Document:

Exhibit 10.14

 

EXECUTION VERSION

	
 
    

 

MASTER REPURCHASE AGREEMENT

 

among

 

NOMURA CORPORATE FUNDING AMERICAS, LLC,

as Buyer

 

ANGEL OAK MORTGAGE, INC.,

as a Seller

 

and

 

ANGEL OAK MORTGAGE FUND TRS,

as a Seller

 

Dated as of December 6, 2018

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1.
    	
APPLICABILITY;   TRANSACTION OVERVIEW
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
FACILITY; CONDITIONS   PRECEDENT; INITIATION; REPURCHASE; HOLDBACK TRIGGER EVENT; LIBOR BREAKAGE   COSTS
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
MANDATORY REPURCHASES
    	
43
    
	
 
    	
 
    	
 
    
	
SECTION 5.
    	
INCOME PAYMENTS
    	
44
    
	
 
    	
 
    	
 
    
	
SECTION 6.
    	
REQUIREMENTS OF LAW
    	
46
    
	
 
    	
 
    	
 
    
	
SECTION 7.
    	
MARGIN MAINTENANCE;   EXCESS CONCENTRATION AMOUNTS; MINIMUM DIVERSITY REQUIREMENT
    	
47
    
	
 
    	
 
    	
 
    
	
SECTION 8.
    	
TAXES
    	
49
    
	
 
    	
 
    	
 
    
	
SECTION 9.
    	
SECURITY INTEREST;   BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT
    	
51
    
	
 
    	
 
    	
 
    
	
SECTION 10.
    	
PAYMENT, TRANSFER AND   CUSTODY
    	
54
    
	
 
    	
 
    	
 
    
	
SECTION 11.
    	
HYPOTHECATION OR PLEDGE   OF PURCHASED ASSETS
    	
54
    
	
 
    	
 
    	
 
    
	
SECTION 12.
    	
FEES
    	
55
    
	
 
    	
 
    	
 
    
	
SECTION 13.
    	
REPRESENTATIONS
    	
55
    
	
 
    	
 
    	
 
    
	
SECTION 14.
    	
COVENANTS OF EACH   SELLER
    	
60
    
	
 
    	
 
    	
 
    
	
SECTION 15.
    	
EVENTS OF DEFAULT
    	
70
    
	
 
    	
 
    	
 
    
	
SECTION 16.
    	
REMEDIES
    	
73
    
	
 
    	
 
    	
 
    
	
SECTION 17.
    	
INDEMNIFICATION AND   EXPENSES
    	
75
    
	
 
    	
 
    	
 
    
	
SECTION 18.
    	
SERVICING; SUBSERVICING
    	
76
    
	
 
    	
 
    	
 
    
	
SECTION 19.
    	
RECORDING OF   COMMUNICATIONS
    	
78
    
	
 
    	
 
    	
 
    
	
SECTION 20.
    	
DUE DILIGENCE
    	
78
    

 

 

	
SECTION 21.
    	
ASSIGNABILITY
    	
79
    
	
 
    	
 
    	
 
    
	
SECTION 22.
    	
TRANSFER AND   MAINTENANCE OF REGISTER
    	
80
    
	
 
    	
 
    	
 
    
	
SECTION 23.
    	
TAX TREATMENT
    	
80
    
	
 
    	
 
    	
 
    
	
SECTION 24.
    	
SET-OFF
    	
80
    
	
 
    	
 
    	
 
    
	
SECTION 25.
    	
TERMINABILITY
    	
81
    
	
 
    	
 
    	
 
    
	
SECTION 26.
    	
NOTICES AND OTHER COMMUNICATIONS
    	
81
    
	
 
    	
 
    	
 
    
	
SECTION 27.
    	
ENTIRE AGREEMENT;   SEVERABILITY; SINGLE AGREEMENT
    	
81
    
	
 
    	
 
    	
 
    
	
SECTION 28.
    	
GOVERNING LAW
    	
82
    
	
 
    	
 
    	
 
    
	
SECTION 29.
    	
SUBMISSION TO   JURISDICTION; WAIVERS
    	
82
    
	
 
    	
 
    	
 
    
	
SECTION 30.
    	
NO WAIVERS, ETC.
    	
83
    
	
 
    	
 
    	
 
    
	
SECTION 31.
    	
NETTING
    	
83
    
	
 
    	
 
    	
 
    
	
SECTION 32.
    	
CONFIDENTIALITY
    	
83
    
	
 
    	
 
    	
 
    
	
SECTION 33.
    	
INTENT
    	
85
    
	
 
    	
 
    	
 
    
	
SECTION 34.
    	
DISCLOSURE RELATING TO   CERTAIN FEDERAL PROTECTIONS
    	
86
    
	
 
    	
 
    	
 
    
	
SECTION 35.
    	
CONFLICTS
    	
86
    
	
 
    	
 
    	
 
    
	
SECTION 36.
    	
AUTHORIZATIONS
    	
86
    
	
 
    	
 
    	
 
    
	
SECTION 37.
    	
ACKNOWLEDGEMENT OF ANTI   PREDATORY LENDING PRACTICES
    	
86
    
	
 
    	
 
    	
 
    
	
SECTION 38.
    	
MISCELLANEOUS
    	
86
    
	
 
    	
 
    	
 
    
	
SECTION 39.
    	
GENERAL INTERPRETIVE   PRINCIPLES
    	
87
    
	
 
    	
 
    	
 
    
	
SECTION 40.
    	
JOINT AND SEVERAL   LIABILITY
    	
88
    

 

 

	
SCHEDULE 1-A
    	
REPRESENTATIONS AND WARRANTIES RE: HOME$ENSE   MORTGAGE LOANS, PORTFOLIO SELECT MORTGAGE LOANS, PLATINUM MORTGAGE LOANS,   PRIME JUMBO MORTGAGE LOANS, INVESTOR MORTGAGE LOANS AND AGENCY MORTGAGE LOANS
    
	
SCHEDULE 1-B
    	
REPRESENTATIONS AND WARRANTIES RE: RTL MORTGAGE   LOANS
    
	
SCHEDULE 1-C
    	
REPRESENTATIONS AND WARRANTIES RE: CHERRYWOOD MORTGAGE   LOANS AND CRE BRIDGE MORTGAGE LOANS
    
	
SCHEDULE 2
    	
AUTHORIZED REPRESENTATIVES
    
	
SCHEDULE 3
    	
MORTGAGE LOAN PURCHASE AGREEMENTS
    
	
SCHEDULE 4
    	
CRE BRIDGE MORTGAGE LOAN DELIVERABLES
    
	
 
    	
 
    
	
EXHIBIT A-1
    	
FORM OF CONFIRMATION LETTER - [HOME$ENSE   MORTGAGE LOANS] [PORTFOLIO SELECT MORTGAGE LOANS] [PLATINUM MORTGAGE LOANS]   [PRIME JUMBO MORTGAGE LOANS] [INVESTOR MORTGAGE LOANS] [AGENCY MORTGAGE   LOANS]
    
	
EXHIBIT A-2
    	
FORM OF CONFIRMATION LETTER - RTL MORTGAGE   LOANS
    
	
EXHIBIT A-3
    	
FORM OF CONFIRMATION LETTER - CHERRYWOOD MORTGAGE   LOANS
    
	
EXHIBIT A-4
    	
FORM OF CONFIRMATION LETTER - CRE BRIDGE MORTGAGE   LOANS
    
	
EXHIBIT B
    	
RESERVED
    
	
EXHIBIT C
    	
SELLERS’ TAX IDENTIFICATION NUMBERS
    
	
EXHIBIT D
    	
EVIDENCE OF BUYER LISTED AS LOSS PAYEE OF FIDELITY   INSURANCE POLICY
    
	
EXHIBIT E
    	
FORM OF CONFIRMATION LETTER - MARGIN EXCESS
    
	
EXHIBIT F
    	
FORM OF SECTION 8 CERTIFICATE
    
	
EXHIBIT G-1
    	
ASSET SCHEDULE FIELDS - HOME$ENSE MORTGAGE LOANS,   PORTFOLIO SELECT MORTGAGE LOANS, PLATINUM MORTGAGE LOANS, PRIME JUMBO   MORTGAGE LOANS, INVESTOR MORTGAGE LOANS AND AGENCY MORTGAGE LOANS
    
	
EXHIBIT G-2
    	
ASSET SCHEDULE FIELDS - RTL MORTGAGE LOANS
    
	
EXHIBIT G-3
    	
ASSET SCHEDULE FIELDS - CHERRYWOOD MORTGAGE LOANS
    
	
EXHIBIT G-4
    	
ASSET SCHEDULE FIELDS - CRE BRIDGE MORTGAGE LOANS
    
	
EXHIBIT H
    	
RESERVED
    
	
EXHIBIT I
    	
FORM OF [SERVICER][SUBSERVICER] NOTICE
    
	
EXHIBIT J
    	
FORM OF SELLER POWER OF ATTORNEY
    
	
EXHIBIT K
    	
HOME$ENSE UNDERWRITING GUIDELINES
    
	
EXHIBIT L
    	
PORTFOLIO SELECT UNDERWRITING GUIDELINES
    
	
EXHIBIT M
    	
RESERVED
    
	
EXHIBIT N
    	
INVESTOR CASH FLOW UNDERWRITING GUIDELINES
    
	
EXHIBIT O
    	
RTL UNDERWRITING GUIDELINES
    
	
EXHIBIT P
    	
PLATINUM UNDERWRITING GUIDELINES
    
	
EXHIBIT Q
    	
PRIME JUMBO UNDERWRITING GUIDELINES
    
	
EXHIBIT R
    	
CHERRYWOOD UNDERWRITING GUIDELINES
    
	
EXHIBIT S
    	
CRE BRIDGE UNDERWRITING GUIDELINES
    

 

 

MASTER REPURCHASE AGREEMENT

 

This MASTER REPURCHASE AGREEMENT, is entered into as of December 6, 2018, among ANGEL OAK MORTGAGE, INC., a Maryland corporation (“AOMI Seller” or a “Seller”), ANGEL OAK MORTGAGE FUND TRS, a Delaware statutory trust (“AOMF Seller” or a “Seller”, collectively, the “Sellers”), and NOMURA CORPORATE FUNDING AMERICAS, LLC, a Delaware limited liability company (the “Buyer”).

 

Section 1. Applicability; Transaction Overview. From time to time, upon the terms and conditions set forth herein, the parties hereto may agree to enter into transactions in which a Seller agrees to transfer to Buyer certain Mortgage Loans against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to such Seller such Mortgage Loans against the transfer of funds by such Seller. From time to time, a Seller may request a release of Purchased Assets from Buyer in conjunction with an Optional Repurchase. Notwithstanding anything to the contrary herein, this Agreement is not a commitment by Buyer to enter into Transactions with Sellers but rather sets forth the procedures to be used in connection with periodic requests for Buyer to enter into Transactions with Sellers. Each such transaction involving the transfer of Eligible Mortgage Loans shall be referred to herein as a “Transaction” and, unless otherwise agreed in writing, shall be governed by this Agreement, including any supplemental terms or conditions contained in any annexes identified herein, as applicable hereunder. As additional credit enhancement in connection with the Transactions hereunder and as a condition precedent to Buyer entering into the Transactions hereunder, (i) Guarantor shall deliver a full recourse guaranty of all Obligations and (ii) each Pledgor shall deliver a Pledge Agreement to secure the Obligations.

 

Section 2. Definitions. As used herein, the following terms shall have the following meanings.

 

“12 Month Bank Statement Mortgage Loan” shall mean a Mortgage Loan with a self-employed Mortgagor whose income was qualified using twelve (12) months of bank statements in accordance with the applicable Underwriting Guidelines.

 

“24 Month Bank Statement Mortgage Loan” shall mean a Mortgage Loan with a self-employed Mortgagor whose income was qualified using twenty four (24) months of bank statements in accordance with the applicable Underwriting Guidelines.

 

“1934 Act” shall have the meaning set forth in Section 34(a) hereof.

 

“Accelerated Repurchase Date” shall have the meaning set forth in Section 16(a)(i)  hereof.

 

“Accepted Servicing Practices” shall mean, with respect to any Purchased Asset, those mortgage servicing practices of prudent mortgage lending institutions which service Mortgage Loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located, consistent with the degree of skill and care that such servicers customarily require with respect to similar Mortgage Loans owned or managed by such servicers, and that are in accordance with all applicable Federal, State and local laws and regulations and the terms of the related Loan Documents.

 

1

 

“Actual Disbursed Holdback Amount” shall mean, with respect to the Purchased Assets that are either RTL Mortgage Loans, Cherrywood Mortgage Loans or CRE Bridge Mortgage Loans, the total aggregate Disbursed Holdback Amount disbursed by the applicable Servicer or Subservicer to the related Mortgagor in the prior calendar month.

 

“Additional Asset” shall have the meaning assigned thereto in Section 7(b) hereof.

 

“Additional Purchase Price” shall have the meaning assigned thereto in Section 7(c)  hereof.

 

“Adjustable Rate Mortgage Loan” shall mean a Mortgage Loan which provides for the adjustment of the Mortgage Interest Rate payable in respect thereto.

 

“Affiliate” shall mean with respect to any Person, any “affiliate” of such Person, as such term is defined in the Bankruptcy Code.

 

“Agency Mortgage Loan” shall mean a Fannie Mae High Balance Mortgage Loan and a Freddie Mac Super Conforming Mortgage Loan, individually or together as the context may require.

 

“Aggregate Asset Value” shall mean, as of any date of determination, the sum of the Asset Values of all Purchased Assets less the Excess Concentration Amount.

 

“Aggregate Facility Purchase Price” shall mean, as of any date of determination, the sum of the Purchase Prices of all Purchased Assets.

 

“Aggregate Facility Repurchase Price” shall mean, as of any date of determination, the sum of the Repurchase Prices of all Purchased Assets not yet repurchased.

 

“Aggregate Market Value” shall mean, as of any date of determination, the sum of the Market Values of all Purchased Assets using the most recent Market Value obtained or determined pursuant to the definition of Market Value.

 

“Agreement” shall mean this Master Repurchase Agreement among Buyer and Sellers, dated as of the date hereof as the same may be amended, supplemented or otherwise modified in accordance with the terms hereof.

 

“AMC” shall mean American Mortgage Consultants, Inc.

 

“Anti-Money Laundering Laws” shall have the meaning set forth in Section 13(a)(xxviii)  hereof.

 

“Anticipated Disbursed Holdback Amount” shall mean, with respect to the Purchased Assets that are RTL Mortgage Loans, Cherrywood Mortgage Loans or CRE Bridge Mortgage Loans, the total aggregate Disbursed Holdback Amount anticipated by AOPB, in each case, to be disbursed to the related Mortgagors in the following calendar month, as reasonably determined by such party.

 

2

 

“AOCB” means Angel Oak Commercial Bridge, LLC, a Delaware limited liability company.

 

“AOMF Seller Collection Holdback Sub-Account” means that certain segregated sub-account established by Sellers at the Collection Account Bank, exclusively for the benefit of Buyer, into which all Holdback Amounts related to any Purchased Asset that is an RTL Mortgage Loan sold by AOMF Seller to Buyer pursuant to a Transaction hereunder will be deposited upon the occurrence of a Holdback Trigger Event, and which shall be subject to the Collection Account Control Agreement.

 

“AOMI Seller Collection Holdback Sub-Account” means that certain segregated sub-account established by Sellers at the Collection Account Bank, exclusively for the benefit of Buyer, into which all Holdback Amounts related to any Purchased Asset that is an RTL Mortgage Loan sold by AOMI Seller to Buyer pursuant to a Transaction hereunder will be deposited upon the occurrence of a Holdback Trigger Event, and which shall be subject to the Collection Account Control Agreement.

 

“AOPB” means Angel Oak Prime Bridge, LLC, a Georgia limited liability company.

 

“Appraisal” shall mean, with respect to any Eligible Mortgage Loan, an appraisal of the “as is” or “as repaired” fair market value incorporating an interior inspection of the residence on such Mortgaged Property and the after repair value incorporating the Mortgagor’s scope of work of the related Mortgaged Property, given by an Appraisal Firm and obtained in conformity with Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation, in compliance with the requirements of Title 11 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989.

 

“Appraisal Firm” means the appraisal firm or other licensed real estate agent or broker acceptable to Buyer, in each case, that (i) holds a Member Appraisal Institute designation, (ii) is licensed or certified under the laws of the state where the applicable Mortgaged Property is located, (iii) has no interest, direct or indirect, in the Mortgaged Property or in any RTL Mortgage Loan made on the security thereof and (iv) their compensation is not affected by the approval or disapproval of the Mortgage Loan.

 

“Appraisal Value” shall mean, with respect to any Eligible Mortgage Loan, the value of the related Mortgaged Property as set forth in the Appraisal. The Appraisal Value for any Eligible Mortgage Loan shall be deemed to be zero following notice from Buyer to a Seller or knowledge by a Seller that the Asset Value thereof has been reduced to zero in accordance with the definition thereof.

 

“Approved Diligence Provider” shall mean AMC, Clayton or another due diligence vendor approved by Buyer in its sole discretion.

 

“Asset Detail and Exception Report” shall have the meaning set forth in the Custodial Agreement.

 

“Asset File” shall have the meaning set forth in the Custodial Agreement.

 

3

 

“Asset Schedule” shall mean with respect to any Transaction as of any date, an asset schedule in the form of a computer tape or other electronic medium (including an Excel spreadsheet) generated by the related Seller and delivered to Buyer and the Custodian, which provides information (including, without limitation, the information set forth on Exhibits G-1, G-2, G-3 or G-4 attached hereto, as applicable) relating to the Eligible Mortgage Loans in a format reasonably acceptable to Buyer.

 

“Asset Value” shall have the meaning set forth in the Pricing Side Letter.

 

“Assignment and Acceptance” shall have the meaning set forth in Section 21 hereof.

 

“Assignment and Conveyance” shall mean with respect to each Purchased Asset, the applicable Assignment and Conveyance entered into pursuant to the applicable Mortgage Loan Purchase Agreement, between the applicable Seller, as purchaser, and the applicable Originator, as seller.

 

“Assignment of Mortgage” shall mean, with respect to any Mortgage, an assignment of such Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of such Mortgage.

 

“Assignment of Rents” shall mean, with respect to any Mortgaged Property, an assignment of leases, rents and profits thereunder, notice of transfer or equivalent instrument, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment of leases, rents and profits.

 

“Authorized Representative” shall mean, for the purposes of this Agreement only, an agent or Responsible Officer of each Seller, each Servicer and Buyer listed on Schedule 2 hereto, as such Schedule 2 may be amended from time to time.

 

“Bailee Letter” shall mean a bailee letter substantially in the form prescribed by the Custodial Agreement or otherwise approved in writing by Buyer.

 

“Bank Statement Mortgage Loan” shall mean (i) a 12 Month Bank Statement Mortgage Loan and (ii) a 24 Month Bank Statement Mortgage Loan, individually or together as the context may require.

 

“Bankruptcy Code” shall mean the United States Bankruptcy Code of 1978, as amended from time to time.

 

“BOV” shall mean, with respect to any Eligible Cherrywood Mortgage Loan or any Eligible CRE Bridge Mortgage Loan, a broker’s opinion of the “as is” value, or, with respect to any Eligible CRE Bridge Mortgage Loan, a broker’s opinion of the “as repaired” value of the related Mortgaged Property given by a licensed real estate agent or broker acceptable to Buyer, obtained by or on behalf of the applicable Seller in conformity with customary and usual and business practices, which generally includes three (3) comparable sales and three (3) comparable listings.

 

4

 

“BOV Value” shall mean, with respect to any Eligible Cherrywood Mortgage Loan or any Eligible CRE Bridge Mortgage Loan, the value of the related Mortgaged Property as set forth in the BOV obtained by or on behalf of such Seller; provided, however, that if such determined value is not acceptable to Buyer, then Buyer may require such Seller to obtain (at such Seller’s cost) an additional BOV from another BOV provider selected by Buyer in its sole discretion, and Buyer may adjust such BOV Value as Buyer reasonably deems appropriate. The BOV Value for any Purchased Asset that is a Cherrywood Mortgage Loan or a CRE Bridge Mortgage Loan shall be deemed to be zero following notice from Buyer to the applicable Seller or knowledge by the applicable Seller that the Asset Value thereof has been reduced to zero in accordance with the definition thereof.

 

“BPO” shall mean, with respect to any Mortgage Loan, a broker’s price opinion of the “as is” fair market value of the related Mortgaged Property given by a licensed real estate agent, appraisal management company or broker acceptable to Buyer, obtained by or on behalf of such Seller in conformity with customary and usual and business practices, which generally includes three (3) comparable sales and three (3) comparable listings.

 

“BPO Value” shall mean, with respect to any Mortgage Loan, the “as is” or “as repaired” fair market value of the related Mortgaged Property as set forth in the BPO obtained by or on behalf of such Seller; provided, however, that if such determined value is not acceptable to Buyer, then Buyer may require such Seller to obtain (at such Seller’s cost) an additional BPO from a BPO provider selected by Buyer in its sole discretion, and Buyer may adjust such BPO Value as Buyer reasonably deems appropriate. The BPO Value for any RTL Mortgage Loan shall be deemed to be zero following notice from Buyer to a Seller or knowledge by a Seller that the Asset Value thereof has been reduced to zero in accordance with the definition thereof.

 

“BSI” means Servis One, Inc. d/b/a BSI Financial Services.

 

“Business Day” shall mean a day other than (i) a Saturday or Sunday, (ii) any day on which banking institutions are authorized or required by law, executive order or governmental decree to be closed in the States of New York or Georgia or (iii) any day on which the New York Stock Exchange is closed.

 

“Buyer” shall mean Nomura Corporate Funding Americas, LLC, its successors in interest and assigns, and with respect to Section 8, its participants.

 

“Buyer’s Account” shall mean, unless otherwise disclosed to Sellers by Buyer in writing, the following account maintained by Buyer: Account No. 6550561119, for the account of Nomura Corp Funding Americas, Bank of America, N.A., New York, ABA No. 026009593.

 

“Capital Lease Obligations” shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

 

5

 

“Capital Stock” shall mean, as to any Person, any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent equity ownership interests in a Person which is not a corporation, including, without limitation, any and all member or other equivalent interests in any limited liability company, limited partnership, trust, and any and all warrants or options to purchase any of the foregoing, in each case, designated as “securities” (as defined in Section 8-102 of the Uniform Commercial Code) in such Person, including, without limitation, all rights to participate in the operation or management of such Person and all rights to such Person’s properties, assets, interests and distributions under the related organizational documents in respect of such Person. “Capital Stock” also includes (i) all accounts receivable arising out of the related organizational documents of such Person; (ii) all general intangibles arising out of the related organizational documents of such Person; and (iii) to the extent not otherwise included, all proceeds of any and all of the foregoing (including within proceeds, whether or not otherwise included therein, any and all contractual rights under any revenue sharing or similar agreement to receive all or any portion of the revenues or profits of such Person).

 

“Cash Equivalent” means any one or more of the obligations and securities listed below which investment provides for a date of maturity not later than one day prior to the Repurchase Date:

 

(i)                                     direct obligations of, and obligations fully guaranteed as to timely payment of principal and interest by, the United States of America or any agency or instrumentality of the United States of America the obligations of which are backed by the full faith and credit of the United States of America (“Direct Obligations”); and

 

(ii)                                  certificates or receipts representing direct ownership interests in future interest or principal payments on obligations of the United States of America or its agencies or instrumentalities (which obligations are backed by the full faith and credit of the United States of America) held by a custodian in safekeeping on behalf of the holders of such receipts.

 

“Cashout Refinancing” means any origination of a Mortgage Loan which is a refinancing and which results in a payment being made to the Mortgagor from the proceeds of such Mortgage Loan refinancing.

 

“Change in Control” shall mean:

 

(i)                                     any transaction or event as a result of which Guarantor ceases to directly own one hundred percent (100%) of AOMI Seller;

 

(ii)                                  any transaction or event as a result of which Guarantor ceases to directly own one hundred percent (100%) of AOMF Seller;

 

(iii)                               the sale, transfer, or other disposition of all or substantially all of either Seller’s or Guarantor’s assets (excluding any such action taken in connection with any securitization transaction);

 

6

 

(iv)                              Angel Oak Capital Advisors, LLC ceases to be the primary active manager of any Seller or Guarantor; or

 

(v)                                 the consummation of a merger or consolidation of Guarantor with or into another entity or any other corporate reorganization (in one transaction or in a series of transactions), if more than fifty-one percent (51%) of the combined voting power of the continuing or surviving entity’s Capital Stock outstanding immediately after such merger, consolidation or such other reorganization is owned by persons who were not owners of the Guarantor immediately prior to such merger, consolidation or other reorganization.

 

“Cherrywood” means Cherrywood Mortgage, LLC, a Delaware limited liability company.

 

“Cherrywood Concentration Limit” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Cherrywood Investor Mortgage Loan” shall mean a Cherrywood Mortgage Loan that meets the CM300, CM310 or CM320 guidelines set forth in the Cherrywood Underwriting Guidelines.

 

“Cherrywood Maximum Aggregate Purchase Price” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Cherrywood Mortgage Loan” shall mean any first lien commercial mortgage loan, which (a) was originated by Cherrywood in compliance with the Cherrywood Underwriting Guidelines (other than with respect to the Exception Cherrywood Mortgage Loans) and (b) acquired by a Seller.

 

“Cherrywood Program A Mortgage Loan” shall mean a Cherrywood Mortgage Loan that meets the CM100 or CM300 guidelines set forth in the Cherrywood Underwriting Guidelines.

 

“Cherrywood Program C Mortgage Loan” shall mean a Cherrywood Mortgage Loan that meets the CM120 or CM320 guidelines set forth in the Cherrywood Underwriting Guidelines.

 

“Cherrywood Underwriting Guidelines” shall mean the underwriting guidelines set forth in Exhibit R.

 

“Clayton” shall mean Clayton Holdings LLC.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“Collection Account” means that certain segregated account, for the benefit of Buyer, as referenced in, and subject to, the Collection Account Control Agreement and as held by the Collection Account Bank, into which any Income derived from a Purchased Asset sold by a Seller to Buyer pursuant to a Transaction hereunder shall be deposited.

 

“Collection Account Bank” shall mean U.S. Bank National Association, in its capacity as bank with respect to the Collection Account Control Agreement.

 

7

 

“Collection Account Control Agreement” shall mean that certain Account Control Agreement, dated as of the date hereof, by and among Sellers, Buyer and the Collection Account Bank, in form and substance acceptable to Buyer, as the same may be amended, restated, supplemented or otherwise modified from time to time, and which shall provide for Buyer control of the Collection Account as of the date of execution.

 

“Collection Holdback Sub-Account” shall mean the AOMF Seller Collection Holdback Sub-Account and the AOMI Seller Collection Holdback Sub-Account.

 

“Collection Period” shall mean the period commencing on the first (1st) day of the month up to but not including the first (1st) day of the following month.

 

“Concentration Limit” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Confidential Information” shall have the meaning set forth in Section 32(b) hereof.

 

“Confidential Terms” shall have the meaning set forth in Section 32(a) hereof.

 

“Confirmation” shall have the meaning set forth in Section 3(c)(iii) hereof.

 

“Construction Loan Management Agreement” shall mean that certain Master Services Agreement, dated as of June 13, 2017, entered into by and between AOPB and the Construction Loan Manager, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Construction Loan Manager” shall mean, with respect to the RTL Mortgage Loans, (a) Land Gorilla, LLC or (b) such other entity retained by Sellers to manage the renovation progress of a Mortgaged Property and approved by Buyer in its good faith discretion.

 

“Cost Basis” shall mean, with respect to each Mortgage Loan, the sum of (a) (i) to the extent such Mortgage Loan was acquired by Seller within twelve (12) months of the applicable Purchase Date, the related acquisition price paid by Seller for such Mortgage Loan or (ii) otherwise, the “as is” value of such Mortgage Loan, plus (b) the documented cost of improvements with respect to the related Mortgaged Property.

 

“Costs” shall have the meaning set forth in Section 17(a) hereof.

 

“CRE Bridge Concentration Limit” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“CRE Bridge Maximum Aggregate Purchase Price” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“CRE Bridge Mortgage Loan” shall mean any first lien commercial mortgage loan, which (a) was originated by AOCB in compliance with the CRE Bridge Underwriting Guidelines and (b) acquired by a Seller.

 

8

 

“CRE Bridge Underwriting Guidelines” shall mean the underwriting guidelines set forth in Exhibit S.

 

“Custodial Agreement” shall mean that certain Custodial Agreement, dated as of the date hereof, by and among Sellers, Buyer and Custodian, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Custodian” shall mean U.S. Bank National Association and any successor thereto under the Custodial Agreement.

 

“Days Delinquent” shall refer to the number of days a Mortgage Loan is delinquent using the MBA Method of Delinquency.

 

“Deed” shall mean the deed issued in connection with a foreclosure sale of a Mortgaged Property or in connection with receiving a deed in lieu of foreclosure evidencing title to the related REO Property.

 

“Default” shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.

 

“Defaulting Party” shall have the meaning set forth in Section 31(b) hereof.

 

“Disbursed Holdback Amount” shall mean, with respect to any Purchased Asset that are RTL Mortgage, any Holdback Amount disbursed by AOPB, in each case, to the related Mortgagor in accordance with the applicable Loan Documents.

 

“Dollars” and “$” shall mean lawful money of the United States of America.

 

“DSCR” or “Debt-Service Coverage Ratio” shall mean, with respect to any Eligible CRE Bridge Mortgage Loan or Eligible Cherrywood Mortgage Loans), as of the related origination date, an amount equal to (a) the annual Net Operating Income for the related Mortgaged Property, divided by (b) the Annual Debt Service of such Purchased Asset.

 

“Due Diligence Documents” shall have the meaning set forth in Section 20 hereof.

 

“Due Diligence Review” shall mean the performance by Buyer or its designee of any or all of the reviews permitted under Section 20 hereof with respect to any or all of the Mortgage Loans proposed to be subject to a Transaction, the Purchased Assets, Sellers, Originators, Pledgors and/or Servicers or Subservicers, as desired by Buyer from time to time.

 

“Effective Date” shall mean the date upon which the conditions precedent set forth in Section 3(a) shall have been satisfied.

 

“Electronic Tracking Agreement” shall mean that certain Electronic Tracking Agreement, to be entered into by and among Sellers, Buyer, MERSCORP Holdings, Inc. and MERS, as the same may be amended from time to time.

 

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“Eligible Agency Mortgage Loan” shall mean an Agency Mortgage Loan which complies with the representations and warranties set forth on Schedule 1-A with respect thereto, as applicable.

 

“Eligible Cherrywood Mortgage Loan” shall mean a Cherrywood Mortgage Loan which complies with (a) the representations and warranties set forth on Schedule 1-C with respect thereto and (b) the Cherrywood Concentration Limits. Unless otherwise consented to by Buyer in writing in its sole and absolute discretion, each Eligible Cherrywood Mortgage Loan must:

 

(i)                                     be a commercial purpose Mortgage Loan;

 

(ii)                                  have a Mortgagor (or a Sponsor if such Mortgagor is not an individual) with a FICO Score greater than or equal to 550; provided that if the related Mortgagor has a FICO Score less than 550, but greater than or equal to 500, Buyer may, in its sole discretion, approve such Cherrywood Mortgage Loan subject to review of demonstrated offsetting credit factors;

 

(iii)                               carry the unconditional personal payment Guarantee of the largest percentage owner or most creditworthy principal of the related Mortgagor;

 

(iv)                              have been originated less than ninety (90) days prior to the related Purchase Date by Cherrywood;

 

(v)                                 have an unpaid principal balance in an amount (A) greater than or equal to Two Hundred Thousand Dollars ($200,000), but (B) less than Five Million Dollars ($5,000,000);

 

(vi)                              not be past due as of the related Purchase Date and not have been past due at any point prior to becoming subject to a Transaction hereunder after application of any applicable grace period provided for in the related Loan Documents;

 

(vii)                           have a Mortgage Note with an outstanding principal balance in an amount that is less than or equal to (A) with respect to any Cherrywood Program A Mortgage Loan, eighty percent (80%), and (B) with respect to any Mortgage Loan secured by a Mortgaged Property that is permitted hereunder and under the Cherrywood Underwriting Guidelines (other than as set forth in clause (A) above), seventy five percent (75%), in each case, of the Appraisal Value of the related Mortgaged Property;

 

(viii)                        have had a DSCR on the related origination date greater than or equal to 1.10x; and

 

(ix)                              must have had an environmental review performed upon the related Mortgaged Property in compliance with the Cherrywood Underwriting Guidelines.

 

“Eligible CRE Bridge Mortgage Loan” shall mean a CRE Bridge Mortgage Loan which complies with (a) the representations and warranties set forth on Schedule 1-C with respect thereto and (b) the CRE Bridge Concentration Limits. Unless otherwise consented to by Buyer in writing in its sole and absolute discretion, each Eligible CRE Bridge Mortgage Loan must:

 

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(i)                                  be secured by a Mortgaged Property that is a Specified Property Type or Other Property Type;

 

(ii)                               not be secured by a Mortgaged Property or Mortgaged Properties with a subordinate lien;

 

(iii)                            have an original term to maturity of greater than or equal to one (1) year, but less than or equal to three (3) years;

 

(iv)                           have an unpaid principal balance in an amount (A) greater than or equal to Five Hundred Thousand Dollars ($500,000), but (B) less than or equal to Twenty Five Million Dollars ($25,000,000);

 

(v)                              have, as of any date of determination, an LTV that is less than or equal to seventy five percent (75%);

 

(vi)                           be secured by a Mortgaged Property that is not subject to a ground-up construction, a tear-down, a partial tear-down, a gut rehabilitation, a repurposing project or other substantial construction or rehabilitation, as determined by Buyer in its sole discretion;

 

(vii)                        be and have been, at all times since origination, less than one hundred twenty (120) Days Delinquent; and

 

(viii)                     have had a DSCR on the related origination date greater than or equal to 1.00x (taking into consideration any interest reserves).

 

“Eligible Mortgage Loan” shall mean a Mortgage Loan that is (a) an Eligible Non-QM Mortgage Loan, (b) an Eligible Cherrywood Mortgage Loan, (c) an Eligible CRE Bridge Mortgage Loan, (d) an Eligible RTL Mortgage Loan or (e) an Eligible Agency Mortgage Loan, as applicable, in each case. Unless otherwise consented to by Buyer in writing in its sole and absolute discretion, each Eligible Mortgage Loan must:

 

(i)                                     have been approved by Buyer as of the related Purchase Date in its sole and absolute discretion;

 

(ii)                                  have been originated by an Originator;

 

(iii)                               must have been originated in accordance with and conforms with the applicable Underwriting Guidelines without exception, other than with respect to any Eligible Mortgage Loan that is an Exception Cherrywood Mortgage Loan;

 

(iv)                              be serviced by a Servicer or Subservicer that has entered into a Servicing Agreement or Subservicing Agreement and Servicer Notice or Subservicer Notice, in each case, in form and substance acceptable to Buyer;

 

(v)                                 have an Asset File that has been received by the Custodian (which Asset File shall include, but not be limited to, an original Mortgage Note, with a complete chain of endorsement

 

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and endorsed in blank, a complete chain of assignments of mortgage with an assignment in blank, a Mortgage with evidence of recording thereon, and a title policy) on or prior to the related Purchase Date;

 

(vi)                              be secured by a first lien on a Mortgaged Property that is located in a State in the U.S. or in the District of Columbia;

 

(vii)                           not be secured by a Mortgaged Property that is an Ineligible Property Type;

 

(viii)                        not have a Mortgagor that is subject to an Insolvency Event;

 

(ix)                              have a Mortgagor that is a U.S. Person;

 

(x)                                 not be and never have been, at any time since origination, subject to a foreclosure proceeding; and

 

(xi)                              not be an REO Property.

 

“Eligible Non-QM Mortgage Loan” shall mean a Home$ense Mortgage Loan, Portfolio Select Mortgage Loan, a Platinum Mortgage Loan, a Prime Jumbo Mortgage Loan or an Investor Mortgage Loan which (i) complies with the representations and warranties set forth on Schedule 1-A with respect thereto, as applicable, (ii) complies with the Non-QM Sub-limits, as applicable, and (iii) other than Grade Open Mortgage Loans, has been classified as a Grade A Mortgage Loan or a Grade B Mortgage Loan from an Approved Diligence Provider on or prior to the related Purchase Date (as set forth on the related Asset Schedule). No Grade Open Mortgage Loan shall be an Eligible Mortgage Loan if such Mortgage Loan has been subject to a Transaction for more than sixty (60) days and has not been reclassified as a Grade A Mortgage Loan or Grade B Mortgage Loan and no Grade C Mortgage Loan or Grade D Mortgage Loan shall be an Eligible Mortgage Loan unless otherwise approved in Buyer’s sole and absolute discretion.

 

“Eligible RTL Mortgage Loan” shall mean an RTL Mortgage Loan which complies with (a) the representations and warranties set forth on Schedule 1-B with respect thereto and (b) the RTL Concentration Limits. Unless otherwise consented to by Buyer in writing in its sole and absolute discretion, each Eligible RTL Mortgage Loan must:

 

(i)                                     be an investor purpose Mortgage Loan;

 

(ii)                                  be secured by a Mortgaged Property that has an “as is” Appraisal Value or BPO Value, as applicable, greater than or equal to Fifty Thousand Dollars ($50,000);

 

(iii)                               have an unpaid principal balance in an amount less than Two Million Dollars ($2,000,000);

 

(iv)                              be secured by a Mortgaged Property that is classified as a single family residential one-to-four family property, a planned unit development, townhouse or condo;

 

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(v)                                 be secured by a Mortgaged Property that is not subject to a ground-up construction, a tear-down, a partial tear-down, a gut rehabilitation, a repurposing project or other substantial construction or rehabilitation, as determined by Buyer in its sole discretion;

 

(vi)                              have an original term to maturity of less than or equal to one (1) year;

 

(vii)                           have, as of any date of determination, a Mortgage Note with an outstanding principal balance in an amount that is less than or equal to seventy five percent (75%) of the “after repair” Appraisal Value of the related Mortgaged Property;

 

(viii)                        to the extent such Eligible RTL Mortgage Loan has a Holdback Amount, have a Holdback Amount which is less than or equal to one hundred percent (100%) of the related “as is” Appraisal Value or BPO Value, as applicable, of the related Mortgaged Property; and

 

(ix)                              have, as of any date of determination, an LTC that is less than or equal to ninety percent (90%).

 

“Environmental Issue” shall mean any material environmental issue with respect to any Mortgaged Property, as determined by the Buyer in its good faith discretion, including without limitation, the violation of any federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guideline, written policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, employee health and safety or hazardous substances, materials or other pollutants, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq. and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state and local or foreign analogues, counterparts or equivalents, in each case as amended from time to time.

 

“EO13224” shall have the meaning set forth in Section 13(a)(xxix) hereof.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor thereto, and the regulations promulgated and rulings issued thereunder.

 

“ERISA Affiliate” shall mean any Person which, together with any Seller or Guarantor, is treated as a single employer under Section 414(b) or (c) of the Code or solely for purposes of

 

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Section 302 of ERISA and Section 412 of the Code is treated as a single employer described in Section 414 of the Code.

 

“Event of Default” shall have the meaning set forth in Section 15 hereof.

 

“Event of ERISA Termination” shall mean (i) with respect to any Plan, a Reportable Event, as to which the PBGC has not by regulation waived the reporting of the occurrence of such event, or (ii) the withdrawal of Sellers or any ERISA Affiliate thereof from a Plan during a plan year in which it is a substantial employer, as defined in Section 4001(a)(2) of ERISA, or (iii) the failure by Sellers or any ERISA Affiliate thereof to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA with respect to any Plan, including, without limitation, the failure to make on or before its due date a required installment under Section 430 (j) of the Code or Section 303(j) of ERISA, or (iv) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by Sellers or any ERISA Affiliate thereof to terminate any Plan (in each case, other than a standard termination), or (v) the failure to meet the requirements of Section 436 of the Code resulting in the loss of qualified status under Section 401(a)(29) of the Code, or (vi) the institution by the PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or (vii) the receipt by Sellers or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action of the type described in the previous clause (vi) has been taken by the PBGC with respect to such Multiemployer Plan, or (viii) any event or circumstance exists which may reasonably be expected to constitute grounds for Sellers or any ERISA Affiliate thereof to incur liability under Title IV of ERISA or under Sections 412(b) or 430 (k) of the Code with respect to any Plan.

 

“Exception Cherrywood Mortgage Loan” shall mean any Cherrywood Mortgage Loan that (a) is documented as an “Exception Mortgage Loan” under the Cherrywood Underwriting Guidelines exceptions limitations, (b) is identified as an “Exception Mortgage Loan” in the related Asset Schedule, (c) has demonstrated compensating factors, (d) was disclosed as having such exceptions to Buyer in writing prior to the related Purchase Date, and (e) is purchased by Buyer hereunder in its sole discretion.

 

“Excess Concentration Amount” shall mean as of any day an amount equal to the aggregate Purchase Price of Purchased Assets that are (i) Mortgage Loans in excess of any applicable Concentration Limit, (ii) Prime Jumbo Mortgage Loan or an Agency Mortgage Loan in excess of the Prime Jumbo and Agency Maximum Aggregate Purchase Price, (iii) RTL Mortgage Loans in excess of the RTL Maximum Aggregate Purchase Price, (iv) Cherrywood Mortgage Loans in excess of the Cherrywood Maximum Aggregate Purchase Price and (v) CRE Bridge Mortgage Loans in excess of the CRE Bridge Maximum Aggregate Purchase Price.

 

“Exit Fee” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Facility Documents” shall mean this Agreement, the Pricing Side Letter, the Custodial Agreement, Guaranty, the Electronic Tracking Agreement, each Servicing Agreement, each Servicing Notice, each Subservicing Agreement, each Subservicer Notice, each Power of Attorney, the Collection Account Control Agreement, the Holdback Account Control Agreement, each MSR Purchase Agreement, each Assignment and Conveyance, the Mortgage

 

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Loan Purchase Agreements, each Pledge Agreement and any and all other documents and agreements executed and delivered by a Seller in connection with this Agreement or any Transactions hereunder, in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time pursuant to the terms hereof.

 

“Fannie Mae” shall mean Fannie Mae, or any successor thereto.

 

“Fannie Mae Guides” shall mean the Fannie Mae Seller’s Guide, the Fannie Mae Servicing Guide and all amendments and additions thereto.

 

“Fannie Mae High Balance Mortgage Loan” shall mean a Mortgage Loan that (i) is eligible for sale to Fannie Mae in accordance with the high balance loan requirements applicable to mortgage loans with original loan amounts meeting the high-cost area loan limits established by the Federal Housing Finance Agency, as published by Fannie Mae from time to time in accordance with the Fannie Mae Guides and (ii) is otherwise approved by the Buyer in its sole discretion as of any date of determination.

 

“FDIA” shall have the meaning set forth in Section 33(c) hereof.

 

“FDICIA” shall have the meaning set forth in Section 33(d) hereof.

 

“FICO Score” means the credit score of the Mortgagor provided by Fair, Isaac & Company, Inc. or such other organization providing credit scores on the date on which the related Mortgage Loan was originated.

 

“Fidelity Insurance” shall mean insurance coverage with respect to employee errors, omissions, dishonesty, forgery, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud, with broad coverage on all officers, employees or other persons set forth in the next sentence acting in any capacity requiring such persons to handle funds, money, documents or papers relating to the Mortgage Loans. For the sake of clarity such policies must protect and insure Seller against losses (i) resulting from fraud, theft, errors, omissions, negligence, dishonest or fraudulent acts committed by a Seller’s personnel, and temporary contract employees or student interns and (ii) in connection with the release or satisfaction of a Mortgage Loan without having obtained payment in full of the indebtedness secured thereby.

 

“Financial Statements” shall mean the consolidated financial statements of the Guarantor prepared in accordance with GAAP for the year or other period then ended. Such financial statements will be audited, in the case of annual statements, by a nationally recognized independent certified public accounting firm.

 

“Foreign National” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Freddie Mac” shall mean Freddie Mac, or any successor thereto.

 

“Freddie Mac Guides” shall mean the Freddie Mac Seller/Servicer Guide, and all amendments and additions thereto.

 

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“Freddie Mac Super Conforming Mortgage Loan” shall mean a Mortgage Loan that (i) is eligible for sale to Freddie Mac in accordance with the applicable Super Conforming Mortgage Requirements as set forth in the Freddie Mac Guides and (ii) is otherwise approved by the Buyer in its sole discretion as of any date of determination.

 

“GAAP” shall mean generally accepted accounting principles in the United States of America, applied on a consistent basis and applied to both classification of items and amounts, and shall include, without limitation, the official interpretations thereof by the Financial Accounting Standards Board, its predecessors and successors.

 

“GLB Act” shall have the meaning set forth in Section 32(b) hereof.

 

“Governmental Authority” shall mean any nation or government, any state, county, municipality or other political subdivision thereof or any governmental body, agency, authority, department or commission (including, without limitation, any taxing authority) or any instrumentality or officer of any of the foregoing (including, without limitation, any court or tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation, partnership or other entity directly or indirectly owned by or controlled by the foregoing.

 

“Grade A Mortgage Loan” shall mean with respect to the applicable Underwriting Guidelines, a Mortgage Loan either purchased or originated in accordance with every applicable credit guideline with no exceptions permitted unless expressly approved by Buyer, all as determined by Approved Diligence Provider.

 

“Grade B Mortgage Loan” shall mean with respect to the applicable Underwriting Guidelines, a Mortgage Loan that does not meet every applicable credit guideline, but either most characteristics of the Mortgage Loan are within the guidelines or strong compensating factors, all as determined by Approved Diligence Provider.

 

“Grade C Mortgage Loan” shall mean with respect to the applicable Underwriting Guidelines, a Mortgage Loan that does not meet every applicable credit guideline, and either most characteristics of the Mortgage Loan are outside of the guidelines or there weak or no compensating factors, all as determined by Approved Diligence Provider.

 

“Grade D Mortgage Loan” shall mean with respect to the applicable Underwriting Guidelines, a Mortgage Loan for which the critical related documents required to perform any review are missing, all as determined by Approved Diligence Provider.

 

“Grade Open Mortgage Loan” shall mean a Home$ense Mortgage Loan, a Portfolio Select Mortgage Loan, a Platinum Mortgage Loan, a Prime Jumbo Mortgage Loan, an Investor Mortgage Loan or an Agency Mortgage Loan, which has not, as of the related Purchase Date, received a final grade (i.e., Grade A or Grade B), as determined by Approved Diligence Provider.

 

“Ground Lease” shall mean the ground lease pursuant to which any Mortgagor holds a leasehold interest in the related Mortgaged Property, together with any estoppels or other

 

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agreements executed and delivered by the ground lessor in favor of the holder of the related Mortgage Loan.

 

“Guarantee” shall mean, 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 or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.

 

“Guarantor” shall mean Angel Oak Mortgage Fund, LP and its successors in interest and assigns.

 

“Guaranty” shall mean the Guaranty, dated as of the date hereof, by Guarantor in favor of the Buyer, as may be amended from time to time.

 

“High Cost Mortgage Loan” shall mean a Mortgage Loan classified as (a) a “high cost” loan under the Home Ownership and Equity Protection Act of 1994; (b) a “high cost,” “high risk,” “high rate,” “threshold,” “covered,” or “predatory” loan under any other applicable state, federal or local law (or a similarly classified loan using different terminology under a law, regulation or ordinance imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees) or (c) having a percentage listed under the Indicative Loss Severity Column (the column that appears in the S&P Anti-Predatory Lending Law Update Table, included in the then-current S&P’s LEVELS® Glossary of Terms on Appendix E).

 

“Holdback Account” means each segregated account held by the related Holdbank Bank, which account is held by the applicable Seller and into which any Holdback Amounts (exclusive of the related Non-Segregated Holdback Amounts) with respect to the Purchased Assets shall be deposited. Buyer shall have a perfected security interest in each such account and all amounts deposited therein from time to time and the applicable Seller acknowledges that Buyer shall have no obligations of any kind to remit any additional amounts into the related Holdback Account.

 

“Holdback Account Control Agreement” shall mean, with respect to each Holdback Account, (a) that certain Holdback Deposit Account Control Agreement with respect to the Cherrywood Mortgage Loans, dated as of the date hereof, by and among Sellers, Situs, Buyer and the Cherrywood & CRE Holdback Bank, (b) that certain Holdback Deposit Account Control Agreement with respect to the CRE Bridge Mortgage Loans, dated as of the date hereof, by and among Sellers, Situs, Buyer and the Cherrywood & CRE Holdback Bank, (c) that certain Holdback Account Control Agreement, dated as of the date hereof, by and among Sellers, AOPB, BSI, Buyer and the RTL Holdback Bank, and (d) any other deposit account control agreement, among a Seller or Sellers, a Servicer or Servicers, an Originator or Originators, Buyer

 

17

 

and a bank, in each case, which shall provide for Buyer’s control of the applicable Holdback Account(s) as provided for thereunder and shall be in form and substance acceptable to Buyer, and, in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Holdback Amounts” means, with respect to any RTL Mortgage Loan, Cherrywood Mortgage Loan or CRE Bridge Mortgage Loan, the future funding amounts for the related Mortgagor to improve and rehabilitate the related Mortgaged Property in accordance with the applicable Loan Documents.

 

“Holdback Bank” shall mean (a) with respect to the Cherrywood Mortgage Loans and the CRE Bridge Mortgage Loans, Wells Fargo Bank, National Association, in its capacity as bank with respect to the applicable Holdback Account Control Agreement (in such capacity, the “Cherrywood & CRE Hldback Bank”), (b) with respect to the RTL Mortgage Loans, IBERIABANK, in its capacity as bank with respect to the applicable Holdback Account Control Agreement (in such capacity, the “RTL Holdback Bank”) and (c) any other bank approved by Buyer in its sole discretion with respect to a Holdback Account Control Agreement.

 

“Holdback Net Asset Value Threshold” shall have the meaning set forth in the Pricing Side Letter.

 

“Holdback Repurchase Trigger Amount” shall have the meaning set forth in the Pricing Side Letter.

 

“Holdback Trigger Event” shall mean, as of any date of determination, (i) Guarantor’s Net Asset Value (as such term is defined in the Guaranty) is less than the Holdback Net Asset Value Threshold or (ii) (x) the aggregate Repurchase Price of the RTL Mortgage Loans or CRE Bridge Mortgage Loans exceeds the Holdback Repurchase Trigger Amount and (y) the aggregate Holdback Amount is greater than the Holdback UPB Trigger Amount.

 

“Holdback UPB Trigger Amount” shall have the meaning set forth in the Pricing Side Letter.

 

“Homebridge” shall mean Homebridge Financial Services, Inc.

 

“Home$ense Mortgage Loan” shall mean a Mortgage Loan that meets the Home$ense Underwriting Guidelines.

 

“Home$ense Underwriting Guidelines” shall mean the underwriting guidelines set forth in Exhibit K.

 

“Income” shall mean, with respect to any Purchased Asset, without duplication, all principal and income or dividends or distributions received with respect to such Purchased Asset, including any Liquidation Proceeds, insurance proceeds, interest, dividends or other distributions payable thereon or any fees or payments of any kind received less the applicable Servicing Fee.

 

“Indebtedness” shall mean, with respect to any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt

 

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securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (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 within 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 or accepted by banks and other financial institutions for the account of such Person; (e) Capital Lease Obligations of such Person; (f) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements; (g) Indebtedness of others Guaranteed by such Person; (h) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; and (i) Indebtedness of general partnerships of which such Person is a general partner.

 

“Indemnified Party” shall have the meaning set forth in Section 17(a) hereof.

 

“Ineligible Property Type” shall mean a property used for any of the following purposes: a gas station, vacant or unimproved land, heavy industrial, stand-alone religious institution, night club/bar, adult care facility, health care related facility (excluding a medical office), funeral home, campground, educational institution (e.g., schools, etc.), auto dealership, car wash, automotive related use, adult entertainment, a marijuana dispensary or any other cannabis related use, leisure establishment / sports facility, public assistance office, drug treatment clinic, RV park, marina with lake access only, golf course, any property with Environmental Issues unless environmental insurance acceptable to Buyer in its sole discretion is in place, and business plans requiring re-entitlement or discretionary permits.

 

“Insolvency Event” shall mean, for any Person:

 

(i)                                     that such Person or any Affiliate shall discontinue or abandon operation of its business; or

 

(ii)                                  that such Person or any Affiliate shall fail generally to, or admit in writing its inability to, pay its debts as they become due; or

 

(iii)                               a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of such Person or any Affiliate in an involuntary case under any applicable bankruptcy, insolvency, liquidation, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of such Person or any Affiliate, or for any substantial part of its property, or for the winding-up or liquidation of its affairs; or

 

(iv)                              the commencement by such Person or any Affiliate of a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or such Person’s or any Affiliate’s consent to the entry of an order for relief in an

 

19

 

involuntary case under any such law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of such Person, or for any substantial part of its property, or any general assignment for the benefit of creditors; or

 

(v)                                 that such Person or any Affiliate shall become insolvent; or

 

(vi)          if such Person or any Affiliate is a corporation, such Person or any Affiliate, or any of their Subsidiaries, shall take any corporate action in furtherance of, or the action of which would result in any of the actions set forth in the preceding clauses (i), (ii), (iii), (iv) or (v).

 

“Interest-Only Mortgage Loan” means a Mortgage Loan (i) with an interest-only term of up to ten (10) years, (ii) during its interest-only term the related Mortgagor is only required to make monthly payments of interest (and not principal), (iii) after the expiration of the interest-only term, the related Mortgagor’s monthly payment is recalculated to fully amortize the loan over its remaining life and the related Mortgagor is required to make monthly payments of both principal and interest, (iv) the Mortgagor represented at the time of origination of the Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the Mortgagor’s primary residence, and (v) the FICO Score of the related Mortgagor at the time of origination complies with the standards set forth in the applicable Underwriting Guidelines.

 

“Investor Cash Flow Mortgage Loan” shall mean an Investor Mortgage Loan that meets the Investor Cash Flow Underwriting Guidelines.

 

“Investor Cash Flow Underwriting Guidelines” shall mean the underwriting guidelines set forth in Exhibit N.

 

“Investor Mortgage Loan” shall mean any Eligible Mortgage Loan (other than any RTL Mortgage Loan and any Prime Jumbo Mortgage Loan) that is originated for investment or business purposes and for which the related Mortgaged Property securing the related Mortgage is non-owner occupied. For the avoidance of doubt, each Investor Cash Flow Mortgage Loan shall be an Investor Mortgage Loan; provided that, not every Investor Mortgage Loan shall be an Investor Cash Flow Mortgage Loan.

 

“LIBOR Rate” shall mean, with respect to each Pricing Rate Period, the rate of interest (calculated on a per annum basis) equal to the one month ICE Benchmark Administration (or any successor institution or replacement institution used to administer LIBOR) as reported on the display designated as “BBAM” “Page DG8 4a” on Bloomberg (or such other display as may replace “BBAM” “Page DG8 4a” on Bloomberg) on related Pricing Rate Determination Date, and if such rate is not available at such time for any reason, then the LIBOR Rate for the relevant Pricing Rate Period shall be the rate at which one (1) month U.S. dollar deposits are offered in immediately available funds by the principal London office of a major bank in the London interbank market, selected by Buyer in its sole discretion, at approximately 11:00 a.m. London time on that day; provided that, if prior to any Remittance Date, Buyer determines in its sole discretion that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the LIBOR Rate, the LIBOR Rate is no longer in

 

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existence, or the administrator of the LIBOR Rate or a Governmental Authority having jurisdiction over Buyer has made a public statement identifying a specific date after which the LIBOR Rate shall no longer be made available or used for determining the interest rate of loans, Buyer may give prompt notice thereof to Seller, whereupon the Pricing Rate for such period, and for all subsequent periods until such notice has been withdrawn by Buyer, shall be an alternative benchmark rate (including any mathematical or other adjustments to the benchmark rate (if any) incorporated therein) (any such rate, a “Successor Rate”), together with any proposed Successor Rate conforming changes, as determined by Buyer in its sole discretion.

 

“Lien” shall mean any lien, claim, charge, restriction, pledge, security interest, mortgage, deed of trust or other encumbrance.

 

“Liquidation Proceeds” shall mean, with respect to a Purchased Asset, all cash amounts received by the related Servicer or Subservicer in connection with: (i) the liquidation of the related Mortgaged Property or other collateral constituting security for such Purchased Asset through trustee’s sale, foreclosure sale, disposition or otherwise, exclusive of any portion thereof required to be released to the related Mortgagor, or (ii) the realization upon any deficiency judgment obtained against a Mortgagor.

 

“Loan Documents” shall mean, with respect to a Mortgage Loan, the related Mortgage Note and each other “Loan Document” (or other similar term) as such term is defined in such

 

Mortgage Note, all of which shall be included in the related Asset File to be delivered to Custodian pursuant to the terms of the Custodial Agreement.

 

“LTC” shall mean the ratio of (a) the original principal balance of a Mortgage Loan to (b) the Cost Basis of such Mortgage Loan.

 

“LTV” shall mean the ratio of (a) the original principal balance of a Mortgage Loan to (b) the “as is” Appraised Value of such Mortgage Loan.

 

“Margin Call” shall have the meaning assigned thereto in Section 7(b) hereof.

 

“Margin Deficit” shall have the meaning assigned thereto in Section 7(b) hereof.

 

“Margin Excess” shall have the meaning assigned thereto in Section 7(c) hereof.

 

“Market Value” shall mean, as of any date of determination, for each Mortgage Loan, the market value of such Mortgage Loan as determined by the Buyer in its absolute and sole discretion exercised in good faith; provided, that, the Market Value of any Mortgage Loan shall be capped at its par value.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the Property, business, operations, financial condition of Sellers, Guarantor or Servicers, (b) the ability of Sellers, Guarantor or Servicers to perform its obligations under any of the Facility Documents to which it is a party, (c) the validity or enforceability of any of the Facility Documents, (d) the rights and remedies of Buyer or any Affiliate under any of the Facility Documents, or (e) the timely payment by Sellers or Guarantor of any amounts payable under the Facility Documents; in each case as determined by Buyer in good faith.

 

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“Maximum Aggregate Purchase Price” shall have the meaning set forth in the Pricing Side Letter.

 

“MBA Method of Delinquency” shall mean, with respect to Mortgage Loans, the methodology used by the Mortgage Bankers Association for assessing delinquency. For the avoidance of doubt, under the MBA Method of Delinquency, a Mortgage Loan is considered “30 days delinquent” if the Mortgagor fails to make a monthly payment prior to the close of business on the day that immediately precedes the due date on which the next monthly payment is due. For example, a Mortgage Loan will be considered thirty (30) days delinquent if the Mortgagor fails to make a monthly payment originally due on September 1 by the close of business on September 30.

 

“MERS” shall mean Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

 

“MERS  Mortgage  Loan”  shall  mean  any  Mortgage  Loan  as  to  which  the  related Mortgage or assignment of mortgage has been recorded in the name of MERS, as agent for the holder from time to time of the Mortgage Note, and which is identified as a MERS Mortgage Loan on the related Asset Schedule.

 

“Minimum  Diversity Increase Amount” shall  have the meaning set forth in  Section 7(g)(ii) hereof.

 

“Minimum Diversity Reduction Amount” shall have the meaning set forth in Section 7(g)(i) hereof.

 

“Minimum Diversity Requirement” shall have the meaning set forth in the Pricing Side Letter.

 

“Minimum Release Amount” shall mean, with respect to a Purchased Asset, an amount equal to the sum of (x) such Mortgage Loan’s Repurchase Price of such Purchased Asset, and (y) any related Exit Fee.

 

“Monthly Payment” shall mean the scheduled monthly payment of principal and interest on a Mortgage Loan as adjusted in accordance with changes in the Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an Adjustable Rate Mortgage Loan.

 

“Mortgage” shall mean each mortgage, or deed of trust, security agreement and fixture filing, deed to secure debt, or similar instrument creating and evidencing a first Lien on real property and other property and rights incidental thereto.

 

“Mortgage Identification Number” shall mean the eighteen digit number permanently assigned by MERS to each Purchased Mortgage Loan which is a MERS Mortgage Loan.

 

“Mortgage Interest Rate” shall mean with respect to each Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note.

 

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“Mortgage Loan” shall mean any first lien, one-to-four-family residential loan, RTL Mortgage Loan or commercial real estate loan evidenced by and including a Mortgage Note and a Mortgage, which in no event shall include any mortgage loan which (a) is subject to Section 226.32 of Regulation Z or any similar state or local law (relating to high interest rate credit/lending transactions), (b) includes any single premium credit life or accident and health insurance or disability insurance or (c) is a High Cost Mortgage Loan.

 

“Mortgage Loan Purchase Agreement” shall mean each mortgage loan purchase agreement pursuant to which a Seller purchased an Eligible Mortgage Loan from an Originator, as set forth on Schedule 3 attached hereto, in each case, to the extent consented to by Buyer pursuant to Section 18(h) hereof, as the same may be amended, restated, supplemented or otherwise modified from time to time and as such Schedule 3 may be amended from time to time upon delivery by Buyer of such amended schedule to Sellers and confirmation thereof by Sellers (which delivery and confirmation may be via e-mail).

 

“Mortgage Note” shall mean the promissory note or other evidence of the indebtedness of a Mortgagor secured by a Mortgage.

 

“Mortgaged Property” shall mean the real property securing repayment of the debt evidenced by a Mortgage Note.

 

“Mortgagor” shall mean the obligor or obligors on a Mortgage Note, including any Person who has assumed or guaranteed the obligations of the obligor thereunder.

 

“MSR Purchase Agreements” shall mean (i) the MSR Purchase Agreement, dated as of the date hereof, between the Buyer, Sellers and AOPB, pursuant to which the Buyer and Sellers, as applicable, have an option to purchase AOPB’s Servicing Rights, as the same may be amended, supplemented or restated from time to time, (ii) the MSR Purchase Agreement, dated as of the date hereof, between the Buyer, AOMF Seller and Homebridge, pursuant to which the Buyer and AOMF Seller, as applicable, have an option to purchase Homebridge’s Servicing Rights, as the same may be amended, supplemented or restated from time to time, and (iii) any other MSR Purchase Agreement entered into by an Originator approved by Buyer pursuant to which the Buyer and Sellers, as applicable, have an option to purchase such Originator’s Servicing Rights, as the same may be amended, supplemented or restated from time to time.

 

“Multiemployer Plan” shall mean, with respect to any Person, a “multiemployer plan” as defined in Section 3(37) of ERISA which is or was at any time during the current year or the immediately preceding five years contributed to (or required to be contributed to) by such Person or any ERISA Affiliate thereof on behalf of its employees and which is covered by Title IV of ERISA.

 

“Net Operating Income” or “NOI” shall mean net operating income for a Mortgaged Property for the specified period, and generally consists of revenue derived from the use and operation of the Mortgaged Property, consisting primarily of rental income, less the sum of (a) operating expenses (such as utilities, administrative expenses, management fees and advertising) and (b) fixed expenses, such as insurance, real estate taxes and, if applicable, ground lease payments, which Net Operating Income may be adjusted by Buyer, in its sole discretion. For the

 

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sake of clarity, Net Operating Income generally does not reflect (i.e. it does not deduct for) capital expenditures, including tenant improvement costs and leasing commissions, interest expenses and non-cash items such as depreciation and amortization.

 

“Nondefaulting Party” shall have the meaning set forth in Section 31(b) hereof.

 

“Non-Excluded Taxes” shall have the meaning set forth in Section 8(a) hereof.

 

“Non-QM Mortgage Loan” shall mean any Eligible Mortgage Loan, other than an RTL Mortgage Loan, a Cherrywood Mortgage Loan, a CRE Bridge Mortgage Loan or an Agency Mortgage Loan.

 

“Non-QM Sub-limits” shall mean each Non-QM Mortgage Loan concentration limit set forth on Schedule 2 attached to the Pricing Side Letter.

 

“Non-Segregated Holdback Amount” shall mean, with respect to any Purchased Asset that is an RTL Mortgage Loan or a CRE Mortgage Loan, that has a Holdback Amount, the portion of such Holdback Amount that has not been deposited into the applicable Holdback Account or the Collection Holdback Sub-Account.

 

“Obligations” shall mean (a) any amounts owed by Sellers to Buyer in connection with any or all Transactions hereunder, together with interest thereon (including interest which would be payable as post-petition interest in connection with any bankruptcy or similar proceeding) and all other fees or expenses which are payable to Buyer hereunder or under any of the Facility Documents; and (b) all other obligations or amounts owed by Sellers to Buyer or an Affiliate of Buyer under any other related contract or agreement, in each case, whether such amounts or obligations owed are direct or indirect, absolute or contingent, matured or unmatured.

 

“OFAC” shall have the meaning set forth in Section 13(a)(xxix) hereof.

 

“Optional Repurchase” shall have the meaning set forth in Section 3(d) hereof.

 

“Originator” shall mean Angel Oak Home Loans LLC, Angel Oak Mortgage Solutions LLC, AOPB, Cherrywood, AOCB, Homebridge and any other originator approved by the Buyer in its sole discretion exercised in good faith, as applicable, and each of their respective successors in interest.

 

“Other Property Type” shall mean any property other than a Specified Property Type and an Ineligible Property Type.

 

“Other Taxes” shall have the meaning set forth in Section 8(b) hereof.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

 

“Person” shall mean any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or

 

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government (or any agency, instrumentality or political subdivision thereof) including, but not limited to, Sellers.

 

“Plan” shall mean, with respect to Sellers, any employee benefit or similar plan that is or was at any time during the current year or immediately preceding five years established, maintained or contributed to by Sellers or any ERISA Affiliate thereof and that is covered by Title IV of ERISA, other than a Multiemployer Plan.

 

“Platinum Mortgage Loan” shall mean a Mortgage Loan that meets the Platinum Underwriting Guidelines.

 

“Platinum Underwriting Guidelines” shall mean the underwriting guidelines set forth in Exhibit P.

