Document:

Exhibit 10.1(a)

 

FIRST AMENDMENT TO

SECOND AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

GOVERNING PURCHASES AND SALES OF MORTGAGE LOANS

 

This First Amendment, dated as of December 28, 2005 (this “Amendment”),
to the Second Amended and Restated Master Repurchase Agreement Governing
Purchases and Sales of Mortgage Loans, dated as of December 29, 2004 (the “Repurchase
Agreement”), is made by and among LEHMAN BROTHERS BANK, FSB (“Buyer”),
FIELDSTONE INVESTMENT CORPORATION (“FIC”) and FIELDSTONE MORTGAGE COMPANY
(“FMC”) (FIC and FMC shall be individually and collectively referred to
as “Seller”).  Buyer, FMC and FIC
may be collectively referred to herein as the “Parties”.

 

RECITALS

 

WHEREAS, pursuant to the Repurchase Agreement, Buyer has agreed,
subject to the terms and conditions set forth in the Repurchase Agreement, to
purchase certain Mortgage Loans owned by Seller, including, without limitation,
all rights of Seller to service and administer such Mortgage Loans; and

 

WHEREAS, the Parties desire to amend the Repurchase Agreement as set
forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:

 

Section 1.  Definitions.  Capitalized terms used but not otherwise
defined herein have the meanings given them in the Repurchase Agreement.

 

Section 2.  Amendments to Repurchase Agreement.  Subject to Section 4 hereof, the
Repurchase Agreement shall be amended as follows:

 

(a)  References in the Repurchase Agreement to “this
Agreement” or words of similar import (including indirect references to the
Repurchase Agreement) shall, without limitation, be deemed to be references to
the Repurchase Agreement as amended by this Amendment.

 

(b) The term of the Repurchase Agreement shall be
renewed for a period of 364 days from the date of this Amendment or such
earlier date on which all Purchased Mortgage Loans are required to be
immediately repurchased pursuant to Section 14(a) of the Repurchase
Agreement (unless such date is extended upon mutual agreement of Buyer and
Seller).  Thus, the definition of “Final
Repurchase Date” shall be amended in accordance with such renewal term.

 

(c)  The definitions of “Estimated Recovery Value”,
“Fee Letter”, “Performing Mortgage Loan” and “Workout Mortgage Loan” contained
in Section 2 are hereby deleted in their entirety.

 

(d) The definitions of “Collateral Deficit”, “Collateral
Maintenance Percentage”, “Market Value”, “Permitted Guarantee Obligations” and “Purchase
Price” contained in Section 2 are hereby deleted in their entirety and
replaced with the following:

 

 

“Collateral
Deficit” means a Market Value Collateral Deficit or a Securitization Value
Collateral Deficit.

 

“Collateral
Maintenance Percentage” means the amount set forth in the related
Confirmation with respect to each Mortgage Loan which, (1) in determining
whether a Market Value Collateral Deficit exists pursuant to the second
sentence of Section 4(a) hereof shall, for each type of Mortgage Loan
set forth in the first column below, equal the applicable percentage set forth
in the second column below and (2) in determining whether a Securitization
Value Collateral Deficit exists pursuant to the third sentence of Section 4(a) hereof
shall, for each type of Mortgage Loan set forth in the first column below,
equal the applicable percentage set forth in the third column below:

 

	
  Mortgage Loan Type

  	
   

  	
  % for Market

  Value

  Collateral

  Deficit

  	
   

  	
  % for

  Securitization

  Value Collateral

  Deficit

  	
   

  
	
  (a)

  	
  first lien
  High Purchase Price Mortgage Loans that are Three Month Aged Mortgage Loans

  	
   

  	
  103.1

  	
  %

  	
  103.1

  	
  %

  
	
  (b)

  	
  first lien
  High Purchase Price Mortgage Loans that are Five Month Aged Mortgage Loans

  	
   

  	
  104.2

  	
  %

  	
  104.2

  	
  %

  
	
  (c)

  	
  second lien
  High Purchase Price Mortgage Loans

  	
   

  	
  106.4

  	
  %

  	
  106.4

  	
  %

  
	
  (d)

  	
  first lien
  Medium Purchase Price Mortgage Loans that are Three Month Aged Mortgage Loans

