum
  Tangible Net Worth

  	
   

  
	
   

  	
  8.10.

  	
   

  	
  Minimum Liquid Assets

  	
   

  
	
   

  	
  8.11.

  	
   

  	
  Operating
  Losses

  	
   

  
	
   

  	
  8.12.

  	
   

  	
  Distributions
  to Shareholders

  	
   

  
	
   

  	
  8.13.

  	
   

  	
  Transactions
  with Affiliates

  	
   

  
	
   

  	
  8.14.

  	
   

  	
  Recourse Servicing
  Contracts

  	
   

  
	
  9.

  	
   

  	
  SPECIAL REPRESENTATIONS,
  WARRANTIES AND COVENANTS CONCERNING COLLATERAL

  	
   

  
	
   

  	
  9.1.

  	
   

  	
  Special Representations and
  Warranties Concerning Eligibility as Seller/Servicer of Mortgage Loans

  	
   

  
	
   

  	
  9.2.

  	
   

  	
  Special
  Representations and Warranties Concerning Warehousing Collateral

  	
   

  
	
   

  	
  9.3.

  	
   

  	
  Special Affirmative
  Covenants Concerning Warehousing Collateral

  	
   

  
	
   

  	
  9.4.

  	
   

  	
  Special Negative Covenants
  Concerning Warehousing Collateral

  	
   

  
	
  10.

  	
   

  	
  DEFAULTS; REMEDIES

  	
   

  
	
   

  	
  10.1.

  	
   

  	
  Events
  of Default

  	
   

  
	
   

  	
  10.2.

  	
   

  	
  Remedies

  	
   

  
	
   

  	
  10.3.

  	
   

  	
  Application of Proceeds

  	
   

  
	
   

  	
  10.4.

  	
   

  	
  Lender Appointed
  Attorney-in-Fact

  	
   

  
	
   

  	
  10.5.

  	
   

  	
  Right
  of Set-Off

  	
   

  
	
  11.

  	
   

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  11.1.

  	
   

  	
  Notices

  	
   

  
	
   

  	
  11.2.

  	
   

  	
  Reimbursement Of
  Expenses; Indemnity

  	
   

  
	
   

  	
  11.3.

  	
   

  	
  Financial Information

  	
   

  
	
   

  	
  11.4.

  	
   

  	
  Terms
  Binding Upon Successors; Survival of Representations

  	
   

  
	
   

  	
  11.5.

  	
   

  	
  Assignment

  	
   

  
	
   

  	
  11.6.

  	
   

  	
  Amendments

  	
   

  
	
   

  	
  11.7.

  	
   

  	
  Governing
  Law

  	
   

  
	
   

  	
  11.8.

  	
   

  	
  Participations

  	
   

  

 

 

	
   

  	
  11.9.

  	
   

  	
  Relationship of the
  Parties

  	
   

  
	
   

  	
  11.10.

  	
   

  	
  Severability

  	
   

  
	
   

  	
  11.11.

  	
   

  	
  Consent to Credit
  References

  	
   

  
	
   

  	
  11.12.

  	
   

  	
  Counterparts

  	
   

  
	
   

  	
  11.13.

  	
   

  	
  Headings/Captions

  	
   

  
	
   

  	
  11.14.

  	
   

  	
  Entire
  Agreement

  	
   

  
	
   

  	
  11.15.

  	
   

  	
  Consent to Jurisdiction

  	
   

  
	
   

  	
  11.16.

  	
   

  	
  Waiver of Jury Trial

  	
   

  
	
   

  	
  11.17.

  	
   

  	
  Waiver
  of Punitive, Consequential, Special or Indirect Damages

  	
   

  
	
  12.

  	
   

  	
  DEFINITIONS

  	
   

  
	
   

  	
  12.1.

  	
   

  	
  Defined
  Terms

  	
   

  
	
   

  	
  12.2.

  	
   

  	
  Other
  Definitional Provisions; Terms of Construction

  	
   

  

 

 

EXHIBITS

 

	
  Exhibit A

  	
  Request for Advance Against
  Eligible Loans

  
	
   

  	
   

  
	
  Exhibit B

  	
  Procedures and
  Documentation for Warehousing Mortgage Loans

  
	
   

  	
   

  
	
  Exhibit C

  	
  Schedule of Servicing
  Portfolio

  
	
   

  	
   

  
	
  Exhibit D

  	
  Subsidiaries

  
	
   

  	
   

  
	
  Exhibit E

  	
  Compliance Certificate

  
	
   

  	
   

  
	
  Exhibit F

  	
  Schedule of Lines of
  Credit

  
	
   

  	
   

  
	
  Exhibit G

  	
  Assumed Names

  
	
   

  	
   

  
	
  Exhibit H

  	
  Eligible Loans and
  Other Assets

  
	
   

  	
   

  
	
  Exhibit I

  	
  Collateral Operations
  Fee Schedule

  
	
   

  	
   

  
	
  Exhibit J

  	
  Commitment Summary
  Report

  

 

 

WAREHOUSING CREDIT AND SECURITY
AGREEMENT

 

WAREHOUSING CREDIT AND
SECURITY AGREEMENT, dated as of August 1, 2003 between
MORTGAGEIT, INC., a New York corporation (“Borrower”), and RESIDENTIAL
FUNDING CORPORATION, a Delaware corporation (“Lender”).

 

A.                                         Borrower
has requested certain financing from Lender.

 

B.                                           Lender
has agreed to provide that financing to Borrower subject to the terms and
conditions of this Agreement.

 

C.                                           Subject
to Borrower’s satisfaction of the conditions set forth in Article 5, the “Closing
Date” for the transactions contemplated by this Agreement is the date set
forth as the Closing Date on the signature page to this Agreement.

 

NOW, THEREFORE,
the parties to this Agreement agree as follows:

 

THE CREDIT

 

1.1.                            The Warehousing Commitment

 

On the terms and
subject to the conditions and limitations of this Agreement, including Exhibit
H, Lender agrees to make Warehousing Advances to Borrower from the Closing
Date to the Business Day immediately preceding the Warehousing Maturity Date,
during which period Borrower may borrow, repay and reborrow in accordance with
the provisions of this Agreement. Lender has no obligation to make Warehousing
Advances in excess of the Warehousing Commitment Amount.  While a Default or Event of Default exists,
Lender may refuse to make any additional Warehousing Advances to Borrower.  All Warehousing Advances under this
Agreement constitute a single indebtedness, and all of the Collateral is
security for the Warehousing Note and for the performance of all of the
Obligations.  If the initial Warehousing
Advance has not been made within 90 days after the Closing Date, the
Warehousing Commitment and Lender’s obligation to make Warehousing Advances to
Borrower under this Agreement will automatically terminate, and all Obligations
(including any Obligations arising under Section 11.2) will automatically
become due and payable, without presentment, demand or other Notice or
requirements of any kinds, all of which Borrower expressly waives.

 

1.2.                            Expiration of Warehousing Commitment

 

The Warehousing
Commitment expires on the earlier of (“Warehousing Maturity Date”): (a) January
15, 2005, as such date may be extended in writing by Lender, in its sole
discretion, on which date the Warehousing Commitment will expire of its own
term and the Warehousing Advances will become due and payable without the
necessity of Notice or action by Lender; and (b) the date the Warehousing
Commitment is terminated and the Warehousing Advances become due and payable
under Section 10.2.

 

1.3.                            Warehousing Note

 

Warehousing
Advances are evidenced by Borrower’s promissory note, payable to Lender on the
form prescribed by Lender (“Warehousing Note”). The term “Warehousing
Note” as used in this

 

1

 

Agreement includes
all amendments, restatements, renewals or replacements of the original
Warehousing Note and all substitutions for it. All terms and provisions of the
Warehousing Note are incorporated into this Agreement.

 

 

End of Article 1

 

2

 

PROCEDURES FOR OBTAINING ADVANCES

 

2.1.                            Warehousing Advances

 

To obtain a
Warehousing Advance under this Agreement, Borrower must deliver to Lender either
a completed and signed request for a Warehousing Advance on the then current
form approved by Lender, or an Electronic Advance Request, together with a list
of the Mortgage Loans for which the request is being made and a signed
RFConnects Pledge Agreement sent by facsimile (“Warehousing Advance Request”),
not later than (i) in the case of Electronic Advance Requests, 2:30 p.m. on the
Business Day, and (ii) in all other cases, 1 Business Day before the Business
Day on which Borrower desires the Warehousing Advance. Subject to the delivery
of a Warehousing Advance Request and the satisfaction of the conditions set
forth in Sections 5.1 and 5.2, Borrower may obtain a Warehousing Advance
under this Agreement upon compliance with the procedures set forth in this
Section and in the applicable Exhibit B, including delivery to
Lender of all required Collateral Documents. Lender’s current form of
Warehousing Advance Request is set forth in Exhibit A. Upon not
less than 3 Business Days’ prior Notice to Borrower, Lender may modify its form
of Warehousing Advance Request, RFConnects Pledge Agreement and any other
Exhibit or document referred to in this Section to conform to current legal
requirements or Lender practices and, as so modified, those Exhibits and
documents will become part of this Agreement.

 

 

End of Article 2

 

1

 

INTEREST, PRINCIPAL AND FEES

 

3.1.                            Interest

 

3.1 (a)                    Except
as otherwise provided in this Section, Borrower must pay interest on the unpaid
amount of each Warehousing Advance from the date the Warehousing Advance is
made until it is paid in full at the Interest Rate specified in Exhibit H.

 

3.1 (b)                   As
long as no Default or Event of Default exists, Borrower is entitled to receive
a benefit in the form of an “Earnings Credit” on the portion of the
Eligible Balances maintained in time deposit accounts with a Designated Bank,
and Borrower is entitled to receive a benefit in the form of an “Earnings
Allowance” on the portion of the Eligible Balances maintained in demand
deposit accounts with a Designated Bank. Any Earnings Allowance will be used
first and any Earnings Credit will be used second as a credit against Miscellaneous
Fees and Charges (including Designated Bank Charges), Warehousing Fees, Wire
Fees, Warehousing Commitment Fees, Loan Package Fees, and any other fees
payable under this Agreement, and may be used, at Lender’s option, to reduce
accrued interest. Any Earnings Allowance not used during the month in which the
benefit was received will be accumulated and must be used within 6 months of
the month in which the benefit was received. As long as no Default or Event of
Default exists, any Earnings Credit not used during the month in which the
benefit was received will be used to provide a cash benefit to Borrower. Any
Earnings Credit retained by Lender as a result of a Default or Event of Default
will be applied to the payment of Borrower’s Obligations in the order Lender
determines in its sole discretion. The Earnings Credit and the Earnings
Allowance for any month will be determined by Lender in its sole discretion and
Lender’s determination of those amounts is conclusive and binding absent
manifest error. In no event will the benefit received by Borrower exceed the
Depository Benefit.

 

Either party to this Agreement may terminate the benefits provided for
in this Section effective immediately upon Notice to the other party, if the
terminating party determines (which determination is conclusive and binding on
the other party, absent manifest error) at any time that any applicable law,
rule, regulation, order or decree or any interpretation or administration of
such law, rule, regulation, order or decree by any governmental authority
charged with its interpretation or administration, or compliance by such party
with any request or directive (whether or not having the force of law) of any
such authority, makes it unlawful or impossible for the party sending the Notice
to continue to offer or receive the benefits provided for in this Section. No
Notice is required for a termination of benefits as a result of a Default or
Event of Default.

 

3.1 (c)                    Lender
computes interest on the basis of the actual number of days in each month and a
year of 360 days (“Accrual Basis”). 
Borrower must pay interest monthly in arrears, not later than 9 days
after the date of Lender’s invoice or, if applicable, 2 days after the date of
Lender’s account analysis statement, commencing with the first month following
the Closing Date and on the Warehousing Maturity Date.

 

3.1 (d)                   If,
for any reason Borrower repays a Warehousing Advance on the same day that it
was made by Lender, Borrower agrees to pay to Lender an administrative fee
equal to 1 day of interest on that Warehousing Advance at the Interest Rate
that would otherwise be applicable under Exhibit H.  Borrower must pay all administrative fees
within 9 days after the date of Lender’s invoice or, if applicable, within 2
days after the date of Lender’s account analysis statement.

 

1

 

3.1 (e)                    After
an Event of Default occurs and upon Notice to Borrower by Lender, the unpaid
amount of each Warehousing Advance will bear interest at the Default Rate until
paid in full.

 

3.1 (f)                      Lender
will adjust the rates of interest provided for in this Agreement as of the
effective date of each change in the applicable index. Lender’s determination
of such rates of interest as of any date of determination are conclusive and
binding, absent manifest error.

 

3.2.                            Interest Limitation

 

Lender does not
intend, by reason of this Agreement, the Warehousing Note or any other Loan
Document, to receive interest in excess of the amount permitted by applicable
law. If Lender receives any interest in excess of the amount permitted by
applicable law, whether by reason of acceleration of the maturity of this
Agreement, the Warehousing Note or otherwise, Lender will apply the excess to
the unpaid principal balance of the Warehousing Advances and not to the payment
of interest. If all Warehousing Advances have been paid in full and the Warehousing
Commitment has expired or has been terminated, Lender will remit any excess to
Borrower. This Section controls every other provision of all agreements between
Borrower and Lender and is binding upon and available to any subsequent holder
of the Warehousing Note.

 

3.3.                            Principal Payments

 

3.3 (a)                    Borrower
must pay Lender the outstanding principal amount of all Warehousing Advances on
the Warehousing Maturity Date.

 

3.3 (b)                   Except
as otherwise provided in Section 3.1, Borrower may prepay any portion of the
Warehousing Advances without premium or penalty at any time.

 

3.3 (c)                    Borrower
must pay to Lender, without the necessity of prior demand or Notice from
Lender, and Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account for, the amount of any outstanding Warehousing
Advance against a specific Pledged Asset upon the earliest occurrence of any of
the following events:

 

(1)                                  One
(1) Business Day elapses from the date a Warehousing Advance was made if the
Pledged Loan to be funded by that Warehousing Advance is not closed and funded.

 

(2)                                  Ten
(10) Business Days elapse without the return of a Collateral Document delivered
by Lender to Borrower under a Trust Receipt for correction or completion.

 

(3)                                  On
the date on which a Pledged Loan is determined to have been originated based on
untrue, incomplete or inaccurate information or otherwise to be subject to fraud,
whether or not Borrower had knowledge of the misrepresentation, incomplete or
incorrect information or fraud, on the date on which Borrower knows, has reason
to know, or receives Notice from Lender, that (A) one or more of the
representations and warranties set forth in Article 9 were inaccurate or
incomplete in any material respect on any date when made or deemed made, or
(B) Borrower has failed to perform or comply with any covenant, term or
condition set forth in Article 9.

 

(4)                                  On
the date the Pledged Loan or a Lien prior to the Mortgage securing repayment of
the Pledged Loan is defaulted and remains in default for a period of 60 days or
more.

 

2

 

(5)                                  Upon
the sale, other disposition or prepayment of any Pledged Asset or, with respect
to a Pledged Loan included in an Eligible Mortgage Pool, upon the sale or other
disposition of the related Agency Security.

 

(6)                                  One
(1) Business Day immediately preceding the date scheduled for the foreclosure
or trustee sale of the premises securing a Pledged Loan.

 

(7)                                  If
the outstanding Warehousing Advances against Pledged Loans of a specific type
of Eligible Loan exceed the aggregate Purchase Commitments for that type of
Eligible Loan.

 

3.3 (d)                   Upon
telephonic or written Notice to Borrower by Lender, Borrower must pay to
Lender, and Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account for, the amount of any outstanding Warehousing
Advance against a specific Pledged Asset upon the earliest occurrence of any of
the following events:

 

(1)                                  For
any Pledged Loan, other than an Aged Mortgage Loan, the Standard Warehouse
Period elapses and, for any Aged Mortgage Loan, the Aged Warehouse Period
elapses.

 

(2)                                  Forty-five
(45) days elapse from the date a Pledged Loan was delivered to an Investor or
Approved Custodian for examination and purchase or for inclusion in a Mortgage
Pool, without the purchase being made or an Eligible Mortgage Pool being
initially certified, or upon rejection of a Pledged Loan as unsatisfactory by
an Investor or Approved Custodian.

 

(3)                                  Seven
(7) Business Days elapse from the date a Wet Settlement Advance was made
against a Pledged Loan without receipt by Lender of all Collateral Documents
relating to the Pledged Loan.

 

(4)                                  Three
(3) Business Days after the mandatory delivery date of the related Purchase
Commitment if the specific Pledged Loan or the Pledged Security backed by that
Pledged Loan has not been delivered under the Purchase Commitment prior to such
mandatory delivery date, or on the date the related Purchase Commitment expires
or is terminated, unless, in each case, the Pledged Loan or Pledged Security is
eligible for delivery to another Investor under a comparable Purchase
Commitment.

 

(5)                                  With
respect to any Pledged Loan, any of the Collateral Documents, upon examination
by Lender, are found not to be in compliance with the requirements of this
Agreement or the related Purchase Commitment.

 

3.3 (e)                    In
addition to the payments required by Sections 3.3(a), 3.3(c) and 3.3(d),
if the principal amount of any Pledged Loan is prepaid in whole or in part
while a Warehousing Advance is outstanding against the Pledged Loan, Borrower
must pay to Lender, without the necessity of prior demand or Notice from
Lender, and Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account for, the amount of the prepayment, to be applied
against the Warehousing Advance.

