Document:

Guaranty

 Exhibit 10.55 
 GUARANTY 
 THIS GUARANTY, dated as of April 15, 2005, (this “Guaranty”), is made by NovaStar
Financial, Inc. (“NovaStar Financial”), NFI Holding Corp. (“NFI Holding”, and together with NovaStar Financial, the “Guarantors”) in favor of Wachovia Investment Holdings, LLC, (the “Buyer”, which term shall
include any buyer for whom Buyer acts as Agent as defined and provided for in the Master Repurchase Agreement referred to below). 
 RECITALS 
 A. Pursuant to that certain Amended and Restated Master Repurchase Agreement (Securities), dated as of
April 15, 2005, among NovaStar Mortgage, Inc. (“NMI”), NovaStar Assets Corp. (“NAC” and together with NMI, jointly and severally the “Sellers”) and the Buyer(the “Master Repurchase Agreement”), the Buyer
has agreed to purchase certain securities (the “Purchased Assets”) from the Sellers and the Sellers have agreed to repurchase such Purchased Assets upon the terms and subject to the conditions set forth therein. 
 B. It is a condition precedent to the obligation of the Buyer to purchase the Purchased Assets from the Sellers under the Master Repurchase Agreement
that the Guarantor shall have executed and delivered this Guaranty to the Buyer. 
 NOW, THEREFORE, for good and valuable consideration,
receipt of which by the parties hereto is hereby acknowledged, the parties hereto hereby agree as follows: 
 1. Defined Terms.
(a) Unless otherwise defined herein, terms defined in the Master Repurchase Agreement and used herein shall have the meanings given to them in the Master Repurchase Agreement. 
 (b) “Obligations” shall mean the obligations and liabilities of the Sellers and the Guarantor to the Buyer, including, without
limitation, the obligations whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, or out of or in connection with the Master Repurchase Agreement, this Guaranty, any
other Program Documents and any other document made, delivered or given in connection therewith or herewith, whether on account of covenants, Repurchase Prices, reimbursement obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees and disbursements of counsel to the Buyer that are required to be paid by the Sellers pursuant to the terms of the Master Repurchase Agreement) or otherwise. 
 (d) The words “hereof, “herein” and “hereunder” and words of similar import when used in this Guaranty shall refer to this
Guaranty as a whole and not to any particular provision of this Guaranty, and section and paragraph references are to this Guaranty unless otherwise specified. 
 (e) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 
  

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 2. Guaranty. (a) The Guarantors hereby, unconditionally and irrevocably, guarantee to the
Buyer and its successors, endorsees, transferees and assigns the prompt and complete payment and performance by the Sellers when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. 
 (b) The Guarantors further agree to pay any and all expenses (including, without limitation, all reasonable fees and disbursements of counsel) which may
be paid or incurred by the Buyer in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantors under this Guaranty. This Guaranty shall remain
in full force and effect until the Obligations are paid in full, notwithstanding that from time to time prior thereto either or both Sellers may be free from any Obligations. 
 (c) Each Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing this Guaranty or affecting the rights and remedies of the Buyer hereunder. 
 (d) No payment or payments made by the
Sellers, the Guarantors, any other guarantor or any other Person or received or collected by the Buyer from the Sellers, the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantors hereunder which shall, notwithstanding any such payment or
payments other than payments made by the Guarantors in respect of the Obligations or payments received or collected from the Guarantors in respect of the Obligations, remain liable for the Obligations until the Obligations are paid in full and the
Master Repurchase Agreement is terminated. 
 (e) Each Guarantor agrees that whenever, at any time, or from time to time, it shall make any
payment to the Buyer on account of its liability hereunder, it will notify the Buyer in writing that such payment is made under this Guaranty for such purpose. 
 (f) Each Guarantor shall be jointly and severally liable to the Buyer for all obligations of the guarantors hereunder. 
 3. Representations and Warranties of the Guarantor. Each Guarantor hereby represents and warrants that: 
 (a) It is duly organized and validly existing in good standing under the laws of the jurisdiction under which it is organized and is duly qualified to do business and is in good standing in every other jurisdiction as to which the nature of
the business conducted by it makes such qualification necessary. 
 (b) It has the full power, authority and legal right to execute, deliver
and perform its obligations under this Guaranty. This Guaranty has been duly executed and delivered by it, has not been amended or otherwise modified, is in full force and effect and is the legal, valid and binding obligation of each Guarantor,
enforceable against it in accordance with its terms, except as may be 

  

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limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally and to the
application of general principles of equity (regardless of whether considered in a proceeding in equity or at law). 
 (c) Neither the
execution and delivery of this Guaranty nor the consummation of the transactions contemplated herein will conflict with or result in a breach of, or require any consent under, any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any agreement or instrument to which the Guarantors are a party or by which the Guarantors or their property is bound or to which the Guarantors are subject, or constitute a default under
any such agreement or instrument, or (except for the liens created pursuant hereto) result in the creation or imposition of any lien or encumbrance upon the Guarantors’ revenues or assets pursuant to the terms of any such agreement or
instrument. 
 (d) The Guarantors have received and reviewed copies of the Master Repurchase Agreement. 
 (e) This Guaranty is the legal, valid and binding obligation of the Guarantors, enforceable against each Guarantor, in accordance with its terms, subject
to bankruptcy, insolvency and similar laws and to the availability of equitable remedies. 
 (f) There is no action, suit or proceeding at
law or in equity by or before any governmental authority, arbitral tribunal or other body now pending, or to the best of the Guarantors’ knowledge, threatened against or affecting the Guarantors or any of their property that could have a
material adverse effect on the Guarantors’ condition, financial or otherwise. 
 (g) No authorizations, approvals or consents of, and no
filings or registrations with, any governmental authority are necessary for the execution, delivery or performance by the Guarantors of this Guaranty. 
 4. Reserved. 
 5. Right of Set-off. Upon the occurrence of any Event of Default, the
Guarantors hereby irrevocably authorize the Buyer or any of its Affiliates at any time and from time to time without notice to the Guarantors, any such notice being expressly waived by the Guarantors, to set-off and appropriate and apply any and all
deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Buyer or any of its Affiliates to or for the credit or the account of the Guarantors, or any part thereof in such amounts as the Buyer may elect, against and on account of the obligations and liabilities of the Guarantors to the
Buyer hereunder and claims of every nature and description of the Buyer or any of its Affiliates against the Guarantors, in any currency, whether arising hereunder, under the Master Repurchase Agreement as the Buyer may elect, whether or not the
Buyer has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. The Buyer shall notify the Guarantors promptly of any such set-off and the application made by the Buyer, provided that the
failure to give such notice shall not affect the validity of such set-off and application. The rights of the Buyer and its Affiliates under this Section are in addition to other rights and remedies (including without limitation, other rights of
set-off) which the Buyer and its Affiliates may have. 

  

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 6. No Subrogation. Notwithstanding any payment or payments made by the Guarantors hereunder or any
set-off or application of funds of the Guarantors by the Buyer or any of its Affiliates, the Guarantor shall not be entitled to be subrogated to any of the rights of the Buyer against either Seller or any other guarantor or any collateral security
or guarantee or right of offset held by the Buyer for the payment of the Obligations, nor shall the Guarantors seek or be entitled to seek any contribution or reimbursement from either Seller or any other guarantor in respect of payments made by the
Guarantors hereunder, until all amounts owing to the Buyer by the Sellers on account of the Obligations are paid in full and the Master Repurchase Agreement is terminated. If any amount shall be paid to the Guarantors on account of such subrogation
rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by the Guarantors in trust for the Buyer, segregated from other funds of each Guarantor, and shall, forthwith upon receipt by the Guarantors,
be turned over to the Buyer in the exact form received by the Guarantors (duly indorsed by the related Guarantor to the Buyer, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Buyer may
determine. 
 7. Amendments, Etc. with Respect to the Obligations. The Guarantors shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantors and without notice to or further assent by the Guarantors, any demand for payment of any of the Obligations made by the Buyer may be rescinded by the Buyer and any of the Obligations
continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Buyer, and the Master Repurchase Agreement and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Buyer may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Buyer for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. The Buyer shall not have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guaranty or any property subject thereto. When making any demand
hereunder against any Guarantor, the Buyer may, but shall be under no obligation to, make a similar demand on the Sellers or the other Guarantor, and any failure by the Buyer to make any such demand or to collect any payments from the Sellers of the
other Guarantor or any release of the Sellers or such other Guarantor shall not relieve the Guarantors of their obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law,
of the Buyer against the Guarantors. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings. 
 8. Waiver of Rights. The Guarantors waive any and all notice of the creation, renewal, extension or accrual of any of the Obligations, and notice of or proof of reliance by the Buyer upon this Guaranty or
acceptance of this Guaranty; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guaranty; and all dealings between the Sellers
and the Guarantors, on the one hand, and the Buyer, on the other hand, likewise shall be conclusively presumed to have 

  

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been had or consummated in reliance upon this Guaranty. The Guarantors waive diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Sellers or the Guarantors with respect to the Obligations. 
 9. Guaranty Absolute and Unconditional. The
Guarantors understand and agree that this Guaranty shall be construed as a continuing, absolute and unconditional guarantee of the full and punctual payment and performance by the Sellers of the Obligations and not of their collectibility only, and
is in no way conditioned upon any requirement that the Buyer first attempt to collect any of the obligations from the Sellers, without regard to (a) the validity, regularity or enforceability of the Master Repurchase Agreement, any of the
Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Buyer (b) any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by a Seller against the Buyer, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Sellers or the Guarantors) which constitutes, or might be
construed to constitute, an equitable or legal discharge of a Seller from the Obligations, or of the Guarantors from this Guaranty, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantors, the
Buyer may, but shall be under no obligation to, pursue such rights and remedies as it may have against a Seller or any other Person or any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any
failure by the Buyer to pursue such other rights or remedies or to collect any payments from a Seller or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of a
Seller or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve the Guarantors of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Buyer against the Guarantors. This Guaranty shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the successors and assigns thereof, and shall inure
to the benefit of the Buyer, and its successors, endorsees, transferees and assigns, until all the Obligations and the obligations of the Guarantors under this Guaranty shall have been satisfied by payment in full and the Master Repurchase Agreement
shall be terminated, notwithstanding that from time to time during the term of the Master Repurchase Agreement the Sellers may be free from any Obligations. 
 10. Reinstatement. This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Buyer upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of either Seller or and of the Guarantors, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, either Seller or either Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 
 11. Payments. The Guarantors hereby guarantee that payments hereunder will be paid to the Buyer without set-off or counterclaim in U.S. Dollars in accordance with the wiring instructions of the Buyer.

 12. Notices. All notices, requests and other communications provided for herein (including without limitation any modifications of,
or waivers, requests or consents under, this 

  

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Guaranty) shall be given or made in writing (including without limitation by telex or telecopy) and delivered to the intended recipient at the “Address
for Notices” specified on the signature page hereto; or, as to any party, at such other address as shall be designated by such party in a written notice to each other party. All such communications shall be deemed to have been duly given when
transmitted by telex or telecopy or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. 
 13. Severability. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 
 14. Integration. This Guaranty and the Master Repurchase Agreement represent the agreement of the Guarantors with respect to the subject matter
hereof and thereof and there are no promises or representations by the Buyer relative to the subject matter hereof or thereof not reflected herein or therein. 
 15. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of the terms or provisions of this Guaranty may be waived, amended, supplemented or otherwise modified except by a written instrument
executed by the Guarantors and the Buyer, provided that any provision of this Guaranty may be waived by the Buyer. 
 (b) The Buyer shall not
by any act (except by a written instrument pursuant to Section 15(a) hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of the Buyer, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Buyer of any right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Buyer would otherwise have on any future occasion. 
 (c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 
 16. Section
Headings. The section headings used in this Guaranty are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 
 17. Successors and Assigns. This Guaranty shall be binding upon the successors and assigns of the Guarantors and shall inure to the benefit of the
Buyer and its successors and assigns. This Guaranty may not be assigned by any of the Guarantors without the express written consent of the Buyer. 
  

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 18. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY NEW YORK LAW WITHOUT REFERENCE TO CHOICE OF
LAW DOCTRINE. 
 19. SUBMISSION TO JURISDICTION; WAIVERS. EACG GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY: 
 (A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY AND THE MASTER REPURCHASE
AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY
THEREOF; 
 (B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED
BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

 (C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE BUYER SHALL HAVE BEEN NOTIFIED; AND 
 (D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION. 
 20. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, THE MASTER REPURCHASE AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 21. Other Liens. Notwithstanding anything to the contrary contained herein, liens previously granted by the Guarantors in favor
of the Buyer or future liens that are granted by the Guarantors in favor of the Buyer will not constitute a breach of this Guaranty. 
  

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 22. Agents. The Buyer may employ agents and attorneys-in-fact in connection herewith and shall not
be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. 
 23.
Counterparts. This Guaranty may be executed in any number of counterparts, all of which when taken together shall constitute one and the same instrument and any of the parties hereto may execute this Guaranty by signing any such counterpart.

 [SIGNATURE PAGE FOLLOWS] 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly executed and delivered as of
the day and year first above written. 
  