  	
   

  	
  105.3

  	
  %

  	
  105.3

  	
  %

  
	
  (e)

  	
  first lien
  Medium Purchase Price Mortgage Loans that are Five Month Aged Mortgage Loans

  	
   

  	
  106.4

  	
  %

  	
  106.4

  	
  %

  
	
  (f)

  	
  second lien
  Medium Purchase Price Mortgage Loans

  	
   

  	
  108.7

  	
  %

  	
  108.7

  	
  %

  
	
  (g)

  	
  first lien
  Low Purchase Price Mortgage Loans that are Three Month Aged Mortgage Loans

  	
   

  	
  107.5

  	
  %

  	
  107.5

  	
  %

  
	
  (h)

  	
  first lien
  Low Purchase Price Mortgage Loans that are Five Month Aged Mortgage Loans

  	
   

  	
  108.7

  	
  %

  	
  108.7

  	
  %

  
	
  (i)

  	
  second lien
  Low Purchase Price Mortgage Loans

  	
   

  	
  111.1

  	
  %

  	
  111.1

  	
  %

  

 

“Market
Value” means as of any date with respect to any Mortgage Loan, the price at
which such Mortgage Loan could readily be sold as determined by Buyer in its
sole reasonable discretion; provided, that Market Value may be deemed
zero by Buyer for:

 

2

 

(i)            any Mortgage Loan
that has been the subject of a Transaction for more than one-hundred fifty
(150) days,

 

(ii)           any Mortgage Loan
which, when added with all other Purchased Mortgage Loans subject to then
outstanding Transactions, would cause the aggregate Repurchase Price for all
Purchased Mortgage Loans that are subject to then outstanding transactions to
exceed the Total Facility Amount,

 

(iii)          any Five Month Aged
Mortgage Loan which, when added with all other Five Month Aged Mortgage Loans
subject to then outstanding Transactions, would cause the aggregate Repurchase
Price for all Five Month Aged Mortgage Loans that are subject to then
outstanding Transactions to exceed 50% of the aggregate Repurchase Price for
all Purchased Mortgage Loans that are subject to then outstanding Transactions,

 

(iv)          any Mortgage Loan
that is Delinquent for thirty (30) or more days but not more than fifty-nine
(59) days which, when added with all other Purchased Mortgage Loans subject to
then outstanding Transactions that are Delinquent for such period, would cause
the aggregate Repurchase Price of such Purchased Mortgage Loans subject to then
outstanding Transactions that are Delinquent for such period to exceed 3.0% of
the Total Facility Amount,

 

(v)           any Mortgage Loan
that is secured by a second mortgage lien on the Mortgaged Property which, (a) when
added with all other Purchased Mortgage Loans secured by second mortgage liens
on the Mortgaged Properties subject to then outstanding Transactions, would
cause the aggregate Repurchase Price for all Purchased Mortgage Loans secured
by second mortgage liens on the Mortgaged Properties that are subject to then
outstanding Transactions to exceed $30,000,000 or (b) when such Mortgage
Loan’s FICO score is averaged with all other Purchased Mortgage Loans secured
by second mortgage liens on the Mortgaged Properties subject to then
outstanding transactions, would cause the weighted average FICO score for all
Purchased Mortgage Loans secured by second mortgage liens on the Mortgaged
Properties that are subject to then outstanding Transactions to be less than
640,

 

(vi)          any Mortgage Loan
that is a Wet Ink Mortgage Loan for more than seven (7) Business Days,

 

(vii)         any Wet Ink Mortgage
Loan which, when added with all other Wet Ink Mortgage Loans subject to then
outstanding Transactions, would cause the aggregate Repurchase Price of all Wet
Ink Mortgage Loans subject to then outstanding Transactions to exceed (a) 30%
of the Total Facility Amount during the first and last week of any calendar
month or (b) 20% of the Total Facility Amount at all other times,

 

3

 

(viii)        any Balloon Mortgage
Loans which, when added with all other Balloon Mortgage Loans subject to then
outstanding Transactions, would cause the aggregate Repurchase Price of all
Balloon Mortgage Loans subject to then outstanding Transactions to exceed the
greater of (a) 10% of the aggregate Repurchase Price for all Purchased
Mortgage Loans that are subject to then outstanding Transactions and (b) $25,000,000;