 

3.3 (f)                      The
proceeds of the sale or other disposition of Pledged Assets must be paid
directly by the Investor to the Cash Collateral Account. Borrower must give
Notice to Lender in writing or by telephone or by RFConnects Delivery to Lender
(and if by telephone, followed promptly by written Notice) of the Pledged
Assets for which proceeds have been received. Upon receipt of Borrower’s
Notice, Lender will apply any proceeds

 

3

 

deposited into the Cash Collateral Account to the payment of the Warehousing
Advances related to the Pledged Assets identified by Borrower in its Notice,
and those Pledged Assets will be considered to have been redeemed from pledge.
Lender is entitled to rely upon Borrower’s affirmation that deposits in the
Cash Collateral Account represent payments from Investors for the purchase of
the Pledged Assets specified by Borrower in its Notice. If the payment from an
Investor for the purchase of Pledged Assets is less than the outstanding Warehousing
Advances against the Pledged Assets identified by Borrower in its Notice, Borrower
must pay to Lender, and Borrower authorizes Lender to cause the Funding Bank to
charge Borrower’s Operating Account in, an amount equal to that deficiency. As
long as no Default or Event of Default exists, Lender will return to Borrower
any excess payment from an Investor for Pledged Assets.

 

3.3 (g)                   Lender
reserves the right to revalue any Pledged Loan.  Borrower must pay to Lender, without the necessity of prior
demand or Notice from Lender, and Borrower authorizes Lender to cause the
Funding Bank to charge Borrower’s Operating Account for, any amount required
after any such revaluation to reduce the principal amount of the Warehousing
Advance outstanding against the revalued Pledged Loan to an amount equal to the
Advance Rate for the applicable type of Eligible Loan multiplied by the Fair
Market Value of the Mortgage Loan.

 

3.4.                            Buydowns

 

Borrower may
prepay a portion of the Warehousing Advances outstanding against Prime Mortgage
Loans (a “Buydown”) upon Notice to Lender not later than (a) 1:00 p.m. on
the Business Day immediately preceding the Business Day on which Borrower
desires to make a Buydown in the amount of $10,000,000 or more or (b) 1:00 p.m.
on the Business Day on which Borrower desires to make a Buydown in an amount
less than $10,000,000.  Each Buydown
must be in an amount not less than $5,000, and Buydowns may not exceed the
aggregate principal balance of the Warehousing Advances outstanding against
Prime Mortgage Loans.  A Buydown is a
reduction in the aggregate amount of the Warehousing Advances outstanding
against Prime Mortgage Loans, but does not represent the prepayment of any
particular Warehousing Advance, and does not entitle Borrower to the release of
any Collateral.  Lender may apply Buydowns
to reduce interest payable by Borrower on outstanding Warehousing Advances in
any order that Lender determines in its sole discretion.  Unless a Default or Event of Default exists,
Borrower may reborrow all or any portion of a Buydown upon Notice to Lender not
later than (m) 1:00 p.m. on the Business Day immediately preceding the Busines
Day on which borrower desires to reborrow $10,000,000 or more or (n) 1:00 p.m.
on the Business Day that Borrower desires to reborrow an amount less than
$10,000,000.  If Lender receives
Buydowns or a combination of Buydowns and payments of Warehousing Advances that
exceed the aggregate principal balance of the Warehousing Advances outstanding
against Prime Mortgage Loans (an “Excess Buydown”), as long as no
Default or Event of Default exists, Borrower may reborrow all or any portion of
an Excess Buydown upon Notice to Lender not later than (y) 1:00 p.m. on the
Business Day immediately preceding the Business Day on which Borrower desires
to reborrow $10,000,000 or more or (z) 1:00 p.m. on the Business Day that Borrower
desires to reborrow an amount less than $10,000,000.   Alternatively, Lender may, in its sole discretion, re-advance to
Borrower all or any portion of an Excess Buydown by causing the Funding Bank to
credit the Operating Account in that amount. 
Lender has no obligation to pay or otherwise provide to Borrower any
interest, dividends or other benefits on an Excess Buydown.

 

3.5.                            Warehousing Commitment Fees

 

Borrower must pay
Lender a fee (“Warehousing Commitment Fee”) in the amount set forth in Exhibit
I.  The Warehousing Commitment Fee
is payable quarterly in advance. On the Closing Date, Borrower must pay the
prorated portion of the Warehousing Commitment Fee due from the

 

4

 

Closing Date to
the last day of the current Calendar Quarter. After the Closing Date, Borrower
must pay the Warehousing Commitment Fee within 9 days after the date of
Lender’s invoice or, if applicable, within 2 days after the date of Lender’s
account analysis statement. If the date set forth in clause (a) of the
definition of Warehousing Maturity Date occurs on a day other than the last day
of a Calendar Quarter, Borrower must pay the prorated portion of the
Warehousing Commitment Fee due from the beginning of the then current Calendar
Quarter to and including that date. Borrower is not entitled to a reduction in
the amount of the Warehousing Commitment Fee if (a) the Warehousing
Commitment Amount is reduced or (b) the Warehousing Commitment is
terminated at the request of Borrower or as a result of an Event of Default. If
the Warehousing Commitment terminates at the request of Borrower or as a result
of an Event of Default, Borrower must pay, on the date of termination, a
Warehousing Commitment Fee on the Warehousing Commitment Amount in effect
immediately prior to termination, for the period from the date of termination
to and including the date set forth in clause (a) of the definition of
Warehousing Maturity Date on the date of such termination. Lender’s
determination of the Warehousing Commitment Fee for any period is conclusive
and binding, absent manifest error.

 

3.6.                            Loan Package Fees, Wire Fees, Warehousing Fees

 

At the time of
each Warehousing Advance against an Eligible Loan, Borrower will incur a loan
package fee (“Loan Package Fee”) and a wire fee (“Wire Fee”).
Loan Package Fees and Wire Fees may, at Lender’s discretion, be billed
separately or combined into a single warehousing fee (“Warehousing Fee”).  Borrower must pay all Loan Package Fees,
Wire Fees or Warehousing Fees in the amount set forth in Exhibit I
within 9 days after the date of Lender’s invoice or, if applicable, within 2
days after the date of Lender’s account analysis statement.

 

3.7.                            Miscellaneous Fees and Charges

 

Borrower must
reimburse Lender for all Miscellaneous Fees and Charges.  Borrower must pay all Miscellaneous Fees and
Charges within 9 days after the date of Lender’s invoice or, if applicable,
within 2 days after the date of Lender’s account analysis statement.

 

3.8.                            Overdraft Advances

 

If, under the
authorization given by Borrower in the Funding Bank Agreement or pursuant to
this Agreement, Lender debits Borrower’s Operating Account or directs the
Funding Bank to honor an item presented against the Operating Account or
against the Check Disbursement Account, and that debit or direction results in
an overdraft, Lender may make an additional Warehousing Advance to fund that
overdraft (“Overdraft Advance”). 
Borrower must pay (a) the outstanding amount of any Overdraft Advance,
within 1 Business Day after the date of the Overdraft Advance, and (b) interest
on the amount of the Overdraft Advance, at a rate per annum equal to the Bank
One Prime Rate plus 2%, within 9 days after the date of Lender’s invoice or, if
applicable, within 2 days after the date of Lender’s account analysis
statement.

 

3.9.                            Method of Making Payments

 

3.9 (a)                    Unless
otherwise specified in this Agreement, Borrower must make all payments under
this Agreement to Lender by the close of business on the date when due unless
the date is not a Business Day. If the due date is not a Business Day, payment
is due on, and interest will accrue to, the next Business Day. Borrower must
make all payments in United States dollars in immediately available funds
transferred by wire to accounts designated by Lender.

 

5

 

3.9 (b)                   Borrower
authorizes Lender to cause the Funding Bank to charge Borrower’s Operating
Account for any interest or fees due and payable to Lender on or after the 9th
day after the date of Lender’s invoice or, if applicable, on or after the 2nd
day after the date of Lender’s account analysis statement, without the
necessity of prior demand or Notice from Lender.

 

3.9 (c)                    While
a Default or Event of Default exists, Borrower authorizes Lender to cause the
Funding Bank to charge Borrower’s Operating Account for any Obligations due and
payable to Lender, without the necessity of prior demand or Notice from Lender.

 

 

End of Article 3

 

6

 

COLLATERAL

 

4.1.                            Grant of Security Interest

 

As security for
the payment of the Warehousing Note and for the performance of all of
Borrower’s Obligations, Borrower grants a security interest to Lender in all of
Borrower’s right, title and interest in and to the following described property
(“Collateral”):

 

4.1 (a)                    All
amounts advanced by Lender to or for the account of Borrower under this
Agreement to fund a Mortgage Loan until that Mortgage Loan is closed and those
funds disbursed.

 

4.1 (b)                   All
Mortgage Loans, including all Mortgage Notes, Mortgages and Security Agreements
evidencing or securing those Mortgage Loans, that are delivered or caused to be
delivered to Lender (including delivery to a third party on behalf of Lender),
or that otherwise come into the possession, custody or control of Lender (including
the possession, custody or control of a third party on behalf of Lender) for
the purpose of pledge or in respect of which Lender has made a Warehousing
Advance under this Agreement (collectively, “Pledged Loans”).

 

4.1 (c)                    All
Mortgage-backed Securities that are created in whole or in part on the basis of
Pledged Loans or that are delivered or caused to be delivered to Lender (including
delivery to a third party on behalf of Lender), or that otherwise come into the
possession, custody or control of Lender (including the possession, custody or
control of a third party on behalf of Lender) or that are registered by
book-entry in the name of Lender (including registration in the name of a third
party on behalf of Lender), in each case for the purpose of pledge, or in
respect of which a Warehousing Advance has been made by Lender under this
Agreement (collectively, “Pledged Securities”).

 

4.1 (d)                   All
private mortgage insurance and all commitments issued by the VA or FHA to
insure or guarantee any Mortgage Loans included in the Pledged Loans; all
Purchase Commitments held by Borrower covering Pledged Loans or Pledged
Securities, and all proceeds from the sale of Pledged Loans or Pledged
Securities to Investors pursuant to those Purchase Commitments; and all
personal property, contract rights, servicing rights or contracts and servicing
fees and income or other proceeds, amounts and payments payable to Borrower as
compensation or reimbursement, accounts, payments, intangibles and general
intangibles of every kind relating to Pledged Loans, Pledged Securities,
Purchase Commitments, VA commitments or guaranties, FHA commitments, private
mortgage insurance and commitments, and all other documents or instruments
relating to Pledged Loans and Pledged Securities, including any interest of
Borrower in any fire, casualty or hazard insurance policies and any awards made
by any public body or decreed by any court of competent jurisdiction for a
taking or for degradation of value in any eminent domain proceeding as the same
relate to Pledged Loans.

 

4.1 (e)                    All
escrow accounts, documents, instruments, files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting
records (including all information, records, tapes, data, programs, discs and
cards necessary or helpful in the administration or servicing of the
Collateral) and other information and data of Borrower relating to the
Collateral.

 

4.1 (f)                      All
cash, whether now existing or acquired after the date of this Agreement,
delivered to or otherwise in the possession of Lender, the Funding Bank or
Lender’s agent, bailee or custodian or designated on the books and records of
Borrower as assigned and pledged

 

1

 

to Lender, including all cash deposited in the Cash Collateral Account,
the Check Disbursement Account and the Wire Disbursement Account.

 

4.1 (g)                   All
Hedging Arrangements related to the Collateral (“Pledged Hedging
Arrangements”) and Borrower’s accounts in which those Hedging Arrangements
are held (“Pledged Hedging Accounts”), including all rights to payment
arising under the Pledged Hedging Arrangements and the Pledged Hedging
Accounts, except that Lender’s security interest in the Pledged Hedging
Arrangements and Pledged Hedging Accounts applies only to benefits, including
rights to payment, related to the Collateral.

 

4.1 (h)                   All
cash and non-cash proceeds of the Collateral, including all dividends,
distributions and other rights in connection with, and all additions to,
modifications of and replacements for, the Collateral, and all products and
proceeds of the Collateral, together with whatever is receivable or received
when the Collateral or proceeds of Collateral are sold, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or involuntary,
including all rights to payment with respect to any cause of action affecting
or relating to the Collateral or proceeds of Collateral.

 

4.2.                            Maintenance of Collateral Records

 

As long as the
Warehousing Commitment is outstanding or there remain any Obligations to be
paid or performed under this Agreement or under any other Loan Document,
Borrower must preserve and maintain, at its chief executive office and principal
place of business or in a regional office approved by Lender, or in the office
of a computer service bureau engaged by Borrower and approved by Lender and,
upon request, make available to Lender the originals, or copies in any case
where the originals have been delivered to Lender or to an Investor, of the
Mortgage Notes, Mortgages and Security Agreements included in Pledged Loans,
Mortgage-backed Securities delivered to Lender as Pledged Securities, Purchase
Commitments, and all related Mortgage Loan documents and instruments, and all
files, surveys, certificates, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records and other information and data relating
to the Collateral.

 

4.3.                            Release of Security Interest in Pledged Loans and
Pledged Securities

 

4.3 (a)                    Except
as provided in Section 4.3(b), Lender will release its security interest
in the Pledged Loans only against payment to Lender of the Release Amount in
connection with those Pledged Loans. If Pledged Loans are transferred to a pool
custodian or an Investor for inclusion in a Mortgage Pool and Lender’s security
interest in the Pledged Loans included in the Mortgage Pool is not released
before the issuance of the related Mortgage-backed Security, then that Mortgage-backed
Security, when issued, is a Pledged Security, Lender’s security interest
continues in the Pledged Loans backing that Pledged Security and Lender is
entitled to possession of the Pledged Security in the manner provided in this
Agreement.

 

4.3 (b)                   If
Pledged Loans are transferred to an Approved Custodian and included in an
Eligible Mortgage Pool, Lender’s security interest in the Pledged Loans
included in the Eligible Mortgage Pool will be released upon the delivery of
the Agency Security to Lender (including delivery to or registration in the
name of a third party on behalf of Lender) and that Agency Security is a
Pledged Security.  Lender’s security
interest in that Pledged Security will be released only against payment to
Lender of the Release Amount in connection with the Mortgage Loans backing that
Pledged Security.

 

4.3 (c)                    Lender
has the exclusive right to possession of all Pledged Securities or, if Pledged
Securities are issued in book-entry form or issued in certificated form and
delivered to a

 

2

 

clearing corporation (as that term is defined in the Uniform Commercial
Code of Minnesota) or its nominee, Lender has the right to have the Pledged
Securities registered in the name of a securities intermediary (as that term is
defined in the Uniform Commercial Code of Minnesota) in an account containing
only customer securities and credited to an account of Lender. Lender has no
duty or obligation to deliver Pledged Securities to an Investor or to credit Pledged
Securities to the account of an Investor or an Investor’s designee except
against payment for those Pledged Securities. Borrower acknowledges that Lender
may enter into one or more standing arrangements with securities intermediaries
with respect to Pledged Securities issued in book entry form or issued in
certificated form and delivered to a clearing corporation or its designee,
under which the Pledged Securities are registered in the name of the securities
intermediary, and Borrower agrees, upon request of Lender, to execute and
deliver to those securities intermediaries Borrower’s written concurrence in
any such standing arrangements.

 

4.3 (d)                   If
no Default or Event of Default occurs, Borrower may redeem a Pledged Loan or
Pledged Security from Lender’s security interest by notifying Lender of its
intention to redeem the Pledged Loan or Pledged Security from pledge and either
(1) paying, or causing an Investor to pay, to Lender, for application as a
prepayment on the principal balance of the Warehousing Note, the Release Amount
in connection with the Pledged Loan or the Pledged Loans backing that Pledged
Security, or (2) delivering substitute Collateral that, in addition to
being acceptable to Lender in its sole discretion, will, when included with the
remaining Collateral, result in a Warehousing Collateral Value of all
Collateral held by Lender that is at least equal to the aggregate outstanding
Warehousing Advances.

 

4.3 (e)                    After
a Default or Event of Default occurs, Lender may, with no liability to Borrower
or any Person, continue to release its security interest in any Pledged Loan or
Pledged Security against payment of the Release Amount for that Pledged Loan or
for the Pledged Loans backing that Pledged Security.

 

4.3 (f)                      The
amount to be paid by Borrower to obtain the release of Lender’s security
interest in a Pledged Loan (“Release Amount”) will be (1) in
connection with the sale of a Pledged Loan by Borrower, the payment required in
any bailee letter pursuant to which Lender ships that Pledged Loan to an
Investor, Approved Custodian, pool custodian or other party, (2) in connection
with the sale of a Pledged Loan by Lender while an Event of Default exists, the
amount paid to Lender in a commercially reasonable disposition of that Pledged
Loan and (3) otherwise, until an Event of Default occurs, the principal amount
of the Warehousing Advance outstanding against the Pledged Loan.

 

4.4.                            Collection and Servicing Rights

 

4.4 (a)                    If
no Event of Default exists, Borrower may service and receive and collect
directly all sums payable to Borrower in respect of the Collateral other than
proceeds of any Purchase Commitment or proceeds of the sale of any
Collateral.  All proceeds of any
Purchase Commitment or any other sale of Collateral must be paid directly to
the Cash Collateral Account for application as provided in this Agreement.