			
	NFI HOLDING CORP.
	jointly and severally as Guarantor
		
	By:	 	 /s/ Rodney E. Schwatken

	Name:	 	Rodney E. Schwatken
	Title:	 	Vice President & Treasurer
	
	 NOVASTAR FINANCIAL, INC.,
 jointly and
severally as Guarantor

		
	By:	 	 /s/ Rodney E. Schwatken

	Name:	 	Rodney E. Schwatken
	Title:	 	Vice President & Treasurer

  

					
	Address for Notices with respect to each of the foregoing:
	8140 Ward Parkway, Suite 300
	Kansas City, Missouri 64114
	Attention:	 	Rodney Schwatken
		 	Vice President/Treasury
	Telephone:	 	(XXX) XXX-XXXX
	Facsimile:	 	(XXX) XXX-XXXX

  

			
	
	WACHOVIA INVESTMENT HOLDINGS, LLC
		
	By:	 	 /s/ Prakash B. Wadhwani

	Name:	 	Prakash B. Wadhwani
	Title:	 	Vice President

 Address for Notices: 
 301 South College Street 
 Charlotte, North Carolina 28288 
 Attention: Prakash B. Wadhwani 
 Telephone: (XXX) XXX-XXXX 
 Facsimile: (XXX) XXX-XXXX 
  

 9Master Repurchase Agreement (Securities)

 Exhibit 10.56 
 MASTER REPURCHASE AGREEMENT (SECURITIES) 
 Dated as of April 14, 2006

 AMONG: 
 Wachovia Investment Holdings, LLC, as
buyer (“Buyer”, which term shall include any “Principal” as defined and provided for in Annex I), or as agent pursuant hereto (“Agent”); 
 NovaStar Mortgage, Inc. (“NMI”), as a seller; NovaStar Certificates Financing LLC (“NCFLLC”), as a seller; and NovaStar Certificates Financing Corporation (“NCFC”),
as a seller ( NMI, NCFLLC and NCFC, each a Seller and collectively, jointly and severally, the “Sellers”). 
 1. APPLICABILITY

 Buyer shall, from time to time, upon the terms and conditions set forth herein, agree to enter into transactions in which the related
Seller transfers to Buyer Eligible Assets against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to the related Seller such Purchased Assets at a date certain, against the transfer of funds by the related Seller.
Each such transaction shall be referred to herein as a “Transaction”, and, unless otherwise agreed in writing, shall be governed by this Agreement. 
  

	2.	DEFINITIONS AND INTERPRETATION 

 a. Defined
Terms. 
 “1YR Repurchase Agreement” means that certain Second Amended and Restated Master Repurchase Agreement (Securities),
dated as of April 14, 2006, among Wachovia Investment Holdings, LLC, Wachovia Bank, National Association, NovaStar Mortgage, Inc., NovaStar Assets Corp., NovaStar Certificates Financing LLC, and NovaStar Certificates Financing Corp., as amended
from time to time. 
 “Adjusted Tangible Net Worth” means shall mean at any date: 
 (a) Book Net Worth, minus 
 (b) The sum of (1) all assets which would be classified as intangible assets of NFI and its consolidated Subsidiaries under GAAP (except purchased and capitalized value of servicing rights), including, without
limitation, goodwill (whether representing the excess cost over book value of assets acquired or otherwise), patents, trademarks, trade names, copyrights, franchises and deferred charges (including, without limitation, unamortized debt discount and
expense, organization costs and research and product development costs) plus (2) all receivables from directors, officers and shareholders of NFI and its consolidated Subsidiaries, minus 
 (c) The amount of unrealized gains on debt securities (as defined in FASB 115) of NFI and any Subsidiaries of NFI Holding, plus

  

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 (d) The amount of unrealized losses on debt securities (as defined in FASB 115) of NFI
and any Subsidiaries of NFI Holding. 
 Provided that in all cases such amounts shall be determined by combining the relevant figures for NFI
and for NFI Holding and its consolidated Subsidiaries and its Affiliates, as accounted for under the equity method. 
 “Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” means the
power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting equity, by contract or otherwise. 
 “Agent” means Wachovia Investment Holdings, LLC or any successor. 
 “Agreement” means this Master Repurchase Agreement (Securities), as it may be amended, supplemented or otherwise modified from time to time. 
 “Asset-Backed Security” shall mean either (i) a certificate issued under a Trust Agreement representing 100% ownership of a Delaware business trust that has issued bonds secured by a pool of
Mortgage Assets originated in accordance with the Underwriting Standards of the applicable Affiliate of the related Seller or (ii) a subordinated bond issued by a Delaware business trust that has issued bonds under an Indenture secured by a
pool of Mortgage Assets originated in accordance with the Underwriting Standards of the applicable affiliate of the related Seller. 
 “Book Net Worth” shall mean the excess of total assets of NFI and its consolidated Subsidiaries over Total Liabilities of NFI and its consolidated Subsidiaries determined in accordance with GAAP (or such non-GAAP principles
as may be disclosed to and approved by Buyer from time to time). 
 “Breakage Costs” shall have the meaning assigned thereto
in Section 3(c) herein. 
 “Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day
upon which the New York Stock Exchange or the Federal Reserve Bank of New York is obligated by law or executive order to be closed. 
 “Buyer’s Margin Amount” means, with respect to any Transaction as of any date of determination, the amount obtained by application of Buyer’s Margin Percentage to the Repurchase Price for such Transaction as of
such date. 
 “Buyer’s Margin Percentage” means, with respect to any Transaction as of any date of determination, the
percentage obtained by dividing the Market Value of the Purchased Assets on the Purchase Date by the Purchase Price on the Purchase Date. 
 “Change in Control” shall mean the acquisition (excluding any conversion of convertible preferred stock to common stock) by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission 

  

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under the Securities Exchange Act of 1934) of outstanding shares of voting stock of the Guarantor at any time if after giving effect to such acquisition such
Person or Persons owns fifty percent (50%) or more of such outstanding voting stock. 
 “Change in Law” means
(a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement
or (c) compliance by Buyer (or any Affiliate of Buyer) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. 
 “Code” shall mean the Internal Revenue Code of 1986, as amended. 
 “Collateral” shall have the meaning assigned thereto in Section 8 hereof. 
 “Confirmation” shall have the meaning assigned thereto in Section 4(b) hereof. 
 “Default” means any event, that, with the giving of notice or the passage of time or both, would constitute an Event of Default.

 “Default Rate” means, as of any date of determination, the lesser of (i) the Pricing Rate plus 4% and (ii) the
maximum rate permitted by applicable law. 
 “Effective Date” shall mean the date set forth on the top of the first page of
this Agreement. 
 “Eligible Asset” shall mean each Eligible Residual with respect to which each of the representations and
warranties set forth on Exhibit C hereto is accurate and complete as of the date of the related Transaction and as of each date thereafter through and including the related Repurchase Date, and for which Wachovia Capital Markets LLC
(“WCM”) has acted as co-lead underwriter and joint book-runner of the offered securities at a minimum of 25% share of the underwriter’s concession for the respective securitization. 
 “Eligible Residuals” shall mean residual certificates arising from future securitizations of first-lien and second-lien home equity
loans and mortgage loans to sub-prime borrowers originated by a Seller or an Affiliate thereof, which residual certificates are deemed to be eligible by Buyer in its sole and absolute discretion; provided, however, that any residual
certificate shall cease to be an Eligible Residual if such residual has been subject to Transactions for greater than 1093 days. 
 “Event of Default” shall have the meaning assigned thereto in Section 18 hereof. 
 “Event of
Termination” shall have the meaning assigned thereto in Section 18 hereof. 
 “GAAP” shall mean generally
accepted accounting principles in the United States of America in effect from time to time. 
 “Governing Agreement” shall
mean with respect to any Purchased Asset, the pooling and servicing agreement, indenture or similar agreement. 
  

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 “Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions over any Seller. 
 “Guarantee” means, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person.

 “Guarantor” means NFI. 
 “Guaranty” means the Guaranty of the Guarantor in favor of the Buyer, dated as of April 14, 2006. 
 “Income” means, with respect to any Purchased Asset at any time, any principal thereof and all interest, dividends and other collections and distributions thereon, but not including any commitment nor
origination fees. 
 “Indebtedness” shall mean, for any Person: (a) all obligations for borrowed money;
(b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable and paid within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (c) indebtedness of others secured by a lien on the
Property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued for account
of such Person; (e) capital lease obligations of such Person; (f) obligations of such Person under repurchase agreements or like arrangements; (g) indebtedness of others guaranteed on a recourse basis by such Person; (h) all
obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (i) indebtedness of general partnerships of which such Person is a general partner; and (j) any other contingent liabilities
of such Person. 
 “Investment Company Act” means the Investment Company Act of 1940, as amended, including all rules and
regulations promulgated thereunder. 
 “LIBOR” shall mean, for each day of a Transaction, a rate based on the offered rates
of the Reference Banks for one-month U.S. dollar deposits, as determined by the Buyer for the related Purchase Date. 
 “Margin
Call” As defined in Section 6(a). 
 “Margin Deficit” shall have the meaning assigned thereto in
Section 6(a) hereof. 
 “Market Value” means (i) with respect to any Purchased Asset that is an Eligible Asset, as
of any date of determination, the value ascribed to such asset by Buyer in its sole discretion, and (ii) with respect to a Purchased Asset that is not an Eligible Asset, zero. 
  

 4 

 “Master Security and Netting Agreement” means the Master Security and Netting Agreement
dated as of April 15, 2005 among Buyer and certain Affiliates and the Guarantor and certain Affiliates as it may be further amended from time to time (including the joinder agreement dated as o April 14, 2006 executed in connection with
this Agreement). 
 “Material Adverse Change” means, with respect to a Person, any material adverse change in the business,
condition (financial or otherwise), operations, performance or properties taken as a whole of such Person. 
 “Material Adverse
Effect” means (a) a Material Adverse Change with respect to the Guarantor or the Guarantor and its Affiliates that are party to any Program Document taken as a whole; (b) a material impairment of the ability of the Guarantor or
any Affiliate that is a party to any Program Document to perform under any Program Document and to avoid any Event of Default; (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Program Document
against the Guarantor or any Affiliate that is a party to any Program Document; or (d) a material adverse effect upon the value or marketability of a material portion of the Purchased Assets. 
 “Maximum Aggregate Purchase Price” means $150,000,000. 
 “Maximum Recourse Amount” shall have the meaning thereto in Section 19. 
 “Mortgage Assets” shall mean home equity loans or mortgage loans originated by any Seller or an Affiliate of a Seller and underlying any Purchased Assets. 
 “Non-Seller Affiliate” means an Affiliate of any Seller or Guarantor that is not, itself, a Seller or Guarantor. 
 “Notice Date” shall have the meaning assigned thereto in Section 4 hereof. 
 “NCI Repurchase Agreement” means the Master Repurchase Agreement dated as of December 12, 2005 by and between NovaStar Capital,
Inc. and Wachovia Bank, National Association. 
 “NFI” means NovaStar Financial, Inc. and its permitted successors and
assigns. 
 “NFI Holding” means NFI Holding Corp. and its permitted successors and assigns. 
 “NMI Master Repurchase Agreement” means the Amended and Restated Master Repurchase Agreement dated as of May 14, 2004, between
Wachovia Bank, National Association and NovaStar Mortgage, Inc. 
 “Obligations” means (a) all of Sellers’ and
Guarantor’s obligation to pay the Repurchase Price on the Repurchase Date, and other obligations and liabilities of Sellers and Guarantors, to Buyer or its Affiliates arising under, or in connection with, the Program Documents or otherwise,
whether now existing or hereafter arising; (b) any and all sums paid by Buyer or on behalf of Buyer pursuant to the Program Documents in order to preserve any Purchased Asset or its interest therein; (c) in the event of any proceeding for
the collection or enforcement of any of Sellers’ or Guarantor’s 

  

 5 

 
indebtedness, obligations or liabilities referred to in clause (a), the reasonable expenses of retaking, holding, collecting, preparing for sale, selling or
otherwise disposing of or realizing on any Purchased Asset, or of any exercise by Buyer or such Affiliate of its rights under the related agreements, including without limitation, reasonable attorneys’ fees and disbursements and court costs;
and (d) all of Sellers’ and Guarantor’s obligations to Buyer or any other Person pursuant to the Program Documents. 
 “Person” shall mean any legal person, including any individual, corporation, partnership, association, joint-stock company, trust, limited liability company, unincorporated organization, governmental entity or other entity
of similar nature. 
 “Price Differential” means, with respect to each Transaction as of any date, the aggregate amount
obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price on a 360-day-per-year basis for the actual number of days during the period commencing on (and including) the Purchase Date and ending on (but excluding)
the date of determination (reduced by any amount of such Price Differential in respect of such period previously paid by the related Seller to Buyer) with respect to such Transaction. 
 “Pricing Rate” means the per annum percentage rate for determination of the Price Differential as set forth in Section 3(b) hereof
or as otherwise set forth in the Side Letter. 
 “Prime Rate” means the daily prime loan rate as reported in The Wall Street
Journal or if more than one rate is published, the highest of such rates. 
 “Principal” shall have the meaning given to it
in Annex I. 
 “Program Documents” means this Agreement, the Master Security and Netting Agreement, the Guaranty, the Side
Letter, the Swap Agreement and any other agreement entered into by any of the Sellers and/or the Guarantor, on the one hand, and Buyer or one of its Affiliates on the other, in connection herewith or therewith. 
 “Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible. 
 “Purchase Date” means the date on which Purchased Assets are to be transferred by the related Seller to
Buyer. 
 “Purchase Price” shall mean the price at which Purchased Assets are transferred by Sellers to Buyer in a
Transaction, which shall (unless otherwise agreed) be equal to the Purchase Price Percentage times the Market Value of the related Purchased Assets. 
 “Purchase Price Percentage” with respect to each Purchased Asset shall be equal to either (A) 75%, after the completion of the pre-funding period of the related securitization; or (B) the
product of (x) 75% and (y) a fraction, the numerator of which is the unpaid principal balance of the underlying mortgage loans as of the applicable cut-off date, and the denominator of which is the aggregate balance of all of the bonds
(including, without limitation, publicly offered, non-publicly offered and any bonds representing over collateralization or the right to receive prepayment 