 

(ix)           any Mortgage Loan
for which greater than one-hundred eighty (180) days have elapsed since the
date of origination of such Mortgage Loan,

 

(x)            any Mortgage Loan
with respect to that there is a breach of a representation, warranty or
covenant made by either Seller in this Agreement,

 

(xi)           any Mortgage Loan
which, when added with all other Mortgage Loans that have the same Mortgagor as
such Mortgage Loan, would cause the amount of Mortgage Loans that have the same
Mortgagor to be greater than three,

 

(xii)          any Mortgage Loan
that is in foreclosure or subject to a bankruptcy proceeding of the related
Mortgagor or with respect to which the first and second monthly payments were
not made on their respective due dates or within the grace period in accordance
with the terms of the Mortgage Note; provided, that, if such payments are
brought current, Buyer shall assign a reasonable Market Value to such Mortgage
Loan; and

 

(xiii)         any Mortgage Loan
for which the related Mortgagor is thirty (30) or more days delinquent with
respect to the Mortgage Loan’s first monthly payment due; provided, that, if
such payments are brought current, Buyer shall assign a reasonable Market Value
to such Mortgage Loan.

 

“Permitted
Guarantee Obligations” means (a) mortgage, repurchase and warehouse
facilities whereby Sellers are jointly and severally liable thereunder; (b) mortgage
repurchase, warehouse facilities or other ordinary course transactions whereby
FIC guarantees the obligations of its Subsidiaries thereunder; and (c) the
obligations of either Seller pursuant to surety bonds required in connection
with state licensing and branch offices.

 

“Purchase
Price” means on each Purchase Date, the price at which each Purchased
Mortgage Loan is transferred by the applicable Seller to Buyer or its designee
(including Custodian) that shall be equal to for each type of Mortgage Loan set
forth in the first column below, the lowest of: (i) the product of the
Market Value of such Mortgage Loan and the applicable percentage set forth
below under the column labeled “A”, (ii) the product of the Securitization
Value of such Mortgage Loan and the applicable percentage set forth under the
column labeled “B” and (iii) the product of the outstanding principal
balance of such Mortgage Loan and the applicable percentage set forth below
under the column labeled “C”:

 

4

 

	
   

  	
   

  	
  A

  	
   

  	
  B

  	
   

  	
  C

  	
   

  
	
  Mortgage Loan Type

  	
   

  	
  % of

  Market

  Value

  	
   

  	
  % of

  Securitization

  Value

  	
   

  	
  % of

  Outstanding

  Principal

  Balance

  	
   

  
	
  (a)

  	
  first lien
  High Purchase Price Mortgage Loans that are Three Month Aged Mortgage Loans

  	
   

  	
  97.0

  	
  %

  	
  97.0

  	
  %

  	
  98.5

  	
  %

  
	
  (b)

  	
  first lien
  High Purchase Price Mortgage Loans that are Five Month Aged Mortgage Loans

  	
   

  	
  96.0

  	
  %

  	
  96.0

  	
  %

  	
  97.5

  	
  %

  
	
  (c)

  	
  second lien
  High Purchase Price Mortgage Loans

  	
   

  	
  94.0

  	
  %

  	
  94.0

  	
  %

  	
  95.5

  	
  %

  
	
  (d)

  	
  first lien
  Medium Purchase Price Mortgage Loans that are Three Month Aged Mortgage Loans

  	
   

  	
  95.0

  	
  %

  	
  95.0

  	
  %

  	
  96.5

  	
  %

  
	
  (e)

  	
  first lien
  Medium Purchase Price Mortgage Loans that are Five Month Aged Mortgage Loans

  	
   

  	
  94.0

  	
  %

  	
  94.0

  	
  %

  	
  95.5

  	
  %

  
	
  (f)

  	
  second lien
  Medium Purchase Price Mortgage Loans

  	
   

  	
  92.0

  	
  %

  	
  92.0

  	
  %

  	
  93.5

  	
  %

  
	
  (g)

  	
  first lien
  Low Purchase Price Mortgage Loans that are Three Month Aged Mortgage Loans

  	
   