 

4.4 (b)                   After
an Event of Default, Lender or its designee is entitled to service and receive
and collect all sums payable to Borrower in respect of the Collateral, and in
such case (1) Lender or its designee in its discretion may, in its own
name, in the name of Borrower or otherwise, demand, sue for, collect or receive
any money or property at any time payable or receivable on account of or in
exchange for any of the Collateral, but Lender has no obligation to do so,
(2) Borrower must, if Lender requests it to do so, hold in trust for the
benefit of Lender and immediately pay to Lender at its office designated

 

3

 

by Notice, all amounts received by Borrower upon or in respect of any
of the Collateral, advising Lender as to the source of those funds and
(3) all amounts so received and collected by Lender will be held by it as
part of the Collateral.

 

4.5.                            Return of Collateral at End of Warehousing
Commitment

 

If (a) the Warehousing
Commitment has expired or been terminated, and (b) no Warehousing Advances,
interest or other Obligations are outstanding and unpaid, Lender will release
its security interest and will deliver all Collateral in its possession to
Borrower at Borrower’s expense. Borrower’s acknowledgement or receipt for any
Collateral released or delivered to Borrower under any provision of this
Agreement is a complete and full acquittance for the Collateral so returned, and
Lender is discharged from any liability or responsibility for that Collateral.

 

4.6.                            Delivery of Collateral Documents

 

4.6 (a)                    Lender
may deliver documents relating to the Collateral to Borrower for correction or
completion under a Trust Receipt.

 

4.6 (b)                   If
no Default or Event of Default exists, upon delivery by Borrower to Lender of
shipping instructions pursuant to the applicable Exhibit B, Lender
will deliver the Mortgage Notes evidencing Pledged Loans or Pledged Securities,
together with all related loan documents and pool documents previously received
by Lender under the requirements of the applicable Exhibit B, to the
designated Investor or Approved Custodian or to another party designated by
Borrower and acceptable to Lender in its sole discretion.

 

4.6 (c)                    If
a Default or Event of Default exists, Lender may, without liability to Borrower
or any other Person, continue to deliver Pledged Loans or Pledged Securities,
together with all related loan documents and pool documents in Lender’s
possession, to the applicable Investor, or Approved Custodian or to another
party acceptable to Lender in its sole discretion.

 

 

End of Article 4

 

4

 

CONDITIONS PRECEDENT

 

5.1.                            Initial Advance

 

Lender’s
obligation to make the initial Warehousing Advance, is subject to the
satisfaction, in the sole discretion of Lender, of the following conditions
precedent:

 

5.1 (a)                    Lender
must receive the following, all of which must be satisfactory in form and
content to Lender, in its sole discretion:

 

(1)                                  The
Warehousing Note and this Agreement duly executed by Borrower.

 

(2)                                  Borrower’s
articles or certificate of incorporation, together with all amendments, as
certified by the Secretary of State of New York, Borrower’s bylaws, together with
all amendments, certified by the corporate secretary or assistant secretary of
Borrower, and certificates of good standing dated within 60 days of the date of
this Agreement, together with a certification from the Franchise Tax Board or
other state tax authority stating that Borrower is in good standing with the
Franchise Tax Board or such state tax authority, if applicable.

 

(3)                                  A
resolution of the board of directors of Borrower authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents, each Warehousing
Advance Request and all other agreements, instruments or documents to be
delivered by Borrower under this Agreement.

 

(4)                                  A
certificate as to the incumbency and authenticity of the signatures of the officers
of Borrower executing this Agreement and the other Loan Documents.

 

(5)                                  Assumed
Name Certificates dated within 30 days of the date of this Agreement for any
assumed name used by Borrower in the conduct of its business.

 

(6)                                  Fiscal
year-end financial statements of Borrower (and, if applicable, Borrower’s
Subsidiaries, on a consolidated basis) containing a balance sheet as of
December 31, 2002 and related statements of income, changes in stockholders’
equity and cash flows for the period ended on that date, all in reasonable
detail and prepared in accordance with GAAP applied on a basis consistent with
prior periods and accompanied by (A) an opinion as to those financial
statements in form and substance satisfactory to Lender and prepared by
independent certified public accountants of recognized standing acceptable to
Lender and (B) any management letters, management reports or other
supplementary comments or reports delivered by those accountants to Borrower or
its board of directors.

 

(7)                                  Interim
financial statements of Borrower (and, if applicable, Borrower’s Subsidiaries,
on a consolidated basis) containing a balance sheet as of March 31, 2003, and a
related statement of income, for the period ended on that date prepared in
accordance with GAAP applied on a basis consistent with Borrower’s most recent
audited financial statements.

 

(8)                                  A
favorable written opinion of counsel to Borrower, addressed to Lender and dated
as of the date of this Agreement, covering such matters as Lender may
reasonably request.

 

1

 

(9)                                  Uniform
Commercial Code, tax lien and judgment searches of the appropriate public
records for Borrower that do not disclose the existence of any prior Lien on
the Collateral other than in favor of Lender or as permitted under this
Agreement.

 

(10)                            Copies
of the certificates, documents or other written instruments that evidence
Borrower’s eligibility described in Section 9.1, all in form and substance satisfactory to Lender.

 

(11)                            Copies
of Borrower’s errors and omissions insurance policy or mortgage impairment
insurance policy, and blanket bond coverage policy, or certificates in lieu of
policies, showing compliance by Borrower as of the date of this Agreement with
the provisions of Section 7.9.

 

(12)                            A fully-executed
Funding Bank Agreement and evidence that all accounts into which Warehousing
Advances will be funded have been established at the Funding Bank.

 

(13)                            One or more
agreements among Borrower, Lender and Fannie Mae in which Fannie Mae agrees to
send all cash proceeds of Mortgage Loans sold by Borrower to Fannie Mae to the
Cash Collateral Account, each in form and substance satisfactory to Lender.

 

(14)                            Receipt
by Lender of any fees due on the date of this Agreement.

 

5.1 (b)                   If,
as of the date of this Agreement, Borrower has any indebtedness for borrowed
money to any of its directors, officers, shareholders or Affiliates, which
indebtedness has a term of more than 1 year or is in excess of $25,000, the
Person to whom Borrower is indebted must have executed a Subordination of Debt
Agreement, on the form prescribed by Lender; and Lender must have received an
executed copy of that Subordination of Debt Agreement, certified by the corporate
secretary or assistant secretary of Borrower to be true and complete and in
full force and effect as of the date of the Warehousing Advance.

 

5.1 (c)                    Borrower
must not have incurred any material liabilities, direct or contingent, other
than in the ordinary course of its business, since the Audited Statement Date.

 

5.2.                            Each Advance

 

Lender’s
obligation to make the initial and each subsequent Warehousing Advance is
subject to the satisfaction, in the sole discretion of Lender, as of the date
of each Warehousing Advance, of the following additional conditions precedent:

 

5.2 (a)                    Borrower
must have delivered to Lender the Warehousing Advance Request and Collateral
Documents required by, and must have satisfied the procedures set forth in,
Article 2 and the Exhibits described in that Article. All items delivered to
Lender must be satisfactory to Lender in form and content, and Lender may
reject any item that does not satisfy the requirements of this Agreement or of
the related Purchase Commitment.

 

5.2 (b)                   Lender
must have received evidence satisfactory to it as to the making or continuation
of any book entry or the due filing and recording in all appropriate offices of
all financing statements and other instruments necessary to perfect the
security interest of Lender in the Collateral under the Uniform Commercial Code
or other applicable law.

 

2

 

5.2 (c)                    The
representations and warranties of Borrower contained in Article 6 and Article 9
must be accurate and complete in all material respects as if made on and as of
the date of each Warehousing Advance.

 

5.2 (d)                   Borrower
must have performed all agreements to be performed by it under this Agreement,
and after giving effect to the requested Warehousing Advance, no Default or
Event of Default will exist under this Agreement.

 

Delivery of a Warehousing Advance Request by Borrower
will be deemed a representation by Borrower that all conditions set forth in
this Section have been satisfied as of the date of the Warehousing Advance.

 

5.3.                            Force Majeure

 

Notwithstanding
Borrower’s satisfaction of the conditions set forth in this Agreement, Lender
has no obligation to make a Warehousing Advance if Lender is prevented from
obtaining the funds necessary to make a Warehousing Advance, or is otherwise
prevented from making a Warehousing Advance as a result of any fire or other
casualty, failure of power, strike, lockout or other labor trouble, banking
moratorium, embargo, sabotage, confiscation, condemnation, riot, civil
disturbance, insurrection, act of terrorism, war or other activity of armed forces,
act of God or other similar reason beyond the control of Lender.  Lender will make the requested Warehousing
Advance as soon as reasonably possible following the occurrence of such an
event.

 

End of Article 5

 

3

 

GENERAL REPRESENTATIONS AND WARRANTIES

 

Borrower
represents and warrants to Lender, as of the date of this Agreement and as of
the date of each Warehousing Advance Request and the making of each Warehousing
Advance, that:

 

6.1.                            Place of Business

 

Borrower’s chief
executive office and principal place of business is 33 Maiden Lane, New York,
NY, 10038.

 

6.2.                            Organization; Good Standing; Subsidiaries

 

Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New York, and has the full legal power and authority to
own its property and to carry on its business as currently conducted. Borrower
is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction in which the transaction of its business makes
qualification necessary, except in jurisdictions, if any, where a failure to be
in good standing has no material adverse effect on Borrower’s business,
operations, assets or financial condition as a whole. For the purposes of this
Agreement, good standing includes qualification for all licenses and payment of
all taxes required in the jurisdiction of its incorporation and in each
jurisdiction in which Borrower transacts business. Borrower has no Subsidiaries
except as set forth on Exhibit D, which sets forth with respect to
each Subsidiary, its name, address, jurisdiction of organization, each state in
which it is qualified to do business, and the percentage ownership of its capital
stock by Borrower.  Each of Borrower’s
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, and has the full legal power and
authority to own its property and to carry on its business as currently
conducted.

 

6.3.                            Authorization and Enforceability

 

Borrower has the
power and authority to execute, deliver and perform this Agreement, the Warehousing
Note and other Loan Documents to which Borrower is party and to make the
borrowings under this Agreement. The execution, delivery and performance by
Borrower of this Agreement, the Warehousing Note and the other Loan Documents
to which Borrower is party and the making of the borrowings under this
Agreement, and the Warehousing Note, have been duly and validly authorized by
all necessary corporate action on the part of Borrower (none of which actions
has been modified or rescinded, and all of which actions are in full force and
effect) and do not and will not (a) conflict with or violate any provision of
law, of any judgments binding upon Borrower, or of the articles of
incorporation or by-laws of Borrower, or (b) conflict with or result in a
breach of, constitute a default or require any consent under, or result in or
require the acceleration of any indebtedness of Borrower under any agreement,
instrument or indenture to which Borrower is a party or by which Borrower or
its property may be bound or affected, or result in the creation of any Lien
upon any property or assets of Borrower (other than the Lien on the Collateral
granted under this Agreement). This Agreement, the Warehousing Note and the
other Loan Documents constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or other such laws affecting the enforcement
of creditors’ rights.

 

6.4.                            Approvals

 

The execution and
delivery of this Agreement, the Warehousing Note and the other Loan Documents
and the performance of Borrower’s obligations under this Agreement, the Warehousing
Note and the other Loan Documents and the validity and enforceability of this

 

1

 

Agreement, the Warehousing
Note and the other Loan Documents do not require any license, consent, approval
or other action of any state or federal agency or governmental or regulatory
authority other than those that have been obtained and remain in full force and
effect.

 

6.5.                            Financial Condition

 

The balance sheet
of Borrower (and, if applicable, Borrower’s Subsidiaries, on a consolidated
basis) as of each Statement Date, and the related statements of income, cash
flows and changes in stockholders’ equity for the fiscal period ended on each
Statement Date, furnished to Lender, fairly present the financial condition of
Borrower (and, if applicable, Borrower’s Subsidiaries) as at that Statement
Date and the results of its operations for the fiscal period ended on that
Statement Date. Borrower had, on each Statement Date, no known material
liabilities, direct or indirect, fixed or contingent, matured or unmatured, or
liabilities for taxes, long-term leases or unusual forward or long-term
commitments not disclosed by, or reserved against in, those financial
statements, and at the present time there are no material unrealized or
anticipated losses from any loans, advances or other commitments of Borrower
except as previously disclosed to Lender in writing. Those financial statements
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved. Since the Audited Statement Date, there has been no
material adverse change in the business, operations, assets or financial
condition of Borrower (and, if applicable, Borrower’s Subsidiaries), nor is
Borrower aware of any state of facts that (with or without notice or lapse of
time or both) would or could result in any such material adverse change.

 

6.6.                            Litigation

 

There are no
actions, claims, suits or proceedings pending or, to Borrower’s knowledge,
threatened or reasonably anticipated against or affecting Borrower or any
Subsidiary of Borrower in any court or before any arbitrator or before any
government commission, board, bureau or other administrative agency that, if
adversely determined, may reasonably be expected to result in a material adverse
change in Borrower’s business, operations, assets or financial condition as a
whole, or that would affect the validity or enforceability of this Agreement,
the Warehousing Note or any other Loan Document.

 

6.7.                            Compliance with Laws

 

Neither Borrower
nor any Subsidiary of Borrower is in violation of any provision of any law, or
of any judgment, award, rule, regulation, order, decree, writ or injunction of
any court or public regulatory body or authority that could result in a
material adverse change in Borrower’s business, operations, assets or financial
condition as a whole or that would affect the validity or enforceability of
this Agreement, the Warehousing Note or any other Loan Document.

 

6.8.                            Regulation U

 

Borrower is not
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock, and no
part of the proceeds of any Warehousing Advance made under this Agreement will
be used to purchase or carry any Margin Stock or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock.

 

6.9.                            Investment Company Act

 

Borrower is not an
“investment company” or controlled by an “investment company” within the
meaning of the Investment Company Act.

 

2

 

6.10.                     Payment of Taxes

 

Borrower and each
of its Subsidiaries has filed or caused to be filed all federal, state and
local income, excise, property and other tax returns that are required to be
filed with respect to the operations of Borrower and its Subsidiaries, all such
returns are true and correct and Borrower and each of its Subsidiaries has paid
or caused to be paid all taxes shown on those returns or on any assessment, to
the extent that those taxes have become due, including all FICA payments and
withholding taxes, if appropriate. The amounts reserved as a liability for
income and other taxes payable in the financial statements described in
Section 6.6 are sufficient for payment of all unpaid federal, state and
local income, excise, property and other taxes, whether or not disputed, of
Borrower and its Subsidiaries accrued for or applicable to the period and on
the dates of those financial statements and all years and periods prior to
those financial statements and for which Borrower and its Subsidiaries may be
liable in their own right or as transferee of the assets of, or as successor
to, any other Person. No tax Liens have been filed and no material claims are
being asserted against Borrower, any Subsidiary of Borrower or any property of
Borrower or any Subsidiary of Borrower with respect to any taxes, fees or
charges.

 

6.11.                     Agreements

 

Neither Borrower
nor any Subsidiary of Borrower is a party to any agreement, instrument or
indenture or subject to any restriction materially and adversely affecting its
business, operations, assets or financial condition, except as disclosed in the
financial statements described in Section 6.6.  Neither Borrower nor any Subsidiary of Borrower is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement, instrument, or indenture which
default could result in a material adverse change in Borrower’s business,
operations, properties or financial condition as a whole. No holder of any
indebtedness of Borrower or of any of its Subsidiaries has given notice of any
asserted default under that indebtedness, and no liquidation or dissolution of
Borrower or of any of its Subsidiaries and no receivership, insolvency,
bankruptcy, reorganization or other similar proceedings relative to Borrower or
of any of its Subsidiaries or any of its or their properties is pending, or to
the knowledge of Borrower, threatened.

 

6.12.                     Title to Properties

 

Borrower and each
Subsidiary of Borrower has good, valid, insurable and (in the case of real
property) marketable title to all of its properties and assets (whether real or
personal, tangible or intangible) reflected on the financial statements
described in Section 6.6, except for those properties and assets that
Borrower has disposed of since the date of those financial statements either in
the ordinary course of business or because they were no longer used or useful
in the conduct of Borrower’s or the Subsidiary’s business. All of Borrower’s
properties and assets are free and clear of all Liens except as disclosed in
Borrower’s financial statements.

 

6.13.                     ERISA

 

Each Plan is in
compliance with all applicable requirements of ERISA and the Internal Revenue
Code and with all material applicable rulings and regulations issued under the
provisions of ERISA and the Internal Revenue Code setting forth those
requirements, except where any failure to comply would not result in a material
loss to Borrower or any ERISA Affiliate. All of the minimum funding standards
or other contribution obligations applicable to each Plan have been satisfied.
No Plan is a defined-benefit pension plan subject to Title IV of ERISA,
and there is no Multiemployer Plan.

 

3

 

6.14.                     No Retiree Benefits

 

Except as required
under Section 4980B of the Internal Revenue Code, Section 601 of
ERISA or applicable state law, neither Borrower nor, if applicable, any
Subsidiary is obligated to provide post-retirement medical or insurance
benefits with respect to employees or former employees.