 

“Pledge Agreement” shall mean (i) the pledge agreement, dated as of the date hereof, between Angel Oak Home Loans LLC, as pledgor, and the Buyer, as buyer, pursuant to which Angel Oak Home Loans LLC pledges all of its right, title and interest in and to the pledged collateral and any proceeds thereof to Buyer, as the same may be amended, supplemented or otherwise modified from time to time, (ii) the pledge agreement, dated as of the date hereof, between Angel Oak Mortgage Solutions LLC, as pledgor, and the Buyer, as buyer, pursuant to which Angel Oak Mortgage Solutions LLC pledges all of its right, title and interest in and to the pledged collateral and any proceeds thereof to Buyer, as the same may be amended, supplemented or otherwise modified from time to time, (iii) the pledge agreement, dated as of the date hereof, between Angel Oak Prime Bridge, LLC, as pledgor, and the Buyer, as buyer, pursuant to which Angel Oak Prime Bridge, LLC pledges all of its right, title and interest in and to the pledged collateral and any proceeds thereof to Buyer, as the same may be amended, supplemented or otherwise modified from time to time, (vi) the pledge agreement, dated as of the date hereof, between Cherrywood, as pledgor, and the Buyer, as buyer, pursuant to which Cherrywood pledges all of its right, title and interest in and to the pledged collateral and any proceeds thereof to Buyer, as the same may be amended, supplemented or otherwise modified from time to time, (v) the pledge agreement, dated as of the date hereof, between AOCB, as pledgor, and the Buyer, as buyer, pursuant to which AOCB pledges all of its right, title and interest in and to the pledged collateral and any proceeds thereof to Buyer, as the same may be amended, supplemented or otherwise modified from time to time and (vi) any pledge agreement, between any other originator approved by the Buyer in its sole discretion exercised in good faith, as pledgor, and the Buyer, as buyer, pursuant to which such Originator pledges all of its right, title and interest in and to the pledged collateral and any proceeds thereof to Buyer, as the same may be amended, supplemented or otherwise modified from time to time.

 

“Pledgor” shall mean Angel Oak Home Loans LLC, Angel Oak Mortgage Solutions LLC, AOPB, Cherrywood, AOCB and any other originator approved by the Buyer in its sole discretion exercised in good faith, as applicable, and each of their respective successors in interest.

 

“Portfolio Select Mortgage Loan” shall mean a Mortgage Loan that meets Portfolio  Select Underwriting Guidelines.

 

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“Portfolio Select Underwriting Guidelines” shall mean the underwriting guidelines set forth in Exhibit L.

 

“Post-Default Rate” shall have the meaning set forth in the Pricing Side Letter.

 

“Power of Attorney” shall mean the power of attorney in the form of Exhibit J delivered by each Seller.

 

“Price Differential” shall mean, with respect to any Purchased Asset as of any date, the aggregate amount obtained by daily application of the applicable Pricing Rate (or, during the continuation of an Event of Default, by daily application of the Post-Default Rate) for the related Transaction to the Repurchase Price for such Purchased Asset on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Purchased Asset and ending on (but excluding) the later of (i) the Repurchase Date of such Purchased Asset and (ii) the date on which the Repurchase Price for such Purchased Asset is remitted to the Buyer’s Account, in each case reduced by any amount of such Price Differential previously paid by a Seller to Buyer with respect to such Purchased Asset.

 

“Pricing Rate” shall have the meaning set forth in the Pricing Side Letter.

 

“Pricing Rate Determination Date” shall mean with respect to any Pricing Rate Period with respect to any Transaction, the second (2nd) Business Day preceding the first day of such Pricing Rate Period.

 

“Pricing Rate Period” shall mean, (i) in the case of the first Pricing Rate Period with respect to any Transaction, the period commencing on and including the Purchase Date for such Transaction and ending on and excluding the following Remittance Date, and (ii) in the case of any subsequent Pricing Rate Period, the period commencing on and including each Remittance Date and ending on and excluding the following Remittance Date; provided, however, that in no event shall any Pricing Rate Period end subsequent to the Repurchase Date.

 

“Pricing Side Letter” shall mean that certain letter agreement among the Buyer and the Sellers, as acknowledged by Guarantor, dated as of the date hereof, as the same may be amended from time to time.

 

“Prime Jumbo and Agency Maximum Aggregate Purchase Price” shall have the meaning set forth in the Pricing Side Letter.

 

“Prime Jumbo Mortgage Loan” shall mean a Mortgage Loan that (i) meets the Prime Jumbo Underwriting Guidelines, and (ii) is otherwise approved by the Buyer in its sole discretion as of any date of determination.

 

“Prime Jumbo Underwriting Guidelines” shall mean the underwriting guidelines set forth in Exhibit Q.

 

“Prior Credit Event” shall mean, with respect to any Mortgagor, such Mortgagor is or has previously been subject to a bankruptcy proceeding (including with respect to any bankruptcy proceeding that has been filed, dismissed and/or discharged) or any property previously owned

 

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by such Mortgagor was the subject of any of the following: deed-in-lieu, short sale or foreclosure.

 

“Prohibited Person” shall have the meaning set forth in Section 13(a)(xxix) hereof.

 

“Property” shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.

 

“Purchased Asset” shall mean the collective reference to the Mortgage Loans transferred by Sellers to Buyer in a Transaction hereunder and listed on the Asset Schedule attached to the related Confirmation, which Asset Files the Custodian has been instructed to hold pursuant to the Custodial Agreement. The term “Purchased Assets” with respect to any Transaction at any time also shall include Additional Assets delivered pursuant to Section 7(b) hereof.

 

“Purchased Asset Issue” shall mean, with respect to any Purchased Asset and as determined in Buyer’s good faith discretion, (a) the related Mortgage Note, Mortgage or related guarantee, if any, are determined to be unenforceable by Buyer in its good faith discretion; (b) there has occurred and is continuing a Representation Issue; (c) the underlying Mortgaged Property is found to have an Environmental Issue that is not covered by insurance or an escrowed reserve; (d) federal, state or local law enforcement agencies have seized the underlying Mortgaged Property; (e) such Purchased Asset is not an Eligible Mortgage Loan; (f) a BOV, a BPO or an Appraisal, as applicable, is not obtained by the applicable Seller in accordance with the terms of this Agreement; (g) such Purchased Asset is not eligible for whole loan sale or securitization in a transaction consistent with the prevailing sale and securitization history; or (h) the related Asset File has been released from the possession of the Custodian under the Custodial Agreement, other than pursuant to the terms of such Custodial Agreement (including, but not limited to, any such release for a period of time in excess of the applicable time period permitted under such Custodial Agreement).

 

“Purchase Date” shall mean the date on which Purchased Assets are transferred by a Seller to Buyer or its designee.

 

“Purchase Price” shall mean with respect to a Purchased Asset, the amount advanced by the Buyer to the related Seller on the Purchase Date for such Purchased Asset which shall be an amount equal to the Asset Value of such Purchased Asset as of the related Purchased Date.

 

“Purchase Price Percentage” shall have the meaning set forth in the Pricing Side Letter.

 

“Purchase Price Value” shall mean, with respect to each Purchased Asset that is a CRE Bridge Mortgage Loan, an amount equal to the lower of (a) the applicable Appraisal and (b) the applicable Originator’s underwritten value; provided, however, that if such Purchased Asset was originated in connection with the purchase of the related Mortgaged Property, the Purchase Price Value shall not exceed the purchase price paid by the related Mortgagor in the acquisition of such Mortgaged Property.

 

“Qualified Insurer” means an insurance company duly authorized and licensed where required by law to transact the related insurance business.

 

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“Qualified Mortgage Loan” shall mean a Home$ense Mortgage Loan, a Portfolio Select Mortgage Loan, a Platinum Mortgage Loan, a Prime Jumbo Mortgage Loan or an Agency Mortgage Loan that satisfies the criteria for a “qualified mortgage” as set forth in 12 CFR 1026.43(e).

 

“Records” shall mean all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by Seller or any other Person or entity with respect to a Mortgage Loan. Records shall include the Mortgage Notes, any Mortgages, the Asset Files, the credit files related to the Mortgage Loan and any other instruments necessary to document or service a Mortgage Loan. For REO Properties, Records shall include the Asset Files and any other instruments necessary to document or manage an REO Property.

 

“Register” shall have the meaning set forth in Section 22(b) hereof.

 

“Regulations T, U and X” shall mean Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

 

“Released Holdback Amount” shall have the meaning set forth in Section 3(f)(iii) hereof.

 

“Remittance Date” shall mean with respect to each Collection Period (i) the twentieth (20th) calendar day of the first month following such Collection Period, or the next succeeding Business Day, if such calendar day shall not be a Business Day and (ii) the Repurchase Date.

 

“REO Property” shall mean real property acquired through foreclosure of a Mortgage Loan or by deed in lieu of such foreclosure, the fee title of which is held by a Seller.

 

“Reportable Event” shall mean any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under PBGC Reg. § 4043.

 

“Representation Issue” shall mean , with respect to each Purchased Asset, the Buyer’s determination, in its good faith judgment, that there is a breach of a representation and warranty with respect to a Purchased Asset (including a breach of any representation set forth on Schedule 1-A, 1-B or 1-C hereof), which materially and adversely affects, as determined by the Buyer in its sole discretion, the value of such Purchased Asset or Buyer’s interest therein.

 

“Repurchase Assets” shall have the meaning provided in Section 9(a)(i) hereof.

 

“Repurchase Date” shall mean, with respect to each Purchased Asset, the earliest to occur of (a) the Termination Date, (b) the date of an Optional Repurchase pursuant to Section 3(e) hereof, (c) the date of a mandatory repurchase pursuant to Section 4 hereof, (d) the Accelerated Repurchase Date, (e) the date on which such Purchased Asset has been paid in full, (f) the maturity date of such Purchased Asset (unless such Purchased Asset is in default), (g) the date on which the applicable Seller is to repurchase such Purchased Asset from Buyer as specified in the related Confirmation, if applicable, and (h) to the extent such Purchased Asset is an Eligible Cherrywood Mortgage Loan or an Eligible CRE Bridge Mortgage Loan, the date on which such

 

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Purchased Asset becomes either (i) more than (A) with respect to any such Purchased Asset that is an Eligible Cherrywood Mortgage Loan, ninety (90) Days Delinquent and (B) with respect to any such Purchased Asset that is an Eligible CRE Bridge Mortgage Loan, one hundred twenty (120) Days Delinquent, or (ii) subject to a foreclosure proceeding.

 

“Repurchase Notice” shall have the meaning provided in Section 4(a) hereof.

 

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any date of determination, an amount equal to the applicable Purchase Price minus (A) the sum of (i) any Income which has been remitted to the Buyer’s Account and applied to the Repurchase Price of such Purchased Asset (and allocated to the related Mortgage Loan) by Buyer pursuant to this Agreement and (ii) any payments made by a Seller in reduction of the outstanding Repurchase Price in each case before or as of such determination date with respect to such Purchased Asset (and allocated to the related Mortgage Loan), plus (B) (i) any accrued and unpaid Price Differential and (ii) any increased costs, indemnification amounts, taxes and breakage fees allocable the repurchase of such Purchased Asset.

 

“Requirement of Law” shall mean as to any Person, any law, treaty, rule, regulation, procedure or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Responsible Officer” shall mean, (a) as to any Person, the chief executive officer or, with respect to financial matters, the chief financial officer of such Person and (b) as to any Seller and Guarantor, any manager or director or managing member.

 

“RTL Concentration Limit” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“RTL Income” means all Income derived from a Purchased Asset that is a RTL Mortgage Loan.

 

“RTL Maximum Aggregate Purchase Price” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“RTL Mortgage Loan” shall mean any first lien, fixed-rate or floating-rate mortgage loan, made solely for investment and business purposes, which is evidenced by a Mortgage Note, and each advance under which is secured by a Mortgage on a non-owner occupied one-to-four family residential property, condominium, townhouse or mixed use property and meets the RTL Underwriting Guidelines.

 

“RTL Sub-limits” shall mean each RTL Mortgage Loan concentration limit set forth on Schedule 1 attached to the Pricing Side Letter.

 

“RTL Underwriting Guidelines” shall mean the underwriting guidelines set forth in Exhibit O hereto.

 

“S&P” shall mean Standard & Poor’s Ratings Services, or any successor thereto.

 

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“SEC” shall have the meaning set forth in Section 34(a) hereof.

 

“Section 404 Notice” shall mean the notice required pursuant to Section 404 of the Helping Families Save Their Homes Act of 2009 (P.L. 111-22), which amends 15 U.S.C. Section 1641 et seq., to be delivered by a creditor that is an owner or an assignee of a Mortgage Loan to the related Mortgagor within thirty (30) days after the date on which such Mortgage Loan is sold or assigned to such creditor.

 

“Section 4402” shall have the meaning set forth in Section 31 hereof.

 

“Section 8 Certificate” shall have the meaning set forth in Section 8(e)(ii) hereof.

 

“Seller” shall mean each of Angel Oak Mortgage, Inc., a Maryland corporation and Angel Oak Mortgage Fund TRS, a Delaware statutory trust.

 

“Servicer” shall mean (i) with respect to the Non-QM Mortgage Loans and the Prime Jumbo Mortgage Loans, SPS, or any successor thereto, (ii) with respect to the RTL Mortgage Loans, AOPB, or any successor thereto, (iii) with respect to the Cherrywood Mortgage Loans and CRE Bridge Mortgage Loans, Situs, (iv) with respect to Agency Mortgage Loans, Homebridge and (v) any other servicer approved by the Buyer in its sole discretion exercised in good faith.

 

“Servicer Custodial Account” means, with respect to any Servicer, as applicable, each segregated account established for the benefit of Buyer, as referenced in, and subject to, the related Servicer Custodial Account Control Agreement, in each case, into which any Income derived from a Purchased Asset sold by a Seller to Buyer pursuant to a Transaction hereunder and serviced by such Servicer shall be deposited.

 

“Servicer Custodial Account Bank” shall mean (a) with respect to the Cherrywood Mortgage Loans and the CRE Bridge Mortgage Loans, Wells Fargo Bank, National Association, in its capacity as bank with respect to the applicable Servicer Custodial Account Control Agreement (in such capacity, the “Cherrywood & CRE Servicer Custodial Account Bank”), (b) with respect to the RTL Mortgage Loans, Ameris Bank, in its capacity as bank with respect to the applicable Servicer Custodial Account Control Agreement (in such capacity, the “RTL Servicer Custodial Account Bank”) and (c) any other bank approved by Buyer in its sole discretion with respect to a Servicer Custodial Account Control Agreement.

 

“Servicer Custodial Account Control Agreement” means (a) with respect to Situs, (i) that certain Servicer Deposit Account Control Agreement with respect to the Cherrywood Mortgage Loans, dated as of the date hereof, by and among Sellers, Situs, Buyer and the Cherrywood & CRE Servicer Custodial Account Bank and (ii) that certain Servicer Deposit Account Control Agreement with respect to the CRE Bridge Mortgage Loans, dated as of the date hereof, by and among Sellers, Situs, Buyer and the Cherrywood & CRE Servicer Custodial Account Bank, (b) with respect to BSI, that certain Deposit Account Control Agreement, dated as of the date hereof, by and among Sellers, BSI, Buyer and the RTL Servicer Custodial Account Bank, and (c) with respect to any other Servicer, any account control agreement, in form and substance acceptable to Buyer, by and among Buyer, Sellers, such Servicer and a depository institution where the related Servicer Custodial Account is held, in each case, which shall provide for Buyer’s control

 

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of the applicable Servicer Custodial Account(s) as provided for thereunder and shall be in form and substance acceptable to Buyer, and, in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Servicer Notice” shall mean the notice acknowledged by a Servicer substantially in the form of Exhibit I hereto.

 

“Servicer Termination Event” means, with respect to each Servicer or Subservicer, as applicable, (a) a Default or an Event of Default hereunder, (b) the occurrence of a material breach, a default, an event of default or similar occurrence under the applicable Servicing Agreement or Subservicing Agreement, (c) such Servicer or Subservicer shall become the subject of a bankruptcy proceeding or shall become insolvent, (d) such Servicer or Subservicer shall admit in writing its inability to, or its intention not to, perform any of its obligations under the Facility Documents to which it is a party, (e) the failure of any Seller to enforce such Servicer’s or Subservicer’s obligations under the related Servicing Agreement or Subservicing Agreement, or (f) the failure of such Servicer or Subservicer to perform its obligations under any of the Facility Documents to which it is a party or the related Servicing Agreement or Subservicing Agreement, including, without limitation, the failure of such Servicer or Subservicer to (i) deposit funds in accordance with Section 5(b) hereof, or (ii) deliver reports when required.

 

“Servicing Agreement” shall mean (a) with respect to the Non-QM Mortgage Loans and the Prime Jumbo Mortgage Loans, that certain Servicing Agreement by and among AOMF Seller, Angel Oak Home Loans LLC and SPS, dated as of September 21, 2018, (b) with respect to the Cherrywood Mortgage Loans and the CRE Bridge Mortgage Loans, that certain Servicing Agreement, dated as of February 19, 2018, by and between AOPB and Situs, as modified by that certain Angel Oak Capital Advisors Form of Additional Loans Addendum, dated as of August 1, 2018, by and between Angel Oak Capital Advisors and Situs, and as further modified by that certain Joinder Agreement for Loan Servicing, dated as of November 29, 2018, by and among AOMI Seller, AOPB and Situs, (c) with respect to the Agency Mortgage Loans, that certain Mortgage Loan Purchase and Servicing Agreement, dated as of October 15, 2018, by and between AOMF Seller and Homebridge, and (d) any other servicing agreement between a Seller or Sellers, on the one hand, and a Servicer, on the other hand, approved by Buyer in its sole discretion, in each case, to the extent consented to by Buyer pursuant to Section 18(g) hereof, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Servicing Fee” shall mean, with respect to any Remittance Date and Purchased Asset, an amount equal to the product of one-twelfth of, for any Home$ense Mortgage Loan, 0.500%, for any Portfolio Select Mortgage Loan, 0.375%, for any Platinum Mortgage Loan, 0.375%, for any Prime Jumbo Mortgage Loan, 0.250%, for any Investor Mortgage Loan, 0.500%, for any RTL Mortgage Loan, 1.000%, for any Cherrywood Mortgage Loan, 0.250%, for any CRE Bridge Mortgage Loan, 0.250%, for any Agency Mortgage Loan, 0.250%, and the unpaid principal balance of the related Purchased Asset as of the last day of the related Collection Period.

 

“Servicing Retained Mortgage Loans” shall mean the RTL Mortgage Loans originated by AOPB and transferred by a Seller to the Buyer in a Transaction hereunder on a servicing retained

 

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basis and the Agency Mortgage Loans originated by Homebridge and transferred by a Seller to the Buyer in a Transaction hereunder on a servicing retained basis.

 

“Servicing Released  Mortgage  Loans”  shall  mean  all  Purchased  Assets  that  are  not Servicing Retained Mortgage Loans, and that are transferred by a Seller to the Buyer in a Transaction hereunder on a servicing released basis.

 

“Servicing Rights” shall mean rights of any Person to administer, manage, service or subservice, the Purchased Assets or to possess related Records.

 

“Single-Employer Plan” shall mean a single-employer plan as defined in Section 4001(a)(15) of ERISA which is subject to the provisions of Title IV of ERISA.

 

“SIPA” shall have the meaning set forth in Section 34(a) hereof.

 

“Situs” means Situs Asset Management LLC.

 

“Special Purpose Entity” shall mean a Person, other than an individual, which is formed or organized solely for the purpose of holding, directly or indirectly, an ownership interest in one or more Mortgage Loans, does not engage in any business unrelated to the Mortgage Loans, does not have any assets other than as otherwise expressly permitted by this Agreement or the other Facility Documents, has its own separate books and records and will not commingle its funds in each case which are separate and apart from the books and records of any other Person, and is subject to all of the limitations on the powers set forth in the organizational documentation of such Person as in effect on the date hereof, and holds itself out as a Person separate and apart from any other Person and otherwise complies with all of the covenants set forth in Section 14(v) hereof.

 

“Specified Property Type” shall mean a property used for any of the following purposes: a multifamily, office, storage, mixed use, retail or an industrial property; provided, that, with respect to mixed use properties, each purpose must be one of the purposes as set forth in this definition for such property to be considered a “Specified Property Type”; provided, further, that, for the avoidance of doubt, in no event shall any such purpose be one of the purposes as set forth in the definition of “Ineligible Property Type”.

 

“Sponsor” shall mean, with respect to any Mortgage Loan, any Person with more than a twenty percent (20%) ownership interest in the related Mortgagor, or the related monied Person, including any direct co-obligor on the related Mortgage Note, guarantor of such Mortgagor or any Person other than such Mortgagor providing a financial backstop.

 

“SPS” means Select Portfolio Servicing, Inc.

 

“Subservicer” shall mean (i) with respect to the RTL Mortgage Loans, BSI, and (ii) any other subservicer approved by Buyer in its sole discretion exercised in good faith to service Purchased Assets.

 

“Subservicer Notice” shall mean the notice acknowledged by a Subservicer substantially in the form of Exhibit I hereto.

 

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“Subservicing Agreement” shall mean (i) with respect to the RTL Mortgage Loans, the subservicing agreement by and between AOPB and BSI, dated as of July 26, 2017, and (ii) any other subservicing agreement between any Servicer and a Subservicer approved by the Buyer in its reasonable discretion.

 

“Subsidiary” shall mean, 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.

 

“Take-out  Commitment”  shall  mean  a  commitment  of  a  Seller  to sell  one  or  more Mortgage Loans to a Take-out Investor in an arms-length transaction, and the corresponding Take-out Investor’s commitment back to such Seller to effectuate the foregoing.

 

“Take-out Investor” shall mean any Person (other than an Affiliate of either Seller) that has entered into a Take-out Commitment; provided that to the extent Purchased Assets are sent pursuant to a Bailee Letter with a third party bailee that is not a nationally known bank to a Take-out Investor prior to purchase, such Take-out Investor must be approved by Buyer in its reasonable discretion.

 

“Taxes” shall have the meaning set forth in Section 8(a) hereof.

 

“Termination Date” shall have the meaning set forth in the Pricing Side Letter.

 

“Transaction” shall have the meaning set forth in Section 1 hereof.

 

“Transaction Notice” shall mean a written request, from either Seller to Buyer, to enter into a Transaction (which may be via e-mail) together with (a) a draft Confirmation and (b) an Asset Schedule.

 

“Trust Receipt” shall have the meaning set forth in the Custodial Agreement.

 

“Underwriting Guidelines” shall mean (i) with respect to Home$ense Mortgage Loans, the Home$ense Underwriting Guidelines, (ii) with respect to Portfolio Select Mortgage Loans, the Portfolio Select Underwriting Guidelines, (iii) with respect to Platinum Mortgage Loans, the Platinum Underwriting Guidelines, (iv) with respect to Prime Jumbo Mortgage Loans, the Prime Jumbo Underwriting Guidelines, (v) with respect to Investor Cash Flow Mortgage Loans, the Investor Cash Flow Underwriting Guidelines, (vi) with respect to RTL Mortgage Loans, the RTL Underwriting Guidelines, (vii) with respect to Fannie Mae High Balance Mortgage Loans, the Fannie Mae Guides, (viii) with respect to Freddie Mac Super Conforming Mortgage Loans, the Freddie Mac Guides, (ix) with respect to the Cherrywood Mortgage Loans, the Cherrywood Underwriting Guidelines and (x) with respect to the CRE Bridge Mortgage Loans, the CRE Bridge Underwriting Guidelines, individually or together as the context may require.

 

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“Underwriting Package” shall mean with respect to any Eligible Mortgage Loan, the Asset Schedule listing such Eligible Mortgage Loan and such other information that is in the possession or control of the Sellers, the Guarantor, the Servicers or any Subservicer requested by the Buyer during the course of its due diligence and delivered prior to the date of a Transaction for any Purchased Asset containing, with respect to the related Eligible Mortgage Loan, information in form and substance acceptable to the Buyer in its reasonable discretion, together with a certification that such Seller has no actual knowledge of any material information concerning such Eligible Mortgage Loan which is not reflected in such file or otherwise disclosed to Buyer in writing.

 

“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the security interest in any Repurchase Assets or the continuation, renewal or enforcement thereof is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection.

 

Section 3. Facility; Conditions Precedent; Initiation; Repurchase; Holdback Trigger Event; LIBOR Breakage Costs. Subject to the terms and conditions of the Facility Documents, on each Purchase Date, as applicable, Buyer may, in its sole and absolute discretion, purchase Eligible Mortgage Loans from the related Seller. This Agreement is not a commitment by Buyer to enter into Transactions with any Seller, but rather, sets forth the procedures to be used in connection with periodic requests for Buyer to enter into such Transactions with a Seller. Each Seller hereby acknowledges that Buyer is under no obligation to agree to enter into, or to enter into, any Transaction pursuant to this Agreement. Buyer acknowledges that each Seller and each Seller’s Affiliates are not under any obligation to offer or sell any specific mortgage loan (regardless of whether such mortgage loan is an Eligible Mortgage Loan) to Buyer pursuant to this Agreement, subject to Section 14(k). The sum of the Purchase Prices of all Purchased Assets subject to outstanding Transactions shall not at any time exceed the Maximum Aggregate Purchase Price. Each Seller acknowledges and agrees that the Purchase Price paid in connection with any Purchased Assets that are Servicing Released Mortgage Loans purchased in any Transaction includes a mutually negotiated premium allocated to the portion of such Purchased Assets that constitutes the related Servicing Rights. The Servicing Rights and other servicing provisions under this Agreement are not severable from or to be separated from the Purchased Assets that are Servicing Released Mortgage Loans under this Agreement, and such Servicing Rights and other servicing provisions of this Agreement relating to the Servicing Released Mortgage Loans constitute (a) “related terms” under this Agreement within the meaning of Section 101(47) of the Bankruptcy Code and/or (b) a security agreement or other arrangement or other credit enhancement related to this Agreement.

 

(a)           Conditions Precedent to Initial Transaction. Buyer’s agreement to enter into the initial Transaction hereunder is subject to the satisfaction, immediately prior to or concurrently with the making of such Transaction, of the condition precedent that Buyer shall

 

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have received from the Sellers ant fees and expenses payable hereunder, and all of the following documents, each of which shall be satisfactory to Buyer and its counsel in form and substance:

 

(i)            Facility Documents. The Facility Documents and each Mortgage Loan Purchase Agreement related thereto duly executed by the parties thereto;

 

(ii)           Opinions of Counsel. An opinion of Sellers’, Pledgors’ and Guarantor’s outside counsel, dated as of the date hereof, as to such matters as Buyer may request and in form and substance acceptable to Buyer, including, without limitation, with respect to (A) Buyer’s first priority lien on and perfected security interest in the Purchased Assets and Repurchase Assets; (B) Buyer’s perfected security interest in the Collection Account, each Servicer Custodial Account, each Holdback Account and each Collection Holdback Sub-Account and, in each case, the amounts deposited therein from time to time; (C) the non-contravention of law, enforceability and corporate opinions with respect to each Seller and each Pledgor; (D) matters of Delaware or Georgia law, as applicable, with respect to each Seller and each Pledgor; (E) the inapplicability of the Investment Company Act of 1940 to each Seller; and (F) the applicability of Bankruptcy Code, “repurchase agreement”, “securities contract” and “master netting agreement” safe harbors to this Agreement and each Pledge Agreement;

 

(iii)          Sellers’, Pledgors’ and Guarantor’s Organizational Documents. A certificate of an officer of each Seller, each Pledgor and Guarantor, in form and substance acceptable to Buyer and delivered to Buyer prior to the Effective Date, attaching certified copies of such party’s formation and organizational documents and corporate resolutions or written consents approving the Facility Documents and transactions thereunder and all documents evidencing other necessary limited liability company or limited partnership, as applicable, action or governmental approvals as may be required in connection with the Facility Documents;

 

(iv)          Good Standing Certificates. A certified copy of a good standing certificate from the jurisdiction of organization of the Sellers, the Pledgors and Guarantor, dated as of no earlier than the date that is ten (10) Business Days prior to the date hereof;

 

(v)           Incumbency Certificates. An incumbency certificate of the manager, member, director or other similar officer of the Sellers, the Pledgors and Guarantor certifying the names, true signatures and titles of the representatives duly authorized to request transactions hereunder and to execute the Facility Documents;

 

(vi)          Security Interest. Evidence that all other actions necessary or, in the opinion of Buyer, desirable to perfect and protect the sale, transfer, conveyance and assignment by (A) each Seller to Buyer or its designee, subject to the terms of this Agreement, of all of each Seller’s right, title and interest in and to the Purchased Assets and other items pledged under Section 9(a) together with all right, title and interest in and to the proceeds of any related Repurchase Assets have been taken and (B) each Pledgor to Buyer or its designee, subject to the terms of this Agreement and the related Pledge

 

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Agreement, of all of such Pledgor’s right, title and interest in and to the pledged collateral and any proceeds thereof;

 

(vii)         Insurance. Evidence that each Seller has added Buyer as an additional loss payee under each Seller’s Fidelity Insurance; and

 

(viii)        Other Documents. Such other documents as Buyer may reasonably request, in form and substance reasonably acceptable to Buyer, including but not limited to a certification by each Seller that each this Agreement and all of the other Facility Documents executed and delivered by each Seller in connection herewith are legal, valid and binding obligations of both Sellers and are enforceable against both Sellers in accordance with their terms.

 

(b)           Conditions Precedent to all Transactions. Buyer’s entering into each Transaction (including the initial Transaction) is subject to the satisfaction of the following further conditions precedent, both immediately prior to entering into such Transaction and also after giving effect thereto to the intended use thereof:

 

(i)            Confirmation. The applicable Seller shall have delivered to Buyer a Transaction Notice, including the related Confirmation executed by such Seller in accordance with the procedures set forth in Section 3(c);

 

(ii)                                  Due Diligence Review.  Without limiting the generality of Section 20 hereof, Buyer shall have completed, to its satisfaction, its due diligence review of the related Mortgage Loans and, at its sole discretion, may have completed, to its satisfaction, its due diligence review of the Sellers, the Pledgors, the Guarantor and the Servicers or Subservicers;

 

(iii)                               No Default. No Default or Event of Default shall have occurred and be continuing under the Facility Documents;

 

(iv)          Representations and Warranties. Both immediately prior to the Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by each Seller in Section 13 hereof, the representations and warranties made by each Seller with respect to each Mortgage Loan to be subject to the proposed Transaction as set forth in Schedule 1-A, Schedule 1-B and/or Schedule 1-C, as applicable, the representations and warranties of each Pledgor under the related Pledge Agreement and the representations made by Guarantor under the Guaranty, shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date). Each Mortgage Loan offered for purchase to Buyer pursuant to such Transaction is an Eligible Mortgage Loan;

 

(v)           Maximum Purchase Price. After giving effect to the requested Transaction, the Aggregate Facility Purchase Price subject to then outstanding Transactions under this Agreement shall not exceed the least of (a) the Aggregate Asset Value and (b) the Maximum Aggregate Purchase Price;

 

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(vi)          No Purchased Asset Issue; No Margin Deficit. As of the related Purchase Date, (A) no Seller shall have failed to repurchase any Purchased Asset pursuant to a repurchase request by Buyer made pursuant to Section 4(b) hereof and (B) no Margin Deficit shall have occurred and be continuing with respect to any Purchased Assets. Additionally, after giving effect to the requested Transaction, no Purchased Asset Issue or Margin Deficit shall have occurred or be continuing with respect to the related Purchased Assets;

 

(vii)         Transaction Notice. On or prior to 5:00 p.m. (New York Time) three (3) Business Days prior to the related Purchase Date, each Seller shall have delivered to Buyer a Transaction Notice, which shall include the related Confirmation(s) and the related Asset Schedule(s);;

 

(viii)        Delivery of Asset File. Each Seller shall have delivered to the Custodian the Asset File with respect to each Mortgage Loan that is subject to the proposed Transaction, with an electronic copy of such Asset File to Buyer via email to structuredfinancedesksecure@nomura.com, in a format reasonably acceptable to Buyer, and the Custodian shall have issued a Trust Receipt showing no exceptions with respect to each such Mortgage Loan to Buyer as of the related Purchase Date, all subject to and in accordance with the Custodial Agreement;

 

(ix)          Delivery of Assignment and Conveyance. On or prior to the related Purchase Date, each Seller shall have executed an Assignment and Conveyance pursuant to the terms of the applicable Mortgage Loan Purchase Agreement with respect to each Eligible Mortgage Loan subject to the proposed Transaction. Upon request by Buyer (which may be via e-mail), each Seller shall promptly (but, in any event, no later than two (2) Business Days after such request) deliver each such executed Assignment and Conveyance to Buyer;

 

(x)           Delivery of Security Release Certification. To the extent required, on or prior to the related Purchase Date, each Seller shall have obtained (A) a certification that the related Purchased Assets have not, at any time, been subject to a security interest, pledge or hypothecation, or (B) the security release certification and related certificate of the applicable Originator and opinion of counsel. Upon request by Buyer (which may be via e-mail), each Seller shall promptly (but, in any event, no later than two (2) Business Days after such request) deliver to Buyer the applicable certification;

 

(xi)          Purchase Price Floor. The aggregate Purchase Price for any Transaction shall not be less than Three Million Dollars ($3,000,000);

 

(xii)         Funding Frequency. In any thirty (30) day period there will be no more than four (4) Transactions;

 

(xiii)                        Reserved;

 

(xiv)                       Approval  of  Subservicing  Agreement. To the extent not previously delivered and approved, Buyer shall have, in its sole discretion, approved each

 

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Subservicing Agreement pursuant to which any Mortgage Loan that is subject to the proposed Transaction is serviced;

 

(xv)         Servicer or Subservicer Notice; Addition Notice. To the extent the related Purchased Assets are not already covered by the Servicer Notice or Subservicer Notice, Buyer shall have received any of: (i) a fully executed and acknowledged notice in the form of Exhibit A to the Servicer Notice or Subservicer Notice; (ii) a confirmation or acknowledgement email from such Servicer or Subservicer in response to an email notice in the form of Exhibit B to the Servicer Notice or Subservicer Notice; or (iii) a confirmation or acknowledgment in such other form as is acceptable to the Buyer at its reasonable discretion, in any such case, confirming or acknowledging that such Purchased Assets are subject to the Servicer Notice or Subservicer Notice;

 

(xvi)        Fees and Expenses. Buyer shall have received all fees and expenses due and payable to Buyer as of the related Purchase Date, including, but not limited to, counsel fees and expenses and those set forth in Sections 12 and 17(b) which amounts, at Buyer’s option, may be withheld from the proceeds remitted by Buyer to Sellers pursuant to any Transaction hereunder;

 

(xvii)       Requirements of Law. Sellers or Buyer shall not have determined in good faith that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to the Sellers or the Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for the Sellers or the Buyer to enter into Transactions hereunder;

 

(xviii)      No Material Adverse Change. None of the following shall have occurred and/or be continuing:

 

(A)          an event or events shall have occurred in the good faith determination of Buyer resulting in the effective absence of a “repo market” or comparable “lending market” for financing debt obligations secured by securities or an event or events shall have occurred resulting in Buyer not being able to finance Mortgage Loans through the “repo market” or “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; or

 

(B)          an event or events shall have occurred resulting in the effective absence of a “securities market” for securities backed by Mortgage Loans or an event or events shall have occurred resulting in Buyer not being able to sell securities backed by Mortgage Loans at prices which would have been reasonable prior to such event or events; or

 

(C)          there shall have occurred a material adverse change in the financial condition of Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of Buyer to fund its obligations under this Agreement; and

 

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(xix)        Certification. Each Confirmation delivered by the related Seller hereunder shall constitute a certification by such Seller that all the conditions set forth in this Section 3(b) (other than clauses (xvi) and (xviii)) have been, or will be on the related Purchase Date, satisfied (both as of the date of such notice or request and as of Purchase Date);

 

(xx)         Approval of the Mortgage Loan Purchase Agreements. To the extent not previously delivered and approved, Buyer shall have, in its sole discretion, approved any Mortgage Loan Purchase Agreement pursuant to which any Mortgage Loan that is subject to the proposed Transaction was acquired by Seller, including with respect to any amendment, restatement, supplement or modification thereto pursuant to Section 18(g). For the avoidance of doubt, each such Mortgage Loan Purchase Agreement shall document the sale of any Servicing Released Mortgage Loan to the applicable Seller from the related Originator on a servicing-released basis;

 

(xxi)        The Repurchase Date for each Transaction shall not be later than the then current Termination Date; and

 

(xxii)       Holdback Amount. With respect to each Mortgage Loan subject to the proposed Transaction that has a Holdback Amount (including, for the avoidance of doubt, the related Non-Segregated Holdback Amounts), Buyer shall have reviewed and approved the Holdback Amount arrangements and documentation therefor and the related Holdback Amount (exclusive of the Non Segregated Holdback Amount) shall have been deposited in the applicable Holdback Account (or, with respect to any Purchased Asset that is an RTL Mortgage Loan, if a Holdback Trigger Event has occurred and is continuing as of such Purchase Date, in the applicable Collection Holdback Sub-Account); provided that Buyer may, after providing notice to the applicable Seller net such Holdback Amount (including, for the avoidance of doubt, the related Non-Segregated Holdback Amounts) from the proceeds of any Purchase Price paid to the applicable Seller in connection with such proposed Transaction and such netting shall satisfy such condition precedent set forth in this Section 3(c)(xxii);

 

(xxiii)      Holdback Account Control Agreement. If any related Mortgage Loan that is subject to the proposed Transaction has a Holdback Amount, Buyer shall have received the Holdback Account Control Agreement duly executed by the parties thereto, together with a security interest, general corporate and enforceability opinion or opinions of outside counsel to the Sellers covering the Holdback Account Control Agreement; each of which shall be in a form acceptable to Buyer in its sole discretion.

 

(xxiv)     Delivery of Appraisal. With respect to each Mortgaged Property related to a RTL Mortgage Loan that is subject to a proposed Transaction, the related Seller shall have delivered to Buyer a true and complete copy of an Appraisal for such Mortgaged Property dated no more than ninety (90) days prior to the requested Purchase Date;

 

(xxv)      Construction Loan Management Agreement. With respect to each RTL Mortgage Loan that is subject to a proposed Transaction, the Seller shall have

 

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delivered to Buyer the related Construction Loan Management Agreement duly executed by the parties thereto;

 

(xxvi)                Key Man Provision. With respect to each Cherrywood Mortgage Loan that is subject to a proposed Transaction, William Komperda is an officer of Cherrywood, unless otherwise waived by Buyer. With respect to each CRE Bridge Mortgage Loan that is subject to a proposed Transaction, Ben F. Easterlin is an officer of AOCB, unless otherwise waived by Buyer;

 

(xxvii)             Electronic Tracking Agreement. With respect to each Mortgage Loan (excluding RTL Mortgage Loans, Cherrywood Mortgage Loans and CRE Bridge Mortgage Loans) that is subject to a proposed Transaction, Sellers shall have, within ten (10) Business Days after becoming a member of the MERS® System, delivered to Buyer the Electronic Tracking Agreement duly executed by the parties thereto.

 

(xxviii)          CRE Bridge Mortgage Loans. With respect to each CRE Bridge Mortgage Loan that is subject to a proposed Transaction, the applicable Seller shall have uploaded to a DebtX site at least five (5) Business Days prior to the proposed Purchase Date all related Loan Documents and all related reports, including, but not limited to each document set forth on Schedule 4 attached hereto.

 

(xxix)                Underwriting Guidelines; Environmental Review. To the extent that any of the Underwriting Guidelines have been amended or otherwise modified after the date hereof, the applicable Seller shall promptly provide Buyer with a marked copy of such amendment or modification and Buyer, in its sole discretion, shall have approved such amendment or modification. With respect to each Eligible Cherrywood Mortgage Loan to be subject to the proposed Transaction, the applicable Seller shall have delivered the results of the related environmental review performed upon the related Mortgaged Property in compliance with the Cherrywood Underwriting Guidelines.

 

(xxx)                   Servicer Custodial Account Control Agreement. With respect to any Servicer or Subservicer for which there is a Servicer Custodial Account, the related Servicer Custodial Account Control Agreement duly executed and delivered by the parties thereto and being in full force and effect, free of any modification, breach or waiver and an opinion of Sellers’ counsel, as to the enforceability of such Servicer Custodial Account Control Agreement and Buyer’s perfected security interest in such Servicer Custodial Account.

 

(c)                                 Initiation.

 

(i)                                     Unless otherwise agreed, the Sellers shall request that the Buyer enter into a Transaction with respect to any Eligible Mortgage Loans by delivering to the Buyer a copy of the applicable Assignment and Conveyance from the related Originator to the related Seller, and a Transaction Notice, as early as practicable, but no later than three (3) days prior to the proposed Purchase Date. Buyer shall have the right to review the information set forth on the Transaction Notice, Confirmation, the Underwriting Package and the Eligible Mortgage Loans proposed to be subject to a Transaction as

 

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Buyer determines during normal business hours. For the avoidance of doubt, each Seller shall deliver one (1) Confirmation with respect to each type of Eligible Mortgage Loan subject to the proposed Transaction.

 

(ii)                                 Upon Seller’s request to enter into a Transaction pursuant to Section 3(c)(i) and assuming all conditions precedent set forth in this Section 3 and have been met, on the requested Purchase Date, Buyer may, in its sole discretion purchase the Eligible Mortgage Loans included in the related Confirmation pursuant to the terms of this Agreement.

 

(iii)                               Any additional terms with respect to a Transaction that the Buyer and the related Seller may agree upon, such additional terms not to be inconsistent with the terms of this Agreement, shall be evidenced by a written confirmation from the Buyer to such Seller on or prior to the requested Purchase Date in the form of Exhibit A-1, A-2, A-3 or A-4, as applicable, attached hereto (in each case, a “Confirmation”). Delivery of a Confirmation shall be deemed a representation and warranty that the related Seller has no actual knowledge of any material information concerning such Eligible Mortgage Loan which is not reflected in such Confirmation or other information or otherwise disclosed to Buyer in writing. The related Seller shall execute and return the Confirmation to Buyer via e-mail on or prior to 12:00 p.m. (New York time) on the related Purchase Date. The related Seller shall deliver a fully executed Assignment and Conveyance with respect to each Purchased Loan on each Purchase Date. In connection with a Margin Excess pursuant to Section 7(c) hereof, the Sellers shall deliver to Buyer a confirmation in the form of Exhibit E attached hereto in connection with the related Additional Purchase Price.

 

(iv)                              Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the Transaction(s) covered thereby.

 

(v)                                Upon Buyer’s receipt of the Trust Receipt in accordance with the Custodial Agreement and subject to the provisions of this Section 3, the aggregate Purchase Price for the related Transaction shall then be made available to the related Seller by Buyer transferring, via wire transfer, in the aggregate amount of such Purchase Prices in funds immediately available.

 

(d)                                 Optional Repurchase. Subject to the conditions herein, Sellers may cause the sale of Purchased Assets and effect an Optional Repurchase (as defined below), subject to the payment by the Sellers to the Buyer of an Exit Fee, on any date in connection with Optional Repurchase which are not made in connection with an ordinary course liquidation of a Purchased Asset. When the Purchased Assets are desired to be sold or otherwise transferred or liquidated by Sellers to a Take-Out Investor (an “Optional Repurchase”), for net sale proceeds that are equal or greater to the Minimum Release Amount of such Purchased Assets, Sellers shall give the Buyer at least three (3) Business Day’s prior written notice thereof designating the applicable Purchased Assets and specifying the net sale proceeds expected from such sale. If such notice is given, the Sellers shall cause the Take-Out Investor to make payment directly to the Collection Account in an amount equal the aggregate net proceeds to be received by Sellers in connection with such sale. So long as no Default or Event of Default has occurred or is continuing, the

 

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Purchased Assets may be sold or otherwise transferred or liquidated by Sellers in a sale other than a sale described above or at an amount less than the applicable Minimum Release Amount, if (a) such sale does not cause a Margin Deficit or Sellers contemporaneously cure any Margin Deficit in connection therewith, (b) the Sellers have given the Buyer at least three (3) Business Days’ prior written notice thereof designating the applicable Purchased Assets and (c) the Sellers have received the prior written consent of the Buyer in its sole discretion. If Buyer’s consent is granted and the sale is effected, Sellers shall cause the Take-Out Investor or Servicer or Subservicer to remit the net sale proceeds, including any Exit Fees, in connection with such Optional Repurchase directly to the Collection Account. With respect to a sale of Mortgage Loans for net sale proceeds that are less than the applicable Minimum Release Amount, the difference between (x) such Minimum Release Amount and (y) such net sale proceeds deposited in the Collection Account shall be added, on a pro-rata basis and as determined by the Buyer in its sole discretion, to the allocated Repurchase Price of the remaining Purchased Assets.

 

(e)                                  Repurchase. On the Repurchase Date for any Transaction, termination of such Transaction will be effected by reassignment to Sellers or their designee of the Purchased Assets subject to such Transaction (and any Income in respect thereof received by Buyer not previously credited or transferred to, or applied to the obligations of, Sellers pursuant to Section 5 hereof) against the simultaneous transfer of the Repurchase Price to an account of Buyer. Such obligation to repurchase exists without regard to any prior or intervening liquidation or foreclosure with respect to any Purchased Asset (but Liquidation Proceeds received by Buyer shall be applied to reduce the Repurchase Price for the Purchased Assets to which such Liquidation Proceeds relate on each Remittance Date except as otherwise provided herein). Buyer shall release the Asset Files to Sellers or their designee at Sellers’ expense on the Repurchase Date.

 

(f)                                   Holdback Trigger Event; Funding of Holdback Amount. Following the occurrence of a Holdback Trigger Event:

 

(i)                                     The applicable Seller shall (or shall cause the applicable Servicer or the applicable Originator to) transfer cash to the applicable Collection Holdback Sub-Account, in an amount equal to the sum of (A) the aggregate amount of Holdback Amounts (including, for the avoidance of doubt, the related Non-Segregated Holdback Amounts) related to each such Purchased Asset then on deposit in the applicable Holdback Account, minus (B) the related Anticipated Disbursed Holdback Amount for the following calendar month to the extent requested by such Seller and approved by Buyer in its good faith discretion.

 

(ii)                                  At least five (5) Business Days’ prior to any requested release of funds from the Collection Holdback Sub-Account (which shall not occur more than once every calendar month, unless otherwise agreed to by Buyer), such Seller shall deliver to Buyer a report detailing the Anticipated Disbursed Holdback Amount for the following calendar month in form and substance acceptable to Buyer, with such evidence required by Buyer to substantiate or validate such request (such evidence to be satisfactory to Buyer in its good faith discretion).

 

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(iii)                               Buyer may, in its sole discretion, cause the Bank, in accordance with Section 5(g) of this Agreement, to remit funds to the Holdback Account from the Collection Holdback Sub-Account in (a) an amount equal to the Anticipated Disbursed Holdback Amount (as modified herein) or (b) such lesser amount as determined by Buyer (in each case, the “Released Holdback Amount”).

 

(iv)                              If such Holdback Trigger Event is no longer continuing (as determined by Buyer), Buyer may, in its sole good faith discretion agree that all Holdback Amounts then on deposit in the Collection Holdback Sub-Account may be remitted to the Holdback Account.]

 

(g)                                  [Reserved].

 

(h)                                 LIBOR Rate Breakage Costs. Without limiting, and in addition to, the provisions of Section 17 hereof, the Sellers agree that if any Repurchase Price is paid other than in connection with an ordinary course liquidation of a Mortgage Loan and such Repurchase Price is paid on a date other than on a Remittance Date, the Sellers shall, upon demand by the Buyer, pay to the Buyer any such amounts as are reasonable to compensate the Buyer for any additional losses (not including lost profits), costs or expenses which the Buyer may incur as a result of such payments, including, without limitation, any hedge breakage costs.

 

Section 4.                                          Mandatory Repurchases.

 

(a)                                 If at any time there has occurred a Purchased Asset Issue with respect to any Purchased Asset, then the Market Value thereof shall automatically be reduced to zero and Buyer may, at its option, by notice to Sellers (as such notice is more particularly set forth below, a “Repurchase Notice”), require Sellers to repurchase such asset or Sellers may repurchase such asset without the payment of any Exit Fees. In the case of a repurchase, the Sellers, shall, at the Buyer’s direction, be required to repurchase the affected Purchased Asset as soon as is practicable but, in any case, not more than two (2) Business Days after Buyer has delivered such Repurchase Notice to Sellers. The Sellers shall be required to notify the Buyer as soon as is practicable after obtaining knowledge of any fact that could be the basis for any Purchased Asset Issue, but, in any case, not more than two (2) Business Days after obtaining knowledge thereof. In such event, the price paid by the Sellers for such Purchased Asset shall be equal to the Repurchase Price.

 

(b)                                Buyer’s election, in its sole and absolute discretion, not to send a Repurchase Notice at any time a Purchased Asset is no longer an Eligible Mortgage Loan shall not in any way limit or impair its right to send a Repurchase Notice at a later time.

 

(c)                                  The fact that Buyer has conducted or has failed to conduct any partial or complete due diligence investigation in connection with its purchase of any Purchased Asset shall not affect Buyer’s right to demand repurchase or any other remedy as provided under this Agreement.

 

(d)                                 Any cash transferred to Buyer pursuant to Section 4(a) above shall be credited to the Repurchase Price of the related Transactions.

 

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Section 5.                                          Income Payments.

 

(a)                                 Notwithstanding that Buyer and Sellers intend that the Transactions hereunder be sales to Buyer of the Purchased Assets for all purposes except accounting and tax purposes, Sellers shall pay to Buyer the accrued and unpaid Price Differential (less any amount of such Price Differential previously paid by Sellers to Buyer) on each Remittance Date from funds on deposit in the Collection Account; provided, that, to the extent there is a shortfall in the Collection Account, Sellers shall pay to Buyer the amount of such shortfall by wire transfer of immediately available funds. Notwithstanding the preceding sentence, if Sellers fail to pay all or part of the Price Differential then due by 3:00 p.m. (New York time) on any Remittance Date, the Pricing Rate shall be equal to the Post-Default Rate until the Price Differential then due is received in full by Buyer. For the avoidance of doubt, Seller’s obligation to pay any Price Differential to Buyer shall not be deemed to be satisfied (and such Price Differential shall not deemed to be paid to Buyer) until the amount of such Price Differential is actually received in full by Buyer in the Buyer’s Account.

 

(b)                                 Notwithstanding the foregoing, each Seller shall cause the related Servicer or Subservicer to hold, for the benefit of, and in trust for, Buyer, all Income, including, without limitation, all Income received by or on behalf of such Seller and/or such Servicer or Subservicer with respect to the Purchased Assets. Each Seller shall cause the related Servicer or Subservicer to deposit all Income received on account of the Purchased Assets serviced by such Servicer or Subservicer (i) into the applicable Servicer Custodial Account maintained by such Servicer or Subservicer promptly (but, in any event, no later than two (2) Business Day) upon receipt and (ii) into the applicable Collection Account no later than the ninth (9th) Business Day of the following calendar month. To the extent that a Seller or an Originator is holding any Income, such Seller or Originator, as applicable, shall promptly deposit (or cause to be deposited, as applicable) such Income into the applicable Collection Account. Each Seller understands and agrees that each Collection Account shall be subject to the Collection Account Control Agreement and that each Servicer Custodial Account shall be subject to the applicable Servicer Custodial Account Control Agreement. Each Seller understands and agrees that all Income shall be held in trust for Buyer, and shall constitute the property of Buyer for all purposes other than tax purpose. For tax purposes, such Income shall be treated as income and property of the applicable Seller and shall not be commingled with other property of such Seller or any Affiliate of such Seller. Funds deposited in each Collection Account and each Servicer Custodial Account during any Collection Period shall be held therein, in trust for Buyer, until, with respect to each Servicer Custodial Account, remitted into the applicable Collection Account and, with respect to each Collection Account, the related Remittance Date.

 

(c)                                  Subject to the terms of the Collection Account Control Agreement, funds on deposit in the Collection Account (other than those on deposit in the AOMF Seller Collection Holdback Sub-Account or AOMI Seller Collection Holdback Sub-Account, which funds shall be disbursed in accordance with Section 5(g) hereof) shall be applied on each Remittance Date prior to the occurrence of an Event of Default as follows:

 

(i)                                     first, to U.S. Bank National Association an amount equal to any accrued and unpaid fees as the Custodian and the Collection Account Bank and current and unpaid invoiced fees and expenses of each applicable Servicer Custodial Account

 

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Bank and each applicable Holdback Bank, in each case, with respect to any Purchased Asset that was sold to Buyer pursuant to a Transaction hereunder;

 

(ii)                                  second, to Buyer an amount equal to the Price Differential in respect of any Purchased Asset that was sold to Buyer pursuant to a Transaction hereunder which has accrued and is outstanding as of the Remittance Date;

 

(iii)                               third, to Buyer on account of unpaid fees, expenses, LIBOR Rate breakage costs, and indemnity amounts and any other amounts due and payable by Sellers to Buyer hereunder or under the other Facility Documents;

 

(iv)                              fourth, to Buyer on account of, and application to, the Repurchase Price of each Purchased Asset that was sold to Buyer pursuant to a Transaction hereunder, the amount of principal payments that have been received with respect to such Purchased Asset during the immediately preceding Collection Period;

 

(v)                                 fifth, to Buyer an amount equal to any unpaid Margin Deficit (including due to a Minimum Diversity Reduction Amount with respect to any Purchased Asset that is an Eligible CRE Bridge Mortgage Loan that was sold to Buyer pursuant to a Transaction hereunder) regardless of whether the related Margin Call has been delivered;

 

(vi)                              sixth, to U.S. Bank National Association an amount equal to any accrued and unpaid indemnities of U.S. Bank National Association as the Custodian and the Collection Account Bank; and

 

(vii)                           seventh, all remaining amounts (if any), to an account or accounts designated by Sellers.

 

Each Seller shall be jointly and severally liable for all payment obligations under this Section 5(c). Buyer shall be expressly permitted to set-off and appropriate and apply any amounts on deposit in the Collection Account against any payment obligation due and owing under this Section 5(c).

 

(d)                                 Reserved.

 

(e)                                  To the extent that Buyer receives any funds from a Take-out Investor with respect to the purchase by such Take-out Investor of a Purchased Asset, the Buyer shall promptly apply such funds in accordance with the same order of priority set forth in Sections 5(c) and (d) hereof, as applicable, with such funds being first allocated to the Repurchase Price of the related Purchased Assets purchased by such Take-out Investor.

 

(f)                                   Notwithstanding the preceding provisions, if an Event of Default has occurred, all funds in the Collection Accounts and in the Servicer Custodial Accounts may be withdrawn by Buyer and applied as determined by Buyer; provided, however, funds in the Collection Accounts shall be withdrawn by Buyer and applied (i) first, to the amounts specified under Section 5(c)(ii) through Section 5(c)(v), in the priority determined by Buyer in its sole discretion, (ii) second, to the amounts specified under Sections 5(c)(i) and Section 5(c)(vi), in the

 

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priority determined by Buyer in its sole discretion and (iii) third, to the extent applicable, as determined by Buyer in its sole discretion, to the amounts specified in Section 5(c)(vii).

 

(g)                                  Prior to the occurrence of an Event of Default, and following the occurrence of a Holdback Trigger Event, upon Buyer’s written direction (which may be via email) to the Collection Account Bank funds on deposit in the Collection Holdback Sub-Account shall be disbursed to the applicable Holdback Account in an amount equal to (i) the Released Holdback Amount plus (ii) the excess if any of (x) the aggregate Actual Disbursed Holdback Amount over (y) the Anticipated Disbursed Holdback Amount for the prior month, minus (iii) the shortfall, if any, between (A) the aggregate Actual Disbursed Holdback Amount and (B) the Anticipated Disbursed Holdback Amount, for the prior month.

 

Section 6.                                          Requirements Of Law.

 

(a)                                 If any Requirement of Law (other than with respect to any amendment made to Buyer’s or any of its affiliate’s certificate of formation, operating agreement or other organizational governing documents) or any change in the interpretation or application thereof or compliance by Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the Closing Date:

 

(i)                                     shall subject Buyer to any Tax or increased Tax of any kind whatsoever with respect to this Agreement or any Transaction or change the basis of taxation of payments to Buyer in respect thereof, provided such Tax is a Non-Excluded Tax;

 

(ii)                                  shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, or other extensions of credit by, or any other acquisition of funds by, any office of Buyer which is not otherwise included in the determination of the LIBOR Rate hereunder; or

 

(iii)                              shall impose on Buyer any other condition; and the result of any of the foregoing is to increase the cost to Buyer, by an amount which Buyer deems to be material, of entering, continuing or maintaining any Transaction or to reduce any amount due or owing hereunder in respect thereof, then, in any such case, Sellers shall promptly pay Buyer, upon Buyer’s written demand, such additional amount or amounts as calculated by Buyer in good faith as will compensate Buyer for such increased cost or reduced amount receivable.

 

(b)                                If Buyer shall have determined that the adoption of or any change in any Requirement of Law (other than with respect to any amendment made to Buyer’s or any of its affiliate’s certificate of formation, operating agreement or other organizational governing documents) regarding capital adequacy or in the interpretation or application thereof or compliance by Buyer or any corporation controlling Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level

 

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below that which Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by Buyer to be material, then from time to time, Sellers shall promptly pay to Buyer, upon Buyer’s written demand, such additional amount or amounts as will compensate Buyer for such reduction.

 

(c)                                  If Buyer becomes entitled to claim any additional amounts pursuant to this Section, it shall make good faith efforts to promptly notify Sellers of the event by reason of which it has become so entitled and provide a calculation of the additional amount owed. A certificate as to any additional amounts payable pursuant to this Section submitted by Buyer to either Seller shall be conclusive in the absence of manifest error; provided, however, that to the extent either Seller does not elect to pay the Aggregate Facility Repurchase Price pursuant to the last sentence of this clause (c), Buyer shall use commercially reasonable efforts to monitor the additional costs incurred on an ongoing basis, and if Buyer determines that the additional amounts specified in the certificate delivered pursuant to this clause (c) are greater than the actual amounts incurred by Buyer during such period, Buyer shall correct such certificate to reflect the actual additional costs incurred. Upon receipt of such certificate either Seller may, upon payment to the Buyer of an amount equal to the Aggregate Facility Repurchase Price (not taking into account any Exit Fees), terminate this Agreement.

 

Section 7.                                          Margin Maintenance; Excess Concentration Amounts; Minimum Diversity Requirement

 

(a)                                 The Buyer shall have the right to determine the Market Value of the Purchased Assets on a daily basis in its sole and absolute discretion, which determination may affect the Aggregate Asset Value of the Purchased Assets. The Sellers may challenge the Market Value of a Purchased Asset determined by Buyer by delivery to Buyer of up to three (3) dealer quotations for such Purchased Asset within three (3) Business Days of Buyer’s determination; provided, that no such dispute by Seller or consideration by Buyer shall delay Sellers’ obligation to timely satisfy any Margin Call as provided in subsection (b) below, Buyer shall review such quotations and may consider revising the Market Value of such Purchased Assets to reflect such quotations, in its sole and good faith discretion. Notwithstanding the foregoing, Buyer, at its sole discretion, may revise the Market Value of a Purchased Asset based on such information. In addition the Aggregate Asset Value of the Purchased Assets may be adjusted from time to time as a result of the occurrence of the events included in the definition thereof.

 

(b)                                 If, as of any date of determination, the Aggregate Asset Value of the Purchased Assets is less than the Aggregate Facility Repurchase Price for all such Transactions (a “Margin Deficit”), then Buyer may, by notice to Sellers (as such notice is more particularly set forth below, a “Margin Call”), require Sellers to transfer to Buyer or its designee cash, or, at Buyer’s option in its sole discretion (and provided Sellers have additional Eligible Mortgage Loans), Additional Assets to Buyer to cure such Margin Deficit. If Buyer delivers a Margin Call to Sellers on or prior to 10:00 a.m. (New York City time) on any Business Day, then Sellers shall transfer cash or Additional Assets to Buyer or its designee no later than 5:00 p.m. (New York City time) on the Business Day following Sellers’ receipt of such Margin Call. In the event Buyer delivers a Margin Call to Sellers after 10:00 a.m. (New York City time) on any Business Day, Sellers shall be required to transfer cash or Additional Assets no later than 5:00 p.m. (New

 

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York City time) on the second (2nd) Business Day following Sellers’ receipt of such Margin Call.

 

(c)                                  If, on any date of determination, the Aggregate Asset Value for the Purchased Assets subject to a Transaction as of such date exceeds the Aggregate Facility Repurchase Price related to such Purchased Assets as of such date (a “Margin Excess”), then a Seller may, by written notice to the Buyer, request that Buyer transfer to such Seller or its designee additional Purchase Price with respect to such Purchased Assets in an amount no greater than such Margin Excess (such requested amount, the “Additional Purchase Price”) within ten (10) Business Days of such written request, and Buyer may, in its sole discretion, agree to such request. Any Additional Purchase Price transferred to such Seller shall be added to the Repurchase Price for such Purchased Assets.

 

(d)                                 The failure of the Buyer, on any one or more occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions of this Agreement or limit the right of the Buyer to do so at a later date. The Sellers and the Buyer each agree that a failure or delay by the Buyer to exercise its rights hereunder shall not limit or waive the Buyer’s rights under this Agreement or otherwise existing by law or in any way create additional rights for Sellers.

 

(e)                                  For the avoidance of doubt, it is hereby understood and agreed that the Sellers shall be responsible for satisfying any Margin Deficit existing as a result of any cram down of the unpaid principal balance of any Purchased Asset pursuant to any action by any bankruptcy court.

 

(f)                                   Excess Concentration Amounts. If, as of any date of determination, the Repurchase Price (excluding any amounts calculated pursuant to clause (b) of the definition thereof) of any type of Purchased Asset creates an Excess Concentration Amount, then Buyer may, by notice to the applicable Seller, require such Seller to reduce such Repurchase Price by remitting such Excess Concentration Amount to Buyer within two (2) Business Days of such notice.

 

(g)                                 Minimum Diversity Requirement.

 

(i)                                     If, as of any date of determination, a Purchased Asset that is an Eligible CRE Bridge Mortgage Loan, which, prior to such date of determination, satisfied the Minimum Diversity Requirement, no longer satisfies the Minimum Diversity Requirement, then Seller shall repay the amount allocable to the related reduction in the Asset Value of such Eligible CRE Bridge Mortgage Loan (such amount, a “Minimum Diversity Reduction Amount”) by remitting such Minimum Diversity Reduction Amount to Buyer within five (5) Business Days of the earlier of (A) the date on which Seller was notified or otherwise became aware that such Purchased Asset became eligible for such reduction in Asset Value or (B) the date on which such Purchased Asset became eligible for such reduction in Asset Value.

 

(ii)                                  If, on any date of determination, (a) Buyer determines the Minimum Diversity Requirement is satisfied, and (b) as of such date, each related

 

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Purchased Asset that is an Eligible CRE Bridge Mortgage Loan is less than thirty (30) Days Delinquent with respect to any payment of principal or interest and is otherwise not in material non-monetary default, then Buyer shall pay an additional amount of Purchase Price attributable to such Purchased Asset(s) on account of Seller’s satisfaction of the Minimum Diversity Requirement (such amount, a “Minimum Diversity Increase Amount”) by remitting such Minimum Diversity Increase Amount to Seller within five (5) Business Days the date on which Buyer was notified or otherwise became aware that such Purchased Asset became eligible for such Minimum Diversity Increase Amount. For the avoidance of doubt, the Purchase Price (and Repurchase Price) of each such Eligible CRE Bridge Mortgage Loan shall be deemed to be increased in an amount equal to the Minimum Diversity Increase Amount as of such date of determination.

 

Section 8.                                          Taxes.

 

(a)                                 Any and all payments by Sellers under or in respect of this Agreement or any other Facility Documents to which Sellers are parties shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto, whether now or hereafter imposed, levied, collected, withheld or assessed by any taxation authority or other Governmental Authority (collectively, “Taxes”), unless required by law. If Sellers shall be required under any applicable Requirement of Law to deduct or withhold any Taxes from or in respect of any sum payable under or in respect of this Agreement or any of the other Facility Documents to Buyer, (i) Sellers shall make all such deductions and withholdings in respect of Taxes, (ii) Sellers shall pay the full amount deducted or withheld in respect of Taxes to the relevant taxation authority or other Governmental Authority in accordance with any applicable Requirement of Law, and (iii) if such Tax is a Non-Excluded Tax, the sum payable by Sellers shall be increased as may be necessary so that after Sellers have made all required deductions and withholdings (including deductions and withholdings applicable to additional amounts payable under this Section 8) Buyer receives an amount equal to the sum it would have received had no such deductions or withholdings been made in respect of Non-Excluded Taxes. For purposes of this Agreement the term “Non-Excluded Taxes” are Taxes other than (i) Taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the jurisdiction under the laws of which Buyer is organized or of its applicable lending office, or any political subdivision thereof, (ii) Taxes attributable to the recipient’s failure to comply with Section 8(e), and (iii) any U.S. federal withholding Taxes imposed under section 1471 or 1472 of the Code.

 

(b)                                 In addition, Sellers hereby agree to pay any present or future stamp, recording, documentary, excise, property or value-added taxes, or similar taxes, charges or levies that arise from any payment made under or in respect of this Agreement or any other Facility Document or from the execution, delivery or registration of, any performance under, or otherwise with respect to, this Agreement or any other Facility Document (collectively, “Other Taxes”).

 

(c)                                  Each Seller hereby agrees to indemnify Buyer for, and to hold it harmless against, the full amount of Non-Excluded Taxes and Other Taxes, and the full amount of Non-Excluded Taxes or Other Taxes imposed on amounts payable by Sellers under this Section 8

 

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imposed on or paid by Buyer and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. The indemnity by Sellers provided for in this Section 8(c) shall apply and be made whether or not the Non-Excluded Taxes or Other Taxes for which indemnification hereunder is sought have been correctly or legally imposed or asserted. Amounts payable by Sellers under the indemnity set forth in this Section 8(c) shall be paid within ten (10) days from the date on which Buyer makes written demand therefor.

 

(d)           Within thirty (30) days after the date of any payment of Taxes, Sellers (or any Person making such payment on behalf of Sellers) shall furnish to Buyer for its own account a copy of the original official receipt evidencing payment thereof.