  

 6 

 
penalties) comprising the related securitization with respect to Purchased Assets that are residuals, prior to the completion of the pre-funding period of
the related securitization (the “Pre-Funded Purchase Price Percentage”). 
 “Purchased Assets” means, with
respect to a Transaction, the Eligible Assets subject thereto, together with the related Records and other Collateral, and all instruments, chattel paper, and general intangibles comprising or relating to all of the foregoing. 
 “Rating Agency” means each of Moody’s Investors Service, Inc., Standard & Poor’s, a division of The McGraw Hill
Companies, Inc. or Fitch Ratings. 
 “Records” means all instruments, agreements and other books, records, and reports and
data generated by other media for the storage of information maintained by the related Seller or any other person or entity with respect to a Purchased Asset. Records shall include the certificates with respect to any Purchased Asset and any other
instruments necessary to document or service a Purchased Asset. 
 “Reference Banks” mean any leading banks selected by the
Agent which are engaged in transactions in Eurodollar deposits in the international Eurocurrency market with an established place of business in London. 
 “REMIC” means a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code. 
 “Repurchase Date” shall have the meaning assigned thereto in Section 3(d) and shall also include the date determined by application of Section 19. 
 “Repurchase Price” means the price at which Purchased Assets are to be transferred from Buyer to the related Seller upon termination of
a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination. 
 “Required Equity” shall mean, with respect to the Guarantor (and its consolidated Subsidiaries) (together, the “Companies”),
the sum of the dollar amounts calculated after multiplying the amount determined by combining the relevant figures for the Guarantor and its consolidated Subsidiaries for each asset class set forth in the table below (or if such asset class is owned
by NFI or a consolidated Subsidiary but cannot be determined by combining the relevant figures for the Guarantor and its consolidated Subsidiaries, the fair market value thereof as calculated by the Companies subject, however, to the approval of the
Buyer which will not be unreasonably withheld) by the Percentage Multipliers set forth opposite such asset class in the table below: 
  

				
	 Asset Class
	  	Percentage
Multiplier	 
	 Cash
	  	0	%
	 Performing Warehouse Mortgage Loans including Accrued
	  	5	%

  

 7 

				
	  
 Asset
Class
	  	 Percentage
 Multiplier
	 
	 Interest Receivable
	  		
	 AAA-Rated I/O and Prepay (P) Certificates booked on-B/S
	  	25	%
	 BBB NIM Certificates
	  	25	%
	 Residuals from whole loan securitizations (including 1999-1)
	  	35	%
	 Residuals from NIM/CAPS
	  	100	%
	 Non-rated subordinate bonds (i.e. class O from 2002-2)
	  	100	%
	 BBB-Rated Mortgage-Backed Securities
	  	25	%
	 BB-Rated Mortgage-Backed Securities
	  	50	%
	 Agency Securities
	  	3	%
	 Servicing Agreements (Mortgage Servicing Rights)
	  	35	%
	 Servicing Advances
	  	15	%
	 REO + Non-performing (90+ & foreclosures from bond collateral calls)
	  	35	%
	 Other assets
 -        Hedging Agreements (Value of reserves that are not reflected in Marks to Market
that impact
 equity)
 -        All Other Assets (all else remaining - including Other Receivables &
PP&E)
	  	100
35	%
%
	 Intangible Assets
	  	100	%

 “Revolving Term” shall mean the period of time beginning on the Effective Date of
this Agreement and ending on the earlier to occur: (i) 364 days following the Effective Date of the Agreement and (ii) the date an Event of Default or Event of Termination exists. 
 “SEC” shall mean the Securities and Exchange Commission. 
 “Servicer” shall mean the designated servicer under each Servicing Agreement. 
 “Servicing Agreement” shall mean any servicing agreement pursuant to which any Mortgage Assets are serviced. 
 “Side Letter” means the Pricing Side Letter, dated as of April 14, 2006, among the Sellers, Guarantor and Buyer. 
  

 8 

 “Subsidiary” means, with respect to any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person; provided, however, that for purposes of
Section 18 hereof, “Subsidiary” shall not include any of the entities listed on Exhibit D hereto, which may be revised by Sellers from time to time upon consent of Buyers. 
 “Substitute Assets” has the meaning assigned thereto in Section 16(a). 
 “Swap Agreement” means the ISDA master swap agreement between Wachovia Bank, National Association and NovaStar Mortgage, Inc. dated as
of September 15, 2003. 
 “Termination Date” has the meaning assigned thereto in Section 27. 
 “Total Liabilities” shall mean total liabilities of NFI and its consolidated Subsidiaries determined in accordance with GAAP (or with
such non-GAAP principles as may be disclosed to and approved by Buyer from time to time) provided; for purposes of this Agreement, such term shall not include $50,000,000 of any unsecured junior subordinated notes issued pursuant to the
Indenture dated as of March 15, 2005 between NMI and JPMorgan Chase Bank, N.A. 
 “Transaction” has the meaning
assigned thereto in Section 1. 
 “Transaction Notice” means a written request of the related Seller to enter into a
Transaction, in the form attached hereto as Exhibit B which is delivered to Buyer. 
 “Trust Agreement” shall mean each of
the trust agreements pursuant to which an Asset-Backed Security has been issued. 
 “Trustee” shall mean, as applicable, the
entity designated as such pursuant to each Trust Agreement. 
 “Underwriting Standards” means NMI’s underwriting
guidelines in effect as of the date of this Agreement as the same may be amended from time to time. 
 “Uniform Commercial
Code” means the Uniform Commercial Code as in effect on the date hereof in the State of New York or the Uniform Commercial Code as in effect in the applicable jurisdiction. 
 “WL Master Repurchase Agreement” means that certain Second Amended and Restated Master Repurchase Agreement (Whole Loan), dated as of
April 14, 2006, among Wachovia Bank, National Association, NFI Repurchase Corporation, NMI Repurchase Corporation, Acceleron Lending, Inc., HomeView Lending, Inc., and NovaStar Certificates Financing Corporation, as further amended from time to
time. 
  

 9 

 “Whole Loan Outstanding Balance” means on any date of determination, the aggregate
purchase price with respect to all mortgage loans subject to transactions under the WL Master Repurchase Agreement. 
 b. Interpretation.

 Headings are for convenience only and do not affect interpretation. The following rules of this subsection (b) apply unless the
context requires otherwise. The singular includes the plural and conversely. A gender includes all genders. Where a word or phrase is defined, its other grammatical forms have a corresponding meaning. A reference to a subsection, Section, Annex or
Exhibit is, unless otherwise specified, a reference to a Section of, or annex or exhibit to, this Agreement. A reference to a party to this Agreement or another agreement or document includes the party’s successors and permitted substitutes or
assigns. A reference to an agreement or document is to the agreement or document as amended, modified, novated, supplemented or replaced, except to the extent prohibited by any Program Document. A reference to legislation or to a provision of
legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. A reference to writing includes a facsimile transmission and any means of reproducing
words in a tangible and permanently visible form. A reference to conduct includes, without limitation, an omission, statement or undertaking, whether or not in writing. An Event of Default subsists until it has been waived in writing by the Buyer or
has been timely cured. The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” is not limiting
and means “including without limitation.” In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until”
each mean “to but excluding”, and the word “through” means “to and including.” This Agreement may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations,
tests and measurements are cumulative and shall each be performed in accordance with their terms. Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP, consistently applied. References herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods of the related Seller. Except where otherwise
provided in this Agreement any determination, statement or certificate by the Buyer or an authorized officer of the Buyer provided for in this Agreement is conclusive and binds the parties in the absence of manifest error. A reference to an
agreement includes a security interest, guarantee, agreement or legally enforceable arrangement whether or not in writing. A reference to a document includes an agreement (as so defined) in writing or a certificate, notice, instrument or document,
or any information recorded in computer disk form. Where the related Seller or the Guarantor is required to provide any document to the Buyer under the terms of this Agreement, the relevant document shall be provided in writing or printed form
unless the Buyer requests otherwise. At the request of the Buyer, the document shall be provided in computer disk form or both printed and computer disk form. This Agreement is the result of negotiations among and has been reviewed by counsel to the
Buyer, Guarantor and the Sellers, and is the product of all parties. In the interpretation of this Agreement, no rule of construction shall apply to disadvantage one party on the ground that such party proposed or was involved in the preparation

  

 10 

 
of any particular provision of this Agreement or this Agreement itself. Except where otherwise expressly stated, the Buyer may give or withhold, or give
conditionally, approvals and consents, and may form opinions and make determinations at its absolute discretion. Any requirement of good faith, discretion or judgment by the Buyer shall not be construed to require Buyer to request or await receipt
of information or documentation not immediately available from or with respect to the related Seller, the Guarantor, a servicer of the Purchased Assets, any other Person or the Purchased Assets themselves. 
 3. THE TRANSACTIONS 
 a. Under the terms and
conditions of the Program Documents, during the Revolving Term Buyer hereby agrees to enter into new Transactions with a Purchase Price up to the Maximum Aggregate Purchase Price. Unless otherwise agreed, the related Seller shall give Buyer notice
of any proposed Purchase Date prior to 2:00 p.m. New York City time on the preceding Business Day (the date on which such notice is so given, the “Notice Date”). On the Notice Date, the related Seller or the Guarantor shall request that
Buyer enter into a Transaction by furnishing to Buyer a Transaction Notice. 
 b. The related Transaction Notice, together with this
Agreement, shall constitute conclusive evidence of the terms agreed between Buyer and the related Seller with respect to the Transaction. 
 c. The related Seller shall repurchase Purchased Assets from Buyer on each related Repurchase Date. Each obligation to repurchase subsists without regard to any prior or intervening liquidation or foreclosure with respect to each Purchased
Asset. The related Seller is obligated to obtain the Purchased Assets from Buyer or its designee at the related Seller’s expense on (or after) the related Repurchase Date. 
 d. Provided that the applicable conditions in Sections 9(a) and (b) have been satisfied, each Purchased Asset that is repurchased by the related
Seller on the 25th day of each month (or, if such 25th day is not a Business Day, the immediately following Business Day) following the related initial Purchase Date (the day of the month so determined for each month, or any other date designated by
the related Seller to Buyer for such a repurchase on at least one Business Day’s prior notice to Buyer, a “Repurchase Date”, which term shall also include the date determined by application of Section 19) shall automatically
become subject to a new Transaction unless Buyer is notified by the related Seller at least one (1) Business Day prior to any Repurchase Date, provided that if the Repurchase Date so determined is later than the Termination Date, the Repurchase
Date for such Transaction shall automatically reset the Termination Date, and the provisions of this sentence as it might relate to a new Transaction shall expire on such date for each new Transaction, unless otherwise agreed, (y) the accrued
and unpaid Price Differential shall be settled in cash on each related Repurchase Date, and (z) the Pricing Rate shall be as set forth in the Side Letter. 
 e. If the related Seller repurchases Purchased Assets on any day which is not a Repurchase Date for such Purchased Assets, the related Seller shall indemnify Buyer and hold Buyer harmless from any losses, costs and/or
expenses which Buyer may sustain or incur arising from the reemployment of funds obtained by Buyer hereunder or from fees payable to terminate the deposits from which such funds were obtained (“Breakage Costs”), in each case for the
remainder of the 

  

 11 

 
applicable 30 day period. Buyer shall deliver to the related Seller a statement setting forth the amount and basis of determination of any Breakage Costs in
such detail as determined in good faith by Buyer to be adequate, it being agreed that such statement and the method of its calculation shall be adequate and shall be conclusive and binding upon the related Seller, absent manifest error. This Section
shall survive termination of this Agreement and the repurchase of all Purchased Assets subject to Transactions hereunder. 
 4. [RESERVED]

 5. PAYMENT AND TRANSFER 
 Unless
otherwise agreed, all transfers of funds hereunder shall be in immediately available funds and all Purchased Assets transferred shall be transferred to the Buyer. Any Repurchase Price or Price Differential received by Buyer after 12:00 noon New York
City time shall be applied on the next succeeding Business Day. 
 6. MARGIN MAINTENANCE 
 a. If at any time the aggregate Market Value of all Purchased Assets subject to all Transactions is less than the aggregate Buyer’s Margin Amount for
all such Transactions (a “Margin Deficit”), then Buyer may by notice to the related Seller require the related Seller in such Transactions to transfer to Buyer cash so that the cash and aggregate Market Value of the Purchased Assets will
thereupon equal or exceed such aggregate Buyer’s Margin Amount (such requirement, a “Margin Call”). 
 b. Notice required
pursuant to Section 6(a) may be given by any means provided in Section 35 hereof. Any notice given before 11:00 a.m. New York time on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. New York time
on such Business Day; notice given after 11:00 a.m. New York time on a Business Day shall be met, and the related Margin Call satisfied, no later than 5:00 p.m. New York time on the following Business Day. The failure of Buyer, on any one or more
occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions to which this Agreement is subject or limit the right of Buyer to do so at a later date. The related Seller, the Guarantor and Buyer each agree that a
failure or delay by Buyer to exercise its rights hereunder shall not limit or waive Buyer’s rights under this Agreement or otherwise existing by law or in any way create additional rights for the related Seller or the Guarantor. 
 c. If the Sellers and the Guarantor fail to cure a Margin Deficit up to the Maximum Recourse Amount within the time period set forth in subsection
(b) above, such failure shall be considered an Event of Default under Section 18 of this Agreement. If the Sellers and the Guarantor fail to cure the amount of a Margin Deficit that is in excess of the Maximum Recourse Amount (the
“Excess Deficit Amount”) within the time period set forth in subsection (b) above, all collections on Eligible Assets that are subject to this Agreement must be immediately deposited by Seller into a controlled account (the
“Buyer Controlled Account”) for the benefit of the Buyer. The Buyer may use such collections in the Buyer Controlled Account to satisfy any amount owed to Buyer under this Agreement, including, but not limited to, the Excess Deficit
Amount. The Sellers and the Guarantor 