 

6.15.                     Assumed Names

 

Borrower does not
originate Mortgage Loans or otherwise conduct business under any names other
than its legal name and the assumed names set forth on Exhibit G.
Borrower has made all filings and taken all other action as may be required
under the laws of any jurisdiction in which it originates Mortgage Loans or
otherwise conducts business under any assumed name. Borrower’s use of the
assumed names set forth on Exhibit G does not conflict with any
other Person’s legal rights to any such name, nor otherwise give rise to any
liability by Borrower to any other Person. 
Borrower may amend Exhibit G to add or delete any assumed names
used by Borrower to conduct business. 
An amendment to Exhibit G to add an assumed name is not effective
until Borrower has delivered to Lender an assumed name certificate in the
jurisdictions in which the assumed name is to be used, which must be
satisfactory in form and content to Lender, in its sole discretion.  In connection with any amendment to delete a
name from Exhibit G, Borrower represents and warrants that it has ceased
using that assumed name in all jurisdictions.

 

6.16.                     Servicing

 

Exhibit C
is a true and complete list of Borrower’s Servicing Portfolio. All of
Borrower’s Servicing Contracts are in full force and effect, and are
unencumbered by Liens other than Liens disclosed in Exhibit C. No
default or event that, with notice or lapse of time or both, would become a
default, exists under any of Borrower’s Servicing Contracts.

 

 

End of Article 6

 

4

 

AFFIRMATIVE COVENANTS

 

As long as the Warehousing
Commitment is outstanding or there remain any Obligations to be paid or
performed under this Agreement or under any other Loan Document, Borrower must:

 

7.1.                            Payment of Obligations

 

Punctually pay or
cause to be paid all Obligations, including the Obligations payable under this
Agreement and under the Warehousing Note, in accordance with their terms.

 

7.2.                            Financial Statements

 

Deliver to Lender:

 

7.2 (a)                    As soon as available and in any
event within 30 days after the end of each month, including the last month of
Borrower’s fiscal year, an interim statement of income of Borrower (and, if
applicable, Borrower’s Subsidiaries, on a consolidated basis) for the
immediately preceding month and for the period from the beginning of the fiscal
year to the end of that month, and the related balance sheet as at the end of
the immediately preceding month, all in reasonable detail, subject, however, to
year-end audit adjustments.

 

7.2 (b)                   As
soon as available and in any event within 90 days after the end of each fiscal
year of Borrower, fiscal year-end statements of income, changes in stockholders’
equity and cash flow of Borrower (and, if applicable, Borrower’s Subsidiaries,
on a consolidated basis) for that year, and the related balance sheet as of the
end of that year (setting forth in comparative form the corresponding figures
for the preceding fiscal year), all in reasonable detail and accompanied by (1)
an opinion as to those financial statements in form and substance satisfactory
to Lender and prepared by independent certified public accountants of
recognized standing acceptable to Lender and (2) any management letters,
management reports or other supplementary comments or reports delivered by
those accountants to Borrower or its board of directors.

 

7.2 (c)                    Together
with each delivery of financial statements required by this Section, a
Compliance Certificate substantially in the form of Exhibit E.

 

7.2 (d)                   Copies
of all regular or periodic financial and other reports that Borrower files with
the Securities and Exchange Commission or any successor governmental agency or
other entity.

 

7.3.                            Other Borrower Reports

 

Deliver to Lender:

 

7.3 (a)                  If
Borrower has a Servicing Portfolio, then as soon as available and in any event
within 30 days after the end of each month, a consolidated report (“Servicing
Portfolio Report”) as of the end of the month, as to all Mortgage Loans the
servicing rights to which are owned by Borrower (specified by investor type,
recourse and non-recourse) regardless of whether the Mortgage Loans are Pledged
Loans. The Servicing Portfolio Report must indicate which Mortgage Loans
(1) are current and in good standing, (2) are more than 30, 60 or 90
days past due, (3) are the subject of pending bankruptcy or foreclosure

 

1

 

proceedings, or (4) have been converted (through foreclosure or
other proceedings in lieu of foreclosure) into real estate owned by Borrower.

 

7.3 (b)                   As
soon as available and in any event within 30 days after the end of each month,
a consolidated loan production report as of the end of that month, presenting
the total dollar volume and the number of Mortgage Loans originated and closed
or purchased during that month and for the fiscal year-to-date, specified by
property type and loan type.

 

7.3 (c)                    As
soon as available and in any event within 30 days after the end of each month,
a commitment summary and pipeline report, substantially in the form of Exhibit
J, as of the end of that month.

 

7.3 (d)                   Unless
the Funding Bank has previously provided Lender with a copy of the Funding
Bank’s monthly statement for the Check Disbursement Account, as soon as
available and in any event within 30 days after the end of each month, a copy
of that monthly statement.

 

7.3 (e)                    Within
30 days after the end of each month, a report as of the end of that month
detailing all requests that Borrower repurchase Mortgage Loans from an Investor
or out of an Eligible Mortgage Pool for which Borrower has determined it is
legally obligated to honor pursuant to the applicable written agreements
between Borrower and the requesting party, including the status of each such
request and any indemnification or similar agreement to which Borrower is a
party in connection with any such request.

 

7.3 (f)                      Other
reports in respect of Pledged Assets, including copies of purchase
confirmations issued by Investors purchasing Pledged Loans from Borrower, in
such detail and at such times as Lender in its discretion may reasonably
request.

 

7.3 (g)                   With
reasonable promptness, all further information regarding the business,
operations, properties or financial condition of Borrower as Lender may
reasonably request, including copies of any audits completed by HUD, Ginnie
Mae, Fannie Mae or Freddie Mac.

 

7.4.                            Maintenance of Existence; Conduct of Business

 

Preserve and
maintain its corporate existence in good standing and all of its rights,
privileges, licenses and franchises necessary or desirable in the normal
conduct of its business, including its eligibility as lender, seller/servicer
and issuer described under Section 9.1; conduct its business in an orderly
and efficient manner; maintain a net worth of acceptable assets as required for
maintaining Borrower’s eligibility as lender, seller/servicer and issuer
described under Section 9.1; and make no material change in the nature or
character of its business or engage in any business in which it was not engaged
on the date of this Agreement.

 

7.5.                            Compliance with Applicable Laws

 

Comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, a breach of which could result in a material adverse
change in Borrower’s business, operations, assets, or financial condition as a
whole or on the enforceability of this Agreement, the Warehousing Note, any
other Loan Document or any Collateral, except where contested in good faith and
by appropriate proceedings.

 

2

 

7.6.                            Inspection of Properties and Books; Operational Reviews

 

Permit Lender or
any Participant (and their authorized representatives) to discuss the business,
operations, assets and financial condition of Borrower and its Subsidiaries
with Borrower’s officers, agents and employees, and to examine and make copies
or extracts of Borrower’s and its Subsidiaries’ books of account, all at such
reasonable times as Lender or any Participant may request. Provide its
accountants with a copy of this Agreement promptly after its execution and
authorize and instruct them to answer candidly all questions that the officers
of Lender or any Participant or any authorized representatives of Lender or any
Participant may address to them in reference to the financial condition or
affairs of Borrower and its Subsidiaries. Borrower may have its representatives
in attendance at any meetings held between the officers or other
representatives of Lender or any Participant and Borrower’s accountants under
this authorization. Permit Lender or any Participant (and their authorized
representatives) access to Borrower’s premises and records for the purpose of
conducting a review of Borrower’s general mortgage business methods, policies
and procedures, auditing its loan files and reviewing the financial and
operational aspects of Borrower’s business.

 

7.7.                            Notice

 

Give prompt Notice
to Lender of (a) any action, suit or proceeding instituted by or against
Borrower or any of its Subsidiaries in any federal or state court or before any
commission or other regulatory body (federal, state or local, domestic or
foreign), which action, suit or proceeding has at issue in excess of $250,000,
or any such proceedings threatened against Borrower or any of its Subsidiaries
in writing containing the details of that action, suit or proceeding;
(b) the filing, recording or assessment of any federal, state or local tax
Lien against Borrower, or any of its assets or any of its Subsidiaries; (c) an
Event of Default; (d) a Default that continues for more than 4 days;
(e) the suspension, revocation or termination of Borrower’s eligibility,
in any respect, as lender, seller/servicer or issuer as described under
Section 9.1; (f) the transfer, loss, nonrenewal or termination of any
Servicing Contracts to which Borrower is a party, or which is held for the
benefit of Borrower, and the reason for that transfer, loss, nonrenewal or
termination; (g) any Prohibited Transaction with respect to any Plan, specifying
the nature of the Prohibited Transaction and what action Borrower proposes to
take with respect to it; and (h) any other action, event or condition of
any nature that could lead to or result in a material adverse change in the
business, operations, assets or financial condition of Borrower or any of its
Subsidiaries.

 

7.8.                            Payment of Debt, Taxes and Other Obligations

 

Pay, perform and
discharge, or cause to be paid, performed and discharged, all of the
obligations and indebtedness of Borrower and its Subsidiaries, all taxes,
assessments and governmental charges or levies imposed upon Borrower or its
Subsidiaries or upon their respective income, receipts or properties before
those taxes, assessments and governmental charges or levies become past due, and
all lawful claims for labor, materials and supplies or otherwise that, if
unpaid, could become a Lien or charge upon any of their respective properties
or assets. Borrower and its Subsidiaries are not required to pay, however, any
taxes, assessments and governmental charges or levies or claims for labor,
materials or supplies for which Borrower or its Subsidiaries have obtained an
adequate bond or insurance or that are being contested in good faith and by
proper proceedings that are being reasonably and diligently pursued and for
which proper reserves have been created.

 

7.9.                            Insurance

 

Maintain blanket
bond coverage and errors and omissions insurance or mortgage impairment
insurance, with such companies and in such amounts as satisfy prevailing
requirements

 

3

 

applicable to a
lender, seller/servicer and issuer described under Section 9.1, and
liability insurance and fire and other hazard insurance on its properties, in
each case with responsible insurance companies acceptable to Lender, in such
amounts and against such risks as is customarily carried by similar businesses
operating in the same location. Within 30 days after Notice from Lender, obtain
such additional insurance as Lender may reasonably require, all at the sole
expense of Borrower. Copies of such policies must be furnished to Lender
without charge upon request of Lender.

 

7.10.                     Closing Instructions

 

Indemnify and hold
Lender harmless from and against any loss, including reasonable attorneys’ fees
and costs, attributable to the failure of any title insurance company, agent or
attorney to comply with Borrower’s disbursement or instruction letter relating
to any Mortgage Loan. Lender has the right to pre-approve Borrower’s choice of
title insurance company, agent or attorney and Borrower’s disbursement or
instruction letter to them in any case in which Borrower intends to obtain a
Warehousing Advance against the Mortgage Loan to be created at settlement or to
pledge that Mortgage Loan as Collateral under this Agreement. In any event,
Borrower’s disbursement or instruction letter must include the following
language:

 

A warehouse lender has a security interest in any amounts advanced by
it to fund this mortgage loan and in the mortgage loan funded with those
amounts.  You must promptly return any
amounts advanced by the warehouse lender and not used to fund this mortgage
loan.  If the mortgage loan does not
close and disburse within 24 hours of receipt of funds, the closing agent must
contact MIT Lending and return the wire to the warehouse lender from whom funds
were delivered.  All funds wired are to
be held in trust until such time as the corresponding mortgage loan is recorded
and funds are disbursed.

 

7.11.                     Subordination of Certain Indebtedness

 

Cause any
indebtedness of Borrower for borrowed money to any shareholder, director,
officer or Affiliate of Borrower, which indebtedness has a term of more than 1
year or is in excess of $25,000, to be subordinated to the Obligations by the
execution and delivery to Lender of a Subordination of Debt Agreement, on the
form prescribed by Lender, certified by the corporate secretary of Borrower to
be true and complete and in full force and effect.

 

7.12.                     Other Loan Obligations

 

Perform all
material obligations under the terms of each loan agreement, note, mortgage,
security agreement or debt instrument by which Borrower is bound or to which
any of its property is subject which involves obligations, in the aggregate, in
excess of $250,000, and promptly notify Lender in writing of a declared default
under or the termination, cancellation, reduction or nonrenewal of any of its
other lines of credit or agreements with any other lender. Exhibit F
is a true and complete list of all such lines of credit or agreements as of the
date of this Agreement. Borrower must give Lender at least 30 days Notice
before entering into any additional lines of credit or agreements with a
commitment of $1,000,000 or more.

 

7.13.                     ERISA

 

Maintain (and, if
applicable, cause each ERISA Affiliate to maintain) each Plan in compliance
with all material applicable requirements of ERISA and of the Internal Revenue
Code and with all applicable rulings and regulations issued under the
provisions of ERISA and of the Internal Revenue Code, and not (and, if
applicable, not permit any ERISA Affiliate to), (a) engage in any

 

4

 

transaction in
connection with which Borrower or any ERISA Affiliate would be subject to
either a civil penalty assessed pursuant to Section 502(i) of ERISA or a
tax imposed by Section 4975 of the Internal Revenue Code, in either case
in an amount exceeding $25,000 or (b) fail to make full payment when due
of all amounts that, under the provisions of any Plan, Borrower or any ERISA
Affiliate is required to pay as contributions to that Plan, or permit to exist
any accumulated funding deficiency (as such term is defined in Section 302
of ERISA and Section 412 of the Internal Revenue Code), whether or not
waived, with respect to any Plan in an aggregate amount exceeding $25,000.

 

7.14.                     Use of Proceeds of Warehousing Advances

 

Use the proceeds
of each Warehousing Advance solely for the purpose of funding Eligible Loans
and against the pledge of those Eligible Loans as Collateral.

 

 

End of Article 7

 

5

 

NEGATIVE COVENANTS

 

As long as the Warehousing
Commitment is outstanding or there remain any Obligations to be paid or
performed, Borrower must not, either directly or indirectly, without the prior
written consent of Lender:

 

8.1.                            Contingent Liabilities

 

Assume, guarantee,
endorse or otherwise become contingently liable for the obligation of any
Person except by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business, and except for obligations
arising in connection with the sale of Mortgage Loans with recourse in the
ordinary course of Borrower’s business.

 

8.2.                            Pledge of Servicing Contracts

 

Pledge or grant a
security interest in any existing or future Servicing Contracts of Borrower
other than to Lender, or omit to take any action required to keep all of
Borrower’s Servicing Contracts in full force and effect.

 

8.3.                            Restrictions on Fundamental Changes

 

8.3 (a)                    Consolidate,
merge or enter into any analogous reorganization or transaction with any
Person.

 

8.3 (b)                   Amend
or otherwise modify Borrower’s articles of incorporation or by-laws.

 

8.3 (c)                    Liquidate,
wind up or dissolve (or suffer any liquidation or dissolution).

 

8.3 (d)                   Cease
actively to engage in the business of originating or acquiring Mortgage Loans
or make any other material change in the nature or scope of the business in
which Borrower engages as of the date of this Agreement.

 

8.3 (e)                    Sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one
transaction or a series of transactions) all or any substantial part of
Borrower’s business or assets, whether now owned or acquired after the Closing
Date, other than, in the ordinary course of business and to the extent not
otherwise prohibited by this Agreement, sales of (1) Mortgage Loans, (2)
Mortgage-backed Securities and (3) Servicing Contracts.

 

8.3 (f)                      Acquire
by purchase or in any other transaction all or substantially all of the
business or property of, or stock or other ownership interests of, any Person.

 

8.3 (g)                   Permit
any Subsidiary of Borrower to do or take any of the foregoing actions.

 

8.4.                            Subsidiaries

 

Form or acquire,
or permit any Subsidiary of Borrower to form or acquire, any Person that would
thereby become a Subsidiary.

 

1

 

8.5.                            Deferral of Subordinated Debt

 

Pay any
Subordinated Debt of Borrower in advance of its stated maturity or, after a
Default or Event of Default under this Agreement has occurred, make any payment
of any kind on any Subordinated Debt of Borrower until all of the Obligations
have been paid and performed in full and any applicable preference period has
expired.

 

8.6.                            Loss of Eligibility

 

Take any action
that would cause Borrower to lose all or any part of its status as an eligible
lender, seller/servicer or issuer as described under Section 9.1.

 

8.7.                            Accounting Changes

 

Make, or permit
any Subsidiary of Borrower to make, any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change its
fiscal year or the fiscal year of any Subsidiary of Borrower.

 

8.8.                            Leverage Ratio

 

Permit Borrower’s
Leverage Ratio at any time to exceed 20 to 1.

 

8.9.                            Minimum Tangible Net Worth

 

Permit Borrower’s
Tangible Net Worth at any time to be less than $25,000,000.

 

8.10.                     Minimum Liquid Assets

 

Permit Borrower’s
Liquid Assets at any time to be less than $2,000,000.

 

8.11.                     Operating Losses

 

Permit Borrower
(and its Subsidiaries, on a consolidated basis) to have any calendar quarter of
net operating losses.

 

8.12.                     Distributions to Shareholders

 

Declare or pay any
dividends or otherwise declare or make any distribution to Borrower’s
shareholders (including any purchase or redemption of stock) if a Default or
Event of Default exists or would occur as a result of the dividend or
distribution.

 

8.13.                     Transactions with Affiliates

 

Excluding
Permitted Affiliate Transactions, directly or indirectly (a) make any
loan, advance, extension of credit or capital contribution to any of Borrower’s
Affiliates, (b) sell, transfer, pledge or assign any of its assets to or
on behalf of those Affiliates, (c) merge or consolidate with or purchase
or acquire assets from those Affiliates, or (d) pay management fees to or
on behalf of those Affiliates.