  	
  93.0

  	
  %

  	
  93.0

  	
  %

  	
  94.5

  	
  %

  
	
  (h)

  	
  first lien
  Low Purchase Price Mortgage Loans that are Five Month Aged Mortgage Loans

  	
   

  	
  92.0

  	
  %

  	
  92.0

  	
  %

  	
  93.5

  	
  %

  
	
  (i)

  	
  second lien
  Low Purchase Price Mortgage Loans

  	
   

  	
  90.0

  	
  %

  	
  90.0

  	
  %

  	
  91.5

  	
  %

  

 

(e)  The following new definitions are hereby added
to Section 2 in their proper alphabetic places:

 

“High
Purchase Price Mortgage Loan” means a Purchased Mortgage Loan that is
designated as a “High Purchase Price Mortgage Loan” by Seller pursuant to Section 3(c)(i).

 

“Low
Purchase Price Mortgage Loan” means a Purchased Mortgage Loan that is
designated as a “Low Purchase Price Mortgage Loan” by Seller pursuant to Section 3(c)(i).

 

“Medium
Purchase Price Mortgage Loan” means a Purchased Mortgage Loan that is
designated as a “Medium Purchase Price Mortgage Loan” by Seller pursuant to Section 3(c)(i).

 

5

 

“Permitted
Liens” means, with respect to any Mortgage Loan, (i) liens of current
real property taxes and assessments not yet due and payable, (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording being acceptable to mortgage lending
institutions generally and specifically referred to in the lender’s title
insurance policy delivered to the Seller and which does not adversely affect
the appraised value of the Mortgaged Property, (iii) in the case of a
Mortgaged Property that is a condominium or an individual unit in a planned
unit development, liens for common charges permitted by statute, (iv) other
matters to which like properties are commonly subject, which do not,
individually or in the aggregate, materially interfere with the benefits of the
security intended to be provided by the related Mortgage or the use, enjoyment,
value or marketability of the related Mortgaged Property.

 

“Pricing
and Fee Letter” means that certain pricing and fee Letter, dated as of even
date herewith (as may be amended from time to time), between Sellers and
Purchaser.

 

(f)  References to “Fee Letter” are hereby deemed
to be references to “Pricing and Fee Letter”.

 

(g) References to “Performing Mortgage Loan” are
hereby deemed to be references to “Mortgage Loan”.

 

(h) Each of the roman numerals in the current
subclauses of Section 3(c) are hereby increased by one and a new
subclause (i) is hereby added to the beginning of Section 3(c) to
read as follows:

 

(i)            On or before the first day of each
calendar month, Seller shall notify Buyer in writing whether the Purchased Mortgage
Loans to be included in any Transaction for such month shall be designated as
High Purchase Price Mortgage Loans, Medium Purchase Price Mortgage Loans or Low
Purchase Price Mortgage Loans.  If Seller
fails to make such designation by the first day of the related calendar month,
the Purchased Mortgage Loans for all Transaction in such month shall be
designated as High Purchase Price Mortgage Loans.  Further, such designation shall apply to all
Transactions in such month and may not be modified until the subsequent month;
provided, that, for any Transactions consummated in a given month that are
outstanding as of the first day of any subsequent month, the designation made
by Seller for such subsequent month shall apply to any such outstanding
Transactions.  By way of example, if (1) Seller
notifies buyer in writing on January 31 that all Purchased Mortgage Loans
included in any Transaction in February are to be designated as Medium
Purchase Price Mortgage Loans, (2) Seller and Buyer enter into a
Transaction on February 20 and (3) such Transaction is outstanding on
February 28 and Seller notifies Buyer in writing on February 28 that
all Purchased Mortgage Loans included in any Transaction in March are to
be designated as High Purchase Price Mortgage Loans, then on March 1

 

6

 

the Purchased
Mortgage Loans included in the February 20 Transaction will be designated
as High Purchase Price Mortgage Loans.

 

(i)   Section 3(g) is hereby deleted in
its entirety and replaced with the following:

 

(g)           Maximum Facility Amount.  With respect to all Transactions hereunder,
the aggregate Purchase Price for all Purchased Mortgage Loans at any one time
subject to then outstanding Transactions shall not exceed THREE HUNDRED MILLION
DOLLARS ($300,000,000) (the “Total Facility Amount”).