  

 12 

 
shall have five (5) calendar days to pay the Excess Deficit Amount to the Buyer by wire transfer in immediately available funds (such time period, the
“Excess Deficit Amount Grace Period”) to Buyer, provided that no Event of Default exists under this Agreement. If the Sellers and the Guarantor fail to provide the Excess Deficit Amount to Buyer prior to the end of such Excess Deficit
Amount Grace Period, such failure shall be considered an Event of Termination under Section 18 of this Agreement (but not an Event of Default). 
 7.
INCOME PAYMENTS 
 Where a particular term of a Transaction extends over the date on which Income is paid in respect of any
Purchased Assets subject to that Transaction, such Income shall be paid directly to the Buyer and be the property of Buyer; provided, however, that all such Income shall be applied by Buyer to reduce the Obligations of Sellers hereunder.
Notwithstanding the foregoing and subject to Section 6(c) above, Buyer agrees that prior to the occurrence of a Default, the related Seller shall be entitled to receive an amount equal to all Income received, whether by the Guarantor, Buyer or
any servicer or any other Person, which is not otherwise received by the related Seller, in respect of the Purchased Assets minus an amount equal to the related Price Differential plus any Margin Deficit and any other amounts due to the Buyer
pursuant to this Agreement; provided, however, that any income received by or on behalf of the related Seller while the related Transaction is outstanding shall be deemed held by the related Seller solely in trust for Buyer pending the repurchase on
the related Repurchase Date. 
 8. SECURITY INTEREST 
 The related Seller and Buyer intend that the Transactions hereunder be sales to Buyer of the Purchased Assets and not loans from Buyer to the related Seller secured by the Purchased Assets. However, in order to
preserve Buyer’s rights under this Agreement in the event that a court or other forum recharacterizes the Transactions hereunder as other than sales, and as security for the related Seller’s performance of all of its Obligations, the
related Seller hereby grants Buyer a fully perfected first priority security interest in the following property, whether now existing or hereafter acquired: the Purchased Assets, the related Records, the contractual right to receive payments,
including the right to payments of principal and interest and the right to enforce such payments arising from or under any of the Purchased Assets, the contractual right to service or arrange for the servicing of each Mortgage Asset to the extent,
if any, the related Seller has such rights, any servicing agreements with respect to each Mortgage Asset, including the rights of the related Seller, if any, under any Servicing Agreements to the extent such rights under the Servicing Agreements are
assignable by the related Seller, and any proceeds and distributions with respect to any of the foregoing (collectively the “Collateral”). 
 9.
CONDITIONS PRECEDENT 
 a. As conditions precedent to the initial Transaction, Buyer shall have received on or before the day of
such initial Transaction the following, in form and substance satisfactory to Buyer and duly executed by each party thereto: 
 (i) The Program Documents duly executed and delivered by the parties thereto and being in full force and effect, free of any modification, breach or waiver; 
  

 13 

 (ii) Evidence that all other actions necessary or, in the opinion of Buyer, desirable to
perfect and protect Buyer’s interest in the Purchased Assets and other Collateral have been taken, including, without limitation, duly executed and filed Uniform Commercial Code financing statements on Form UCC-1; 
 (iii) A certified copy of each Seller’s and the Guarantor’s consents or corporate resolutions, as applicable, approving the
Program Documents and Transactions thereunder (either specifically or by general resolution), and all documents evidencing other necessary corporate action or governmental approvals as may be required in connection with the Program Documents;

 (iv) An incumbency certificate of the secretaries of each Seller and the Guarantor certifying the names, true signatures
and titles of each Seller’s and the Guarantor’s representatives duly authorized to request Transactions hereunder and to execute the Program Documents and the other documents to be delivered thereunder; 
 (v) An opinion of each Seller’s and the Guarantor’s counsel as to such matters as Buyer (including, without limitation, a
corporate opinion, a New York enforceability opinion, a security interest opinion, an investment company opinion and a “repurchase agreement” under federal bankruptcy law opinion), may reasonably request and in form and substance
acceptable to Buyer, including; 
 (vi) A copy of the Underwriting Standards certified by an officer of NMI; 
 (vii) The Guaranty; 
 (viii) All of the conditions precedent in the Guaranty shall have been satisfied; and 
 (ix) Any other documents
reasonably requested by Buyer. 
 b. The obligation of Buyer to enter into each Transaction pursuant to this Agreement is subject to the
following conditions precedent: 
 (i) Buyer or its designee shall have received on or before the day of a Transaction with
respect to such Purchased Assets (unless otherwise specified in this Agreement) the following, in form and substance satisfactory to Buyer and (if applicable) duly executed: 
  

	 	(A)	Transaction Notice delivered pursuant to Section 4(a); 

  

	 	(B)	the definitive certificate representing ownership of such Purchased Asset in the name of Buyer or, if such Purchased Asset is registered on DTC or similar depository, evidence
satisfactory to Buyer that the records of DTC or such depository show the Buyer as the beneficial ownership of such Purchased Asset; 

  

	 	(C)	each Governing Agreement with respect to each Purchased Asset; and 

	 	

  

 14 

	 	(D)	such certificates, customary opinions of counsel or other documents as Buyer may reasonably request, provided that such opinions of counsel shall not be required in connection with
each Transaction but shall only be required from time to time as deemed necessary by Buyer in its good faith. 

 (ii) No Default or Event of Default shall have occurred and be continuing. 
 (iii) Buyer shall not have reasonably
determined that a change in any requirement of law or in the interpretation or administration of any requirement of law applicable to Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Buyer to
enter into Transactions with a Pricing Rate based on LIBOR, unless Seller shall have elected pursuant to Section 15(a) hereof that the Pricing Rate for all Transactions be based upon the Prime Rate. 
 (iv) All representations and warranties in the Program Documents shall be true and correct on the date of such Transaction. 
 (v) The then aggregate outstanding Purchase Price for all Purchased Assets, when added to the Purchase Price for the requested
Transaction, shall not exceed the Maximum Aggregate Purchase Price. 
 (vi) No event or events shall have been reasonably
determined by Buyer to have occurred and be continuing resulting in the effective absence of a whole loan or asset-backed securities market. 
 (vii) If requested, Buyer shall have received satisfactory information regarding the hedging strategy, arrangements and general policy of the Guarantor with respect to hedge instruments. 
 (viii) Satisfaction of any conditions precedent to the initial Transaction as set forth in clause (a) of this Section 9 that
were not satisfied prior to such initial Purchase Date. 
 (ix) The Purchase Price for the requested Transaction shall not be
less than $1,000,000 or an integral multiple of $500,000 thereafter. 
 (x) Buyer shall have determined that all actions
necessary or, in the opinion of Buyer, desirable to maintain Buyer’s perfected interest in the Purchased Assets and other Collateral have been taken, including, without limitation, duly executed and filed Uniform Commercial Code financing
statements on Form UCC-1. 
 (xi) Buyer shall not be obligated to enter into more than one Transaction per month (excluding
any automatic Transaction pursuant to Section 3(d)). 
 (xii) Seller shall have paid to Buyer a fee equal to 1.00% of the
initial Market Value of each Eligible Asset (as communicated in writing by the Buyer to the Seller), payable on the first Purchase Date for such Eligible Asset. 
  

 15 

 (xiii) The aggregate Purchase Price for the requested Transaction, when added to the
aggregate Purchase Price of all Eligible Seasoned Residuals (as defined in the 1YR Repurchase Agreement) outstanding under the 1YR Repurchase Agreement shall not exceed $200,000,000. 
 (xiv) Any other documents reasonably requested by Buyer. 
 10. RELEASE OF PURCHASED ASSETS 
 Upon timely payment in full of the Repurchase Price and all
other Obligations owing with respect to a Purchased Asset, if no Default or Event of Default has occurred and is continuing, Buyer shall release such Purchased Asset unless such release would give rise to or perpetuate a Margin Deficit. Except as
set forth in Sections 6(a) and 16, the related Seller shall give at least three (3) Business Days’ prior written notice to Buyer if such repurchase shall occur on other than a Repurchase Date. 
 If such a Margin Deficit is applicable, Buyer shall notify the related Seller of the amount thereof and the related Seller may thereupon satisfy the
Margin Call in the manner specified in Section 6. 
 11. RELIANCE 
 With respect to any Transaction, Buyer may conclusively rely upon, and shall incur no liability to the related Seller or the Guarantor in acting upon, any
request or other communication that Buyer reasonably believes to have been given or made by a person authorized to enter into a Transaction on the related Seller’s or the Guarantor’s behalf. 
 12. REPRESENTATIONS AND WARRANTIES 
 Each
Seller and the Guarantor hereby represents and warrants, and shall on and as of the Purchase Date for any Transaction and on and as of each date thereafter through and including the related Repurchase Date be deemed to represent and warrant, that:

 a. Due Organization and Qualification. Each Seller and the Guarantor is duly organized, validly existing and in good
standing under the laws of the jurisdiction under whose laws it is organized. Each Seller and the Guarantor is duly qualified to do business, is in good standing and has obtained all necessary licenses, permits, charters, registrations and approvals
necessary for the conduct of its business as currently conducted and the performance of its obligations under the Program Documents except to the extent any failure to be so qualified and in good standing or to obtain such a license, permit,
charter, registration or approval will not cause a Material Adverse Effect or impair the enforceability of any Purchased Asset. 
 b. Power and Authority. Each Seller and the Guarantor has all necessary power and authority to conduct its business as currently conducted, to execute, deliver and perform its obligations under the Program Documents and to consummate
the Transactions. 
  

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 c. Due Authorization. The execution, delivery and performance of the Program
Documents by each Seller and the Guarantor have been duly authorized by all necessary action and do not require any additional approvals or consents or other action by or any notice to or filing with any Person other than any that have heretofore
been obtained, given or made. 
 d. Noncontravention. None of the execution and delivery of the Program Documents by
the related Seller or the Guarantor or the consummation of the Transactions and transactions thereunder: 
 i) conflicts with,
breaches or violates any provision of any Seller’s charter documents, bylaws, operating agreement or any similar agreement, any material agreement of any Seller or the Guarantor or any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having applicability to the related Seller or the Guarantor or its properties; 
 ii) constitutes a default by the related Seller or the Guarantor under any loan or repurchase agreement, mortgage, indenture or other material agreement or instrument to which the related Seller or the Guarantor is a party or by which it or
any of its properties is or may be bound or affected; or 
 iii) results in or requires the creation of any lien upon or in
respect of any of the assets of the related Seller or the Guarantor except the lien relating to the Program Documents. 
 e.
Legal Proceeding. There is no action, proceeding or investigation by or before any court, governmental or administrative agency or arbitrator affecting any of the Purchased Assets, any Seller, the Guarantor or any of their Affiliates, pending
or threatened, which is reasonably likely to be adversely determined and which, if decided adversely, would have a Material Adverse Effect. 
 f. Valid and Binding Obligations. Each of the Program Documents to which Sellers or the Guarantor is a party, when executed and delivered by Sellers or the Guarantor, as applicable, will constitute the legal,
valid and binding obligations of the related Seller or the Guarantor, as applicable, enforceable against the related Seller or the Guarantor, as applicable, in accordance with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equitable principles. 
 g. Financial Statements. The financial statements of Guarantor, copies of which have been furnished to Buyer, (i) are, as of the dates and for the periods referred to therein, complete and correct in all
material respects, (ii) present fairly the financial condition and results of operations of Guarantor as of the dates and for the periods indicated and (iii) have been prepared in accordance with GAAP consistently applied, except as noted
therein (subject as to interim statements to normal year-end adjustments). Since the date of the most recent financial statements, there has been no Material Adverse Change with respect to 

  