 

2

 

8.14.                     Recourse Servicing Contracts

 

Acquire or enter
into Servicing Contracts under which Borrower must repurchase or indemnify the
holder of the Mortgage Loans as a result of defaults on the Mortgage Loans at
any time during the term of those Mortgage Loans.

 

 

End of Article 8

 

3

 

SPECIAL
REPRESENTATIONS,
WARRANTIES AND COVENANTS CONCERNING COLLATERAL

 

9.1.                            Special
Representations and
Warranties Concerning Eligibility as Seller/Servicer of Mortgage Loans

 

Borrower represents and
warrants to Lender, as of the date of this Agreement and as of the date of each
Warehousing Advance Request and the making of each Warehousing Advance, that
Borrower is approved and qualified and in good standing as a lender,
seller/servicer or issuer, as set forth below, and meets all requirements
applicable to its status as: 

 

9.1 (a)                    A
HUD-approved mortgagee, eligible to originate, purchase, hold, sell and service
FHA fully insured Mortgage Loans.   

 

9.1 (b)                   A
Fannie Mae-approved seller/servicer of Mortgage Loans, eligible to originate,
purchase, hold, sell and service Mortgage Loans to be sold to Fannie Mae. 

 

9.1 (c)                    A
Freddie Mac-approved seller of Mortgage Loans, eligible to originate, purchase,
hold and sell Mortgage Loans to be sold to Freddie Mac. 

 

9.1 (d)                   A
VA-approved mortgagee and a lender in good-standing under the VA loan guarantee
program, eligible to originate, purchase, hold, sell and service VA-guaranteed
Mortgage Loans. 

 

9.1 (e)                    A
Lender-approved seller/servicer of Mortgage Loans, eligible to originate,
purchase, hold, sell and service Mortgage Loans to be sold to Lender.

 

9.2.                            Special
Representations and Warranties Concerning Warehousing Collateral

 

Borrower represents and
warrants to Lender, as of the date of this Agreement and as of the date of each
Warehousing Advance Request and the making of each Warehousing Advance, that:

 

9.2 (a)                    Borrower has not selected the
Collateral in a manner so as to affect adversely Lender’s interests.

 

9.2 (b)                   Borrower is the legal and equitable
owner and holder, free and clear of all Liens (other than Liens granted under
this Agreement), of the Pledged Loans and the Pledged Securities. All Pledged
Loans, Pledged Securities and related Purchase Commitments have been duly
authorized and validly issued to Borrower, and all of the foregoing items of
Collateral comply with all of the requirements of this Agreement, and have been
and will continue to be validly pledged or assigned to Lender, subject to no
other Liens.

 

9.2 (c)                    Borrower has, and will continue to
have, the full right, power and authority to pledge the Collateral pledged and
to be pledged by it under this Agreement.

 

9.2 (d)                   Each Mortgage Loan and each related
document included in the Pledged Loans (1) has been duly executed and
delivered by the parties to that Mortgage Loan and that related document,
(2) has been made in compliance with all applicable laws, rules and
regulations (including all laws, rules and regulations relating to usury),
(3) is and will continue to be a legal, valid and binding obligation,
enforceable in accordance with its

 

1

 

terms, without setoff, counterclaim or defense in
favor of the mortgagor under the Mortgage Loan or any other obligor on the
Mortgage Note and (4) has not been modified, amended or any requirements
of which waived, except in writing that is part of the Collateral Documents. 

 

9.2 (e)                    Each Pledged Loan is secured by a
Mortgage on real property and improvements located in one of the states of the
United States or the District of Columbia.

 

9.2 (f)                      Unless Third Party Originated
Loans are permitted, each Pledged Loan has been closed or will be closed and
funded with the Warehousing Advance made against it. 

 

9.2 (g)                   Except for open-ended Second
Mortgage Loans, each Mortgage Loan has been fully advanced in the face amount
of its Mortgage Note.

 

9.2 (h)                   Each First Mortgage Loan is secured
by a First Mortgage on the real property and improvements described in or
covered by that Mortgage.

 

9.2 (i)                       Each First Mortgage Loan has or
will have a title insurance policy, in ALTA form or equivalent, from a
recognized title insurance company, insuring the priority of the Lien of the
Mortgage and meeting the usual requirements of Investors purchasing those
Mortgage Loans. 

 

9.2 (j)                       Each Second Mortgage Loan is
secured by a Second Mortgage on the real property and improvements described in
or covered by that Mortgage.

 

9.2 (k)                    To the extent required by the
related Purchase Commitment or by Investors generally for similar Mortgage
Loans, each Second Mortgage Loan has or will have a title insurance policy, in
ALTA form or equivalent, from a recognized title insurance company, insuring
the priority of the Lien of the Mortgage and meeting the usual requirements of
Investors purchasing those Mortgage Loans. 

 

9.2 (l)                       Each Mortgage Loan has been
evaluated or appraised in accordance with Title XI of FIRREA.

 

9.2 (m)                 The Mortgage Note for each Pledged
Loan is (1) payable or endorsed to the order of Borrower, (2) an “instrument”
within the meaning of Article 9 of the Uniform Commercial Code of all
applicable jurisdictions and (3) is denominated and payable in United States
dollars.

 

9.2 (n)                   No default has existed for 60 days
or more under any Mortgage Loan included in the Pledged Loans.

 

9.2 (o)                   No party to a Mortgage Loan or any
related document is in violation of any applicable law, rule or regulation that
would impair the collectibility of the Mortgage Loan or the performance by the
mortgagor or any other obligor of its obligations under the Mortgage Note or
any related document.

 

9.2 (p)                   All fire and casualty policies
covering the real property and improvements encumbered by each Mortgage
included in the Pledged Loans (1) name and will continue to name Borrower
and its successors and assigns as the insured under a standard mortgagee
clause, (2) are and will continue to be in full force and effect and
(3) afford and will continue to afford insurance against fire and such
other risks as are usually insured against in the broad form of extended
coverage insurance generally available.

 

2

 

9.2 (q)                   Pledged Loans secured by real
property and improvements located in a special flood hazard area designated as
such by the Director of the Federal Emergency Management Agency are and will
continue to be covered by special flood insurance under the National Flood
Insurance Program.

 

9.2 (r)                      Each Pledged Loan against which a
Warehousing Advance is made on the basis of a Purchase Commitment meets all of
the requirements of that Purchase Commitment, and each Pledged Security against
which a Warehousing Advance is outstanding meets all of the requirements of the
related Purchase Commitment. 

 

9.2 (s)                    Pledged Loans that are intended to
be exchanged for Agency Securities comply or, prior to the issuance of the
Agency Securities will comply, with the requirements of any governmental
instrumentality, department or agency issuing or guaranteeing the Agency
Securities. 

 

9.2 (t)                  Pledged Loans
that are intended to be used in the formation of Mortgage-backed Securities
(other than Agency Securities) comply with the requirements of the issuer of
the Mortgage-backed Securities (or its sponsor) and of the Rating
Agencies.   

 

9.2 (u)                   The original assignments of Mortgage
delivered to Lender for each Pledged Loan are in recordable form and comply
with all applicable laws and regulations governing the filing and recording of
such documents.

 

9.2 (v)                   None of the mortgagors, guarantors
or other obligors of any Pledged Loan is a Person named in any Restriction List
and to whom the provision of financial services is prohibited or otherwise
restricted by applicable law. 

 

9.2 (w)                 No Pledged Loan delivered to Lender is
a Discontinued Loan. 

 

9.2 (x)                     Each Pledged Loan secured by real
property to which a Manufactured Home is affixed will create a valid Lien on
that Manufactured Home that will have priority over any other Lien on the
Manufactured Home, whether or not arising under applicable real property law.  

 

9.3.                            Special Affirmative Covenants Concerning
Warehousing Collateral  

 

As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed under this Agreement or under any other
Loan Document, Borrower must:

 

9.3 (a)                    Warrant and defend the right, title
and interest of Lender in and to the Collateral against the claims and demands
of all Persons.

 

9.3 (b)                   Service or cause to be serviced all
Pledged Loans in accordance with the standard requirements of the issuers of
Purchase Commitments covering them and all applicable HUD, Fannie Mae and
Freddie Mac requirements, including taking all actions necessary to enforce the
obligations of the obligors under such Mortgage Loans. Service or cause to be
serviced all Mortgage Loans backing Pledged Securities in accordance with
applicable governmental requirements and requirements of issuers of Purchase
Commitments covering them. Hold all escrow funds collected in respect of
Pledged Loans and Mortgage Loans backing Pledged Securities in trust, without
commingling the same with non-custodial funds, and apply them for the purposes
for which those funds were collected.

 

3

 

9.3 (c)                    Execute and deliver to Lender with
respect to the Collateral those further instruments of sale, pledge, assignment
or transfer, and those powers of attorney, as required by Lender, and do and
perform all matters and things necessary or desirable to be done or observed,
for the purpose of effectively creating, maintaining and preserving the
security and benefits intended to be afforded Lender under this Agreement.

 

9.3 (d)                   Notify Lender within 2 Business Days
of any default under, or of the termination of, any Purchase Commitment
relating to any Pledged Loan, Eligible Mortgage Pool, or Pledged Security.

 

9.3 (e)                    Promptly comply in all respects
with the terms and conditions of all Purchase Commitments, and all extensions,
renewals and modifications or substitutions of or to all Purchase Commitments.
Deliver or cause to be delivered to the Investor the Pledged Loans and Pledged
Securities to be sold under each Purchase Commitment not later than the
mandatory delivery date of the Pledged Loans or Pledged Securities under the
Purchase Commitment.

 

9.3 (f)                      Compare the names of every
mortgagor, guarantor and other obligor of every Mortgage Loan, together with
appropriate identifying information concerning those Persons obtained by
Borrower, against every Restriction List, and make certain that none of the
mortgagors, guarantors or other obligors of any Mortgage Loan is a Person named
in any Restriction List and to whom the provision of financial services is
prohibited or otherwise restricted by applicable law. 

 

9.3 (g)                   Prior to the origination by Borrower
of any Mortgage Loans for sale to Fannie Mae, enter into an agreement among
Borrower, Lender and Fannie Mae, pursuant to which Fannie Mae agrees to send
all cash proceeds of Mortgage Loans sold by Borrower to Fannie Mae to the Cash
Collateral Account.

 

9.3 (h)                   Prior to the origination by Borrower
of any Mortgage Loan to be registered on the MERS system, obtain the approval
of Lender and enter into an Electronic Tracking Agreement.   

 

9.4.                            Special
Negative Covenants Concerning Warehousing Collateral  

 

As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed, Borrower must not, either directly or
indirectly, without the prior written consent of Lender:

 

9.4 (a)                    Amend or modify, or waive any of
the terms and conditions of, or settle or compromise any claim in respect of,
any Pledged Loans or Pledged Securities.

 

9.4 (b)                   Sell, transfer or assign, or grant
any option with respect to, or pledge (except under this Agreement and, with
respect to each Pledged Loan or Pledged Security, the related Purchase
Commitment) any of the Collateral or any interest in any of the Collateral.

 

9.4 (c)                    Make any compromise, adjustment or
settlement in respect of any of the Collateral or accept other than cash in
payment or liquidation of the Collateral.

 

End
of Article 9

 

4

 

DEFAULTS; REMEDIES

 

10.1.                     Events
of Default

 

The occurrence of any of the following is an event of
default (“Event of Default”):

 

	
  10.1 (a)

  	
  Borrower fails to pay
  the principal of any Warehousing Advance when due, whether at stated
  maturity, by acceleration, or otherwise; or fails to pay any installment of
  interest on any Warehousing Advance within 9 days after the date of Lender’s
  invoice or, if applicable, within 2 days after the date of Lender’s account
  analysis statement; or fails to pay, within any applicable grace period, any
  other amount due under this Agreement or any other Obligation of Borrower to
  Lender.

  
	
   

  	
   

  
	
  10.1 (b)

  	
  Borrower or any of its
  Subsidiaries fails to pay, or defaults in the payment of any principal or
  interest on, any other indebtedness or any contingent obligation within any
  applicable grace period; breaches or defaults with respect to any other
  material term of any other indebtedness or of any loan agreement, mortgage,
  indenture or other agreement relating to that indebtedness, if the effect of
  that breach or default is to cause, or to permit the holder or holders of
  that indebtedness (or a trustee on behalf of such holder or holders) to
  cause, indebtedness of Borrower or its Subsidiaries in the aggregate amount
  of $50,000 or more to become or be declared due before its stated maturity
  (upon the giving or receiving of notice, lapse of time, both, or otherwise).

  
	
   

  	
   

  
	
  10.1 (c)

  	
  Borrower fails to
  perform or comply with any term or condition applicable to it contained in
  Sections 7.4 or 7.14 or in any Section of Article 8.

  
	
   

  	
   

  
	
  10.1 (d)

  	
  Any representation or
  warranty made or deemed made by Borrower under this Agreement, in any other
  Loan Document or in any written statement or certificate at any time given by
  Borrower, other than the representations and warranties set forth in
  Article 9 with respect to specific Pledged Loans, is inaccurate or
  incomplete in any material respect on the date as of which it is made or
  deemed made.

  
	
   

  	
   

  
	
  10.1 (e)

  	
  Borrower defaults in
  the performance of or compliance with any term contained in this Agreement or
  any other Loan Document other than those referred to in Sections 10.1(a),
  10.1(c) or 10.1(d) and such default has not been remedied or waived within 30
  days after the earliest of (1) receipt by Borrower of Notice from Lender
  of that default, (2) receipt by Lender of Notice from Borrower of that
  default or (3) the date Borrower should have notified Lender of that
  default under Section 7.7(c) or 7.7(d).

  
	
   

  	
   

  
	
  10.1 (f)

  	
  An “event of default”
  (however defined) occurs under any agreement between Borrower and Lender
  other than this Agreement and the other Loan Documents.

  
	
   

  	
   

  
	
  10.1 (g)

  	
  A case (whether voluntary
  or involuntary) is filed by or against Borrower or any Subsidiary of Borrower
  under any applicable bankruptcy, insolvency or other similar federal or state
  law; or a court of competent jurisdiction appoints a receiver (interim or
  permanent), liquidator, sequestrator, trustee, custodian or other officer
  having similar powers over Borrower or any Subsidiary of Borrower, or over
  all or a substantial part of their respective properties or assets; or
  Borrower or any Subsidiary of Borrower (1) consents to the appointment of or
  possession by a receiver (interim or permanent), liquidator, sequestrator,
  trustee, custodian or other officer having similar powers over Borrower or
  any Subsidiary of Borrower, or over all or a substantial part of their

  

 

1

 

	
   

  	
  respective properties or assets, (2) makes an assignment for the
  benefit of creditors, or (3) fails, or admits in writing its inability,
  to pay its debts as those debts become due.

  
	
   

  	
   

  
	
  10.1 (h)

  	
  Borrower fails to repurchase Mortgage Loans for which Borrower has
  determined it is legally obligated to repurchase pursuant to the applicable
  written agreements with respect to any such Mortgage Loans, if such
  obligations in the aggregate exceed $500,000.

  
	
   

  	
   

  
	
  10.1 (i)

  	
  Any money judgment, writ or warrant of attachment or similar process
  involving an amount in excess of $250,000 is entered or filed against
  Borrower or any of its Subsidiaries or any of their respective assets and
  remains undischarged, unvacated, unbonded or unstayed for a period of 30 days
  or 5 days before the date of any proposed sale under that money judgment,
  writ or warrant of attachment or similar process.

  
	
   

  	
   

  
	
  10.1 (j)

  	
  Any order, judgment or decree decreeing the dissolution of Borrower
  is entered and remains undischarged or unstayed for a period of 20 days.

  
	
   

  	
   

  
	
  10.1 (k)

  	
  Borrower purports to disavow the Obligations or contests the validity
  or enforceability of any Loan Document.

  
	
   

  	
   

  
	
  10.1 (l)

  	
  Lender’s security interest on any portion of the Collateral becomes
  unenforceable or otherwise impaired.

  
	
   

  	
   

  
	
  10.1 (m)

  	
  A material adverse change occurs in Borrower’s financial condition,
  business, properties, operations or prospects, or in Borrower’s ability to
  repay the Obligations.

  
	
   

  	
   

  
	
  10.1 (n)

  	
  Any Lien for any taxes, assessments or other governmental charges
  (1) is filed against Borrower or any of its property, or is otherwise
  enforced against Borrower or any of its property, or (2) obtains
  priority that is equal to or greater than the priority of Lender’s security
  interest in any of the Collateral.

  
	
   

  	
   

  
	
  10.1 (o)

  	
  Larry Lewis ceases to
  be the Chief Operating Officer of Borrower, unless a successor acceptable to
  Lender in its sole discretion has been appointed Chief Operating Officer of
  Borrower within 60 days of the date on which Larry Lewis ceases to be the
  Chief Operating Officer of Borrower.

  
	
   

  	
   

  
	
  10.2.

  	
  Remedies

  
	
   

  	
   

  
	
  10.2 (a)

  	
  If an Event of Default described in Section 10.1(g) occurs with
  respect to Borrower, the Warehousing Commitment will automatically terminate
  and the unpaid principal amount of and accrued interest on the Warehousing
  Note and all other Obligations will automatically become due and payable,
  without presentment, demand or other Notice or requirements of any kind, all
  of which Borrower expressly waives.