 

(e)           For purposes of subsection (e) of this Section 8, the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Code. Each Buyer (including for avoidance of doubt any assignee, successor or participant) shall deliver or cause to be delivered to Sellers the following properly completed and duly executed documents:

 

(i)            in the case of a Buyer that is an entity that is not a United States person, a complete and executed (x) U.S. Internal Revenue Form W-8BEN-E with Part III completed in which Buyer claims the benefits of a tax treaty with the United States providing for a zero or reduced rate of withholding (or any successor forms thereto), including all appropriate attachments or (y) a U.S. Internal Revenue Service Form W-8ECI (or any successor forms thereto); or

 

(ii)           in the case of an individual that is not a United States person, a complete and executed U.S. Internal Revenue Service Form W-8BEN (or any successor forms thereto) and a certificate substantially in the form of Exhibit F (a “Section 8 Certificate”); or

 

(iii)          in the case of a Buyer that is a United States person, a complete and executed U.S. Internal Revenue Service Form W-9 (or any successor forms thereto), including all appropriate attachments; or

 

(iv)          in the case of a Buyer that (A) is treated as an intermediary partnership or other non-corporate entity, and (B) is not a United States person, (x)(i) a complete and executed U.S. Internal Revenue Service Form W-8IMY (or any successor forms thereto) (including all required documents and attachments) and (ii) a Section 8 Certificate, and (y) without duplication, with respect to each of its beneficial owners and the beneficial owners of such beneficial owners looking through chains of owners to individuals or entities that are treated as corporations for U.S. federal income tax purposes (all such owners, “beneficial owners”), the documents that would be provided by each such beneficial owner pursuant to this Section if such beneficial owner were Buyer; provided, however, that no such documents will be required with respect to a beneficial owner to the extent the actual Buyer is determined to be in compliance with the requirements for certification on behalf of its beneficial owner as may be provided in applicable U.S. Treasury regulations, or the requirements of this clause (v) are otherwise determined to be unnecessary, all such determinations under this clause (v) to be made in

 

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the sole discretion of Sellers; provided, however, that Buyer shall be provided an opportunity to establish such compliance as reasonable; or

 

If Buyer has provided a form pursuant to clause (e)(i)(x) above and the form provided by Buyer either at the time Buyer first becomes a party to this Agreement or, with respect to a grant of a participation, at the effective date of such participation, indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be treated as Taxes other than “Non-Excluded Taxes” (“Excluded Taxes”) and shall not qualify as Non-Excluded Taxes unless and until Buyer provides the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate shall be considered Excluded Taxes solely for the periods governed by such form. If, however, on the date (after the Effective Date) a Person becomes an assignee, successor or participant to this Agreement, Buyer transferor was entitled to indemnification or additional amounts under this Section 8, then Buyer assignee, successor or participant shall be entitled to indemnification or additional amounts to the extent (and only to the extent), that Buyer transferor was entitled to such indemnification or additional amounts for Non-Excluded Taxes, and Buyer assignee, successor or participant shall be entitled to additional indemnification or additional amounts for any other or additional Non-Excluded Taxes.

 

If, on the date (after the Effective Date) a Person becomes an assignee, successor or participant to this Agreement, Buyer transferor was entitled to indemnification or additional amounts under this Section 8, then Buyer assignee, successor or participant shall be entitled to indemnification or additional amounts to the extent (and only to the extent), that Buyer transferor was entitled to such indemnification or additional amounts for Non-Excluded Taxes, and Buyer assignee, successor or participant shall be entitled to additional indemnification or additional amounts for any other or additional Non-Excluded Taxes.

 

(f)            Without prejudice to the survival of any other agreement of Sellers hereunder, the agreements and obligations of Sellers contained in this Section 8 shall survive the termination of this Agreement. Nothing contained in this Section 8 shall require Buyer to make available any of its tax returns or any other information that it deems to be confidential or proprietary.

 

(g)           Each party to this Agreement acknowledges that it is its intent for purposes of U.S. federal, and relevant state and local income and franchise taxes, to treat the Transaction as indebtedness of Sellers that is secured by the Purchased Assets and the Purchased Assets as owned by Sellers for federal income tax purposes in the absence of an Event of Default by Sellers. All parties to this Agreement agree to such treatment and agree to take no action inconsistent with this treatment, unless required by law.

 

Section 9.                                          Security Interest; Buyer’s Appointment as Attorney-in-Fact.

 

(a)                                Security Interest.

 

(i)            On each Purchase Date, each Seller hereby sells, assigns and conveys to Buyer all right, title and interest, including, with respect to the Servicing Released Mortgage Loans, all of each Seller’s Servicing Rights, and with respect to the

 

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Servicing Retained Mortgage Loans, all of each Seller’s Servicing Rights both before and after each Seller exercises its right to purchase Servicing Rights pursuant to each MSR Purchase Agreement, in the Purchased Assets listed on the related Asset Schedule to the extent of its rights therein. Although the parties intend that all Transactions hereunder be sales and purchases (other than for accounting and tax purposes) and not loans, in the event any such Transactions are deemed to be loans, and in any event, each Seller, to the extent of its rights therein, hereby pledges on the date hereof and on each Purchase Date, to Buyer as security for the performance of the Obligations and hereby grants, assigns and pledges to Buyer a first priority security interest in each Seller’s rights, title and interest in the Purchased Assets, the Records related to the Purchased Assets, all Servicing Rights related to the Purchased Assets (to the extent of its rights therein), each Facility Document and each Mortgage Loan Purchase Agreement, any Property relating to any Purchased Asset or the related Mortgaged Property, all insurance policies and insurance proceeds relating to any Purchased Asset or any related Mortgaged Property, including but not limited to any payments or proceeds under any related primary insurance or hazard insurance, any Income relating to any Purchased Asset, each Collection Account, each Servicer Custodial Account, each Holdback Account, each Collection Holdback Sub-Account, in each case, all amounts deposited therein from time to time, any Servicing Agreement, any Subservicing Agreement, and any other contract rights, including rights under the Mortgage Loan Purchase Agreements, accounts (including any interest of either Seller in escrow accounts) and any other payments, rights to payment (including payments of interest or finance charges) and general intangibles to the extent that the foregoing relates to any Purchased Assets and any other assets relating to the Purchased Assets (including, without limitation, any other accounts) or any interest in the Purchased Assets and any proceeds and distributions and any other property, rights, title or interests as are specified on a Confirmation and/or Trust Receipt and Asset Detail and Exception Report with respect to any of the foregoing, in all instances, whether now owned or hereafter acquired, now existing or hereafter created. This paragraph is intended to constitute a security agreement or other arrangement or other credit enhancement related to the Agreement and transactions hereunder as defined under Section 101(47)(v) and 741(7)(xi) of the Bankruptcy Code. The assets set forth in this clause (i) are the “Repurchase Assets”.

 

Without limiting the generality of the foregoing and in the event that Sellers are deemed to retain any residual Servicing Rights, and for the avoidance of doubt, each Seller grants, assigns and pledges to Buyer a security interest in the related Servicing Rights and proceeds related thereto and in all instances, whether now owned or hereafter acquired, now existing or hereafter created. The foregoing provision is intended to constitute a security agreement or other arrangement or other credit enhancement related to this Agreement and Transactions hereunder as defined under Sections 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.

 

The Sellers hereby authorize Buyer to file such financing statement or statements relating to the Repurchase Assets as Buyer, at its option, may deem reasonable and appropriate. The Sellers shall pay the filing costs for any financing statement or statements prepared pursuant to this Section 9.

 

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(b)           Buyer’s Appointment as Attorney in Fact. With respect to the Repurchase Assets, each Seller hereby irrevocably constitutes and appoints Buyer and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of each Seller and in the name of each Seller or in its own name, from time to time in Buyer’s discretion, for the purpose of carrying out the terms of this Agreement and to take any and all appropriate action and to execute any and all documents and instruments which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, in each case, subject to the terms of this Agreement. Without limiting the generality of the foregoing, each Seller hereby gives the Buyer the power and right, on behalf of each Seller without assent by, but with notice to, each Seller if an Event of Default shall have occurred and be continuing, to do the following:

 

(i)            in the name of such Seller, or in its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any Repurchase Assets and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Buyer for the purpose of collecting any and all such moneys due with respect to any Repurchase Assets whenever payable;

 

(ii)           to pay or discharge taxes and Liens levied or placed on or threatened against the Repurchase Assets; and

 

(iii)          (A) to direct any party liable for any payment under any Repurchase Assets to make payment of any and all moneys due or to become due thereunder directly to Buyer or as Buyer shall direct, including, without limitation, any payment agent with respect to any Repurchase Asset; (B) to send “goodbye” letters on behalf of such Seller and such Subservicer and Section 404 Notices; (C) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Repurchase Assets; (D) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any Repurchase Assets; (E) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Repurchase Assets or any proceeds thereof and to enforce any other right in respect of any Repurchase Assets; (F) to defend any suit, action or proceeding brought against such Seller with respect to any Repurchase Assets; (G) to settle, compromise or adjust any suit, action or proceeding described in clause (F) above and, in connection therewith, to give such discharges or releases as Buyer may deem appropriate; and (H) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Repurchase Assets as fully and completely as though Buyer were the absolute owner thereof for all purposes, and to do, at Buyer’s option and such Seller’s expense, at any time, and from time to time, all acts and things which Buyer deems necessary to protect, preserve or realize upon the Repurchase Assets and Buyer’s Liens thereon and to effect the intent of this Agreement, all as fully and effectively as such Seller might do.

 

Each Seller hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be

 

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irrevocable. In addition to the foregoing, each Seller agrees (or as has agreed) to execute a Power of Attorney, the form of Exhibit J hereto, to be delivered (or, which was delivered) on or prior to the Effective Date. Each Seller and the Buyer acknowledge that the Power of Attorney shall terminate on the date on which both (1) this Agreement is terminated and (2) all Obligations hereunder have been satisfied in full.

 

Each Seller also authorizes the Buyer, if an Event of Default shall have occurred, from time to time, to execute, in connection with any sale provided for in Section 16 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Repurchase Assets.

 

The powers conferred on Buyer hereunder are solely to protect Buyer’s interests in the Repurchase Assets and shall not impose any duty upon it to exercise any such powers. Buyer shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to either Seller for any act or failure to act hereunder, except for its or their own gross negligence or willful misconduct.

 

Section 10.                                   Payment, Transfer and Custody.

 

(a)           Payments and Transfers of Funds. Unless otherwise mutually agreed in writing, all transfers of funds to be made by Sellers hereunder shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to Buyer’s Account, not later than 3:00 p.m. New York City time, on the date on which such payment shall become due (and each such payment made after such time shall be deemed to have been made on the next succeeding Business Day). Sellers acknowledge that they have no rights of withdrawal from the foregoing account.

 

(b)           Remittance of Purchase Price. On the Purchase Date for each Transaction, ownership of the Purchased Assets shall be transferred to Buyer or its designee against the simultaneous transfer of the Purchase Price to the following account of Sellers: Account No. 173103322058, for the account of Structure Finance Wire Clearing, US Bank National Association, ABA No. 091000022, Ref: Angel Oak Mortgage Fund TRS - 235384000, or such other account as designated by Sellers to Buyer, simultaneously with the delivery to Buyer of the Purchased Assets relating to each Transaction.

 

Section 11.            Hypothecation or Pledge of Purchased Assets. Title to all Purchased Assets and Repurchase Assets shall pass to Buyer and Buyer shall have free and unrestricted use of all Purchased Assets. Nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Assets or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating the Purchased Assets. Nothing contained in this Agreement shall obligate Buyer to segregate any Purchased Assets delivered to Buyer by Sellers. Notwithstanding the foregoing, nothing in this Section 11 shall relieve the Buyer from its obligation to return the Purchased Assets to Sellers upon payment of the related Repurchase Price on the related Repurchase Date.

 

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Section 12.            Fees. Sellers shall pay to Buyer, in immediately available funds, all fees due and owing to Buyer, as set forth in the Pricing Side Letter. Such payment shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to Buyer at such account designated by Buyer.

 

Section 13.                                   Representations.

 

(a)           Each Seller represents and warrants to Buyer that as of the date hereof, as of each Purchase Date of any Purchased Assets by Buyer from each Seller and at all times while this Agreement is effective and any Transaction is outstanding:

 

(i)                                     Acting as Principal. Each Seller will engage in such Transactions as principal (or, if agreed in writing in advance of any Transaction by the other party hereto, as agent for a disclosed principal).

 

(ii)                                  [Reserved].

 

(iii)                               Solvency. Neither the Facility Documents nor any Transaction thereunder are entered into in contemplation of insolvency or with intent to hinder, delay or defraud any of either Seller’s creditors. The transfer of the Purchased Assets subject hereto is not undertaken with the intent to hinder, delay or defraud any of either Seller’s creditors. Each Seller is not insolvent within the meaning of 11 U.S.C. Section 101(32) and the transfer and sale of the Purchased Assets pursuant hereto (i) will not cause either Seller to become insolvent, (ii) will not result in any property remaining with either Seller to be unreasonably small capital, and (iii) will not result in debts that would be beyond either Seller’s ability to pay as same mature. Each Seller has delivered to the applicable Originator reasonably equivalent value in exchange for the transfer and sale of the Purchased Assets by such Originator to each Seller.

 

(iv)                              No Broker. Each Seller has not 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.

 

(v)                                 Ability to Perform. Each Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in the Facility Documents to which it is a party on its part to be performed.

 

(vi)                             Existence.

 

(A)          AOMI Seller (a) is a Maryland corporation, (b) is in good standing under the laws of Maryland, (c) has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect; and (d) is qualified to do business and is in good standing in all other jurisdictions in which the nature of the business conducted by it makes such qualification

 

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necessary, except where failure so to qualify would not be reasonably likely (either individually or in the aggregate) to have a Material Adverse Effect.

 

(B)          AOMF Seller (a) is a Delaware statutory trust (b) is in good standing under the laws of Delaware, (c) has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect; and (d) is qualified to do business and is in good standing in all other jurisdictions in which the nature of the business conducted by it makes such qualification necessary, except where failure so to qualify would not be reasonably likely (either individually or in the aggregate) to have a Material Adverse Effect.

 

(vii)                           Financial Statements. The Guarantor has heretofore furnished to Buyer a copy of its consolidated balance sheet and the consolidated balance sheets of its consolidated Subsidiaries for the fiscal year ended December 31, 2017 and the calendar quarter ended September 30, 2018, and the related consolidated statements of income and retained earnings and of cash flows for the Guarantor and its consolidated Subsidiaries for such fiscal year, setting forth in each case in comparative form the figures for the previous year, with the opinion thereon of a national recognized accounting firm. All such financial statements are complete and correct and fairly present, in all material respects, the consolidated financial condition of the Guarantor and its Subsidiaries and the consolidated results of their operations as at such dates and for such monthly periods, all in accordance with GAAP applied on a consistent basis. Since September 30, 2018, there has been no material adverse change in the consolidated business, operations or financial condition of the Guarantor and its consolidated Subsidiaries taken as a whole from that set forth in said financial statements nor is Guarantor aware of any state of facts which (without notice or the lapse of time) would or could result in any such material adverse change or could have a Material Adverse Effect. Guarantor has, on September 30, 2018, no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of the Guarantor except as heretofore disclosed to Buyer in writing.

 

(viii)                        No Breach. Neither (a) the execution and delivery of the Facility Documents nor (b) the consummation of the transactions therein contemplated to be entered into by either Seller in compliance with the terms and provisions thereof will conflict with or result in (i) a breach of the organizational documents of either Seller, or (ii) a breach of any applicable law, rule or regulation, or (iii) a breach of any order, writ, injunction or decree of any Governmental Authority, or (iv) a breach of other material agreement or instrument to which either Seller is a party or by which either Seller or any of either Seller’s Property is bound or to which either Seller is subject, or (v) a default under any such material agreement or instrument, or (vi) the creation or imposition of any

 

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Lien (except for the Liens created pursuant to the Facility Documents) upon any Property of either Seller pursuant to the terms of any such agreement or instrument.

 

(ix)                              Action. Each Seller has all necessary corporate or other power, authority and legal right to execute, deliver and perform its obligations under each of the Facility Documents to which it is a party; the execution, delivery and performance by each Seller of each of the Facility Documents to which it is a party have been duly authorized by all necessary corporate or other action on its part; and each Facility Document to which it is a party has been duly and validly executed and delivered by each Seller and constitutes a legal, valid and binding obligation of each Seller enforceable against each Seller in accordance with its terms.

 

(x)                                 Approvals. No authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority or any securities exchange are necessary for the execution, delivery or performance by each Seller of the Facility Documents to which it is a party or for the legality, validity or enforceability thereof, except for filings and recordings in respect of the Liens created pursuant to the Facility Documents.

 

(xi)                              Enforceability. This Agreement and all of the other Facility Documents executed and delivered by each Seller in connection herewith are legal, valid and binding obligations of each Seller and are enforceable against each Seller in accordance with their terms except as such enforceability may be limited by (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity.

 

(xii)                           [Reserved].

 

(xiii)                        Material Adverse Effect. Since the date of the most recently provided financial information with respect to each Seller and Guarantor there has been no development or event nor, to either Seller’s knowledge, any prospective development or event, which has had or could have a Material Adverse Effect.

 

(xiv)                      No Default. No Default or Event of Default has occurred and is continuing.

 

(xv)                         Adverse Selection. Each Seller has not selected the Purchased Assets in a manner so as to adversely affect Buyer’s interests; provided that as described in Section 3 herein, no Seller is under any obligation to offer or sell any or all Eligible Mortgage Loans, Home$ense Mortgage Loans or Portfolio Select Mortgage Loans to Buyer pursuant to this Agreement.

 

(xvi)                       Litigation. There are no actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other legal or arbitrable proceedings affecting either Seller, the Guarantor or any of its Subsidiaries or affecting any of the Property of any of them before any federal or state court or before any Governmental Authority that (i) questions or challenges the validity or enforceability of any of the Facility Documents or any action to be taken in connection

 

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with the transactions contemplated hereby, (ii) makes a claim in an aggregate amount greater than Five Hundred Thousand Dollars ($500,000), (iii) which, individually or in the aggregate, if not cured or if adversely determined, could be reasonably likely to have a Material Adverse Effect or constitute an Event of Default, or (iv) relates to any violation of the Home Ownership and Equity Protection Act or any state, city or district high cost home mortgage or predatory lending law.

 

(xvii)                    Margin Regulations. The use of all funds acquired by each Seller under this Agreement will not conflict with or contravene any of Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve System as the same may from time to time be amended, supplemented or otherwise modified.

 

(xviii)                 Taxes. Each Seller and its Subsidiaries have timely filed all tax returns that are required to be filed by it and have timely paid all Taxes, except for any such Taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided. There are no Liens for Taxes, except for statutory Liens for Taxes not yet due and payable.

 

(xix)                       Investment Company Act. None of any Seller or any of its respective Subsidiaries is an “investment company”, or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

 

(xx)                         Purchased Assets.

 

(A)          Each Seller has not assigned, pledged, or otherwise conveyed or encumbered any Purchased Asset to any other Person.

 

(B)          The provisions of this Agreement are effective to either constitute a sale of the Repurchase Assets to Buyer or to create in favor of Buyer a valid security interest in all right, title and interest of each Seller in, to and under the Repurchase Assets.

 

(xxi)                      Chief Executive  Office/Jurisdiction  of Organization. On the Effective Date, AOMI Seller’s office is located 3060 Peachtree Road NW, Suite 500, Atlanta, Georgia 30305. On the Effective Date, AOMI Seller’s jurisdiction of organization is Maryland. On the Effective Date, AOMF Seller’s office is located at 3060 Peachtree Road NW, Suite 500, Atlanta, Georgia 30305. On the Effective Date, AOMF Seller’s jurisdiction of organization is Delaware.

 

(xxii)                    Location of Books and Records. The location where each Seller, respectively, and the Guarantor keeps its books and records, including all computer tapes and records related to the Repurchase Assets, is its chief executive office.

 

(xxiii)                 True and Complete Disclosure. The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of each Seller to Buyer in connection with the negotiation, preparation or delivery of this Agreement and

 

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the other Facility Documents or included herein or therein or delivered pursuant hereto or thereto (other than with respect to the Purchased Assets), when taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. All written information furnished after the date hereof by or on behalf of each Seller to Buyer in connection with this Agreement and the other Facility Documents and the transactions contemplated hereby (other than with respect to the Purchased Assets) and thereby will be true, complete and accurate in every material respect, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. There is no fact known to a Responsible Officer of each Seller, after due inquiry, that could reasonably be expected to have a Material Adverse Effect that has not been disclosed herein, in the other Facility Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to Buyer for use in connection with the transactions contemplated hereby or thereby.

 

(xxiv)                ERISA.

 

(A)          No liability under Section 4062, 4063, 4064 or 4069 of ERISA has been or is expected to be incurred by Sellers or any ERISA Affiliate thereof with respect to any Plan which is a Single-Employer Plan in an amount that could reasonably be expected to have a Material Adverse Effect.

 

(B)          No Plan which is a Single-Employer Plan had a failure to satisfy the minimum funding standard, whether or not waived, as of the last day of the most recent fiscal year of such Plan ended prior to the date hereof, except where such failure would not result in a Material Adverse Effect, and no such plan which is subject to Section 412 of the Code failed to meet the requirements of Section 436 of the Code as of such last day. No Seller nor any ERISA Affiliate thereof are subject to a Lien in favor of such a Plan as described in Section 430(k) of the Code or Section 303(k) of ERISA.

 

(C)          Each Plan of Seller and each of its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code, except where the failure to comply would not result in any Material Adverse Effect.

 

(D)          None of any Seller or any of its ERISA Affiliates has incurred a tax liability under Chapter 43 of the Code or a penalty under Section 502(i) of ERISA which has not been paid in full, except where the incurrence of such tax or penalty would not result in a Material Adverse Effect.

 

(E)           None of any Seller or any ERISA Affiliate thereof has incurred or reasonably expects to incur any withdrawal liability under Section 4201 of ERISA as a result of a complete or partial withdrawal from a Multiemployer Plan in an amount that could reasonably be expected to have a Material Adverse Effect.

 

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(xxv)                   [Reserved].

 

(xxvi)                No Reliance.  Each Seller has made its own independent decisions to enter into the Facility Documents and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including without limitation, legal counsel and accountants) as it has deemed necessary. Each Seller is not relying upon any advice from Buyer as to any aspect of the Transactions, including without limitation, the legal, accounting or tax treatment of such Transactions.

 

(xxvii)    Plan Assets. Each Seller is not an employee benefit plan as defined in Section 3 of Title I of ERISA that is subject to Part 4, Subtitle B, Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code that is subject to 4975 of the Code, and the Purchased Assets are not “plan assets” within the meaning of 29 CFR §2510.3-101, as modified by Section 3(42) of ERISA, and transactions by or with either Seller are not subject to any state or local statute regulating investments of, or fiduciary obligations with respect to, governmental plans within the meaning of Section 3(32) of ERISA.

 

(xxviii)   Anti-Money Laundering Laws. Each Seller has complied with all applicable anti-money laundering laws and regulations, including without limitation the USA Patriot Act of 2001 (collectively, the “Anti-Money Laundering Laws”).

 

(xxix)     No Prohibited Persons. None of any Seller or any of its Affiliates, officers, directors, partners or members or any Eligible Mortgage Loan or the Mortgagor related to any such Eligible Mortgage Loan is an entity or person (or to either Seller’s knowledge, owned or controlled by an entity or person): (i) that is listed in the Annex to, or is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001 (“EO13224”); (ii) whose name appears on the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, https://www.treasury.gov/ofac/downloads/sdnlist.pdf); (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in EO13224; or (iv) who is otherwise affiliated with any entity or person listed above (any and all parties or persons described in clauses (i) through (iv) above are herein referred to as a “Prohibited Person”).

 

Section 14.            Covenants Of Each Seller. On and as of the date hereof and each Purchase Date and on each day until this Agreement is no longer in force, each Seller covenants as follows:

 

(a)                                 Preservation of Existence; Compliance with Law.  Each Seller shall:

 

(i)                                     Preserve and maintain its legal existence;

 

(ii)                                  Comply  with  the  requirements  of  all  applicable  laws,  rules, regulations and orders, whether now in effect or hereafter enacted or promulgated by any

 

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applicable Governmental Authority (including, without limitation, all environmental laws);

 

(iii)                               Preserve and maintain all material rights, privileges, licenses, franchises, permits or other approvals necessary for each Seller to conduct its business and to perform its obligations under the Facility Documents, and shall conduct its business strictly in accordance with applicable law; and

 

(iv)                              Keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied.

 

(b)                                 Taxes. Each Seller and each Seller’s Subsidiaries shall timely file all tax returns that are required to be filed by them and shall timely pay all Taxes due, except for any such Taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided.

 

(c)                                  Notice of Proceedings or Adverse Change. Each Seller shall give notice to Buyer promptly after a responsible officer of each Seller has any knowledge of:

 

(i)                                     the occurrence of any Default or Event of Default;

 

(ii)                                  any (a) default or event of default under any Indebtedness of any Seller or any Originator or (b) litigation, investigation, regulatory action or proceeding that is pending or threatened by or against a Seller or an Originator in any federal or state court or before any Governmental Authority which, if not cured or if adversely determined, would reasonably be expected to have a Material Adverse Effect or constitute a Default or Event of Default;

 

(iii)                               any litigation or proceeding that is pending or threatened against (a) any Seller or Guarantor in which the amount involved exceeds Five Hundred Thousand Dollars ($500,000), and is not covered by insurance, in which injunctive or similar relief is sought, or which, if adversely determined, would reasonably be expected to have a Material Adverse Effect and (b) any litigation or proceeding that is pending or threatened in connection with any of the Repurchase Assets, which, if adversely determined, would reasonably be expected to have a Material Adverse Effect; and

 

(iv)                             as soon as reasonably practicable, notice of any of the following events:

 

(A)                               a change in the insurance coverage of either Seller, with a copy of evidence of same attached;

 

(B)                               any material change in accounting policies or financial reporting practices of either Seller;

 

(C)                              [reserved];

 

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(D)                               promptly upon receipt of notice or knowledge of any Lien or security interest (other than security interests created hereby or under any other Facility Document) on, or claim asserted against, any of the Repurchase Assets;

 

(E)                                as soon as practicable, but, in any case, no more than two (2)      Business Days, after either Seller has obtained knowledge of any fact that could be the basis of any Purchased Asset Issue with respect to a Purchased Asset, notice identifying the Purchased Asset with respect to which such Purchased Asset Issue exists and detailing the cause of such Purchased Asset Issue; or

 

(F)                                 any other event, circumstance or condition that has resulted or could reasonably be expected to result in a Material Adverse Effect.

 

(v)           Promptly, but no later than five (5) Business Days after either Seller receives any of the same, deliver to Buyer a true, complete, and correct copy of any notice, or any other document (other than notices delivered in the ordinary course of business or documents having no impact on the value of the Purchased Assets) received by either Seller from any Person pursuant to, or in connection with, any of the Repurchase Assets; or

 

(vi)          Promptly, but no later than ten (10) Business Days after either Seller receives notice of the same, any Mortgage Loan submitted to a Take-out Investor (whole loan or securitization) and rejected for purchase by such Take-out Investor.

 

(d)                                 Financial Reporting. Each Seller (itself or in consolidation with Guarantor) shall maintain a system of accounting established and administered in accordance with GAAP, and each Seller shall furnish to Buyer in connection with clauses (i) - (iv) below, via email to nomuracovenants@nomura.com, in a format reasonably acceptable to Buyer:

 

(i)                                    Within ninety (90) days after the last day of its fiscal year, each Seller’s and Guarantor’s (which may be consolidated) unaudited balance sheet as of the end of such fiscal year, in each case presented fairly in accordance with GAAP;

 

(ii)                                  Within sixty (60) days after the last day of each of the first three (3)                   fiscal quarters of each fiscal year of each Seller, each of the Sellers’ and Guarantor’s management certified Financial Statements, including a balance sheet, income statement and cash flow statement, each as of the end of such fiscal quarter and in each case presented fairly in accordance with GAAP;

 

(iii)                               Within one-hundred and twenty (120) days after the last day of its fiscal year, commencing with the 2017 fiscal year, each of the Sellers’ and Guarantor’s Financial Statements for such fiscal year, presented fairly in accordance with GAAP, and accompanied, in all cases, by an unqualified report of a nationally recognized accounting firm;

 

(iv)                              (A) Simultaneously with the furnishing of each of the financial statements to be delivered pursuant to subsection (i)-(iii) above, a certificate of each Seller in form and substance acceptable to Buyer in its reasonable discretion, and

 

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certified by an executive officer of the respective Seller, and (B) quarterly, or simultaneously with the financial statements to be delivered pursuant to subsection (ii) above, an officer’s certificate of covenant compliance of each Seller certifying that the related Financial Statements are true and correct in all material respects;

 

(v)                                 Within fifteen (15) days after the end of each calendar month, a monthly servicing report of the related Servicer or Subservicer, in form and substance reasonably acceptable to Buyer;

 

(vi)                              Two (2) Business Days prior to each Remittance Date, a monthly remittance report of the related Servicer or Subservicer, in form and substance reasonably acceptable to the Buyer;

 

(vii)                           Within five (5) days after any material amendment, modification or supplement has been entered into with respect to the related Subservicing Agreement, a fully executed copy thereof, certified by the Seller;

 

(viii)                        Within fifteen (15) days after the end of each calendar month, a monthly report listing Mortgage Loans held for each Seller that are not Purchased Assets;

 

(ix)                              Any other material agreements, correspondence, documents or other information not included in an Underwriting Package which is related to either Seller or the Purchased Assets, as soon as possible after the discovery thereof by either Seller;

 

(x)                                 Promptly, from time to time, such other information regarding the business affairs, operations and financial condition of each Seller, the Guarantor and their Subsidiaries as Buyer may reasonably request;

 

(xi)                              Within two (2) days after each sale of a Purchased Asset, a copy of the related purchase confirmation (which indicates the Purchased Asset sold, the date sold, the name of the purchaser and the purchaser price); and

 

(xii)                           Access to the related Servicer’s or Subservicer’s online loan data site containing sale data, data tapes and other reports maintained by the related Servicer or Subservicer in accordance with the related Servicing Agreement or Subservicing Agreement.

 

(xiii)                        Within fifteen (15) days after the end of each calendar month, a monthly report listing such month’s Delinquency Percentage and Repurchase Percentage (as each term is defined in the related MSR Purchase Agreement);

 

(e)                                  Visitation and Inspection Rights. The Sellers shall permit Buyer to inspect, and to discuss with the Sellers’ officers, agents and auditors, the affairs, finances, and accounts of the Sellers, the Repurchase Assets, and the Sellers’ books and records, and to make abstracts or reproductions thereof and to duplicate, reduce to hard copy or otherwise use any and all computer or electronically stored information or data, in each case, (i) during normal business hours, (ii) upon reasonable notice (provided, that upon the occurrence of an Event of Default, no

 

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notice shall be required), and (iii) at the expense of the Sellers to discuss with its officers, its affairs, finances, and accounts.

 

(f)                                   Reimbursement of Expenses. Subject to Section 20, on the Effective Date, the Sellers shall reimburse Buyer for all reasonable expenses (including reasonable legal fees) incurred by Buyer in connection with the Facility Documents, the Transactions and Buyer’s due diligence. From and after such date, the Sellers shall promptly reimburse Buyer for all reasonable expenses as the same are incurred by Buyer and within thirty (30) days of the receipt of invoices therefor.

 

(g)                                  [Reserved].

 

(h)                                 Further Assurances.  The Sellers shall execute and deliver to Buyer all further documents, financing statements, agreements and instruments, and take all further action that may be required under applicable law, or that Buyer may reasonably request, in order to effectuate the transactions contemplated by this Agreement and the Facility Documents or, without limiting any of the foregoing, to grant, preserve, protect and perfect the validity and first-priority of the security interests created or intended to be created hereby. The Sellers shall do all things necessary to preserve the Repurchase Assets so that they remain subject to a first priority perfected security interest hereunder. Without limiting the foregoing, the Sellers will comply with all rules, regulations, and other laws of any Governmental Authority and cause the Repurchase Assets to comply with all applicable rules, regulations and other laws. The Sellers will not allow any default for which the Sellers are responsible to occur under any Repurchase Assets or any Facility Document and the Sellers shall fully perform or cause to be performed when due all of its obligations under any Repurchase Assets or the Facility Documents.

 

(i)                                     True and Correct Information. All information, reports, exhibits, schedules, financial statements or certificates of the Sellers or any of their Affiliates or any of their officers furnished to Buyer hereunder and during Buyer’s diligence of the Sellers are and will be true and complete and will not omit to disclose any material facts necessary to make the statements therein or therein, in light of the circumstances in which they are made, not misleading. All required financial statements, information and reports delivered by the Sellers to the Buyer pursuant to this Agreement shall be prepared in accordance with GAAP, or in connection with SEC filings, if any, the appropriate SEC accounting requirements.

 

(j)                                   ERISA Events.

 

(i)                                     Promptly upon becoming aware of the occurrence of any Event of ERISA Termination which, together with all other Events of ERISA Termination occurring within the prior twelve (12) months, involves a payment of money by or a potential aggregate liability of a Seller or any ERISA Affiliate thereof or any combination of such entities in excess of Five Hundred Thousand Dollars ($500,000) such Seller shall give Buyer a written notice specifying the nature thereof, what action such Seller or any ERISA Affiliate thereof has taken and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto.

 

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(ii)                                  Promptly upon receipt thereof, Seller shall furnish to Buyer copies of (i) all notices received by Seller or any ERISA Affiliate thereof of the PBGC’s intent to terminate any Plan or to have a trustee appointed to administer any Plan; (ii) all notices received by Seller or any ERISA Affiliate thereof from the sponsor of a Multiemployer Plan pursuant to Section 4202 of ERISA involving a withdrawal liability in excess of Five Hundred Thousand Dollars ($500,000); and (iii) all funding waiver requests filed by Seller or any ERISA Affiliate thereof with the Internal Revenue Service with respect to any Plan, the accrued benefits of which exceed the present value of the plan assets as of the date the waiver request is filed by more than Five Hundred Thousand Dollars ($500,000), and all communications received by Seller or any ERISA Affiliate thereof from the Internal Revenue Service with respect to any such funding waiver request.

 

(k)                                 Financial Condition Covenants. The Guarantor shall comply with the Financial Condition Covenants set forth in the related Guaranty.

 

(l)                                     No Adverse Selection. The Sellers shall not select Eligible Mortgage Loans to be sold to Buyer as Purchased Assets using any type of adverse selection or other selection criteria which would adversely affect Buyer; provided that as described in Section 3 herein, Sellers are not under any obligation to offer or sell any or all Eligible Mortgage Loans, Home$ense Mortgage Loans or Portfolio Select Mortgage Loans to Buyer pursuant to this Agreement.

 

(m)                             Insurance. Sellers shall continue to maintain Fidelity Insurance in an aggregate amount at least equal to Five Million Dollars ($5,000,000). Sellers shall maintain Fidelity Insurance in respect of its officers, employees and agents, with respect to any claims made in connection with all or any portion of the Repurchase Assets. Sellers shall notify Buyer of any material change in the terms of any such Fidelity Insurance.

 

(n)                                 Books and Records. Sellers shall, to the extent practicable, maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing the Repurchase Assets in the event of the destruction of the originals thereof), and keep and maintain or obtain, as and when required, all documents, books, records and other information reasonably necessary or advisable for the collection of all Repurchase Assets.

 

(o)                                 Illegal Activities. The Sellers shall not engage in any conduct or activity that could subject its assets to forfeiture or seizure.

 

(p)                                 Material Change in Business. No Seller shall make any material change in the nature of its business as carried on as of the date hereof.

 

(q)                                 Limitation on Dividends and Distributions. Following the occurrence and during the continuation of an Event of Default or if an Event of Default would result therefrom, Sellers shall not make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity interest of the Sellers, whether now or hereafter outstanding, or make any other distribution or dividend in respect of any of the foregoing or to any shareholder or equity owner

 

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of Sellers, either directly or indirectly, whether in cash or property or in obligations of Sellers or any of Sellers’ consolidated Subsidiaries.

 

(r)                                    Disposition of Assets; Liens. The Sellers shall not cause any of the Repurchase Assets to be sold, pledged, assigned or transferred; nor shall the Sellers create, incur, assume or suffer to exist any mortgage, pledge, Lien, charge or other encumbrance of any nature whatsoever on any of the Repurchase Assets, whether real, personal or mixed, now or hereafter owned, other than Liens in favor of Buyer.

 

(s)                                   Substitute Mortgage Loans. Sellers shall not approve any Substitute Mortgage Loans (as defined in the applicable Mortgage Loan Purchase Agreement) without Buyer’s written consent.

 

(t)                                   ERISA Matters.

 

(i)                                     The Sellers shall not permit any event or condition which is described in any of clauses (i) through (viii) of the definition of “Event of ERISA Termination” to occur or exist with respect to any Plan or Multiemployer Plan if such event or condition, together with all other events or conditions described in the definition of Event of ERISA Termination occurring within the prior twelve (12) months, involves the payment of money by or an incurrence of liability of the Sellers or any ERISA Affiliate thereof, or any combination of such entities in an amount in excess of One Million Dollars ($1,000,000).

 

(ii)                                  The Sellers shall not be employee benefits plans as defined in Section 3 of Title I of ERISA that is subject to Part 4, Subtitle B, Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code that is subject to Section 4975 of the Code and the Sellers shall not use “plan assets” within the meaning of 29 CFR §2510.3-101, as modified by Section 3(42) of ERISA, to engage in this Agreement or the Transactions hereunder and transactions by or with the Sellers are not subject to any state or local statute regulating investments of, or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.

 

(u)                                Consolidations,  Mergers  and  Sales  of  Assets.   The  Sellers  shall  not (i) consolidate or merge with or into any other Person or (ii) sell, lease or otherwise transfer all or substantially all of its assets to any other Person.

 

(v)                                 Facility Documents. Sellers shall not permit the amendment or modification of, the waiver of any event of default under, or the termination of any Facility Document without Buyer’s prior written consent. The Sellers shall not waive (or direct the waiver of) the performance by any party to any Facility Document of any action, if the failure to perform such action would adversely affect the Sellers or any Purchased Assets in any material respect, nor has any such Person waived (or has directed the waiver of) any default resulting from any action or inaction by any party.

 

(w)                               Special Purpose Entity. Unless otherwise consented to by the Buyer in writing, and except as permitted by the Facility Documents, the Sellers shall be Special Purpose Entities that shall (a) own no assets, and will not engage in any business, other than the assets

 

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and transactions specifically contemplated by the Facility Documents; (b) not incur any Indebtedness or obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than pursuant to the Facility Documents; (c) not make any loans or advances to any Affiliate or third party, and shall not acquire obligations or securities of the Sellers’ Affiliates; (d) pay its debts and liabilities (including, as applicable, shared personnel expenses and overhead expenses) only from its own assets; (e) comply with the provisions of its organizational documents; (f) do all things necessary to observe organizational formalities and to preserve its existence, and not amend, modify or otherwise change its organizational documents, or suffer same to be amended, modified or otherwise changed, without the Buyer’s prior written consent which shall not be unreasonably withheld; (g) maintain all of its books, records and financial statements separate from those of its Affiliates (except that such financial statements may be consolidated with Guarantor’s or as a matter of applicable law; provided, that (i) appropriate notation shall be made on such financial statements if prepared to indicate the separateness of the Sellers from such Affiliates and to indicate that Sellers’ assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (ii) such assets shall also be listed on the Sellers’ own separate balance sheet if prepared and (iii) the Sellers shall file their own tax returns if filed, except to the extent consolidation is required or permitted under applicable law); (h) be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, shall not identify itself or any of its Affiliates as a division or part of the other; (i) not enter into any transactions with any Affiliates except on commercially reasonable terms similar to those available to unaffiliated parties in an arm’s length transaction; (j) maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; (k) not engage in or suffer any dissolution, winding up, liquidation, consolidation or merger or transfer all or substantially all of its properties and assets to any other Person (except as contemplated herein); (l) not commingle its funds or other assets with those of any Affiliate or any other Person and shall maintain its properties and assets in such manner that it would not be costly or difficult to identify, segregate or ascertain its properties and assets from those of others; (m) not institute against, or join any other Person in instituting against the Sellers, any proceedings of the type referred to in the definition of “Insolvency Event” hereunder or seek to substantively consolidate the Sellers in connection with any Insolvency Event with respect to the Sellers; (n) will not hold itself out to be responsible for the debts or obligations of any other Person; (o) not form, acquire or hold any Subsidiary or own any equity interest in any other entity; (p) use separate stationery, invoices and checks bearing its own name; (q) allocate fairly and reasonably any overhead for shared office space and services performed by an employee of an Affiliate; and (r) not pledge its assets to secure the obligations of any other Person.

 

(x)                                 [Reserved].

 

(y)                                 Delivery of Appraisal, BOV or BPO. For each RTL Mortgage Loan that is subject to a Transaction hereunder the related Seller shall obtain, or cause the related Subservicer to obtain and deliver to Buyer, at such Seller’s cost, (i) an Appraisal for the related Mortgaged Property that is no more than ninety (90) days old at the time of the applicable Purchase Date (unless otherwise approved by Buyer in its sole and absolute discretion) and (ii) a BPO for the related Mortgaged Property as soon as possible, but no later than five (5) Business Days

 

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following the occurrence of any of the following: (a) the date on which such RTL Mortgage Loan becomes more than sixty (60) days delinquent in payment, and thereafter, every one hundred and eighty (180) days during which such RTL Mortgage Loan remains delinquent; (b) if any extension is requested with regard to the stated maturity date of any RTL Mortgage Loan under the Mortgage, the Mortgage Note or any other related Loan Document, (c) if any default exists at the stated maturity date of any RTL Mortgage Loan under the Mortgage, the Mortgage Note or any other related Loan Document and (d) the date that is one (1) year following the date of the BPO or Appraisal, as applicable, previously delivered to Buyer for such Mortgage Loan. The related Seller shall cause the related Subservicer to provide Buyer (x) the values included in such updated BPOs or Appraisals, as applicable, with its then-current monthly servicing reports and (y) if requested by Buyer, copies of such BPOs or Appraisals, as applicable. Notwithstanding the foregoing, Buyer shall have the right to obtain updated BPOs or Appraisals, as applicable, on any Mortgaged Property at any time at Buyer’s cost; provided that any BPO or Appraisal, as applicable, obtained by Buyer after the occurrence of and during the continuance of an Event of Default shall be at such Seller’s cost. If at any time such Seller, the applicable Servicer or the applicable Subservicer obtains a BPO or Appraisal, as applicable, for any Mortgage Loan that is subject to a Transaction hereunder (which BPO or Appraisal, as applicable, is in addition to the BPOs and Appraisals that such Seller is required to deliver (or cause to be delivered) to Buyer under this Section 14(y)), such Seller shall promptly deliver a copy of such additional BPO or Appraisal to Buyer. For each Cherrywood Mortgage Loan or a CRE Bridge Mortgage Loan, a BOV for the related Mortgaged Property (A) no later than the date that is one (1) calendar year following the date of the BOV or Appraisal, as applicable, previously delivered to Buyer for such Purchased Asset, or (B) after the occurrence of a material adverse change in such Purchased Asset or the related Mortgaged Property, as determined by Buyer in its good faith discretion (and which may include, but is not limited to a material decline in Net Operating Income, occupancy, material increases in expenses (either operating expenses or unforeseen capital expenditure) or any other material adverse changes to observable performance metrics), in the credit profile or value of the related Mortgaged Property or such Purchased Asset; provided, that, if any of the events referenced in clause (B) above has occurred and is continuing, the BOV or Appraisal, as applicable, shall be updated as such Seller’s cost no later than every four (4) months after the most recently delivered BOV or Appraisal, as applicable; and (iii) to the extent such Purchased Asset is an RTL Mortgage Loan, a BPO for the related Mortgaged Property as soon as possible, but no later than five (5) Business Days following the occurrence of any of the following: (1) the date on which the related Mortgagor requests an extension with regard to the stated maturity date of such Purchased Asset by the related Mortgagor under the Mortgage, the Mortgage Note or any other related Loan Document, if applicable, and (2) the date on which the related Mortgagor is (x) fails to repay the related Purchased Asset on the stated Maturity of such Purchased Asset (to the extent no extension was granted with respect to such stated maturity date) and / or (y) sixty (60) or more Days Delinquent in payment, and (z) thereafter, every one hundred and eighty (180) calendar days during which such Mortgagor remains delinquent. With respect to each Purchased Asset, the applicable Seller shall cause the related Servicer to provide Buyer (i) the values included in the related updated Appraisals, BOVs, or BPOs, as applicable, with its then-current monthly servicing reports and (ii) if requested by Buyer, copies of updated Appraisals, BOVs, or BPOs, as applicable. Notwithstanding the foregoing, Buyer shall have the right to obtain updated Appraisals, BOVs, or BPOs, as applicable, on any Mortgaged Property (i) at any time prior to the occurrence of an

 

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Event of Default, at Buyer’s cost and (ii) at any time after the occurrence of and during the continuation of an Event of Default, at the applicable Sellers’ cost. If at any time the applicable Seller or the applicable Servicer obtains an Appraisal, BOV, or BPO, as applicable, for any Purchased Asset that is subject to a Transaction hereunder (which Appraisal, BOV, or BPO, as applicable, is in addition to the Appraisal, BOV, or BPO, as applicable, that such Seller is required to deliver (or cause to be delivered) to Buyer under this Section 14(y)), such Seller shall promptly deliver (or cause to be delivered) a copy of such additional Appraisal, BOV, or BPO, as applicable, to Buyer.

 

(z)                                  Underwriting Guidelines. Sellers shall provide to Buyer written update packages containing any modifications to the Underwriting Guidelines since the date of the prior delivery, clearly identifying such changes. No Mortgage Loans originated pursuant to Underwriting Guidelines as amended by any such modification shall constitute Eligible Mortgage Loans unless and until such Underwriting Guidelines have been approved by Buyer in its good faith discretion, and Sellers shall not request that Buyer enter into a Transaction with respect to any Mortgage Loan originated pursuant to such revised Underwriting Guidelines prior to such delivery and Buyer’s approval thereof.

 

(aa)                          Electronic Tracking Agreement. Sellers shall promptly notify Buyer upon registering as a member of the MERS® System. Within ten (10) Business Days of such registration, Sellers shall enter into an Electronic Tracking Agreement with Buyer, MERSCORP Holdings, Inc. and MERS.

 

(bb)                          Holdback Amounts. With respect to each RTL Mortgage Loan, Cherrywood Mortgage Loan and CRE Bridge Mortgage Loan, the applicable Seller shall hold or cause to be held all related Holdback Amounts (exclusive of the related Non-Segregated Holdback Amounts) not yet disbursed to the related Mortgagor in the applicable Holdback Account and shall apply the same to improve and rehabilitate the related Mortgaged Property in accordance with the related Loan Documents. Except to the extent such funds (with respect to any Purchased Asset that is an RTL Mortgage Loan) are held in a Collection Holdback Sub-Account, the applicable Seller shall hold (or cause to be held) the related Holdback Amounts (exclusive of the related Non Segregated Holdback Amounts) in the applicable Holdback Account for the benefit of Buyer. With respect to any Purchased Asset that is an RTL Mortgage Loan, following the occurrence of a Holdback Trigger Event, the applicable Seller shall cause the related Holdback Amounts (including, for the avoidance of doubt, the related Non-Segregated Holdback Amounts) to be held in the applicable Collection Holdback Sub Account in accordance with the related Loan Documents. The applicable Seller shall apply (or shall cause to be applied) the related Disbursed Holdback Amount in accordance with the related Loan Documents.

 

(cc)                            Servicing. Notwithstanding anything to the contrary in the applicable Servicing Agreement or Subservicing Agreement, each Seller hereby agrees that it shall not permit any Person (other than a Servicer or Subservicer pursuant to the applicable Servicing Agreement or Subservicing Agreement and who is subject to a Servicer Notice or Subservicer Notice) to (i) service (or subservice) or (ii) otherwise employ any subservicer or successor servicer in connection with the servicing of, in each case, any of the Purchased Assets, without the prior written consent of Buyer.

 

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Section 15. Events Of Default. If any of the following events (each an “Event of Default”) occur, Sellers and Buyer shall have the rights set forth in Section 16, as applicable:

 

(a)                                 Payment Default. (i) Any Seller or Guarantor fails to make any payment of (A) Repurchase Price (other than Price Differential) when due, whether by acceleration, mandatory repurchase or otherwise, (B) Price Differential when due, under the terms of the Facility Documents or (C) Margin Deficit when due, under the terms of the Facility Documents or (ii) a Seller or Guarantor fails to make any payment of any sum (other than Repurchase Price, Price Differential or Margin Deficit) when due under the terms of the Facility Documents and with respect to this clause (ii) only, such Default is unremedied for more than three (3) Business Days; or

 

(b)                                 Immediate Representation and Warranty Default. The failure of a Seller to perform, comply with or observe any representation, warranty or certification applicable to such Seller contained in any of Sections 13(a)(iii) (Solvency); (a)(vi) (Existence); (a)(viii) (No Breach); (a)(ix) (Action); (a)(xi) (Enforceability); (a)(xvi) (Litigation); (a)(xvii) (Margin Regulations); (a)(xix) (Investment Company Act); (a)(xx) (Purchased Assets); (a)(xxiii) (True and Complete Disclosure); (a)(xxiv) (ERISA); (a)(xxvi) (No Reliance); (a)(xxvii) (Plan Assets) unless either (i) such failure is corrected in accordance with Section 408(b)(20) of ERISA or Section 4975(d)(23) of the Code, or (ii) such failure does not result in a non-exempt violation of Similar Law and is corrected within sixty (60) days after delivery of such failure; or Section 13(a)(xxix) (No Prohibited Persons), in each case, of this Agreement; or

 

(c)                                  Additional Representation and Warranty Defaults. Any representation, warranty or certification made or deemed made herein or in any other Facility Document (and not identified in Section 15(b)) by the any Seller or Guarantor or any Pledgor or any certificate furnished to Buyer pursuant to the provisions hereof or thereof or any information with respect to the Purchased Assets furnished in writing by on behalf of any Seller or Guarantor or any Pledgor shall prove to have been untrue or misleading in any material respect as of the time made or furnished (other than the representations and warranties set forth in Schedule 1-A, 1-B or 1-C; unless (A) such Seller or the Guarantor or such Pledgor shall have made any such representations and warranties with actual knowledge that they were materially false or misleading at the time made or (B) any such representations and warranties have been determined in good faith by Buyer to be materially false or misleading on a regular basis) and such breach of a representation, warranty or certification shall continue unremedied for more than thirty (30) days; or

 

(d)                                 Immediate Covenant Default. The failure of either Seller to perform, comply with or observe any term, covenant or agreement applicable to either Seller contained in any of Sections 14(a)(i) and (ii) (Preservation of Existence; Compliance with Law); (i) (True and Correct Information); (k) (Financial Condition Covenants); (l) (No Adverse Selection); (o) (Illegal Activities); (p) (Material Change in Business); (q) (Limitation on Dividends and Distributions); (r) (Disposition of Assets; Liens); (t) (ERISA Matters) unless, in the case of Section 14(t)(ii), either (i) such failure is corrected in accordance with Section 408(b)(20) of ERISA or Section 4875(d)(23) of the Code, or (ii) such failure does not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a non-exempt violation of Similar Law and is corrected with sixty (60) days after discovery of such failure;

 

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Section 14(u) (Consolidations, Mergers and Sales of Assets); or (w) (Special Purpose Entity), in each case, of this Agreement; or Guarantor under any of Sections 25(a)(i) and (ii) (Preservation of Existence; Compliance with Law); (e) (Illegal Activities); (f) (Limitation on Dividends and Distributions); in each case, of the applicable Guaranty; or Guarantor under Section 25(g) (Financial Covenants; Officer’s Compliance Certificate) of the applicable Guaranty; or

 

(e)                                  Additional Covenant Defaults. Any Seller or Guarantor or any Pledgor shall fail to observe or perform any other covenant or agreement contained in the Facility Documents (and not identified in clause (d) of Section 15), and if such default shall be capable of being remedied, such failure to observe or perform shall continue unremedied beyond fifteen (15) days; or

 

(f)                                   Judgments. A final judgment or judgments for the payment of money in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate shall be rendered against any Seller or Guarantor by one or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within thirty (30) days from the date of entry thereof, and such party shall not, within said period of thirty (30) days, or such longer period during which execution of the same shall have been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal; or

 

(g)                                  Cross-Default. (i) Any Seller or Guarantor shall be in default beyond any applicable grace period under (A) any Indebtedness of such Seller or the Guarantor which default involves the failure to pay a material matured obligation or permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness, or (B) any other financing, hedging, security or other agreement or contract between such Seller or the Guarantor on the one hand, and the Buyer on the other; provided however that, with respect to the Guarantor only, obligations in an aggregate amount of less than $1,000,000 shall not be considered material; or (ii) any Seller shall be in default beyond any applicable grace period under the applicable Mortgage Loan Purchase Agreement; or

 

(h)                                 Insolvency Event. An Insolvency Event shall have occurred with respect to either Seller or the Guarantor; or

 

(i)                                     Enforceability. For any reason (other than any action by Buyer or an Affiliate thereof) (i) any Facility Document at any time shall not to be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance with its terms, (ii) the Sellers (or an Affiliate thereof) shall contest the validity, enforceability, perfection or priority of any Lien granted pursuant thereto, (iii) any Person (other than Buyer) contests the validity, enforceability, perfection or priority of any Lien granted pursuant thereto and the Sellers and Guarantor fail to take all commercially reasonable action to contest such contesting Person, or (iv) any party thereto (other than Buyer) shall seek to disaffirm, terminate, limit or reduce its obligations under any Facility Document; or

 

(j)                                    Liens. The Sellers shall grant, or suffer to exist, any Lien on any Repurchase Asset (except any Lien in favor of Buyer) or Buyer for any reason ceases to have a valid, first priority security interest in any of the Repurchase Assets; or

 

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(k)                                 Material Adverse Effect. A Material Adverse Effect, other than any effect from market events that do not have a disproportionate impact on the Buyer or its Affiliates, shall have occurred as determined by Buyer in its reasonable discretion; or

 

(l)                                     Change in Control. A Change in Control shall have occurred; or

 

(m)                             Inability to Perform. Any Seller or Guarantor shall admit its inability to, or its intention not to, perform any of their obligations under the Facility Documents; or

 

(n)                                 [Reserved];

 

(o)                                 Failure to Transfer.  Sellers fail to transfer the Purchased Assets to Buyer on or prior to the applicable Purchase Date (provided Buyer has paid the Purchase Price); or

 

(p)                                 Government Action. Any Governmental Authority or any person, agency or entity acting or purporting to act under Governmental Authority shall have received any judicial or administrative order permitting such Governmental Authority to take any action that is reasonably likely to result in a condemnation, seizure or appropriation, or assumption of custody or control of, all or any substantial part of the Property of any Seller or Guarantor, or shall have taken any action to displace the management of any Seller or Guarantor or to materially curtail its authority in the conduct of the business of any Seller or Guarantor, or takes any action in the nature of enforcement to remove, limit or restrict the approval of any Seller or Guarantor as an issuer, buyer or a seller of Mortgage Loans or REO Properties or securities backed thereby, and such action shall not have been discontinued or stayed within thirty (30) days; or

 

(q)                                 Assignment. Assignment or attempted assignment by the Sellers of this Agreement or any other Facility Document or any rights hereunder or thereunder without first obtaining the specific written consent of Buyer; or

 

(r)                                    Reasonable Assurances. Buyer shall reasonably request, specifying the reasons for such request, reasonable information, and/or written responses to such requests, regarding the financial well-being of any Seller or Guarantor (including but not limited to any information regarding any repurchase and indemnity requests or demands made upon any Seller or Guarantor by any third party investors) and such reasonable information and/or responses shall not have been provided within five (5) Business Days of such request; or

 

(s)                                   Financial Statements. Guarantor’s audited annual financial statements or the notes thereto or other opinions or conclusions stated therein are qualified or limited by reference to the status of the Sellers or the Guarantor as a “going concern” or a reference of similar import; or

 

(t)                                    Servicer Default. With respect to any Servicer, a Servicer Termination Event has occurred and such Servicer is not replaced with a successor servicer reasonably acceptable to Buyer within thirty (30) calendar days; or

 

(u)                                 Collection Holdback Sub-Account Maintenance. Following the occurrence of a Holdback Trigger Event, any Seller has knowledge that the amount on deposit in

 

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any Collection Holdback Sub-Account is less than the related Holdback Amounts (including, for the avoidance of doubt, the related Non-Segregated Holdback Amounts), and the deficiency is not deposited within two (2) Business Days.

 

(v)                                 MSR Purchase Agreements. The related Seller fails to purchase the MSR (as defined in the related MSR Purchase Agreement) within five (5) Business Days of receipt of notice of an occurrence of an MSR Purchase Trigger Event (as defined in the related MSR Purchase Agreement).

 

Section 16.                                   Remedies.

 

(a)                                 If an Event of Default occurs, the following rights and remedies are available to Buyer; provided, that an Event of Default shall be deemed to be continuing unless expressly waived by Buyer in writing:

 

(i)                                     At the option of Buyer, exercised by written notice to Sellers (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Insolvency Event of the Sellers or the Guarantor), the Repurchase Date for each Transaction hereunder, if it has not already occurred, shall be deemed immediately to occur (the date on which such option is exercised or deemed to have been exercised being referred to hereinafter as the “Accelerated Repurchase Date”).

 

(ii)                                  If Buyer exercises or is deemed to have exercised the option referred to in subsection (a)(i) of this Section,

 

(A)                              Sellers’ obligations in such Transactions to repurchase all Purchased Assets, at the Repurchase Price therefor on the Repurchase Date determined in accordance with subsection (a)(i) of this Section, (1) shall thereupon become immediately due and payable, (2) all Income paid after such exercise or deemed exercise shall be retained by Buyer and applied to the aggregate unpaid Repurchase Price and any other amounts owed by Sellers hereunder, and (3) Sellers shall immediately deliver all Purchased Assets to the Buyer subject to such Transactions then in Sellers’ or Servicers’ or Subservicers’ possession or control, including Mortgage Loans; and

 

(B)                               to the extent permitted by applicable law, the Repurchase Price with respect to each such Transaction (determined as of the Accelerated Repurchase Date) shall be increased by the aggregate amount obtained by daily application of, on a 360 day per year basis for the actual number of days during the period from and including the date of the exercise or deemed exercise of such option to but excluding the date of payment of the Repurchase Price as so increased, (x) the Post-Default Rate in effect following an Event of Default to (y) the Repurchase Price for such Transaction as of the Repurchase Date as determined pursuant to subsection (a)(i) of this Section in accordance with the definition of Repurchase Price.

 

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(iii)                               Upon the occurrence of one or more Events of Default, Buyer shall have the right to obtain physical possession of all files of the Sellers relating to the Purchased Assets and the Repurchase Assets and all documents relating to the Purchased Assets which are then or may thereafter come in to the possession of the Sellers or any third party acting for the Sellers and the Sellers shall deliver to Buyer such assignments as Buyer shall request.

 

(iv)                              Upon the occurrence of an Event of Default, upon notice to the Sellers, the Buyer, or Buyer through its Affiliates or designees, may (A) immediately sell, at a public or private sale at such price or prices as Buyer may reasonably deem satisfactory any or all of the Purchased Assets and Repurchase Assets on a servicing released basis with respect to the Servicing Released Mortgage Loans and on a servicing retained basis with respect to the Servicing Retained Mortgage Loans or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Assets and Repurchase Assets, to retain such Purchased Assets and Repurchase Assets and give Sellers credit for such Purchased Assets in an amount equal to the fair market value of the related Mortgage Loans or REO Property (as determined and adjusted by the Buyer in its sole discretion, giving such weight to the outstanding principal balance of such Mortgage Loan or REO Property as Buyer deems appropriate) against the aggregate unpaid Repurchase Price for such Purchased Assets and Repurchase Assets and any other amounts owing by the Sellers under the Transaction Documents. The proceeds of any disposition of Purchased Assets and Repurchase Assets effected pursuant to the foregoing shall be applied as determined by Buyer.

 

(v)                                 Sellers shall be liable to Buyer for (A) the amount of all actual expenses, including reasonable documented legal fees and expenses, actually incurred by Buyer in connection with or as a consequence of an Event of Default, (B) all actual costs incurred in connection with covering transactions or hedging transactions, and (C) any other actual loss, damage, cost or expense arising or resulting from the occurrence of an Event of Default.

 

(b)                                 The Sellers acknowledge and agree that (A) in the absence of a generally recognized source for prices or bid or offer quotations for any Purchased Assets and Repurchase Assets, the Buyer may establish the source therefor in its sole discretion exercised in good faith and (B) all prices, bids and offers shall be determined together with accrued Income. The Sellers recognize that it may not be possible to purchase or sell all of the Purchased Assets and Repurchase 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 and Repurchase Assets may not be liquid at such time. In view of the nature of the Purchased Assets and Repurchase Assets, the Sellers agree that liquidation of a Transaction or the Purchased Assets and Repurchase 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, in its sole discretion, the time and manner of liquidating any Purchased Assets and Repurchase Assets, and nothing contained herein shall (A) obligate Buyer to liquidate any Purchased Assets and Repurchase Assets on the occurrence and during the continuance of an Event of Default or to liquidate all of the Purchased Assets and Repurchase Assets in the same manner or on the same Business Day or (B) constitute a waiver of any right or remedy of Buyer.

 

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Buyer may exercise one or more of the remedies available hereunder immediately upon the occurrence of an Event of Default and at any time thereafter without notice to the Sellers. All rights and remedies arising under this Agreement as amended from time to time hereunder are cumulative and not exclusive of any other rights or remedies which Buyer may have.

 

(c)                                  Buyer may enforce its rights and remedies hereunder without prior judicial process or hearing, and the Sellers hereby expressly waive any defenses the Sellers might otherwise have to require Buyer to enforce its rights by judicial process. The Sellers also waive any defense (other than a defense of payment or performance) the Sellers might otherwise have arising from the use of nonjudicial process, enforcement and sale of all or any portion of the Repurchase Assets, or from any other election of remedies. The Sellers recognize 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.

 

(d)                                 Without limiting the rights of Buyer hereto to pursue all other legal and equitable rights available to Buyer for the Sellers’ failure to perform their obligations under this Agreement, the Sellers acknowledge and agree that the remedy at law for any failure to perform obligations hereunder would be inadequate and Buyer shall be entitled to specific performance, injunctive relief, or other equitable remedies in the event of any such failure. The availability of these remedies shall not prohibit Buyer from pursuing any other remedies for such breach, including the recovery of monetary damages.

 

(e)                                  Buyer shall have, in addition to its rights and remedies under the Facility Documents, all of the rights and remedies provided by applicable federal, state, foreign, and local laws (including, without limitation, if the Transactions are recharacterized as secured financings, the rights and remedies of a secured party under the UCC of the State of New York, to the extent that the UCC is applicable, and the right to offset any mutual debt and claim), in equity, and under any other agreement between Buyer and the Sellers. Without limiting the generality of the foregoing, Buyer shall be entitled to set off the proceeds of the liquidation of the Purchased Assets and Repurchase Assets against all of the Sellers’ obligations to the Buyer, whether or not such obligations are then due, without prejudice to Buyer’s right to recover any deficiency.

 

(f)                                   Each Seller hereby assigns and pledges all of its rights, but none of its duties or obligations, under the respective Mortgage Loan Purchase Agreements to Buyer, effective immediately upon the occurrence and during the continuance of an Event of Default.

 

Section 17.                                   Indemnification and Expenses.

 

(a)                                 Each Seller agrees to hold Buyer, and its Affiliates and their officers, directors, employees, agents and advisors (each an “Indemnified Party”) harmless from and indemnify any Indemnified Party against all liabilities, losses, damages, judgments, costs and expenses of any kind (including reasonable fees of counsel, and Taxes relating to or arising in connection with the ownership of the Purchased Assets, including REO Property, but excluding any Taxes) which may be imposed on, incurred by or asserted against such Indemnified Party (collectively, “Costs”), relating to or arising out of this Agreement, any other Facility Document or any transaction contemplated hereby or thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, any other

 

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Facility Document or any transaction contemplated hereby or thereby, that, in each case, results from anything other than the Indemnified Party’s gross negligence or willful misconduct. For the avoidance of doubt “Costs” shall include Taxes that represent losses, damages, claims, costs and expenses arising from any non-Tax claim. Without limiting the generality of the foregoing, each Seller agrees to hold any Indemnified Party harmless from and indemnify such Indemnified Party against all Costs with respect to all Purchased Assets, including REO Property, that, in each case, results from anything other than the Indemnified Party’s gross negligence or willful misconduct. In any suit, proceeding or action brought by an Indemnified Party in connection with any Purchased Assets for any sum owing thereunder, or to enforce any provisions of any Purchased Assets, each Seller will save, indemnify and hold such Indemnified Party harmless from and against all reasonable out-of-pocket expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by either Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from either Seller. Each Seller also agrees to reimburse an Indemnified Party as and when billed by such Indemnified Party for all the Indemnified Party’s reasonable out-of-pocket costs and expenses incurred in connection with the enforcement or the preservation of Buyer’s rights under this Agreement, any other Facility Document or any transaction contemplated hereby or thereby, including without limitation the reasonable fees and disbursements of its counsel.

 

(b)                                 Each Seller agrees to pay as and when billed by Buyer all of the reasonable out-of-pocket costs and expenses incurred by Buyer in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement, any other Facility Document or any other documents prepared in connection herewith or therewith. Each Seller agrees to pay as and when billed by Buyer all of the reasonable out-of-pocket costs and expenses incurred in connection with the consummation and administration of the transactions contemplated hereby and thereby including without limitation filing fees and all the reasonable fees, reasonable disbursements and reasonable expenses of counsel to Buyer which amount shall be deducted from the Purchase Price paid for the first Transaction hereunder. Subject to the limitations set forth in Sections 20 and 31 hereof, each Seller agrees to pay Buyer all the reasonable out-of-pocket due diligence, inspection, testing and review costs and expenses incurred by Buyer with respect to Mortgage Loans or REO Property submitted by each Seller for purchase under this Agreement, including, but not limited to, those reasonable out-of-pocket costs and expenses incurred by Buyer pursuant to Sections 16(b) and 20 hereof.

 

(c)                                  The obligations of each Seller from time to time to pay the Repurchase Price, the Price Differential, all fees and indemnity amounts and all other amounts due under this Agreement shall be full recourse obligations of each Seller.

 

Section 18.                                   Servicing; Subservicing.