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Guarantor. Except as disclosed in such financial statements, the Guarantor is not subject to any contingent liabilities or commitments that, individually or
in the aggregate, have a material possibility of causing a Material Adverse Change with respect to the Guarantor. 
 h.
Accuracy of Information. None of the documents or information prepared by or on behalf of Sellers or any Guarantor and provided by Sellers or the Guarantor to Buyer relating to Sellers’ or the Guarantor’s financial condition contain
any statement of a material fact with respect to Sellers or the Guarantor or the Transactions that was untrue or misleading in any material respect when made. Since the most recent furnishing of such documents or information, there has been no
Material Adverse Change with respect to Sellers or the Guarantor, that would render any of such documents or information untrue or misleading in any material respect. 
 i. No Consents. No consent, license, approval or authorization from, or registration, filing or declaration with, any regulatory
body, administrative agency, or other governmental, instrumentality, nor any consent, approval, waiver or notification of any creditor, lessor or other non-governmental person, is required in connection with the execution, delivery and performance
by Sellers or the Guarantor of this Agreement or the consummation by Sellers or the Guarantor of any other Program Document, other than any that have heretofore been obtained, given or made. 
 j. Compliance With Law. Etc. No practice, procedure or policy employed or proposed to be employed by Sellers or the Guarantor in
the conduct of its businesses violates any law, regulation, judgment, agreement, order or decree applicable to it which, if enforced, would result in either a Material Adverse Change with respect to Sellers or the Guarantor or a Material Adverse
Effect. 
 k. Solvency: Fraudulent Conveyance. Each Seller and the Guarantor is solvent and will not be rendered
insolvent by the Transaction and, after giving effect to such Transaction, neither Sellers nor the Guarantor will be left with an unreasonably small amount of capital with which to engage in its business. Neither Sellers nor the Guarantor intends to
incur, nor believes that it has incurred, debts beyond its ability to pay such debts as they mature. Neither Sellers nor the Guarantor is contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Sellers or the Guarantor or any of their assets. The amount of consideration being received by Sellers upon the sale of the Purchased Assets to Buyer
constitutes reasonably equivalent value and fair consideration for such Purchased Assets. Sellers are not transferring any Purchased Assets with any intent to hinder, delay or defraud any of its creditors. 
 l. Investment Company Act Compliance. Each Seller is not required to be registered as an “investment company” as defined
under the Investment Company Act nor as an entity under the control of an “investment company” as defined under the Investment Company Act. 
 m. Taxes. Each Seller and the Guarantor has filed all federal and state tax returns which are required to be filed and paid all taxes, including any assessments received by it, to 

  

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the extent that such taxes have become due (other than for taxes that are being contested in good faith or for which it has established adequate reserves).
Any taxes, fees and other governmental charges payable by the Sellers or the Guarantor in connection with a Transaction and the execution and delivery of the Program Documents have been paid. 
 n. Additional Representation. With respect to each Purchased Asset, the related Seller hereby makes all of the applicable
representations and warranties set forth in each Confirmation to which such Purchased Asset is or has been subject, in each case as of the related Purchase Date, and the related Seller understands that if the substance of any such representation or
warranty ceases to be true because of events occurring after such date, the Market Value could be adversely affected. 
 o.
No Broker. Neither any Seller nor the Guarantor has dealt with any broker, investment banker, agent, or other person, except for Buyer, who may be entitled to any commission or compensation in connection with the sale of Purchased Assets
pursuant to this Agreement; provided, that if Sellers or the Guarantor has dealt with any broker, investment banker, agent, or other person, except for Buyer, who may be entitled to any commission or compensation in connection with the sale of
Purchased Assets pursuant to this Agreement, such commission or compensation shall have been paid in full by the related Seller or the Guarantor, as applicable. 
 p. Corporate Separateness. 
 (i) The capital of Sellers and the Guarantor is adequate for the respective business and undertakings of Sellers and the Guarantor. 
 (ii) Other than as provided in this Agreement and the other Program Documents, Sellers are not engaged in any business transactions with
the Guarantor or any of its Affiliates other than transactions in the ordinary course of its business on an “arms-length” basis. 
 (iii) The funds and assets of each Seller is not and will not be, commingled with the funds of any other Person. 
 q. Hedging. Each Seller has entered into the hedge instruments pursuant to its customary hedging procedures. 
 r. Governing Agreements. Each Governing Agreement is in full force and effect and has not been modified, amended or supplemented except for any modifications, amendments and supplements approved by Buyer.

 s. Purchased Assets. With respect to each Purchased Asset, the related Seller has sold to Buyer a one hundred
percent (100%) interest in each class of such Purchased Asset. 
  

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 The representations and warranties set forth in this Agreement shall survive transfer of the Purchased
Assets to Buyer and shall continue for so long as the Purchased Assets are subject to this Agreement. 
 13. COVENANTS OF SELLERS AND GUARANTOR

 Each Seller and the Guarantor, as applicable, hereby covenants with Buyer as follows: 
 a. Defense of Title. Each Seller and the Guarantor warrants and will defend the right, title and interest of Buyer in and to all
Collateral against all adverse claims and demands. 
 b. No Amendment or Compromise. Without Buyer’s prior written
consent, neither any Seller, the Guarantor nor those acting on any Seller’s or the Guarantor’s behalf shall amend or modify, or waive any term or condition of, or settle or compromise any claim in respect of, any item of the Purchased
Assets, any related rights or any of the Program Documents. 
 c. No Assignment. Except as permitted herein, neither
any Seller nor any Guarantor shall sell, assign, transfer or otherwise dispose of, or grant any option with respect to, or pledge, hypothecate or grant a security interest in or lien on or otherwise encumber (except pursuant to the Program
Documents), any of the Purchased Assets or any interest therein, provided that this Section shall not prevent any transfer of Purchased Assets in accordance with the Program Documents. 
 d. Reserved. 
 e. Preservation of Collateral: Collateral Value. Each Seller and the Guarantor shall do all things necessary to preserve the Collateral so that it remains subject to a first priority perfected security interest hereunder. Without
limiting the foregoing, each Seller and the Guarantor will comply with all rules, regulations and other laws of any Governmental Authority necessary to preserve the Collateral so that it remains subject to a first priority perfected security
interest hereunder. Neither any Seller nor the Guarantor will allow any default for which any Seller or the Guarantor is responsible to occur under any Collateral or any Program Documents and each Seller and the Guarantor shall fully perform or
cause to be performed when due all of its obligations under any Collateral or the Program Documents. 
 f. Maintenance of
Papers, Records and Files. Each Seller and the Guarantor shall require, and each Seller or the Guarantor of the Purchased Assets shall build, maintain and have available, a complete file in accordance with lending industry custom and practice
for each Purchased Asset. Each Seller or the Guarantor of the Purchased Assets will maintain all such Records not in the possession of Buyer in good and complete condition in accordance with industry practices and preserve them against loss.

 i) Each Seller and the Guarantor shall collect and maintain or cause to be collected and maintained all Records relating to
the Purchased Assets in accordance with industry custom and practice, including those maintained pursuant to the preceding subsection, and all such Records shall be in Buyer’s possession unless Buyer otherwise approves. 

  

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 ii) For so long as Buyer has an interest in or lien on any Purchased Asset, each Seller
and the Guarantor will hold or cause to be held all related Records in trust for Buyer. Each Seller or the Guarantor shall notify, or cause to be notified, every other party holding any such Records of the interests and liens granted hereby.

 iii) Upon reasonable advance notice from Buyer, each Seller and the Guarantor shall (x) make any and all such Records
available to Buyer to examine any such Records, either by its own officers or employees, or by agents or contractors, or both, and make copies of all or any portion thereof, (y) permit Buyer or its authorized agents to discuss the affairs,
finances and accounts of each Seller or the Guarantor with its respective chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of each Seller or the Guarantor with its independent certified public
accountants. 
 g. Financial Statements: Accountants’ Reports: Other Information. Each Seller and the Guarantor
shall keep or cause to be kept in reasonable detail books and records of account of its assets and business and shall clearly reflect therein the transfer of Purchased Assets to Buyer. Each Seller and Guarantor shall furnish or cause to be furnished
to Buyer the following: 
 i) Financial Statements. (x) As soon as available and in any event within 90 days after
the end of each fiscal year, the consolidated and consolidating, audited balance sheets of Guarantor as of the end of each fiscal year of Guarantor, and the audited financial statements of income and changes in equity of Guarantor, and the audited
statement of cash flows of Guarantor and each Seller, for such fiscal year and (y) as soon as available and in any event within 45 days after the end of each quarter, the consolidated and consolidating, unaudited balance sheets of Guarantor as
of the end of each quarter, and the unaudited financial statements of income and changes in equity of Guarantor and the unaudited statement of cash flows of Guarantor for the portion of the fiscal year then ended, and (z) within 30 days after
the end of each month, monthly consolidated and consolidating and unaudited statements (excluding cash flow statements) and balance sheets as provided in clause (y), all of which have been prepared in accordance with GAAP (subject, in the case of
interim statements, to normal year-end adjustments) and certified by Guarantor’s treasurer or chief financial officer. 
 ii) Monthly Certification. Each Seller shall execute and deliver a monthly certification substantially in the form of Exhibit A-1 attached hereto and Guarantor shall execute and deliver a monthly certification substantially in the
form of Exhibit A-2 attached hereto. 
 h. Notice of Material Events. Each Seller and the Guarantor shall promptly
inform Buyer in writing of any of the following: 
  

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 i) any Default, Event of Default or default or breach by any Seller or the Guarantor of
any other material obligation under any Program Document, or the occurrence or existence of any event or circumstance that any Seller or the Guarantor reasonably expects will with the passage of time become a Default, Event of Default or such a
default or breach by any Seller or the Guarantor; 
 ii) any material change in the insurance coverage required of any Seller
or the Guarantor or any other Person pursuant to any Program Document, with copy of evidence of same attached; 
 iii) any
material dispute, litigation, investigation, proceeding or suspension between any Seller or the Guarantor, on the one hand, and any Governmental Authority or any other Person; 
 iv) any material change in accounting policies or financial reporting practices of any Seller or the Guarantor; 
 v) the occurrence of any material employment dispute and a description of the strategy for resolving it; and 
 vi) any event, circumstance or condition that has resulted, or has a reasonable possibility of resulting, in either a Material Adverse
Change with respect to any Seller or the Guarantor or a Material Adverse Effect. 
 i. Maintenance of Licenses. Except
as would not be reasonably likely to have a Material Adverse Effect, (i) each Seller and the Guarantor shall maintain, all material licenses, permits or other approvals necessary for each Seller and the Guarantor to conduct its business and to
perform its obligations under the Program Documents, and (ii) each Seller and the Guarantor shall conduct its business in accordance with applicable law. 
 j. No Withholdings for Taxes. Any payments made by the related Seller to Buyer shall be free and clear of, and without deduction or
withholding for, any taxes; provided, however, that if the related Seller shall be required by law to deduct or withhold any taxes from any sums payable to Buyer, then the related Seller shall (A) make such deductions or withholdings and pay
such amounts to the relevant authority in accordance with applicable law, (B) pay to Buyer the sum that would have been payable had such deduction or withholding not been made, and (C) at the time the Price Differential is paid, pay to
Buyer all additional amounts as specified by Buyer to preserve the after-tax yield Buyer would have received if such tax had not been imposed. This provision does not apply to income taxes payable by Buyer on its taxable income. 
 k. Change in Nature of Business. Neither any Seller nor the Guarantor shall make any material adverse change in the nature of its
business as a mortgage originator and servicer as such business is carried on at the date hereof. 
 l. Limitation on
Distributions. If an Event of Default has occurred and is occurring, neither any Seller nor the Guarantor shall pay any dividends or distributions with 

  

 22 

 
respect to any capital stock or other equity interests in any Seller or the Guarantor (except any dividends or distributions required by law in order for
such party to maintain its status as a real estate investment trust), whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of any Seller
or the Guarantor. 
 m. Merger of Guarantor. The Guarantor shall not at any time, directly or indirectly, without
Buyer’s prior consent (i) liquidate or dissolve or enter into any consolidation or merger or be subject to a Change in Control; (ii) form or enter into any partnership, joint venture, syndicate or other combination which would have a
Material Adverse Effect; or (iii) make any Material Adverse Change with respect to the Guarantor or the Guarantor’s Subsidiaries. 
 n. Insurance. Each Seller will obtain and maintain insurance with responsible companies in such amounts and against such risks as are customarily carried by business entities engaged in similar businesses
similarly situated, and will furnish Buyer on request full information as to all such insurance, and provide within (15) days after receipt of such request the certificates or other documents evidencing renewal of each such policy. 

o. Affiliate Transaction. Neither any Seller nor the Guarantor will at any time, directly or indirectly, sell, lease or
otherwise transfer any material property or assets to, or otherwise acquire any material property or assets from, or otherwise engage in any material transactions with, any of their Non-Seller Affiliates unless the terms thereof are no less
favorable to the related Seller or the Guarantor, as applicable, than those that could be obtained at the time of such transaction in an arm’s length transaction with a Person who is not an Affiliate. 
 p. Change of Fiscal Year. Neither any Seller nor the Guarantor will at any time, directly or indirectly, except upon thirty
(30) days’ prior written notice to Buyer, change the date on which the related Seller’s or the Guarantor’s fiscal year begins from the related Seller’s or such Guarantor’s current fiscal year beginning date. 

q. Underwriting Standards. Guarantor shall not permit any material modifications to be made to the Underwriting Standards
without prior notice to the Buyer. 
 r. Excluded Subsidiaries. No material change in the nature of the business
including without limitation, capitalization or change in significant investors shall occur for any Subsidiaries listed on Exhibit D, without thirty (30) days prior written notice to the Buyer. 
 14. REPURCHASE DATE PAYMENTS/COLLECTIONS 
 On each Repurchase Date, the related Seller shall remit or shall cause to be remitted to Buyer the Repurchase Price. 
 15. CHANGE OF
LAW 
  