 

(j)   The last sentence of Section 4(a) is
hereby deleted in its entirety.

 

(k)  Section 10(b)(iv) is hereby amended
by adding the parenthetical “(other than Permitted Liens)” immediately after
the first reference to “lien” therein.

 

(l)   Section 10(b)(xx) is hereby deleted in
its entirety and replaced with the following:

 

(xx)          Subsidiaries.  As of the date of this Agreement, FMC has no
Subsidiaries.  As of the date of this
Agreement, FIC has no Subsidiaries other than FMC, Fieldstone Mortgage
Ownership Corp., Fieldstone Mortgage Investment Corporation and Fieldstone
Servicing Corp.

 

(m) Section 11(b) is
hereby amended by adding the phrase “and Permitted Liens” immediately after the
phrase “Section 6 of this Agreement”.

 

(n) Section 12(f) is hereby deleted in
its entirety and replaced with the following:

 

(f)            Each Seller shall provide Buyer
prompt notification of (i) the creation of any new Subsidiary, which
notice shall set forth a description of the purpose of such Subsidiary and (ii) a
change in the identity or authority of the president of FMC or FIC.

 

(o) Section 12(l)(2) is hereby amended by
adding the phrase “material portion of the” immediately after the phrase “or
litigation related to any”.

 

(p) Section 12(m) is hereby amended by
deleting the “Profitability” financial covenant therein in its entirety and
replacing it with the following:

 

	
  Profitability

  	
   

  	
  Seller shall not have Net Income of less
  than $1.00 in any two consecutive fiscal quarters without regard to
  unrealized gains or losses from Hedges during such period; provided, that,
  Seller shall notify Buyer of any such unrealized gains or losses via the
  related compliance certificate.

  

 

(q) Section 13(viii) is hereby amended by
replacing the references to “$10,000,000” therein to “$20,000,000”.

 

7

 

(r)  Section 13(xi) is hereby deleted in its
entirety and replaced with the following:

 

(xi)           A Market Value Collateral Deficit or
Securitization Value Collateral Deficit occurs and is not eliminated within the
time periods specified in Section 4(b).

 

(s)  Section 25(e) is hereby deleted in
its entirety.

 

(t)  Section 30(e) is hereby amended by
adding the phrase “and by facsimile” after the first reference to “counterparts”
therein.

 

(u) Subsections (j), (aa), (jj), (kk), and (zz) of Schedule 1
are hereby deleted in their entirety and replaced with the following:

 

(j)            Valid First or Second Lien.  The Mortgage is a valid, subsisting and
enforceable first or second lien on the Mortgaged Property, including all
buildings on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or
annexed to such buildings, and all additions, alterations and replacements made
at any time with respect to the foregoing. 
The lien of the Mortgage is subject only to Permitted Liens, and in the
case of a Second Lien Mortgage Loan, the lien of the related First Mortgage.  Any security agreement, chattel mortgage or
equivalent document related to and delivered in connection with the Mortgage
Loan establishes and creates a valid, subsisting and enforceable first lien and
first priority security interest, with respect to first lien Mortgage Loans, or
second lien and second priority security interest, with respect to Second Lien
Mortgage Loans, on the property described therein and Seller has full right to
pledge and assign the same to Buyer or its designee (including Custodian).

 

(aa)         Condominiums/Planned Unit
Developments/Manufactured Homes.  If
the Mortgaged Property is a condominium unit or a planned unit development
(other than a de minimus planned unit development) such condominium or planned
unit development project meets Seller’s Underwriting Guidelines. With respect to
each Mortgage Loan secured by a manufactured home: (i) the manufactured
home is permanently affixed to a foundation which is suitable for the soil
conditions of the site; (ii) all foundations, both perimeter and interior,
have footings that are located below the frost line; (iii) any wheels,
axles and trailer hitches are removed from the manufactured home; (iv) the
Mortgage Loan is covered under a standard real estate title insurance policy or
attorney’s title opinion or certificate that identified the manufactured home
as part of the real property and insures or indemnifies against any loss if the
manufactured home is determined not to be part of the real property.  In no event shall any Mortgage Loan be
secured by a mobile home.