 

(a)                                Each Servicer, on the Buyer’s behalf, shall contract with the related Servicer or Subservicer to service the Mortgage Loans consistent with the degree of skill and care that such Servicer or Subservicer customarily requires with respect to similar Mortgage Loans owned or managed by such Servicer or Subservicer and in accordance with Accepted

 

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Servicing Practices. Each Servicer shall cause the related Servicer or Subservicer to (i) comply with all applicable federal, state and local laws and regulations, (ii) maintain all state and federal licenses necessary for it to perform its servicing responsibilities under the related Subservicing Agreement and (iii) not impair the rights of Buyer in any Purchased Asset or any payment thereunder. Buyer may terminate the servicing of any Purchased Asset with the then existing servicer in accordance with Section 18(f) hereof.

 

(b)                                 Each Servicer shall cause the related Servicer or Subservicer to hold or cause to be held all collections and escrow funds collected by the Sellers with respect to any Purchased Assets in trust accounts and shall apply the same for the purposes for which such funds were collected.

 

(c)                                  Each Servicer shall, or shall cause the related Servicer or Subservicer to, deposit all collections received by Sellers on account of the Purchased Assets in the Collection Account in accordance with the provisions of Sections 5(c) and (d) hereof.

 

(d)                                 As compensation for its services under this Agreement the Servicers shall be entitled to the Servicing Fee payable on each Remittance Date. The Servicers shall be responsible to pay all the fees and expenses of the Servicer or Subservicer out of the Servicing Fee.

 

(e)                                  The Sellers shall provide promptly to the Buyer (i) a Servicer Notice or Subservicer Notice addressed to and agreed to by the related Servicer or Subservicer of the related Purchased Assets, advising such Servicer or Subservicer of such matters as Buyer may reasonably request, including, without limitation, recognition by such Servicer or Subservicer of the Buyer’s interest in such Purchased Assets and such Servicer or Subservicer agreement that upon receipt of notice of an Event of Default from Buyer, it will follow the instructions of Buyer with respect to the Purchased Assets and any related Income with respect thereto.

 

(f)                                   Upon the occurrence of a Servicer Termination Event, Buyer shall have the right to immediately terminate the related Servicer’s right to service the Purchased Assets without payment of any penalty or termination fee. In connection with such termination, each Seller shall and shall cause the applicable Servicer to cooperate in transferring the servicing of the Purchased Assets (a) following an Event of Default, to a successor servicer appointed by Buyer in its sole discretion, and (b) upon the occurrence of a Servicer Termination Event (other than an Event of Default), to a successor servicer selected by Sellers and approved by Buyer in its sole discretion exercised in good faith; provided, that, if either Seller fails to select a successor servicer within ten (10) Business Days, Buyer may select a successor servicer in its sole discretion. Upon the resignation of any Servicer, each Seller shall (and shall cause the related Servicer to) cooperate in transferring the servicing of the related Purchased Assets to a successor selected by selected by Sellers and approved by Buyer in its sole discretion exercised in good faith; provided, that, if either Seller fails to select a successor servicer within ten (10) Business Days, Buyer may select a successor servicer in its sole discretion; provided, further, that, if an Event of Default has occurred, Buyer may select such successor servicer in its sole discretion.

 

(g)                                  If the Sellers or the Servicers or Subservicers should discover that, for any reason whatsoever, any entity responsible to the Sellers or the Servicers or Subservicers by

 

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contract for managing or servicing any such Purchased Assets has failed to perform fully the Sellers’ or the Servicers’ or Subservicers’ obligations under the Facility Documents or any of the obligations of such entities with respect to the Purchased Assets, the Sellers or the Servicers or Subservicers, as applicable, shall promptly notify the Buyer.

 

(h)                                 Buyer may, in its sole discretion, consent to a waiver of a Servicer Termination Event. No Seller shall consent to any amendment to a Mortgage Loan Purchase Agreement or a Servicing Agreement without Buyer’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. No new Servicer shall be appointed without the prior reasonable consent of Buyer.

 

(i)                                     Sellers may, from time to time, acquire Mortgage Loans from an Originator on a servicing retained basis. Buyer may, from time to time in its sole discretion exercised in good faith, approve any other servicer or subservicer to service Purchased Assets; provided that, to the extent not previously delivered and approved, (x) Buyer shall have, in its sole discretion, approved each Servicing Agreement or Subservicing Agreement pursuant to which any Eligible Mortgage Loan that is subject to the proposed Transaction is serviced, and (y) Buyer shall have received a fully executed copy of the related Servicer Notice or Subservicer Notice.

 

Section 19.            Recording of Communications. The Buyer and the Sellers shall have the right (but not the obligation) from time to time to make or cause to be made tape recordings of communications between its employees and those of the other party with respect to Transactions upon notice to the other party of such recording.

 

Section 20.            Due Diligence. The Sellers acknowledge that Buyer has the right, which Buyer does not expect to (but may) exercise more frequently than quarterly, to perform continuing due diligence reviews with respect to the Purchased Assets, the Sellers, the Servicers, the Guarantor and the Servicers or Subservicers, including, without limitation, financial information, organization documents, business plans, purchase agreements and underwriting purchase models for each pool of Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and the Sellers agree that (a) upon reasonable prior notice to Sellers, unless an Event of Default shall have occurred, in which case no notice is required, Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of the Asset Files and any and all documents, records, agreements, instruments or information relating to such Purchased Assets (the “Due Diligence Documents”) in the possession or under the control of the Sellers and/or the Custodian, or (b) upon request, the Sellers shall create and deliver to Buyer within three (3) Business Days of such request, an electronic copy via email to structuredfinancedesksecure@nomura.com, in a format acceptable to Buyer, of such Due Diligence Documents as Buyer may request. Upon reasonable advance notice from the Buyer, the Sellers also shall reasonably make available to Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Asset Files and the Purchased Assets. Without limiting the generality of the foregoing, the Sellers acknowledge that Buyer may purchase Purchased Assets from Sellers and enter into additional Transactions with respect to the Purchased Assets based solely upon the information provided by the Sellers to the Buyer in the Asset Schedule and the representations, warranties and covenants contained herein,

 

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and that the Buyer, at its option, has the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Assets purchased in a Transaction, including, without limitation, ordering broker’s price opinions, new credit reports and new appraisals on the related Mortgaged Properties with respect to the Mortgage Loans and otherwise re-generating the information used to originate such Mortgage Loan. Buyer has engaged an Approved Diligence Provider to perform such underwriting. The Sellers agree to cooperate with the Buyer and such Approved Diligence Provider in connection with such underwriting, including, but not limited to, providing Buyer and Approved Diligence Provider with access to any and all documents, records, agreements, instruments or information relating to such Mortgage Loans in the possession, or under the control, of the Sellers. The Sellers further agree that the Sellers shall pay all reasonable out-of-pocket costs and expenses incurred by Buyer in connection with Buyer’s due diligence activities pursuant to this Section 20.

 

Section 21.                                   Assignability.

 

(a)                                 The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by the Sellers without the prior written consent of the Buyer. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. Nothing in this Agreement express or implied, shall give to any Person, other than the parties to this Agreement and their successors hereunder, any benefit of any legal or equitable right, power, remedy or claim under this Agreement. Buyer may, upon at least five (5) Business Days’ notice to Sellers, from time to time assign all or a portion of its rights and obligations under this Agreement and the Facility Documents to any Person pursuant to an executed assignment and acceptance by Buyer and assignee (“Assignment and Acceptance”), specifying the percentage or portion of such rights and obligations assigned; provided, however so long as an Event of Default has not occurred and is not continuing, no such Assignment and Acceptance shall be valid without the Sellers’ consent, which consent shall not be unreasonably withheld. Upon such assignment, (a) such assignee shall be a party hereto and to each Facility 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 be released from its obligations hereunder and under the Facility Documents. Unless otherwise stated in the Assignment and Acceptance, the Sellers 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 the Buyer by the Sellers.

 

(b)                                 Buyer, upon at least five (5) Business Days’ notice to Sellers, may sell participations to one or more Persons in or to all or a portion of its rights and obligations under this Agreement to any Person; provided, however, that (i) Buyer’s obligations under this Agreement shall remain unchanged, (ii) Buyer shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) the Sellers shall continue to deal solely and directly with Buyer in connection with Buyer’s rights and obligations under this Agreement and the other Facility Documents except as provided in Section 8; provided that no such restrictions shall apply with respect to any sale to any Affiliate of Buyer or if an Event of Default has occurred and is continuing; and provided further that Buyer shall act as agent for all

 

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purchasers, assignees and point of contact for Sellers pursuant to agency provisions to be agreed upon by Buyer, its intended purchasers and/or assignees and Sellers.

 

(c)                                  Buyer may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 21, disclose to the assignee or participant or proposed assignee or participant, as the case may be, any information relating to the Sellers or any of their Subsidiaries or to any aspect of the Transactions that has been furnished to Buyer by or on behalf of the Sellers or any of their Subsidiaries; provided that such assignee or participant agrees to hold such information subject to the confidentiality provisions of this Agreement.

 

(d)                                 In the event Buyer assigns all or a portion of its rights and obligations under this Agreement, the parties hereto agree to negotiate in good faith an amendment to this Agreement to add agency provisions similar to those included in repurchase agreements for similar syndicated repurchase facilities.

 

Section 22.                                   Transfer and Maintenance of Register.

 

(a)                                 Subject to acceptance and recording thereof pursuant to paragraph (b) of this Section 22, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of Buyer under this Agreement.

 

(b)                                 Each Seller shall maintain a register (the “Register”) on which it shall record Buyer’s rights hereunder, and each Assignment and Acceptance and participation and no transfer shall be effective in the absence of such recording. The Register shall include the names and addresses of Buyer (including all assignees, successors and participants) and the percentage or portion of such rights and obligations assigned or participated. Failure to make any such recordation, or any error in such recordation shall not affect either Seller’s obligations in respect of such rights, but a transfer shall not be effective absent a recording. If Buyer sells a participation in its rights hereunder, it shall provide each Seller, or maintain as agent of each Seller, the information described in this paragraph and permit each Seller to review such information as reasonably needed for each Seller to comply with its obligations under this Agreement or under any applicable Requirement of Law and shall not allow transfers to be effective without a record of such transfer.

 

Section 23.            Tax Treatment. Each party to this Agreement acknowledges that it is its intent for purposes of U.S. federal, state and local income and franchise taxes, to treat each Transaction as indebtedness of Sellers that is secured by the Purchased Assets and that the Purchased Assets are owned by Sellers in the absence of a Default by Sellers. All parties to this Agreement agree to such treatment and agree to take no action inconsistent with this treatment, unless required by law.

 

Section 24.                                   Set-Off.

 

(a)                                 In addition to any rights and remedies of Buyer hereunder and by law, Buyer shall have the right, without prior notice to the Sellers, any such notice being expressly waived by the Sellers to the extent permitted by applicable law, to set-off and appropriate and

 

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apply against any obligation from the Sellers to Buyer or any of its Affiliates any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other obligation (including to return excess margin), 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 or due from Buyer or any Affiliate thereof to or for the credit or the account of the Sellers. Buyer agrees promptly to notify Sellers after any such set-off and application made by Buyer; provided that the failure to give such notice shall not affect the validity of such set-off and application.

 

(b)                                 Buyer shall at any time have the right, in each case until such time as Buyer determines otherwise, to retain, to suspend payment or performance of, or to decline to remit, any amount or property that Buyer would otherwise be obligated to pay, remit or deliver to the Sellers hereunder if an Event of Default has occurred.

 

Section 25. Terminability. Each representation and warranty made or deemed to be made by entering into a Transaction, herein or pursuant hereto shall survive the making of such representation and warranty, and Buyer shall not be deemed to have waived any Default that may arise because any such representation or warranty shall have proved to be false or misleading, notwithstanding that Buyer may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time the Transaction was made. The obligations of each Seller under Section 17 hereof shall survive the termination of this Agreement.

 

Section 26. Notices And Other Communications. Except as otherwise expressly permitted by this Agreement, all notices, requests and other communications provided for herein (including without limitation any modifications of, or waivers, requests or consents under, this Agreement) shall be given or made in writing (including without limitation by telecopy) delivered to the intended recipient at the “Address for Notices” specified below its name on the signature pages hereof or thereof); or, as to any party, at such other address as shall be designated by such party in a written notice to each other party. Except as otherwise provided in this Agreement and except for notices given under Section 3 (which shall be effective only on receipt), all such communications shall be deemed to have been duly given when transmitted by telecopy or electronic mail or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. In all cases, to the extent that the related individual set forth in the respective “Attention” line is no longer employed by the respective Person, such notice may be given to the attention of a Responsible Officer of the respective Person or to the attention of such individual or individuals as subsequently notified in writing by a Responsible Officer of the respective Person.

 

Section 27.                                   Entire Agreement; Severability; Single Agreement.

 

(a)                                 This Agreement, together with the Facility Documents, constitute the entire understanding between Buyer and Sellers with respect to the subject matter they cover and shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions involving Purchased Assets. By acceptance of this Agreement, Buyer and the Sellers acknowledge that they have not made, and are not relying upon, any statements, representations, promises or undertakings not contained in this Agreement.

 

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Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

(b)                                 Buyer and the Sellers 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 that each has been entered into in consideration of the other Transactions. Accordingly, each of Buyer and the Sellers agree (i) to perform all of their obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by them in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transaction hereunder; (iii) that payments, deliveries, and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries, and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries, and other transfers may be applied against each other and netted and (iv) to promptly provide notice to the other after any such set off or application.

 

Section 28.                                    GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN.

 

Section 29.                                    SUBMISSION TO JURISDICTION; WAIVERS. BUYER AND THE SELLERS EACH HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(a)                                SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER FACILITY DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, 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

 

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SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH BUYER SHALL HAVE BEEN NOTIFIED;

 

(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; AND

 

(e)                                 BUYER AND THE SELLERS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER FACILITY DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

Section 30.                                    No Waivers, etc. No failure on the part of Buyer to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under any Facility Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any Facility Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. An Event of Default shall be deemed to be continuing unless expressly waived by Buyer in writing.

 

Section 31.                                    Netting. If Buyer and the Sellers are “financial institutions” as now or hereinafter defined in Section 4402 of Title 12 of the United States Code (“Section 4402”) and any rules or regulations promulgated thereunder,

 

(a)                                 All amounts to be paid or advanced by one party to or on behalf of the other under this Agreement or any Transaction hereunder shall be deemed to be “payment obligations” and all amounts to be received by or on behalf of one party from the other under this Agreement or any Transaction hereunder shall be deemed to be “payment entitlements” within the meaning of Section 4402, and this Agreement shall be deemed to be a “netting contract” as defined in Section 4402.

 

(b)                                 The payment obligations and the payment entitlements of the parties hereto pursuant to this Agreement and any Transaction hereunder shall be netted as follows. In the event that either party (the “Defaulting Party”) shall fail to honor any payment obligation under this Agreement or any Transaction hereunder, the other party (the “Nondefaulting Party”) shall be entitled to reduce the amount of any payment to be made by the Nondefaulting Party to the Defaulting Party by the amount of the payment obligation that the Defaulting Party failed to honor.

 

Section 32.                                   Confidentiality.

 

(a)                                 The Buyer and the Sellers hereby acknowledge and agree that all written or computer-readable information provided by one party to any other regarding the terms set forth in any of the Facility Documents or the Transactions contemplated thereby (the “Confidential Terms”) shall be kept confidential and shall not be divulged to any party without the prior written consent of such other party except to the extent that (i) it is necessary to disclose

 

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to its Affiliates and its and their legal counsel, accountants, auditors, or taxing authorities, (ii) it is requested or required by governmental agencies, regulatory bodies or other legal, governmental or regulatory process, (iii) any of the Confidential Terms are in the public domain other than due to a breach of this covenant, or (iv) an Event of a Default has occurred and Buyer determines such information to be necessary or desirable to disclose in connection with the marketing and sales of the Purchased Assets or otherwise to enforce or exercise Buyer’s rights hereunder. Sellers shall be responsible for any breach of the terms of this Section 32(a) by any Person that it discloses Confidential Terms to pursuant to clause (i) above. Sellers shall not, without the written consent of the Buyer, make any communication, press release, public announcement or statement in any way connected to the existence or terms of this Agreement or the other Facility Documents or the Transactions contemplated hereby or thereby, except where such communication or announcement is required by law or regulation, in which event the parties shall consult and cooperate with respect to the wording of any such announcement. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Facility Document, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal, state and local tax treatment of the Transactions, any fact relevant to understanding the federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that the Sellers may not disclose the name of or identifying information with respect to Buyer or any pricing terms (including, without limitation, the Pricing Rate, Purchase Price Percentage and Purchase Price) or other nonpublic business or financial information (including any sublimits and financial covenants) that is unrelated to the federal, state and local tax treatment of the Transactions and is not relevant to understanding the federal, state and local tax treatment of the Transactions, without the prior written consent of Buyer. The provisions set forth in this Section 32 shall survive for one year after the termination of this Agreement.

 

(b)                                 Notwithstanding anything in this Agreement to the contrary, the Sellers shall comply with all applicable local, state and federal laws, including, without limitation, all privacy and data protection law, rules and regulations that are applicable to the Purchased Assets and/or any applicable terms of this Agreement (the “Confidential Information”). The Sellers understand that the Confidential Information may contain “nonpublic personal information”, as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the “GLB Act”), and the Sellers agree to maintain such nonpublic personal information that it receives hereunder in accordance with the GLB Act and other applicable federal and state privacy laws. The Sellers shall implement administrative, technical and physical safeguards and other security measures to (a) ensure the security and confidentiality of the “nonpublic personal information” of the “customers” (as defined in the GLB Act) of Buyer or any Affiliate of Buyer which Buyer holds (b) protect against any threats or hazards to the security and integrity of such nonpublic personal information, and (c) protect against any unauthorized access to or use of such nonpublic personal information. The Sellers shall, at a minimum establish and maintain such data security program as is necessary to meet the objectives of the Interagency Guidelines Establishing Standards for Safeguarding Customer Information as set forth in the Code of Federal Regulations at 12 C.F.R. Parts 30, 208, 211, 225, 263, 308, 364, 568 and 570. Upon request, the Sellers will provide evidence reasonably satisfactory to allow Buyer to confirm that the Sellers have satisfied their obligations as required under this Section. Without limitation, this may include Buyer’s review of audits, summaries of test results, and other equivalent evaluations of the Sellers. The Sellers

 

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shall notify Buyer immediately following discovery of any breach or compromise of the security, confidentiality, or integrity of nonpublic personal information of the customers and consumers of Buyer or any Affiliate of Buyer provided directly to the Sellers. The Sellers shall provide such notice to Buyer by personal delivery, by facsimile with confirmation of receipt, or by overnight courier with confirmation of receipt to the applicable requesting individual.

 

Section 33.                                   Intent.

 

(a)                                 The parties 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, a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended, and a “master netting agreement” as that term is defined in Section 101(38A)(A) of the Bankruptcy Code, that all payments hereunder are deemed “margin payments” or “settlement payments” as defined in Title 11 of the United States Code, and that the pledge of the Repurchase Assets constitutes “a security agreement or other arrangement or other credit enhancement” that is “related to” the Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code. Sellers and Buyer further recognize and intend that this Agreement is an agreement to provide financial accommodations and is not subject to assumption pursuant to Bankruptcy Code Section 365(a).

 

(b)                                 Buyer’s right to liquidate the Repurchase Assets delivered to it in connection with the Transactions hereunder or to accelerate or terminate this Agreement or otherwise exercise any other remedies pursuant to Section 16 hereof is a contractual right to liquidate, accelerate or terminate such Transaction as described in Bankruptcy Code Sections 555, 559 and 561; any payments or transfers of property made with respect to this Agreement or any Transaction shall be considered a “margin payment” and “settlement payment” as such terms are defined in Bankruptcy Code Section 741(5).

 

(c)                                  The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

 

(d)                                 It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).

 

(e)                                  This Agreement is intended to be a “repurchase agreement” and a “securities contract,” within the meaning of Section 555 and Section 559 under the Bankruptcy Code.

 

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(f)                                   Each party agrees that this Agreement is intended to create mutuality of obligations among the parties, and as such, the Agreement constitutes a contract which (i) is between all of the parties and (ii) places each party in the same right and capacity.

 

(g)                                  Each party agrees that it shall not challenge the characterization of this Agreement or any Transaction as a securities contract and master netting agreement under the Bankruptcy Code.

 

(h)                                 Each party agrees that this Agreement and the Transactions entered into hereunder are part of an integrated, simultaneously-closing suite of financial contracts.

 

Section 34.                                    Disclosure Relating to Certain Federal Protections. The parties acknowledge that they have been advised that:

 

(a)                                 in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder;

 

(b)                                 in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and

 

(c)                                  in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.

 

Section 35.                                    Conflicts. In the event of any conflict between the terms of this Agreement, any other Facility Document and any Confirmation, the documents shall control in the following order of priority: first, the terms of the Confirmation shall prevail, second, then the terms of this Agreement shall prevail, and then the terms of the Facility Documents shall prevail.

 

Section 36.                                    Authorizations. Any of the persons whose signatures and titles appear on Schedule 2 are authorized, acting singly, to act for the Sellers or Buyer under this Agreement.

 

Section 37.                                    Acknowledgement of Anti Predatory Lending Practices. Buyer has in place internal policies and procedures that prohibit its purchase of any High Cost Mortgage Loan.

 

Section 38.                                   Miscellaneous.

 

(a)                                 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of

 

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the parties hereto may execute this Agreement by signing any such counterpart. Counterparts may be delivered electronically.

 

(b)                                 Captions. The captions and headings appearing herein are for included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

 

(c)                                 Acknowledgment. The Sellers hereby acknowledge that:

 

(ii)                                  it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Facility Documents;

 

(iii)                              Buyer has no fiduciary relationship to the Sellers; and

 

(iv)                              no joint venture exists between Buyer and the Sellers.

 

(d)                                 Documents Mutually Drafted. The Sellers and the Buyer agree that this Agreement and each other Facility Document prepared in connection with the Transactions set forth herein have been mutually drafted and negotiated by each party, and consequently such documents shall not be construed against either party as the drafter thereof.

 

Section 39. General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

 

(a)                                 the terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender;

 

(b)                                 accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;

 

(c)                                  references herein to “Articles”, “Sections”, “Subsections”, “Paragraphs”, and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement;

 

(d)                                 a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions;

 

(e)                                  the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision;

 

(f)                                   the term “include” or “including” shall mean without limitation by reason of enumeration;

 

(g)                                  all times specified herein or in any other Facility Document (unless expressly specified otherwise) are local times in New York, New York unless otherwise stated; and

 

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(h)                                 all references herein or in any Facility Document to “good faith” means good faith as defined in Section 1-201(19) of the UCC as in effect in the State of New York.

 

Section 40.                                    Joint and Several Liability. Each Seller shall be jointly and severally liable for the full, complete and punctual performance and satisfaction of all obligations of any Seller under this Agreement. Accordingly, each Seller waives any and all notice of creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by Buyer upon such Seller’s joint and several liability. Each Seller waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon such Seller with respect to the Obligations. When pursuing its rights and remedies hereunder against any Seller, Buyer may, but shall be under no obligation, to pursue such rights and remedies hereunder against any Seller or any other Person or against any collateral security for the Obligations or any right of offset with respect thereto, and any failure by Buyer to pursue such other rights or remedies or to collect any payments from such Seller or any such other Person to realize upon any such collateral security or to exercise any such right of offset, or any release of such Seller or any such other Person or any such collateral security, or right of offset, shall not relieve such Seller 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 Buyer against such Seller.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date set forth above.

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
NOMURA   CORPORATE FUNDING 

AMERICAS,   LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jack Kattan
    
	
 
    	
Name:
    	
Jack Kattan
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
Address for Notices:
    
	
 
    	
 
    
	
 
    	
Nomura Corporate   Funding Americas, LLC
    
	
 
    	
Worldwide Plaza
    
	
 
    	
309 West 49th Street
    
	
 
    	
New York, New York   10019-7316
    
	
 
    	
Telephone: (212)   667-1578
    
	
 
    	
Facsimile: (646)   587-1582
    
	
 
    	
Attention: Operations
    
	
 
    	
Email:   wholeloanmosupport@nomura.com
    
	
 
    	
 
    
	
 
    	
With copies to:
    
	
 
    	
 
    
	
 
    	
Nomura Corporate   Funding Americas, LLC
    
	
 
    	
Worldwide Plaza
    
	
 
    	
309 West 49th Street
    
	
 
    	
New York, New York   10019-7316
    
	
 
    	
Telephone: (212)   667-1578
    
	
 
    	
Facsimile: (646)   587-1582
    
	
 
    	
Attention: Michael   Rogozinski
    
	
 
    	
Email:   michael.rogozinski@nomura.com
    
	
 
    	
 
    
	
 
    	
Dentons US LLP
    
	
 
    	
One Market Plaza, Spear   Tower, 24th Floor
    
	
 
    	
San Francisco, CA 94105
    
	
 
    	
Tel: 415.882.0179
    
	
 
    	
Attn: Shannon McSwain
    
	
 
    	
Email:   shannon.mcswain@dentons.com
    

 

[Master Repurchase Agreement (Nomura-AO (P2P) 2018)]

 

 

	
 
    	
AOMI SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL   OAK MORTGAGE, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael Fierman
    
	
 
    	
Name:
    	
Michael Fierman
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
Address for Notices:
    
	
 
    	
 
    
	
 
    	
Angel Oak   Mortgage, Inc.
    
	
 
    	
3060 Peachtree Road NW,   Suite 500
    
	
 
    	
Atlanta, Georgia 30305
    
	
 
    	
Telephone: (404) 390-1131
    
	
 
    	
Attention: Erin Rogers
    
	
 
    	
Email:   erin.rogers@angeloakcapital.com
    

 

[Master Repurchase Agreement (Nomura-AO (P2P) 2018)]

 

 

	
 
    	
AOMF SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL   OAK MORTGAGE FUND TRS
    
	
 
    	
 
    
	
 
    	
By: Angel Oak-Capital   Advisors, LLC, not in its individual capacity but solely as the Administrator
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John R. Hsu
    
	
 
    	
Name:
    	
John R. Hsu
    
	
 
    	
Title:
    	
Head of Capital Markets
    
	
 
    	
 
    	
 
    
	
 
    	
Address for Notices:
    
	
 
    	
 
    
	
 
    	
Angel Oak Mortgage Fund   TRS
    
	
 
    	
3060 Peachtree Road NW,   Suite 500
    
	
 
    	
Atlanta, Georgia 30305
    
	
 
    	
Telephone: (404)   390-1131
    
	
 
    	
Attention: Erin Rogers
    
	
 
    	
Email:   erin.rogers@angeloakcapital.com
    

 

[Master Repurchase Agreement (Nomura-AO (P2P) 2018)]

 

 

SCHEDULE 1-A

 

REPRESENTATIONS AND WARRANTIES RE: HOME$ENSE MORTGAGE LOANS, PORTFOLIO SELECT MORTGAGE LOANS, PLATINUM MORTGAGE LOANS, PRIME JUMBO MORTGAGE LOANS, INVESTOR MORTGAGE LOANS AND AGENCY MORTGAGE LOANS

 

Each Seller makes the following representations and warranties to Buyer with respect to each Purchased that is a Home$ense Mortgage Loan, a Portfolio Select Mortgage Loan, a Platinum Mortgage Loan, a Prime Jumbo Mortgage Loan, an Investor Mortgage Loan or an Agency Mortgage Loan as of the Purchase Date for the purchase of any such Purchased Asset by Buyer from such Seller and at all times while such Purchased Asset is subject to a Transaction hereunder. With respect to those representations and warranties which are made to the best of a Seller’s knowledge, if it is discovered by a Seller or Buyer that the substance of such representation and warranty is inaccurate, notwithstanding such Seller’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty.

 

(a)                                 Data. The information on the Asset Schedule is true and correct in all material respects as of the date of such information. All information contained in the related Underwriting Package in respect of the Purchased Assets is accurate and complete in all material respects.

 

(b)                                 Appraisal. Each Mortgage Loan contains a written appraisal of the related Mortgaged Property, in a form acceptable to Fannie Mae or Freddie Mac and which complies with the requirements of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 as amended and the regulation promulgated thereunder, and was made and signed, prior to the approval of the Mortgage Loan application, by an appraiser licensed or certified by the applicable governmental body in which the mortgaged property is located. The person performing any property valuation (including an appraiser) received no benefit from, and such person’s compensation or flow of business from the originator was not affected by, the approval or disapproval of the Mortgage Loan. The selection of the appraiser was made independently of the mortgage broker (where applicable) and the originator’s loan sales and loan production personnel. The selection of the appraiser met the criteria of Fannie Mae and Freddie Mac for selecting an independent appraiser. The appraisal (i) was written in form and substance to customary Fannie Mae or Freddie Mac standards for mortgage loans of the same type pursuant to the Mortgage Loans and Uniform Standards of Professional Appraisal Practice (ii) was determined and written in accordance with current industry practices, and (iii) satisfies applicable legal and regulatory requirements. No appraisal or other property valuation was more than 120 days old at the time of the related Purchase Date.

 

(c)                                  Source of Loan Payments. With respect to each Mortgage Loan, no portion of the loan proceeds has been escrowed as part of the loan proceeds on behalf of the Mortgagor and no payments due and payable under the terms of the Mortgage Note and Mortgage or deed of trust, except for seller or builder concessions or amounts paid or escrowed for payment by the Mortgagor’s employer, have been paid by any person (other than a guarantor)

 

 

who was involved in or benefited from the sale of the Mortgaged Property or the origination, refinancing, sale or servicing of the Mortgage Loan.

 

(d)                                 Underwriting Guidelines. Each Mortgage Loan (i) was underwritten in accordance with the Underwriting Guidelines in effect at the time of origination without regard to any underwriter discretion or (ii) has reasonable and documented compensating factors in the Asset File and is indicated in the Asset Schedule as having such factors. No representations have been made to a Mortgagor that are inconsistent with the mortgage instruments used. No FICO Score listed on the Asset Schedule was more than 120 days old at the time of the related Purchase Date.

 

(e)                                  Escrow Payments. With respect to escrow deposits and payments that the related Servicer, is entitled to collect, all such payments are in the possession of, or under the control of such Servicer, and there exist no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made. All escrow payments have been collected in full compliance with applicable Requirements of Law and the provisions of the related Mortgage Note and Mortgage. As to any Mortgage Loan that is the subject of an escrow, escrow of funds is not prohibited by applicable Requirements of Law and has been established in an amount sufficient to pay for every escrowed item that remains unpaid and has been assessed but is not yet due and payable. No escrow deposits or other charges or payments due under the Mortgage Note have been capitalized under any Mortgage or the related Mortgage Note.

 

(f)                                  Income/Employment/Assets. The related Originator verified the Mortgagor’s income, employment (to the extent such Originator relied upon such employment), and assets in accordance with the Underwriting Guidelines and employed Mortgagor had a reasonable ability to repay the Mortgage Loan and authenticate the documentation supporting such income, employment, and assets with respect to each Mortgage Loan in accordance with the Underwriting Guidelines and applicable Requirements of Law. If required by the Underwriting Guidelines, such verification includes the transcripts received from the Internal Revenue Service pursuant to a filing of IRS Form 4506-T. Where commercially reasonable, the originator utilized (i) pay statements reflecting current and year-to-date earnings and deductions, (ii) copies of tax returns provided by the Mortgagor(s), (iii) transcripts received from the IRS pursuant to a filing of IRS Form 4506-T (to the extent specified in the Mortgage Loan Schedule) or (iv) public and/or commercially available information in order to test the reasonableness of the income. With respect to each Mortgage Loan, other than a Mortgage Loan for which the Mortgagor documented his or her income by providing Form W-2 or tax returns, the related Originator employed a process designed to test the reasonableness of the income used to approve documented Mortgage Loans. With respect to each Mortgage Loan, the related Originator (i) reviewed other attributes of the Mortgagor, including, but not limited to, disposable income, reserves and credit history, and reasonably determined that such attributes supported the income used to approve the Mortgage Loan, and (ii) utilized a third-party fraud review on each Mortgagor and co- mortgagor, and considered the results of such review in making its approval decision.

 

(g)                                  Origination and Servicing Regulatory Compliance. The origination, servicing and collection practices used with respect to each Mortgage Loan have been in accordance with the applicable Requirements of Law including, without limitation, usury, truth-

 

 

in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws and the servicing and collection practices used with respect to each Mortgage Loan have been in accordance with Accepted Servicing Practices, whether such servicing was done by the related Servicer, its Affiliates, or any third party or any subservicer or servicing agent of any of the foregoing. Without limiting the generality of the foregoing, unless approved in writing by Buyer, other than with respect to Investor Cash Flow Mortgage Loans, if the related Mortgagor’s loan application for such Mortgage Loan was taken on or after October 3, 2015, such Mortgage Loan was originated in compliance with the 1026 Real Estate Settlement Procedures Act Integrated Disclosure Rule.

 

(h)                                 Regarding the Mortgagor. Each Mortgagor is one or more natural persons or, solely with respect a Mortgage Loan secured by an investment property, legal entities and, if a natural person, is, and was at the time the Mortgage Loan was originated, legally permitted to reside in the United States. No Mortgagor is, was at the time the Mortgage Loan was originated, or has been since the time the Mortgage Loan was originated, a debtor in any state or federal bankruptcy or insolvency proceeding.

 

(i)                                     Occupancy of the Mortgaged Property. If the Mortgaged Property is occupied, such Mortgaged Property is, to the Seller’s knowledge, lawfully occupied under applicable Requirements of Law. All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities and, to the Seller’s knowledge, no improvement located on or part of the Mortgaged Property is in violation of any zoning law or regulation.

 

(j)                                    Occupancy Review. With respect to each Mortgage Loan, the related Originator gave due consideration at the time of origination to factors, including but not limited to other real estate owned by the Mortgagor, commuting distance to work, appraiser comments and notes, the location of the property and any difference between the mailing address in the servicing system and the Mortgaged Property address, to evaluate whether the occupancy status of the Mortgaged Property as represented by the Mortgagor was reasonable.

 

(k)                                 Validity of Mortgage Documents. The Mortgage Note, the related Mortgage and any intervening assignments of the Mortgage are original and genuine and each is the legal, valid and binding obligation of the maker thereof, enforceable in all respects in accordance with its terms except as enforceability may be limited by (i) bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization or other similar laws affecting the enforcement of the rights of creditors and (ii) general principles of equity, whether enforcement is sought in a proceeding in equity or at law and the Seller has taken all action necessary to transfer such rights of enforceability to the Buyer. All parties to the Mortgage Note, the Mortgage and any intervening assignments had the legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage and such assignments, and the Mortgage Note, the Mortgage and such assignments have been duly and properly executed and delivered by such parties. The Seller has not waived the performance by the Mortgagor of any action, if the Mortgagor’s failure to perform such action would cause the Mortgage Loan to be in

 

 

default, nor has the Seller waived any default resulting from any action or inaction by the Mortgagor.

 

(l)                                     Full Disbursement of Proceeds. The proceeds of the Mortgage Loan have been fully disbursed, there is no requirement for future advances thereunder, and any and all requirements as to completion of any on-site or off-site improvements and as to disbursements of any escrow funds have been complied with (except for escrow funds for exterior items, which could not be completed due to weather, and escrow funds for the completion of swimming pools). Additionally, all costs, fees and expenses incurred in making, closing or recording the Mortgage Loan have been paid, except recording fees with respect to Mortgages not recorded as of the Effective Date.

 

(m)                             Title Policy. The Mortgage Loan is covered by an ALTA lender’s title insurance policy or other generally acceptable form of policy or insurance acceptable to Fannie Mae or Freddie Mac and each such title insurance policy is issued by a Qualified Insurer qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring the Seller and its successors and assigns as to the first priority lien of the Mortgage in the original principal amount of the Mortgage Loan and, with respect to Adjustable Rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment in the Mortgage Interest Rate or Monthly Payment. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress, and against encroachments by or upon the Mortgaged Property or any interest therein. The Seller and its successors and assigns are the sole insured of such mortgagee title insurance policy. The assignment to the Buyer of the Seller’s interest in such mortgagee title insurance policy does not require any consent of or notification to the Qualified Insurer which has not been obtained or made, such mortgagee title insurance policy is in full force and effect and will be in full force and effect and inure to the benefit of the Buyer upon the consummation of the transactions contemplated by this Agreement. No claims have been made under such lender’s title insurance policy and no prior holder of the related Mortgage, including the Seller, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy.

 

(n)                                 Hazard Insurance. The Mortgaged Property and all buildings or other customarily insured improvements upon the Mortgaged Property are insured by a Qualified Insurer against loss by fire, hazards of extended coverage and such other hazards as are required by the Underwriting Guidelines as well as all additional requirements set forth herein, pursuant to an insurance policy conforming to the requirements of Accepted Servicing Practices and providing coverage in an amount equal to the lesser of (i) the full insurable value of the Mortgaged Property or (ii) the outstanding principal balance owing on the Mortgage Loan, but in no event less than the minimum amount necessary to fully compensate for any damage or loss on a replacement cost basis. All such insurance policies are the valid and binding obligation of the insurer are in full force and effect, inure to the benefit of the Buyer upon the consummation of the transactions contemplated by this Agreement and contain a standard mortgagee clause naming the originator of the Mortgage Loan, its successors and assigns as mortgagee and all premiums thereon have been paid. If the Mortgaged Property is, or was at origination of the Mortgage Loan, in an area identified on a flood hazard map or flood insurance rate map issued by the Federal Emergency Management Agency as having special flood hazards, a flood

 

 

insurance policy meeting the applicable Requirements of Law, including the current guidelines of the Federal Insurance Administration, is in effect, which policy conforms to the Underwriting Guidelines and was issued by a Qualified Insurer and provides coverage in the an amount equal to not less than the least of (i) the outstanding principal balance of the Mortgage Loan, (ii) the full insurable value of the Mortgaged Property, and (iii) the maximum amount of insurance that was available under applicable Requirements of Law including the National Flood Insurance Act of 1968, as amended. The Mortgage obligates the Mortgagor thereunder to maintain all such insurance at the Mortgagor’s cost and expense, and on the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at the Mortgagor’s cost and expense and to seek reimbursement therefor from the Mortgagor and may not be canceled, reduced or terminated without 30 days’ prior notice. If the Mortgaged Property is a condominium unit, it is included under coverage afforded by a blanket policy for the project.

 

(o)                                 No Default. There is no monetary default (including any related event of acceleration), monetary breach or monetary violation existing under the Mortgage or the related Mortgage Note and no event that, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a monetary violation or event of acceleration. To the Seller’s knowledge, there is no other default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event permitting acceleration. Additionally, neither the Seller nor the related Servicer has waived any such default, breach, violation or event of acceleration, and no foreclosure action is currently threatened or commenced with respect to the Mortgage Loan.

 

(p)                                 No Defenses. No Mortgage Note or Mortgage is subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of the Mortgage Note or mortgage or the exercise of any right thereunder render the Mortgage Note or mortgage unenforceable in whole or in part or subject it to any right of rescission, set-off, counterclaim or defense, including the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto.

 

(q)                                 Customary Provisions. The Mortgage and related Mortgage Note contain customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including (i) in the case of a Mortgage designated as a deed of trust by trustee’s sale, and (ii) otherwise by judicial foreclosure. Except as set forth in the related Asset Schedule, there is no homestead or other exemption or other right available to the Mortgagor or any other person, or restriction on the Seller or any other person, including without limitation, any federal, state or local, law, ordinance, decree, regulation, guidance, attorney general action, or other pronouncement, whether temporary or permanent in nature, that would interfere with, restrict or delay, either (y) the ability of the Seller, Buyer or any servicer or any successor servicer to sell the related Mortgaged Property at a trustee’s sale or otherwise, or (z) the ability of the Seller, Buyer or any servicer or any successor servicer to foreclose on the related Mortgage. The Mortgage Note and Mortgage are on forms acceptable to Fannie Mae or Freddie Mac.

 

(r)                                    Origination. With respect to each Mortgage Loan, the Seller and all other parties which have had any interest in the Mortgage Loan, whether as originator, mortgagee,

 

 

assignee, pledgee or otherwise, are (and, during the period in which they held and disposed of such interest, were) in compliance with any and all applicable “doing business”, licensing, or other requirements of the laws of the state wherein the Mortgaged Property is located.

 

(s)                                   REMIC. The Mortgage Loan is a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code.

 

(t)                                    No Additional Fees. With respect to any broker fees collected and paid on any of the Mortgage Loans, all such fees have been properly assessed to the Mortgagor and no claims will arise as to such fees that are double charged and for which the Mortgagor would be entitled to reimbursement.

 

(u)                                 No Fraud. No material fraud, error, omission, misrepresentation, negligence or similar occurrence with respect to the Mortgage Loan has taken place on the part of the Seller or any party or person (including without limitation the Mortgagor and any originator, correspondent, mortgage broker, appraiser, realtor, builder, developer, title company, closing or settlement agent) involved in the solicitation, origination, closing or funding of the Mortgage Loan, the determination of the value of the mortgaged property, the application of any insurance in relation to such Mortgage Loan, or the sale or servicing of the Mortgage Loan or Mortgaged Property prior to the Effective Date. No such party or person has made any representations to the Mortgagor or the Seller that are inconsistent with the Loan Documents. The documents, instruments and agreements submitted for loan underwriting were not falsified and contain no untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the information and statements therein not misleading. The Seller reviewed all of the documents constituting the Asset File and has made such inquiries as it deems necessary to make and confirm the accuracy of the statements set forth herein.

 

(v)                                 Consolidation of Future Advances. Except with respect to Adjustable Rate Mortgage Loans, any future advances made prior to the related Purchase Date have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. The lien of the Mortgage securing the consolidated principal amount is expressly insured as having first-lien priority by a title insurance policy or an endorsement to the policy insuring the mortgagee’s consolidated interest. The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan.

 

(w)                               Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a trustee, duly qualified under applicable Requirements of Law to serve as such, has been properly designated and currently serves and is named in the Mortgage, and no fees or expenses are or will become payable by the Buyer or the Seller to such trustee under the deed of trust, except in connection with a trustee’s sale after default by the Mortgage.

 

(x)                                 HOEPA and Similar Laws; Predatory Lending. No Mortgage Loan is a High Cost Mortgage Loan regardless of whether the related Originator or the Seller is exempted from applicable state or local law by virtue of federal preemption, provided that, any Mortgage Loan secured by a Mortgaged Property in Illinois characterized as a “threshold” loan shall not be a “high cost” loan unless it is characterized as “predatory” under applicable local law. The

 

 

related Originator and Seller have implemented and conducted compliance procedures to determine if each Mortgage Loan is a High Cost Mortgage Loan under the applicable Requirements of Law and performed a review of the disclosure provided to the related Mortgagor in accordance with such laws and the related Mortgage Note in order to determine that such Mortgage Loan, if subject to any such law, does not violate any such law. No Mortgage Loan has an “annual percentage rate” or “total points and fees” (as each such term is defined under the Home Ownership and Equity Protection Act (“HOEPA”)) payable by the Mortgagor that equals or exceeds the applicable thresholds as defined under HOEPA (as defined in 12 C.F.R. § 1026.32(a)(l)(i) and (ii)). No Mortgage Loan is in violation of any comparable state or local law. No Mortgage Loan is a “covered loan.” Each Mortgage Loan is in compliance with the anti-predatory lending eligibility for purchase requirements of Fannie Mae. No Mortgage Loan is a “higher-priced mortgage loan” under applicable Requirements of Law unless it complies with the Underwriting Guidelines and applicable Requirements of Law.

 

(y)                                 Higher Cost Credit Products. No Mortgagor was encouraged or required to select a Mortgage Loan product offered by the related Originator that was a higher cost product designed for less creditworthy borrowers, unless at the time of the Mortgage Loan’s origination, such Mortgagor did not qualify, taking into account credit history and debt-to-income ratios, for a lower cost credit product then offered by the related Originator or an affiliate thereof. If, at the time of loan application, the Mortgagor may have qualified for a lower cost credit product then offered by the related Originator or any affiliate thereof, such originator referred the Mortgagor’s application to such affiliate for underwriting consideration.

 

(z)                                  No Satisfaction; Original Terms Unmodified. The Mortgage has not been satisfied, cancelled, subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such satisfaction, cancellation, subordination, rescission or release. The terms of the Mortgage Note and the Mortgage have not been impaired, waived, altered or modified in any respect.

 

(aa)                          Location and Type of Mortgaged Property. Each Mortgaged Property is located in one of the fifty (50) states of the United States of America or the District of Columbia and consists of a one- to four-unit residential property, which may include, but is not limited to, a single-family dwelling, townhouse, condominium unit or unit in a planned unit development or, in the case of Mortgage Loans secured by co-op shares, leases or occupancy agreements.

 

(bb)                          No HELOC or Reverse Mortgage; No Second Liens; No Construction Loan; No Ground Leases or Leasehold Interest; No Manufactured or Mobile Homes. No Mortgage Loan is a home equity line of credit or a reverse mortgage. No Mortgage Loan is secured by a second lien on the related Mortgaged Property. With the exception of RTL Mortgage Loans, no Mortgage Loan was made in connection with (i) the construction or rehabilitation of a Mortgaged Property or (ii) facilitating the trade in or exchange of a Mortgaged Property. No Mortgaged Property is subject to any ground lease. No Mortgaged Property consists of a leasehold interest. No Mortgaged Property, in whole or part, is a manufactured home or mobile home.

 

 

(cc)                            Loans Current/Prior Delinquencies. All payments required to be made for such Mortgage Loan under the terms of the Mortgage Note have been made. The Mortgage Loan has not been dishonored. No Mortgage Loan has been thirty (30) days or more delinquent since origination date. All delinquency figures are calculated and reported using the MBA Method of Delinquency.

 

(dd)                          No Additional Collateral. The Mortgage Note is not and has not been secured by any collateral, pledged account or other security except the lien of the corresponding Mortgage on the Mortgaged Property and the security interest of any applicable security agreement or chattel mortgage. Unless otherwise indicated, at origination, such collateral does not serve as security for any other obligation.

 

(ee)                            Servicemembers’ Civil Relief Act. The Mortgagor has not notified the Seller or the related Servicer, and neither the Seller nor the related Servicer has knowledge of any relief requested or allowed to the Mortgagor under the Servicemembers’ Civil Relief Act, or other similar state or local statutes; provided that a violation of this representation (ee) shall not constitute a breach hereunder if expressly waived by Buyer in writing.

 

(ff)                              Arbitration. No Mortgagor agreed to submit to arbitration to resolve any dispute arising out of or relating in any way to the Mortgage Loan transaction.

 

(gg)                            Payment Terms. Principal payments on the Mortgage Loan, other than an Interest-Only Mortgage Loan, commenced no more than sixty (60) days after the proceeds of the Mortgage Loan were disbursed. No Mortgage Note permits negative amortization. Interest on the Mortgage Note is calculated on the basis of a 360-day year consisting of twelve 30-day months. The maturity date, amortization schedule and payment terms comply with the Underwriting Guidelines and applicable Requirements of Law. No Mortgage Loan has a shared appreciation or other contingent interest feature or any “buydown” provision currently in effect.

 

(hh)                          Flood Certification Contract. The Seller has obtained a life of loan, transferable flood certification contract for each Mortgage Loan and such contract is assignable to the Buyer or the Buyer’s designee.

 

(ii)                                  Asset File Delivery. The Mortgage Note, the Mortgage and the other Loan Documents required to be delivered on or before the related Purchase Date have been delivered to the Custodian in compliance with the specific requirements of this Agreement. With respect to each Mortgage Loan, the Seller is in possession of a complete Asset File, including all documents used in the qualification of the Mortgagor, except for such documents as have been delivered to the Custodian. The Asset File contains each of the documents and instruments specified to be included therein duly executed and in due and proper form, and each such document or instrument is in form acceptable to the applicable federal or state regulatory agency.

 

(jj)                                Marketable Title. The Seller is the sole legal, beneficial and equitable owner and holder of each Mortgage Loan and the indebtedness evidenced by the Mortgage Note and upon sale the Buyer or its designee will be the owner of the Mortgage and the indebtedness evidenced by the Mortgage Note. Each sale of the Mortgage Loan from any prior owner or the related Originator was in exchange for fair equivalent value. Each Mortgage Loan, including the

 

 

Mortgage Note and the Mortgage, are not assigned or pledged by the Seller and the Seller has good, indefeasible and marketable title thereto, the Seller is the sole owner thereof and the Seller has full right and authority to transfer and sell the Mortgage Loans to the Buyer free and clear of any encumbrance, participation interest, lien, equity, pledge, charge, claim (including, but not limited to, any preference or fraudulent transfer claim) or security interest and has full right and authority subject to no interest or participation in, or agreement with any other party to sell, assign or otherwise transfer the Mortgage Loans. Immediately following the sale of the Mortgage Loan to the Buyer pursuant to this Agreement, the Buyer will own such Mortgage Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest. The Seller intends to relinquish all rights to possess and control the Mortgage Loan except in connection with the servicing of the Mortgage Loan by the related Servicer as set forth in this Agreement.

 

(kk)                          Valid First-Lien. The Mortgage is a valid, subsisting, existing, perfected and enforceable first-lien on the Mortgaged Property, including all buildings and improvements on the Mortgaged Property, and all installations and mechanical, electrical, plumbing, heating and air conditioning systems affixed to such buildings, and all additions, alterations and replacements made at any time with respect to the foregoing securing the Mortgage Note’s original principal balance. The Mortgage and the Mortgage Note have not been modified or released, in whole or in part, and do not contain any evidence of any security interest or other interest or right thereto. Such lien is free and clear of all adverse claims, liens and encumbrances having priority over the first-lien of the Mortgage, including but not limited to any mechanics’ or similar liens or any rights or claims which may give rise to a mechanic’s or similar lien, subject only to (i) the lien of current real property taxes and assessments not yet due and payable and (ii) any security agreement, chattel mortgage or equivalent document. Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, existing and enforceable first-lien and first priority security interest with respect to each Mortgage Loan on the property described therein and the Seller has the full right to sell and assign the same to the Buyer.

 

(ll)                                  Mortgaged Property Undamaged; No Condemnation Proceedings. There is no proceeding pending or threatened for the total or partial condemnation of the Mortgaged Property, nor is such a proceeding currently occurring, and such property is in good repair and is undamaged by waste, water, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty, so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended or would render the Mortgaged Property uninhabitable. Each Mortgaged Property is in substantially the same condition it was at the time the most recent Appraisal Value was obtained.

 

(mm)                  No Outstanding Charges. All taxes, governmental assessments, insurance premiums and water, sewer and municipal charges that previously became due and payable have been paid or an escrow of funds has been established, to the extent permitted by law, in an amount sufficient to pay for any such item that remains unpaid.

 

(nn)                          No Mechanics’ Liens. The Mortgaged Property is free and clear of all mechanics’ and materialmen’s liens or a title policy affording, in substance, the same protection afforded by this warranty has been furnished to the Buyer by the Seller.

 

 

(oo)                          Location of Improvements; No Encroachments. The Mortgage creates a first lien or a first priority ownership interest in an estate in fee simple in real property securing the related Mortgage Note. All buildings and improvements subject to the Mortgage which were considered in determining the Appraisal Value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of the Mortgaged Property (and wholly within the project with respect to a condominium unit). No buildings or improvements on adjoining properties encroach upon the Mortgaged Property except those which are insured against by the title insurance policy referred to in clause (m) above. All improvements on the Mortgaged Property comply with all applicable zoning and subdivision laws and ordinances. Neither the Seller nor the related Servicer has received notice from the Mortgagor, any governmental authority, or any other person of any noncompliance with any use or occupancy law, ordinance, regulation, standard, license, or certificate with respect to the Mortgaged Property.

 

(pp)                          Transfer of Mortgage Loans. The assignment of mortgage is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located (except with respect to each MERS Mortgage Loan for which an assignment of mortgage to MERS has been duly and properly recorded). Each original Mortgage was recorded and, except for those Mortgage Loans subject to the MERS identification system, all subsequent assignments of the original Mortgage have been recorded in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of the Seller, or is in the process of being recorded. With respect to each MERS Mortgage Loan, a Mortgage Identification Number has been assigned by MERS and such Mortgage Identification Number is accurately provided on the Mortgage Loan Schedule. At all times after Seller becomes a member of the MERS® System, Seller has provided the Custodian and the Buyer with a MERS Report listing the Buyer as the “Warehouse / Gestation Lender” with respect to each MERS Mortgage Loan. At all times after Seller becomes a member of the MERS® System, with respect to each MERS Mortgage Loan, the Seller has designated the Buyer as the “Warehouse / Gestation Lender” and no Person is listed as “Interim Funder” on the MERS® System. The Seller has not received any notice of liens or legal actions, and no such notices have been electronically posted by MERS.

 

(qq)                          Due on Sale. The Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee.

 

(rr)                               Qualified Mortgage Loan.  Each Mortgage Loan shall either be (i) a “Qualified Mortgage” within 12 CFR 1026.43(e)(2), (3) or (4) or, (ii) prior to the origination of each Mortgage Loan, the originator made a reasonable and good faith determination that the borrower would have a reasonable ability to repay the Mortgage Loan according to its terms, in accordance with, at a minimum, the eight underwriting factors set forth in 12 CFR 1026.43(c)(2). The Asset File for each Mortgage Loan contains documentation that evidences compliance by the related Mortgage Loan with 12 CFR 1026.43(c)(2). The originator has retained written records that evidence its compliance with the ability-to-repay standards that include, but are not limited to: (i) a borrower income and debt worksheet; and (ii) a points and fees worksheet, and shall have included a litigation-ready copy thereof in the Asset File.

 

 

(ss)                             Downpayment. With respect to each Mortgage Loan (other than Investor Cash Flow Loans) whose purpose is listed on the Mortgage Loan Schedule as “purchase,” the Mortgagor paid with his or her own funds at least that portion of the purchase price required by the Underwriting Guidelines.

 

(tt)                                Environmental Matters. There does not exist on the related Mortgaged Property any hazardous substances, hazardous wastes or solid wastes, as such terms are defined in the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act of 1976, or other federal, state or local environmental legislation including, without limitation, asbestos. There is no pending action or proceeding directly involving any Mortgaged Property of which the Seller or the related Servicer is aware in which compliance with any environmental law, rule or regulation is an issue and nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation constituting a prerequisite to use and enjoyment of said property. As of origination of each Mortgage Loan, the related Mortgaged Property was in compliance with all applicable environmental laws pertaining to environmental hazards including, without limitation, asbestos. Each 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 and there exists no violation of any environmental law, rule, or regulation with respect to the Mortgaged Property.

 

(uu)                          Anti-Money Laundering Laws. The related Originator and Seller have complied with all Anti-Money Laundering Laws. The related Originator and Seller have established anti-money laundering compliance programs as required by the Anti-Money Laundering Laws, have conducted the requisite due diligence in connection with the origination of each Mortgage Loan for purposes of the Anti-Money Laundering Laws, including with respect to the legitimacy of the applicable Mortgagor and the origin of the assets used by the said Mortgagor to purchase the property in question, and maintains, and will maintain, sufficient information to identify the applicable Mortgagor for purposes of the Anti-Money Laundering Laws. No Mortgage Loan is subject to EO13224 or the regulations promulgated by the Office of Foreign Assets Control of the United States Department of the Treasury (the “OFAC Regulations”) or in violation of the Executive Order or the OFAC Regulations, and no Mortgagor is subject to the provisions of such Executive Order or the OFAC Regulations nor listed as a “blocked person” for purposes of the OFAC Regulations.

 

(vv)                          No Grade C or Grade D Mortgage Loans. Unless otherwise approved by Buyer, no Mortgage Loan is a Grade C Mortgage Loan or a Grade D Mortgage Loan. For the avoidance of doubt, the purchase by Buyer of any Grade C or Grade D Mortgage Loan shall in no event be deemed to be approval unless specifically stated in writing and, unless otherwise specified in such approval, any such approval may be revoked by Buyer at any time.

 

(ww)                      Credit Reporting; Credit Information. Credit Reporting. The Seller has caused to be fully furnished, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (i.e., favorable and unfavorable) on its Mortgagor credit files to Equifax, Experian, and Trans Union Credit Information Company (three of the credit repositories), on a monthly basis. As to each consumer report (as defined in the Fair Credit Reporting Act, Public Law 91-508) or other credit information furnished by the

 

 

Seller to the Buyer, the Seller has full right and authority and is not precluded by law or contract from furnishing such information to the Buyer and the Buyer is not precluded from furnishing the same to any prospective purchaser of such Mortgage Loan.

 

(xx)                          Investment Properties. With respect to each Mortgage Loan originated for investment purposes, the related Mortgaged Property is solely for use as an investment property and Seller has provided Buyer or its designee with a statement from the Mortgagor certifying such purposes as well as other checks as agreed to between Seller and Buyer as determined through due diligence. Such Mortgage Loan was not originated primarily for a personal, family or household purpose, as defined in the Truth in Lending Act and its implementing Regulation Z, and such Mortgage Loans was originated for business purposes. The Mortgaged Property securing the related Mortgage (i) is non-owner occupied, and (ii) is one or more parcels of real property with a detached single family residence erected thereon, or a two- to four- family dwelling. The related Mortgagor does not intend to, and will not, occupy the Mortgaged Property for more than fourteen (14) calendar days during any one (1) calendar year. In connection with the origination of the Mortgage Loan, the related Mortgagor certified to the applicable Originator that such Mortgaged Property is non-owner occupied.

 

(yy)                          No Litigation. There is no litigation, proceeding, governmental investigation or class action lawsuit existing or pending or to the knowledge of Seller threatened, or any order, injunction, decree or settlement agreement outstanding, relating to or arising out of the Mortgage Loan, nor does Seller know of any basis for any such litigation, proceeding, governmental investigation or class action lawsuit.

 

(zz)                            Interest Rate Adjustments. With respect to each Adjustable Rate Mortgage Loan, all Mortgage Interest Rate adjustments have been made in strict compliance with applicable Requirements of Law and the terms of the related Mortgage Note. Any interest required to be paid pursuant to applicable Requirements of Law has been properly paid and credited.

 

(aaa)                   Colorado, Georgia, New York and Texas Mortgage Loans. No Mortgage Loan secured by a Mortgaged Property located in the State of Colorado, as to which the related application was taken on or after June 1, 2007, was originated pursuant to a no income or no asset documentation program or any limited documentation program or other program other than a full documentation program or stated income / verified asset or stated income / stated asset program (i.e., NIVA, NINA or NINANE). There is no Mortgage Loan that was originated on or after March 7, 2003, which is a “high-cost home loan” as defined under the Georgia Fair Lending Act. There is no Mortgage Loan secured by Mortgaged Property located in the State of New York (1) with an original principal balance of $300,000 or less, (2) that has an application date on or after April 1, 2003 and (3) that is a “High-Cost Home Loan” as defined in Section 6-1 of the New York State Banking Law. With respect to any Mortgage Loan which is a Texas Home Equity Loan, any and all requirements of Section 50, Article XVI of the Texas Constitution applicable to Texas Home Equity Loans which were in effect at the time of the origination of the Mortgage Loan have been complied with. If the Mortgage Loan relates to a Mortgaged Property located in Texas, it was not originated in connection with a cash out refinancing.

 

 

(bbb)                   FICO Score (Investor Cash Flow Mortgage Loans). All Mortgagors of Investor Cash Flow Mortgage Loans have a weighted average FICO Score that complies with the standards set forth in the applicable Underwriting Guidelines.

 

(ccc)                      12 Month Bank Statement Mortgage Loans. With respect to each 12 Month Bank Statement Mortgage Loans, (i) the related Mortgagor has a weighted average FICO Score that complies with the standards set forth in the applicable Underwriting Guidelines, (ii) the related Mortgagor has never been subject to a Prior Credit Event, (iii) the related weighted average debt to income ratio used to originate such Mortgage Loan is less than or equal to forty percent (40%) and (iv) the related weighted average LTV used to originate such Mortgage Loan is less than or equal to eighty percent (80%).

 

(ddd)                   Approved Originator. With respect to each Home$ense Mortgage Loan, Portfolio Select Mortgage Loan, Platinum Mortgage Loan, Prime Jumbo Mortgage Loan, Investor Mortgage Loan and Agency Mortgage Loan, such Mortgage Loan was acquired by Seller from an Approved Originator. For purposes of this clause(s), “Approved Originator” shall mean Angel Oak Home Loans LLC, Angel Oak Mortgage Solutions LLC, Homebridge and AOPB, and each of their respective successors in interest, or any other originator approved by Buyer in its sole discretion.

 

 

SCHEDULE 1-B

 

REPRESENTATIONS AND WARRANTIES RE: RTL MORTGAGE LOANS

 

Each Seller makes the following representations and warranties to Buyer with respect to each Purchased Asset that is a RTL Mortgage Loan as of the Purchase Date for the purchase of any such Purchased Asset by Buyer from such Seller and at all times while such Purchased Asset is subject to a Transaction hereunder. With respect to those representations and warranties which are made to the best of a Seller’s knowledge, if it is discovered by a Seller or Buyer that the substance of such representation and warranty is inaccurate, notwithstanding such Seller’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty.

 

(a)                                 Data. The information on the Asset Schedule is true and correct in all material respects as of the date of such information. All information contained in the related Underwriting Package in respect of the Purchased Assets is accurate and complete in all material respects.

 

(b)                                 Regulatory Compliance. Any and all requirements of applicable federal, state, and local laws, including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity, predatory and abusive lending laws, disclosure or unfair and deceptive practice laws have been complied with. All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including, but not limited to, certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities.

 

(c)                                  Origination and Servicing Practices; No Escrow Deposits. The origination and collection practices used by the originator, each servicer of the Mortgage Loan and Seller with respect to each Mortgage Loan have been in all respects in accordance with Accepted Servicing Practices, applicable laws and regulations, and have been in all respects legal and proper and the servicing practices used with respect to the Mortgage Loan have been in accordance with Accepted Servicing Practices, whether such servicing was done by the Seller, its affiliates, or any third-party subservicer or servicing agent of any of the foregoing. With respect to escrow deposits and escrow payments (including, without limitation, any Holdback Amount), all such payments are in the possession of, or under the control of Seller. All escrow payments have been collected in full compliance with state and federal law. No escrow deposits or escrow payments or other charges or payments due Seller have been capitalized under the Mortgage, the Mortgage Note or any related Loan Document. Any interest required to be paid pursuant to state, federal and local law has been properly paid and credited.

 

(d)                                 Ownership. The Seller is the sole owner of record and holder of the Mortgage Loan, and the related Mortgage Note and the Mortgage are not assigned or pledged, and the Seller has good and marketable title thereto and has full right and authority to transfer and sell the Mortgage Loan to the Buyer. The Seller is transferring the Mortgage Loan free and clear of any and all encumbrances, liens, pledges, equities, participation interests, claims,

 

 

agreements with other parties to sell or otherwise transfer the Mortgage Loan, charges or security interests of any nature encumbering such Mortgage Loan.

 

(e)                                  Enforceability and Priority of Lien. The Mortgage is a valid, subsisting, and enforceable perfected first lien on the property therein described, the Mortgaged Property is free and clear of all adverse claims, encumbrances and liens having priority over the first lien of the Mortgage except for, (i) the lien 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 public record as of the date of recording of such mortgage acceptable to mortgage lending institutions in the area in which the Mortgaged Property is located, and (iii) such other matters to which like properties are commonly subject that do not individually or in aggregate materially interfere with the benefits of the security intended to be provided by the Mortgage.

 

(f)                                   No Prior Modifications. Unless otherwise indicated in the related Asset Schedule and reflected in an agreement included in the Asset File, neither Seller nor any prior holder of the Mortgage or the related Mortgage Note has: (i) modified the mortgage or the related Mortgage Note in any material respect; (ii) satisfied, canceled, or subordinated the mortgage in whole or in part; (iii) released the Mortgaged Property in whole or in part from the lien of the Mortgage; or (iv) executed any instrument of release, cancellation, modification, or satisfaction. If a Mortgage Loan has been modified, the modified terms are reflected on the Asset Schedule. The related Mortgage, Mortgage Note and each other related Loan Document contain the entire agreement of the parties and all of the obligations of Seller under the related Mortgage Loan.

 

(g)                                  Business Purpose Mortgage Loan. The related Mortgaged Property is solely for use as an investment property and Seller has provided Buyer or its designee with a statement from the Mortgagor certifying such purposes as well as other checks as agreed to between Seller and Buyer as determined through due diligence. Such Mortgage Loan was not originated primarily for a personal, family or household purpose, as defined in the Truth in Lending Act and its implementing Regulation Z, and such Mortgage Loans was originated for business purposes. The Mortgaged Property securing the related Mortgage is non-owner occupied. The related Mortgagor furnished to the Seller a certification that it and the related Sponsor(s) do not intend to, and will not, occupy the Mortgaged Property for more than fourteen (14) calendar days during any one (1) calendar year.

 

(h)                                 Mortgage Recorded; Assignments of Mortgage. Except as provided in paragraph (i) below, each original Mortgage was recorded or submitted for recordation in the jurisdiction in which the Mortgaged Property is located and all subsequent assignments of the original Mortgage have been delivered in the appropriate form for recording in all jurisdictions in which such recordation is necessary to perfect the ownership of the Mortgage by the owner thereof. With respect to each Mortgage that constitutes a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in such Mortgage and no fees or expenses are or will become payable by the mortgagee to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Mortgagor. With respect to each Mortgage Loan that is not subject to the MERS identification system, the name of the assignee and recording information in the related assignment of mortgage is in recordable form (other than the name of the assignee if in blank)

 

 

and is acceptable for recording under the laws of the jurisdiction in which the related Mortgaged Property is located. With respect to each Mortgage Loan that is subject to the MERS identification system, (i) the related assignment of mortgage have been duly and properly recorded in the name of MERS or its designee or have been delivered for recording to the applicable recording office and (ii) a Mortgage Identification Number has been assigned by MERS and such Mortgage Identification Number is accurately provided on the Asset Schedule (or is otherwise provided to Buyer).

 

(i)                                     Litigation. There is no action, suit, proceeding or investigation pending, or to the best of Seller’s knowledge threatened, that is related to the Mortgage Loan and likely to affect materially and adversely such Mortgage Loan.