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 a. If Buyer determines that the introduction of, any change in, or the interpretation or administration
of any requirement of law has made it unlawful or commercially impracticable to engage in any Transactions with a Pricing Rate based on LIBOR, then the related Seller (i) shall, upon its receipt of notice of such fact and demand from Buyer,
repurchase the Purchased Assets subject to the Transaction on the next succeeding Business Day and, at the related Seller’s election, concurrently enter into a new Transaction with Buyer with a Pricing Rate based on the Prime Rate plus the
margin set forth in the Side Letter as part of the Pricing Rate and (ii) may elect, by giving notice to Buyer, that all new Transactions shall have Pricing Rates based on the Prime Rate plus such margin. 
 b. If Buyer determines in its sole discretion that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of
return on Buyer’s capital or on the capital of any Affiliate of Buyer as a consequence of such Change in Law on this Agreement, then from time to time the related Seller will compensate Buyer or Buyer’s Affiliate, as applicable, for such
reduced rate of return suffered as a consequence of such Change in Law on terms similar to those imposed by Buyer on its other similarly affected customers. Buyer shall provide the related Seller with prompt notice as to any Change in Law.
Notwithstanding any other provisions in this Agreement, in the event of any such Change in Law, the related Seller will have the right to terminate all Transactions then outstanding without any prepayment penalty as of a date selected by the related
Seller, which date shall be prior to the then applicable Repurchase Date and which date shall thereafter for all purposes hereof be deemed to be the Repurchase Date. 
 16. SUBSTITUTION 
 a. The related Seller may, subject to agreement with and acceptance
by Buyer, substitute other assets which are substantially the same as the Purchased Assets (the ?Substitute Assets?) for any Purchased Assets. Such substitution shall be made by transfer to Buyer of such other Substitute Assets and transfer to the
related Seller of such Purchased Assets. After substitution, the Substitute Assets shall be deemed to be Purchased Assets. 
 b. In the case
of any Transaction for which the Repurchase Date is other than the Business Day immediately following the Purchase Date and with respect to which the related Seller does not have any existing right to Substitute Assets for the Purchased Assets, the
related Seller shall have the right, subject to the proviso to this sentence, upon notice to Buyer, which notice shall be given at or prior to 10 a.m. (New York City time) on the second preceding Business Day, to Substitute Assets for any Purchased
Assets; provided, however, that Buyer may elect, by the close of business on the Business Day following which such notice is received, or by the close of the next Business Day if notice is given after 10 a.m. (New York City time) on such day, not to
accept such substitution. In the event such substitution is accepted by Buyer, such substitution shall be made by the related Seller’s transfer to Buyer of such Substitute Assets and Buyer’s transfer to the related Seller of such Purchased
Assets, and after such substitution, the Substitute Assets shall be deemed to be Purchased Assets. In the event Buyer elects not to accept such substitution, Buyer shall offer the related Seller the right to terminate the Transaction. 
 c. In the event the related Seller exercises its right to substitute or terminate under subsection (b), the related Seller shall be obligated to pay to
Buyer, by the close of the Business Day of such substitution, as the case may be, an amount equal to (A) Buyer’s actual cost in bona fide third 

  

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party transactions (including all fees, expenses and commissions) of (i) entering into replacement transactions; (ii) entering into or terminating
hedge transactions; and/or (iii) terminating transactions or substituting securities in like transactions with third parties in connection with or as a result of such substitution or termination, and (B) to the extent Buyer determines not
to enter into replacement transactions, the Breakage Costs incurred by Buyer directly arising or resulting from such substitution or termination. 
 17. REPURCHASE TRANSACTIONS 
 Buyer may, in its sole election, engage in repurchase transactions with the
Purchased Assets or otherwise pledge, hypothecate, assign, transfer or otherwise convey the Purchased Assets with a counterparty of Buyer’s choice, in all cases subject to Buyer’s obligation to reconvey the Purchased Assets (and not
substitutes therefor) on the Repurchase Date. In the event Buyer engages in a repurchase transaction with any of the Purchased Assets or otherwise pledges or hypothecates any of the Purchased Assets, Buyer shall have the right to assign to
Buyer’s counterparty any of the applicable representations or warranties with respect to the Purchased Assets hereunder and the remedies for breach thereof, as they relate to the Purchased Assets that are subject to such repurchase transaction.

 18. EVENTS OF DEFAULT; EVENTS OF TERMINATION 
 a. With respect to any Transactions covered by or related to this Agreement, the occurrence of any of the following events shall constitute an “Event of Default”: 
 i. any Seller fails to transfer the Purchased Assets to Buyer on the applicable Purchase Date (provided Buyer has tendered the related Purchase Price);

 ii. any Seller either fails to repurchase the Purchased Assets on the applicable Repurchase Date or fails to perform its obligations to pay
the Maximum Recourse Amount prior to such Repurchase Date; 
 iii. either any Seller or a Guarantor shall fail to perform, observe or comply
with any other material term, covenant or agreement contained in the Program Documents and such failure is not cured within the time period expressly provided or, if no such cure period is provided, within two (2) Business Days of the earlier
of (i) such party’s receipt of written notice from Buyer of such breach or (ii) the date on which such party obtains notice or knowledge of the facts giving rise to such breach; 
 iv. any representation or warranty made by any Seller or a Guarantor (or any of any Seller’s or such Guarantor’s officers) in the Program
Documents or in any other document delivered in connection therewith shall have been incorrect or untrue in any material respect when made or repeated or to have been made or repeated (other than the representations or warranties in Exhibit C, which
shall be considered solely for the purpose of determining whether the related Purchased Asset is an Eligible Asset, unless Seller shall have made any such representations or warranties with the knowledge that they were materially false or misleading
at the time made or repeated or deemed to have been made or repeated); 
  

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 v. any Seller, the Guarantor, or any of Sellers’ or Guarantor’s Affiliates and Subsidiaries
shall fail to pay any of Sellers’, Guarantor’s or Sellers’ or Guarantor’s Affiliates’ and Subsidiaries’ Indebtedness, or any interest or premium thereon when due (whether by scheduled maturity, requirement prepayment,
acceleration, demand or otherwise), or shall fail to make any payment when due under Sellers’, Guarantor’s or Sellers’ or Guarantor’s Affiliates’ Guarantee of another person’s Indebtedness for borrowed money, and such
failure shall entitle any related counterparty to declare any such Indebtedness or Guarantee to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof provided
that such Indebtedness is in excess of (i) $5,000,000 with respect to the Guarantor and (ii) $1,000,000 with respect to all other parties referenced in this subsection (v) and such failure is not cured within two (2) Business
Days; 
 vi. a custodian, receiver, conservator, liquidator, trustee, sequestrator or similar official for any Seller, a Guarantor or any of
any Seller’s or the Guarantor’s Subsidiaries, or of any of any Seller’s, the Guarantor’s or their respective Property (as a debtor or creditor protection procedure), is appointed or takes possession of such property; or any
Seller, the Guarantor or any of any Seller’s or the Guarantor’s Subsidiaries generally fails to pay any Seller’s, the Guarantor’s or any Seller’s or the Guarantor’s Subsidiaries’ debts as they become due; or any
Seller, the Guarantor or any of any Seller’s or the Guarantor’s Subsidiaries is adjudicated bankrupt or insolvent; or an order for relief is entered under the Federal Bankruptcy Code, or any successor or similar applicable statute, or any
administrative insolvency scheme, against any Seller, the Guarantor or any of any Seller’s or a Guarantor’s Subsidiaries; or any of any Seller’s, Guarantor’s or any Seller’s or the Guarantor’s Subsidiaries’
Property is sequestered by court or administrative order; or a petition is filed against any Seller, the Guarantor or any of any Seller’s or the Guarantor’s Subsidiaries under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, moratorium, delinquency or liquidation law of any jurisdiction, whether now or subsequently in effect; 
 vii. any Seller, the Guarantor or any of any Seller’s or the Guarantor’s Subsidiaries files a voluntary petition in bankruptcy seeks relief under any provision of any bankruptcy, reorganization, moratorium, delinquency,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction whether now or subsequently in effect; or consents to the filing of any petition against it under any such law; or consents to the appointment of or
taking possession by a custodian, receiver, conservator, trustee, liquidator, sequestrator or similar official for any Seller, any Guarantor or any of any Seller’s or the Guarantor’s Subsidiaries, or of all or any part of any
Seller’s, the Guarantor’s or any Seller’s or the Guarantor’s Subsidiaries’ Property; or makes an assignment for the benefit of any Seller, the Guarantor or any Seller’s or the Guarantor’s Subsidiaries’
creditors; 
 viii. any final, nonappealable judgment or order for the payment of money in excess of (i) $5,000,000 with respect to the
Guarantor and (ii) $1,000,000 with respect to all other parties referenced in this subsection (viii), in the aggregate (to the extent that it is, in the reasonable determination of Buyer, uninsured and provided that any insurance or other
credit posted in connection with an appeal shall not be deemed insurance for these purposes) shall be rendered against any Seller, the Guarantor or any of Sellers’ or Guarantor’s Affiliates and Subsidiaries by one or more courts,
administrative tribunals or other bodies having 

  

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jurisdiction over them and the same shall not be discharged (or provisions shall not be made for such discharge), satisfied, or bonded, or a stay of
execution thereof shall not be procured, within sixty (60) days from the date of entry thereof and any Seller, the Guarantor or any of Sellers’ or Guarantor’s Affiliates and Subsidiaries, as applicable, shall not, within said period
of sixty (60) days, appeal therefrom and cause the execution thereof to be stayed during such appeal; 
 ix. any Governmental Authority
or any person, agency or entity acting or purporting to act under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the Property of any Seller, the
Guarantor or any of any Seller’s or Guarantor’s Subsidiaries, or shall have taken any action to displace the management of any Seller, the Guarantor or any of any Seller’s or Guarantor’s Subsidiaries or to materially curtail its
authority in the conduct of the business of any Seller, the Guarantor or any of any Seller’s or Guarantor’s Subsidiaries, or takes any action in the nature of enforcement to remove or materially limit or restrict the approval of any
Seller, the Guarantor or any of any Seller’s or Guarantor’s Subsidiaries as an issuer, buyer or a seller/servicer of the Purchased Assets or similar securities; 
 x. any Seller, any Guarantor or any of any Seller’s or any Guarantor’s Subsidiaries shall default under, or fail to perform as requested under, or shall otherwise breach the material terms of any instrument,
agreement or contract relating to Indebtedness, and such default, failure or breach shall entitle any counterparty to declare an amount of such Indebtedness in excess of (i) $5,000,000 with respect to the Guarantor and (ii) $1,000,000 with
respect to all other parties referenced in this subsection (x), to be due and payable prior to the maturity thereof; 
 xi. in the reasonable
good faith judgment of Buyer any Material Adverse Change shall have occurred with respect to any Seller, a Guarantor or any of any Seller’s or a Guarantor’s Subsidiaries taken as a whole; 
 xii. any Seller or any Guarantor shall admit in writing its inability to, or intention not to, perform any of any Seller’s or such Guarantor’s
respective material Obligations; 
 xiii. any Seller or any Guarantor dissolves, merges or consolidates with another entity, or sells,
transfers, or otherwise disposes of a material portion of any Seller’s or such Guarantor’s (as applicable) business or assets (other than pursuant to a securitization or similar transaction in the ordinary course of business) unless
Buyer’s written consent is given; 
 xiv. this Agreement shall for any reason cease to create a valid, first priority security interest
or ownership interest upon transfer in any material portion of the Purchased Assets or Collateral purported to be covered hereby; 
 xv.
either any Seller’s or the Guarantor’s audited annual financial statements or the notes thereto or other opinions or conclusions stated therein shall be qualified or limited by reference to the status of any Seller or the Guarantor as a
“going concern” or a reference of similar import; 
  

 27 

 xvi. a Change in Control of the Guarantor shall have occurred which has not been approved by Buyer;

 xvii. the ratio of Guarantor’s Adjusted Tangible Net Worth to Required Equity at any date is less than 1.0:1.0; 
 xviii. Guarantor shall fail to maintain a minimum Adjusted Tangible Net Worth of $300,000,000 plus 80% of any new equity raised after September 30,
2005; 
 xix. any (a) termination by any Seller of any Servicer or subservicer or the Mortgage Assets without the prior written consent
of Buyer to the extent any Seller’s consent is required for such termination or (b) amendment of any Servicing Agreement without the prior written consent of Buyer to the extent any Seller’s consent is required for such occurrences,
(c) failure by any Seller (if it is the Servicer) or any Servicer to service the Mortgage Assets in accordance with (i) industry standards for similar loans with third parties or (ii) the standards set forth in the Servicing
Agreement; and 
 xx. any event of default has occurred under any Servicing Agreement, any Indenture, any Trust Agreement or the Guaranty.

 xxi. the amount of Guarantor’s liquidity (defined as the aggregate amount of Guarantor’s cash plus amount available under
warehouse financing facility, but only to the extent that Guarantor has unencumbered assets to pledge thereunder and further adjusted by taking into account any applicable haircuts) as of any date is less than $15,000,000. 
 xxii. any event of default under the Swap Agreement, the NMI Repurchase Agreement, the NCI Repurchase Agreement or WL Master Repurchase Agreement.

 b. With respect to any Transactions covered by or related to this Agreement, the Sellers’ and Guarantor’s failure to cure an
Excess Deficit Amount pursuant to Section 6(c) of this Agreement shall constitute an “Event of Termination”. 
 19. REMEDIES

 Upon the occurrence of an Event of Default or an Early Termination Date, Buyer, at its option, shall have any or all of the following
rights and remedies, which may be exercised by Buyer in good faith: 
 a. The Repurchase Date for each Transaction hereunder shall be deemed
immediately 
 to occur. 
 b. The related
Seller’s obligations hereunder to pay the Maximum Recourse Amount shall thereupon become immediately due and payable; all Income paid after such exercise or deemed exercise shall be retained by Buyer; the related Seller and each Guarantor shall
immediately deliver to Buyer or its designee any and all original papers, records and files relating to the Purchased Assets subject to such Transaction then in any Seller’s and any Guarantor’s possession and/or control; and all right,
title and interest in and entitlement to such Purchased Assets thereon shall be deemed transferred to Buyer. 