 

8

 

(jj)           Servicemembers’ Civil Relief Act.  The Mortgagor has not notified Seller, and
Seller has no knowledge of any relief requested or allowed to the Mortgagor
under the Servicemembers’ Civil Relief Act of 2003 or any other federal or
state law that would have the effect of suspending or reducing the Mortgagor’s
payment obligations under a Mortgage Loan or that would prevent or restrict the
ability of Seller to commence or continue with the foreclosure of a Mortgage
Loan.

 

(kk)         Environmental Matters.  The Mortgaged Property is free from any and
all toxic or hazardous substances and there exists no violation of any local,
state or federal environmental law, rule or regulation. There is no
pending action or proceeding directly involving any Mortgaged Property of which
the Seller is aware in which compliance with any environmental law, rule or
regulation is an issue; and to the best of the Seller’s knowledge, nothing
further remains to be done to satisfy in full all requirements of each such
law, rule or regulation consisting a prerequisite to use and enjoyment of
said property.

 

(zz)          Single Premium Credit Life
Insurance.  No Mortgagor was required to purchase any credit life, disability,
accident or health insurance product or debt cancellation agreement as a condition of obtaining the extension of credit
evidenced by the Mortgage Loan.  No
Mortgagor obtained a prepaid single-premium credit life, disability, accident
or health insurance policy in connection with the origination of the Mortgage
Loan.  No proceeds from any Mortgage Loan
were used to purchase single premium credit insurance policies as part of the
origination of, or as a condition to closing, such Mortgage Loan.

 

(v) New subsections (bbb), (ccc) and (ddd) are
hereby added to Schedule 1 to read as follows:

 

(bbb)      Mortgagor Disclosure.  All points, fees and charges (including
finance charges), whether or not financed, assessed, collected or to be
collected in connection with the origination and servicing of each Mortgage
Loan have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation.

 

(ccc)       Origination Practices.  No error, omission, misrepresentation,
negligence, fraud or similar occurrence with respect to a Mortgage Loan has
taken place on the part of any person including without limitation Seller, the
Mortgagor, any appraiser, any builder or developer, or any other party involved
in the origination of the Mortgage Loan or, in the application of any insurance
in relation to such Mortgage Loan; no predatory or deceptive lending practices
or deceptive trade practices, including, without limitation, the extension of
credit without regard to the ability of the borrower to repay and the extension
of credit which has no apparent benefit to the borrower, were employed in the
origination of the Mortgage Loan.  No
Mortgagor was

 

9

 

a debtor in
any state or federal bankruptcy or insolvency proceeding at any time within
twenty-four months prior to the origination of the Mortgage Loan, nor has any
Mortgagor had a foreclosure proceeding commenced against such Mortgagor within
twenty-four months prior to origination of the Mortgage Loan.

 

(ddd)      Prepayment Premium.  With respect
to any Mortgage Loan that contains a provision permitting imposition of a
premium upon a prepayment prior to maturity: (i) the prepayment
premium is enforceable and will be enforced by the Seller through the related
Transfer Date, (ii) the prepayment premium is permitted pursuant to
federal, state and local law.  Except as
otherwise set forth in the related Mortgage Loan Schedule, with respect to each
Mortgage Loan that contains a prepayment fee, such prepayment fee is at least
equal to the lesser of (A) the maximum amount permitted under applicable
law and (B) six months interest at the
related Mortgage Interest Rate on the amount prepaid in excess of 20% of the
original principal balance of such Mortgage Loan.  With respect to any Mortgage Loan that
contains a provision permitting imposition of a premium upon a prepayment prior
to maturity: (i) prior to the origination of such Mortgage Loan, the
Mortgagor agreed to such premium in exchange for a monetary benefit, including
but not limited to a rate or fee reduction, (ii) prior to the origination
of such Mortgage Loan, the Mortgagor was offered the option of obtaining a
mortgage loan that did not require payment of such a premium, (iii) the
prepayment premium is disclosed to the borrower in the Mortgage Loan Documents
pursuant to applicable state and federal law and (iv) for Mortgage Loans
originated on or after September 1, 2004, the duration of the prepayment
period shall not exceed three (3) years from the date of the Mortgage
Note, unless the Mortgage Loan was modified to reduce the prepayment period to
no more than three (3) years from the date of the Mortgage Note and the
Mortgagor was notified in writing of such reduction in prepayment period, (v) notwithstanding
any state or federal law to the contrary or clause (i) above, the Seller
shall not impose such prepayment premium in any instance when the mortgage debt
is accelerated as the result of the borrower’s default in making the loan
payments and (vi) the prepayment premium is set forth on the
related Mortgage Loan Schedule.