 

(j)                                    Complete Asset Files. For each Mortgage Loan, all of the Loan Documents required to be delivered to the Custodian have been delivered to the Custodian and all Loan Documents necessary to foreclose on the Mortgaged Property are included in the related Asset File delivered to the Custodian. Each of the documents and instruments specified to be included in the Asset File is executed and in due and proper form. With respect to each such Mortgage Loan, upon the consummation of the related Transaction, Custodian shall have received the related Asset File and such Asset File shall not have been released from the possession of the Custodian for longer than the time periods permitted under the Custodial Agreement.

 

(k)                                 Taxes, Assessments. All taxes, governmental assessments, water, sewer, and municipal charges which previously became due and owing have been paid, or, where applicable law allows, an escrow of funds has been established in an amount sufficient to pay for such item that remains unpaid; except for any such charges for which Seller and/or Servicer have, after due consideration, made a determination not to pay for, in accordance with their current practice and have been disclosed in writing to Buyer.

 

(l)                                     No Rescission. (A) No Mortgage Note or Mortgage is subject to any right of rescission, set-off, counterclaim, or defense, including the defense of usury, nor will the operation of any of the terms of the Mortgage Note or Mortgage, or the exercise of any right thereunder, render the Mortgage Note or Mortgage unenforceable, in whole or in part, or subject it to any right of rescission, set-off, counterclaim, or defense, including the defense of usury; and (B) to the best of Seller’s knowledge, no such right of rescission, set-off, counterclaim, or defense has been asserted with respect thereto.

 

(m)                             No Consents. Other than consents and approvals obtained as of the related Purchase Date or those already granted in the documents governing such Mortgage Loan, no consent or approval by any Person is required in connection with Seller’s sale and/or Buyer’s acquisition of such Mortgage Loan, for Buyer’s exercise of any rights or remedies in respect of such Mortgage Loan or for Buyer’s sale, pledge or other disposition of such Mortgage Loan. No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies with respect to such Mortgage Loan. No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or

 

 

governmental agency or body having jurisdiction or regulatory authority over Seller is required for any transfer or assignment by the holder of such Mortgage Loan.

 

(n)                                 Legal, Valid and Binding Obligation. The Mortgage Note and the related Mortgage are genuine, and each constitutes the legal, valid and binding obligation of the maker thereof, enforceable in accordance with its terms.

 

(o)                                 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 the Mortgaged Property in which compliance with any environmental law, rule or regulation is an issue or is secured by a secured lender’s environmental insurance policy

 

(p)                                 Location and Type of Mortgaged Property. The Mortgaged Property is located in the U.S. or a territory of the U.S. and consists of a one- to four-unit residential property, which may include, but is not limited to, a single-family dwelling, condominium unit, or mixed use property. No Mortgaged Property is a mobile home or a manufactured home. The Mortgage Loan is secured by a Mortgage on only one Mortgaged Property.

 

(q)                                 Mortgaged Property Undamaged. Unless required repairs were identified at the time of origination and appropriate set-asides have been made for such repairs, to the best of the best of Seller’s knowledge, the Mortgaged Property is in good repair and undamaged by waste, fire, earthquake or earth movement, windstorm, flood, hurricane, tornado, mold or other casualty so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended.

 

(r)                                   No Condemnation. There is no proceeding pending or to the best of the Seller’s knowledge threatened for the total or partial condemnation of the related Mortgaged Property.

 

(s)                                  Mortgagor. The related Mortgagor is not insolvent and is not a Foreign National.

 

(t)                                    Consolidation of Principal Advances. Any principal advances made have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate reflected on the Asset Schedule. The lien of the Mortgage securing the principal amount and any future principal advances is expressly insured as having first lien priority by a title insurance policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other title evidence acceptable to Buyer.

 

(u)                                 No Fraud. No fraud, error, omission, misrepresentation, negligence or similar occurrence with respect to a Mortgage Loan has taken place on the part of the Seller, the Mortgagor, the appraiser, any servicer or any other party involved in the origination or servicing of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan or in connection with the sale of such Mortgage Loan to the Buyer.

 

(v)                                [Reserved].

 

 

(w)                               Documents Genuine. Such Mortgage Loan and all accompanying Loan Documents (including without limitation the related Loan Documents) are complete and authentic and all signatures thereon are genuine.

 

(x)                                 Disbursements of Holdback Amounts. To the extent the related Mortgagor requests disbursement of any Holdback Amounts as set forth in the related Loan Documents, all advances and all such Holdback Amounts required to be disbursed have been disbursed by Holdback Servicer to the Mortgagor in accordance with the related Loan Documents. Notwithstanding anything to the contrary herein, in no event shall Buyer have any obligation to fund any advances made to a Mortgagor with respect to any Mortgage Loan, which obligations shall be retained by Seller.

 

(y)                                 Hazard Insurance. The related Mortgaged Property is insured by a fire and extended perils insurance policy, issued by an insurer acceptable to Buyer, and such other hazards as are customary in the area where the Mortgaged Property is located, in an amount not less than the least of (1) the outstanding principal balance of the Mortgage Loan and (2) the full insurable value of the Mortgaged Property. If the Mortgaged Property is a condominium unit, it is included under the coverage afforded by a blanket policy for the project. If any portion of the Mortgaged Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (1) the outstanding principal balance of the Mortgage Loan, (2) the full insurable value of the Mortgaged Property, and (3) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1973. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming Seller, its successors and assigns (including, without limitation, subsequent owners of the Mortgage Loan), as mortgagee, and, to the extent such agreement is commercially available from the related insurer, may not be reduced, terminated or canceled without 10 days’ prior written notice to the mortgagee arising because of nonpayment of a premium and at least 30 days’ prior written notice to the mortgagee arising for any reason other than nonpayment of a premium. No such notice has been received by Seller. All currently due premiums on such insurance policy have been paid. The related Mortgage obligates the Mortgagor to maintain all such insurance and, at such Mortgagor’s failure to do so, authorizes the mortgagee to maintain such insurance at the Mortgagor’s cost and expense and to seek reimbursement therefor from such Mortgagor. Where required by state law or regulation, the Mortgagor has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “master” or “blanket” hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. To Seller’s knowledge, the hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. Seller has not engaged in, and has no knowledge of the Mortgagor’s having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Seller.

 

 

(z)                                  Disbursement of Proceeds. Any and all requirements as to disbursements of any escrow funds therefor have been complied with. All costs, fees and expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage were paid, and the Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage Note, Mortgage or any other related Loan Document. All escrow deposits and payments required to be escrowed with Seller pursuant to each Mortgage Loan are in the possession, or under the control, of Seller or its servicer, and there are no deficiencies (subject to any applicable grace or cure periods) in connection therewith.

 

(aa)                          Title Insurance. The Mortgage Loan is covered by either (i) an attorney’s opinion of title and abstract of title, the form and substance of which is acceptable to prudent mortgage lending institutions making mortgage loans in the area wherein the Mortgaged Property is located or (ii) an ALTA lender’s title insurance policy or other generally acceptable form of policy or insurance acceptable to Buyer and each such title insurance policy is issued by a title insurer acceptable to Buyer and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring Seller, its successors and assigns, as to the first priority lien of the Mortgage, as applicable, in the original principal amount of the Mortgage Loan. Where required by state law or regulation, the Mortgagor has been given the opportunity to choose the carrier of the required mortgage title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress and against encroachments by or upon the Mortgaged Property or any interest therein. The title policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or to replace the standard survey exception with a specific survey reading. Seller, its successors and assigns, are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Agreement. No claims have been made under such lender’s title insurance policy, and no prior holder or servicer of the related Mortgage, including Seller, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy, including without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Seller.

 

(bb)                          No Defaults. As of the Purchase Date, (i) there is no default, breach, violation or event of acceleration existing under the Mortgage, the Mortgage Note or any other related Loan Document (including without limitation a failure by Seller to make an advance in accordance with the terms thereof to the related Mortgagor thereunder), and (ii) no event has occurred which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration. Seller has not waived any default, breach, violation or event of acceleration under the Mortgage Note or any other related Loan Document.

 

(cc)                            No Mechanics’ Liens. There are no mechanics’ or similar liens or claims which have been filed for work, labor or material affecting the Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the Mortgage.

 

 

(dd)                          Location of Improvements; No Encroachments. All improvements which were considered in determining the BPO Value, as applicable, of the Mortgaged Property lie wholly within the boundaries and building restriction lines of such Mortgaged Property, and no improvements on adjoining properties encroach upon such Mortgaged Property. No improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning and building law, ordinance or regulation.

 

(ee)                            Underwriting Standards. Each Mortgage Loan was underwritten in accordance with the Underwriting Guidelines.

 

(ff)                              Customary Provisions. The Mortgage Note has a stated maturity. The Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial foreclosure. There is no homestead or other exemption available to a Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustee’s sale or the right to foreclose the Mortgage. There is only one originally executed Mortgage Note not stamped as a duplicate with respect to such Mortgage Loan.

 

(gg)                            No Additional Collateral. The Mortgage Note is not and has not been secured by any collateral except the lien of the corresponding Mortgage and the security interest of any applicable security agreement and chattel mortgage or other collateral specified in the related Loan Documents. There are, as of origination date and as of the Purchase Date, no subordinate mortgages or junior liens securing the payment of money encumbering the related Mortgaged Property, and equipment and other personal property financing). No mezzanine debt is secured directly by interests in the related Mortgagor.

 

(hh)                          Due-On-Sale. The Mortgage contains a provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder.

 

(ii)                                  Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have not been and shall not be used to satisfy, in whole or in part, any debt owed or owing by the Mortgagor to Seller or any Affiliate or correspondent of Seller, except in connection with a refinanced Mortgage Loan.

 

(jj)                                No Equity Participation. No document relating to the Mortgage Loan provides for any contingent or additional interest in the form of participation in the cash flow of the Mortgaged Property or a sharing in the appreciation of the value of the Mortgaged Property. The indebtedness evidenced by the Mortgage Note is not convertible to an ownership interest in the Mortgaged Property or the Mortgagor and Seller has not financed and does not own directly or indirectly, any equity of any form in the Mortgaged Property or the Mortgagor.

 

(kk)                          Recourse Obligations. The Loan Documents for each Mortgage Loan provide that such Mortgage Loan is either (x) full recourse against the related Mortgagor and/or

 

 

natural person or (y) non-recourse to the related parties thereto except that (a) the related Mortgagor and at least one individual or entity shall be fully liable for actual losses, liabilities, costs and damages arising from certain acts of the related Mortgagor and/or its principals specified in the related Loan Documents, which acts generally include the following: (i) acts of fraud or intentional material misrepresentation, (ii) misapplication or misappropriation of rents, insurance proceeds or condemnation awards, (iii) intentional material physical waste of any related Mortgaged Property, and (iv) any breach of the environmental covenants contained in the related Loan Documents, and (b) the Mortgage Loan shall become full recourse to the related Mortgagor and at least one individual or entity, if the related Mortgagor files a voluntary petition under federal or state bankruptcy or insolvency law.

 

(ll)                                  Single-Purpose Entity. With respect to each Mortgagor that is a Person other than an individual, each related non-recourse Mortgage Loan requires such Mortgagor to be a Single-Purpose Entity for at least as long as the Mortgage Loan is outstanding. For this purpose, a “Single-Purpose Entity” shall mean an entity, other than an individual, whose organizational documents provide substantially to the effect that it was formed or organized solely for the purpose of owning and operating one or more of the Mortgaged Properties securing the Mortgage Loans and prohibit it from engaging in any business unrelated to such Mortgaged Property or Properties, and whose organizational documents further provide, or which entity represented in the related Loan Documents, substantially to the effect that it does not have any assets other than those related to its interest in and operation of such Mortgaged Property or Properties, or any indebtedness other than as permitted by the related Mortgage(s) or the other related Loan Documents, that it has its own books and records and accounts separate and apart from those of any other person, and that it holds itself out as a legal entity, separate and apart from any other person or entity.

 

(mm)                  Mortgage Releases. The terms of the related Mortgage or related Loan Documents do not provide for the release of any related Mortgaged Property from the lien of the Mortgage except (a) upon payment in full of such Mortgage Loan, (b) as required pursuant to an order of condemnation or a material casualty, or (c) in connection with a substitution of collateral within the parameters specified in the related Loan Documents.

 

(nn)                          Payments Current. All payments required to be made up to the Purchase Date for the Mortgage Loan under the terms of the Mortgage Note have been made and credited.

 

(oo)                          Advance of Funds by Seller. After origination, no advance of funds has been made by Seller to the related Mortgagor other than in accordance with the Loan Documents, and, to each Seller’s knowledge, no funds have been received from any person other than the related Mortgagor or an affiliate for, or on account of, payments due on the Mortgage Loan (other than as contemplated by the Loan Documents, such as, by way of example and not in limitation of the foregoing, amounts paid by the tenant(s) into a lender-controlled lockbox if required or contemplated under the related lease or Loan Documents). Neither Seller nor any affiliate thereof has any obligation to make any capital contribution to any Mortgagor under a Mortgage Loan, other than contributions made on or prior to the date hereof.

 

(pp)                         Reserved.

 

 

(qq)                          Compliance with Anti-Money Laundering Laws. Each Seller has complied in all material respects with all applicable anti-money laundering laws and regulations, including without limitation the Anti-Money Laundering Laws, with respect to the origination or purchase of each Mortgage Loan. No Mortgage Loan is subject to nullification pursuant to the orders or the regulations promulgated by OFAC or in violation of the orders or OFAC regulations, and no Mortgagor is subject to the provisions of such orders or OFAC regulations and no Mortgagor qualifies as a Prohibited Person.

 

(rr)                                Access; Utilities; Separate Tax Lots. Each Mortgaged Property (a) is located on or adjacent to a public road and has direct legal access to such road, or has access via an irrevocable easement or irrevocable right of way permitting ingress and egress to/from a public road, (b) is served by or has uninhibited access rights to public or private water and sewer (or well and septic) and electricity all of which are appropriate for the current use of such Mortgaged Property, and (c) constitutes one or more separate tax parcels which do not include any property which is not part of such Mortgaged Property or is subject to an endorsement under the related title insurance policy insuring such Mortgaged Property, or in certain cases, an application has been, or will be, made to the applicable governing authority for creation of separate tax lots, in which case the related Mortgage Loan requires the related Mortgagor to escrow an amount sufficient to pay taxes for the existing tax parcel of which such Mortgaged Property is a part until the separate tax lots are created.

 

(ss)                              Licenses and Permits. Each Mortgagor covenants in the Loan Documents that it shall keep all material licenses, permits and applicable governmental authorizations necessary for its operation of the related Mortgaged Property in full force and effect, and all such material licenses, permits and applicable governmental authorizations are in effect. Each Mortgage Loan requires the related Mortgagor to be qualified to do business in the jurisdiction in which the related Mortgaged Property is located. Seller is not aware of any Mortgagor, guarantor or other obligor on the Mortgage Loan having received notice of any noncompliance with any use or occupancy law, ordinance, regulation, standard, license or certificate with respect to any Mortgaged Property.

 

(tt)                                Mortgage Provisions. The Loan Documents for each Mortgage Loan contain provisions that render the rights and remedies of the holder thereof adequate for the practical realization against each related Mortgaged Property of the principal benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, non-judicial foreclosure.

 

(uu)                          UCC Filings; Mortgage Recorded. Each Seller has recorded or caused to be recorded (or, if not recorded, have been submitted in proper form for recording), UCC financing statements in the appropriate public recording offices necessary at the time of the origination of the Mortgage Loan to perfect a valid security interest in any collateral for such Mortgage Loan to the extent perfection may be effected pursuant to applicable law by recording, as the case may be. The related Mortgage (or equivalent document) or other related collateral document creates a valid and enforceable lien and security interest on the items of personalty described above that may be perfected by recording. No representation is made as to the perfection of any security interest in rents or other personal property to the extent that possession or control of such items or actions other than the recording of UCC financing statements are

 

 

required in order to effect such perfection. The Mortgage either has been or will promptly be submitted for recordation in the appropriate recording office of the jurisdiction where the Mortgaged Property is located. The Mortgage Note is not and has not been secured by any collateral except the lien of the corresponding Mortgage and the security interest of any applicable security agreement and chattel mortgage or other collateral specified in the related Loan Documents.

 

(vv)                          Compliance with Usury Laws. The mortgage interest rate (exclusive of any default interest, late charges, yield maintenance charge, or prepayment premiums) of each Mortgage Loan complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury. No Mortgage Loan is subject to forfeiture or any material penalties as a result of non-compliance with any applicable state or federal laws, regulations and other requirements pertaining to usury.

 

(ww)                      Costs. All costs, fees and expenses incurred in making or closing the Mortgage Loan and the recording of the related Mortgage, which if unpaid would have a material adverse effect on the value, use or operation of the Mortgaged Property or the value of the related Mortgage Loan, were paid as of the related Purchase Date. The Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage Note, Mortgage or any other related Loan Document.

 

 

SCHEDULE 1-C

 

REPRESENTATIONS AND WARRANTIES RE: CHERRYWOOD MORTGAGE LOANS AND CRE BRIDGE MORTGAGE LOANS

 

Each Seller makes the following representations and warranties to Buyer, with respect to each Purchased Asset that is a Cherrywood Mortgage Loan or CRE Bridge Mortgage Loan, as of the Purchase Date for the purchase of any such Purchased Asset by Buyer from such Seller and at all times while such Purchased Asset is subject to a Transaction hereunder. With respect to those representations and warranties which are made to the best of each Seller’s knowledge, if it is discovered by any Seller or Buyer that the substance of such representation and warranty is inaccurate, notwithstanding such Seller’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty.

 

(a)                                 Eligible Asset. Such Mortgage Loan is either an Eligible Cherrywood Mortgage Loan or an Eligible CRE Bridge Mortgage Loan, as applicable, and such Mortgage Loan is secured by a Mortgaged Property located in the contiguous U.S. and that is not an Ineligible Property Type.

 

(b)                                 Data. The information on the applicable Asset Schedule is true and correct in all material respects as of the date of such information. All information contained in the related Underwriting Package in respect of such Mortgage Loan is accurate and complete in all material respects. All information contained in the related Underwriting Package in respect of such Mortgage Loan is accurate and complete in all material respects.

 

(c)                                  Regulatory Compliance. At the time of origination, or if modified, the date of modification, such Mortgage Loan complied in all material respects with all then applicable federal, state, and local laws. The origination, servicing and collection practices used by the related Originator, the related Servicer and predecessor servicer (if any) of such Mortgage Loan and Seller with respect to such Mortgage Loan have been in all respects in compliance with Accepted Servicing Practices, applicable laws and regulations, and have been in all respects legal and proper.

 

(d)                                 Ownership. Immediately prior to the transfer and assignment of such Mortgage Loan pursuant to this Agreement, Seller had good title to, and was the sole owner and holder of such Mortgage Loan, and the related Mortgage Note and the related Mortgage and the Servicing Rights related thereto free and clear of any and all liens, charges, pledges, encumbrances, participations, any other ownership interests on, in or to such Mortgage Loan. Seller has full right and authority to sell, assign and transfer such Mortgage Loan, and the assignment to Buyer constitutes a legal, valid and binding assignment of such Mortgage Loan free and clear of any and all liens, pledges, charges or security interests of any nature encumbering such Mortgage Loan.

 

 

(e)                                  Enforceability and Priority of Lien. Such Mortgage Loan is secured by one or more related Mortgages and each such Mortgage is a valid and enforceable first priority lien on the related Mortgaged Property subject only to the following title exceptions (each such title exception, a “Permitted Encumbrance”, and collectively, the “Permitted Encumbrances”): (i) the lien of current real property taxes, water charges, sewer rents and assessments not yet due and payable, (ii) covenants, conditions and restrictions, rights of way, easements and other matters of public record, none of which, individually or in the aggregate, materially and adversely interferes with the current use of the related Mortgaged Property or the security intended to be provided by such Mortgage or with the related Mortgagor’s ability to pay its obligations under such Mortgage Loan when they become due or materially and adversely affects the value of the related Mortgaged Property, (iii) the exceptions (general and specific) and exclusions set forth in the applicable policy described in paragraph (t) below or appearing of record, none of which, individually or in the aggregate, materially and adversely interferes with the current use of the related Mortgaged Property or the security intended to be provided by such Mortgage or with the related Mortgagor’s ability to pay its obligations under such Mortgage Loan when they become due or materially and adversely affects the value of the related Mortgaged Property, (iv) other matters to which like properties are commonly subject, none of which, individually or in the aggregate, materially and adversely interferes with the current use of the related Mortgaged Property or the security intended to be provided by such Mortgage or with the related Mortgagor’s ability to pay its obligations under such Mortgage Loan when they become due or materially and adversely affects the value of the related Mortgaged Property and (v) the rights of tenants (as tenants only) under leases (including subleases) pertaining to the related Mortgaged Property. There are no mortgage loans that are senior or pari passu with respect to the related Mortgaged Property or such Mortgage Loan.

 

(f)                                   No Prior Modifications. Unless otherwise indicated in the related Asset Schedule (including an updated Asset Schedule) and reflected in an agreement included in such Asset File, neither Seller nor any prior holder of the related Mortgage or the related Mortgage Note has: (i) modified such Mortgage or such Mortgage Note in any material respect; (ii) satisfied, canceled, or subordinated the mortgage in whole or in part; (iii) released the related Mortgaged Property in whole or in part from the lien of such Mortgage; or (iv) executed any instrument of release, cancellation, modification, or satisfaction. To the extent such Mortgage Loan has been modified, the modified terms are reflected on the related Asset Schedule and approved by Buyer. The related Mortgage, Mortgage Note and each other related Loan Document contain the entire agreement of the parties and all of the obligations of the related Originator under such Mortgage Loan.

 

(g)                                  Business Insurance. The related Mortgaged Property is, and is required pursuant to the related Mortgage to be, (i) insured by a property insurance policy providing coverage for loss in accordance with coverage found under a “special cause of loss form” or “all risk form” that includes replacement cost valuation issued by an insurer meeting the requirements of the related Mortgage and meeting the Insurance Rating Requirements, is in an amount (subject to a customary deductible) at least equal to the lesser of (A) the replacement cost of improvements, furniture, fixtures, furnishings and equipment owned by Mortgagor and located on such Mortgaged Property, or (B) the outstanding principal balance of such Mortgage Loan, and in any event, the amount necessary to prevent operation of any co-insurance provisions; and (ii) is also

 

 

covered by business interruption or rental loss insurance, in an amount (subject to the customary deductible and except where an applicable tenant lease does not permit the tenant to abate rent under any circumstances) at least equal to twelve (12) months of operations of such Mortgaged Property, all of which was in full force and effect with respect to such Mortgaged Property; and (iii) all insurance coverage required under the related Loan Documents, which insurance covers such risks and is in such amounts as are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to such Mortgaged Property in the jurisdiction in which such Mortgaged Property is located, is in full force and effect with respect to such Mortgaged Property; all premiums due and payable are current and have been paid (or have been financed or are being paid currently in installments); and (iv) no notice of termination or cancellation with respect to any such insurance policy has been received by Seller; and (v) except for certain amounts not greater than amounts which would be considered prudent by an institutional commercial and/or multifamily mortgage lender with respect to a similar Mortgage Loan and which are set forth in the related Loan Documents, any insurance proceeds in respect of a casualty loss or condemnation awards, will be applied either (A) to the repair or restoration of all or part of such Mortgaged Property, with respect to all property losses (and, with respect to all insurance proceeds, all property losses in excess of 5% (or such other fixed percentage as shall be expressly indicated in the related Loan Documents for such Mortgaged Property) of the then outstanding principal amount of such Mortgage Loan, the mortgagee (or a trustee appointed by it) having the right to hold and disburse such proceeds as the repair or restoration progresses, or (B) the reduction of the outstanding principal balance of such Mortgage Loan, subject in either case to requirements with respect to leases at such Mortgaged Property and to other exceptions customarily provided for by prudent institutional lenders for similar loans. The related Mortgaged Property is covered, and required to be covered pursuant to the related Loan Documents, by a commercial general liability insurance policy issued by an insurer meeting the Insurance Rating Requirements including coverage for property damage, contractual damage and personal injury (including bodily injury or death) in amounts as are generally required by Seller for loans originated for securitization, and in any event not less than $1 million per occurrence and $2 million in the aggregate. An architectural or engineering consultant has performed an analysis of the related Mortgaged Property to the extent located in seismic zone 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing the probable maximum loss (“PML”) for such Mortgaged Property in the event of an earthquake. In such instance, the PML was based on a 475 year lookback with a 10% probability of exceedance in a fifty (50) year period. If the resulting report concluded that the PML would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Mortgaged Property was obtained by an insurer meeting the Insurance Rating Requirements. If the related Mortgaged Property is located in Florida or within 25 miles of the coast of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina or South Carolina, such Mortgaged Property is insured by windstorm and/or windstorm related perils and/or “named storms” insurance issued by an insurer meeting the Insurance Rating Requirements or endorsement covering damage from windstorm and/or windstorm related perils and/or named storms in an amount at least equal to the lesser of (1) the outstanding principal balance of such Mortgage Loan, (2) 100% of the full insurable value, or 100% of the replacement cost, of the improvements located on such Mortgaged Property, or (3) such other amounts (expressly indicated in the related Loan Documents) as shall not be less than limits which would be considered prudent by an institutional commercial and/or multifamily mortgage

 

 

lender with respect to such Mortgage Loan in the amount of such Mortgage Loan and secured by property similar to such Mortgaged Property.

 

The insurance policies contain a standard mortgagee clause naming the mortgagee of such Mortgage Loan, its successors and assigns as loss payee, in the case of a property insurance policy, and additional insured in the case of a liability insurance policy and provide that they are not terminable without thirty (30) calendar days’ prior written notice to such mortgagee (or, with respect to non-payment, ten (10) calendar days’ prior written notice to such mortgagee) or such lesser period as prescribed by applicable law. The related Mortgage requires that the related Mortgagor maintain insurance as described above or permits the related mortgagee of such Mortgage Loan to require insurance as substantially described above, and permits such mortgagee to purchase such insurance at such Mortgagor’s expense if such Mortgagor fails to do so.

 

(h)                                 Mortgage Recorded. The related original Mortgage was recorded or submitted for recordation in the jurisdiction in which the related Mortgaged Property is located and all subsequent assignments of such original Mortgage have been delivered in the appropriate form for recording in all jurisdictions in which such recordation is necessary to perfect the ownership of such Mortgage by the owner thereof. With respect to each Mortgage that is a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in such Mortgage.

 

(i)                                     Litigation. There is no litigation, proceeding or governmental investigation pending, or any order, injunction or decree outstanding, existing or relating to such Mortgage Loan or the related Mortgagor or any related Mortgaged Property.

 

(j)                                    Complete Asset Files. All of the required Loan Documents have been delivered to the Custodian in accordance with the Custodial Agreement and all related Loan Documents necessary to foreclose on the related Mortgaged Property are included in the related Asset File delivered to the Custodian. No material documentation is missing from the related Asset File in possession of Custodian, unless such documentation is subject to the related Servicer’s request for release of documents and a foreclosure attorney acknowledgment in form and substance acceptable to Buyer. Each of the documents and instruments specified to be included in the related Asset File is executed and in due and proper form, and each such document or instrument is in form acceptable to the applicable federal or state regulatory agency. Upon the consummation of the related Transaction, Custodian shall have received the related Asset File and such Asset File shall not have been released from the possession of the Custodian for longer than the time periods permitted under the Custodial Agreement.

 

(k)                                 No Cross-Collateralization. No Mortgage Loan is cross-collateralized or cross-defaulted with any other Mortgage Loan and/or any loan.

 

(l)                                     Taxes, Assessments. All real estate taxes and governmental assessments, or installments thereof, which would be a lien on any related Mortgaged Property and that have become delinquent in respect of such Mortgaged Property have been paid, or an escrow of funds in an amount sufficient to cover such payments and reasonably estimated interest and penalties,

 

 

if any, has been established in connection with such Mortgage Loan. For purposes of this representation and warranty, real estate taxes and governmental assessments and installments thereof shall not be considered delinquent until the earlier of (i) the date on which interest and/or penalties would first be payable thereon and (ii) the date on which enforcement action is entitled to be taken by the related taxing authority.

 

(m)                             No Rescission. The related Loan Documents provide that the related Mortgage Note and the related Mortgage is not subject to any right of rescission, set-off, counterclaim, or defense, including the defense of usury, and that the operation of any of the terms of such Mortgage Note or such Mortgage, or the exercise of any right thereunder, shall not render such Mortgage Note or such Mortgage unenforceable, in whole or in part, or subject it to any right of rescission, set-off, counterclaim, or defense, including the defense of usury. No such right of rescission, set-off, counterclaim, or defense has been asserted with respect thereto.

 

(n)                                 No Consents. Other than consents and approvals obtained as of the related Purchase Date or those already granted in the documents governing such Mortgage Loan, no consent or approval by any Person is required in connection with Seller’s sale and/or Buyer’s acquisition of such Mortgage Loan, for Buyer’s exercise of any rights or remedies in respect of such Mortgage Loan or for Buyer’s sale, pledge or other disposition of such Mortgage Loan. No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies with respect to such Mortgage Loan. No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over Seller is required for any transfer or assignment by the holder of such Mortgage Loan.

 

(o)                                 Legal, Valid and Binding Obligation. The related Loan Documents (including the related Mortgage Note and the related Mortgage (including the related Assignment of Rents, if a document separate from such Mortgage) are genuine, and each constitutes the legal, valid and binding obligation of the maker thereof, enforceable in accordance with its terms. With respect to any Mortgaged Property that has tenants, there exists as either part of the related Mortgage or as a separate document, an assignment of leases.

 

(p)                                 Environmental Matters. There is no Environmental Issue with respect to the related Mortgaged Property. Except as set forth on the Phase I Environmental Report with respect to the related Mortgaged Property delivered to Buyer, (i) there is no material and adverse Environmental Issue or circumstance affecting such Mortgaged Property; (ii) Seller has no knowledge of any material violation of any applicable Environmental Law with respect to such Mortgaged Property; (iii) neither Seller nor the related Mortgagor has taken any actions which would cause such Mortgaged Property not to be in compliance with all applicable Environmental Laws; (iv) the related Loan Documents require such Mortgagor to comply with all Environmental Laws; and (v) such Mortgagor has agreed to indemnify the related mortgagee for any losses resulting from any material, adverse environmental condition or failure of such Mortgagor to abide by such Environmental Laws or has provided environmental insurance. A Phase I environmental site assessment (or update of a previous Phase I and/or Phase II site assessment) and, with respect to certain Mortgage Loans, a Phase II environmental site

 

 

assessment (collectively, an “Environmental Site Assessment”) meeting the American Society for Testing and Materials (“ASTM”) requirements conducted by a reputable environmental consultant in connection with such Mortgage Loan within twelve (12) months prior to its origination date (or an update of a previous Environmental Site Assessment was prepared), and such Environmental Site Assessment (A) did not identify the existence of recognized Environmental Conditions (in each case, as such term is defined in ASTM E1527-05 or its successor) at any related Mortgaged Property or the need for further investigation, or (B) if the existence of an Environmental Condition or need for further investigation was indicated in any such Environmental Site Assessment, then at least one of the following statements is true: (1) 100% or more of the funds reasonably estimated by a reputable environmental consultant to be sufficient to cover the estimated cost to cure any material noncompliance with applicable Environmental Laws or the Environmental Condition has been escrowed by the related Mortgagor and is held or controlled by the related mortgagee; (2) if the only Environmental Condition relates to the presence of asbestos-containing materials, radon in indoor air, lead based paint or lead in drinking water, the only recommended action in the Environmental Site Assessment is the institution of an operations or maintenance plan, and such a plan has been required to be instituted by the related Mortgagor that, based on the Environmental Site Assessment, can reasonably be expected to mitigate the identified risk; (3) the Environmental Condition identified in the related environmental report was remediated or abated in all material respects prior to the applicable Purchase Date, and, if and as appropriate, a no further action or closure letter was obtained from the applicable governmental regulatory authority (or the Environmental Issue affecting any related Mortgaged Property was otherwise listed by such governmental authority as “closed” or a reputable environmental consultant has concluded that no further action is required); (4) an environmental policy or a lender’s pollution legal liability insurance policy meeting the requirements set forth below that covers liability for the identified circumstance or condition was obtained from a Qualified Insurer meeting the Insurance Rating Requirements; (5) a party not related to the related Mortgagor was identified as the responsible party for such condition or circumstance and such responsible party has financial resources reasonably estimated to be adequate to address the situation; or (6) a party related to the related Mortgagor having financial resources reasonably estimated to be adequate to address the situation is required to take action. Except as set forth in the Environmental Site Assessment, there is no Environmental Condition at any related Mortgaged Property.

 

(q)                                 Operating Statements. The related Underwriting Package requires the related Mortgagor, in some cases at the request of the lender, to provide to the holder of such Mortgage Loan annual operating statements, financial statements and annual rent rolls.

 

(r)                                    Bankruptcy. At origination, none of the related Mortgagor or guarantor or tenant occupying a single-tenant property on such Mortgage Loan was insolvent or was a debtor in state or federal bankruptcy, insolvency or similar proceeding. None of the related Mortgagor or guarantor or tenant occupying a single-tenant property on such Mortgage Loan is insolvent or is a debtor in state or federal bankruptcy, insolvency or similar proceeding.

 

(s)                                   Hazard Insurance. The related Mortgaged Property is insured by a fire and extended perils insurance policy, issued by an insurer meeting the Insurance Rating Requirements, and such other hazards as are customary for like properties in the area where the

 

 

Mortgaged Property is located, and to the extent required by Seller as of the date of origination, against other risks insured against by Persons operating like properties in the locality of the related Mortgaged Property, in an amount not less than the outstanding principal balance of such Mortgage Loan. If any portion of the related Mortgaged Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (i) the allocated loan amount of such Mortgaged Property, (ii) the full insurable value of such Mortgaged Property, and (iii) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1974. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming the related Originator, its successors and assigns (including, without limitation, subsequent owners of such Mortgage Loan), as mortgagee, and, to the extent such agreement is commercially available from the related insurer, may not be reduced, terminated or canceled without thirty (30) calendar days’ prior written notice to the related mortgagee. No such notice has been received by Seller. All currently due premiums on such insurance policy have been paid. The related Loan Documents obligate the Mortgagor to maintain all such insurance and, at such Mortgagor’s failure to do so, authorizes the mortgagee to maintain such insurance at the Mortgagor’s cost and expense and to seek reimbursement therefor from such Mortgagor. Where required by state law or regulation, the related Mortgagor has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “master” or “blanket” hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. The hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. Seller has not engaged in, and has no knowledge of the related Originator or the related Mortgagor’s having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by such Originator or Seller.

 

(t)                                    Title Insurance. Such Mortgage Loan is covered by either (i) an irrevocable title commitment, or an attorney’s opinion of title and abstract of title, each of which must be in form and substance acceptable to prudent mortgage lending institutions making mortgage loans in the area wherein the related Mortgaged Property is located or (ii) an ALTA lender’s title insurance policy or other generally acceptable form of policy or insurance acceptable to prudent mortgage lending institutions making mortgage loans in the area wherein the related Mortgaged Property is located and each such title insurance policy is issued by a title insurer qualified to do business in the jurisdiction where the related Mortgaged Property is located and identified on the related Asset Schedule, insuring the related Originator, its successors and assigns, as to the first priority lien of the related Mortgage, as applicable, in the original principal amount of such Mortgage Loan (or with respect to any such Mortgage Loan secured by multiple properties, an amount equal to at least the allocated loan amount with respect to the title policy for each such property), subject only to the Permitted Encumbrances. Where required by state law or regulation, the related Mortgagor has been given the opportunity to choose the carrier of the required mortgage

 

 

title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress and against encroachments by or upon the related Mortgaged Property or any interest therein. The title policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or to replace the standard survey exception with a specific survey reading. Seller, its successors and assigns, are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Agreement. No claims have been made under such lender’s title insurance policy, and no prior holder or servicer of the related Mortgage, including Seller, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy, including without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Seller.

 

(u)                                 No Defaults. As of the applicable Purchase Date, (i) there is no default, breach, violation or event of acceleration existing under the related Mortgage, the related Mortgage Note or any other related Loan Document (including without limitation a failure by Seller to make an advance in accordance with the terms thereof to the related Mortgagor thereunder), and (ii) no event has occurred which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration. Seller has not waived any default, breach, violation or event of acceleration under the related Mortgage Note or any other related Loan Document.

 

(v)                                 No Mechanics’ Liens. At origination, there were no mechanics’ or similar liens or claims which have been filed for work, labor or material affecting any related Mortgaged Property which were or may be liens prior to, or equal or coordinate with, the lien of the Mortgage, except those which were bonded over, escrowed for or insured against by a lender’s title insurance policy. There are no mechanics’ or similar liens or claims which have been filed for work, labor or material affecting any related Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the Mortgage, except those which are bonded over, escrowed for or insured against by a lender’s title insurance policy.

 

(w)                               Location of Improvements; No Encroachments. All improvements which were considered in determining the BOV Value of the related Mortgaged Property at the time of the origination of such Mortgage Loan (or when such Mortgaged Property was added to the collateral therefor) lie wholly within the boundaries and building restriction lines of such Mortgaged Property, and no improvements on adjoining properties encroach upon such Mortgaged Property, except in each case for encroachments that are insured against by the applicable title insurance policy. The terms of the related Loan Documents require the related Mortgagor to comply with all applicable governmental regulations, zoning and building laws. There are no material violations of any applicable zoning ordinances, building codes or land laws applicable to the related Mortgaged Property or the use and occupancy thereof which (i) are not insured by an ALTA lender’s title insurance policy (or a binding, irrevocable and unconditional commitment therefor), or its equivalent as adopted in the applicable jurisdiction, or a law and ordinance insurance policy or (ii) as determined by Seller at the time of origination, would have

 

 

a material adverse effect on the value, operation, or Net Operating Income of any Mortgaged Property.

 

(x)                                 Customary Provisions. The related Mortgage Note and the applicable related Loan Document each has a stated maturity. The related Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the related Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial foreclosure, in each case subject to applicable law. Upon default by the related Mortgagor and foreclosure on, or trustee’s sale of, the related Mortgaged Property pursuant to the proper procedures and subject to applicable law, the holder of such Mortgage Loan will be able to deliver good and merchantable title to the related Mortgaged Property. There is no homestead or other exemption available to the related Mortgagor which would interfere with the right to sell the related Mortgaged Property at a trustee’s sale or the right to foreclose the related Mortgage. There is only one originally executed Mortgage Note not stamped as a duplicate with respect to such Mortgage Loan.

 

(y)                                 Occupancy of the Mortgaged Property. All inspections, licenses, and certificates required to be made or issued with respect to all occupied portions of the related Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, are, or will be, obtained from the appropriate authorities at the time required in the jurisdiction such Mortgaged Property resides. Seller has not received notification from any Governmental Authority that the related Mortgaged Property is in material non-compliance with such laws or regulations, is being used, operated or occupied unlawfully or has failed to have or obtain such inspection, licenses or certificates, as the case may be. Seller has not received notice of any violation or failure to conform with any such law, ordinance, regulation, standard, license or certificate. The related Mortgagor does not intend to occupy the related Mortgaged Property for more than fourteen (14) calendar days during any one (1) calendar year. In connection with the origination of such Mortgage Loan, the related Mortgagor represented to the related Originator that such Mortgaged Property is non-owner occupied.

 

(z)                                  No Additional Collateral. The related Mortgage Note is not and has not been secured by any collateral except the lien of the corresponding Mortgage(s) and the security interest of any applicable security agreement and chattel mortgage or other collateral specified in the related Loan Documents. There are no subordinate mortgages or junior liens securing the payment of money encumbering any related Mortgaged Property (other than Permitted Encumbrances, taxes and assessments, homeowner association dues and fees, mechanics and materialmen’s liens (which are the subject of the representation in paragraph (v) above), and equipment and other personal property financing). Seller has no knowledge of any mezzanine debt secured directly by interests in the related Mortgagor. No mezzanine debt is secured directly by interests in the related Mortgagor.

 

(aa)                          Due-On-Sale. Subject to certain exceptions set forth below, the related Loan Documents contain a provision for the acceleration of the payment of the unpaid principal balance of such Mortgage Loan in the event that, if, without the consent of the holder of the

 

 

related Mortgage (which consent, in some cases, may not be unreasonably withheld) and/or complying with the requirements of the related Loan Documents (which provide for transfers without the consent of the mortgagee which are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Mortgaged Property, including, without limitation, transfers of worn-out or obsolete furnishings, fixtures or equipment properly replaced with property of equivalent value and functionality and transfers by leases entered into in accordance with such Loan Documents), (i) the related Mortgaged Property, or any equity interest of greater than 50% in the related Mortgagor, is directly or indirectly pledged, transferred or sold, other than as related to (A) family and estate planning transfers or transfers upon death or legal incapacity, (B) transfers to certain affiliates as defined in the related Loan Documents, (C) transfers of less than, or other than, a controlling interest in the related Mortgagor, (D) transfers to another holder of direct or indirect equity in the related Mortgagor, a specific Person designated in the related Loan Documents or a Person satisfying specific criteria identified in the related Loan Documents, such as a qualified equityholder, (E) transfers of stock or similar equity units in publicly traded companies or (F) a substitution or release of collateral within the parameters of this Agreement, or (G) as set forth on an exhibit to the applicable Mortgage Loan purchase agreement by reason of any mezzanine debt that existed at the origination of the related Mortgage Loan, or future permitted mezzanine debt as set forth on an exhibit to the applicable Mortgage Loan purchase agreement or (ii) the related Mortgaged Property is encumbered with a subordinate lien or security interest against the related Mortgaged Property, other than (A) any subordinate debt that existed at origination and is permitted under the related Loan Documents, (B) purchase money security interests or (C) Permitted Encumbrances. The Mortgage or other Loan Documents provide that to the extent any Rating Agency fees are incurred in connection with the review of and consent to any transfer or encumbrance, the Mortgagor is responsible for such payment along with all other reasonable out-of-pocket fees and expenses incurred by the Mortgagor with respect to any transfer, assumption or encumbrance requiring lender’s approval.

 

(bb)                          Costs. All costs, fees and expenses incurred in making or closing the such Mortgage Loan and the recording of the related Mortgage were paid, and the related Mortgagor is not entitled to any refund of any amounts paid or due under the related Mortgage Note, the related Mortgage or any other related Loan Document.

 

(cc)                            No Advance of Funds After Origination. After origination, no advance of funds has been made by the related Originator to the related Mortgagor other than in accordance with the related Loan Documents, and no funds have been received from any Person other than the related Mortgagor or an affiliate for, or on account of, payments due on such Mortgage Loan. Any future advances (including disbursements of the related Holdback Amounts) made to the related Mortgagor prior to the applicable Purchase Date have been consolidated with the outstanding principal amount secured by the related Mortgage, and the secured principal amount, as consolidated and bears a single interest rate. Neither Seller nor any affiliate thereof has any obligation to make any capital contribution to the related Mortgagor under such Mortgage Loan, other than contributions made on or prior to the date hereof. The lien of the related Mortgage securing the consolidated principal amount and any related future advance (including disbursements of Holdback Amounts) is expressly insured as having first lien priority by a title insurance policy that satisfies the requirements of paragraph (t) above.

 

 

(dd)                          Disbursements of Holdback Amounts. The stated principal balance of such Mortgage Loan has been fully disbursed as of the applicable Purchase Date and there is no requirement for future advances thereunder (except as identified in the related Asset Schedule in respect of any related Holdback Amount). To the extent the related Mortgagor requests disbursement of any Holdback Amounts as set forth in the related Loan Documents, all advances and all such Holdback Amounts required to be disbursed have been disbursed by the related Originator or the related Servicer, as applicable, to the related Mortgagor in accordance with the related Loan Documents. Notwithstanding anything to the contrary herein, in no event shall Buyer have any obligation to fund any advances made to the related Mortgagor with respect to such Mortgage Loan to the extent the related obligations are retained by Seller.

 

(ee)                            Segregated Holdback Amounts. To the extent such Mortgage Loan is a Mortgage Loan for which there are Holdback Amounts, such Holdback Amounts (exclusive of the Non-Segregated Holdback Amount) have been deposited in the applicable Holdback Account on or prior to the related Purchase Date.

 

(ff)                              Escrow Deposits. All escrow deposits and payments required to be escrowed with the related Originator pursuant to such Mortgage Loan, if any, are in the possession, or under the control, of Seller or the related Servicer, and there are no deficiencies (subject to any applicable grace or cure periods) in connection therewith, and all such escrows and deposits (or the right thereto) that are required to be escrowed with lender under the related Loan Documents are being conveyed by Seller to Buyer or the related Servicer.

 

(gg)                            Mortgaged Property Undamaged; No Condemnation. The related Mortgaged Property is in good repair and undamaged by waste, fire, earthquake or earth movement, windstorm, flood, hurricane, tornado, mold or other casualty so as to affect adversely the value of such Mortgaged Property as security for such Mortgage Loan or the use for which the premises were intended. There is no proceeding pending or threatened, for the total or partial condemnation of such Mortgaged Property.

 

(hh)                          Mortgagor. The related Mortgagor is not insolvent and is not a Foreign National.

 

(ii)                                  No Contingent Interest or Equity Participation. No document relating to such Mortgage Loan provides for any contingent or additional interest in the form of participation in the cash flow of the related Mortgaged Property or a sharing in the appreciation of the value of such Mortgaged Property. The indebtedness evidenced by the related Mortgage Note is not convertible to an ownership interest in the related Mortgaged Property or the related Mortgagor (other than in connection with a default by such Mortgagor and the lender’s enforcement of remedies pursuant to the related Loan Documents) and Seller has not financed nor does it own directly or indirectly, any equity of any form in the related Mortgaged Property or the related Mortgagor (other than in connection with any pledge agreement executed by the holder of the equity interests in the Mortgagor).

 

(jj)                                Single-Purpose Entity. Each Mortgage Loan that requires the Mortgagor to be a Single-Purpose Entity, requires such Mortgagor to be a Single-Purpose Entity for at least as long as such Mortgage Loan is outstanding. Both the Loan Documents and the organizational

 

 

documents of the Mortgagor with respect to each Mortgage Loan with a principal balance in excess of $5 million, provide that the Mortgagor is a Single-Purpose Entity, and each Mortgage Loan with a principal balance of $20 million or more has a counsel’s opinion regarding non consolidation of the Mortgagor. For this purpose, a “Single-Purpose Entity” shall mean an entity, other than an individual, whose organizational documents provide substantially to the effect that it was formed or organized solely for the purpose of owning and operating one or more of the Mortgaged Properties securing such Mortgage Loans and prohibit it from engaging in any business unrelated to such Mortgaged Property or Properties, and whose organizational documents further provide, or which entity represented in the related Loan Documents, substantially to the effect that it does not have any assets other than those related to its interest in and operation of such Mortgaged Property or Properties, or any indebtedness other than as permitted by the related Mortgage(s) or the other related Loan Documents, that it has its own books and records and accounts separate and apart from those of any other person, and that it holds itself out as a legal entity, separate and apart from any other person or entity.

 

(kk)                          Mortgage Releases. The terms of the related Mortgage or related Loan Documents do not provide for release of any material portion of the related Mortgaged Property from the lien of such Mortgage except (i) a partial release, accompanied by principal repayment, of not less than a specified percentage at least equal to the lesser of (A) 110% of the related allocated loan amount of such portion of the related Mortgaged Property and (B) the outstanding principal balance of such Mortgage Loan, (ii) upon payment in full of such Mortgage Loan, (iii) upon a Defeasance defined in paragraph (jjj) below, (iv) releases of out-parcels that are unimproved or other portions of the related Mortgaged Property which will not have a material adverse effect on the underwritten value of such Mortgaged Property and which were not afforded any material value in the appraisal obtained at the origination of such Mortgage Loan and are not necessary for physical access to the related Mortgaged Property or compliance with zoning requirements, or (v) as required pursuant to an order of condemnation or taking by a State or any political subdivision or authority thereof. With respect to any partial release under the preceding clauses (i) or (iv), either: (A) such release of collateral (1) would not constitute a “significant modification” of such Mortgage Loan within the meaning of Treasury Regulations Section 1.860G-2(b)(2) and (2) would not cause such Mortgage Loan to fail to be a “qualified mortgage” within the meaning of Section 860G(a)(3)(A) of the Code; or (B) the related mortgagee or the related Servicer can, in accordance with the related Loan Documents, condition such release of collateral on the related Mortgagor’s delivery of an opinion of tax counsel to the effect specified in the immediately preceding clause (A). For purposes of the preceding clause (A), for all such Mortgage Loans originated after December 6, 2010, if the fair market value of the real property constituting the related Mortgaged Property after the release is not equal to at least 80% of the principal balance of such Mortgage Loan outstanding after the release, the related Mortgagor is required to make a payment of principal in an amount not less than the amount required by the REMIC provisions of the Code.

 

(ll)                                  Compliance with Anti-Money Laundering Laws. Seller and the related Originator have complied in all material respects with all applicable anti-money laundering laws and regulations, including without limitation the Anti-Money Laundering Laws, with respect to the origination or purchase of such Mortgage Loan. Such Mortgage Loan is not subject to nullification pursuant to the orders or the regulations promulgated by OFAC or in violation of

 

 

the orders or OFAC regulations, and the related Mortgagor is not subject to the provisions of such orders or OFAC regulations and such Mortgagor does not qualify as a Prohibited Person.

 

(mm)                  Access; Utilities; Separate Tax Lots. The related Mortgaged Property (i) is located on or adjacent to a public road and has direct legal access to such road, or has access via an irrevocable easement or irrevocable right of way permitting ingress and egress to/from a public road, (ii) is served by or has uninhibited access rights to public or private water and sewer (or well and septic) and electricity all of which are appropriate for the current use of such Mortgaged Property, and (iii) constitutes one or more separate tax parcels which do not include any property which is not part of such Mortgaged Property or is subject to an endorsement under the related title insurance policy insuring such Mortgaged Property, or in certain cases, an application has been, or will be, made to the applicable governing authority for creation of separate tax lots, in which case such Mortgage Loan requires the related Mortgagor to escrow an amount sufficient to pay taxes for the existing tax parcel of which such Mortgaged Property is a part until the separate tax lots are created.

 

(nn)                          Licenses and Permits. The related Mortgagor covenants in the related Loan Documents that it shall keep all licenses, permits and applicable governmental authorizations necessary for its operation of the related Mortgaged Property in full force and effect, all such licenses, permits and applicable governmental authorizations are in effect. Such Mortgage Loan requires the related Mortgagor to be qualified to do business in the jurisdiction in which the related Mortgaged Property is located. Seller is not aware of any Mortgagor, guarantor or other obligor on such Mortgage Loan having received notice of any noncompliance with any use or occupancy law, ordinance, regulation, standard, license or certificate with respect to the related Mortgaged Property.

 

(oo)                          Mortgage Provisions. The related Loan Documents contain provisions that render the rights and remedies of the holder thereof adequate for the practical realization against the related Mortgaged Property of the principal benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, non-judicial foreclosure.

 

(pp)                          UCC Filings; Mortgage Recorded. Uniform Commercial Code financing statements have been filed and/or recorded (or, if not filed and/or recorded, have been submitted in proper form for filing and recording), in all public places to the extent necessary, to perfect a valid first priority security interest in all items of personal property located on the related Mortgaged Property that are owned by the related Mortgagor and either (i) are reasonably necessary to operate such Mortgaged Property or (ii) are (as indicated in the Appraisal obtained in connection with the origination of such Mortgage Loan) material to the value of such Mortgaged Property (other than any personal property subject to a purchase money security interest or a sale and leaseback financing arrangement permitted under the terms of such Mortgage Loan or any other personal property leases applicable to such personal property), to the extent perfection may be effected pursuant to applicable law by recording or filing, and the related Mortgages, security agreements, chattel mortgages or equivalent documents related to and delivered in connection with such Mortgage Loan establish and create a valid and enforceable lien and priority security interest on such items of personalty except as such enforcement may be limited by bankruptcy, insolvency, receivership, reorganization,

 

 

moratorium, redemption, liquidation or other laws relating to or affecting the enforcement of creditor’s rights generally, or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). Notwithstanding the foregoing, no representation is made as to perfection of security interests in personal property to the extent action, possession or control beyond the filing of the Uniform Commercial Code financing statements is required in order to effect such perfection.

 

(qq)                          Recourse Obligations. The related Loan Documents provide that such Mortgage Loan is either (i) full recourse against the related Mortgagor and/or natural person or (ii) non-recourse to the related parties and (A) the related Mortgagor and at least one individual or entity is fully liable for actual losses, liabilities, costs and damages arising from certain acts of the related Mortgagor and/or its principals specified in the related Loan Documents, which acts generally include the following: (1) acts of fraud or intentional material misrepresentation, (2) misapplication or misappropriation of rents, insurance proceeds or awards or security deposits or, alternatively, the failure of any security deposits to be delivered to mortgagee upon foreclosure or action in lieu thereof (except to the extent applied in accordance with leases prior to such Mortgage Loan event of default), (3) intentional material physical waste of any related Mortgaged Property, (4) commission of intentional material physical waste at any related Mortgaged Property; (5) breaches of the special purpose covenants in the related Loan Documents, and (6) any breach of the environmental covenants contained in the related Loan Documents, and (B) such Mortgage Loan becomes full recourse to the related Mortgagor and at least one individual or entity, if (1) the related Mortgagor files a voluntary petition under federal or state bankruptcy or insolvency law; (2) such Mortgagor or the related guarantor shall have colluded with (or, alternatively, solicited or caused to be solicited) other creditors to cause an involuntary bankruptcy filing with respect to such Mortgagor; (3) any transfer of either any related Mortgaged Property or equity interests in such Mortgagor made in violation of the Loan Document; (4) such Mortgagor obtains any subordinate financing or encumbers the property with a voluntary lien in violation of the restrictions set forth in the related Loan Documents; or (5) after an event of default under such Mortgage Loan (after the expiration of any applicable notice or cure periods, if any) that results in lender accelerating the indebtedness, and after exercising remedies against any related Mortgaged Property, the related Mortgagor or any guarantor intentionally interferes for the sake of delay with lender’s exercise of remedies under the related Mortgage, except for such interference solely related to compulsory counterclaims or colorable defenses brought in good faith.

 

(rr)                                Compliance with Usury Laws. The mortgage interest rate (exclusive of any default interest, late charges, yield maintenance charge, or prepayment premiums) of such Mortgage Loan complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury. Such Mortgage Loan is not subject to forfeiture or any material penalties as a result of non-compliance with any applicable state or federal laws, regulations and other requirements pertaining to usury.

 

(ss)                              No Fraud. No fraud with respect to such Mortgage Loan has taken place on the part of Seller or the related Originator in connection with the origination of such Mortgage Loan.

 

 

(tt)                                Appraisal/Evaluation. The related Asset File contains an Appraisal of the related Mortgaged Property which is dated no more than ninety (90) calendar days prior to the related origination date. Each such Appraisal of the related Mortgaged Property is signed by a qualified appraiser who had no interest, direct or indirect, in such Mortgaged Property or in any loan made on the security thereof; and whose compensation was and is not affected by the approval or disapproval of such Mortgage Loan, and such Appraisal and appraiser both satisfied either (i) the requirements of the “Uniform Standards of Professional Appraisal Practice” as adopted by the Appraisal Standards Board of the Appraisal Foundation, or (ii) the guidelines in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act or 1989, in either case as in effect on the date such Mortgage Loan was originated, were prepared in connection with the origination of such Mortgage Loan no more than twelve (12) months prior to the origination date of such Mortgage Loan.

 

(uu)                          Whole Loan. Such Mortgage Loan is a whole loan and not a participation interest in a mortgage loan.

 

(vv)                          Post-Closing Obligations. All post-closing obligations required to be performed in connection with the closing of such Mortgage Loan have been or should have been satisfied by the date required in the related Loan Documents.

 

(ww)                      Assignment of Rents. There exists, to be included in the related Asset File as otherwise contemplated by this Agreement, an Assignment of Rents, either as a separate instrument or as part of the related Mortgage, related to and delivered in connection with such Mortgage Loan that establishes and creates a valid, subsisting and, subject to the exceptions set forth in paragraph (e) above, an enforceable assignment of, or first priority lien on and security interest in, subject to applicable law, the property, rights and interests of the related Mortgagor described therein (including in all leases, subleases, licenses or other agreements with Mortgagor pursuant to which any Person is entitled to occupy, use or possess all or any portion of the real property); and each assignor thereunder has the full right to assign the same. If an Assignment of Rents exists with respect to such Mortgage Loan (whether as part of the related Mortgage or separately), then the related Mortgage or related Assignment of Rents, subject to applicable law, provides for, upon an event of default under such Mortgage Loan, the appointment of a receiver for the collection of rents or for the related mortgagee to enter into possession to collect the rents or for rents to be paid directly to the mortgagee.

 

(xx)                          Assignment of Collateral. There is no material collateral securing such Mortgage Loan that has not been assigned to Buyer.

 

(yy)                          No Affiliates. The related Mortgagor is not an Affiliate of Seller. Except as disclosed in writing to Buyer, such Mortgage Loan does not have a Mortgagor that is an Affiliate of another Mortgagor under another Mortgage Loan that is also a Purchased Asset.

 

(zz)                            Assignments of Mortgage. Each related Assignment of Mortgage and assignment of Assignment of Rents from Seller in blank constitutes the legal, valid and binding first priority assignment from Seller (assuming the insertion of the Buyer’s name), except as such enforcement may be limited by bankruptcy, insolvency, receivership, reorganization,

 

 

moratorium, redemption, liquidation or other laws relating to or affecting the enforcement of creditors’ rights generally, or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). The related Mortgage and the related Assignment of Rents, if any, is freely assignable without the consent of any Person.

 

(aaa)                   Advancement of Funds. Neither Seller nor any prior holder of such Mortgage Loan has advanced funds or induced, solicited or knowingly received any advance of funds from a party other than the owner of the related Mortgaged Property or a party associated with the owner of such Mortgaged Property (other than amounts paid by the tenant into a lender controlled lockbox as specifically required under a related lease), for the payment of any amount required by such Mortgage Loan, except for interest accruing from the date of origination of such Mortgage Loan or the date of disbursement of such Mortgage Loan proceeds, whichever is later, to the date which preceded by thirty (30) days the first due date under the related Mortgage Note.

 

(bbb)                   Licenses and Permits. The related Mortgagor, the related lessees, trustee, franchisor or operators are in possession of all material licenses, permits and authorizations then required for the use permitted by the related Loan Documents of the related Mortgaged Property by the related Mortgagor, related lessee, trustee, franchisor, and/or operator. The related Loan Documents require the related Mortgagor to maintain or cause to be maintained all such licenses, permits, certificates of occupancy, and authorizations. All such material licenses, permits, certificates of occupancy, and applicable governmental authorizations are in effect. The related Loan Documents require the related Mortgagor to be qualified to do business in the jurisdiction in which the related Mortgaged Property is located.

 

(ccc)                      TRIA. The related special-form all-risk insurance policy and business interruption policy (issued by a Qualified Insurer meeting the Insurance Rating Requirements) do not specifically exclude Acts of Terrorism, as defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007 (collectively referred to as “TRIA”), from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. The related Loan Documents do not expressly waive or prohibit the related mortgagee from requiring coverage for Acts of Terrorism, as defined in TRIA, or damages related thereto; provided, however, that if TRIA or a similar or subsequent statute is not in effect, then, provided that terrorism insurance is commercially available, the related Mortgagor under such Mortgage Loan is required to carry terrorism insurance, but in such event such Mortgagor shall not be required to spend on terrorism insurance coverage more than 200% of the amount of the insurance premium that is payable at such time in respect of the property and business interruption/rental loss insurance required under the related Asset File (without giving effect to the cost of terrorism and earthquake components of such casualty and business interruption/rental loss insurance), and if the cost of terrorism insurance exceeds such amount, such Mortgagor is required to purchase the maximum amount of terrorism insurance available with funds equal to such amount.

 

(ddd)                   No Ground Lease. No Mortgaged Property is subject to a Ground Lease.

 

(eee)                      No Junior Liens. There are no subordinate mortgages or junior mortgages encumbering the related Mortgaged Property other than Permitted Encumbrances, mechanics’ or

 

 

materialmen’s liens (which are subject to the representations in paragraph (v) above), equipment or other personal property financing. Seller has no knowledge of any mezzanine debt secured directly or indirectly by interests in the related Mortgagor.

 

(fff)                         No Tenants in Common. No Mortgaged Property is owned by Mortgagors as tenants in common.

 

(ggg)                      REMIC. Such Mortgage Loan is a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code (but determined without regard to the rule in Treasury Regulations Section 1.860G-2(f)(2) that treats certain defective mortgage loans as qualified mortgages), and, accordingly, (i) the issue price of such Mortgage Loan to the related Mortgagor at origination did not exceed the non-contingent principal amount of such Mortgage Loan and (ii) either: (A) such Mortgage Loan is secured by an interest in real property (including buildings and structural components thereof, but excluding personal property) having a fair market value (1) at the date such Bridge Mortgage Loan was originated at least equal to 80% of the adjusted issue price of such Mortgage Loan on such date or (2) at the applicable Purchase Date at least equal to 80% of the adjusted issue price of such Mortgage Loan on such date, provided that for purposes hereof, the fair market value of the real property interest must first be reduced by (x) the amount of any lien on the real property interest that is senior to such Mortgage Loan and (y) a proportionate amount of any lien that is in parity with such Mortgage Loan; or (B) substantially all of the proceeds of such Mortgage Loan were used to acquire, improve or protect the real property which served as the only security for such Mortgage Loan (other than a recourse feature or other third party credit enhancement within the meaning of Treasury Regulations Section 1.860G-2(a)(1)(ii)). If such Mortgage Loan was “significantly modified” prior to the applicable Purchase Date so as to result in a taxable exchange under Section 1001 of the Code, it either (x) was modified as a result of the default or reasonably foreseeable default of such Mortgage Loan or (y) satisfies the provisions of either sub-clause (B)(a)(i) above (substituting the date of the last such modification for the date such Mortgage Loan was originated) or sub-clause (B)(a)(ii), including the proviso thereto. Any prepayment premium and yield maintenance charges applicable to such Mortgage Loan constitute “customary prepayment penalties” within the meaning of Treasury Regulations Section 1.860G-1(b)(2). All terms used in this paragraph shall have the same meanings as set forth in the related Treasury Regulations.

 

(hhh)                   Authorized to do Business. To the extent required under applicable law, as of the date that such entity held the related Mortgage Note, each holder of such Mortgage Note was authorized to originate, acquire and/or hold (as applicable) such Mortgage Note in the jurisdiction in which the related Mortgaged Property is located, or the failure to be so authorized does not materially and adversely affect the enforceability of such Mortgage Loan by Seller.

 

(iii)                               Defeasance. With respect to any such Mortgage Loan that, pursuant to the related Loan Documents, can be defeased (a “Defeasance”), (i) such Loan Documents provide for defeasance as a unilateral right of the related Mortgagor, subject to satisfaction of conditions specified in such Loan Documents; (ii) such Mortgage Loan cannot be defeased within two (2) years after the applicable closing date; (iii) the related Mortgagor is permitted to pledge only United States “government securities” within the meaning of Treasury Regulations Section 1.860G-2(a)(8)(ii), the revenues from which will, in the case of a full Defeasance, be sufficient

 

 

to make all scheduled payments under such Mortgage Loan when due, including the entire remaining principal balance on the maturity date or, if such Mortgage Loan is an anticipated repayment date loan, the entire principal balance outstanding on the related anticipated repayment date (or on or after the first date on which payment may be made without payment of a yield maintenance charge or prepayment penalty), and if such Mortgage Loan permits partial releases of real property in connection with partial defeasance, the revenues from the collateral will be sufficient to pay all such scheduled payments calculated on a principal amount equal to a specified percentage at least equal to the lesser of (A) 110% of the allocated loan amount for the real property to be released and (B) the outstanding principal balance of such Mortgage Loan; (iv) the related Mortgagor is required to provide a certification from an independent certified public accountant that the collateral is sufficient to make all scheduled payments under the related Mortgage Note as set forth in (iii) above, (v) if the related Mortgagor would continue to own assets in addition to the defeasance collateral, the portion of such Mortgage Loan secured by defeasance collateral is required to be assumed (or the mortgagee may require such assumption) by a Single-Purpose Entity; (vi) the related Mortgagor is required to provide an opinion of counsel that the mortgagee has a perfected security interest in such collateral prior to any other claim or interest; and (vii) the related Mortgagor is required to pay all rating agency fees associated with defeasance (if rating confirmation is a specific condition precedent thereto) and all other reasonable out-of-pocket expenses associated with defeasance, including, but not limited to, accountant’s fees and opinions of counsel.

 

(jjj)                            Refinancing. Such Mortgage Loan is not the result of more than one (1) refinancing of such Mortgage Loan, unless otherwise disclosed to and approved by Buyer.

 

(kkk)                   Fee Simple. The interest of the related Mortgagor in the related Mortgaged Property securing such Mortgage Loan includes a fee simple interest in real property and the improvements thereon.