  

 28 

 c. At any time during the continuance of an Event of Termination, Buyer shall have the right to terminate
this Agreement and all Transactions hereunder by delivering written notice of termination to Sellers and Guarantor (a “Notice of Termination”) specifying the Market Value of the Purchased Assets as of the date of such notice, in which
event this Agreement and all Transactions hereunder shall terminate on the date that is five (5) Business Days following such Termination Notice (the “Early Termination Date”). Prior to such Early Termination Date, the Sellers shall
have the option, but not the obligation, to repurchase the Purchased Assets at the Repurchase Price. 
 d. Buyer may (A) sell, on or
following the Business Day following the date on which the Repurchase Price became due and payable pursuant to Section 19(b) without notice or demand of any kind, at a public or private sale and at such price or prices as Buyer may reasonably
deem satisfactory any or all Purchased Assets or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Assets, to give the related Seller credit for such Purchased Assets in an amount equal to the Market Value
of the Purchased Assets against the aggregate unpaid Maximum Recourse Amount and any other amounts owing by the related Seller hereunder. The proceeds of any disposition of Purchased Assets shall be applied first to the reasonable costs and expenses
incurred by Buyer in connection with or as a result of an Event of Default or an Event of Termination; second to Breakage Costs, costs of cover and/or related hedging transactions; third to the Maximum Recourse Amount; and fourth to all other
Obligations. 
 e. The parties recognize that it may not be possible to purchase or sell all of the Purchased Assets on a particular Business
Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets may not be liquid. In view of the nature of the Purchased Assets, the parties agree that liquidation of a Transaction or the
underlying Purchased Assets does not require a public purchase or sale and that a good faith private purchase or sale shall be deemed to have been made in a commercially reasonable manner. Accordingly, Buyer may elect the time and manner of
liquidating any Purchased Asset and nothing contained herein shall obligate Buyer to liquidate any Purchased Asset on the occurrence of an Event of Default or an Event of Termination, or to liquidate all Purchased Assets in the same manner or on the
same Business Day or constitute a waiver of any right or remedy of Buyer. Notwithstanding the foregoing, the parties to this Agreement agree that the Transactions have been entered into in consideration of and in reliance upon the fact that all
Transactions hereunder constitute a single business and contractual obligation and that each Transaction has been entered into in consideration of the other Transactions. 
 f. In addition to its rights hereunder and subject to the limitations in Section 19(k) hereof, Buyer shall have the right to proceed against any of the related Seller’s assets which may be in the possession
of Buyer, any of Buyer’s Affiliates or its designee (other than assets held solely in a custodial capacity for any Person other than Buyer or any Affiliate of Buyer), including the right to liquidate such assets and to set-off the proceeds
against monies owed by the related Seller to Buyer pursuant to this Agreement. Buyer may set off cash, the proceeds of the liquidation of the Purchased Assets, any other Collateral or its proceeds and all other sums or obligations owed by Buyer to
the related Seller hereunder against all of the related Seller’s Obligations to Buyer, whether under this Agreement, under a Transaction, or under any other agreement between the parties, or otherwise, whether or not such Obligations are then
due, without prejudice to Buyer’s right to recover any deficiency. 

  

 29 

 g. Buyer may direct all Persons servicing the Purchased Assets to take such action with respect to the
Purchased Assets as Buyer determines appropriate. 
 h. Buyer may direct the Seller, or its Affiliate, to resign as the servicer of the
Mortgage Assets and to cooperate with any successor servicer; provided that, it shall be a condition of such resignation that the Seller, or its Affiliate, (i) receive an amount equal to the greater of book or market value of the servicing
rights to the Mortgage Assets plus any unreimbursed servicing advances due to the Seller or its Affiliate and (ii) shall have the right to select such successor servicer which shall be subject to the final approval of the Buyer. 
 i. Subject to the limitations in Section 19(k) hereof, the related Seller shall be liable to Buyer for the amount of all expenses (plus interest
thereon at a rate equal to the Default Rate), and Breakage Costs and all costs and expenses incurred within 30 days of the Event of Default or an Event of Termination in connection with hedging or covering transactions related to the Purchased
Assets. 
 j. Each Seller and each Guarantor shall cause all sums received by it with respect to the Purchased Assets to be remitted to Buyer
(or such other Person as Buyer may direct) after receipt thereof. 
 k. Sellers and Guarantors shall remain liable to Buyer for any amounts
that remain owing to Buyer by any Seller or Guarantor under this Agreement and any other Program Document following application of all cash, Purchased Assets and proceeds of liquidation thereof, any other Collateral and proceeds thereof, and all
other sums or obligations owed by Buyer to any Seller hereunder or under any other Program Document, pursuant to and in accordance with this Section 19; provided, however, that absent any Seller’s fraud, willful misconduct or bad faith,
the aggregate amount of such remaining liability of each Seller and Guarantor, collectively, to Buyer under this Agreement and the other Program Documents, collectively, shall not exceed the Maximum Recourse Amount, and all Obligations of each
Seller and Guarantor under this Agreement and the other Program Documents, collectively, in excess of the Maximum Recourse Amount shall be deemed, for all purposes under this Agreement, the other Program Documents, and otherwise, to have been
satisfied and discharged in full. For purposes of this Agreement and the other Program Documents: 
 i. The term “Maximum
Recourse Amount” means an aggregate amount equal to ten percent (10%) of the Purchase Price of all Purchased Assets subject to outstanding Transactions under this Agreement as of the occurrence of an Event of Default or Early Termination
Date, as applicable, minus the aggregate amount of all Margin Calls with respect to such Transactions that has previously been paid by Sellers and Guarantor; provided, however, that the Maximum Recourse Amount will be equal to the amount of any
actual deficiency (only if such deficiency is greater than the Maximum Recourse Amount determined above) to the extent resulting from: (A) failure of any representation and warranties set forth in this Agreement to be materially true and
correct with regard to a particular Purchased Asset on the initial Purchase Date for such Purchased Asset; (B) Seller’s failure to notify Buyer, on or 

  

 30 

 
prior to any Purchase Date, of any failure of any representation and warranty set forth in this Agreement hereto to be materially true and correct, to the
extent such failure of such representation and warranty to continue to be materially true and correct is actually known to Seller; or (C) Buyer’s failure to receive an interest in the Purchased Assets as contemplated by this Agreement upon
payment by Buyer of the Purchase Price for such Purchased Assets. 
 l. Buyer shall without regard to the adequacy of the security for the
Obligations, be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession of and protect, collect, manage, liquidate, and sell the Purchased Assets and any other Collateral or any portion thereof,
collect the payments due with respect to the Purchased Assets and any other Collateral or any portion thereof, and do anything that Buyer is authorized hereunder to do. The related Seller shall pay all costs and expenses incurred by Buyer in
connection with the appointment and activities of such receiver. 
 m. Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and the related Seller hereby expressly waives, to the extent permitted by law, any right the related Seller might otherwise have to require Buyer to enforce its rights by judicial process. The related Seller also
waives, to the extent permitted by law, any defense the related Seller might otherwise have to the Obligations, arising from use of nonjudicial process, enforcement and sale of all or any portion of the Purchased Assets and any other Collateral or
from any other election of remedies. The related Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s length. 
 n. In addition to all the rights and remedies specifically provided herein, Buyer shall have all other rights and remedies provided by applicable
federal, state, foreign, and local laws, whether existing at law, in equity or by statute, in each case subject to the limitations in Section 19(k) hereof. 
 Upon the occurrence of an Event of Default or an Event of Termination, Buyer shall have, except as otherwise expressly provided in this Agreement, the right to exercise any of its rights and/or remedies without
presentment, demand, protest or further notice of any kind other than as expressly set forth herein, all of which are hereby expressly waived by the related Seller. 
 The related Seller hereby authorizes Buyer, at the related Seller’s expense, to file such financing statement or statements relating to the Purchased Assets and the Collateral without the related Seller’s
signature thereon as Buyer at its option may deem appropriate, and appoints Buyer as the related Seller’s attorney-in-fact to execute any such financing statement or statements in the related Seller’s name and to perform all other acts
which Buyer deems appropriate to perfect and continue the lien and security interest granted hereby and to protect, preserve and realize upon the Purchased Assets and the Collateral, including, but not limited to, the right to endorse notes,
complete blanks in documents and execute assignments on behalf of the related Seller as its attorney-in-fact. This power of attorney is coupled with an interest and is irrevocable without Buyer’s consent. 
  

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 20. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE 
 No failure on the part of Buyer to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by Buyer of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. Subject to the limitations of Section 19(k) of this Agreement,
all rights and remedies of Buyer provided for herein are cumulative and in addition to any and all other rights and remedies provided by law, the Program Documents and the other instruments and agreements contemplated hereby and thereby, and are not
conditional or contingent on any attempt by Buyer to exercise any of its rights under any other related document. Buyer may exercise at any time after the occurrence of an Event of Default or an Event of Termination one or more remedies, as it so
desires, and may thereafter at any time and from time to time exercise any other remedy or remedies. 
 21. USE OF EMPLOYEE PLAN ASSETS

 No assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) shall be used by either party hereto in a Transaction. 
 22. INDEMNITY 
 a. The related Seller agrees to pay on demand (i) all reasonable out-of-pocket costs and expenses of Buyer in connection with the preparation,
execution, delivery, modification and amendment of this Agreement (including, without limitation, (A) all collateral review and UCC search and filing fees and expenses and (B) the reasonable fees and expenses of counsel for Buyer with
respect to advising Buyer as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under this Agreement, with respect to negotiations with the related Seller or with other creditors of the related
Seller or any of its Subsidiaries arising out of any-Default or any events or circumstances that may arise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar
proceeding involving creditors’ rights generally and any proceeding ancillary thereto); provided, however that the related Seller shall not be required to reimburse the Buyer for any such expenses and attorneys’ fees in
excess of $8,000 in connection with the initial preparation and execution of the Program Documents; and (ii) all costs and expenses of Buyer in connection with the enforcement of this Agreement, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally (including, without limitation, the reasonable fees and expenses of counsel for Buyer) whether or not the transactions contemplated hereby are consummated.

 b. Subject to the limitations of Section 19(k) of this Agreement, the related Seller agrees to indemnify and hold harmless Buyer and
each of its respective Affiliates and their officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against (and will reimburse each Indemnified Party as the same is incurred) any and all claims,
damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel and allocated costs of internal counsel) that may be incurred by or asserted or awarded against any 

  

 32 

 
Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation,
litigation or other proceeding (whether or not such Indemnified Party is a party thereto) relating to, resulting from or arising out of any of the Program Documents and all other documents related thereto, any breach of a representation or warranty
of any Seller or any Guarantor or any Seller’s or any Guarantor’s officers in this Agreement or any other Program Document, and all actions taken pursuant thereto) (i) the Transactions, the actual or proposed use of the proceeds of
the Transactions, this Agreement or any of the transactions contemplated thereby, including, without limitation, any acquisition or proposed acquisition or (ii) the actual or alleged presence of hazardous materials on any Property or any
environmental action relating in any way to any Property, except to the extent such claim, damage, class, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence or willful misconduct or is the result of a claim made by any Seller or any Guarantor against the Indemnified Party, and the related Seller or such Guarantor is ultimately the successful party in any resulting
litigation or arbitration. The related Seller also agrees not to assert any claim against Buyer or any of its Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating to the Facilities, the actual or proposed use of the proceeds of the Transactions, this Agreement or any of the transactions contemplated thereby. THE FOREGOING
INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES. 
 c. Without limitation on the provisions of Section 4, if any payment of the Repurchase Price of any Transaction is made by the related Seller other
than on the then scheduled Repurchase Date thereto as a result of an acceleration of the Repurchase Date pursuant to Section 19 or for any other reason, the related Seller shall, except as otherwise provided in Sections 15 and 24, upon demand
by Buyer, pay to Buyer any Breakage Costs incurred as of a result of such payment. 
 d. If the related Seller fails to pay when due any
costs, expenses or other amounts payable by it under this Agreement, including, without limitation, reasonable fees and expenses of counsel and indemnities, such amount may be paid on behalf of the related Seller by Buyer, in its sole discretion.

 e. Without prejudice to the survival of any other agreement of the related Seller hereunder, the easements and obligations of the related
Seller contained in this Section shall survive the payment in full of the Repurchase Price and all other amounts payable hereunder and delivery of the Purchased Assets by Buyer against full payment therefor. 
 23. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS 
 The related Seller hereby expressly waives, to the fullest extent permitted by law, every statute of limitation on a deficiency judgment, any reduction in the proceeds of any Purchased Assets as a result of restrictions upon Buyer contained
in the Program Documents or any other instrument delivered in connection therewith, and any right that it may have to direct the order in which any of the Purchased Assets shall be disposed of in the event of any disposition pursuant hereto.