 

Section 3.  Representations and Warranties.  Seller hereby represents and warrants to
Buyer that (a) both immediately before and after giving effect to the
amendments set forth in Section 2 of this Amendment, no Event of Default
shall have occurred and be continuing, (b) the representations and
warranties of Seller set forth in Section 10 of the Repurchase Agreement
are true and complete as if made on and as of such date and as if each
reference in said Section 10 to “this Agreement” included reference to the
Repurchase Agreement as amended hereby, (c) this Amendment constitutes the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms and (d) the execution and delivery by Seller of
this Amendment has been duly authorized by all requisite corporate action on
the part of Seller and will not violate any provision of Seller’s
organizational documents.

 

10

 

Section 4.  Conditions Precedent.  The amendments set forth in Section 2
above shall not become effective unless, on or before December 28, 2005,
Buyer shall have received all of the following documents, each of which shall
be satisfactory in form and substance to Buyer and its counsel:

 

(a)  Amendment.  This Amendment, duly completed, executed and
delivered by Seller;

 

(b) Opinion of Counsel.  An opinion or opinions of counsel favorable
to Buyer with respect to Seller and this Amendment;

 

(c)  Officer’s Certificate.  A certificate of an officer of Seller certifying
to such matters as may be required by Buyer; and

 

(d) Other Documents.  Such other documents as Buyer may reasonably
request.

 

Section 5.  Miscellaneous.

 

(a)  Except as expressly amended by Section 2
hereof, the Repurchase Agreement remain unaltered and in full force and
effect.  Each of the Parties hereby
reaffirms all terms and covenants made in the Repurchase Agreement as amended
hereby.

 

(b) The execution, delivery and effectiveness of
this Amendment shall not operate as a waiver of any right, power or remedy of
any Party under the Repurchase Agreement, or any other document, instrument or
agreement executed and/or delivered in connection therewith.

 

(c)  THIS AMENDMENT SHALL BE CONSTRUED, INTERPRETED
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.

 

(d) This Amendment may be executed in any number of
counterparts, and all such counterparts shall together constitute the same
agreement.  Any signature delivered by a
party via facsimile shall be deemed to be an original signature hereto.

 

[SIGNATURE PAGE TO FOLLOW]

 

11

 

IN WITNESS
WHEREOF, the Parties hereto have caused this Amendment to be executed as of the
day and year first above written.

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  FIELDSTONE MORTGAGE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark C. Krebs

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
  FIELDSTONE INVESTMENT CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark C. Krebs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark C. Krebs

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  LEHMAN BROTHERS BANK, FSB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fred Madonna

  	
   

  
	
   

  	
   

  	
  Name:  Fred
  Madonna

  
	
   

  	
   

  	
  Title:   
  Authorized Signature

  
					

 

A-1Exhibit 10.1(b)

 

Execution

 

Fieldstone Mortgage Company

Fieldstone Investment Corporation

11000 Broken Land Parkway

Suite 600

Columbia, Maryland 21044

 

December 28, 2005

 

Lehman Brothers Bank, FSB

745 Seventh Avenue

7th Floor

New York, New York 10019

 

Re:          Pricing and Fee Letter

 

Gentlemen:

 

Reference is made to that certain First
Amendment to the Second Amended and Restated Master Repurchase Agreement
Governing Purchases and Sales of Mortgage Loans, dated as of December 28,
2005 (as amended, modified or supplemented from time to time, the “Repurchase
Agreement”) between Fieldstone Mortgage Company (“FMC”), Fieldstone
Investment Corporation (“FIC”) (FIC and FMC shall be individually and
collectively referred to herein as “Seller”) and Lehman Brothers Bank,
FSB (“Buyer”).  All capitalized
terms not otherwise defined herein shall have the meanings given to such terms
in the Repurchase Agreement.