 

 

SCHEDULE 2

 

AUTHORIZED REPRESENTATIVES

 

AOMI SELLER NOTICES

 

	
Attention: Erin   Rogers
    	
Address: 3060 Peachtree Road NW, Suite 500
    
	
Telephone: (404)   390-1131
    	
Atlanta, Georgia 30305
    
	
Email:   erin.rogers@angeloakcapital.com
    	
 
    

 

AOMI SELLER AUTHORIZATIONS

 

Any of the persons whose signatures and titles appear below are authorized, acting singly, to act for AOMI Seller under this Agreement:

 

	
Name
    	
 
    	
Title
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sreeni V. Prabhu
    	
 
    	
Managing Partner
    	
 
    	
/s/ Sreeni V. Prabhu
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Michael Fierman
    	
 
    	
Managing Partner
    	
 
    	
/s/ Michael Fierman
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Ashish Neghandi
    	
 
    	
Senior Portfolio Manager
    	
 
    	
/s/ Ashish Neghandi
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dan Fazioli
    	
 
    	
Controller
    	
 
    	
/s/ Dan Fazioli
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dory Black
    	
 
    	
General Counsel
    	
 
    	
/s/ Dory Black
    

 

[Schedule 2 to Master Repurchase Agreement (Nomura-AO (P2P) 2018)]

 

 

AOMF SELLER NOTICES

 

	
Attention: Erin   Rogers
    	
Address: 3060 Peachtree Road NW, Suite 500
    
	
Telephone: (404)   390-1131
    	
Atlanta, Georgia 30305
    
	
Email:   erin.rogers@angeloakcapital.com
    	
 
    

 

AOMF SELLER AUTHORIZATIONS

 

Any of the persons whose signatures and titles appear below are authorized, acting singly, to act for the Administrator on behalf of AOMF Seller under this Agreement:

 

	
Name
    	
 
    	
Title
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sreeni V. Prabhu
    	
 
    	
Managing Partner
    	
 
    	
/s/ Sreeni V. Prabhu
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Michael Fierman
    	
 
    	
Managing Partner
    	
 
    	
/s/ Michael Fierman
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Ashish Neghandi
    	
 
    	
Senior Portfolio Manager
    	
 
    	
/s/ Ashish Neghandi
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dan Fazioli
    	
 
    	
Controller
    	
 
    	
/s/ Dan Fazioli
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dory Black
    	
 
    	
General Counsel
    	
 
    	
/s/ Dory Black
    

 

[Schedule 2 to Master Repurchase Agreement (Nomura-AO (P2P) 2018]

 

 

BUYER NOTICES

 

	
Name: Operations
    	
Address:
    
	
Telephone:   212.667.1578
    	
Worldwide Plaza
    
	
Facsimile:   646.587.1582
    	
309 West 49th Street
    
	
Email:   wholeloanmosupport@nomura.com
    	
New York, New York 10019-7316
    
	
 
    	
 
    
	
With a copy to:
    	
 
    
	
 
    	
 
    
	
Name: Michael   Rogozinski
    	
Address:
    
	
Telephone:   212.667.1578
    	
Worldwide Plaza
    
	
Facsimile:   646.587.1582
    	
309 West 49th Street
    
	
Email:   michael.rogozinski@nomura.com
    	
New York, New York 10019-7316
    

 

BUYER AUTHORIZATIONS

 

Any of the persons whose signatures and titles appear below, including any other authorized officers, are authorized, acting singly, to act for Buyer under this Agreement:

 

	
Name
    	
 
    	
Title
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Gordon Sweely
    	
 
    	
Managing Director
    	
 
    	
/s/ Gordon Sweely
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Jack Kattan
    	
 
    	
Managing Director
    	
 
    	
/s/ Jack Kattan
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Scott Lechner
    	
 
    	
Managing Director
    	
 
    	
/s/ Scott Lechner
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sanil Patel
    	
 
    	
Managing Director
    	
 
    	
/s/ Sanil Patel
    

 

[Schedule 2 to Master Repurchase Agreement (Nomura-AO (P2P) 2018]

 

 

SCHEDULE 3

 

MORTGAGE LOAN PURCHASE AGREEMENTS

 

1.              That certain Flow Loan Purchase Agreement, dated as of September 10, 2018, by and between Angel Oak Mortgage, Inc. (“AOMI”) and Angel Oak Commercial Bridge, LLC.

 

2.              That certain Mortgage Loan Purchase Agreement, dated as of October 1, 2018, by and between Angel Oak Mortgage Fund TRS (“AOMF”) and Angel Oak Home Loans LLC.

 

3.              That certain Mortgage Loan Purchase Agreement, dated as of October 1, 2018, by and between AOMF and Angel Oak Mortgage Solutions LLC.

 

4.              That certain Mortgage Loan Purchase Agreement, dated as of October 1, 2018, by and between AOMF and Angel Oak Prime Bridge, LLC (“AOPB”).

 

5.              That certain Mortgage Loan Purchase Agreement, dated as of October 1, 2018, by and between AOMF and AOPB.

 

6.              That certain Flow Loan Purchase Agreement, dated as of September 10, 2018, by and between AOMI and Cherrywood Mortgage, LLC.

 

7.              That certain Mortgage Loan Purchase and Servicing Agreement, dated as of October 15, 2018, by and between HomeBridge Financial Services, Inc. and AOMF.

 

 

SCHEDULE 4

 

CRE BRIDGE MORTGAGE LOAN DELIVERABLES

 

I.                BUYER ITEMS

 

A.                    Risk Profile Assessment

 

B.                    Environmental Assessment

 

C.                    KYC Diligence

 

D.                    Lien/Litigation Searches

 

E.                     Insurance Certificates

 

1.        Flood Insurance (if required)

 

F.                      Appraisal

 

G.                    PML Report

 

II.           ENTITY

 

A.                    Organizational Chart

 

B.                    Seller

 

1.        Articles of Organization

 

2.        Operating Agreement

 

3.        Good Standing Certificates

 

(a)         Charter State

 

(b)         Project State

 

4.        Qualification to do Business (Project State)

 

5.        Authorizing Resolutions/Consents/Approvals

 

6.        Tax Identification Number (FEIN)

 

C.                    Seller’s Managing Member

 

1. Certificate of Formation

 

 

2.              Operating Agreement

 

3.              Good Standing Certificate (Charter State)

 

4.              Authorizing Resolutions/Consents/Approvals

 

5.              Tax Identification Number (FEIN)

 

D.                         Guarantor - Individual

 

III.                              LOAN DOCUMENTS

 

A.                         Loan Agreement

 

B.                         Promissory Note

 

C.                         Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing

 

D.                         Assignment of Leases and Rents

 

E.                          Pledge and Security Agreement

 

F.                           Environmental Indemnity Agreement (Unsecured)

 

G.                         Guaranty of Recourse Obligations

 

H.                        Collateral Assignment of Interest Rate Cap Agreement

 

I.                             UCC-1 (Charter State)

 

J.                             UCC-1 Fixture Filing (County Filing)

 

K.                         Assignment of Management Agreement and Subordination of Management Fees

 

L.                          Cash Management Agreement

 

M.                         Collection Account Control Agreement

 

N.                            Legal Opinions of Seller’s Counsel

 

1.              Seller’s Primary Counsel

 

2.              Seller’s Local Counsel

 

3.              Non-Consolidation Opinion (if required)

 

O.                            Loan Disbursement Statement

 

P.                              Buyer’s Closing Instruction/Escrow Letter

 

 

IV                                  ASSIGNMENT DOCUMENTS

 

A.            Allonge

 

B.            Assignment of Security Instrument

 

C.            Assignment of ALR

 

D.            Omnibus Assignment

 

E.             UCC-3 (County)

 

F.              UCC-3 (State)

 

G.            Assignment Closing Instruction/Escrow Letter

 

V.                                    TITLE, SURVEY AND ZONING

 

A.            Preliminary Title Report or Title Commitment

 

B.            Copies of Underlying Title Exceptions

 

C.            Title Company’s Wiring Instructions

 

D.            Pro Forma Title Policy with all endorsements

 

E.             Final Title Policy

 

F.              As-Built Survey

 

G.            Standard Flood Hazard Determination Form

 

H.           Flood Zone Certification

 

I.                Zoning Report/Zoning Certification Letter

 

J.                Certificate of Occupancy (or “no adverse impact” letter)

 

VI.                               OTHER

 

A.            Seller Financing Note

 

B.            Seller Financing Guaranty

 

C.            Executed Leases

 

D.            Tenant Estoppels

 

E.             SNDA’s

 

 

F.              Property Management Agreement

 

G.            Payoff Letter and Release Documents (if applicable)

 

VII.                          CLOSING DELIVERIES AND CONFIRMATIONS

 

A.            Updated Certified Rent Roll

 

B.            Standard Form Lease

 

C.            Closing/Settlement Statement

 

D.            Origination Fee

 

E.             Required Reserve Deposits (Tax Reserve, Insurance Reserve, etc.)

 

F.              Other deliverables as required by Buyer

 

G.            Confirmation of no material adverse change (Seller, Originator, Pledgor, Underwritten NOI, any major or anchor tenant)

 

H.           Confirmation of no unrestored material casualty, no actual or threatened condemnation, adverse zoning or usage change proceeding; no adverse law, regulation, ordinance, moratorium, injunctive proceeding, restriction, litigation, action, citation or similar proceeding

 

I.                Evidence of payment of brokerage fees/commissions

 

 

EXHIBIT A-1

 

FORM OF CONFIRMATION LETTER - [HOME$ENSE MORTGAGE LOANS]

[PORTFOLIO SELECT MORTGAGE LOANS] [PLATINUM MORTGAGE LOANS]

[PRIME JUMBO MORTGAGE LOANS] [INVESTOR MORTGAGE LOANS] [AGENCY

MORTGAGE LOANS]

 

,

 

[Angel Oak Mortgage, Inc.] [Angel Oak Mortgage Fund TRS]

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

Confirmation No.:

 

Ladies/Gentlemen:

 

This letter confirms our agreement to purchase from you the Purchased Assets listed in Appendix I hereto, pursuant to the Master Repurchase Agreement governing purchases and sales of Purchased Assets between us, dated as of December 6, 2018 (the “Agreement”), as follows:

 

Purchase Date:                  ,

 

Purchased Assets to be Purchased: See Appendix I hereto.

 

Appendix I to Confirmation Letter will list Purchased Assets

 

Type of Mortgage Loans: [Home$ense] [Portfolio Select] [Platinum] [Prime Jumbo] [Investor] [Agency] [Cherrywood Mortgage Loans] [CRE Bridge Mortgage Loans]

 

Aggregate Principal Amount of Mortgage Loans:

 

Purchase Price:

 

Pricing Rate:

 

Repurchase Date:

 

Repurchase Price:

 

 

Names and addresses for communications:

 

Buyer:

 

Nomura Corporate Funding Americas, LLC

Worldwide Plaza

309 West 49th Street

New York, New York 10019-7316

Attention: Michael Rogozinski

 

Seller:

 

[Angel Oak Mortgage, Inc.][Angel Oak Mortgage Fund TRS]

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

The Eligible Mortgage Loans have the characteristics on the electronic file or computer tape or disc delivered by Seller to Buyer with respect thereto in connection with this Confirmation.

 

The Seller hereby certifies that, to the best of Seller’s knowledge, as of such Purchase Date, the following will be true:

 

(1)             no Default or Event of Default shall have occurred and be continuing under the Facility Documents;

 

(2)              both immediately prior to the Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by Seller in Section 13 of the Repurchase Agreement and representations and warranties of the Guarantor under the related Guaranty, shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

 

(3)             Seller or Buyer shall not have determined in good faith that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to the Seller or the Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for the Seller or the Buyer to enter into Transactions under the Repurchase Agreement; and

 

(4)              the Seller has satisfied all applicable conditions precedent in Sections 3 of the Repurchase Agreement and all other requirements of the Facility Documents. The Seller further certifies that (1) (a) with respect to the Eligible Mortgage Loans subject to the Transaction requested herein, the documents constituting the Asset Files (as defined in the Custodial Agreement) and in each case as more specifically identified on the Mortgage Loan Schedule delivered to the Buyer and the Custodian in connection herewith (the “Receipted Assets”), have been submitted to Custodian in accordance with the Custodial Agreement and such required

 

 

documents are to be held by the Custodian for the Buyer in accordance with the Custodial Agreement, (2) all other documents related to such Receipted Assets (including, but not limited to, mortgages, insurance policies, loan applications and appraisals) have been or will be created and held by Seller for Buyer and (3) all documents related to such Receipted Assets withdrawn from Custodian shall be held by Seller for Buyer subject to the terms of the Repurchase Agreement and the Custodial Agreement.

 

By execution of this letter, the undersigned,                                         [MUST BE A RESPONSIBLE OFFICER] of Seller, hereby certifies that, in connection with the Underwriting Package delivered to Buyer on the date hereof with respect to the Eligible Mortgage Loans set forth on the attached Appendix I, [he][she] has no actual knowledge of any material information concerning such Eligible Mortgage Loan that is not reflected in the materials that comprise such Underwriting Package or otherwise disclosed to Buyer in writing.

 

NOMURA CORPORATE FUNDING AMERICAS, LLC

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    
	
[ANGEL OAK   MORTGAGE, INC.]
    
	
[ANGEL OAK MORTGAGE   FUND TRS]
    
	
 
    
	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

Appendix I

 

Asset Schedule

 

	
Loan ID
    	
 
    	
Unpaid Principal Balance
    	
 
    	
Purchase Price Percentage
    	
 
    	
Purchase Price
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT A-2

 

FORM OF CONFIRMATION LETTER - RTL MORTGAGE LOANS

 

,

 

[Angel Oak Mortgage, Inc.] [Angel Oak Mortgage Fund TRS]

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

Confirmation No.:

 

Ladies/Gentlemen:

 

This letter confirms our agreement to purchase from you the Purchased Assets listed in Appendix I hereto, pursuant to the Master Repurchase Agreement governing purchases and sales of Purchased Assets between us, dated as of December 6, 2018 (the “Agreement”), as follows:

 

Purchase Date:                   ,

 

Purchased Assets to be Purchased: See Appendix I hereto.

 

Appendix I to Confirmation Letter will list Purchased Assets

 

Type of Mortgage Loans: RTL Mortgage Loans

 

Aggregate Principal Amount of RTL Mortgage Loans:

 

Purchase Price:

 

Pricing Rate:

 

Actual Disbursed Holdback Amount:

 

 

Names and addresses for communications:

 

Buyer:

 

Nomura Corporate Funding Americas, LLC

Worldwide Plaza

309 West 49th Street

New York, New York 10019-7316

Attention: Michael Rogozinski

 

Seller:

 

[Angel Oak Mortgage, Inc.] [Angel Oak Mortgage Fund TRS]

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

The Eligible Mortgage Loans have the characteristics on the electronic file or computer tape or disc delivered by Seller to Buyer with respect thereto in connection with this Confirmation.

 

The Seller hereby certifies that, to the best of Seller’s knowledge, as of such Purchase Date, the following will be true:

 

(1)              no Default or Event of Default shall have occurred and be continuing under the Facility Documents;

 

(2)              both immediately prior to the Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by Seller in Section 13 of the Repurchase Agreement and representations and warranties of the Guarantor under the related Guaranty, shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

 

(3)              Seller or Buyer shall not have determined in good faith that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to the Seller or the Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for the Seller or the Buyer to enter into Transactions under the Repurchase Agreement; and

 

(4)              the Seller has satisfied all applicable conditions precedent in Sections 3 of the Repurchase Agreement and all other requirements of the Facility Documents. The Seller further certifies that (1) (a) with respect to the Eligible Mortgage Loans subject to the Transaction requested herein, the documents constituting the Asset Files (as defined in the Custodial Agreement) and in each case as more specifically identified on the Mortgage Loan Schedule delivered to the Buyer and the Custodian in connection herewith (the “Receipted Assets”), have

 

 

been submitted to Custodian in accordance with the Custodial Agreement and such required documents are to be held by the Custodian for the Buyer in accordance with the Custodial Agreement, (2) all other documents related to such Receipted Assets (including, but not limited to, mortgages, insurance policies, loan applications and appraisals) have been or will be created and held by Seller for Buyer and (3) all documents related to such Receipted Assets withdrawn from Custodian shall be held by Seller for Buyer subject to the terms of the Repurchase Agreement and the Custodial Agreement.

 

By execution of this letter, the undersigned,                    [MUST BE A RESPONSIBLE OFFICER] of Seller, hereby certifies that, in connection with the Underwriting Package delivered to Buyer on the date hereof with respect to the Eligible Mortgage Loans set forth on the attached Appendix I, [he][she] has no actual knowledge of any material information concerning such Eligible Mortgage Loan that is not reflected in the materials that comprise such Underwriting Package or otherwise disclosed to Buyer in writing.

 

NOMURA CORPORATE FUNDING AMERICAS, LLC

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    
	
 
    
	
Agreed and Acknowledged:
    
	
 
    
	
 
    
	
[ANGEL OAK   MORTGAGE, INC.]
    
	
[ANGEL OAK MORTGAGE   FUND TRS]
    
	
 
    
	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

Appendix I

 

Asset Schedule

 

	
Loan ID
    	
 
    	
Unpaid Principal Balance
    	
 
    	
Purchase Price Percentage
    	
 
    	
Purchase Price
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT A-3

 

FORM OF CONFIRMATION LETTER - CHERRYWOOD MORTGAGE LOANS

 

[               ], 201[    ]

 

[Angel Oak Mortgage, Inc.

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

[Angel Oak Mortgage Fund TRS

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

Confirmation No.: [                   ]

 

Ladies/Gentlemen:

 

This letter confirms our agreement to purchase from you the Purchased Assets listed in Appendix I hereto, pursuant to that certain Master Repurchase Agreement governing purchases and sales of Purchased Assets, dated as of December 6, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), by and among Angel Oak Mortgage, Inc., Angel Oak Mortgage Fund TRS and Nomura Corporate Funding Americas, LLC, as follows:

 

Purchase Date: [                    ], 201[     ]

 

Number of Purchased Assets to be Purchased: [                    ]

 

Purchased Assets to be Purchased: See Appendix I hereto.

 

Appendix I to Confirmation Letter will list Purchased Assets

 

Type of Mortgage Loans: Cherrywood Mortgage Loans

 

Aggregate Principal Amount of Mortgage Loans: [                    ]

 

Purchase Price: [                    ]

 

Pricing Rate: [                    ]

 

Actual Disbursed Holdback Amount: [                    ]

 

 

Repurchase Date: [                    ], 201[     ]

 

Repurchase Price: [                     ]

 

Upfront Fee: [                    ]

 

Names and addresses for communications:

 

Buyer:

 

Nomura Corporate Funding Americas, LLC

Worldwide Plaza

309 West 49th Street

New York, New York 10019-7316

Attention: Operations

 

Seller:

 

[Angel Oak Mortgage, Inc.

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

[Angel Oak Mortgage Fund TRS

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

The Eligible Mortgage Loans have the characteristics on the electronic file or computer tape or disc delivered by the undersigned Seller to Buyer with respect thereto in connection with this Confirmation.

 

The undersigned Seller hereby certifies that, to the best of such Seller’s knowledge, as of such Purchase Date, the following will be true:

 

(1)         no Margin Deficit, Default or Event of Default shall have occurred and be continuing under the Facility Documents;

 

(2)         both immediately prior to the Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by such Seller in Section 13 of the Agreement shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

 

 

(3)         neither such Seller nor Buyer shall have determined in good faith that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to such Seller or Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for such Seller or Buyer to enter into Transactions under the Agreement; and

 

(4)         such Seller has satisfied all applicable conditions precedent in Sections 3 of the Agreement and all other requirements of the Facility Documents.

 

Such Seller further certifies that (1) with respect to the Eligible Mortgage Loans subject to the Transaction requested herein, the documents constituting the Asset Files (as defined in the Custodial Agreement) and in each case as more specifically identified on the Asset Schedule delivered to Buyer and the Custodian in connection herewith (the “Receipted Assets”), have been submitted to Custodian in accordance with the Custodial Agreement and such required documents are to be held by the Custodian for Buyer in accordance with the Custodial Agreement, (2) all other documents related to such Receipted Assets (including, but not limited to, mortgages, insurance policies, loan applications and appraisals) have been or will be created and held by such Seller for Buyer, (3) all documents related to such Receipted Assets withdrawn from Custodian shall be held by such Seller for Buyer subject to the terms of the Agreement and the Custodial Agreement and (4) it has no actual knowledge of any material information concerning such Eligible Mortgage Loan which is not reflected in such file or otherwise disclosed to Buyer in writing.

 

Any capitalized term used but not defined herein shall have the meaning assigned to such term in the Agreement.

 

By execution of this letter, the undersigned, [                   ] [MUST BE A RESPONSIBLE OFFICER] of [Angel Oak Mortgage, Inc.] / [Angel Oak Mortgage Fund TRS], hereby certifies that, in connection with the Underwriting Package delivered to Buyer on the date hereof with respect to the Eligible Mortgage Loans set forth on the attached Appendix I, [he][she] has no actual knowledge of any material information concerning such Eligible Mortgage Loan that is not reflected in the materials that comprise such Underwriting Package or otherwise disclosed to Buyer in writing.

 

[Signature Page Follows]

 

 

	
 
    	
NOMURA CORPORATE FUNDING AMERICAS, LLC, as Buyer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[ANGEL OAK MORTGAGE, INC., as AOMI Seller
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title: ]
    
	
 
    	
/
    
	
 
    	
 
    
	
 
    	
[ANGEL OAK MORTGAGE FUND TRS, as AOMF Seller
    
	
 
    	
 
    
	
 
    	
By: Angel Oak Capital Advisors, LLC, not in its individual   capacity but solely as the Administrator
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title: ]
    

 

 

Appendix I

 

Asset Schedule

 

	
Loan ID
    	
 
    	
Unpaid Principal Balance
    	
 
    	
Purchase Price Percentage
    	
 
    	
Purchase Price
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT A-4

 

FORM OF CONFIRMATION LETTER - CRE BRIDGE MORTGAGE LOANS

 

[            ], 201[   ]

 

[Angel Oak Mortgage, Inc.]

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

/

 

[Angel Oak Mortgage Fund TRS]

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

Confirmation No.: [                   ]

 

Ladies/Gentlemen:

 

This letter confirms our agreement to purchase from you the Purchased Assets listed in Appendix I hereto, pursuant to that certain Master Repurchase Agreement governing purchases and sales of Purchased Assets, dated as of December 6, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), by and among Angel Oak Mortgage, Inc., Angel Oak Mortgage Fund TRS and Nomura Corporate Funding Americas, LLC, as follows:

 

Purchase Date: [           ], 201[    ]

 

Number of Purchased Assets to be Purchased: [       ]

 

Purchased Assets to be Purchased: See Appendix I hereto.

 

Appendix I to Confirmation Letter will list Purchased Assets

 

Type of Mortgage Loans: CRE Bridge Mortgage Loans

 

Aggregate Principal Amount of Mortgage Loans: [         ]

 

Purchase Price: [        ]

 

Pricing Rate: [         ]

 

Actual Disbursed Holdback Amount: [          ]

 

 

Minimum Diversity Requirement will be satisfied following your purchase of such Purchased Assets: [Yes] / [No]

 

Repurchase Date: [                ], 201[    ]

 

Repurchase Price: [        ]

 

Upfront Fee: [         ]

 

Names and addresses for communications:

 

Buyer:

 

Nomura Corporate Funding Americas, LLC

Worldwide Plaza

309 West 49th Street

New York, New York 10019-7316

Attention: Operations

 

Seller:

 

[Angel Oak Mortgage, Inc.

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

/

 

[Angel Oak Mortgage Fund TRS

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

The Eligible Mortgage Loans have the characteristics on the electronic file or computer tape or disc delivered by the undersigned Seller to Buyer with respect thereto in connection with this Confirmation.

 

The undersigned Seller hereby certifies that, to the best of such Seller’s knowledge, as of such Purchase Date, the following will be true:

 

(1)                                     no Margin Deficit, Default or Event of Default shall have occurred and be continuing under the Facility Documents;

 

(2)                                     both immediately prior to the Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by such Seller in Section 13 of the Agreement shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

 

 

(3)                                       neither such Seller nor Buyer shall have determined in good faith that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to such Seller or Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for such Seller or Buyer to enter into Transactions under the Agreement; and

 

(4)                                       such Seller has satisfied all applicable conditions precedent in Sections 3 of the Agreement and all other requirements of the Facility Documents.

 

Such Seller further certifies that (1) with respect to the Eligible Mortgage Loans subject to the Transaction requested herein, the documents constituting the Asset Files (as defined in the Custodial Agreement) and in each case as more specifically identified on the Asset Schedule delivered to Buyer and the Custodian in connection herewith (the “Receipted Assets”), have been submitted to Custodian in accordance with the Custodial Agreement and such required documents are to be held by the Custodian for Buyer in accordance with the Custodial Agreement, (2) all other documents related to such Receipted Assets (including, but not limited to, mortgages, insurance policies, loan applications and appraisals) have been or will be created and held by such Seller for Buyer, (3) all documents related to such Receipted Assets withdrawn from Custodian shall be held by such Seller for Buyer subject to the terms of the Agreement and the Custodial Agreement and (4) it has no actual knowledge of any material information concerning such Eligible Mortgage Loan which is not reflected in such file or otherwise disclosed to Buyer in writing.

 

Any capitalized term used but not defined herein shall have the meaning assigned to such term in the Agreement.

 

By execution of this letter, the undersigned, [                                             ] [MUST BE A RESPONSIBLE OFFICER] of [Angel Oak Mortgage, Inc.] / [Angel Oak Mortgage Fund TRS], hereby certifies that, in connection with the Underwriting Package delivered to Buyer on the date hereof with respect to the Eligible Mortgage Loans set forth on the attached Appendix I, [he][she] has no actual knowledge of any material information concerning such Eligible Mortgage Loan that is not reflected in the materials that comprise such Underwriting Package or otherwise disclosed to Buyer in writing.

 

[Signature Page Follows]

 

 

	
 
    	
NOMURA CORPORATE FUNDING AMERICAS, LLC, as Buyer
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
[ANGEL OAK MORTGAGE, INC., as AOMI Seller
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title: ]
    	
 
    
	
 
    	
/
    
	
 
    	
 
    
	
 
    	
[ANGEL OAK MORTGAGE FUND TRS, as AOMF Seller
    
	
 
    	
 
    
	
 
    	
By: Angel Oak Capital Advisors, LLC, not in its individual   capacity but solely as the Administrator
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title: ]
    	
 
    

 

 

Appendix I

 

Asset Schedule

 

	
Loan ID
    	
 
    	
Unpaid Principal Balance
    	
 
    	
Purchase Price Percentage
    	
 
    	
Purchase Price
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT B

 

RESERVED

 

 

EXHIBIT C

 

SELLERS’ TAX IDENTIFICATION NUMBERS

 

Angel Oak Mortgage, Inc.: 37-1892154

 

Angel Oak Mortgage Fund TRS: 83-6182500

 

 

EXHIBIT D

 

EVIDENCE OF BUYER LISTED AS LOSS PAYEE OF FIDELITY INSURANCE POLICY

 

 

EXHIBIT E

 

FORM OF MARGIN EXCESS CONFIRMATION LETTER

 

December 6, 2018

 

[Angel Oak Mortgage, Inc.]

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

[Angel Oak Mortgage Fund TRS]

3060 Peachtree Rd NW, Suite 500

Atlanta, GA 30305

Email:ashish.neghandi@angeloakcapital.com

 

Re: Additional Purchase Price

 

Ladies/Gentlemen:

 

This letter confirms our agreement to deliver Additional Purchase Price relating to the Purchased Assets listed in Appendix I hereto contemplated by Section 7(c) of that certain Master Repurchase Agreement governing purchases and sales of Purchased Assets by and among Angel Oak Mortgage, Inc., Angel Oak Mortgage Fund TRS and Nomura Corporate Funding Americas, LLC, dated as of December 6, 2018 (as may be amended and restated from time to time, the “Agreement”) (capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Agreement).

 

Purchased Assets to be Purchased: N/A

 

Aggregate Principal Amount of Mortgage Loans Subject to Additional Purchase Price: $

 

Additional Purchase Price: $

 

Purchased Assets Subject to Additional Purchase Price: See Appendix I hereto

 

NOMURA CORPORATE FUNDING AMERICAS, LLC

 

	
By:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

Agreed and Acknowledged:

 

 

[ANGEL OAK MORTGAGE, INC.]

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[ANGEL OAK MORTGAGE FUND TRS]

 

By: Angel Oak Capital Advisors, LLC, not in its individual capacity but solely as the Administrator

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

Appendix I

 

Additional Purchase Price

 

 

EXHIBIT F

 

FORM OF SECTION 8 CERTIFICATE

 

Reference is hereby made to the Master Repurchase Agreement, dated as of December 6, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), among ANGEL OAK MORTGAGE, INC., a Maryland corporation (“AOMI Seller” or a “Seller”), ANGEL OAK MORTGAGE FUND TRS, a [AOMF Seller entity type and jurisdiction of formation] (“AOMF Seller” or a “Seller”, collectively, the “Sellers”), and NOMURA CORPORATE FUNDING AMERICAS, LLC, a Delaware limited liability company (the “Buyer”). Pursuant to the provisions of Section 8 of the Agreement, the undersigned hereby certifies that:

 

1.                It is a      natural individual person,      treated as a corporation for U.S. federal income tax purposes,   disregarded for federal income tax purposes (in which case a copy of this Section 8 Certificate is attached in respect of its sole beneficial owner), or       treated as a partnership for U.S. federal income tax purposes (one must be checked).

 

2.                 It is the beneficial owner of amounts received pursuant to the Agreement.

 

3.                It is not a bank, as such term is used in section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the “Code”), or the Agreement is not, with respect to the undersigned, a loan agreement entered into in the ordinary course of its trade or business, within the meaning of such section.

 

4.                It is not a 10-percent shareholder of either Seller within the meaning of section 871(h)(3) or 881(c)(3)(B) of the Code.

 

5.                It is not a controlled foreign corporation that is related to either Seller within the meaning of section 881(c)(3)(C) of the Code.

 

6.                Amounts paid to it under the Facility Documents are not effectively connected with its conduct of a trade or business in the United States.

 

	
 
    	
 
    	
 
    	
[NAME OF UNDERSIGNED]
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Title:
    	
 
    
	
Date:
    	
 
    	
,
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT G-1

 

ASSET SCHEDULE FIELDS — HOME$ENSE MORTGAGE LOANS, PORTFOLIO

SELECT MORTGAGE LOANS, PLATINUM MORTGAGE LOANS, PRIME JUMBO

MORTGAGE LOANS, INVESTOR MORTGAGE LOANS AND AGENCY MORTGAGE

LOANS

 

	
 
    	
1
    	
Loan ID
    
	
 
    	
2
    	
Borrower Last Name
    
	
 
    	
3
    	
Property Address
    
	
 
    	
4
    	
Origination Date (AOF Note Date)
    
	
 
    	
5
    	
Purchase Date (AOCA Purchase Date)
    
	
 
    	
6
    	
Original Balance (Loan Amount)
    
	
 
    	
7
    	
Current Balance
    
	
 
    	
8
    	
State
    
	
 
    	
9
    	
City
    
	
 
    	
10
    	
Zip
    
	
 
    	
11
    	
Rate (Interest Rate)
    
	
 
    	
12
    	
Original Monthly P&I Amount
    
	
 
    	
13
    	
Asset Type (QM / Non-QM)
    
	
 
    	
14
    	
Program
    
	
 
    	
15
    	
Program Type
    
	
 
    	
16
    	
Rural Property (Y/N)
    
	
 
    	
17
    	
LTV
    
	
 
    	
18
    	
CLTV
    
	
 
    	
19
    	
Original FICO (Credit Score)
    
	
 
    	
20
    	
Original FICO Date
    
	
 
    	
21
    	
Loan Purpose
    
	
 
    	
22
    	
DTI
    
	
 
    	
23
    	
Property Type
    
	
 
    	
24
    	
Owner Occupied (Occupancy)
    
	
 
    	
25
    	
Cash-out Refinancing (Y/N)
    
	
 
    	
26
    	
Foreign National (Y/N)
    
	
 
    	
27
    	
First Payment Date
    
	
 
    	
28
    	
Term
    
	
 
    	
29
    	
Fixed Periodic Cap (Loan Info ARM   First Rate Adj Cap)
    
	
 
    	
30
    	
Fixed Period (Loan Info ARM First   Period Change)
    
	
 
    	
31
    	
Periodic Cap (Loan Info ARM Rate Cap)
    
	
 
    	
32
    	
Reset Frequency (Loan Info ARM Adj   Period)
    
	
 
    	
33
    	
Life Cap (Loan Info ARM Life Cap)
    
	
 
    	
34
    	
Margin (ARM Margin)
    

 

 

	
 
    	
35
    	
Index Rate (ARM Index)
    
	
 
    	
36
    	
Angel Oak Underwriting Exception
    
	
 
    	
37
    	
Type of the Angel Oak Exception   (Exception Reason)
    
	
 
    	
38
    	
DTI>43%
    
	
 
    	
39
    	
Self Employed (Y/N)
    
	
 
    	
40
    	
DELINQUENT 1x60 (Prior 24 Months)
    
	
 
    	
41
    	
DELINQUENT 2x30 (Prior 24 Months)
    
	
 
    	
42
    	
Interest Only Mortgage Loan Status
    
	
 
    	
43
    	
Interest Only Mortgage Loan Term
    
	
 
    	
44
    	
Subordinate Lien Balance
    
	
 
    	
45
    	
Bank Statement Documentation Flag
    
	
 
    	
46
    	
# of Months Bank Statement
    
	
 
    	
47
    	
Balloon Flag
    
	
 
    	
48
    	
Amortization Term
    
	
 
    	
49
    	
Cut-off Date
    
	
 
    	
50
    	
Next Due Date
    
	
 
    	
51
    	
Months Reserves
    
	
 
    	
52
    	
Subject to TRID
    
	
 
    	
53
    	
Appraisal Value
    
	
 
    	
54
    	
Purchase Price
    
	
 
    	
55
    	
Appraisal Date
    
	
 
    	
56
    	
Maturity Date
    
	
 
    	
57
    	
Life Floor
    
	
 
    	
58
    	
Delinquency Status
    
	
 
    	
59
    	
Origination Channel
    
	
 
    	
60
    	
Residual Income
    
	
 
    	
61
    	
MERS (Y/N)
    
	
 
    	
62
    	
Prior Credit Event (Y/N)
    
	
 
    	
63
    	
Prior Credit Event Date
    
	
 
    	
64
    	
Servicer ID
    
	
 
    	
65
    	
Deferred Balance
    
	
 
    	
66
    	
BPO Date
    
	
 
    	
67
    	
BPO Value
    
	
 
    	
68
    	
Next Rate Reset Date
    
	
 
    	
69
    	
Modification Date
    
	
 
    	
70
    	
Modification/Forbearance Expiration   Date
    
	
 
    	
71
    	
Modification Type
    
	
 
    	
72
    	
Value for LTV
    
	
 
    	
73
    	
Pay String
    
	
 
    	
74
    	
Market Rent
    
	
 
    	
75
    	
Lease Rent
    
	
 
    	
76
    	
Bankruptcy Discharge Date
    

 

 

	
 
    	
77
    	
Foreclosure Sale Date
    
	
 
    	
78
    	
Short Sale Date
    
	
 
    	
79
    	
Deed-in-Lieu Date
    
	
 
    	
80
    	
Borrower Income Verification Level
    
	
 
    	
81
    	
Co-Borrower Income Verification Level
    
	
 
    	
82
    	
Borrower Asset Verification
    
	
 
    	
83
    	
Co-Borrower Asset Verification
    
	
 
    	
84
    	
4506-T Indicator
    
	
 
    	
85
    	
Number of Borrowers
    
	
 
    	
86
    	
Appraisal Date 2
    
	
 
    	
87
    	
Appraisal Value 2
    
	
 
    	
88
    	
Prepayment Penalty Calculation
    
	
 
    	
89
    	
Prepayment Penalty Term
    

 

 

EXHIBIT G-2

 

ASSET SCHEDULE FIELDS - RTL MORTGAGE LOANS

 

	
 
    	
1.
    	
Loan ID
    
	
 
    	
2.
    	
Loan #
    
	
 
    	
3.
    	
Closing Date
    
	
 
    	
4.
    	
AOCA Purchase Date
    
	
 
    	
5.
    	
Original UPB
    
	
 
    	
6.
    	
Current UPB
    
	
 
    	
7.
    	
Borrowing Entity Name
    
	
 
    	
8.
    	
Borrower First Name
    
	
 
    	
9.
    	
Borrower Last Name
    
	
 
    	
10.
    	
Property Street Address
    
	
 
    	
11.
    	
City
    
	
 
    	
12.
    	
State
    
	
 
    	
13.
    	
Zip Code
    
	
 
    	
14.
    	
Interest Rate
    
	
 
    	
15.
    	
Originator Name
    
	
 
    	
16.
    	
Servicer Name
    
	
 
    	
17.
    	
Loan Program
    
	
 
    	
18.
    	
Initial Draw Amount
    
	
 
    	
19.
    	
Original Holdback Amount
    
	
 
    	
20.
    	
Remaining Holdback Amount
    
	
 
    	
21.
    	
Property Purchase Price
    
	
 
    	
22.
    	
Property Purchase Price Date
    
	
 
    	
23.
    	
Credit Score
    
	
 
    	
24.
    	
Loan Purpose
    
	
 
    	
25.
    	
Cash-out Refinancing Flag (Y/N)
    
	
 
    	
26.
    	
Original Acquisition Price Refi
    
	
 
    	
27.
    	
Property Type
    
	
 
    	
28.
    	
Occupancy
    
	
 
    	
29.
    	
First Payment Date
    

 

 

	
 
    	
30.
    	
Loan Term (months)
    
	
 
    	
31.
    	
Self-Employed (Y/N)
    
	
 
    	
32.
    	
First Lien Flag (Y/N)
    
	
 
    	
33.
    	
Bankruptcy in last 24 months
    
	
 
    	
34.
    	
Foreclosure in the last 24 months
    
	
 
    	
35.
    	
Angel Oak Underwriting Exception Flag   (Y / N)
    
	
 
    	
36.
    	
Exception Reason
    
	
 
    	
37.
    	
Compensating Factors
    
	
 
    	
38.
    	
Borrower Reserves (months)
    
	
 
    	
39.
    	
P&I Monthly Payment
    
	
 
    	
40.
    	
Interest Only Mos.
    
	
 
    	
41.
    	
Balloon Indicator
    
	
 
    	
42.
    	
Down Payment
    
	
 
    	
43.
    	
Down Payment %
    
	
 
    	
44.
    	
As-Is BPO Date
    
	
 
    	
45.
    	
As-Is BPO Value
    
	
 
    	
46.
    	
As-Repaired Appraisal Date
    
	
 
    	
47.
    	
As-Repaired Appraisal Value
    
	
 
    	
48.
    	
Repeat Borrower Flag
    
	
 
    	
49.
    	
Number of Bedrooms
    
	
 
    	
50.
    	
Number of Bathroom
    
	
 
    	
51.
    	
SQFT
    
	
 
    	
52.
    	
Number of Properties rehabbed in 12   months
    
	
 
    	
53.
    	
Total number of rehab
    
	
 
    	
54.
    	
Years spend in home rehabs
    
	
 
    	
55.
    	
Paystring
    
	
 
    	
56.
    	
Paystring as of date
    
	
 
    	
57.
    	
Paid Through Date
    
	
 
    	
58.
    	
Days Past Due
    
	
 
    	
59.
    	
Foreign National Flag (Y/ N)
    
	
 
    	
60.
    	
Holdback / “As-is” BPO Value (%)
    
	
 
    	
61.
    	
Loan-to-”As-is” BPO Value (%)
    
	
 
    	
62.
    	
Loan-to-Cost Value (%)
    

 

 

	
 
    	
63.
    	
Loan-to-After Repaired Value (%)
    
	
 
    	
64.
    	
Loan Modification Flag (Y/N)
    
	
 
    	
65.
    	
Modification Date
    
	
 
    	
66.
    	
Modification Purpose
    
	
 
    	
67.
    	
# of Modifications
    
	
 
    	
68.
    	
Post Modification Balance
    
	
 
    	
69.
    	
Canceled Holdback Draw
    
	
 
    	
70.
    	
Canceled Holdback Draw Date
    
	
 
    	
71.
    	
REO Flag (Y/N)
    

 

 

EXHIBIT G-3

 

ASSET SCHEDULE FIELDS - CHERRYWOOD MORTGAGE LOANS

 

	
 
    	
1.
    	
Originator
    
	
 
    	
2.
    	
Lender Company
    
	
 
    	
3.
    	
Loan Number
    
	
 
    	
4.
    	
Purchase Date
    
	
 
    	
5.
    	
Borrower
    
	
 
    	
6.
    	
Address
    
	
 
    	
7.
    	
Subject-City
    
	
 
    	
8.
    	
Subject-State
    
	
 
    	
9.
    	
Subject-ZipCode
    
	
 
    	
10.
    	
Property Type
    
	
 
    	
11.
    	
Original Loan Amount
    
	
 
    	
12.
    	
Cut-off Date Principal Balance
    
	
 
    	
13.
    	
Owner Occupied Flag
    
	
 
    	
14.
    	
Single Tenant Flag
    
	
 
    	
15.
    	
Multiple Tenant Flag
    
	
 
    	
16.
    	
Percent Occupied
    
	
 
    	
17.
    	
Vacancy Factor-Actual
    
	
 
    	
18.
    	
Vacancy Factor-UW
    
	
 
    	
19.
    	
Recourse Flag
    
	
 
    	
20.
    	
Recourse%
    
	
 
    	
21.
    	
Credit Score
    
	
 
    	
22.
    	
Lien Status
    
	
 
    	
23.
    	
Ownership Interest
    
	
 
    	
24.
    	
Closed Date
    
	
 
    	
25.
    	
First Payment Due Date
    
	
 
    	
26.
    	
Maturity Date
    
	
 
    	
27.
    	
Original Term
    
	
 
    	
28.
    	
Remaining Term
    

 

 

	
 
    	
29.
    	
Original IO Term
    
	
 
    	
30.
    	
Amortization Term
    
	
 
    	
31.
    	
Initial Rate
    
	
 
    	
32.
    	
Current Rate
    
	
 
    	
33.
    	
Rate Type
    
	
 
    	
34.
    	
Index
    
	
 
    	
35.
    	
Margin
    
	
 
    	
36.
    	
Rate Ceiling
    
	
 
    	
37.
    	
Rate Floor
    
	
 
    	
38.
    	
Initial Cap
    
	
 
    	
39.
    	
Periodic Cap
    
	
 
    	
40.
    	
Life Of Loan Cap
    
	
 
    	
41.
    	
Fixed Term (years)
    
	
 
    	
42.
    	
First Rate Change Date
    
	
 
    	
43.
    	
Frequency of Rate   Change (Floaters) (months)
    
	
 
    	
44.
    	
P&I Payment
    
	
 
    	
45.
    	
DSCR Underwriting
    
	
 
    	
46.
    	
Debt Service   Underwriting
    
	
 
    	
47.
    	
Units
    
	
 
    	
48.
    	
NRA Square Footage
    
	
 
    	
49.
    	
Cut-Off Date Balance   per SF or Unit
    
	
 
    	
50.
    	
Fully Amortizing
    
	
 
    	
51.
    	
Balloon Flag
    
	
 
    	
52.
    	
Balloon Balance
    
	
 
    	
53.
    	
Balloon LTV
    
	
 
    	
54.
    	
Original LTV
    
	
 
    	
55.
    	
Current LTV
    
	
 
    	
56.
    	
Appraisal Value
    
	
 
    	
57.
    	
Appraisal Date
    
	
 
    	
58.
    	
UW Value
    
	
 
    	
59.
    	
Cherrywood Net Usable   Cashflow-Underwriting
    
	
 
    	
60.
    	
Cherrywood Net   Operating Income-Underwriting
    
	
 
    	
61.
    	
Date of Operating   Statement/Tax Statement
    

 

 

	
 
    	
62.
    	
Cross Collateralized /   Cross Defaulted
    
	
 
    	
63.
    	
Single Note / Multiple   Property Loan (Y/N)
    
	
 
    	
64.
    	
Payment Frequency
    
	
 
    	
65.
    	
Current Additional   Financing in Place (Y/N)
    
	
 
    	
66.
    	
Current Additional Financing   Secured by Property (Y/N)
    
	
 
    	
67.
    	
Subordinate Financing
    
	
 
    	
68.
    	
Loan Purpose
    
	
 
    	
69.
    	
Sales Price
    
	
 
    	
70.
    	
Product Description
    
	
 
    	
71.
    	
Business Sub-Channel
    
	
 
    	
72.
    	
Prepay Penalties
    
	
 
    	
73.
    	
Prepayment Penalty Flag
    
	
 
    	
74.
    	
Flood Zone   Classification
    
	
 
    	
75.
    	
Flood Risk
    
	
 
    	
76.
    	
Holdback Type
    
	
 
    	
77.
    	
Holdback Description
    
	
 
    	
78.
    	
Original Holdback   Amount
    
	
 
    	
79.
    	
Current Holdback Amount
    
	
 
    	
80.
    	
Holdback As Of Date
    
	
 
    	
81.
    	
Phase I Ordered Flag
    
	
 
    	
82.
    	
Debt Yield-Orig
    
	
 
    	
83.
    	
Cap Rate-Orig
    
	
 
    	
84.
    	
Foreign National
    
	
 
    	
85.
    	
Environmental Phase One   Report Ordered
    
	
 
    	
86.
    	
Escrow Balance
    
	
 
    	
87.
    	
Tax Escrow
    
	
 
    	
88.
    	
Insurance Escrow
    
	
 
    	
89.
    	
TI/LC Escrow
    
	
 
    	
90.
    	
Borrower Type
    
	
 
    	
91.
    	
Permitted Releases
    
	
 
    	
92.
    	
Affiliated Borrowers   Flag
    
	
 
    	
93.
    	
Affiliated Borrowers
    
	
 
    	
94.
    	
Program
    

 

 

	
 
    	
95.
    	
Exception (Y/N)
    
	
 
    	
96.
    	
Exception Detail
    
	
 
    	
97.
    	
Wet Loan (Y/N)_
    
	
 
    	
98.
    	
Personal Guarantee   (Y/N)
    
	
 
    	
99.
    	
Mortgagor is a U.S.   Person (Y/N)
    
	
 
    	
100.
    	
DQ Status
    
	
 
    	
101.
    	
Historical Pay Strings
    

 

 

EXHIBIT G-4

 

ASSET SCHEDULE FIELDS - CRE BRIDGE MORTGAGE LOANS

 

	
 
    	
1.
    	
Originator
    
	
 
    	
2.
    	
Product
    
	
 
    	
3.
    	
Loan #
    
	
 
    	
4.
    	
Origination Date
    
	
 
    	
5.
    	
Loan Amount
    
	
 
    	
6.
    	
Purchase Date
    
	
 
    	
7.
    	
Property Name
    
	
 
    	
8.
    	
Address
    
	
 
    	
9.
    	
City
    
	
 
    	
10.
    	
County
    
	
 
    	
11.
    	
State
    
	
 
    	
12.
    	
Zip Code
    
	
 
    	
13.
    	
Property Type
    
	
 
    	
14.
    	
Property Sub Type
    
	
 
    	
15.
    	
Yr Built
    
	
 
    	
16.
    	
Yr Renovated
    
	
 
    	
17.
    	
Size
    
	
 
    	
18.
    	
Units of Measure
    
	
 
    	
19.
    	
$/Unit, SF, Room
    
	
 
    	
20.
    	
Property Purchase Price
    
	
 
    	
21.
    	
# of Properties
    
	
 
    	
22.
    	
Original Balance
    
	
 
    	
23.
    	
Cut-off Date Balance   ($)
    
	
 
    	
24.
    	
Loan Balance
    
	
 
    	
25.
    	
Advance
    
	
 
    	
26.
    	
Debt Type
    
	
 
    	
27.
    	
Lien Position
    
	
 
    	
28.
    	
Interest Rate
    
	
 
    	
29.
    	
Payment Type
    

 

 

	
 
    	
30.
    	
Rate Index
    
	
 
    	
31.
    	
Gross Margin
    
	
 
    	
32.
    	
LIBOR Floor
    
	
 
    	
33.
    	
LIBOR Cap
    
	
 
    	
34.
    	
Interest Accrual Basis
    
	
 
    	
35.
    	
Original Term to   Maturity (mo)
    
	
 
    	
36.
    	
Original Term Maturity   Date
    
	
 
    	
37.
    	
Remaining Term to   Maturity (Mo)
    
	
 
    	
38.
    	
First Payment Date
    
	
 
    	
39.
    	
Monthly P&I Payment
    
	
 
    	
40.
    	
Gross Mortgage Rate
    
	
 
    	
41.
    	
Servicing Fee
    
	
 
    	
42.
    	
Net Mortgage Rate
    
	
 
    	
43.
    	
Current Rate As of 9/31
    
	
 
    	
44.
    	
Original Amort Term   (months)
    
	
 
    	
45.
    	
Remaining Amort Term   (months)
    
	
 
    	
46.
    	
Original IO Period   (Months)
    
	
 
    	
47.
    	
Remaining IO Period   (Mo)
    
	
 
    	
48.
    	
Seasoning
    
	
 
    	
49.
    	
Maturity Date
    
	
 
    	
50.
    	
Final Maturity Date
    
	
 
    	
51.
    	
Monthly Debt Service   ($)
    
	
 
    	
52.
    	
Annual Debt Service ($)
    
	
 
    	
53.
    	
Companion Loan Month   Debt Service ($)
    
	
 
    	
54.
    	
Companion Loan Annual   Debt Service ($)
    
	
 
    	
55.
    	
Appraised Value ($)
    
	
 
    	
56.
    	
Appraisal As of Date
    
	
 
    	
57.
    	
Cut off Date LTV Ratio
    
	
 
    	
58.
    	
CLTV at Maturity
    
	
 
    	
59.
    	
UW NOI DSCR
    
	
 
    	
60.
    	
UW NCF DSCR
    
	
 
    	
61.
    	
UW NOI ($)
    
	
 
    	
62.
    	
UW NCF ($)
    

 

 

	
 
    	
63.
    	
UW NOI Debt Yield
    
	
 
    	
64.
    	
UW NCF Debt Yield
    
	
 
    	
65.
    	
UW Revenue ($)
    
	
 
    	
66.
    	
UW EGI ($)
    
	
 
    	
67.
    	
UW Expenses ($)
    
	
 
    	
68.
    	
UW TI/LC ($)
    
	
 
    	
69.
    	
Occupancy Rate
    
	
 
    	
70.
    	
Occupancy As-of Date
    
	
 
    	
71.
    	
Payment Date
    
	
 
    	
72.
    	
Most Recent Operating   Statements Date
    
	
 
    	
73.
    	
Most Recent EGI ($)
    
	
 
    	
74.
    	
Most Expenses ($)
    
	
 
    	
75.
    	
Most Recent NOI ($)
    
	
 
    	
76.
    	
2nd Most Recent   Operating Statements Date
    
	
 
    	
77.
    	
2nd Most Recent EGI ($)
    
	
 
    	
78.
    	
2nd Most Recent   Expenses ($)
    
	
 
    	
79.
    	
2nd Most Recent NOI ($)
    
	
 
    	
80.
    	
3rd Most Recent   Operating Statements Date
    
	
 
    	
81.
    	
3rd Most Recent EGI ($)
    
	
 
    	
82.
    	
3rd Most Recent   Expenses ($)
    
	
 
    	
83.
    	
3rd Most Recent NOI ($)
    
	
 
    	
84.
    	
U/W Hotel ADR
    
	
 
    	
85.
    	
U/W RevPAR
    
	
 
    	
86.
    	
Most Recent Hotel ADR
    
	
 
    	
87.
    	
Most Recent Hotel   RevPAR
    
	
 
    	
88.
    	
Prepayment Provisions   (# of payments)
    
	
 
    	
89.
    	
Ownership Interest
    
	
 
    	
90.
    	
GL Expiration
    
	
 
    	
91.
    	
GL Extension Terms
    
	
 
    	
92.
    	
Annual GL Rent Payment
    
	
 
    	
93.
    	
Annual GL Rent   Increases
    
	
 
    	
94.
    	
Lockbox
    
	
 
    	
95.
    	
Cash Management
    

 

 

	
 
    	
96.
    	
Crossed Collateralized
    
	
 
    	
97.
    	
Related Borrower
    
	
 
    	
98.
    	
Grace Period (days)
    
	
 
    	
99.
    	
Master Lease (Y/N)
    
	
 
    	
100.
    	
Largest Tenant Name
    
	
 
    	
101.
    	
Largest TenantSq. Ft
    
	
 
    	
102.
    	
Lease Expiration
    
	
 
    	
103.
    	
2nd Largest Tenant Name
    
	
 
    	
104.
    	
2nd Largest Sq. Ft
    
	
 
    	
105.
    	
2nd Largest Lease   Expiration
    
	
 
    	
106.
    	
3rd Largest Tenant Name
    
	
 
    	
107.
    	
3rd Largest Sq. Ft
    
	
 
    	
108.
    	
3rd Largest Lease   Expiration
    
	
 
    	
109.
    	
4th Largest Tenant Name
    
	
 
    	
110.
    	
4th Largest Sq. Ft
    
	
 
    	
111.
    	
4th Largest Lease   Expiration
    
	
 
    	
112.
    	
5th Largest Tenant Name
    
	
 
    	
113.
    	
5ht Largest Sq. SF
    
	
 
    	
114.
    	
5ht Largest Lease   Expiration
    
	
 
    	
115.
    	
Upfront Replacement   Reserves ($)
    
	
 
    	
116.
    	
Monthly Replacement   Reserves ($)
    
	
 
    	
117.
    	
Upfront T/LC Reserves   ($)
    
	
 
    	
118.
    	
Monthly TI/LC Reserves   ($)
    
	
 
    	
119.
    	
Upfront Tax Reserves   ($)
    
	
 
    	
120.
    	
Monthly Tax Reserves   ($)
    
	
 
    	
121.
    	
Upfront Insurance   Reserves ($)
    
	
 
    	
122.
    	
Monthly Ins. Reserves   ($)
    
	
 
    	
123.
    	
Upfront Engineering   Reserve ($)
    
	
 
    	
124.
    	
Other Reserves ($)
    
	
 
    	
125.
    	
Interest Reserve
    
	
 
    	
126.
    	
Other Reserve   Description
    
	
 
    	
127.
    	
Enviro Report Date
    
	
 
    	
128.
    	
Engineering Report Date
    

 

 

	
 
    	
129.
    	
Seismic Report Date
    
	
 
    	
130.
    	
Seismic Ins Required   (Y/N)
    
	
 
    	
131.
    	
Terrorism Ins (Y/N)
    
	
 
    	
132.
    	
Loan Purpose
    
	
 
    	
133.
    	
Sponsor
    
	
 
    	
134.
    	
Guarantor
    
	
 
    	
135.
    	
Borrower
    
	
 
    	
136.
    	
Previous Securitization
    
	
 
    	
137.
    	
Non-Trust Pari Passu   Original Balance
    
	
 
    	
138.
    	
Non-Trust Pari Passu   Cut-off Date Balance
    
	
 
    	
139.
    	
Non-Trust Pari Passu   Balloon Balance
    
	
 
    	
140.
    	
Existing Additional Sub   Debt Amount
    
	
 
    	
141.
    	
Existing Additional Sub   Debt Description
    
	
 
    	
142.
    	
Mezz Debt Cut Off Date   Balance ($)
    
	
 
    	
143.
    	
Future Debt Permitted
    
	
 
    	
144.
    	
Recourse
    
	
 
    	
145.
    	
Cap Rate
    
	
 
    	
146.
    	
Sponsor is a Foreign   National (Y/N)
    
	
 
    	
147.
    	
Single Mortgagor (Y/N)
    
	
 
    	
148.
    	
Mortgagor is a U.S.   Person (Y/N)
    
	
 
    	
149.
    	
Wet Loan (Y/N)
    
	
 
    	
150.
    	
Note B Heldback
    
	
 
    	
151.
    	
Origination Fee
    
	
 
    	
152.
    	
Interest Reserves
    
	
 
    	
153.
    	
Construction Holdback
    
	
 
    	
154.
    	
Servicing Fee
    
	
 
    	
155.
    	
DQ Status
    
	
 
    	
156.
    	
Historical Pay Strings
    

 

 

EXHIBIT H

 

[RESERVED]

 

 

EXHIBIT I

 

FORM OF [SERVICER][SUBSERVICER] NOTICE

 

December 6, 2018

 

[          ]

[Address]

[Address]

Attention: [          ]

 

Re:                             Master Repurchase Agreement, dated as of December 6, 2018 (the “Repurchase Agreement”), by and among Angel Oak Mortgage, Inc., Angel Oak Mortgage Fund TRS and Nomura Corporate Funding Americas, LLC (the “Buyer”)

 

Ladies and Gentlemen:

 

[          ] [the (“Servicer”)][(the “Subservicer”)] is servicing certain mortgage loans pursuant to that certain [Servicing][Subservicing] Agreement, dated [   ] (the “[Servicing][Subservicing] Agreement”), between [Angel Oak Home Loans LLC] [Angel Oak Mortgage Solutions LLC] [Angel Oak Prime Bridge, LLC] [Cherrywood Mortgage, LLC] [Angel Oak Commercial Bridge, LLC] [(the “Servicer”)] and Subservicer, attached hereto as Exhibit C. Pursuant to the [Mortgage Loan Purchase and Servicing Agreement], dated as of the date hereof (the “MLPSA”), between [   ] and [Angel Oak Mortgage, Inc.] [Angel Oak Mortgage Fund TRS] (the “Seller”) has acquired and shall acquire in the future mortgage loans from the Servicer.

 

The [Servicer][Subservicer] is hereby notified and acknowledges that, pursuant to the Repurchase Agreement, (i) the Seller has sold and pledged to the Buyer those certain mortgage loans identified on Schedule 1 attached hereto (the “Initial Purchased Assets”) and (ii) from time to time, the Seller may acquire additional mortgage loans and it may sell and pledge to Buyer such additional mortgage loans (the “Additional Purchased Assets” and, collectively with the Initial Purchased Assets, the “Purchased Assets”). The [Servicer][Subservicer] agrees and acknowledges that the Purchased Assets shall be serviced by the [Servicer][Subservicer] on behalf of the Seller in accordance with the Subservicing Agreement and that the Purchased Assets are subject to a security interest in favor of Buyer.

 

The new Additional Purchased Assets will be identified on either (i) Schedule I attached to the related addition notice (“Addition Notice”), the form of which is attached as Exhibit A hereto, or (ii) an email from the Servicer to Subservicer and Buyer (such email to be confirmed by the Subservicer and not to have been objected to by Buyer), the body of such email shall be

 

 

substantially in the form of Exhibit B hereto. Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Subservicing Agreement.

 

At such time, if any, that mortgage loans that were Purchased Assets are no longer Purchased Assets and the Buyer advises the Subservicer to that effect in writing (which may be by email), the Subservicer shall no longer treat them as Purchased Assets and shall service such mortgage loans in accordance with the Subservicing Agreement on behalf of the Servicer.

 

[With respect to each Purchased Asset, the fee payable to the Servicer (the “Servicing Fee”) under the MPLSA shall, for each month, be at a rate per annum equal to, for any [Mortgage Loan], [     ]%, applied on the same basis and to the same principal amount and period respecting which any related interest payment on such Mortgage Loan is computed.]

 

Notwithstanding anything contained to the contrary in the Subservicing Agreement, the Subservicer hereby agrees that for so long as any mortgage loan is a Purchased Asset, it shall:

 

(i)            service the Purchased Assets in accordance with the terms of the Subservicing Agreement and that no amendment to the Subservicing Agreement entered into on and after the date hereof with respect to the Purchased Assets shall be effective without Buyer’s consent;

 

(ii)             segregate all income received by the Subservicer with respect to the Purchased Assets (“Collections”), and remit such Collections (and no other amounts received on mortgage loans that are not Purchased Assets) within (2) Business Days of Subservicer’s receipt to the Custodial Account in the name of “[      ] in trust for Nomura Corporate Funding Americas, LLC”;

 

(iii)            on or prior to the 7th Business Day of each calendar month, the Subservicer shall remit all Collections in respect of the Purchased Assets as follows: (A) to the Collection Account (as defined in the Repurchase Agreement) as specified by Buyer net of (a) the Servicing Fee for the prior calendar month and (b) the amount, if any, by which (1) Servicing Advances made by the Subservicer for the prior calendar month exceed (2) the amount by which the Servicing Fee for the prior calendar month exceeds the Servicing Compensation for the prior calendar month, (B) (1) for so long as [    ] is the Servicer and so long as the servicing rights have not been purchased by the Seller, to or at the direction of the Servicer, the Servicing Fee for the prior calendar month (net of the Servicing Compensation for the prior calendar month and Servicing Advances for the prior calendar month) or (2) otherwise, to or as directed by the Seller and (C) to the Subservicer, the Servicing Compensation for the prior calendar month and any unreimbursed Servicing Advances for the prior calendar month;

 

(iv)            hold all Escrow Payments related to the Purchased Assets in the Escrow Account “[   ] in trust for Nomura Corporate Funding Americas, LLC and the related mortgagors;”

 

(v)             deliver to the Buyer any information with respect to the Purchased Assets reasonably requested by the Buyer which may either be already required in the Subservicing Agreement or any additional information mutually agreed upon by the

 

 

Subservicer and the Buyer, whereas the cost of providing such additional information, if any, will be borne by the Buyer;

 

(vi)            following notice from the Buyer of that an Event of Default (as defined in the Repurchase Agreement) has occurred under the Repurchase Agreement (“Default Notice”) (until such notice is withdrawn by Buyer in a written notice to the Subservicer), reasonably comply exclusively with the written instructions of Buyer regarding the Purchased Assets and the Buyer’s rights therein as provided below; provided, however, compliance with such instructions of the Buyer shall not materially increase the Subservicer’s costs or obligations with respect to the subservicing of the Purchased Assets pursuant to the Subservicing Agreement unless Buyer agrees to compensate the Subservicer for such costs; and

 

(vii)           not, except with the consent of or at the express direction of the Buyer, have any power to modify or foreclose on any Mortgaged Property.

 

Upon the delivery of a Default Notice, (i) only the Buyer shall have the right to instruct the Subservicer with respect to the Purchased Assets and the Subservicer shall act upon the instruction of the Buyer with respect to the Purchased Assets, (ii) the Buyer shall be entitled to all of the rights of Owner but none of its duties or obligations under the Subservicing Agreement or any other related documents with respect to the Purchased Assets, (iii) Buyer may terminate the Subservicing Agreement with respect to the Purchased Assets upon 30 days’ prior written notice, and transfer servicing of the Purchased Assets to a successor servicer identified by the Buyer, at the cost and expense of the Buyer as set forth in the Subservicing Agreement and (iv) the Subservicer shall reasonably cooperate with any transfer of the servicing of the Purchased Assets to any successor servicer appointed by the Buyer.

 

Notwithstanding any contrary information which may be delivered to the Subservicer by the Seller or the Servicer, the Subservicer may conclusively rely on any information or notice (including, but not limited to, any notice of Event of Default) delivered by the Buyer, and the Seller shall indemnify and hold the Subservicer harmless for any and all claims asserted against it for any actions taken in good faith by the Subservicer in connection with the delivery of such information or notice except to the extent such claims arise due to the negligence, bad faith or willful misconduct of Subservicer or any of the Subservicer’s directors, members, officers, employees or agents.

 

The Buyer shall be an intended third-party beneficiary of the Subservicing Agreement.

 

Any conflict between the provisions of this letter agreement and those of the Subservicing Agreement shall be resolved in favor of the provisions of this letter agreement.

 

No provision of this letter agreement may be amended, countermanded or otherwise modified without the prior written consent of the parties hereto.

 

If any one or more of the provisions or terms of this letter agreement shall be for any reason whatsoever held invalid, then such provisions or terms shall be deemed severable from

 

 

the remaining provisions or terms of this letter agreement and shall in no way affect the validity or enforceability of the other provisions or terms of this letter agreement.

 

This letter agreement may be executed by the parties hereto in several counterparts, each of which shall be executed by the parties hereto and be deemed an original and all of which shall constitute together by one and the same agreement. A signature on a copy of this letter agreement received by any party by facsimile or portable document format (PDF) is binding upon the other Party as an original. The parties shall treat a photocopy of such facsimile or PDF as a duplicate original. The parties agree that a secured electronic signature process is acceptable and binding. This letter agreement may be executed by providing an electronic signature under the terms of the Electronic Signatures Act, 15 U.S.C. § 7001 et. seq., and may not be denied legal effect solely because it is in electronic form or permits the completion of the business transaction referenced herein electronically instead of in person.

 

THIS LETTER AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS LETTER AGREEMENT, THE RELATIONSHIP OF THE PARTIES, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES THEREOF OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

 

Please acknowledge receipt of this instruction letter by signing in the signature block below and forwarding an executed copy to the Buyer promptly upon receipt. Any notices to the Buyer should be delivered to the following address: Nomura Corporate Funding Americas, LLC, Worldwide Plaza, 309 West 49th Street, New York, New York 10019-7316, Attention: Michael Rogozinski, Telephone: 212.667.1578, Facsimile: 646.587.1582.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
NOMURA CORPORATE FUNDING AMERICAS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

ACKNOWLEDGED AND AGREED:

 

[ANGEL OAK MORTGAGE, INC.]

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

ACKNOWLEDGED AND AGREED:

 

[ANGEL OAK MORTGAGE FUND TRS]

 

By: Angel Oak Capital Advisors, LLC, not in its individual capacity but solely as the Administrator

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

ACKNOWLEDGED AND AGREED:

 

[SERVICER][SUBSERVICER]

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

SCHEDULE I TO [SERVICER][SUBSERVICER] NOTICE

 

The Initial Purchased Assets

 

 

Exhibit A

 

FORM OF ADDITION NOTICE

 

[         ], 20[    ]

 

[            ]

[Address]

[Address]

 

Attention: [          ]

 

Re:                             Master Repurchase Agreement, dated as of December 6, 2018 (the “Repurchase Agreement”), by and among Angel Oak Mortgage, Inc., Angel Oak Mortgage Fund TRS and Nomura Corporate Funding Americas, LLC (the “Buyer”).

 

Ladies and Gentlemen:

 

[        ] (the [“Servicer”][“Subservicer”]) is servicing certain mortgage loans that are Purchased Assets for [Angel Oak Mortgage, Inc.] [Angel Oak Mortgage Fund TRS] (the “Seller”) pursuant to that certain [Servicing][Subservicing] Agreement, dated [       ] (the “Subservicing Agreement”), between [Angel Oak Home Loans LLC] [Angel Oak Mortgage Solutions LLC] [Angel Oak Prime Bridge, LLC] [Cherrywood Mortgage, LLC] [Angel Oak Commercial Bridge, LLC] (the “Servicer”) and [Servicer][Subservicer]. The Seller and the Buyer have previously delivered to the [Servicer][Subservicer] that certain [Servicer][Subservicer] Notice, dated December 6, 2018 (the “[Servicer][Subservicer] Notice”), between the Seller, [AOMI Seller] / [AOMF Seller] and the Buyer and acknowledged by the [Servicer][Subservicer]. The [Servicer][Subservicer] is hereby notified that pursuant to the [Mortgage Loan Purchase and Servicing Agreement], dated as of December 6, 2018 (the “MLPSA”), between the [Servicer][Subservicer] and the Seller, the Seller has acquired certain additional mortgage loans which it has already identified to the [Servicer][Subservicer]. The [Servicer][Subservicer] is hereby notified that the Seller has pledged to the Buyer Additional Purchased Assets attached hereto as Schedule 1, which also constitute Purchased Assets and are subject to the terms of the [Servicer][Subservicer] Notice. Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the [Servicer][Subservicer] Notice.