  

 33 

 24. REIMBURSEMENT 
 All sums reasonably expended by Buyer in connection with the exercise of any right or remedy provided for herein shall be and remain the related Seller’s obligation. The related Seller agrees to pay, with
interest at the Default Rate to the extent that an Event of Default has occurred, the reasonable out-of-pocket expenses and reasonable attorneys’ fees incurred by Buyer in connection with the preparation, enforcement or administration of the
Program Documents, the taking of any action, including legal action, required or permitted to be taken by Buyer (without duplication to Buyer) pursuant thereto, any “due diligence” or loan agent reviews conducted by Buyer or on its behalf
or by refinancing or restructuring in the nature of a “workout”. If Buyer determines that, due to the introduction of, any change in, or the compliance by Buyer with (i) any eurocurrency reserve requirement or (ii) the
interpretation of any law, regulation or any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be an increase in the cost to Buyer in engaging in the present or any
future Transactions, then the related Seller agrees to pay to Buyer, from time to time, upon demand by Buyer the actual cost of additional amounts as specified by Buyer to compensate Buyer for such increased costs. Notwithstanding any other
provisions in this Agreement, in the event of any such change in the eurocurrency reserve requirement or the interpretation of any law, regulation or any guideline or request from any central bank or other Governmental Authority, the related Seller
will have the right to terminate all Transactions then outstanding as of a date selected by the related Seller, which date shall be prior to the applicable Repurchase Date and which date shall thereafter for all purposes hereof, be deemed to be the
Repurchase Date. In addition, Buyer shall promptly notify Seller if any events in clause (i) or (ii) of this Section 24 occur. 
 25. FURTHER ASSURANCES 
 The Sellers and each Guarantor agree to do such further acts and things and to execute
and deliver to Buyer such additional assignments, acknowledgments, agreements, powers and instruments as are reasonably required by Buyer to carry into effect the intent and purposes of this Agreement, to perfect the interests of Buyer in the
Purchased Assets or to better assure and confirm unto Buyer its rights, powers and remedies hereunder. 
 26. ENTIRE AGREEMENT; PRODUCT OF
NEGOTIATION 
 This Agreement supersedes and integrates all previous negotiations, contracts, agreements and understandings between
the parties relating to a sale and repurchase of Purchased Assets thereto, and it, together with the other Program Documents, and the other documents delivered pursuant hereto or thereto, contains the entire final agreement of the parties. No prior
negotiation, agreement, understanding or prior contract shall have any validity therefor. 
 27. TERMINATION 
 This Agreement shall remain in effect until the earlier of (i) April 12, 2009 (regardless of when any Purchased Asset became subject to a
Transaction hereunder), or (ii) at Buyer’s option upon the occurrence of an Event of Default or Event of Termination (such date, the “Termination Date”). However, no such termination shall affect the related Seller’s
outstanding obligations to Buyer at the time-of such termination. If this Agreement is terminated pursuant to clause (i) in the preceding sentence the Sellers shall repurchase any remaining Purchased Assets at the Repurchase Price. The related
Seller’s obligations to indemnify Buyer pursuant to this Agreement shall survive the termination hereof. 

  

 34 

 28. ASSIGNMENT 
 The Program Documents are not assignable by the related Seller. Buyer may from time to time assign all or a portion of its rights and obligations under this Agreement and the Program Documents; provided, however, that
Buyer shall maintain, for review by the related Seller upon written request, a register of assignees and a copy of an executed assignment and acceptance by Buyer and assignee (“Assignment and Acceptance”), specifying the percentage or
portion of such rights and obligations assigned. Upon such assignment, (a) such assignee shall be a party hereto and to each Program Document to the extent of the percentage or portion set forth in the Assignment and Acceptance, and shall
succeed to the applicable rights and obligations of Buyer hereunder, and (b) Buyer shall, to the extent that such rights and obligations have been so assigned by it to another Person approved by the related Seller (such approval not to be
unreasonably withheld) which assumes the obligations of Buyer, be released from its obligations hereunder accruing thereafter and under the Program Documents. Unless otherwise stated in the Assignment and Acceptance, the related Seller shall
continue to take directions solely from Buyer unless otherwise notified by Buyer in writing. Buyer may distribute to any prospective assignee any document or other information delivered to Buyer by the related Seller. Notwithstanding any assignment
by Buyer pursuant to this Section 28, Buyer shall remain liable as to the Transactions. 
 29. AMENDMENTS, ETC. 
 No amendment or waiver of any provision of this Agreement nor any consent to any failure to comply herewith or therewith shall in any event be effective
unless the same shall be in writing and signed by Sellers and Buyer, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 
 30. SEVERABILITY 
 If any provision of
any Program Document is declared invalid by any court of competent jurisdiction, such invalidity shall not affect any other provision of the Program Documents, and each Program Document shall be enforced to the fullest extent permitted by law.

 31. BINDING EFFECT: GOVERNING LAW 
 This Agreement shall be binding and inure to the benefit of the parties hereto and their respective successors and assigns, except that Sellers may not assign or transfer any of its rights or obligations under this
Agreement or any other Program Document without the prior written consent of Buyer. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF. 
  

 35 

 32. CONSENT TO JURISDICTION 
 SELLERS HEREBY WAIVE TRIAL BY JURY. SELLERS HEREBY IRREVOCABLY CONSENT TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING. SELLERS HEREBY SUBMIT TO, AND WAIVE ANY OBJECTION SELLERS MAY HAVE TO, NON-EXCLUSIVE PERSONAL
JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS. 
 33. SINGLE AGREEMENT 
 Each Seller, each
Guarantor and Buyer acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other. Accordingly, each Seller, each Guarantor and Buyer each agree (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance
of any such obligations shall constitute a default by it in respect of all Transactions hereunder, and (ii) that payments, deliveries and other transfers made by any of them in respect of any Transaction shall be deemed to have been made in
consideration of payments, deliveries and other transfer in respect of any other Transaction hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted. 
 34. INTENT 
 Sellers and Buyer recognize
that each Transaction is a “repurchase agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (“USC”), a “forward contract” as that term is defined in Section 101
of Title 11 of the USC, and a “securities contract” as that term is defined in Section 741 of Title 11 of the USC. 
 It is
understood that Buyer’s right to liquidate the Purchased Assets delivered to it in connection with the Transactions hereunder or to exercise any other remedies pursuant to Section 19 hereof is a contractual right to liquidate such
Transaction as described in Sections 555 and 559 of Title 11 of the USC. 
 35. NOTICES AND OTHER COMMUNICATIONS 
 Except as provided herein, any notice required or permitted by this Agreement shall be in writing and shall be effective and deemed delivered only when
received by the party to which it is sent; provided, however, that a facsimile transmission shall be deemed to be received when transmitted so long as the transmitting machine has provided an electronic confirmation (without error message) of such
transmission. Notice to NAC, NMI, NFI or NFI Holding shall constitute notice to each and all of such entities. Any such notice shall be sent to a party at the address or facsimile transmission number set forth below: 
  

 36 

 if to NCFC: 
  

			
	NovaStar Certificates Financing Corporation
	8140 Ward Parkway, Suite 300
	Kansas City, Missouri 64114
	Attention:	  	Todd Phillips
	Telephone:	  	(XXX) XXX-XXXX
	Facsimile:	  	(XXX) XXX-XXXX
	E-mail:	  	XXXXX@novastar1.com

 if to NCFLLC: 
  

			
	NovaStar Certificates Financing LLC
	8140 Ward Parkway, Suite 300
	Kansas City, Missouri 64114
	Attention:	  	Todd Phillips
	Telephone:	  	(XXX) XXX-XXXX
	Facsimile:	  	(XXX) XXX-XXXX
	E-mail:	  	XXXXX@novastar1.com

 if to NMI: 
  

			
	NovaStar Mortgage, Inc.
	8140 Ward Parkway, Suite 300
	Kansas City, Missouri 64114
	Attention:	  	Todd Phillips
	Telephone:	  	(XXX) XXX-XXXX
	Facsimile:	  	(XXX) XXX-XXXX
	E-mail:	  	XXXXX@novastar1.com

 if to NFI: 
  

			
	NovaStar Financial, Inc.
	8140 Ward Parkway, Suite 300
	Kansas City, Missouri 64114
	Attention:	  	Todd Phillips
	Telephone:	  	(XXX) XXX-XXXX
	Facsimile:	  	(XXX) XXX-XXXX
	E-mail:	  	XXXXX@novastar1.com

 if to NFI Holding: 
  

			
	NFI Holding Corporation
	8140 Ward Parkway, Suite 300
	Kansas City, Missouri 64114
	Attention:	  	Todd Phillips
	Telephone:	  	(XXX) XXX-XXXX
	Facsimile:	  	(XXX) XXX-XXXX
	E-mail:	  	XXXXX@novastar1.com

  

 37 

 if to Buyer or Agent: 
  

			
	Wachovia Investment Holdings, LLC
	One Wachovia Center
	301 South College Street
	Charlotte, NC 28288
	Attention:	  	Andrew W. Riebe
	Telephone:	  	(XXX) XXX-XXXX
	Facsimile:	  	(XXX) XXX-XXXX
	E-mail:	  	XXXXX@wachovia.com

 With a copy to: 
  

			
	Wachovia Capital Markets, LLC
	One Wachovia Center
	301 South College Street
	Charlotte, NC 28288
	Attention:	  	Andrew W. Riebe
	Telephone:	  	(XXX) XXX-XXXX
	Facsimile:	  	(XXX) XXX-XXXX
	E-mail:	  	XXXXX@wachovia.com

  

			
	or, for Transaction Notices and related documents:
		
	Attention:	  	Chad Cote
	Telephone:	  	(XXX) XXX-XXXX
	Facsimile:	  	(XXX) XXX-XXXX
	E-mail:	  	XXXXX@wachovia.com

 as such address or number may be changed by like notice. 
 36. CONFIDENTIALITY 
 (a) This Agreement and
its terms, provisions, supplements and amendments, and transactions and notices hereunder, are proprietary to Buyer and Agent and shall be held by Sellers (and Sellers shall cause each Guarantor to hold it) in strict confidence and shall not be
disclosed to any third party without the consent of Buyer except for (i) disclosure to each Seller’s direct and indirect parent companies, attorneys, agents or accountants, provided that such attorneys or accountants likewise agree to be
bound by this covenant of confidentiality or (ii) upon prior written notice to Buyer, disclosure required by law, rule, regulation or order of a court or other regulatory body or (iii) with prior written notice to Buyer, any required
Securities and Exchange Commission or state securities’ law disclosures or filings, which shall not include the Side Letter unless otherwise agreed by Buyer in writing. Notwithstanding anything herein to the contrary, each party (and each
employee, representative, or other agent of each party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any 

  

 38 

 
kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure. For this purpose, tax treatment and
tax structure shall not include (i) the identity of any existing or future party (or any Affiliate of such party) to this Agreement or (ii) any specific pricing information or other commercial terms, including the amount of any fees,
expenses, rates or payments arising in connection with the transactions contemplated by this Agreement. 
 (b) Buyer acknowledges that
certain of the information provided to it by or on behalf of any Seller or the Guarantor in connection with this Agreement and the transactions contemplated hereby is or may be confidential, and Buyer agrees that, unless such Seller or the
Guarantor, as applicable, shall otherwise agree in writing (subject to subsections (c) and (d) below), Buyer will not disclose to any other person or entity any information regarding any non-public financial statements, reports and other
information furnished by any Seller or the Guarantor to Buyer pursuant to or in connection with any Program Document, unless such information was known to Buyer on a non-confidential basis prior to disclosure by any Seller or the Guarantor.

 (c) Each party may disclose certain confidential information to (i) any of such party’s attorneys, consultants, accountants,
financial advisors and independent auditors, (ii) any actual or potential assignee or participant of Buyer under this Agreement, (iii) any municipal, state, federal or other regulatory body in order to comply with any law, order,
regulation, request or ruling or (iv) in the event such party is legally compelled by subpoena or other similar process. 
 (d)
Notwithstanding anything contained herein to the contrary, Buyer shall not disclose or otherwise take any action with respect to any information furnished by any Seller, the Guarantor or any attorney or other representative of any Seller or the
Guarantor, that would cause any Seller, the Guarantor or any affiliate thereof, to be in violation of any requirement of any law, rule or regulation prohibiting the disclosure of information regarding mortgagors. 
 37. JOINT AND SEVERAL LIABILITY 
 The Sellers
hereby acknowledge and agree that they are jointly and severally liable to the Buyer for all representations, warranties, covenants, obligations and liabilities of each of the Sellers hereunder. The Sellers hereby further acknowledge and agree that
any Default, Event of Default or breach of a representation, warranty or covenant by any Seller under this Agreement is hereby considered a Default, Event of Default or breach by each Seller. A Seller’s subrogation claims arising from payments
to Buyer shall constitute a capital investment in another Seller (1)subordinated to any claims of Buyer, and (2) equal to a ratable share of the equity interests in such Seller. The Sellers hereby: (a) acknowledge and agree that the Buyer
shall have no obligation to proceed against one Seller before proceeding against the other Seller, (b) waive any defense to their obligations under this Agreement or any other Program Document based upon or arising out of the disability or
other defense or cessation of liability of one Seller versus the other or of any other Person, and (c) waive any right of subrogation or ability to proceed against any Person or to participate in any security for the Obligations until the
Obligations have been paid and performed in full. 
 [Signature Page Follows] 
  

 39 

 IN WITNESS WHEREOF, Sellers, Guarantor and Buyer have caused their names to be signed to this Master
Repurchase Agreement by their respective officers thereunto duly authorized as of the date first above written. 
  

			
	 NOVASTAR MORTGAGE, INC., as Seller

		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President

  

			
	NOVASTAR CERTIFICATES FINANCING LLC, as seller
		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President

  

			
	NOVASTAR CERTIFICATES FINANCING CORPORATION, as seller
		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President

  

			
	WACHOVIA INVESTMENT HOLDINGS, LLC, as Buyer and Agent, as applicable
		
	By:	 	 /s/ Andrew W. Riebe

	Name:	 	Andrew W. Riebe
	Title:	 	Vice President

 Acknowledged and Agreed: 
  

			
	NOVASTAR FINANCIAL, INC., as Guarantor
		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President

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