  
	
   

  	
   

  
	
  10.2 (b)

  	
  If any other Event of Default occurs, Lender may, by Notice to
  Borrower, terminate the Warehousing Commitment and declare the Obligations to
  be immediately due and payable.

  
	
   

  	
   

  
	
  10.2 (c)

  	
  If any Event of Default occurs, Lender may also take any of the
  following actions:

  

 

	
   

  	
  (1)                                  Foreclose
  upon or otherwise enforce its security interest in any Lien on the Collateral
  to secure all payments and performance of the Obligations in any manner
  permitted by law or provided for in the Loan Documents.

  

 

2

 

	
   

  	
  (2)                                  Notify all obligors
  under any of the Collateral that the Collateral has been assigned to Lender
  (or to another Person designated by Lender) and that all payments on that
  Collateral are to be made directly to Lender (or such other Person); settle,
  compromise or release, in whole or in part, any amounts any obligor or
  Investor owes on any of the Collateral on terms acceptable to Lender; enforce
  payment and prosecute any action or proceeding involving any of the Collateral;
  and where any Collateral is in default, foreclose on and enforce any Liens
  securing that Collateral in any manner permitted by law and sell any property
  acquired as a result of those enforcement actions.

  
	
   

  	
   

  
	
   

  	
  (3)                                  Prepare and submit
  for filing Uniform Commercial Code amendment statements evidencing the
  assignment to Lender or its designee of any Uniform Commercial Code financing
  statement filed in connection with any item of Collateral.

  
	
   

  	
   

  
	
   

  	
  (4)                                  Act, or contract
  with a third party to act, at Borrower’s expense, as servicer or subservicer
  of Collateral requiring servicing, and perform all obligations required under
  any Collateral, including Servicing Contracts and Purchase Commitments.

  
	
   

  	
   

  
	
   

  	
  (5)                                  Require Borrower to
  assemble and make available to Lender the Collateral and all related books
  and records at a place designated by Lender.

  
	
   

  	
   

  
	
   

  	
  (6)                                  Enter onto property
  where any Collateral or related books and records are located and take
  possession of those items with or without judicial process; and obtain access
  to Borrower’s data processing equipment, computer hardware and software
  relating to the Collateral and use all of the foregoing and the information
  contained in the foregoing in any manner Lender deems necessary for the
  purpose of effectuating its rights under this Agreement and any other Loan
  Document.

  
	
   

  	
   

  
	
   

  	
  (7)                                  Before the
  disposition of the Collateral, prepare it for disposition in any manner and
  to the extent Lender deems appropriate.

  
	
   

  	
   

  
	
   

  	
  (8)                                  Exercise all rights
  and remedies of a secured creditor under the Uniform Commercial Code of
  Minnesota or other applicable law, including selling or otherwise disposing
  of all or any portion of the Collateral at one or more public or private
  sales, whether or not the Collateral is present at the place of sale, for
  cash or credit or future delivery, on terms and conditions and in the manner
  as Lender may determine, including sale under any applicable Purchase
  Commitment. Borrower waives any right it may have to prior notice of the sale
  of all or any portion of the Collateral to the extent allowed by applicable
  law. If notice is required under applicable law, Lender will give Borrower
  not less than 10 days’ notice of any public sale or of the date after which
  any private sale may be held. Borrower agrees that 10 days’ notice is
  reasonable notice. Lender may, without notice or publication, adjourn any
  public or private sale one or more times by announcement at the time and
  place fixed for the sale, and the sale may be held at any time or place
  announced at the adjournment. In the case of a sale of all or any portion of
  the Collateral on credit or for future delivery, the Collateral sold on those
  terms may be retained by Lender until the purchaser pays the selling price or
  takes possession of the Collateral. Lender has no liability to Borrower if a
  purchaser fails to pay for or take possession of Collateral sold on those
  terms, and in the case of any such failure, Lender may sell the Collateral
  again upon notice complying with this Section.

  
	
   

  	
   

  
	
   

  	
  (9)                                  Instead of or in conjunction
  with exercising the power of sale authorized by Section 10.2(c)(8),
  Lender may proceed by suit at law or in equity to collect all amounts due on
  the Collateral, or to foreclose Lender’s Lien on and sell all or any portion
  of the Collateral pursuant to a judgment or decree of a court of competent
  jurisdiction.

  

 

3

 

	
   

  	
  (10)                            Proceed against Borrower
  on the Warehousing Note.

  
	
   

  	
   

  
	
   

  	
  (11)                            Retain all excess
  proceeds from the sale or other disposition of the Collateral, and apply them
  to the payment of the Obligations under Section 10.3.

  

 

	
  10.2 (d)

  	
  Lender will incur no
  liability as a result of the commercially reasonable sale or other
  disposition of all or any portion of the Collateral at any public or private
  sale or other disposition. Borrower waives (to the extent permitted by law)
  any claims it may have against Lender arising by reason of the fact that the
  price at which the Collateral may have been sold at a private sale was less
  than the price that Lender might have obtained at a public sale, or was less
  than the aggregate amount of the outstanding Warehousing Advances, accrued
  and unpaid interest on those Warehousing Advances, and unpaid fees, even if
  Lender accepts the first offer received and does not offer the Collateral to
  more than one offeree. Borrower agrees that any sale of Collateral under the
  terms of a Purchase Commitment, or any other disposition of Collateral
  arranged by Borrower, whether before or after the occurrence of an Event of
  Default, will be deemed to have been made in a commercially reasonable
  manner.

  
	
   

  	
   

  
	
  10.2 (e)

  	
  Borrower acknowledges
  that Mortgage Loans are collateral of a type that is the subject of widely
  distributed standard price quotations and that Mortgage-backed Securities are
  collateral of a type that is customarily sold on a recognized market.
  Borrower waives any right it may have to prior notice of the sale of Pledged
  Securities, and agrees that Lender may purchase Pledged Loans and Pledged
  Securities at a private sale of such Collateral.

  
	
   

  	
   

  
	
  10.2 (f)

  	
  Borrower specifically
  waives and releases (to the extent permitted by law) any equity or right of
  redemption, stay or appraisal that Borrower has or may have under any rule of
  law or statute now existing or adopted after the date of this Agreement, and
  any right to require Lender to (1) proceed against any Person,
  (2) proceed against or exhaust any of the Collateral or pursue its
  rights and remedies against the Collateral in any particular order, or
  (3) pursue any other remedy within its power. Lender is not required to
  take any action to preserve any rights of Borrower against holders of
  mortgages having priority to the Lien of any Mortgage or Security Agreement
  included in the Collateral or to preserve Borrower’s rights against other
  prior parties.

  
	
   

  	
   

  
	
  10.2 (g)

  	
  Lender may, but is not
  obligated to, advance any sums or do any act or thing necessary to uphold or
  enforce the Lien and priority of, or the security intended to be afforded by,
  any Mortgage or Security Agreement included in the Collateral, including
  payment of delinquent taxes or assessments and insurance premiums. All
  advances, charges, costs and expenses, including reasonable attorneys’ fees
  and disbursements, incurred or paid by Lender in exercising any right, power
  or remedy conferred by this Agreement, or in the enforcement of this
  Agreement, together with interest on those amounts at the Default Rate, from
  the time paid by Lender until repaid by Borrower, are deemed to be principal
  outstanding under this Agreement and the Warehousing Note.

  
	
   

  	
   

  
	
  10.2 (h)

  	
  No failure or delay on
  the part of Lender to exercise any right, power or remedy provided in this
  Agreement or under any other Loan Document, at law or in equity, will operate
  as a waiver of that right, power or remedy. No single or partial exercise by
  Lender of any right, power or remedy provided under this Agreement or any
  other Loan Document, at law or in equity, precludes any other or further
  exercise of that right, power, or remedy by Lender, or Lender’s exercise of any
  other right, power or remedy. Without limiting the foregoing, Borrower waives
  all defenses based on the statute of limitations to the extent permitted by
  law. The remedies provided in this Agreement and the other Loan

  

 

4

 

	
   

  	
  Documents are
  cumulative and are not exclusive of any remedies provided at law or in
  equity.

  
	
   

  	
   

  
	
  10.2 (i)

  	
  Borrower grants Lender
  a license or other right to use, without charge, Borrower’s computer
  programs, other programs, labels, patents, copyrights, rights of use of any
  name, trade secrets, trade names, trademarks, service marks and advertising
  matter, or any property of a similar nature, as it pertains to the
  Collateral, in advertising for sale and selling any of the Collateral and Borrower’s
  rights under all licenses and all other agreements related to the foregoing
  inure to Lender’s benefit until the Obligations are paid in full. 

  

 

10.3.                     Application of Proceeds  

 

Lender may apply the
proceeds of any sale, disposition or other enforcement of Lender’s Lien on all
or any portion of the Collateral to the payment of the Obligations in the order
Lender determines in its sole discretion. From and after the indefeasible
payment to Lender of all of the Obligations, any remaining proceeds of the
Collateral will be paid to Borrower, or to its successors or assigns, or as a
court of competent jurisdiction may direct. If the proceeds of any sale,
disposition or other enforcement of the Collateral are insufficient to cover
the costs and expenses of that sale, disposition or other enforcement and
payment in full of all Obligations, Borrower is liable for the deficiency.

 

10.4.                     Lender Appointed Attorney-in-Fact  

 

Borrower appoints Lender
its attorney-in-fact, with full power of substitution, for the purpose of
carrying out the provisions of this Agreement, the Warehousing Note and the
other Loan Documents and taking any action and executing any instruments that
Lender deems necessary or advisable to accomplish that purpose. Borrower’s
appointment of Lender as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, Lender may give
notice of its Lien on the Collateral to any Person, either in Borrower’s name
or in its own name, endorse all Pledged Loans or Pledged Securities payable to
the order of Borrower, change or cause to be changed the book-entry
registration or name of subscriber or Investor on any Pledged Security, prepare
and submit for filing Uniform Commercial Code amendment statements with respect
to any Uniform Commercial Code financing statements filed in connection with
any item of Collateral or receive, endorse and collect all checks made payable
to the order of Borrower representing payment on account of the principal of or
interest on, or the proceeds of sale of, any of the Pledged Loans or Pledged
Securities and give full discharge for those transactions.

 

10.5.                     Right of Set-Off  

 

If Borrower defaults in
the payment of any Obligation or in the performance of any of its duties under
the Loan Documents, Lender may, without Notice to or demand on Borrower (which
Notice or demand Borrower expressly waives), set-off, appropriate or apply any
property of Borrower held at any time by Lender, or any indebtedness at any
time owed by Lender to or for the account of Borrower, against the Obligations,
whether or not those Obligations have matured.

 

End of Article 10

 

5

 

MISCELLANEOUS

 

11.1.                     Notices

 

Except where telephonic or facsimile notice is expressly authorized by
this Agreement, all communications required or permitted to be given or made
under this Agreement (“Notices”) must be in writing and must be sent by
manual delivery, overnight courier or United States mail (postage prepaid),
addressed as follows (or at such other address as may be designated by it in a
Notice to the other):

 

	
  If to Borrower:

  	
   

  	
  MORTGAGEIT, INC.

  33 Maiden Lane

  New York, NY  10038

  Attention: Larry Lewis, Chief Operating Officer

  Facsimile: (212) 651-4691

  
	
   

  	
   

  	
   

  
	
  If to Lender:

  	
   

  	
  Residential
  Funding Corporation

  7501 Wisconsin Avenue

  Bethesda, MD  20814

  Attention: Jason Mitchell, Director

  Facsimile: (301) 215-6288

  

 

All periods of Notice will be measured from the date of delivery if
delivered manually or by facsimile, from the first Business Day after the date
of sending if sent by overnight courier or from 4 days after the date of
mailing if sent by United States mail, except that Notices to Lender under
Article 2 and Section 3.3(f) shall be deemed to have been given only
when actually received by Lender. Borrower authorizes Lender to accept
Borrower’s bailee pledge agreements, Warehousing Advance Requests, shipping
requests, wire transfer instructions and security delivery instructions
transmitted to Lender by facsimile or RFConnects Delivery, and those documents,
when transmitted to Lender by facsimile or by RFConnects Delivery, have the
same force and effect as the originals.

 

11.2.                     Reimbursement
Of Expenses; Indemnity  

 

Borrower must: (a) pay Lender a document production fee in connection
with the preparation and negotiation of this Agreement in an aggregate amount
not to exceed $25,000 at any time; (b) pay such additional documentation
production fees as Lender may require and all out-of-pocket costs and expenses
of Lender, including reasonable fees, service charges and disbursements of
counsel to Lender (including allocated costs of internal counsel), in
connection with the amendment, enforcement and administration of this
Agreement, the Warehousing Note, and other Loan Documents, the making,
repayment and payment of interest on the Warehousing Advances and the payment
of all other Obligations under Loan Documents; (c) indemnify, pay, and
hold harmless Lender and any other holder of the Warehousing Note from and
against, all present and future stamp, documentary and other similar taxes with
respect to the foregoing matters and save Lender and any other holder of the Warehousing
Note harmless from and against all liabilities with respect to or resulting
from any delay or omission to pay such taxes; and (d) indemnify, pay and
hold harmless Lender and all of its Affiliates, officers, directors, employees
or agents and any subsequent holder of the Warehousing Note (collectively
called the “Indemnitees”) from and against all liabilities, obligations,
losses, damages, penalties, judgments, suits, costs, expenses and disbursements
of every kind or nature  (including the
reasonable fees and disbursements of counsel to the Indemnitees (including
allocated costs of internal counsel) in connection with any investigative,
administrative or judicial proceeding, whether or not the

 

1

 

Indemnitees have been
designated as parties to such proceeding) that may be imposed upon, incurred by
or asserted against such Indemnitees in any manner relating to or arising out
of this Agreement, the Warehousing Note, or any other Loan Document or any of
the transactions contemplated by this Agreement, the Warehousing Note and the
other Loan Documents, including against all liabilities, obligations, losses,
damages, penalties, judgments, suits, costs, expenses and disbursements of
every kind or nature (including the reasonable fees and disbursements of
counsel to the Indemnitees (including allocated costs of internal counsel) in
connection with any investigative, administrative or judicial proceeding,
whether or not the Indemnitees have been designated as parties to such
proceeding) arising from any breach of Sections 9.2(v) or 9.3(f) or the making
of any Mortgage Loan in which any mortgagor, guarantor or other obligor is a
Person named in any Restriction List and to whom the provision of financial
services is prohibited or otherwise restricted by applicable law (“Indemnified
Liabilities”), except that Borrower has no obligation under this Agreement
with respect to Indemnified Liabilities arising from the gross negligence or
willful misconduct of any such Indemnitees. To the extent that the undertaking
to indemnify, pay and hold harmless as set forth in the preceding sentence may
be unenforceable because it is violative of any law or public policy, Borrower
must contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them. The agreement of
Borrower contained in this Article survives the expiration or termination
of this Agreement and the payment in full of the Warehousing Note. Attorneys’
fees and disbursements incurred in enforcing, or on appeal from, a judgment
under this Agreement are recoverable separately from and in addition to any
other amount included in such judgment, and this clause is intended to be
severable from the other provisions of this Agreement and to survive and not be
merged into such judgment.

 

11.3.                     Financial Information  

 

All financial statements and reports furnished to Lender under this
Agreement must be prepared in accordance with GAAP, applied on a basis
consistent with that applied in preparing the financial statements as at the
end of and for Borrower’s most recent fiscal year (except to the extent
otherwise required to conform to good accounting practice).

 

11.4.                     Terms Binding Upon Successors; Survival
of Representations  

 

The terms and provisions
of this Agreement are binding upon and inure to the benefit of Borrower, Lender
and their respective successors and assigns. All of Borrower’s representations,
warranties, covenants and agreements survive the making of any Warehousing
Advance, and except where a longer period is set forth in this Agreement,
remain effective for as long as the Warehousing Commitment is outstanding or
there remain any Obligations to be paid or performed.

 

11.5.                     Assignment  

 

Borrower cannot assign
this Agreement. Lender may at any time, without Notice to or the consent of
Borrower, transfer or assign, in whole or in part, its interest in this
Agreement and the Warehousing Note along with Lender’s security interest in any
of the Collateral, and any assignee of Lender may enforce this Agreement, the Warehousing
Note and its security interest in the Collateral assigned.

 

2

 

11.6.                     Amendments  

 

Except as otherwise
provided in this Agreement, this Agreement may not be amended, modified or
supplemented unless the amendment, modification or supplement is set forth in
writing signed by both Borrower and Lender.

 

11.7.                     Governing Law  

 

This Agreement and the
other Loan Documents are governed by the laws of the State of Minnesota,
without reference to its principles of conflicts of laws.

 

11.8.                     Participations  

 

Lender may at any time
sell, assign or grant participations in, or otherwise transfer to any other
Person (“Participant”), all or part of the Obligations. Without limiting
Lender’s exclusive right to collect and enforce the Obligations, Borrower
agrees that each participation will give rise to a debtor-creditor relationship
between Borrower and the Participant, and Borrower authorizes each Participant,
upon the occurrence of an Event of Default, to proceed directly by right of
setoff, banker’s lien, or otherwise, against any assets of Borrower that may be
held by that Participant. Borrower authorizes Lender to disclose to prospective
and actual Participants all information in Lender’s possession concerning
Borrower, this Agreement and the Collateral.