 

 

Please acknowledge receipt of this instruction letter by signing in the signature block below and forwarding an executed copy to Buyer with a copy to Seller and the Servicer promptly upon receipt by email to the following email addresses: [Buyer’s email address], [AOMI Seller’s email address], [AOMF Seller’s email address] and [Servicer’s email address].

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
[ANGEL OAK MORTGAGE, INC.]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
[ANGEL OAK MORTGAGE FUND TRS]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

ACKNOWLEDGED AND AGREED:

 

[SERVICER][SUBSERVICER]

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

[Angel Oak Home Loans LLC]

[Angel Oak Mortgage Solutions LLC]

[Angel Oak Prime Bridge, LLC]

[Cherrywood Mortgage, LLC]

[Angel Oak Commercial Bridge, LLC]

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

SCHEDULE I TO ADDITION NOTICE

 

The Additional Purchased Assets

 

 

Exhibit B

 

FORM OF BODY OF EMAILED ADDITION NOTICE

 

To:     [Servicer][Subservicer]

 

Copy: Nomura Corporate Funding Americas, LLC

 

Reference is made to that certain MASTER REPURCHASE AGREEMENT, dated as of December 6, 2018, among ANGEL OAK MORTGAGE, INC., a Maryland corporation (“AOMI Seller” or a “Seller”), ANGEL OAK MORTGAGE FUND TRS, a [AOMF Seller entity type and jurisdiction of formation] (“AOMF Seller” or a “Seller”, collectively, the “Sellers”), and NOMURA CORPORATE FUNDING AMERICAS, LLC, a Delaware limited liability company (the “Buyer”).

 

[Servicer][Subservicer] is servicing certain mortgage loans for Seller pursuant to that certain Subservicing Agreement, dated [   ] (the “[Servicing][Subservicing Agreement”), between the [Angel Oak Home Loans LLC] [Angel Oak Mortgage Solutions LLC] [Angel Oak Prime Bridge, LLC] [Cherrywood Mortgage, LLC] [Angel Oak Commercial Bridge, LLC] (the “Servicer”) and [Servicer][Subservicer]. The Sellers and the Buyer have previously delivered to the [Servicer][Subservicer] that certain Sub[Servicer][Subservicer] servicer Notice, dated December 6, 2018 (the “[Servicer][Subservicer] Notice”), between the Sellers and the Buyer and acknowledged by the [Servicer][Subservicer]. [The [Servicer][Subservicer] is hereby notified that pursuant to the [Mortgage Loan Purchase and Servicing Agreement], dated as of December 6, 2018 (the “MLPSA”), between the [Servicer][Subservicer] and the Seller, the Seller has acquired certain additional mortgage loans which it has already identified to the Subservicer.] The [Servicer][Subservicer] hereby confirms that it had been notified that the Seller has pledged to the Buyer Additional Purchased Assets identified in the attachment hereto, which also constitute Purchased Assets and are subject to the terms of the [Servicer][Subservicer] Notice. Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the [Servicer][Subservicer] Notice. The [Servicer][Subservicer] is hereby requested to acknowledge receipt of this notice and instruction by emailing confirmation to Buyer at [Buyer’s email address] or any other email provided from time to time by the Buyer with copy to Seller at [Seller’s email address] or any other email provided from time to time by the Seller.

 

 

Exhibit C

 

SUBSERVICING AGREEMENT

 

 

EXHIBIT J

 

FORM OF SELLER POWER OF ATTORNEY

 

KNOW ALL MEN BY THESE PRESENTS, that [Angel Oak Mortgage, Inc.] [Angel Oak Mortgage Fund TRS] (the “Seller”) hereby irrevocably constitutes and appoints Nomura Corporate Funding Americas, LLC (“Buyer”) and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Seller and in the name of Seller or in its own name, from time to time in Buyer’s discretion:

 

(a)                                 in the name of Seller, or in its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any assets purchased by Buyer under the Master Repurchase Agreement (as amended, restated or modified) dated as of December 6, 2018 (the “Assets”), and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Buyer for the purpose of collecting any and all such moneys due with respect to any other assets whenever payable;

 

(b)                                 to pay or discharge taxes and liens levied or placed on or threatened against the Assets;

 

(c)                                  (i) to direct any party liable for any payment under any Assets to make payment of any and all moneys due or to become due thereunder directly to Buyer or as Buyer shall direct, including, without limitation, any payment agent with respect to any REO Property; (ii) to send “goodbye” letters on behalf of Seller and Servicer; (iii) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Assets; (iv) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any Assets; (v) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Assets or any proceeds thereof and to enforce any other right in respect of any Assets; (vi) to defend any suit, action or proceeding brought against Seller with respect to any Assets; (vii) to settle, compromise or adjust any suit, action or proceeding described in clause (vi) above and, in connection therewith, to give such discharges or releases as Buyer may deem appropriate; and (viii) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Assets as fully and completely as though Buyer were the absolute owner thereof for all purposes, and to do, at Buyer’s option and Seller’s expense, at any time, and from time to time, all acts and things which Buyer deems necessary to protect, preserve or realize upon the Assets and Buyer’s Liens thereon and to effect the intent of this Agreement, all as fully and effectively as Seller might do;

 

(d)                                 for the purpose of carrying out the transfer of servicing with respect to the Assets from Seller to a successor servicer appointed by Buyer in its sole discretion and to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish such transfer of servicing, and, without limiting the generality of the foregoing, Seller hereby gives Buyer the power and right, on behalf of Seller,

 

 

without assent by Seller, to, in the name of Seller or its own name, or otherwise, prepare and send or cause to be sent “good-bye” letters to all mortgagors under the Assets, transferring the servicing of the Assets to a successor servicer appointed by Buyer in its sole discretion;

 

(e)                                  for the purpose of delivering any notices of sale to mortgagors or other third parties, including without limitation, those required by law.

 

Seller hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.

 

Seller also authorizes Buyer, from time to time, to execute, in connection with any sale, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Assets.

 

The powers conferred on Buyer hereunder are solely to protect Buyer’s interests in the Assets and shall not impose any duty upon it to exercise any such powers. Buyer shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to Seller for any act or failure to act hereunder, except for its or their own gross negligence or willful misconduct.

 

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OF SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND BUYER ON ITS OWN BEHALF AND ON BEHALF OF BUYER’S ASSIGNS, HEREBY AGREES TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURES FOLLOW.]

 

 

IN WITNESS WHEREOF Seller has caused this power of attorney to be executed and Seller’s seal to be affixed this      day of [MONTH], 2018.

 

	
 
    	
[Angel Oak   Mortgage, Inc.] [Angel Oak  Mortgage Fund TRS]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[Angel Oak Mortgage Fund TRS]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
 
    	
Acknowledgment of Execution by Seller 

(Principal):
    

 

	
STATE OF 
    	
)
    	
 
    
	
 
    	
)
    	
ss.:
    
	
COUNTY OF
    	
)
    	
 
    

 

On the      day of [DATE], 2018, before me, the undersigned, a Notary Public in and for said State, personally appeared                                   , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity as                 for [Angel Oak Mortgage, Inc.] [Angel Oak Mortgage Fund TRS] and that by his signature on the instrument, the person upon behalf of which the individual acted, executed the instrument.

 

IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day and year in this certificate first above written.

 

 

	
 
    	
 
    
	
 
    	
Notary Public
    
	
 
    	
 
    
	
 
    	
My Commission expires 
    

 

 

EXHIBIT K

 

HOMESENSE UNDERWRITING GUIDELINES

 

 

EXHIBIT L

 

PORTFOLIO SELECT UNDERWRITING GUIDELINES

 

 

EXHIBIT M

 

RESERVED

 

 

EXHIBIT N

 

INVESTOR CASH FLOW UNDERWRITING GUIDELINES

 

(Attached)

 

 

EXHIBIT O

 

RTL UNDERWRITING GUIDELINES

 

(Attached)

 

 

EXHIBIT P

 

PLATINUM UNDERWRITING GUIDELINES

 

(Attached)

 

 

EXHIBIT Q

 

PRIME JUMBO UNDERWRITING GUIDELINES

 

(Attached)

 

 

EXHIBIT R

 

CHERRYWOOD UNDERWRITING GUIDELINES

 

(Attached)

 

 

EXHIBIT S

 

CRE BRIDGE UNDERWRITING GUIDELINES

 

(Attached)

 

 

EXECUTION VERSION

 

AMENDMENT NO. 1

TO MASTER REPURCHASE AGREEMENT

 

This Amendment No. 1 to the Master Repurchase Agreement, dated as of April 3, 2019 (this “Amendment”), is by and among Angel Oak Mortgage, Inc. (“AOMI Seller” or a “Seller”), Angel Oak Mortgage Fund TRS (“AOMF Seller” or a “Seller”; and together with AOMI Seller, the “Sellers”), and Nomura Corporate Funding Americas, LLC (the “Buyer”).

 

RECITALS

 

The Buyer and the Sellers are parties to that certain Master Repurchase Agreement, dated as of December 6, 2018 (the “Existing Repurchase Agreement”; as amended by this Amendment and as may be further amended, restated, supplemented and otherwise modified from time to time, the “Master Repurchase Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement.

 

The Buyer and the Sellers have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon changes.

 

Accordingly, the Buyer and the Sellers hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:

 

SECTION 1. Amendments.

 

(a)           Section 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Market Value” in its entirety and replacing it with the following:

 

“Market Value” shall mean, as of any date of determination, for each Mortgage Loan, the market value of such Mortgage Loan as determined by the Buyer in its absolute and sole discretion exercised in good faith (which may be performed on a daily basis, at the Buyer’s discretion), expressed as a percentage of the unpaid principal balance of such Purchased Asset (inclusive of, with respect to any Purchased Asset, the related Actual Disbursed Holdback Amount and the related Holdback Amount, if any, held in the applicable Holdback Account and, with respect to any Purchased Asset that is an RTL Mortgage Loan, in the Collection Holdback Sub-Account, as applicable); provided, that, the Market Value of any Mortgage Loan shall be capped at its par value.

 

(b)           Section 5(c)(iv) of the Existing Repurchase Agreement is hereby amended by deleting such clause in its entirety and replacing it with the following:

 

(iv)          fourth, to Buyer (A) with respect to any principal payments received on any Purchased Asset that is a Non-QM Mortgage Loan or a Cherrywood Mortgage Loan, an amount equal to the product of (1) the aggregate amount of principal payments then held in the Collection Account and attributable

 

1

 

to such Purchased Asset, and (2) the applicable Purchase Price Percentage, which amount shall be applied by Buyer to reduce the Repurchase Price of such Purchased Asset; provided that, with respect to any Purchased Asset that is paid in full, the Buyer shall receive the related Repurchase Price for such Purchased Asset and (B) with respect to any principal payments received on any Purchased Asset that is not a Non-QM Mortgage Loan and not a Cherrywood Mortgage Loan, the amount of principal payments that have been received with respect to such Purchased Asset during the immediately preceding Collection Period, which amount shall be applied by Buyer to reduce the Repurchase Price of each Purchased Asset that was sold to Buyer pursuant to a Transaction hereunder;

 

SECTION 2. Conditions Precedent. This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent: on the Amendment Effective Date, Buyer shall have received the following documents, each of which shall be satisfactory to Buyer in form and substance: (a) this Amendment, executed and delivered by Sellers and Buyer; (b) that certain Amendment No. 1 to the Pricing Side Letter, dated as of the date hereof, executed and delivered by Sellers and Buyer; and (c) such other documents as Buyer may reasonably request.

 

SECTION 3. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

 

SECTION 4. Counterparts. This Amendment may be executed by each of the parties hereto in any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Counterparts may be delivered electronically.

 

SECTION 5. Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

SECTION 6. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

[SIGNATURE PAGES FOLLOW]

 

2

 

IN WITNESS WHEREOF, the parties have caused their name to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
NOMURA CORPORATE FUNDING AMERICAS, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Sanil Patel
    
	
 
    	
 
    	
Name:
    	
Sanil Patel
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

[Amendment 1 to Master Repurchase Agreement (Nomura-AO (P2P)) (2019)]

 

 

	
 
    	
AOMI SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL OAK MORTGAGE, INC.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Michael Fierman
    
	
 
    	
 
    	
Name:
    	
Michael Fierman
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AOMF SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL OAK MORTGAGE FUND TRS
    
	
 
    	
 
    
	
 
    	
By: Angel Oak Capital Advisors, LLC, not in its individual   capacity but solely as the Administrator
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Sreenivas Prabhu
    
	
 
    	
 
    	
Name:
    	
Sreenivas Prabhu
    
	
 
    	
 
    	
Title:
    	
Managing Partner
    
					

 

[Amendment 1 to Master Repurchase Agreement (Nomura-AO (P2P)) (2019)]

 

 

EXECUTION VERSION

 

AMENDMENT NO. 2

TO MASTER REPURCHASE AGREEMENT

 

This Amendment No. 2 to the Master Repurchase Agreement, dated as of June 24, 2019 (this “Amendment”), is by and among Angel Oak Mortgage, Inc. (“AOMI Seller” or a “Seller”), Angel Oak Mortgage Fund TRS (“AOMF Seller” or a “Seller”; and together with AOMI Seller, the “Sellers”), and Nomura Corporate Funding Americas, LLC (the “Buyer”).

 

RECITALS

 

The Buyer and the Sellers are parties to that certain Master Repurchase Agreement, dated as of December 6, 2018 (as amended by that certain Amendment No. 1 to the Master Repurchase Agreement, dated as of April 3, 2019, the “Existing Repurchase Agreement”; as amended by this Amendment and as may be further amended, restated, supplemented and otherwise modified from time to time, the “Master Repurchase Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement.

 

The Buyer and the Sellers have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon changes.

 

Accordingly, the Buyer and the Sellers hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:

 

SECTION 1. Amendments.

 

(a)           Section 2 of the Existing Repurchase Agreement is hereby amended by deleting clause (vi) of the definition of “Eligible Mortgage Loan” in its entirety and replacing it with the following:

 

(vi) be secured by a first Lien, or with respect to a Second Lien Mortgage Loan, a second Lien, in each case, on a Mortgaged Property that is located in a State in the U.S. or in the District of Columbia;

 

(b)           Section 2 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Eligible Non-QM Mortgage Loan”, “Mortgage” and “Mortgage Loan” in their entirety and replacing them with the following:

 

“Eligible Non-QM Mortgage Loan” shall mean a Home$ense Mortgage Loan, Portfolio Select Mortgage Loan, a Platinum Mortgage Loan, a Prime Jumbo Mortgage Loan, a Second Lien Mortgage Loan or an Investor Mortgage Loan which (a) complies with the representations and warranties set forth on Schedule 1-A with respect thereto, as applicable, (b) complies with the Non-QM Sub-limits, as applicable, and (c) other than Grade Open Mortgage Loans, has been classified as a Grade A Mortgage Loan or a Grade B Mortgage Loan from an Approved Diligence Provider on or prior to the related Purchase Date (as set forth on the related

 

1

 

Asset Schedule). No Grade Open Mortgage Loan shall be an Eligible Mortgage Loan if such Mortgage Loan has been subject to a Transaction for more than sixty (60) days and has not been reclassified as a Grade A Mortgage Loan or Grade B Mortgage Loan and no Grade C Mortgage Loan or Grade D Mortgage Loan shall be an Eligible Mortgage Loan unless otherwise approved in Buyer’s sole and absolute discretion.

 

“Mortgage” shall mean each mortgage, or deed of trust, security agreement and fixture filing, deed to secure debt, or similar instrument creating and evidencing a first Lien (or with respect to a Second Lien Mortgage Loan, a second Lien) on real property and other property and rights incidental thereto.

 

“Mortgage Loan” shall mean any first Lien (or with respect to a Second Lien Mortgage Loan, a second Lien), one-to-four-family residential loan, RTL Mortgage Loan or commercial real estate loan evidenced by and including a Mortgage Note and a Mortgage, which in no event shall include any mortgage loan which (a) is subject to Section 226.32 of Regulation Z or any similar state or local law (relating to high interest rate credit/lending transactions), (b) includes any single premium credit life or accident and health insurance or disability insurance or (c) is a High Cost Mortgage Loan.

 

(a)           Section 2 of the Existing Repurchase Agreement is hereby amended by adding the following new definitions of “First Lien Mortgage Loan” and “Second Lien Mortgage Loan” in the appropriate alphabetical order:

 

“First Lien Mortgage Loan” means any Mortgage Loan secured by a first Lien on the Mortgaged Property.

 

“Second Lien Mortgage Loan” means any closed end Mortgage Loan secured by the second Lien on the Mortgaged Property, subject only to one prior Lien on such Mortgaged Property securing financing obtained by the related Mortgagor.

 

(b)           Section 15 of the Existing Repurchase Agreement is hereby amended by deleting Section 15(j) its entirety and replacing it with the following

 

(j)            Liens. The Sellers shall grant, or suffer to exist, any Lien on any Repurchase Asset (except any Lien in favor of Buyer or with respect to any Second Lien Mortgage Loan, a first Lien) or Buyer for any reason ceases to have a valid, first priority security interest (or with respect to any Second Lien Mortgage Loan, a second priority security interest) in any of the Repurchase Assets; or

 

(e)            The Existing Master Repurchase Agreement is hereby amended by deleting the title and introductory paragraph of Schedule 1-A in their entirety and replacing them with the following:

 

REPRESENTATIONS AND WARRANTIES RE: HOME$ENSE MORTGAGE LOANS, PORTFOLIO SELECT MORTGAGE LOANS, PLATINUM MORTGAGE LOANS,
 PRIME JUMBO MORTGAGE LOANS, INVESTOR MORTGAGE LOANS, SECOND
 LIEN MORTGAGE LOANS AND AGENCY MORTGAGE LOANS

 

2

 

Each Seller makes the following representations and warranties to Buyer with respect to each Purchased Asset that is a Home$ense Mortgage Loan, a Portfolio Select Mortgage Loan, a Platinum Mortgage Loan, a Prime Jumbo Mortgage Loan, an Investor Mortgage Loan, a Second Lien Mortgage Loan or an Agency Mortgage Loan as of the Purchase Date for the purchase of any such Purchased Asset by Buyer from such Seller and at all times while such Purchased Asset is subject to a Transaction hereunder. With respect to those representations and warranties which are made to the best of a Seller’s knowledge, if it is discovered by a Seller or Buyer that the substance of such representation and warranty is inaccurate, notwithstanding such Seller’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty.

 

(f)            The Existing Master Repurchase Agreement is hereby amended by deleting clauses (m), (n), (o) and (kk) of Schedule 1-A in their entirety and replacing them with the following:

 

(m)          Title Policy. The Mortgage Loan (or with respect to any Second Lien Mortgage Loan with an original principal balance of less than or equal to $250,000, the related First Lien Mortgage Loan) is covered by an ALTA lender’s title insurance policy or other generally acceptable form of policy or insurance acceptable to Fannie Mae or Freddie Mac and each such title insurance policy is issued by a Qualified Insurer qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring the Seller and its successors and assigns as to the first priority lien (or with respect to any Second Lien Mortgage Loan with an original principal balance of greater than $250,000, second priority lien) of the Mortgage in the original principal amount of the Mortgage Loan and, with respect to Adjustable Rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment in the Mortgage Interest Rate or Monthly Payment. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress, and against encroachments by or upon the Mortgaged Property or any interest therein. The Seller and its successors and assigns are the sole insured of such mortgagee title insurance policy. The assignment to the Buyer of the Seller’s interest in such mortgagee title insurance policy does not require any consent of or notification to the Qualified Insurer which has not been obtained or made, such mortgagee title insurance policy is in full force and effect and will be in full force and effect and inure to the benefit of the Buyer upon the consummation of the transactions contemplated by this Agreement. No claims have been made under such lender’s title insurance policy and no prior holder of the related Mortgage, including the Seller, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy.

 

(n)           Hazard Insurance. The Mortgaged Property and all buildings or other customarily insured improvements upon the Mortgaged Property are insured by a Qualified Insurer against loss by fire, hazards of extended coverage and such other hazards as are required by the Underwriting Guidelines as well as all additional requirements set forth herein, pursuant to an insurance policy conforming to the requirements of Accepted Servicing Practices and providing coverage in an amount equal to the lesser of (i) the full insurable value of the Mortgaged Property or (ii) the outstanding principal balance owing on the Mortgage Loan (or

 

3

 

with respect to any Second Lien Mortgage Loan, the outstanding principal balance owing on the Mortgage Loan and the related First Lien Mortgage Loan), but in no event less than the minimum amount necessary to fully compensate for any damage or loss on a replacement cost basis. All such insurance policies are the valid and binding obligation of the insurer are in full force and effect, inure to the benefit of the Buyer upon the consummation of the transactions contemplated by this Agreement and contain a standard mortgagee clause naming the originator of the Mortgage Loan, its successors and assigns as mortgagee and all premiums thereon have been paid. If the Mortgaged Property is, or was at origination of the Mortgage Loan, in an area identified on a flood hazard map or flood insurance rate map issued by the Federal Emergency Management Agency as having special flood hazards, a flood insurance policy meeting the applicable Requirements of Law, including the current guidelines of the Federal Insurance Administration, is in effect, which policy conforms to the Underwriting Guidelines and was issued by a Qualified Insurer and provides coverage in the an amount equal to not less than the least of (i) the outstanding principal balance of the Mortgage Loan (or with respect to any Second Lien Mortgage Loan, the outstanding principal balance of the Mortgage Loan and the related First Lien Mortgage Loan), (ii) the full insurable value of the Mortgaged Property, and (iii) the maximum amount of insurance that was available under applicable Requirements of Law including the National Flood Insurance Act of 1968, as amended. The Mortgage obligates the Mortgagor thereunder to maintain all such insurance at the Mortgagor’s cost and expense, and on the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at the Mortgagor’s cost and expense and to seek reimbursement therefor from the Mortgagor and may not be canceled, reduced or terminated without 30 days’ prior notice. If the Mortgaged Property is a condominium unit, it is included under coverage afforded by a blanket policy for the project.

 

(o)           No Default. There is no monetary default (including any related event of acceleration), monetary breach or monetary violation existing under the Mortgage or the related Mortgage Note and no event that, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a monetary violation or event of acceleration. To the Seller’s knowledge, there is no other default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event permitting acceleration. Additionally, neither the Seller nor the related Servicer has waived any such default, breach, violation or event of acceleration, and no foreclosure action is currently threatened or commenced with respect to the Mortgage Loan. To the best of Seller’s knowledge, with respect to any Second Lien Mortgage Loan, there is no monetary default (including any related event of acceleration), monetary breach or monetary violation existing with respect to the related First Lien Mortgage Loan, and no event that, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a monetary violation or event of acceleration.

 

(bb)         No HELOC or Reverse Mortgage; No Construction Loan; No Ground Leases or Leasehold Interest; No Manufactured or Mobile Homes. No Mortgage Loan is a home equity line of credit or a reverse mortgage. With the exception of RTL Mortgage Loans, no Mortgage Loan was made in connection with (i) the construction or rehabilitation of a Mortgaged Property or (ii) facilitating the trade in or exchange of a Mortgaged Property. No

 

4

 

Mortgaged Property is subject to any ground lease. No Mortgaged Property consists of a leasehold interest. No Mortgaged Property, in whole or part, is a manufactured home or mobile home.

 

(kk)         Valid Lien. The Mortgage is a valid, subsisting, existing, perfected and enforceable first-lien (or with respect to any Second Lien Mortgage Loan, second lien) on the Mortgaged Property, including all buildings and improvements on the Mortgaged Property, and all installations and mechanical, electrical, plumbing, heating and air conditioning systems affixed to such buildings, and all additions, alterations and replacements made at any time with respect to the foregoing securing the Mortgage Note’s original principal balance. The Mortgage and the Mortgage Note have not been modified or released, in whole or in part, and do not contain any evidence of any security interest or other interest or right thereto. Such lien is free and clear of all adverse claims, liens and encumbrances having priority over the lien of the Mortgage, including but not limited to any mechanics’ or similar liens or any rights or claims which may give rise to a mechanic’s or similar lien, subject only to (i) the lien of current real property taxes and assessments not yet due and payable, (ii) any security agreement, chattel mortgage or equivalent document and (iii) with respect to any Second Lien Mortgage Loan, the related First Lien Mortgage Loan. Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, existing and enforceable first-lien and first priority security interest (or with respect to any Second Lien Mortgage Loan, enforceable second lien and second priority security interest) with respect to each Mortgage Loan on the property described therein and the Seller has the full right to sell and assign the same to the Buyer.

 

(oo)         Location of Improvements; No Encroachments. The Mortgage creates a first lien or a first priority ownership interest (or with respect to any Second Lien Mortgage Loan, a second lien or a second priority ownership interest) in an estate in fee simple in real property securing the related Mortgage Note. All buildings and improvements subject to the Mortgage which were considered in determining the Appraisal Value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of the Mortgaged Property (and wholly within the project with respect to a condominium unit). No buildings or improvements on adjoining properties encroach upon the Mortgaged Property except those which are insured against by the title insurance policy referred to in clause (m) above. All improvements on the Mortgaged Property comply with all applicable zoning and subdivision laws and ordinances. Neither the Seller nor the related Servicer has received notice from the Mortgagor, any governmental authority, or any other person of any noncompliance with any use or occupancy law, ordinance, regulation, standard, license, or certificate with respect to the Mortgaged Property.

 

(g)           The Existing Master Repurchase Agreement is hereby amended by deleting Schedule 3 in its entirety and replacing it with Annex A attached hereto.

 

(h)           The Existing Master Repurchase Agreement is hereby amended by deleting all references to “3060 Peachtree Road NW, Suite 500, Atlanta, GA 30305” and “3060 Peachtree Road NW, Suite 500, Atlanta, Georgia 30305” in their entirety and replacing them with the following:

 

5

 

“3344 Peachtree Road NE, Suite 1725

Atlanta, GA 30326”

 

SECTION 2. Conditions Precedent. This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent: on the Amendment Effective Date, Buyer shall have received the following documents, each of which shall be satisfactory to Buyer in form and substance: (a) this Amendment, executed and delivered by Sellers and Buyer; (b) that certain Amendment No. 1 to the Pricing Side Letter, dated as of the date hereof, executed and delivered by Sellers and Buyer and acknowledged by the Guarantors; and (c) such other documents as Buyer may reasonably request.

 

SECTION 3. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

 

SECTION 4. Counterparts. This Amendment may be executed by each of the parties hereto in any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Counterparts may be delivered electronically.

 

SECTION 5. Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

[SIGNATURE PAGES FOLLOW]

 

6

 

IN WITNESS WHEREOF, the parties have caused their name to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NOMURA CORPORATE FUNDING AMERICAS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jack Kattan
    
	
 
    	
Name:
    	
Jack Kattan
    
	
 
    	
Title:
    	
Managing Director
    

 

[Amendment 2 to Master Repurchase Agreement (Nomura-AO (P2P)) (2019)]

 

 

	
 
    	
AOMI SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL OAK MORTGAGE, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael Fierman
    
	
 
    	
Name:
    	
Michael Fierman
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AOMF SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL OAK MORTGAGE FUND TRS,
    
	
 
    	
 
    
	
 
    	
By: Angel Oak Capital Advisors, LLC, not in its Individual   capacity but solely as the Administrator
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sreeniwas Prabhu
    
	
 
    	
Name:
    	
Sreeniwas Prabhu
    
	
 
    	
Title:
    	
Managing Partner
    

 

[Amendment 2 to Master Repurchase Agreement (Nomura-AO (P2P)) (2019)]

 

 

Annex A

 

SCHEDULE 3

 

MORTGAGE LOAN PURCHASE AGREEMENTS

 

1.              That certain Flow Loan Purchase Agreement, dated as of September 10, 2018, by and between Angel Oak Mortgage, Inc. (“AOMI”) and Angel Oak Commercial Bridge, LLC.

 

2                 That certain Mortgage Loan Purchase Agreement, dated as of October 1, 2018, by and between Angel Oak Mortgage Fund TRS (“AOMF”) and Angel Oak Home Loans LLC.

 

3.              That certain Mortgage Loan Purchase Agreement, dated as of October 1, 2018, by and between AOMF and Angel Oak Mortgage Solutions LLC.

 

4.              That certain Mortgage Loan Purchase Agreement, dated as of October 1, 2018, by and between AOMF and Angel Oak Prime Bridge, LLC (“AOPB”).

 

5.              That certain Mortgage Loan Purchase Agreement, dated as of October 1, 2018, by and between AOMF and AOPB.

 

6.              That certain Flow Loan Purchase Agreement, dated as of September 10, 2018, by and between AOMI and Cherrywood Mortgage, LLC.

 

7.              That certain Mortgage Loan Purchase and Servicing Agreement, dated as of October 15, 2018, by and between AOMF and HomeBridge Financial Services, Inc.

 

8.              That certain Forward Flow Home Equity Loan Purchase Agreement, dated as of November 1, 2018, by and between AOMF and Spring EQ, LLC.

 

 

Execution Copy

 

AMENDMENT NO. 3

TO MASTER REPURCHASE AGREEMENT

 

This Amendment No. 3 to the Master Repurchase Agreement, dated as of October 29, 2019 (this “Amendment”), is by and among Angel Oak Mortgage, Inc. (“AOMI Seller” or a “Seller”), Angel Oak Mortgage Fund TRS (“AOMF Seller” or a “Seller”; and together with AOMI Seller, the “Sellers”), and Nomura Corporate Funding Americas, LLC (the “Buyer”).

 

RECITALS

 

The Buyer and the Sellers are parties to that certain Master Repurchase Agreement, dated as of December 6, 2018 (as amended by that certain Amendment No. 1 to the Master Repurchase Agreement, dated as of April 3, 2019, and as further amended by that certain Amendment No. 2 to the Master Repurchase Agreement, dated as of June 24, 2019, the “Existing Repurchase Agreement”; as amended by this Amendment and as may be further amended, restated, supplemented and otherwise modified from time to time, the “Master Repurchase Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement.

 

The Buyer and the Sellers have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon changes.

 

Accordingly, the Buyer and the Sellers hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:

 

SECTION 1. Amendments. Section 32 is hereby amended by deleting clause (a) in its entirety and replacing it with the following:

 

(a) The Buyer and the Sellers hereby acknowledge and agree that all written or computer-readable information provided by one party to any other regarding the terms set forth in any of the Facility Documents or the Transactions contemplated thereby (the “Confidential Terms”) shall be kept confidential and shall not be divulged to any party without the prior written consent of such other party except to the extent that (i) it is necessary to disclose to its Affiliates and its and their legal counsel, accountants, auditors, or taxing authorities, (ii) it is requested or required by governmental agencies, regulatory bodies or other legal, governmental or regulatory process, (iii) any of the Confidential Terms are in the public domain other than due to a breach of this covenant, (iv) an Event of a Default has occurred and Buyer determines such information to be necessary or desirable to disclose in connection with the marketing and sales of the Purchased Assets or otherwise to enforce or exercise Buyer’s rights hereunder, or (v) notwithstanding anything contained in this Agreement to the contrary, Buyer determines such information is necessary or desirable to disclose in connection with any transaction or potential transaction or any assignment, participation or potential assignment or participation described in Section 11 or Section 21 hereof. Sellers shall be responsible for any breach of the terms of this Section 32(a) by any Person that it discloses Confidential Terms to pursuant to clause (i) above. Sellers shall not, without the written consent of the Buyer, make any communication, press

 

1

 

release, public announcement or statement in any way connected to the existence or terms of this Agreement or the other Facility Documents or the Transactions contemplated hereby or thereby, except where such communication or announcement is required by law or regulation, in which event the parties shall consult and cooperate with respect to the wording of any such announcement. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Facility Document, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal, state and local tax treatment of the Transactions, any fact relevant to understanding the federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that the Sellers may not disclose the name of or identifying information with respect to Buyer or any pricing terms (including, without limitation, the Pricing Rate, Purchase Price Percentage and Purchase Price) or other nonpublic business or financial information (including any sublimits and financial covenants) that is unrelated to the federal, state and local tax treatment of the Transactions and is not relevant to understanding the federal, state and local tax treatment of the Transactions, without the prior written consent of Buyer. The provisions set forth in this Section 32 shall survive for one year after the termination of this Agreement.

 

SECTION 2. Conditions Precedent. This Amendment shall become effective as of the date hereof subject to Buyer’s receipt of this Amendment, executed and delivered by Sellers and Buyer and such other documents as Buyer may reasonably request.

 

SECTION 3. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

 

SECTION 4. Counterparts. This Amendment may be executed by each of the parties hereto in any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Counterparts may be delivered electronically.

 

SECTION 5. Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

SECTION 6. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. THE PARTIES HERETO WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT.

 

[SIGNATURE PAGES FOLLOW]

 

2

 

IN WITNESS WHEREOF, the parties have caused their name to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NOMURA   CORPORATE FUNDING AMERICAS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ David Ritchie
    
	
 
    	
Name:
    	
David Ritchie
    
	
 
    	
Title:
    	
Managing Director
    

 

[Amendment 3 to Master Repurchase Agreement (Nomura-AO (P2P))]

 

 

	
 
    	
AOMI SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL   OAK MORTGAGE, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ashish Negandhi
    
	
 
    	
Name:
    	
Ashish Negandhi
    
	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AOMF SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL   OAK MORTGAGE FUND TRS,
    
	
 
    	
 
    
	
 
    	
By: Angel Oak Capital   Advisors, LLC, not in its individual capacity but solely as the Administrator
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John R. Hsu
    
	
 
    	
Name:
    	
John R. Hsu
    
	
 
    	
Title:
    	
Head of Capital Markets
    

 

[Amendment 3 to Master Repurchase Agreement (Nomura-AO (P2P))]

 

 

Execution

 

AMENDMENT NO. 4

TO MASTER REPURCHASE AGREEMENT

 

This Amendment No. 4 to the Master Repurchase Agreement, dated as of July 21, 2020 (this “Amendment”), is by and among Angel Oak Mortgage, Inc. (“AOMI Seller” or a “Seller”), Angel Oak Mortgage Fund TRS (“AOMF Seller” or a “Seller”; and together with AOMI Seller, the “Sellers”), and Nomura Corporate Funding Americas, LLC (the “Buyer”).

 

RECITALS

 

The Buyer and the Sellers are parties to that certain Master Repurchase Agreement, dated as of December 6, 2018 (as amended by that certain Amendment No. 1 to the Master Repurchase Agreement, dated as of April 3, 2019, that certain Amendment No. 2 to the Master Repurchase Agreement, dated as of June 24, 2019 and that certain Amendment No. 3 to the Master Repurchase Agreement, dated as of October 29, 2019, the “Existing Repurchase Agreement”; as amended by this Amendment and as may be further amended, restated, supplemented and otherwise modified from time to time, the “Master Repurchase Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement.

 

The Buyer and the Sellers have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon changes.

 

Accordingly, the Buyer and the Sellers hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:

 

SECTION 1.         Section 2 of the Existing Repurchase Agreement is hereby amended by adding the following definitions in the proper alphabetical order:

 

“Forbearance Loan” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Initial Forbearance Plan” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Initial Forbearance Loan” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Post Initial Forbearance Plan” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Post Initial Forbearance Loan” shall have the meaning assigned thereto in the Pricing Side Letter.

 

1

 

1.1       The definition of “Eligible Non-QM Mortgage Loan” in Section 2 of the Existing Repurchase Agreement is hereby amended by replacing the “.” appearing at the end of clause (c) with “; and”, and adding the following clauses (d), (e) and (f) with the following:

 

(d)  other than Forbearance Loans, at any time after the related Purchase Date, is less than ninety (90) Days Delinquent;

 

(e)   if such Mortgage Loan is a Post Initial Forbearance Loan and the related Post Initial Forbearance Plan requires the related Mortgagor to make Monthly Payments, such Mortgagor has not failed to make two consecutive Monthly Payments due under the Mortgage Note at any time during the period such Mortgagor was subject to the Post Initial Forbearance Plan; and

 

(f)   if such Mortgage Loan (i) was an Initial Forbearance Loan and is a Post Initial Forbearance Loan and (ii) neither the related Initial Forbearance Plan nor the related Post Initial Forbearance Plan requires the related Mortgagor to make Monthly Payments, such Mortgagor has made at least one Monthly Payment due under the Mortgage Note during the six month period following the date of the Initial Forbearance Plan;

 

1.2.    The definitions of “Days Delinquent” and “Monthly Payment” in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced by the following:

 

“Days Delinquent” shall refer to the number of days a Mortgage Loan is delinquent using the MBA Method of Delinquency (unless agreed to by Buyer in its sole discretion, calculated based on the original stated due date for each Monthly Payment as set forth in the related Mortgage Note, without giving effect any, deferrals, payment plans, modifications, amendments and / or other adjustments to such due date).

 

“Monthly Payment” shall mean the scheduled monthly payment of principal and interest on a Mortgage Loan (unless agreed to by Buyer in its sole discretion, utilizing the original stated Monthly Payment as set forth in the related Mortgage Note, without giving effect to any modifications or amendments thereof) as adjusted in accordance with changes in the Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an Adjustable Rate Mortgage Loan.

 

2.              Schedule 1-A. Paragraph (cc) of Schedule 1-A to the Existing Repurchase Agreement is hereby amended and restated in its entirety to read as follows:

 

(cc) Loans Current/Prior Delinquencies. All payments required to be made for such Mortgage Loan under the terms of the Mortgage Note have been made. The Mortgage Loan has not been dishonored. Other than Forbearance Loans, no Mortgage Loan has been ninety (90) days or more Days Delinquent since origination date. All delinquency figures are calculated and reported using the MBA Method of Delinquency.

 

2

 

SECTION 2. Monthly Servicing Report. Seller shall cause Servicer to provide additional data as may be requested by Buyer from time to time in the monthly servicing and remittance report of Servicer.

 

SECTION 3. Conditions Precedent. This Amendment shall become effective as of the date hereof subject to Buyer’s receipt of this Amendment, executed and delivered by Sellers and Buyer and such other documents as Buyer may reasonably request.

 

SECTION 4. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

 

SECTION 5. Counterparts. This Amendment may be executed by each of the parties hereto in any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Counterparts may be delivered electronically.

 

SECTION 6. Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

SECTION 7. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. THE PARTIES HERETO WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT.

 

[SIGNATURE PAGES FOLLOW]

 

3

 

IN WITNESS WHEREOF, the parties have caused their name to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NOMURA CORPORATE FUNDING AMERICAS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jack Kattan
    
	
 
    	
 
    	
Name: Jack Kattan
    
	
 
    	
 
    	
Title:   Managing   Director
    

 

[Amendment 4 to Master Repurchase Agreement (Nomura-AO (P2P))]

 

 

	
 
    	
AOMI SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL OAK MORTGAGE, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ashish Negandhi
    
	
 
    	
Name: Ashish Negandhi
    
	
 
    	
Title: Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AOMF SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL OAK MORTGAGE FUND TRS,
    
	
 
    	
 
    
	
 
    	
By: Angel Oak Capital Advisors, LLC, not in its individual   capacity but solely as the Administrator
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dory Black
    
	
 
    	
Name: Dory S. Black
    
	
 
    	
Title: General Counsel
    

 

[Amendment 4 to Master Repurchase Agreement (Nomura-AO (P2P))]

 

Execution

 

AMENDMENT NO. 5

TO MASTER REPURCHASE AGREEMENT

 

This Amendment No. 5 to the Master Repurchase Agreement, dated as of December 4, 2020 (this “Amendment”), is by and among Angel Oak Mortgage, Inc. (“AOMI Seller” or a “Seller”), Angel Oak Mortgage Fund TRS (“AOMF Seller” or a “Seller”; and together with AOMI Seller, the “Sellers”), and Nomura Corporate Funding Americas, LLC (the “Buyer”).

 

RECITALS

 

The Buyer and the Sellers are parties to that certain Master Repurchase Agreement, dated as of December 6, 2018 (as amended by that certain Amendment No. 1 to the Master Repurchase Agreement, dated as of April 3, 2019, that certain Amendment No. 2 to the Master Repurchase Agreement, dated as of June 24, 2019, that certain Amendment No. 3 to the Master Repurchase Agreement, dated as of October 29, 2019 and Amendment No. 4 to the Master Repurchase Agreement, dated as of July 21, 2020, the “Existing Repurchase Agreement”; as amended by this Amendment and as may be further amended, restated, supplemented and otherwise modified from time to time, the “Master Repurchase Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement.

 

The Buyer and the Sellers have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon changes.

 

Accordingly, the Buyer and the Sellers hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:

 

SECTION 1. Effective as of the date hereof, the Existing Repurchase Agreement is hereby amended as follows:

 

1.1.Section 2 of the Existing Repurchase Agreement is hereby amended by adding the following definitions in the proper alphabetical order:

 

“DTI” shall have the meaning assigned thereto in the Pricing Side Letter.

 

“Expense Factor Rationale” shall mean, with respect to any Bank Statement Mortgage Loan, the documentation by the related underwriter of the rationale for selecting the expense factor to calculate income of the related Mortgagor on or prior to the origination date.

 

1.2.Section 2 of the Existing Repurchase Agreement is hereby amended by the definition of “Eligible Mortgage Loan” in its entirety and replacing it with the following:

 

“Eligible Mortgage Loan” shall mean a Mortgage Loan that meets the following criteria (unless otherwise agreed to by Buyer in writing in its sole and absolute discretion) at all times (unless otherwise set forth below):

 

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(i)            have been approved by Buyer as of the related Purchase Date in its sole and absolute discretion;

 

(ii)           is (a) an Eligible Non-QM Mortgage Loan, (b) an Eligible Cherrywood Mortgage Loan that is initially subject to a Transaction prior to December 4, 2020, (c) an Eligible CRE Bridge Mortgage Loan, or (d) an Eligible RTL Mortgage Loan, as applicable.

 

(iii)          have been originated by an Originator in accordance with and conforms with the applicable Underwriting Guidelines without exception, other than with respect to any Eligible Mortgage Loan that is an Exception Cherrywood Mortgage Loan;

 

(iv)          be serviced by a Servicer or Subservicer that has entered into a Servicing Agreement or Subservicing Agreement and Servicer Notice or Subservicer Notice, in each case, in form and substance acceptable to Buyer;

 

(v)           have an Asset File that has been received by the Custodian (which Asset File shall include, but not be limited to, an original Mortgage Note, with a complete chain of endorsement and endorsed in blank, a complete chain of assignments of mortgage with an assignment in blank, a Mortgage with evidence of recording thereon, and a title policy) on or prior to the related Purchase Date;

 

(vi)          be secured by a first Lien on a Mortgaged Property that is located in a State in the U.S. or in the District of Columbia;

 

(vii)         not be secured by a Mortgaged Property that is an Ineligible Property Type;

 

(viii)        not have a Mortgagor that is subject to an Insolvency Event;

 

(ix)          have a Mortgagor that is a U.S. Person;

 

(x)           not be and never have been, at any time since origination, subject to a foreclosure proceeding; and

 

(xi)          not be an REO Property.

 

1.3.     The definition of “Eligible Non-QM Mortgage Loan” is hereby amended by deleting clause (d) in its entirety and replacing it with the following:

 

(d) other than Forbearance Loans subject to Transaction prior to December 4, 2020, at any time after the related Purchase Date, is less than ninety (90) Days Delinquent;

 

1.4.     The definition of “Eligible Non-QM Mortgage Loan” in Section 2 of the Existing Repurchase Agreement is hereby amended by replacing the “.” appearing at the end of clause (f) with “; and”, and adding the following clauses (g), (h), (i), (j), (k) and (l):

 

(g) for all Transactions initially occurring on or after January 1, 2021, the Expense Factor Rationale shall be documented for all Mortgage Loans prior to the related Purchase Date in a manner acceptable to Buyer in its sole discretion;

 

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(h) for Transactions initially occurring on or after December 4, 2020 and prior to January 1, 2021, the Expense Factor Rationale will be documented for all Mortgage Loans that do not meet the expense factor criteria set forth on page 76 of the Underwriting Guidelines dated September 1, 2020, in each applicable case prior to the related Purchase Date in a manner acceptable to Buyer in its sole discretion;

 

(i) as of any date of determination (A) with respect to Investor Cash Flow Mortgage Loans, has an LTV that is less than or equal to 80%, and (B) with respect all other Mortgage Loans, has an LTV less than or equal to 90%;

 

(j) as of any date of determination, the related Mortgagor has a FICO score greater than 600;

 

(k) other than Investor Cash Flow Mortgage Loans, as of any date of determination, has a DTI less than or equal to fifty percent (50%); and

 

(l) other than Investor Cash Flow Mortgage Loans, Forbearance Loans subject to an initial Transaction prior to December 4, 2020 and other Mortgage Loans that are fewer than thirty (30) Days Delinquent (without giving effect to any deferrals, payment plans, modifications, amendments and / or other adjustments to the related due date), unless otherwise agreed to by Buyer in writing its sole and absolute discretion, is not subject to any forbearance arrangement, deferral, payment plan, modification, amendment and/or other adjustments to the applicable Due Date, whether requested by any party or pursuant to an agreement, or mandated by a Governmental Authority.

 

1.5.Section 20 of the Existing Repurchase Agreement is hereby amended by adding the following at the conclusion of the section:

 

Without limiting the generality of the foregoing, promptly (but no later than two (2) Business Days) following request from the Buyer or its authorized representatives at any time, Seller shall furnish to Buyer the applicable credit, compliance and valuation documents, agreements and related files (in a form acceptable to Buyer) relating to any proposed Purchased Asset and / or Purchased Asset.

 

1.              Schedule 1-A. Paragraph (cc) of Schedule 1-A to the Existing Repurchase Agreement is hereby amended and restated in its entirety to read as follows:

 

(cc) Loans Current/Prior Delinquencies. All payments required to be made for such Mortgage Loan under the terms of the Mortgage Note have been made. The Mortgage Loan has not been dishonored. Other than Forbearance Loans subject to a Transaction prior to December 4, 2020, no Mortgage Loan has been ninety (90) days or more Days Delinquent since origination date. All delinquency figures are calculated and reported using the MBA Method of Delinquency.

 

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1.6.Exhibit G-1 of the Existing Repurchase Agreement is hereby amended by adding the following fields to Exhibit G-1:

 

Expense Factor

Business Type

Number of Employees

Date of Underwriting Guideline Used to Originate

Income Related Underwriting Exception Flag (Y/N)

 

SECTION 2. Conditions Precedent. This Amendment shall become effective as of the date hereof, subject to Buyer receiving the following:

 

(a)      this Amendment, executed and delivered by Seller and Buyer; and

 

(b)      Amendment No. 4 to the Pricing Side Letter executed and delivered by Seller, Guarantor and Buyer.

 

SECTION 3. Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

 

SECTION 4. Counterparts. This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Counterparts may be delivered electronically. Facsimile, documents executed, scanned and transmitted electronically and electronic signatures shall be deemed original signatures for purposes of this Amendment and all matters related thereto, with such facsimile, scanned and electronic signatures having the same legal effect as original signatures. The parties agree that this Amendment, any addendum or amendment hereto or any other document necessary for the consummation of the transaction contemplated by this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures In Global and National Commerce Act, Title 15, United States Code, Sections 7001 et seq., the Uniform Electronic Transaction Act and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service providers, as long as such service providers use system logs and audit trails that establish a temporal and process link between the presentation of identity documents and the electronic signing, together with identifying information that can be used to verify the electronic signature and its attribution to the signer’s identity and evidence of the signer’s agreement to conduct the transaction electronically and of the signer’s execution of each electronic signature.

 

SECTION 5. Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

SECTION 6. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE

 

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STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. THE PARTIES HERETO WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties have caused their name to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NOMURA CORPORATE FUNDING AMERICAS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jack Kattan
    
	
 
    	
Name
    	
Jack Kattan
    
	
 
    	
Title:
    	
Managing Director
    

 

[Amendment 5 to Master Repurchase Agreement (Nomura-AO (P2P))]

 

 

	
 
    	
AOMI SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL OAK MORTGAGE, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dory Black
    
	
 
    	
Name:
    	
Dory S. Black
    
	
 
    	
Title:
    	
Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AOMF SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL OAK MORTGAGE FUND TRS
    
	
 
    	
 
    
	
 
    	
By: Angel Oak Capital Advisors, LLC, not in its individual   capacity but solely as the Administrator
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dory Black
    
	
 
    	
Name:
    	
Dory S. Black
    
	
 
    	
Title:
    	
General Counsel
    

 

[Amendment 5 to Master Repurchase Agreement (Nomura-AO (P2P))]

 

 

AMENDMENT NO. 6

TO MASTER REPURCHASE AGREEMENT

 

This Amendment No. 6 to the Master Repurchase Agreement, dated as of [  ], 2021 (this “Amendment”), is by and among Angel Oak Mortgage, Inc. (“AOMI Seller” or a “Seller”), Angel Oak Mortgage Fund TRS (“AOMF Seller” or a “Seller”; and together with AOMI Seller, the “Sellers”), and Nomura Corporate Funding Americas, LLC (the “Buyer”).

 

RECITALS

 

The Buyer and the Sellers are parties to that certain Master Repurchase Agreement, dated as of December 6, 2018 (as amended by that certain Amendment No. 1 to the Master Repurchase Agreement, dated as of April 3, 2019, that certain Amendment No. 2 to the Master Repurchase Agreement, dated as of June 24, 2019, that certain Amendment No. 3 to the Master Repurchase Agreement, dated as of October 29, 2019, that certain Amendment No. 4 to the Master Repurchase Agreement, dated as of July 21, 2020 and that certain Amendment No. 5 to the Master Repurchase Agreement, dated as of December 4, 2020 the “Existing Repurchase Agreement”; as amended by this Amendment and as may be further amended, restated, supplemented and otherwise modified from time to time, the “Master Repurchase Agreement”).  Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement.

 

The Buyer and the Sellers have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon changes.

 

Accordingly, the Buyer and the Sellers hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:

 

SECTION 1.                                   Amendments. The Existing Repurchase Agreement is hereby amended as follows:

 

1.1.                            The definitions of “Change in Control”, “Financial Statements” and “Holdback Trigger Event” in Section 2 of the Existing Repurchase Agreement are each hereby amended by deleting the applicable definition in its entirety and replacing it with the following, each in the appropriate alphabetical order:

 

“Change in Control” shall mean:

 

(i)                                     any transaction or event as a result of which AOMI Seller ceases to directly own one hundred percent (100%) of AOMF Seller;

 

(ii)                                  the sale, transfer, or other disposition of all or substantially all of either Seller’s assets (excluding any such action taken in connection with any Capital Markets Rights transaction);

 

(iii)                               Angel Oak Capital Advisors, LLC ceases to be the primary active manager of any Seller; or

 

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(iv)                              the consummation of a merger or consolidation of any Seller with or into another entity or any other corporate reorganization (in one transaction or in a series of transactions), if more than fifty-one percent (51%) of the combined voting power of the continuing or surviving entity’s Capital Stock outstanding immediately after such merger, consolidation or such other reorganization is owned by persons who were not owners of any Seller immediately prior to such merger, consolidation or other reorganization.

 

“Financial Statements” shall mean the consolidated financial statements of AOMI Seller prepared in accordance with GAAP for the year or other period then ended.  Such financial statements will be audited, in the case of annual statements, by a nationally recognized independent certified public accounting firm.

 

Holdback Trigger Event” shall mean, as of any date of determination, (i) AOMI Seller’s Net Asset Value (as such term is defined in the Pricing Side Letter) is less than the Holdback Net Asset Value Threshold or (ii) (x) the aggregate Repurchase Price of the RTL Mortgage Loans or CRE Bridge Mortgage Loans exceeds the Holdback Repurchase Trigger Amount and (y) the aggregate Holdback Amount is greater than the Holdback UPB Trigger Amount.

 

1.2.                            The definitions of “Guarantor” and “Guaranty” in the Existing Repurchase Agreement are each hereby deleted in each of their entirety, and all references to such terms shall be inapplicable, but solely to the extent of such terms and the related obligations of the Guarantor.  For the avoidance of doubt, all obligations of each Seller shall remain in full force and effect, except as specifically amended hereby.

 

1.3.                            The representation and warranty set forth in Section 13(a)(vii) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

 

(vii)                           Financial Statements.  [AO to confirm dates] AOMI Seller has heretofore furnished to Buyer a copy of its consolidated balance sheet and the consolidated balance sheets of its consolidated Subsidiaries for the fiscal year ended December 31, 2020 and the calendar quarter ended March 31, 2021, and the related consolidated statements of income and retained earnings and of cash flows for AOMI Seller and its consolidated Subsidiaries for such fiscal year, setting forth in each case in comparative form the figures for the previous year, with the opinion thereon of a nationally recognized accounting firm.  All such financial statements are complete and correct and fairly present, in all material respects, the consolidated financial condition of AOMI Seller and its Subsidiaries and the consolidated results of their operations as at such dates and for such monthly periods, all in accordance with GAAP applied on a consistent basis.  Since March 31, 2021, there has been no material adverse change in the consolidated business, operations or financial condition of AOMI Seller and its consolidated Subsidiaries taken as a whole from that set forth in said financial statements nor is AOMI Seller aware of any state of

 

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facts which (without notice or the lapse of time) would or could result in any such material adverse change or could have a Material Adverse Effect.  AOMI Seller has, on March 31, 2021, no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of AOMI Seller except as heretofore disclosed to Buyer in writing.

 

1.4.                            The representation and warranty set forth in Section 13(a)(xvi) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

 

(xvi)                       Litigation.  There are no actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other legal or arbitrable proceedings affecting either Seller or any of their Subsidiaries or affecting any of the Property of any of them before any federal or state court or before any Governmental Authority that (i) questions or challenges the validity or enforceability of any of the Facility Documents or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a claim in an aggregate amount greater than Five Hundred Thousand Dollars ($500,000), (iii) which, individually or in the aggregate, if not cured or if adversely determined, could be reasonably likely to have a Material Adverse Effect or constitute an Event of Default, or (iv) relates to any violation of the Home Ownership and Equity Protection Act or any state, city or district high cost home mortgage or predatory lending law.

 

1.5.                The covenant set forth in Section 14(d) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

 

(d)                                 Financial Reporting.  Each Seller shall maintain a system of accounting established and administered in accordance with GAAP, and each Seller shall furnish to Buyer in connection with clauses (i) - (iv) below, via email to nomuracovenants@nomura.com, in a format reasonably acceptable to Buyer:

 

(i)                    Within ninety (90) days after the last day of its fiscal year, each Seller’s unaudited balance sheet as of the end of such fiscal year, in each case presented fairly in accordance with GAAP;

 

(ii)                 Within sixty (60) days after the last day of each of the first three (3) fiscal quarters of each fiscal year of each Seller, each of the Sellers’ management certified Financial Statements, including a balance sheet, income statement and cash flow statement, each as of the end of such fiscal quarter and in each case presented fairly in accordance with GAAP;

 

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(iii)              Within one-hundred and twenty (120) days after the last day of its fiscal year, commencing with the 2021 fiscal year, each of the Sellers’ Financial Statements for such fiscal year, presented fairly in accordance with GAAP, and accompanied, in all cases, by an unqualified report of a nationally recognized accounting firm;

 

(iv)             (A) Simultaneously with the furnishing of each of the financial statements to be delivered pursuant to subsection (i)-(iii) above, a certificate of each Seller in form and substance acceptable to Buyer in its reasonable discretion, and certified by an executive officer of the respective Seller, and (B) quarterly, or simultaneously with the financial statements to be delivered pursuant to subsection (ii) above, an officer’s certificate of covenant compliance of each Seller certifying that the related Financial Statements are true and correct in all material respects;

 

(v)                Within fifteen (15) days after the end of each calendar month, a monthly servicing report of the related Servicer or Subservicer, in form and substance reasonably acceptable to Buyer;

 

(vi)             Two (2) Business Days prior to each Remittance Date, a monthly remittance report of the related Servicer or Subservicer, in form and substance reasonably acceptable to the Buyer;

 

(vii)          Within five (5) days after any material amendment, modification or supplement has been entered into with respect to the related Subservicing Agreement, a fully executed copy thereof, certified by the Seller;

 

(viii)       Within fifteen (15) days after the end of each calendar month, a monthly report listing Mortgage Loans held for each Seller that are not Purchased Assets;

 

(ix)             Any other material agreements, correspondence, documents or other information not included in an Underwriting Package which is related to either Seller or the Purchased Assets, as soon as possible after the discovery thereof by either Seller;

 

(x)                Promptly, from time to time, such other information regarding the business affairs, operations and financial condition of each Seller and their Subsidiaries as Buyer may reasonably request;

 

(xi)             Within two (2) days after each sale of a Purchased Asset, a copy of the related purchase confirmation (which indicates the Purchased Asset sold, the date sold, the name of the purchaser and the purchaser price); and

 

(xii)          Access to the related Servicer’s or Subservicer’s online loan data site containing sale data, data tapes and other reports maintained by the related Servicer or Subservicer in accordance with the related Servicing Agreement or Subservicing Agreement.

 

(xiii)       Within fifteen (15) days after the end of each calendar month, a monthly report listing such month’s Delinquency Percentage and Repurchase Percentage (as each term is defined in the related MSR Purchase Agreement);

 

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1.6.                The covenant set forth in Section 14(k) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

 

(k)                                 Financial Condition Covenants.  AOMI Seller shall comply with the Financial Condition Covenants set forth in the Pricing Side Letter.

 

1.7.                The covenant set forth in Section 14(w) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

 

(w)                               Reserved.

 

1.8.                            The Event of Default set forth in Section 15(s) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

 

(s)                                   Financial Statements.  AOMI Seller’s audited annual financial statements or the notes thereto or other opinions or conclusions stated therein are qualified or limited by reference to the status of any Seller as a “going concern” or a reference of similar import; or

 

SECTION 2.                            Conditions Precedent.  This Amendment shall become effective as of the date hereof subject to Buyer’s receipt of (i) this Amendment and (ii) Amendment No. 5 to Pricing Side Letter, dated as of the date hereof, each executed and delivered by Sellers and Buyer and such other documents as Buyer may reasonably request.

 

SECTION 3.                            Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

 

SECTION 4.                            Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Counterparts may be delivered electronically. Facsimile, documents executed, scanned and transmitted electronically and electronic signatures shall be deemed original signatures for purposes of this Amendment and all matters related thereto, with such facsimile, scanned and electronic signatures having the same legal effect as original signatures. The parties agree that this Amendment, any addendum or amendment hereto or any other document necessary for the consummation of the transaction contemplated by this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures In Global and National Commerce Act, Title 15, United States Code, Sections 7001 et seq., the Uniform Electronic Transaction Act and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service providers, as long as such service providers use system logs and audit trails that establish a temporal and process link between the presentation of identity documents and the electronic signing, together with identifying information that can be used to verify the electronic signature and its attribution to

 

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the signer’s identity and evidence of the signer’s agreement to conduct the transaction electronically and of the signer’s execution of each electronic signature.

 

SECTION 5.                            Severability.  Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

SECTION 6.                            GOVERNING LAW AND WAIVER OF JURY TRIAL.  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF, OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.  THE PARTIES HERETO WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT.

 

[SIGNATURE PAGES FOLLOW]

 

6

 

IN WITNESS WHEREOF, the parties have caused their name to be duly signed to this Amendment by their respective officers thereunto duly authorized, all as of the date first above written.

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
NOMURA CORPORATE FUNDING   AMERICAS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Amendment 6 to Master Repurchase Agreement (Nomura-AO (P2P))]

 

 

	
 
    	
AOMI SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL   OAK MORTGAGE, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AOMF SELLER:
    
	
 
    	
 
    
	
 
    	
ANGEL   OAK MORTGAGE FUND TRS,
    
	
 
    	
 
    
	
 
    	
By: Angel Oak Capital Advisors, LLC, not in its individual capacity but   solely as the Administrator
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Amendment 6 to Master Repurchase Agreement (Nomura-AO (P2P))]Exhibit 10.15

 

MASTER REPURCHASE AGREEMENT

 

THIS MASTER REPURCHASE AGREEMENT (as amended, extended or otherwise modified, supplemented or replaced from time to time, this “Agreement”) is dated as of December 21, 2018, by and among Banc of California, National Association (“Buyer”), Angel Oak Mortgage, Inc. (“Seller 1”) and Angel Oak Mortgage Fund TRS (“Seller 2” and together with Seller 1, each individually and collectively referred to herein as the “Seller”).

 

RECITALS

 

A.            Seller has requested that Buyer agree to purchase from time to time certain assets of Seller consisting of Mortgage Loans and Buyer has agreed to do so on the terms and subject to the conditions set forth herein.

 

B.            The parties hereto hereby acknowledge that, notwithstanding that this Agreement shall have been executed and delivered, this Agreement shall have no force or effect unless and until, and then only during such time as, the Variable Terms Letter duly executed by Seller and Buyer shall be in full force and effect.

 

NOW, THEREFORE, in consideration of the above Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

AGREEMENT

 

1.             Applicability. From time to time the parties hereto may enter into transactions in which Seller agrees to transfer to Buyer Eligible Repo Assets against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Eligible Repo Assets at a date certain or on demand, against the transfer of funds by Seller. Each such transaction shall be referred to herein as a “Transaction” and, unless otherwise agreed in writing, shall be governed by this Agreement. Notwithstanding anything herein or in any of the other Repurchase Facility Documents to the contrary, to the extent that there is a conflict between this Agreement, the other Repurchase Facility Documents on the one hand, and the Variable Terms Letter on the other hand, the terms and conditions of the Variable Terms Letter shall govern.

 

2.             Definitions. For purposes of this Agreement, the terms set forth below shall have the following meanings:

 

“Accepted Servicing Practices” shall mean, with respect to any Mortgage Loan, those mortgage servicing practices of prudent residential or commercial mortgage lending institutions which service mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located.

 

“Act of Insolvency” shall mean, with respect to any Person, (a) the filing of a petition, commencing, or authorizing the commencement of any case or proceeding, or the voluntary joining of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, or suffering any such petition or proceeding to be commenced by another which is consented to, not timely contested, results in entry of an order for relief, or is not dismissed within 30 days; (b) the seeking of the appointment of a receiver, trustee, custodian or similar official for such party or any substantial part of the

 

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property of such party; (c) the appointment of a receiver, conservator, or manager for such party by any governmental agency or authority having the jurisdiction to do so, or the convening of any meeting of creditors for purposes of commencing any such case or proceeding or seeking such an appointment or election; (d) the making or offering by such party of a composition with its creditors or a general assignment for the benefit of creditors; (e) the admission by such party of its inability to pay its debts or discharge its obligations as they become due or mature; (f) that any governmental authority or agency 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 such party, or shall have taken any action to displace the management of such party or to curtail its authority in the conduct of the business of such party; or (g) such Person shall take any corporate (or similar) action in furtherance of, or the action of which would result in any of the actions set forth in the preceding clauses (a), (b), (c), (d) , (e) or (f).

 

“Additional Repo Assets” shall mean Eligible Repo Assets provided by Seller to Buyer pursuant to Section 4(a) below.

 

“Affiliate” shall mean, as to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with, such Person. “Control” as used herein means the power to direct the management and policies of such Person, As to Seller, the term “Affiliate” shall include any officer, partner, shareholder or director, and any member of the immediate family of such Person or such Person’s spouse.

 

“Aggregate Purchase Price Limit” shall mean the dollar amount set forth next to such heading in the Variable Terms Letter.

 

“Allocation” shall mean for each Type of Mortgage Loan, that dollar amount or that percentage of the then current Aggregate Purchase Price Limit set forth for such Type of Mortgage Loan on the Variable Terms Letter.

 

“Anti-Terrorism Order” shall mean Executive Order No, 13,224, 66 Fed. Reg. 49,079 (2001), issued by the President of the United States of America (Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism).

 

“Approved Escrow Account” shall mean an escrow account funded with the Draw Proceeds for an Approved FixNFlip Loan, which is managed by Seller, used for holding and disbursing of such Draw Proceeds.

 

“Approved FixNFlip Loan” shall mean a renovation Mortgage Loan acquired by Seller that meets the Underwriting Guidelines for FixNFlip Loans.

 

“Approved No Escrow FixNFlip Loan” shall mean a renovation Mortgage Loan acquired by Seller that meets the Underwriting Guidelines for No Escrow FixNFlip Loans.

 

“Assignment of Mortgage” shall mean an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the Mortgage to Buyer.

 

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“Authorized Representative” shall mean, with respect to Seller, the officers of Seller as set forth in Schedule B attached to the Variable Terms Letter, with any modifications thereto as to which Seller notifies Buyer to be effective no earlier than the second Business Day following receipt thereof by Buyer.

 

“Bankruptcy Code” shall mean the United States Bankruptcy Code of 1978, as amended from time to time.

 

“Business Day” shall mean any day excluding Saturday, Sunday and any day on which banks located in Los Angeles, California and Georgia are authorized or obligated to close their regular banking business.

 

“Buyer” shall mean Banc of California, N.A., together with its successors and assigns.

 

“Buyer’s Margin Amount” shall mean, with respect to any Purchased Repo Asset as of any date, the amount obtained by application of Buyer’s Margin Percentage to the Market Value of such Purchased Repo Asset as of such date.

 

“Buyer’s Margin Percentage” shall mean, with respect to any Purchased Repo Asset as of any date, the percentage obtained by dividing (a) the Market Value of such Purchased Repo Asset as of its Purchase Date by (b) the Purchase Price of such Purchased Repo Asset as of its Purchase Date; provided, that, with respect to any Mortgage Loan which was not an Exception Mortgage Loan on the related Purchase Date and which, as of the date of determination, is an Exception Mortgage Loan, Buyer’s Margin Percentage as of such date of determination shall be equal to the percentage obtained by dividing (a) the Market Value of such Mortgage Loan on the related Purchase Date by (b) the amount the Purchase Price would have been on the Purchase Date if such Mortgage Loan had been categorized as the type of Mortgage Loan (e.g., Exception Mortgage Loan, etc.) that it is categorized on the date of determination.

 

“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or its Affiliates or of any commercial bank having capital and surplus in excess of $500,000,000, (c) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in either case maturing within 90 days after the day of acquisition, (d) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s, (e) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (f) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (e) of this definition.

 

“Change of Control” shall have the meaning given such term in the Variable Terms

 

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Letter.

 

“Change of Management” shall have the meaning given such term in the Variable Terms Letter.

 

“Commonly Controlled Entity” of a Person shall mean a Person, whether or not incorporated, which is under common control with such Person within the meaning of Section 414(c) of the Internal Revenue Code.