 

For the purposes of the Repurchase Agreement,
the “Pricing Spread” means: (a) 0.70% for each High Purchase Price Mortgage
Loan that is a Dry Ink Mortgage Loan; (b) 0.90% for each High Purchase
Price Mortgage Loan that is a Wet Ink Mortgage Loan; (c) 0.60% for each
Medium Purchase Price Mortgage Loan that is a Dry Ink Mortgage Loan; (d) 0.80%
for each Medium Purchase Price Mortgage Loan that is a Wet Ink Mortgage Loan; (e) 0.50%
for each Low Purchase Price Mortgage Loan that is a Dry Ink Mortgage Loan; and (f) 0.70%
for each Low Purchase Price Mortgage Loan that is a Wet Ink Mortgage Loan.

 

In order to induce Buyer to enter into the
renewal to the facility described in the Repurchase Agreement, and as
compensation for services rendered or to be rendered by Buyer under the
Repurchase Agreement, Seller shall pay Buyer a non-refundable commitment fee in
the amount of $375,000.00.  Although this
fee is deemed to be fully earned on the date hereof, it is payable in twelve
payments of $31,250.00 (each, a “Payment”).  The first Payment will be paid by Seller to
Buyer on the date hereof and the remaining eleven payments will be paid by
Seller to Buyer on the first day of each month beginning with February 1,
2006 and ending with December 1, 2006.

 

 

On the day
following the dates March 31, 2006, June 30,
2006, September 30, 2006 and December 31, 2006 (with respect to each
immediately preceding three month period), Seller shall pay to Buyer a non-use fee (“Non-Use Fee”) equal to
the product of (x) 0.125% multiplied by (y) the fraction expressed as a
percentage the numerator of which equals the number of days in the applicable
period and the denominator of which equals 365 multiplied by (z) an amount
equal to (a) the Facility Amount minus (b) the average Repurchase
Price for all Transactions on each day during the applicable period; provided,
no Non-Use Fee shall be payable during the initial three (3) months of the
term of the Facility or if the amount determined for the preceding clause (b) during
any such period exceeds 50% of the Facility Amount.

 

Seller’s failure to comply with this letter
shall constitute an Event of Default under the Repurchase Agreement.

 

If Buyer terminates the Repurchase Agreement
other than with respect to an Event of Default, and at the time of termination
no Event of Default had occurred or was continuing, (a) Seller shall not
be required to pay Buyer any of the remaining Payments and (b) with
respect to any Payment already made by Seller to Buyer for which the entire
calendar month attributed to such Payment has not been completed (an “Incomplete
Month”), Buyer shall return to Seller the portion of such Payment equal to
the product of (x) the fraction the numerator of which equals $31.250.00 and
the denominator of which equals the number of days in the Incomplete Month
times (y) the number of days remaining in the Incomplete Month as of the date
of termination.

 

The terms of this fee letter may be modified
only by a subsequent letter signed by Buyer and Seller.  This fee letter is delivered to Seller with
the understanding (and Buyer has relied on Seller’s assurances) that the terms
of this fee letter will be kept confidential and not disclosed to any third
party except those in confidential relationship to Seller, such as officers,
directors, legal counsel, investment bankers, or as required by law, without
the express prior written consent of Buyer.

 

THIS FEE LETTER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

This fee
letter may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and any of the parties hereto
may execute this fee letter by signing any such counterpart.  Any signature delivered by a party via
facsimile shall be deemed to be an original signature hereto.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

2

 

If you are in agreement with the foregoing,
kindly sign and return to us the enclosed copy of this fee letter.

 

 

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIELDSTONE MORTGAGE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Mark C. Krebs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark C. Krebs

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIELDSTONE INVESTMENT CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Mark C. Krebs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark C. Krebs

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Treasurer

  
						

 

 

	
  AGREED:

  	
   

  
	
   

  	
   

  
	
  LEHMAN BROTHERS BANK, FSB

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Fred Madonna

  	
   

  	
   

  
	
  Name: Fred Madonna

  	
   

  
	
  Title: Authorized signature

  	
   

  
				

 

3

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