 

11.9.                     Relationship of the Parties  

 

This Agreement provides
for the making and repayment of Warehousing Advances by Lender (in its capacity
as a lender) and Borrower (in its capacity as a borrower), for the payment of
interest on those Warehousing Advances and for the payment of certain fees by
Borrower to Lender. The relationship between Lender and Borrower is limited to
that of creditor and secured party on the part of Lender and of debtor on the
part of Borrower. The provisions of this Agreement and the other Loan Documents
for compliance with financial covenants and the delivery of financial
statements and other operating reports are intended solely for the benefit of
Lender to protect its interest as a creditor and secured party. Nothing in this
Agreement creates or may be construed as permitting or obligating Lender to act
as a financial or business advisor or consultant to Borrower, as permitting or
obligating Lender to control Borrower or to conduct Borrower’s operations, as
creating any fiduciary obligation on the part of Lender to Borrower, or as
creating any joint venture, agency, partnership or other relationship between
Lender and Borrower other than as explicitly and specifically stated in the Loan
Documents. Borrower acknowledges that it has had the opportunity to obtain the
advice of experienced counsel of its own choice in connection with the
negotiation and execution of the Loan Documents and to obtain the advice of
that counsel with respect to all matters contained in the Loan Documents,
including the waivers of jury trial and of punitive, consequential, special or
indirect damages contained in Sections 11.16 and 11.17, respectively.  Borrower further acknowledges that it is
experienced with respect to financial and credit matters and has made its own
independent decisions to apply to Lender for credit and to execute and deliver
this Agreement.

 

11.10.              Severability  

 

If any provision of this
Agreement is declared to be illegal or unenforceable in any respect, that
provision is null and void and of no force and effect to the extent of the
illegality or unenforceability, and does not affect the validity or
enforceability of any other provision of the Agreement.

 

3

 

11.11.              Consent to Credit References  

 

Borrower consents to the
disclosure of information regarding Borrower and its Subsidiaries and their
relationships with Lender to Persons making credit inquiries to Lender. This
consent is revocable by Borrower at any time upon Notice to Lender as provided
in Section 11.1.

 

11.12.              Counterparts  

 

This Agreement may be
executed in any number of counterparts, each of which will be deemed an
original, but all of which together constitute but one and the same instrument.

 

11.13.              Headings/Captions

 

The captions or headings in this Agreement and the other Loan Documents
are for convenience only and in no way define, limit or describe the scope or
intent of any provision of this Agreement or any other Loan Document.

 

11.14.              Entire Agreement  

 

This Agreement, the Warehousing
Note and the other Loan Documents represent the final agreement among the
parties with respect to their subject matter, and may not be contradicted by
evidence of prior or contemporaneous oral agreements among the parties. There
are no oral agreements among the parties with respect to the subject matter of
this Agreement, the Warehousing Note and the other Loan Documents.

 

11.15.              Consent to Jurisdiction  

 

AT THE OPTION OF LENDER,
THIS AGREEMENT, THE WAREHOUSING NOTE AND THE OTHER LOAN DOCUMENTS MAY BE
ENFORCED IN ANY STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA. BORROWER
CONSENTS TO THE JURISDICTION AND VENUE OF THOSE COURTS, AND WAIVES ANY
OBJECTION TO THE JURISDICTION OR VENUE OF THOSE COURTS, INCLUDING THE OBJECTION
THAT VENUE IN THOSE COURTS IS NOT CONVENIENT. ANY SUCH SUIT, ACTION OR
PROCEEDING MAY BE COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON BORROWER
BY FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED
TO BORROWER AT ITS ADDRESS LAST KNOWN TO LENDER. BORROWER’S CONSENT AND
AGREEMENT UNDER THIS SECTION DOES NOT AFFECT LENDER’S RIGHT TO ACCOMPLISH
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION OR
COURT. IN THE EVENT BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR
VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, LENDER AT
ITS OPTION MAY HAVE THE CASE TRANSFERRED TO A STATE OR FEDERAL COURT WITHIN THE
STATE OF MINNESOTA OR, IF A TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, MAY HAVE BORROWER’S ACTION DISMISSED WITHOUT PREJUDICE.

 

11.16.              Waiver
of Jury Trial

 

BORROWER AND LENDER EACH PROMISES AND AGREES NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND FULLY WAIVES
ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT NOW EXISTS OR
ARISES AFTER THE DATE OF THIS AGREEMENT. THIS WAIVER OF THE RIGHT TO TRIAL BY
JURY IS

 

4

 

SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY
BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE
FOR WHICH THE RIGHT TO TRIAL BY JURY WOULD OTHERWISE APPLY. LENDER AND BORROWER
ARE EACH AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS
CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO TRIAL BY JURY. FURTHER,
BORROWER AND LENDER EACH CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE OTHER
PARTY, INCLUDING THE OTHER PARTY’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, TO ANY OF ITS REPRESENTATIVES OR AGENTS THAT THE OTHER PARTY WILL
NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

 

11.17.              Waiver
of Punitive,
Consequential, Special or Indirect Damages

 

BORROWER WAIVES ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES FROM LENDER OR ANY OF LENDER’S AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY BORROWER
AGAINST LENDER OR ANY OF LENDER’S AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR
AGENTS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT. 
THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR
INDIRECT DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN BY BORROWER, AND IS
INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO SEEK
PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES WOULD OTHERWISE
APPLY.  LENDER IS AUTHORIZED AND
DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS
WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT
DAMAGES.

 

End of Article 11

 

5

 

DEFINITIONS

 

12.1.                     Defined Terms

 

Capitalized terms defined below or elsewhere in this Agreement have the
following meanings or, as applicable, the meanings given to those terms in
Exhibits to this Agreement: 

 

“Accrual Basis” has the meaning set forth in Section 3.1(c).

 

“Advance Rate” means, with respect to any Eligible Loan, the
Advance Rate set forth in Exhibit H for that type of Eligible Loan.

 

“Affiliate” means, when used with reference to any Person, (a)
each Person that, directly or indirectly, controls, is controlled by or is
under common control with, the Person referred to, (b) each Person that
beneficially owns or holds, directly or indirectly, 5% or more of any class of
voting Equity Interests of the Person referred to, (c) each Person, 5% or more of
the voting Equity Interests of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person’s officers,
directors, joint venturers and partners. 
For these purposes, the term “control” (including the terms “controlled
by” and “under common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of the Person in question.

 

“Aged Mortgage Loans” means Mortgage Loans against which a
Warehousing Advance has been outstanding for longer than the Standard Warehouse
Period, provided that Aged Mortgage Loans are permitted for such type of
Mortgage Loan.

 

“Aged Warehouse Period” means the maximum number of days a
Warehouse Advance against Aged Mortgage Loans of a particular type may remain
outstanding as set forth in Exhibit H.

 

“Agency Security” means a Mortgage-backed Security issued or
guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.

 

“Agreement” means this Warehousing Credit and Security
Agreement, either as originally executed or as it may be amended, restated,
renewed or replaced.  

 

“Appraised Property Value” means with respect to an interest in
real property, the then current fair market value of the real property and any
improvements on it as of recent date determined in accordance with
Title XI of FIRREA by a qualified appraiser who is a member of the
American Institute of Real Estate Appraisers or other group of professional
appraisers.

 

“Approved Custodian” means a pool custodian or other Person that
Lender deems acceptable, in its sole discretion, to hold Mortgage Loans for
inclusion in a Mortgage Pool or to hold Mortgage Loans as agent for an Investor
that has issued a Purchase Commitment for those Mortgage Loans.

 

“Audited Statement Date” means the date of Borrower’s most
recent audited financial statements (and, if applicable, Borrower’s
Subsidiaries, on a consolidated basis) delivered to Lender under this
Agreement. 

 

“Bank One” means Bank One, National Association, or any
successor bank.

 

1

 

“Bank One Prime Rate” means, as of any date of determination,
the highest prime rate quoted by Bank One and most recently published by
Bloomberg L.P. If the prime rate for Bank One is not quoted or published for
any period, then during that period the term “Bank One Prime Rate” means the
highest prime rate published in the most recent edition of The Wall Street
Journal in its regular column entitled “Money Rates.”

 

“Borrower” has the meaning set forth in the first paragraph of
this Agreement.

 

“Business Day” means any day other than Saturday, Sunday or any
other day on which national banking associations are closed for business.

 

“Buydown” has the meaning set forth in Section 3.4.

 

“Calendar Quarter” means the 3 month period beginning on each
January 1, April 1, July 1 or October 1.

 

“Cash Collateral Account” means a demand deposit account
maintained at the Funding Bank in Lender’s name and designated for receipt of
the proceeds of the sale or other disposition of Collateral. 

 

“Check Disbursement Account” means a demand deposit account
maintained at the Funding Bank in Borrower’s name and under the control of
Lender for clearing checks written by Borrower to fund Mortgage Loans funded by
Warehousing Advances.

 

“Closing Date” has the meaning set forth in the Recitals to this
Agreement.

 

“Collateral” has the meaning set forth in Section 4.1.

 

“Collateral Documents” means, with respect to each Mortgage
Loan, (a) the Mortgage Note, the Mortgage and all other documents
including, if applicable, any Security Agreement, executed in connection with
or relating to the Mortgage Loan; (b) as applicable, the original lender’s
ALTA Policy of Title Insurance or its equivalent, documents evidencing the FHA
Commitment to Insure, the VA Guaranty or private mortgage insurance, the
appraisal, the Regulation Z statement, the environmental assessment, the
engineering report, certificates of casualty or hazard insurance, credit
information on the maker of the Mortgage Note, the HUD-1 or corresponding
purchase advice; (c) any other document listed in Exhibit B;
and (d) any other document that is customarily desired for inspection or
transfer incidental to the purchase of any Mortgage Note by an Investor or that
is customarily executed by the seller of a Mortgage Note to an Investor. 

 

“Committed Purchase Price” means for an Eligible Loan
(a) the dollar price as set forth in the Purchase Commitment or, if the
price is not expressed in dollars, the product of the Mortgage Note Amount
multiplied by the price (expressed as a percentage) as set forth in the
Purchase Commitment for the Eligible Loan, or (b) if the Eligible Loan is
to be used to back an Agency Security, an amount equal to the product of the
Mortgage Note Amount multiplied by the price (expressed as a percentage) as set
forth in the Purchase Commitment for the Agency Security.

 

“Compliance Certificate” means a certificate executed on behalf
of Borrower by its chief financial officer or its treasurer or by another
officer approved by Lender, substantially in the form of Exhibit E.

 

“Credit Score” means a mortgagor’s overall consumer credit
rating, represented by a single numeric credit score using the Fair, Isaac
consumer credit scoring system, provided by a credit repository acceptable to
Lender and the Investor that issued the Purchase Commitment covering the
related Mortgage Loan (if a Purchase Commitment is required by Exhibit H).

 

2

 

“Debt” means (a) all indebtedness or other obligations of a
Person (and, if applicable, that Person’s Subsidiaries, on a consolidated
basis) that, in accordance with GAAP, would be included in determining total
liabilities as shown on the liabilities side of a balance sheet of that Person
on the date of determination, plus (b) all indebtedness or other
obligations of that Person (and, if applicable, that Person’s Subsidiaries, on
a consolidated basis) for borrowed money or for the deferred purchase price of
property or services. For purposes of calculating a Person’s Debt, Subordinated
Debt due more than 6 months after the Warehousing Maturity Date may be excluded
from that Person’s indebtedness.

 

“Default” means the occurrence of any event or existence of any
condition that, but for the giving of Notice or the lapse of time, would
constitute an Event of Default.

 

“Default Rate” means, for any Warehousing Advance, the Interest
Rate applicable to that Warehousing Advance plus 4% per annum. If no Interest
Rate is applicable to a Warehousing Advance, “Default Rate” means, for that Warehousing
Advance, the highest Interest Rate then applicable to any outstanding Warehousing
Advance plus 4% per annum.

 

“Depository Benefit” means the compensation received by Lender,
directly or indirectly, as a result of Borrower’s maintenance of Eligible
Balances with a Designated Bank.

 

“Designated Bank” means any bank designated by Lender as a
Designated Bank, but only for as long as Lender has an agreement under which
Lender receives Depository Benefits from that bank.

 

“Designated Bank Charges” means any fees, interest or other
charges that would otherwise be payable to a Designated Bank in connection with
Eligible Balances maintained at the Designated Bank, including deposit
insurance premiums, service charges and any other charges that may be imposed
by governmental authorities from time to time.   

 

“Discontinued Loan” has the meaning set forth in the GMAC-RFC
Client Guide. 

 

“Earnings Allowance” has the meaning set forth in Section 3.1(b).

 

“Earnings Credit” has the meaning set forth in Section 3.1(b). 

 

“Electronic Advance Request” means an electronic transmission
through RFConnects Delivery containing the same information as Exhibit A
to this Agreement.

 

“Electronic Tracking Agreement” means an Electronic Tracking
Agreement, on the form prescribed by Lender, among Borrower, Lender, MERS and
MERSCORP, Inc.

 

“Eligible Balances” means all funds of or maintained by Borrower
(and, if applicable, Borrower’s Subsidiaries) in demand deposit or time deposit
accounts at a Designated Bank, minus balances to support float, reserve
requirements and any other reductions that may be imposed by governmental
authorities from time to time. 

 

“Eligible Loan” means a Single Family Mortgage Loan that
satisfies the conditions and requirements set forth in Exhibit H.

 

“Eligible Mortgage Pool” means a Mortgage Pool for which
(a) an Approved Custodian has issued its initial certification,
(b) there exists a Purchase Commitment covering the Agency Security to be
issued on the basis of that certification and (c) the Agency Security will
be delivered to Lender. 

 

3

 

“Equity Interests” means all shares, interests, participations
or other equivalents, however, designated, of or in a Person (other than a
natural person), whether or not voting, including common stock, membership
interests, warrants, preferred stock, convertible debentures and all
agreements, instruments and documents convertible, in whole or in part, into
any one or more of the foregoing. 

 

“ERISA” means the Employee Retirement Income Security Act of
1974 and all rules and regulations promulgated under that statute, as amended,
and any successor statute, rules, and regulations.

 

“ERISA Affiliate” means any trade or business (whether or not
incorporated) that is a member of a group of which Borrower is a member and
that is treated as a single employer under Section 414 of the Internal
Revenue Code.

 

“Event of Default” means any of the conditions or events set
forth in Section 10.1.  

 

“Excess Buydown” has the meaning set forth in Section 3.4. 

 

“Exchange Act” means the Securities Exchange Act of 1934 and all
rules and regulations promulgated under that statute, as amended, and any
successor statute, rules, and regulations.

 

“Exhibit B” means Exhibit B, as applicable to the
type of Eligible Loan against which a Warehousing Advance is to be made. 

 

“Fair Market Value” means, at any time for an Eligible Loan or a
related Agency Security (if the Eligible Loan is to be used to back an Agency
Security) as of any date of determination, (a) the Committed Purchase
Price if the Eligible Loan is covered by a Purchase Commitment from Fannie Mae
or Freddie Mac or the Eligible Loan is to be exchanged for an Agency Security
and that Agency Security is covered by a Purchase Commitment from an Investor,
or (b) otherwise, the market price for such Eligible Loan or Agency
Security, determined by Lender based on market data for similar Mortgage Loans
or Agency Securities and such other criteria as Lender deems appropriate in its
sole discretion.

 

“Fannie Mae” means Fannie Mae, a corporation created under the
laws of the United States, and any successor corporation or other entity.    

 

“FHA” means the Federal Housing Administration and any successor
agency or other entity. 

 

“FHA Mortgage Loan” means an FHA-insured Mortgage Loan included
in the Pledged Loans. 

 

“FICA” means the Federal Insurance Contributions Act and all
rules and regulations promulgated under that statute, as amended, and any successor
statute, rules and regulations.

 

“FIRREA” means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 and all rules and regulations promulgated under that
statute, as amended, and any successor statute, rules, and regulations.

 

“First Mortgage” means a Mortgage that constitutes a first Lien
on the real property and improvements described in or covered by that Mortgage.

 

“First Mortgage Loan” means a Mortgage Loan secured by a First
Mortgage.

 

“Freddie Mac” means the Federal Home Loan Mortgage Corporation,
a corporation created under the laws of the United States, and any successor
corporation or other entity.

 

4

 

“Funding Bank” means Bank One or any other bank designated by
Lender as a Funding Bank.

 

“Funding Bank Agreement” means a letter agreement on the form
prescribed by Lender between the Funding Bank and Borrower authorizing Lender’s
access to the Operating Account and the Check Disbursement Account.

 

“GAAP” means generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and in statements and
pronouncements of the Financial Accounting Standards Board, or in opinions,
statements or pronouncements of any other entity approved by a significant
segment of the accounting profession, which are applicable to the circumstances
as of the date of determination.

 

“Ginnie Mae” means the Government National Mortgage Association,
an agency of the United States government, and any successor agency or other
entity. 

 

“GMAC-RFC Client Guide” means the applicable loan purchase guide
issued by Lender, as the same may be amended or replaced.

 

“Government Mortgage Loan” means a closed-end First Mortgage
Loan that is either HUD/FHA insured (other than a HUD 203(K) Mortgage Loan or a
Title I Mortgage Loan) or VA guaranteed. 

 

“Hedging Arrangements” means, with respect to any Person, any
agreements or other arrangements (including interest rate swap agreements,
interest rate cap agreements and forward sale agreements) entered into to
protect that Person against changes in interest rates or the market value of
assets.

 

“High LTV Mortgage Loan” has the meaning set forth in Exhibit
H.

 

“HUD” means the Department of Housing and Urban Development, and
any successor agency or other entity. 

 

“HUD 203(K) Mortgage Loan” means an FHA-insured closed-end First
Mortgage Loan to an individual obligor the proceeds of which will be used for
the purpose of rehabilitating and repairing the related single family property,
and which satisfies the definition of “rehabilitation loan” in 24 C.F.R.
203.50(a). 

 

“Indemnified Liabilities” has the meaning set forth in
Section 11.2.

 

“Indemnitees” has the meaning set forth in Section 11.2. 

 

“Interest Rate” means, for any Warehousing Advance, the floating
rate of interest specified for that Warehousing Advance in Exhibit H.

 

“Interim Statement Date” means the date of the most recent
unaudited financial statements of Borrower (and, if applicable, Borrower’s
Subsidiaries, on a consolidated basis) delivered to Lender under this
Agreement.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986,
Title 26 of the United States Code, and all rules, regulations and interpretations
issued under those statutory provisions, as amended, and any subsequent or
successor federal income tax law or laws, rules, regulations and
interpretations. 

 

5

 

“Investment Company Act” means the Investment Company Act of
1940 and all rules and regulations promulgated under that statute, as amended,
and any successor statute, rules, and regulations.

 

“Investor” means Fannie Mae, Freddie Mac or a financially
responsible private institution that Lender deems acceptable, in its sole
discretion, to issue Purchase Commitments with respect to a particular category
of Eligible Loans.

 

“Lender” has the meaning set forth in the first paragraph of
this Agreement.

 

“Leverage Ratio” means the ratio of a Person’s Debt to Tangible
Net Worth. For purposes of calculating a Person’s Leverage Ratio, Debt arising
under Hedging Arrangements, to the extent of assets arising under those Hedging
Arrangements, may be excluded from that Person’s Debt.

 

“LIBOR” means, for each week, the rate of interest per annum
that is equal to the arithmetic mean of the U.S. Dollar London Interbank
Offered Rates for 1 month periods of certain U.S. banks as of 11:00 a.m.
(London time) on the first Business Day of each week on which the London
Interbank market is open, as published by Bloomberg L.P. If those interest
rates are not offered or published for any period, then during that period
LIBOR means the London Interbank Offered Rate for 1 month periods as published
in The Wall Street Journal in its regular column entitled “Money Rates” on the
first Business Day of each week on which the London Interbank market is open. 

 

“Lien” means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature of such an agreement
and any agreement to give any security interest).

 

“Liquid Assets” means the following assets owned by a Person
(and, if applicable, that Person’s Subsidiaries, on a consolidated basis) as of
any date of determination: (a) unrestricted and unencumbered cash, (b) funds on
deposit in accounts with any bank located in the United States (net of the
aggregate amount payable under all outstanding and unpaid checks, drafts and
similar items drawn by a Person against those accounts), (c) investment grade
commercial paper, (d) money market funds, and (e) marketable securities, plus,
in the case of Borrower and in the absence of a Default or Event of Default,
(f) the amount of any Buydowns and Excess Buydowns. 

 

“Loan Documents” means this Agreement, the Warehousing Note, any
agreement of Borrower relating to Subordinated Debt, and each other document,
instrument or agreement executed by Borrower in connection with any of those
documents, instruments and agreements, as originally executed or as any of the
same may be amended, restated, renewed or replaced.

 

“Loan Package Fee “ has the meaning set forth in
Section 3.6.

 

“Loan-to-Value Ratio” means, for any Mortgage Loan, the ratio of
(a) the maximum amount that may be borrowed under the Mortgage Loan
(whether or not borrowed) at the time of origination, plus the Mortgage Note
Amounts of all other Mortgage Loans secured by senior or pari passu Liens on
the related property, to (b) the Appraised Property Value of the related property.

 

“Manufactured Home” means a structure that is built on a
permanent chassis (steel frame) with the wheel assembly necessary for
transportation in one or more sections to a permanent site or semi-permanent
site. 

 

“Margin Stock” has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System, as
amended.   

 

6

 

“MERS” means Mortgage Electronic Registrations Systems, Inc. and
any successor entity.

 

“Miscellaneous Fees and Charges” means the Collateral Operations
Fees set forth on Lender’s fee schedule attached as Exhibit I and
all miscellaneous disbursements, charges and expenses incurred by or on behalf of
Lender for the handling and administration of Warehousing Advances and
Collateral, including costs for Uniform Commercial Code, tax lien and judgment
searches conducted by Lender, filing fees, charges for wire transfers and check
processing charges, charges for security delivery fees, charges for overnight
delivery of Collateral to Investors, recording fees, Funding Bank service fees
and overdraft charges and Designated Bank Charges.  Upon not less than 3 Business Days’ prior Notice to Borrower,
Lender may modify the Collateral Operations Fees set forth in Exhibit I
to conform to current Lender practices and, as so modified, the revised Exhibit
I will become part of this Agreement. 

 

“Mortgage” means a mortgage or deed of trust on real property
that is improved and substantially completed (including real property to which
a Manufactured Home has been affixed in a manner such that the Lien of a
mortgage or deed of trust would attach to the Manufactured Home under
applicable real property law).

 

“Mortgage-backed Securities” means securities that are secured
or otherwise backed by Mortgage Loans.

 

“Mortgage Loan” means any loan evidenced by a Mortgage Note and
secured by a Mortgage and, if applicable, a Security Agreement.

 

“Mortgage Note” means a promissory note secured by one or more
Mortgages and, if applicable, one or more Security Agreements.

 

“Mortgage Note Amount” means, as of any date of determination,
the then outstanding and unpaid principal amount of a Mortgage Note (whether or
not an additional amount is available to be drawn under that Mortgage Note).

 

“Mortgage Pool” means a pool of one or more Pledged Loans on the
basis of which a Mortgage-backed Security is to be issued.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA, to which either Borrower or any ERISA
Affiliate of Borrower has any obligation with respect to its employees.

 

“Notices” has the meaning set forth in Section 11.1.

 

“Obligations” means all indebtedness, obligations and
liabilities of Borrower to Lender and Lender’s Subsidiaries (whether now
existing or arising after the date of this Agreement, voluntary or involuntary,
joint or several, direct or indirect, absolute or contingent, liquidated or
unliquidated, or decreased or extinguished and later increased and however
created or incurred), including Borrower’s obligations and liabilities to
Lender under the Loan Documents and disbursements made by Lender for Borrower’s
account.

 

“Operating Account” means a demand deposit account maintained at
the Funding Bank in Borrower’s name and designated for funding that portion of
each Eligible Loan not funded by a Warehousing Advance made against that
Eligible Loan and for returning any excess payment from an Investor for a
Pledged Loan or Pledged Security.

 

“Overdraft Advance” has the meaning set forth in
Section 3.8.

 

7

 

“Participant” has the meaning set forth in Section 11.8.

 

“Permitted Affiliate Transactions” means, subject to all terms,
conditions and provisions of this Agreement, transactions between Borrower and
its Affiliates in connection with (i) the securitization, sale, hypothecation
or pledge of certain assets of Borrower (other than any item of Collateral) or
its Affiliates, (ii) hedging activities involving Borrower and certain of its
Affiliates, and/or the origination, and (iii) acquisition of Mortgage Loans,
Mortgage Notes, Mortgages, Security Agreements and all other documents,
agreements and instruments related thereto.

 

“Person” means and includes natural persons, corporations,
limited liability companies, limited liability partnerships, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions of those governments.

 

“Plan” means each employee benefit plan (whether in existence on
the date of this Agreement or established after that date), as that term is
defined in Section 3 of ERISA, maintained for the benefit of directors,
officers or employees of Borrower or any ERISA Affiliate.

 

“Pledged Assets” means, collectively, Pledged Loans and Pledged
Securities.

 

“Pledged Hedging Accounts” has the meaning set forth in
Section 4.1 (g).

 

“Pledged Hedging Arrangements” has the meaning set forth in
Section 4.1 (g).

 

“Pledged Loans” has the meaning set forth in
Section 4.1(b).

 

“Pledged Securities” has the meaning set forth in Section 4.1(c).

 

“Prime Mortgage Loan” has the meaning set forth in Exhibit H.

 

“Prohibited Transaction” has the meanings set forth for such
term in Section 4975 of the Internal Revenue Code and Section 406 of
ERISA.

 

“Purchase Commitment” means a written commitment, in form and
substance satisfactory to Lender, issued in favor of Borrower by an Investor
under which that Investor commits to purchase Mortgage Loans or Mortgage-backed
Securities.

 

“Rating Agency” means any nationally recognized statistical
rating organization that in the ordinary course of its business rates
Mortgage-backed Securities. 

 

“Release Amount” has the meaning set forth in
Section 4.3(f).   

 

“Restriction List” and “Restriction Lists” means each and
every list of Persons to whom the Government of the United States prohibits or
otherwise restricts the provision of financial services.  For the purposes of this Agreement,
Restriction Lists include the list of Specifically Designated Nationals and Blocked
Persons established pursuant to Executive Order 13224 (September 23, 2001)
and maintained by the Office of Foreign Assets Control, U.S. Department of the
Treasury, current as of the day the Restriction List is used for purposes of
comparison in accordance with the requirements of this Agreement. 

 

“RFC Mortgage Loan” means a Mortgage Loan covered by a Purchase
Commitment issued by Lender. 

 

8

 

“RFConnects Delivery” means Lender’s proprietary service to
support the electronic exchange of information between Lender and Borrower,
including Warehousing Advance Requests, shipping requests, payoff requests,
wire transfer instructions, security delivery instructions, activity reports
and exception reports. 

 

“RFConnects Pledge Agreement” means an agreement (on the then
current form prescribed by Lender) granting Lender a security interest in
Mortgage Loans for which Borrower has requested Warehousing Advances using
RFConnects Delivery.

 

“Second Mortgage” means a Mortgage that constitutes a second
Lien on the real property and improvements described in or covered by that
Mortgage.

 

“Second Mortgage Loan” means a Mortgage Loan secured by a Second
Mortgage.

 

“Security Agreement” means a security agreement or other
agreement that creates a Lien on personal property, including furniture,
fixtures and equipment, to secure repayment of a Mortgage Loan. 

 

“Servicing Contract” means, with respect to any Person, the
arrangement, whether or not in writing, under which that Person has the right
to service Mortgage Loans.

 

“Servicing Portfolio” means, as to any Person, the unpaid
principal balance of Mortgage Loans serviced by that Person under Servicing
Contracts, minus the principal balance of all Mortgage Loans that are serviced
by that Person for others under subservicing arrangements.

 

“Servicing Portfolio Report” has the meaning set forth in
Section 7.3(a).   

 

“Single Family Mortgage Loan” means a Mortgage Loan secured by a
Mortgage on improved real property on which is located a 1-to-4 family
residence.  

 

“Standard Warehouse Period” means, for any Mortgage Loan, the
maximum number of days a Warehousing Advance against that type of Mortgage
Loan, other than against an Aged Mortgage Loan, may remain outstanding, as set
forth in Exhibit H. 

 

“Statement Date” means the Audited Statement Date or the Interim
Statement Date, as applicable.

 

“Sublimit” means the aggregate amount of Warehousing Advances
(expressed as a dollar amount or as a percentage of the Warehousing Commitment
Amount) that is permitted to be outstanding at any one time against a specific
type of Eligible Loan.

 

“Subordinated Debt” means (a) all indebtedness of Borrower
for borrowed money that is effectively subordinated in right of payment to all
present and future Obligations either (1) under a Subordination of Debt
Agreement on the form prescribed by Lender or (2) otherwise on terms
acceptable to Lender, and (b) solely for purposes of Section 8.5, all
indebtedness of Borrower that is required to be subordinated by Sections 5.1(b)
and 7.11.  

 

“Subprime Mortgage Loan” has the meaning set forth in Exhibit
H.

 

“Subsidiary” means any corporation, partnership, association or
other business entity in which more than 50% of the shares of stock or other
ownership interests having voting power for the election of directors,
managers, trustees or other Persons performing similar functions is at the time
owned or controlled by any Person either directly or indirectly through one or
more Subsidiaries of that Person.

 

9

 

“Tangible Net Worth” means the excess of a Person’s (and, if
applicable, that Person’s Subsidiaries, on a consolidated basis) total assets
over total liabilities as of the date of determination, each determined in
accordance with GAAP applied in a manner consistent with the financial
statements referred to in Section 5.1 (a)(6), plus that portion of
Subordinated Debt due more than 6 months after the Warehousing Maturity
Date.  For purposes of calculating a
Person’s Tangible Net Worth, advances or loans to shareholders, directors,
officers, employees or Affiliates, investments in Affiliates, assets pledged to
secure any liabilities not included in the Debt of that Person, intangible
assets, those other assets that would be deemed by HUD to be non-acceptable in
calculating adjusted net worth in accordance with its requirements in effect as
of that date, as those requirements appear in the “Consolidated Audit Guide for
Audits of HUD Programs,” and other assets Lender deems unacceptable, in its
sole discretion, must be excluded from that Person’s total assets.

 

“Third Party Originated Loan” means a Mortgage Loan originated
and funded by a third party (other than with funds provided by Borrower at
closing to purchase the Mortgage Loan) and subsequently purchased by Borrower.

 

“Title I Mortgage Loan” means an FHA co-insured closed-end First
Mortgage Loan or Second Mortgage Loan that is underwritten in accordance with
HUD underwriting standards for the Title I Property Improvement Program set
forth in, and that is reported for insurance under, the Mortgage Insurance
Program authorized and administered under Title I of the National Housing Act
of 1934, as amended, and the regulations related to that statute.   

 

“Trust Receipt” means a trust receipt in a form approved by and
under which Lender may deliver any document relating to the Collateral to
Borrower for correction or completion.   

 

“Warehousing Advance” means a disbursement by Lender under
Section 1.1. 

 

“Warehousing Advance Request” has the meaning set forth in
Section 2.1. 

 

“Warehousing Collateral Value” means, as of any date of
determination, (a) with respect to any Eligible Loan, the lesser of
(1) the amount of any Warehousing Advance made, or that could be made,
against such Eligible Loan under Exhibit H or (2) an amount equal
to the Advance Rate for the applicable type of Eligible Loan multiplied by the
Fair Market Value of such Eligible Loan; (b) if Eligible Loans have been
exchanged for Agency Securities, the lesser of (1) the amount of any
Warehousing Advances outstanding against the Eligible Loans backing the Agency
Securities or (2) an amount equal to the Advance Rates for the applicable
types of Eligible Loans backing the Agency Securities multiplied by the Fair
Market Value of the Agency Securities; and (c) with respect to cash, the
amount of the cash.

 

“Warehousing Commitment” means the obligation of Lender to make
Warehousing Advances to Borrower under Section 1.1.

 

“Warehousing Commitment Amount” means $100,000,000  

 

“Warehousing Commitment Fee” has the meaning set forth in
Section 3.5. 

 

“Warehousing Fee” has the meaning set forth in Section 3.6.

 

“Warehousing Maturity Date” has the meaning set forth in
Section 1.2.

 

“Warehousing Note” has the meaning set forth in
Section 1.3.

 

10

 

“Weighted Average Committed Purchase Price” means the weighted
average of the Committed Purchase Prices of the unfilled Purchase Commitments
(expressed as a percentage) for Mortgage Loans or Mortgage-backed Securities of
the same type, interest rate and term.  

 

“Wet Settlement Advance” means with respect to any Warehousing
Advance, the time from the date the Warehousing Advance is made until the date
of Lender’s receipt of the Collateral Documents required by Article 2 and
the Exhibits and documents referenced in that Article.

 

“Wire Disbursement Account” means a demand deposit account
maintained at the Funding Bank in Lender’s name for clearing wire transfers
requested by Borrower to fund Warehousing Advances. 

 

“Wire Fee” has the meaning set forth in Section 3.6.

 

12.2.                     Other Definitional Provisions; Terms of
Construction

 

12.2 (a)                Accounting
terms not otherwise defined in this Agreement have the meanings given to those
terms under GAAP.

 

12.2 (b)               Defined
terms may be used in the singular or the plural, as the context requires.

 

12.2 (c)                All
references to time of day mean the then applicable time in Chicago, Illinois,
unless otherwise expressly provided.

 

12.2 (d)               References
to Sections, Exhibits, Schedules and like references are to Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise expressly provided.

 

12.2 (e)                The
words “include,” “includes” and “including” are deemed to be followed by the
phrase “without limitation.”

 

12.2 (f)                  Unless
the context in which it is used otherwise clearly requires, the word “or” has
the inclusive meaning represented by the phrase “and/or.”

 

12.2 (g)               All
incorporations by reference of provisions from other agreements are
incorporated as if such provisions were fully set forth into this Agreement,
and include all necessary definitions and related provisions from those other
agreements. All provisions from other agreements incorporated into this
Agreement by reference survive any termination of those other agreements until
the Obligations of Borrower under this Agreement and the Warehousing Note are
irrevocably paid in full and the Warehousing Commitment is terminated. 

 

12.2 (h)               All
references to the Uniform Commercial Code shall be deemed to be references to
the Uniform Commercial Code in effect on the date of this Agreement in the
applicable jurisdiction.

 

12.2 (i)                   Unless
the context in which it is used otherwise clearly requires, all references to
days, weeks and months mean calendar days, weeks and months.

 

End of Article 12

 

End of Document

 

11

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