 

“Contractual Obligation” as to any Person shall mean any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound, the failure to comply with which could have a material adverse effect on the business, operations, property, prospects or financial or other condition of such Person, any of its Subsidiaries or on the Repo Assets.

 

“Co-op Lease” shall mean with respect to a Co-op Loan, the lease with respect to a dwelling unit occupied by the Mortgagor and relating to the stock allocated to the related dwelling unit.

 

“Co-op Loan” shall mean a Mortgage Loan secured by the pledge of stock allocated to a dwelling unit in a residential cooperative housing corporation and a collateral assignment of the related Co-op Lease.

 

“Co-op Stock” shall mean with respect to a Co-op Loan, the single outstanding class of stock, partnership interest or other ownership instrument in the related residential cooperative housing corporation.

 

“Current Assets” shall mean for any Person at any date current assets of such Person determined as of such date in accordance with GAAP.

 

“Current Liabilities” shall mean for any Person at any date current liabilities of such Person determined as of such date in accordance with GAAP.

 

“Current Ratio” shall mean Current Assets over Current Liabilities.

 

“Default Spread” shall mean that percentage set forth next to such heading in the Variable Terms Letter.

 

“Delinquent” shall mean with respect to any Mortgage Loan, the Monthly Payment due on a Due Date is not made by the close of business on the Business Day preceding the next scheduled Due Date for such Mortgage Loan.

 

“Draw Proceeds” shall mean the portion of the proceeds of an Approved FixNFlip Loan placed in an Approved Escrow Account and used for the rehabilitation of the Mortgaged Property.

 

“Due Date” shall mean the day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

 

“Effective Date” shall mean the date on which all of the conditions precedent set forth in

 

4

 

Section 28(a) are satisfied.

 

“Eligible Commercial Real Estate Mortgage Loan” shall mean a Mortgage Loan with respect to which each of the following is accurate and complete (and Seller by including said Mortgage Loan in any Transaction hereunder shall be deemed to so represent and warrant to Buyer at and as of the Purchase Date for such Mortgage Loan):

 

(a)           Said Mortgage Loan is an Eligible Repo Asset;

 

(b)           Said Mortgage Loan meets standards for Commercial Real Estate Mortgage Loans under the Underwriting Guidelines;

 

(c)           Said Mortgage Loan does not have a Loan-to-Value Ratio greater than the Maximum Loan-to-Value Ratio for such Type of Mortgage Loan set forth in the Variable Terms Letter, calculated on the basis of the principal amount outstanding at the time the related Purchase Request is submitted to Buyer;

 

(d)           The original principal amount of said Mortgage Loan does not exceed the Maximum Original Principal Amount for such Type of Mortgage Loan set forth in the Variable Terms Letter; and

 

(e)           The Purchase Price of said Mortgage Loan, when added to the Purchase Price of all other Eligible Commercial Real Estate Mortgage Loans which have been purchased and are owned by Buyer, does not exceed the Allocation set forth in the Variable Terms Letter for such Type of Mortgage Loan.

 

“Eligible FixNFlip Mortgage Loan” shall mean a Mortgage Loan with respect to which each of the following is accurate and complete (and Seller by including said Mortgage Loan in any Transaction hereunder shall be deemed to so represent and warrant to Buyer at and as of the Purchase Date for such Mortgage Loan):

 

(f)            Said Mortgage Loan is an Eligible Repo Asset;

 

(g)           Said Mortgage Loan conforms to the Underwriting Guidelines for FixNFlip Mortgage Loans with respect to Obligor credit quality and condition of the Property in all material respects;

 

(h)           Said Mortgage Loan does not have a Loan-to-Value Ratio greater than the Maximum Loan-to-Value Ratio for such Type of Mortgage Loan set forth in the Variable Terms Letter, calculated on the basis of the principal amount outstanding at the time the related Purchase Request is submitted to Buyer;

 

(i)            The original principal amount of said Mortgage Loan does not exceed the Maximum Original Principal Amount for such Type of Mortgage Loan set forth in the Variable Terms Letter; and

 

(j)            The Purchase Price of said Mortgage Loan, when added to the Purchase Price of all other Eligible FixNFlip Mortgage Loans which have been purchased and are owned by Buyer, does not exceed the Allocation set forth in the Variable Terms Letter for such Type of Mortgage Loan.

 

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“Eligible Mortgage Loan” shall mean a Mortgage Loan that is an Eligible Commercial Real Estate Mortgage Loan, an Eligible FixNFlip Mortgage Loan, an Eligible Multifamily Mortgage Loan, an Eligible No Escrow FixNFlip Mortgage Loan, or an Eligible Non-QM Mortgage Loan.

 

“Eligible Multifamily Mortgage Loan” shall mean a Mortgage Loan with respect to which each of the following is accurate and complete (and a Seller by including said Mortgage Loan in any Transaction hereunder shall be deemed to so represent and warrant to Buyer at and as of the Purchase Date for such Mortgage Loan):

 

(a)           Said Mortgage Loan is an Eligible Repo Asset;

 

(b)           Said Mortgage Loan meets standards for Multifamily Mortgage Loans under the Underwriting Guidelines;

 

(c)           Said Mortgage Loan does not have a Loan-to-Value Ratio greater than the Maximum Loan-to-Value Ratio for such Type of Mortgage Loan set forth in the Variable Terms Letter, calculated on the basis of the principal amount outstanding at the time the related Purchase Request is submitted to Buyer;

 

(d)           The original principal amount of said Mortgage Loan does not exceed the Maximum Original Principal Amount for such Type of Mortgage Loan set forth in the Variable Terms Letter; and

 

(e)           The Purchase Price of said Mortgage Loan, when added to the Purchase Price of all other Eligible Multifamily Mortgage Loans which have been purchased and are owned by Buyer, does not exceed the Allocation set forth in the Variable Terms Letter for such Type of Mortgage Loan.

 

“Eligible No Escrow FixNFlip Mortgage Loan” shall mean a Mortgage Loan with respect to which each of the following is accurate and complete (and Seller by including said Mortgage Loan in any Transaction hereunder shall be deemed to so represent and warrant to Buyer at and as of the Purchase Date for such Mortgage Loan):

 

(a)           Said Mortgage Loan is an Eligible Repo Asset which conforms to the Underwriting Guidelines for No Escrow FixNFlip Mortgage Loans with respect to Obligor credit quality and condition of the Property in all material respects;

 

(b)           Prior to the initial Purchase Request from Seller for the purchase of any subsequent draws by the Borrower for said Mortgage Loan, said draws were funded by Seller or Servicer after proof satisfactory to Seller that such draws were used for the rehabilitation of the Mortgaged Property, and such work was completed to the satisfaction of the Seller;

 

(c)           Said Mortgage Loan does not have a Loan-to-Value Ratio greater than the Maximum Loan-to-Value Ratio for such Type of Mortgage Loan set forth in the Variable Terms Letter, calculated on the basis of the principal amount outstanding at the time the related Purchase Request is submitted to Buyer;

 

(d)           The original principal amount of said Mortgage Loan does not exceed the

 

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Maximum Original Principal Amount for such Type of Mortgage Loan set forth in the Variable Terms Letter; and

 

(e)           The Purchase Price of said Mortgage Loan, when added to the Purchase Price of all other Eligible No Escrow FixNFlip Mortgage Loans which have been purchased and are owned by Buyer, does not exceed the Allocation set forth in the Variable Terms Letter for such Type of Mortgage Loan.

 

“Eligible Non-QM Mortgage Loan” shall mean a Mortgage Loan with respect to which each of the following is accurate and complete (and a Seller by including said Mortgage Loan in any Transaction hereunder shall be deemed to so represent and warrant to Buyer at and as of the Purchase Date for such Mortgage Loan):

 

(f)            Said Mortgage Loan is an Eligible Repo Asset;

 

(g)           Said Mortgage Loan meets standards for “Non-QM Mortgage Loan” (or similar term) under the Underwriting Guidelines;

 

(h)           Said Mortgage Loan does not have a Loan-to-Value Ratio greater than the Maximum Loan-to-Value Ratio for such Type of Mortgage Loan set forth in the Variable Terms Letter, calculated on the basis of the principal amount outstanding at the time the related Purchase Request is submitted to Buyer;

 

(i)            The original principal amount of said Mortgage Loan does not exceed the Maximum Original Principal Amount for such Type of Mortgage Loan set forth in the Variable Terms Letter; and

 

(j)            The Purchase Price of said Mortgage Loan, when added to the Purchase Price of all other Eligible Non-Conforming Mortgage Loans which have been purchased and are owned by Buyer, does not exceed the Allocation set forth in the Variable Terms Letter for such Type of Mortgage Loan.

 

“Eligible Repo Asset” shall mean either (i) a Repo Asset that is an Eligible FixNFlip Mortgage Loan, an Eligible No Escrow FixNFlip Mortgage Loan, or an Eligible Non-QM Mortgage Loan which complies with the representations and warranties set forth on Schedule 1 hereto, or (ii) a Repo Asset that is an Eligible Commercial Real Estate Mortgage Loan or an Eligible Multifamily Mortgage Loan which complies with the representations and warranties set forth on Schedule 2 hereto. In determining the eligibility of any Repo Asset, any of the requirements for eligibility may be waived by Buyer in its sole and absolute discretion. Any Purchased Repo Asset shall cease to be an Eligible Repo Asset upon written notice of the retraction of any waiver given to Seller by Buyer unless, at the time of giving such notice, the deficiency which originally required such waiver has been cured and such Repo Asset meets all other requirements for an Eligible Repo Asset. By accepting a Repo Asset as an Eligible Repo Asset for inclusion in a Transaction hereunder, Buyer shall not be deemed to have: (x) made any representation or warranty with respect thereto, (y) undertaken any review of the sufficiency or completeness of such Repo Asset, or (z) verified in any manner or to any extent the representations and warranties of Seller with respect thereto, and Seller should not rely on the acceptance of such Repo Asset as an Eligible Repo Asset for inclusion in a Transaction as any such verification by Buyer.

 

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“ERISA Affiliate” shall mean, with respect to any Person, any trade or business (whether or not incorporated) that is a member of the group of which such Person is a member and which is treated as a single employer under Section 414 of the Internal Revenue Code and the rules and regulations thereunder in effect from time to time.

 

“Event of Default” shall have the meaning given such term in Section 13 below.

 

“Exception Mortgage Loan” shall mean any Mortgage Loan which is otherwise ineligible for purchase hereunder, or which otherwise becomes ineligible for purchase hereunder and which is approved by Buyer in its sole discretion. Buyer’s approval of a Mortgage Loan as an Exception Mortgage Loan shall expire on the date set forth by the Buyer (the “Exception Cure Date”) in the written notice that such Mortgage Loan is approved as an Exception Mortgage Loan (an “Exception Notice”) to cure the exception. The Pricing Rate, Market Value, Purchase Price and Buyer’s Margin Percentage with respect to Exception Mortgage Loans shall be set in the sole discretion of Buyer.

 

“FHLMC” shall mean the Federal Home Loan Mortgage Corporation or any successor thereto.

 

“Fidelity Insurance” shall mean insurance coverage with respect to employee errors, omissions, dishonesty, forgery, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud in an aggregate amount acceptable to Seller’s regulators.

 

“FinCEN” shall mean the Financial Crimes Enforcement Network or any successor thereto.

 

“FNMA” shall mean the Federal National Mortgage Association or any successor thereto.

 

“GAAP” shall mean generally accepted accounting principles in the United States of America in effect from time to time.

 

“Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

“Gross Margin” shall mean, with respect to each adjustable rate Mortgage Loan, the fixed percentage amount set forth in the related Mortgage Note.

 

“Guarantee” shall mean, 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 or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include (a) endorsements for collection or deposit in the ordinary course of business, or (b) obligations to make servicing advances for delinquent taxes and insurance or other obligations in respect of a Mortgaged Property, to the extent required by Buyer. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is

 

8

 

made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.

 

“Guarantor” shall mean the guarantor described more particularly in the Variable Terms Letter.

 

“Guaranties” shall mean, collectively, each guaranty executed by a Guarantor, as amended, extended or otherwise modified, supplemented or replaced from time to time, pursuant to which each Guarantor fully and unconditionally guarantees the obligations of the Seller hereunder, each of which shall be in form and substance satisfactory to Buyer.

 

“Hedge Agreement” shall mean, with respect to any or all of the Purchased Repo Assets, any short sale of a US Treasury Security, or futures contract, or mortgage related security, or Eurodollar futures contract, or options related contract, or interest rate swap, cap or collar agreement, or similar arrangement providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by Seller .

 

“High Cost Mortgage Loan” shall mean a Mortgage Loan classified as (a) a “high cost” loan under the Home Ownership and Equity Protection Act of 1994; (b) a “high cost,” “threshold,” “covered,” or “predatory” loan under any other applicable state, federal or local law (or a similarly classified loan using different terminology under a law, regulation or ordinance imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees) or (c) having a percentage listed under the Indicative Loss Severity Column (the column that appears in the S&P Anti-Predatory Lending Law Update Table, included in the then-current S&P’s LEVELS® Glossary of Terms on Appendix E).

 

“HUD” shall mean the Department of Housing and Urban Development and any successor thereto.

 

“Income” shall mean, with respect to any Purchased Repo Asset at any time, any principal thereof and all interest, dividends or other distributions thereon.

 

“Indebtedness” of any Person shall mean all items of indebtedness which, in accordance with GAAP and practices, would be included in determining liabilities as shown on the liability side of a statement of condition of such Person as of the date as of which indebtedness is to be determined, including, without limitation, all obligations for money borrowed and capitalized lease obligations, and shall also include all indebtedness and liabilities of others assumed or guaranteed by such Person or in respect of which such Person is secondarily or contingently liable (other than by endorsement of instruments in the course of collection) whether by reason of any agreement to acquire such indebtedness or to supply or advance sums or otherwise.

 

“Interest Only Adjustment Date” shall mean, with respect to each Interest Only Mortgage Loan, the date, specified in the related Mortgage Note on which the Monthly Payment will be adjusted to include principal as well as interest.

 

“Interest Only Mortgage Loan” shall mean any Mortgage Loan which provides that the

 

9

 

Obligor on said Mortgage Loan may, at its option with no penalty, choose not to make any regularly scheduled principal payment thereon at any time during the term of said Mortgage Loan.

 

“Interest Rate Adjustment Date” shall mean the date on which an adjustment to the Mortgage Interest Rate with respect to each Mortgage Loan becomes effective.

 

“Interim Date” shall have the meaning given such term in the Variable Terms Letter.

 

“Lien” shall mean any security interest, mortgage, pledge, lien, claim on property, charge or encumbrance (including any conditional sale or other title retention agreement), any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction.

 

“Loan-to-Value Ratio” shall mean the ratio of, (i) the aggregate outstanding indebtedness secured by the subject Property (including the Indebtedness represented by such Mortgage Loan and any other Mortgage Loans secured thereby) at the date of origination thereof to (ii) the lower of: (a) the appraised value, (b) the fair market value or (c) the sales price, if applicable, of such Property at such origination date.

 

“Margin Call” shall have the meaning given such term in Section 4(a) hereof.

 

“Margin Deficit” shall have the meaning given such term in Section 4(a) hereof.

 

“Market Value” shall mean, with respect to a Mortgage Loan, the lesser of (i) the outstanding principal balance of the Mortgage Loan; and (ii) the fair market value of the Mortgage Loan determined in good faith by Buyer in its commercially reasonable discretion; provided, the Buyer will determine the Market Value using the same methodology for similarly situated counterparties with similar assets, and provided further that Seller may provide independent third party marks to the extent Seller disagrees with the Market Value.

 

“Material Adverse Effect” shall mean (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of Seller, or Guarantor taken as a whole; (b) a material impairment of the ability of Seller or Guarantor to perform under any Repurchase Facility Document and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Repurchase Facility Document against Seller or Guarantor, in each case as determined by the Buyer in its sole discretion.

 

“Maximum Loan-to-Value Ratio” shall mean with respect to each Type of Mortgage Loan, the maximum Loan-to-Value Ratio for such Type of Mortgage Loan set forth in the Variable Terms Letter, or as otherwise permitted by Underwriting Guidelines..

 

“Maximum Original Principal Amount” shall mean with respect to each Type of Mortgage Loan, the maximum original principal amount for such Type of Mortgage Loan set forth in the Variable Terms Letter, or as otherwise permitted by Underwriting Guidelines.

 

“MERS” shall mean Mortgage Electronic Registration Systems, Inc.

 

“MERS Designated Loan” shall mean any Mortgage Loan with respect to which MERS,

 

10

 

as nominee for Seller, is the mortgagee or beneficiary thereof.

 

“MERS Procedures Manual” shall mean that certain document entitled “MERS Procedures Manual” as promulgated by MERSCORP Holdings, Inc. and dated as of August 10, 2012, which document describes, and contains the terms and provisions relating to and regulating, the MERS® System, as such document may be replaced, amended, or modified from time to time.

 

“MERS® System” shall mean the mortgage electronic registry system of MERSCORP Holdings, Inc., as more particularly described in the MERS Procedures Manual.

 

“Monthly Payment” shall mean the scheduled monthly payment of principal and/or interest on a Mortgage Loan.

 

“Moody’s” shall mean Moody’s Investors Service, Inc. or any successors thereto.

 

“Mortgage” shall mean each mortgage, assignment of rents, security agreement and fixture filing, or deed of trust, assignment of rents, security agreement and fixture filing, deed to secure debt, assignment of rents, security agreement and fixture filing, or similar instrument creating and evidencing a lien on real property and other property and rights incidental thereto. With respect to a Co-op Loan, the related Security Agreement.

 

“Mortgage File” shall mean, with respect to a Mortgage Loan, the documents and instruments relating to such Mortgage Loan.

 

“Mortgage Interest Rate” shall mean the rate of interest borne on a Mortgage Loan from time to time in accordance with the terms of the related Mortgage Note.

 

“Mortgage Interest Rate Cap” shall mean, with respect to an adjustable rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth in the related Mortgage Note.

 

“Mortgage Loan” shall mean a loan, secured by real estate, made by Seller to an Obligor or acquired by Seller, including, without limitation: (a) a promissory note and related deed of trust (or mortgage) and/or security agreement; (b) all guaranties and insurance policies, including, without limitation, all mortgage and title insurance, all fire and extended coverage policies, and all builder’s “all risk” insurance policies, and all rights of Seller to return premiums or payments with respect thereto; and (c) all right, title and interest of Seller in the Property covered by such deed of trust (or mortgage).

 

“Mortgage Loan Differential” shall have the meaning given such term in Section 3(b) hereof.

 

“Mortgage Loan Documents” shall mean with respect to each Purchased Repo Asset, originals of all promissory notes or other instruments or agreements evidencing the indebtedness of Obligors thereon, all mortgages, deeds to secure debt, trust deeds, security agreements, Assignments of Mortgages related thereto, all rights to payment thereunder, all rights in the Properties securing payment of the Indebtedness of the Obligors thereon or which are the subject of such Mortgage Loans, all rights in the shares of stock and the proprietary lease related to any of the foregoing, all rights under documents related thereto, such as guaranties and insurance

 

11

 

policies (issued by governmental agencies or otherwise), including, without limitation, mortgage and title insurance policies, fire and extended coverage insurance policies (including the right to any return premiums), and all rights in cash deposits consisting of impounds, insurance premiums or other funds held on account thereof.

 

“Mortgage Note” shall mean the promissory note or other evidence of the indebtedness of an Obligor secured by a Mortgage.

 

“Mortgaged Property” shall mean the real property securing repayment of the debt evidenced by a Mortgage Note. With respect to a Co-op Loan, the related Co-op Stock and Co-op Lease securing the indebtedness of the Mortgagor under the related Mortgage Loan.

 

“Multiemployer Plan” shall mean, as to Seller or any of its ERISA Affiliates, a Plan of such Person which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Negative Amortization Mortgage Loan” shall mean any Mortgage Loan which may provide for any increase in the outstanding principal balance thereof following the disbursement date thereof, including, without limitation, through capitalization of accrued interest.

 

“Net Income” shall mean, for any Person for any period, the net income of such Person for such period as determined in accordance with GAAP.

 

“Non-usage Fee” shall mean a fee charged Seller by Buyer for underutilization of the Repurchase Facility as further described in the Variable Terms Letter.

 

“Obligor” shall mean the individual or individuals obligated to pay the indebtedness which is the subject of a Mortgage Loan.

 

“Operating Account” shall mean the account established by Seller with Buyer under the control of Seller from which Buyer shall withdraw the Mortgage Loan Differential necessary to purchase any Mortgage Loan and to which Buyer shall deposit proceeds pursuant to Section 3(e) of this Agreement.

 

“Past Due Rate” shall mean for any day; (a) the Pricing Rate for that day as set forth in the Variable Terms Letter plus (b) the Default Spread.

 

“Payment Deadline” shall have the meaning given such term in the Variable Terms Letter

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA and any successor thereto.

 

“Permissible Wet Mortgage Loan Document Delivery Period” shall mean for any Type of Mortgage Loan the period of time set forth in the Variable Terms Letter.

 

“Permitted Distributions” shall mean distributions set forth in the Variable Terms Letter as Permitted Distributions.

 

“Permitted Indebtedness” shall mean:

 

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(1)                                 The Secured Obligations;

 

(2)                                 Indebtedness as of the Effective Date reflected in the financial statements referred to in Section 10(a);

 

(3)                                 Usual and customary trade debt for a mortgage company incurred in the ordinary course of business, paid within forty-five (45) days after the same has become due and payable or which is being contested in good faith, provided provision is made to the satisfaction of Buyer for the eventual payment thereof in the event it is found that such contested trade debt is payable by Seller;

 

(4)                                 Subordinated Debt;

 

(5)                                 Indebtedness secured by Liens permitted under Section 13(a); and

 

(6)                                 Indebtedness created pursuant to mortgage loans sold to other financial institutions through similar types of repurchase agreements so long as the mortgage loans sold under such agreements are not Purchased Repo Assets and Seller provides Buyer with written notice promptly upon Seller’s entry into such arrangement.

 

“Permitted Investments” shall mean:

 

(a)                                 Direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

 

(b)                                 Investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, a rating from S&P or from Moody’s of at least Al/PI (or equivalent rating), respectively;

 

(c)                                  Investments in certificates of deposit, banker’s acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

 

(d)                                 Fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

 

(e)                                  Money market mutual funds registered under the Investment Company Act of 1940 and which have the highest investment rating from S&P and Moody’s.

 

“Person” shall mean any corporation, natural person, firm, joint venture, partnership, limited liability company, trust, unincorporated organization, Governmental Authority or similar organization.

 

“Plan” shall mean, as to any Person, any pension plan that is covered by Title IV of

 

13

 

ERISA and in respect of which such Person or a Commonly Controlled Entity of such Person is an “employer” as defined in Section 3(5) of ERISA.

 

“Price Differential” shall mean, with respect to any Purchased Repo Asset as of any date, the amount obtained by daily application of the Pricing Rate and/or the Past Due Rate, as applicable subject to Section 3(h) of this Agreement, for such Type of Purchased Repo Asset to the Purchase Price for such Purchased Repo Asset on a 360-day-per-year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Purchased Repo Asset and ending on (but excluding) the date of Buyer’s calculation of the Price Differential (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Purchased Repo Asset).

 

“Price Differential Payment Date” shall mean, with respect to a Purchased Repo Asset, the Payment Date set forth in the Variable Terms Letter, the Repurchase Date and, if the Repurchase Date has not yet occurred, the day following the Targeted Repurchase Date related to the Purchase Date; provided, that, with respect to such Purchased Repo Asset, the final Price Differential Payment Date shall be the related Repurchase Date; and provided, further, that if any such day is not a Business Day, the Price Differential Payment Date shall be the next succeeding Business Day.

 

“Pricing Rate” shall mean on any day, the interest rate set forth in the Variable Terms Letter

 

“Property” shall mean the real property, including the improvements thereon, and the personal property (tangible or intangible) which are encumbered pursuant to a Mortgage Loan.

 

“Purchase Contract Expiration Date” shall have the meaning given such term in the Variable Terms Letter.

 

“Purchase Date” shall mean the date on which Purchased Repo Assets are to be transferred by Seller to Buyer.

 

“Purchase Price” shall mean, as calculated on the Purchase Date pursuant to information certified by Seller with respect to all Purchased Repo Assets subject to a Transaction on such Purchase Date, with respect to each Mortgage Loan included in such Transaction, that amount calculated for such Type of Mortgage Loan at the percentage set forth in the Variable Terms Letter.

 

“Purchase Request” shall mean a written request that Buyer enter into a Transaction and purchase Eligible Repo Assets hereunder substantially in the form attached hereto as Exhibit A.

 

“Purchase Request Delivery Deadline” shall have the meaning given such term in the Variable Terms Letter.

 

“Purchased Repo Assets” shall mean the Eligible Repo Assets transferred by Seller to Buyer in a Transaction hereunder, and any Eligible Repo Assets substituted therefor in accordance with Section 9 below. The term “Purchased Repo Assets” with respect to any Transaction at any time also shall include Additional Repo Assets delivered pursuant to Section 4(a) hereof.

 

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“Qualified Insurer” shall mean an insurance company duly authorized and licensed where required by law to transact insurance business and meeting the insurance ratings requirements of prudent residential or commercial mortgage lending institutions which make mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located.

 

“Repo Assets” shall mean , collectively and severally, all now existing and hereafter arising right, title and interest of Seller, of every kind and nature, in, under and to each of the following:

 

(a)                                 All Mortgage Loans, now owned and hereafter acquired by Seller, the Mortgage Loan Documents for which are delivered to Buyer, including, without limitation, the promissory notes or other instruments or agreements evidencing the indebtedness of Obligors thereon, all mortgages, deeds to secure debt, trust deeds and security agreements related thereto, all rights to payment thereunder, all rights in the Properties securing payment of the Indebtedness of the Obligors thereon or which are the subject of such Mortgage Loans, all rights in the shares of stock and the proprietary lease related to any of the foregoing, all rights under documents related thereto, such as guaranties and insurance policies (issued by governmental agencies or otherwise), including, without limitation, mortgage and title insurance policies, fire and extended coverage insurance policies (including the right to any return premiums), and all rights in cash deposits consisting of impounds, insurance premiums or other funds held on account thereof.

 

(b)                                 All now existing and hereafter arising rights to service, administer and/or collect the foregoing Repo Assets and all rights to the payment of money on account of such servicing, administration and collection activities;

 

(c)                                  All rights of Seller, now existing and hereafter arising, to the payment of monies on account of advances made by Seller, on account of principal and interest payments and otherwise, under all servicing contracts pursuant to which Seller is servicing the foregoing Repo Assets and on account of fees payable to Seller under such servicing contracts;

 

(d)                                 All now existing and hereafter arising accounts, contract rights, chattel paper (including electronic chattel paper), goods (including inventory and equipment and any accessions thereto), instruments (including promissory notes), documents, investment property and general intangibles (including payment intangibles and software) together with all accessions and additions thereto constituting or relating to any of the foregoing Repo Assets;

 

(e)                                  All now existing and hereafter acquired files, documents, instruments, surveys, certificates, correspondence, appraisals, computer programs, tapes, discs, cards, accounting records and other books, records, information and data of Seller relating to the foregoing Repo Assets (including all information, records, data, programs, tapes, discs, and cards necessary or helpful in the administration or servicing of the foregoing Repo Assets);

 

(f)                                   Any Hedge Agreements relating to any Purchased Repo Asset;

 

(g)                                  Any property relating to any Purchased Repo Asset or the related Mortgaged Property;

 

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(h)                                 All insurance policies and insurance proceeds relating to any Purchased Repo Asset or the related Mortgaged Property, including but not limited to any payments or proceeds under any related primary insurance or hazard insurance;

 

(i)                                     All products and proceeds of the foregoing Repo Assets, whether now owned or hereafter acquired, now existing or hereafter created and wherever located.

 

“Reportable Event” shall mean a reportable event as defined in Title IV of ERISA, except actions of general applicability by the Secretary of Labor under Section 110 of ERISA.

 

“Repurchase Date” shall mean, with respect to any Purchased Repo Asset, the earliest of: (a) the number of days following the Purchase Date set forth in the Variable Terms Letter (“Targeted Repurchase Date”), (b) the date all Transactions hereunder are terminated pursuant to Section 17 below, (c) the date such Purchased Repo Asset is no longer an Eligible Repo Asset, (d) the Exception Cure Date set forth in the Exception Notice with respect to an Exception Mortgage Loan (unless the exception is cured and as a result the Mortgage Loan is no longer an Exception Mortgage Loan), and (e) the date of occurrence of any Event of Default; provided, however, that Seller may request to repurchase any Purchased Repo Asset prior to the Targeted Repurchase Date pursuant to the Repurchase Request delivered to Buyer.

 

“Repurchase Facility Documents” shall mean, collectively and severally, this Agreement, the Variable Terms Letter, any Guaranties, the Assignment of Mortgage and all documents, instruments and agreements relating thereto or connected therewith (other than Mortgage Loans and the documents executed by Obligors in connection therewith), now existing or hereafter arising and as any and all of the same may be amended, extended and replaced from time to time.

 

“Repurchase Price” shall mean the price at which Purchased Repo Assets are to be transferred from Buyer to Seller on the Repurchase Date, which in the case of each such Purchased Repo Asset will equal the sum of: (a) the Purchase Price of such Purchased Repo Asset, plus (b) the accrued but unpaid Price Differential as of the date of Buyer’s calculation of the Repurchase Price therefor.

 

“Repurchase Request” shall mean a written request by Seller to repurchase Purchased Repo Assets prior to the Targeted Repurchase Date, at the Repurchase Price.

 

“Required Fees” shall mean those fees described as such in the Variable Terms Letter.

 

“Requirement of Law” shall mean, as to any Person, the articles or certificate of incorporation and bylaws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or a final and binding determination of an arbitrator or a determination of a court or other governmental authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Responsible Financial Officer” shall mean as to any Person the chief financial officer, senior vice president-finance, vice president-finance or assistant vice president-finance of such Person, with any Person executing and delivering any certificate hereunder on behalf of Seller or Guarantor which is required to be executed and delivered by a “Responsible Financial Officer” being acknowledged by Seller as being a Person actively involved with and knowledgeable with respect to all financial matters affecting Seller.

 

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“S&P” shall mean Standard & Poor’s Ratings Services, or any successor thereto.

 

“Secured Obligations” shall mean any and all debts, obligations and liabilities of Seller to Buyer (whether now existing or hereafter arising, voluntary or involuntary, whether or not jointly owned with others, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to time decreased or extinguished and later increased, created or incurred), arising out of or related to this Agreement, and all other Repurchase Facility Documents.

 

“Seller” shall have the meaning given such term in the introductory paragraph of this Agreement.

 

“Seller Instructions” shall have the meaning given such term in Section 3(b) hereof.

 

“Servicer” shall mean Select Portfolio Servicing, Angel Oak Prime Bridge or Situs Group, LLC its successors and assigns as approved by Buyer.

 

“Settlement Agent” shall mean, with respect to any Transaction the subject of which is a Wet Mortgage Loan, the entity approved by Buyer, in its sole good-faith discretion, which may be a title company, escrow company or attorney in accordance with local law and practice in the jurisdiction where the related Wet Mortgage Loan is being originated. A Settlement Agent is deemed approved unless Buyer notifies Seller otherwise at any time electronically or in writing.

 

“Statement Date” shall have the meaning given such term in the Variable Terms Letter.

 

“Subordinated Debt” shall mean Indebtedness of Seller subordinated to the Secured Obligations in the manner and to the extent required by Buyer pursuant to written subordination agreements satisfactory in form and substance to Buyer,

 

“Subsidiary” shall mean, with respect to any Person, any corporation, partnership, limited liability company, association or other business entity more than fifty percent (50%) of the stock or other equity interests of which having by the terms thereof ordinary voting power to elect the board of directors, managers or trustees of such Person shall, at the time as of which any determination is being made, be owned by such Person, either directly or through Subsidiaries of such Person (irrespective of whether or not at such time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency).

 

“Tangible Net Worth” shall mean with respect to a Person at any date, the sum of:

 

(a)         The total assets set forth on the consolidated balance sheet of such Person, prepared in accordance with GAAP including (1) the sum of: (i) the par or stated value of all outstanding common stock, (iii) paid-in capital, and (iv) retained earnings; less (2) the sum of: (i) 50% of the value of MSRs, (ii) goodwill, including any amounts (however designated on such balance sheet) representing the cost of acquisitions or Subsidiaries in excess of underlying tangible assets, together with costs allocated to the purchase or origination of such Person’s servicing portfolio or any part thereof, (ii) patents, trademarks, copyrights, leasehold improvements not recoverable at the expiration of a lease, and deferred

 

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charges (including, but not limited to unamortized debt discount and expense, and organizational expenses) and (iii) loans to, or investments in, affiliates, officers or employees;

 

(b)         Plus committed and undrawn capital up to an amount as set forth in the Variable Terms Letter;

 

Less, the Total Liabilities of the Person.

 

“Total Liabilities” shall mean for any Person at any date, such Person’s total liabilities, determined in accordance with GAAP.

 

“Transaction” shall, in addition to the definition set forth in Section 1 above, refer to substitutions pursuant to Section 9 below.

 

“Type” shall mean, for any Mortgage Loan, an Eligible Commercial Real Estate Mortgage Loan, an Eligible FixNFlip Mortgage Loan, an Eligible Multifamily Mortgage Loan, an Eligible No Escrow FixNFlip Mortgage Loan, or an Eligible Non-QM Mortgage Loan.

 

“Underwriting Guidelines” shall mean the standards, procedures and guidelines of the Seller for underwriting and acquiring Mortgage Loans, which are set forth in the written policies and procedures of the Seller, a copy of which have been provided to Buyer and such other guidelines as are identified and approved in writing by Buyer.

 

“Variable Terms Letter” shall mean that certain Variable Terms Letter, dated as of even date herewith, and entered into by Seller and Buyer, as such letter may be amended by Seller and Buyer from time to time.

 

“Violation Deadline” shall have the meaning given such term in Section 3(f) below.

 

“Wet Mortgage Loan” shall mean a Mortgage Loan with respect to which each of the following is accurate and complete (and Seller by including said Mortgage Loan in any Transaction hereunder shall be deemed to so represent and warrant to Buyer at and as of the Purchase Date for such Mortgage Loan):

 

(a)                                 Said Mortgage Loan has been closed by a title agency, escrow agent or closing attorney and funded (or will no later than the second Business Day following the Purchase Date therefor be closed by a title agency, escrow agent or closing attorney and funded) and would qualify without exception as an Eligible Repo Asset except that some or all of the Mortgage Loan Documents for said Mortgage Loan are in transit to, but have not yet been received by Buyer so as to satisfy all requirements to permit Seller to include said Mortgage Loan in any Transaction;

 

(b)                                 Seller reasonably expects said Mortgage Loan to fully qualify as an Eligible Repo Asset when the Mortgage Loan Documents for said Mortgage Loan have been received by Buyer;

 

(c)                                  A complete file as to said Mortgage Loan, including the Mortgage Loan Documents, exists and that such file is in the possession of either the title agent, escrow agent or closing attorney that closed such Mortgage Loan, Seller or Seller’s servicer for such Mortgage Loan, or that such file has been shipped to Buyer; and

 

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(d)                                 Seller actually and reasonably expects that such full qualification can and will be achieved within the Permissible Wet Mortgage Repurchase Facility Document Delivery Period.

 

“Wet Mortgage Loan Limit” shall mean the aggregate Purchase Price, if any, of Wet Mortgage Loans which may be sold to and be owned by Buyer at any date, as set forth in the Variable Terms Letter.

 

3.                                      Initiation; Purchase Request; Purchase and Repurchase; Price Differential; Transaction Amount.

 

(a)                                 Subject to the terms and conditions set forth herein, Seller at any time from and after the date hereof to but not including the Purchase Contract Expiration Date, may initiate a Transaction by delivering a Purchase Request for each of the Eligible Mortgage Loans for which purchase is requested to Buyer, together with the Mortgage Loan Documents and Repurchase Facility Documents for each Eligible Mortgage Loan to the Custodian, on or before the Purchase Request Delivery Deadline, for Buyer’s review; provided, however, that with respect to Wet Mortgage Loans, drafts of such final Mortgage Loan Documents approved by Originator, Seller and Obligor shall be provided to Buyer.

 

(b)                                 Each Purchase Request shall be prepared by an Authorized Representative of Seller and shall describe the Eligible Mortgage Loans which shall be in compliance with the terms set forth in the Variable Terms Letter, identify Buyer and Seller and set forth (1) the Purchase Date, (2) the Purchase Price, and (3) any additional terms or conditions of the Transaction not inconsistent with this Agreement. Any Purchase Request shall be delivered to Buyer (A) one Business Day prior to the proposed Purchase Date for Mortgage Loans that are not Wet Mortgage Loans or (B) by 1:00 p.m. (Pacific time) on the proposed Purchase Date for Wet Mortgage Loans. On each Purchase Date, (i) the Purchase Price for the Purchased Repo Assets shall be advanced as directed by Seller in accordance with written instructions from Seller for the purpose of funding such Mortgage Loan (“Seller Instructions”) and (ii) (a) for Eligible Mortgage Loans other than FixNFlip Loans, the amount (“Mortgage Loan Differential”) equal to the difference between the Purchase Price and the principal amount of the Mortgage Loan shall be debited from the Operating Account and advanced as directed by Seller in accordance with the Seller Instructions (for the avoidance of doubt, the amount of the Mortgage Loan Differential shall be deposited into the Operating Account by Seller prior to its withdrawal therefrom); (b) for FixNFlip Loans, the Mortgage Loan Differential shall be debited from the Operating Account, and any amount necessary for the Borrower to purchase the Mortgaged Property shall be advanced by as directed by Seller in accordance with the Seller instructions, with the remaining funds deposited by Buyer into the Approved Escrow Account.. For the avoidance of doubt, the amount of the Mortgage Loan Differential shall be deposited into the Operating Account by Seller prior to its withdrawal therefrom. The Purchase Request, together with this Agreement, shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction to which the Purchase Request relates, unless with respect to the Purchase Request specific objection is made promptly after receipt thereof. In the event of any conflict between the terms of such Purchase Request and this Agreement, this Agreement shall prevail. On the Purchase Date for the Transaction, (i) the Purchased Repo Assets shall be transferred to the Buyer (by delivery to the Custodian), along with the originally executed Mortgage Loan Documents and (for the initial Transaction only) the Repurchase Facility Documents and (ii) the Purchase Price and the Mortgage Loan Differential shall be advanced by Buyer pursuant to the

 

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Seller Instructions. The Purchase Price advanced by Buyer to Seller shall commence accruing interest at the Pricing Rate on the Purchase Date and shall continue to accrue interest at the Pricing Rate until the Repurchase Date, subject to Section 3(l) below.

 

(c)                                  With respect to each Exception Mortgage Loan, upon receipt of the Purchase Request, Buyer shall, consistent with this Agreement, specify the terms for such proposed Transaction, including the Purchase Price, the Pricing Rate, and the Repurchase Date in respect of such Transaction.

 

(d)                                 The Purchased Repo Assets shall be repurchased by Seller on the Repurchase Date at the Repurchase Price. Such obligation to repurchase exists without regard to any prior or intervening liquidation or foreclosure with respect to any Purchased Repo Asset (but liquidation or foreclosure proceeds received by Buyer shall be applied to reduce the Repurchase Price for such Purchased Repo Asset on each Price Differential Payment Date except as otherwise provided herein). Seller is obligated to repurchase and take physical possession of the Purchased Repo Assets from Buyer or its designee at Seller’s expense on the related Repurchase Date. In the event Seller wishes to repurchase any Purchased Repo Asset at any time earlier than the Targeted Repurchase Date from the Purchase Date, Seller shall deliver a Repurchase Request to Buyer, which shall describe the Purchased Repo Assets to be repurchased and set forth (1) the Repurchase Date, (2) the Repurchase Price, and (3) any additional terms or conditions of the Transaction not inconsistent with this Agreement. On the Repurchase Date, the Purchased Repo Assets shall be transferred to Seller against the transfer of the proceeds of the sale of the Purchased Repo Asset (“Take-Out Proceeds”) to a Buyer controlled account. Upon receipt by Buyer of the Take-Out Proceeds, Buyer shall, pursuant to written instructions from Seller to Buyer, (i) first, deduct the Repurchase Price from the Take-Out Proceeds, (ii) second, deduct any fees owed by Seller to Buyer in connection with the Purchased Repo Asset, and (iii) apply the remainder of any Take-Out Proceeds to Seller’s Operating Account maintained with Buyer.

 

(e)                                  Unless otherwise required by Buyer, the accrued but unpaid Price Differential for each Purchased Repo Asset shall be payable on the Repurchase Date therefor.

 

(f)                                   The aggregate Purchase Price for all Purchased Repo Assets sold to and owned by Buyer subject to this Agreement as of any date of determination shall not exceed the Aggregate Purchase Price Limit. Moreover, the aggregate Purchase Price for any Type of Mortgage Loan sold to and owned by Buyer subject to this Agreement as of any date of determination shall not exceed the sublimit for such Type of Mortgage Loan as set forth as Allocations under the Variable terms Letter.

 

(g)                                  Seller shall pay to Buyer the Required Fees on the terms set forth in the Variable Terms Letter.

 

(h)                                 Seller agrees that at all times the average daily aggregate Purchase Price for all Eligible Mortgage Loans offered by Seller to Buyer in any one (1) calendar month shall not fall below the percentage of the Seller’s Aggregate Purchase Price Limit set forth in the Variable Terms Letter. If Seller’s daily aggregate Purchase Price for all Eligible Mortgage Loans falls below the percentage of the Seller’s Aggregate Purchase Price Limit set forth in the Variable Terms Letter for any two (2) consecutive calendar months, then the Seller shall pay the Buyer the non-usage fee, and Buyer may, at Buyer’s sole and reasonable discretion reduce the Seller’s Aggregate Purchase Price Limit. If Seller’s daily aggregate Purchase Price for all

 

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Eligible Mortgage Loans falls below the percentage of the Seller’s Aggregate Purchase Price Limit set forth in the Variable Terms Letter for any three (3) consecutive calendar months, then in addition to the above, either Buyer or Seller, after consultation with the other party, shall have the right to reduce the Aggregate Purchase Price Limit by notice to the other Party or (ii) terminate this Agreement pursuant to Section 17.

 

(i)                             In the event Seller fails to repurchase any Purchased Repo Assets from Buyer by not later than the Targeted Repurchase Date for such Purchased Repo Assets, then the Price Differential shall accrue with respect to such Purchased Repo Assets at the Past Due Rate commencing on the day following the Targeted Repurchase Date and be added to the Repurchase Price, an Event of Default shall have been deemed to occur and Buyer shall have the right to exercise any or all of the remedies set forth in Section 14 of this Agreement. Seller’s final payment of the Repurchase Price with respect to such Purchased Repo Assets shall include any unpaid portion of the Repurchase Price, plus the Price Differential (whether at the Pricing Rate or the Past Due Rate) accrued but unpaid pursuant to this Section 3(l).

 

4.                                      Margin Maintenance.

 

(a)                                 Buyer shall determine the Market Value for the Purchased Repo Assets in its sole discretion from time to time and at such time as it may elect in its sole discretion; provided further in the event the Market Value is less than the Purchase Price minus any principal curtailments, that Seller may provide independent third party marks to the extent Seller disagrees with the Market Value. Buyer shall not take into account any Purchased Repo Asset which is not an Eligible Repo Asset, including, without limitation, any Purchased Repo Asset with respect to which there is a breach of representation, warranty or covenant made by Seller in this Agreement and which breach has not been cured prior to the date on which Market Value is being determined. If at any time the aggregate Market Value of all includible Purchased Repo Assets is less than the aggregate Buyer’s Margin Amount for all Purchased Repo Assets (a “Margin Deficit”), then Buyer may by written notice (a “Margin Call”) to Seller require Seller, at Seller’s option, to transfer to Buyer cash or additional Eligible Repo Assets acceptable to Buyer (“Additional Repo Assets”), so that the cash plus the aggregate Market Value of the Purchased Repo Assets, including any such Additional Repo Assets, will thereupon equal or exceed such aggregate Buyer’s Margin Amount.

 

(b)                                 If any notice is given by Buyer under subsection (a) of this Section at or before the close of business on any Business Day, Seller shall transfer cash or Additional Repo Assets as provided in such subsection no later than: (1) if such notice is given by 1:00 p.m. (Pacific Time), by 1:00 p.m. (Pacific Time) on the next Business Day following such notice, or (2) if such notice is given after 1:00 p.m. (Pacific Time), by 4:00 p.m. (Pacific Time) on the next Business Day following such notice. Any cash delivered hereunder shall be credited against the Repurchase Price payable by Seller on the next Repurchase Date.

 

(c)                                  Notwithstanding any term to the contrary set forth herein, so long as a Margin Deficit has occurred and is continuing, Buyer shall not be required to purchase any Eligible Repo Asset or any other Repo Asset from Seller.

 

(d)                                 All amounts payable hereunder, whether prior to or following the occurrence of an Event of Default not paid on the due date therefor shall thereafter bear interest at the Past Due Rate until paid in full, such interest to be payable upon demand.

 

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(e)                                  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. Seller 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 Seller.

 

(f)                                   In the event that a Margin Deficit exists with respect to any Purchased Repo Asset, Buyer may retain any funds received by it to which the Seller would otherwise be entitled hereunder, which funds (i) shall be held by Buyer against the related Margin Deficit and (ii) may be applied by Buyer against the Repurchase Price of any Purchased Repo Asset for which the related Margin Deficit remains otherwise unsatisfied. Notwithstanding the foregoing, the Buyer retains the right, in its sole discretion, to make a Margin Call in accordance with the provisions of this Section 4.

 

5.                                      Income Payments; Price Differential; Servicing Responsibilities.

 

(a)                                 On each Business Day that a Transaction is outstanding, the Pricing Rate shall be reset and, unless otherwise agreed, the accrued and unpaid Price Differential shall be settled in cash on each related Price Differential Payment Date. For any Price Differential Payment Date that occurs on a Repurchase Date, Seller shall determine the amount of the Price Differential to be paid on such Repurchase Date, and Buyer shall have no obligation to provide Seller with any written notice with respect to the amount of such Price Differential. Two Business Days prior to a Price Differential Payment Date that occurs on the day following the Targeted Repurchase Date, Buyer shall give Seller written or electronic notice of the amount of the Price Differential due on such Price Differential Payment Date. On each Price Differential Payment Date, Seller shall pay to Buyer the Price Differential for such Price Differential Payment Date (along with any other amounts to be paid pursuant to this Section 5), by wire transfer in immediately available funds.

 

(b)                                 If Seller fails to pay all or part of the Price Differential by 2:30 p.m. (Pacific time) on the related Price Differential Payment Date, with respect to any Purchased Repo Asset, Seller shall be obligated to pay to Buyer (in addition to, and together with, the amount of such Price Differential) interest on the unpaid Repurchase Price at a rate per annum equal to the Past Due Rate until the Price Differential is received in full by Buyer. If there is a disagreement as to the amounts owed, Seller shall notify Buyer of the disputed amount, provide documentation supporting that amount and pay that amount. Buyer shall then review the documentation and provide Buyer’s basis for the Price Differential. If Buyer and Seller do not agree, the parties shall meet and confer to resolve the Price Differential owed.

 

(c)                                  If an Event of Default with respect to Seller has occurred and is then continuing, all payments and distributions of Income, whether in cash or in kind, made on or with respect to the Purchased Repo Assets shall be made to Buyer and Buyer shall notify Seller and the applicable Obligor under the Purchased Repo Asset to deliver same to Buyer in accordance with the last sentence of Section 5(e) hereof. Upon such notification by Buyer, Seller shall cause all payments and distributions of Income with respect to the Purchased Repo Assets to be made directly to Buyer or Buyer’s designee and any and all Income received by Seller shall be immediately delivered to Buyer and until so delivered shall be held in trust for Buyer and shall not be commingled by Seller with any of its other property or funds. Buyer shall

 

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in its sole discretion, on the date such Income is paid or distributed, either, in Buyer’s sole and absolute discretion: (a) transfer to or credit to the account of Seller such Income or (b) with respect to Income paid in cash, apply the Income payment or payments to reduce the outstanding Repurchase Price to be transferred to Buyer by Seller upon termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the preceding sentence to the extent that such action would result in the creation of a Margin Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or Additional Repo Assets sufficient to eliminate such Margin Deficit.

 

(d)                                 Until otherwise notified by Buyer, in its sole and absolute discretion, Seller hereby covenants and agrees to service all Mortgage Loans included in the Purchased Repo Assets on behalf of Buyer at Seller’s expense and without charge of any kind to Buyer. The obligations of Seller with respect to the servicing of such Mortgage Loans shall include accounting for all such Mortgage Loans, and the proceeds thereof and collections thereon, collecting all sums owing and to become owing thereon when the same become due (including the institution and maintenance of any actions or proceedings, judicial or otherwise, to collect any sums or to enforce rights with respect to security for the payment of any Mortgage Loans), assuring that fire and casualty insurance customary for the locality where the related mortgaged property is located with respect to each Mortgage Loan is maintained and that payment of the premiums with respect thereto is made when due, making and processing any claims under any such insurance and, with respect to any title insurance, any performance and payment bonds, maintaining records regarding taxes upon any Property which may be security for any such Mortgage Loans, and paying the taxes, assessments, and other charges against such Property before the same become delinquent, and defending any security interest securing payment of the Mortgage Loans (including any appearances in any legal actions or proceedings or otherwise to protect and defend the same). In addition, Seller will make appropriate notations in its books and records to reflect Buyer’s ownership interest in such Mortgage Loans. Seller shall at all times maintain a servicing file consisting of all documents necessary to service such Mortgage Loan and accurate and complete records of its servicing of such Mortgage Loan; Seller’s possession of such servicing file being for the sole purpose of servicing such Mortgage Loan and such retention and possession by Seller being in a custodial capacity only.

 

Seller may delegate its obligations hereunder to service the Mortgage Loans to an independent servicer satisfactory to Buyer pursuant to a servicing agreement pre-approved in writing by Buyer. In any event, Seller or its delegate shall service such Mortgage Loans with the degree of care and in accordance with the servicing standards generally prevailing in the industry and in accordance with Accepted Servicing Practices. Seller shall and shall cause the Servicer to hold or cause to be held all escrow funds collected by Seller and Servicer with respect to any Purchased Repo Assets in trust accounts and shall apply the same for the purposes for which such funds were collected. Seller shall and shall cause the Servicer to deposit all collections received by Servicer on the Purchased Repo Assets in an account to be designated by Buyer upon an Event of Default. In the event there is a third party Servicer and upon Buyer’s request, Seller shall provide promptly to Buyer a servicer notice addressed to and agreed to by the Servicer of the related Purchased Repo Assets, in a form approved by Buyer, advising such Servicer of such matters as Buyer may reasonably request, including, without limitation, recognition by the Servicer of Buyer’s interest in such Purchased Repo Assets and the Servicer’s agreement that upon receipt of notice of an Event of Default from Buyer, it will follow the instructions of Buyer with respect to the Purchased Repo Assets and any related Income with respect thereto.

 

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Buyer may, at any time during Seller’s business hours on reasonable written notice and at Seller’s cost and expense, limited to only reasonable cost and expense, examine and make copies of any records or request that Seller make copies of such records and deliver them to Buyer for Buyer’s review. Seller shall, at Buyer’s request, deliver to Buyer monthly reports regarding the status of any Mortgage Loan, which reports shall include, but shall not be limited to, a description of any default thereunder for more than thirty (30) days, and such other circumstances that could cause a material adverse effect on any such Mortgage Loan, Buyer’s title to any such Mortgage Loan or the collateral securing such Mortgage Loan; Seller may be required to deliver such reports until the repurchase of such Mortgage Loan by Seller. Seller shall immediately notify Buyer if it becomes aware of any payment default under a Mortgage Loan. In an Event of Default of Seller, Buyer reserves the right to appoint a successor servicer to service any Mortgage Loans (each a “Successor Servicer”) without the payment by Buyer of any penalty or termination fee. In the event of such an appointment, Seller shall perform all acts and take all action so that all files and records held by Seller relating to such Mortgage Loans are promptly delivered to Successor Servicer. Seller hereby indemnifies and shall defend and hold harmless Buyer from and against any and all claims, liabilities, losses, actions, suits, proceedings, damages, and expense of whatever kind or description in connection with any and all actions taken by Seller and its agents and attorneys in the exercise and enforcement of Seller’s rights, remedies, and obligations under this Section 5(d) or as a result of any failure by Seller to perform its obligations hereunder, including, without limitation, all attorneys’ fees and related expenses incurred by Buyer in connection with any such matters. Seller shall not settle or compromise the amount of any claim, settlement, payment, or award without the prior written approval of Buyer, which approval Buyer may give or withhold its sole opinion and judgment. Seller shall not attempt to sell or transfer any rights to service a Mortgage Loan while such Mortgage Loan is a Purchased Repo Asset without the prior consent of Buyer. Seller shall release its custody of the contents of any servicing file only in accordance with the written instructions of Buyer, except when such release is required as incidental to Seller’s servicing of any Mortgage Loan or is in connection with the repurchase of any Purchased Repo Asset by Seller pursuant to this Agreement. If Seller should discover that, for any reason whatsoever, Seller or any entity responsible to Seller for managing or servicing any such Purchased Repo Asset has failed to perform fully Seller’s obligations under the Repurchase Facility Documents or any of the obligations of such entities with respect to the Purchased Repo Assets, Seller shall promptly notify Buyer. For the avoidance of doubt, Seller retains no economic rights to the servicing of the Purchased Repo Assets; provided that the Seller shall and shall cause the Servicer to continue to service the Purchased Repo Assets hereunder as part of its obligations hereunder. As such, the Seller expressly acknowledges that the Purchased Repo Assets are sold to Buyer on a “servicing released” basis.

 

(e)                                  Seller shall, at its sole cost and expense, endeavor to obtain payment when due and payable of all Income due or to become due with respect to all Purchased Repo Assets, including without limitation, the taking of such action with respect thereto as Buyer may request, or, in the absence of such request, as Seller may reasonably deem advisable; provided, however, that Seller shall not, without the prior written consent of Buyer, grant or agree to any rebate, refund, compromise or extension with respect to any Income or accept any prepayment on account thereof (except those of the foregoing which are disclosed to Buyer pursuant to subsection (g) of the definition of “Eligible Repo Asset” in Section 2 above). Upon the request of Buyer, and during the continuance of an Event of Default, Seller will notify and direct any party who is or might become obligated to make any payment on account of any Income to

 

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make payment thereof to Buyer (or to Seller in care of Buyer) at such address as Buyer may designate, and Seller and Buyer will deliver to Obligors goodbye letters and hello letters as required in connection with servicing transfers pursuant to the Real Estate Settlement Procedures Act and Regulation X promulgated thereunder.

 

6.                                      Security Interest.

 

(a)                                 On each Purchase Date, Seller hereby sells, assigns and conveys all rights and interests in the Purchased Repo Assets identified on the related Mortgage Loan Schedule and the Repo Assets related thereto. Although the parties intend that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, and in any event Seller hereby pledges to Buyer as security for the performance by Seller of its Secured Obligations and hereby grants, assigns and pledges to Buyer a fully perfected first priority security interest in the Repo Assets.

 

(b)                                 Seller hereby authorizes Buyer to file from time to time any and all financing statements determined by Buyer as necessary to perfect and maintain the perfection of such security interest, and shall pay all reasonable fees and expenses associated therewith upon demand of Buyer.

 

7.                                      Transfer of Eligible Repo Assets. All Eligible Repo Assets transferred by Seller to Buyer shall be in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or assignment in blank, including, without limitation, the Repurchase Facility Documents. Seller shall, prior to the funding of each Transaction, deliver to Buyer all Mortgage Loan Documents in connection with each Eligible Repo Asset (other than Wet Mortgage Loans) to be included in such Transaction. All transfers of Purchased Repo Assets by Buyer to Seller shall occur upon Buyer’s receipt of the Repurchase Price therefor. Upon request by Seller, Buyer shall transfer custody of the applicable Purchased Repo Assets to Seller after Buyer has confirmed its receipt of the Repurchase Price therefor.

 

8.                                      Transfer of Purchased Repo Assets by Buyer. All of Seller’s interest in the Purchased Repo Assets shall pass to Buyer on the Purchase Date and nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Repo Assets or otherwise selling, transferring, pledging or hypothecating the Purchased Repo Assets, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Repo Assets to Seller pursuant to the terms hereof, or of Buyer’s obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Section 5 hereof.

 

9.                                      Substitution. Seller may, subject to agreement with and acceptance by Buyer, request that it be permitted to substitute other Eligible Repo Assets of the same type for any Purchased Repo Assets. Buyer shall indicate whether or not it agrees to accept any requested substitution: (a) if the request therefore is made by 10:00 a.m. (Pacific Time) by the close of business on the date such notice is received, or (b) if the request therefor is made after 10:00 a.m. (Pacific Time) on a Business Day, by the close of business on the next succeeding Business Day. Any permitted substitution shall be made by transfer to Buyer of such other Eligible Repo Assets pursuant to the same procedure as that set forth in Section 7 above for any Transaction. After substitution, the substituted Eligible Repo Assets shall be deemed to be Purchased Repo Assets.

 

10.                               Representations and Warranties. Seller hereby represents and warrants, and shall

 

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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)                                 Financial Condition. The financial statements of Guarantor, respectively dated the Statement Date and the Interim Date, copies of which have heretofore been furnished to Buyer, are complete and correct and present fairly the consolidated and consolidating financial condition of Guarantor and its consolidated Subsidiaries at such dates and the consolidated and consolidating results of their operations and changes in financial position for the fiscal periods then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP or such regulatory accounting procedures as may be applicable to Guarantor. Since the Statement Date, there has been no change in the consolidated business, operations or financial condition of Seller or Guarantor and their consolidated Subsidiaries taken as a whole from that set forth in said financial statements that has resulted, or is reasonably likely to result in a Material Adverse Effect, nor is Seller or any Guarantor aware of any state of facts which (with notice or the lapse of time) would or is reasonably likely to result in a Material Adverse Effect,. Seller and Guarantor has, on the Statement Date, no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of Seller or any Guarantor except as heretofore disclosed to Buyer in writing.

 

(b)                                 No Change. Since the Statement Date there has been no change in the business, operations, assets or financial or other condition of Seller or Guarantor, or either of them and their consolidated Subsidiaries taken as a whole that has resulted, or is reasonably likely to result in a Material Adverse Effect.

 

(c)                                  Existence; Compliance with Law. Each of Seller, Guarantor and their Subsidiaries (1) is duly organized, validly existing and in good standing under the laws of the state of its organization and each jurisdiction where its ownership of property or conduct of business requires such qualification, (2) has the power and authority and the legal right to own and operate its property and to conduct business in the manner in which it does and proposes so to do, and (3) is in compliance with all Requirements of Law and material Contractual Obligations.

 

(d)                                 Power; Authorization; Enforceable Obligation. Seller has the power and authority and the legal right to make, deliver and perform the Repurchase Facility Documents and to enter into each Transaction hereunder and has taken all necessary action to authorize such Transaction on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of the Repurchase Facility Documents. The Repurchase Facility Documents have been duly executed and delivered on behalf of Seller and constitute legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, except as such enforceability may be limited by bankruptcy law or general principles of equity.

 

(e)                                  No Legal Bar or Consents. The execution, delivery and performance of the Repurchase Facility Documents, the Transaction hereunder and the use of the proceeds thereof, will not violate any applicable Requirement of Law or any Contractual Obligation of Seller or create or result in the creation of any Lien (except the Lien created by this Agreement)

 

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on any assets of Seller. No consent, approval or authorization of, or registration, declaration or filing with, any Governmental Authority or any other Person is required on the part of Seller in connection with the execution and delivery of the Repurchase Facility Documents (other than filings to perfect the Liens granted pursuant to this Agreement) or the performance of or compliance with the terms, provisions and conditions hereof or thereof or to assure the validity and enforceability of any of the Repurchase Facility Documents.

 

(f)                                   No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Seller, threatened by or against Seller or Guarantor or any of its Subsidiaries or against any of Seller’s or any such Subsidiary’s properties or revenues which (1) if adversely determined, could have a Material Adverse Effect, (2) questions the validity or enforceability of any of the Repurchase Facility Documents, (3) makes a claim individually or in an aggregate amount greater than $500,000.00, or (4) which might materially and adversely affect the validity of the Mortgage Loans or the performance by it of its obligations under, or the validity or enforceability of, any Repurchase Facility Document.

 

(g)                                  Taxes. Seller and each Subsidiary has filed or caused to be filed all tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against them or any of their property. The charges, accruals and reserves on the books of Seller and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of Seller, adequate. Any payments made by Seller or any Guarantor to Buyer shall be free and clear of, and without deduction or withholding for, any taxes; provided, however, that if such payer shall be required by law to deduct or withhold any taxes from any sums payable to Buyer, then such payer 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 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, and otherwise indemnify Buyer for any such taxes imposed.

 

(h)                                 Investment Company Act. Seller is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

(i)                                     Subsidiaries. Seller has delivered to Buyer an accurate and complete list of any and all presently existing Subsidiaries of Seller, their respective jurisdictions of incorporation, the percentage of their capital stock or other equity interests owned by Seller or other Subsidiaries. All of the issued and outstanding shares of capital stock or other equity interests of the Subsidiaries have been duly authorized and issued and are fully paid and non-assessable.

 

(j)                                    Federal Reserve Board Regulations. Neither Seller nor any of its Subsidiaries is engaged or will not engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of such terms under Regulation U of the Board of Governors of the Federal Reserve System. No part of the proceeds of the sale of Eligible Repo Assets or any other Repo Assets to Buyer hereunder will be used for “purchasing” or “carrying” “margin stock” as so defined or for any purpose which violates, or which would be inconsistent with, the

 

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provisions of the Regulations of the Board of Governors of the Federal Reserve System.

 

(k)                                 ERISA. Seller and each Subsidiary is in compliance in all material respects with the requirements of ERISA and no Reportable Event has occurred under any Plan maintained by Seller.

 

(l)                                     Repo Assets. (1) Seller is the sole owner of the Repo Assets (or, in the case of after-acquired Repo Assets, at the time Seller acquires rights in the Repo Assets, will be the sole owner thereof); (2) except for the interests of Buyer in the Purchased Repo Assets and the Lien in favor of Buyer or any investor which has committed to purchase the Mortgage Loan, no Person has (or, in the case of after-acquired Repo Assets, at the time Seller acquires rights therein, will have) any right, title, claim or interest (by way of security interest or other Lien or otherwise) in, against or to the Repo Assets; (3) all information heretofore, herein or hereafter supplied to Buyer by or on behalf of Seller with respect to the Repo Assets is accurate and complete; (4) each item of Repo Assets delivered to Buyer hereunder which is a Mortgage Loan is an Eligible Mortgage Loan. Upon payment of the Purchase Price and the filing of the financing statement and delivery of the Mortgage Loan Documents to the Buyer, Buyer shall become the sole owner of the Purchased Repo Assets, free and clear of all liens and encumbrances.

 

(m)                             Place of Business; Records. Seller’s chief place of business is at the address set forth in the Variable Terms Letter, and Seller’s books, records and agreements concerning the Repo Assets are kept at Seller’s chief place of business. On the Effective Date, Seller’s jurisdiction of organization is State of Delaware. Seller shall provide Buyer with thirty days advance notice of any change in Seller’s principal office or place of business or jurisdiction. Seller has no trade name. During the preceding five years, Seller has not been known by or done business under any other name, corporate or fictitious, and has not filed or had filed against it any bankruptcy receivership or similar petitions nor has it made any assignments for the benefit of creditors.

 

(n)                                 Securities Acts. Seller has not issued any unregistered securities in violation of the registration requirements of Section 5 of the Securities Act of 1933, as amended, or any other law, and is not violating any rule, regulation or requirement under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

 

(o)                                 Anti-Terrorism Regulations. Neither the selling of the Eligible Repo Assets or any other Repo Assets to Buyer hereunder nor the use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or the Anti-Terrorism Order or any enabling legislation or executive order relating to any of the same. Without limiting the generality of the foregoing, neither Seller nor any of its Subsidiaries; (1) is or will become a blocked person described in Section 1 of the Anti-Terrorism Order, or (2) does nor will it engage in any dealings or transactions or otherwise be associated with any such blocked person.

 

(p)                                 Licenses. Seller is duly licensed or is otherwise qualified in each jurisdiction in which it transacts business for the business which it conducts and is not in default of any applicable federal, state or local laws, rules and regulations unless, in either instance, the failure to take such action is not reasonably likely (either individually or in the aggregate) to

 

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cause a Material Adverse Effect and is not in default of such state’s applicable laws, rules and regulations.

 

(q)                                 Event of Default. There exists no material Event of Default under Section 13(q) hereof, which default gives rise to a right to accelerate indebtedness as referenced in Section 13(q) hereof, under any mortgage, borrowing agreement or other instrument or agreement pertaining to indebtedness for borrowed money or to the repurchase of mortgage loans or securities.

 

(r)                                    Solvency. Seller and each Guarantor is solvent and will not be rendered insolvent by any Transaction and, after giving effect to such Transaction, will not be left with an unreasonably small amount of capital with which to engage in its business. Neither Seller nor any Guarantor intends to incur, nor does believe that it has incurred, debts beyond its ability to pay such debts as they mature and is not 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 such entity or any of its assets. The amount of consideration being received by Seller upon the sale of the Purchased Repo Assets to Buyer constitutes reasonably equivalent value and fair consideration for such Purchased Repo Assets. Seller is not transferring any Purchased Repo Assets with any intent to hinder, delay or defraud any of its creditors.

 

(s)                                   True and Complete Disclosure. All material information, reports, exhibits, schedules, financial statements or certificates of Seller, or Guarantor, or any of their officers furnished or to be furnished to Buyer in connection with the initial or any ongoing due diligence of Seller, or Guarantor, or any officer thereof, negotiation, preparation, or delivery of the Repurchase Facility Documents are true and complete and do not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All financial statements have been prepared in accordance with GAAP (other than monthly financial statements solely with respect to footnotes, year-end adjustments and cash flow statements).

 

(t)                                    Underwriting Guidelines. The Underwriting Guidelines provided to Buyer are the true and correct Underwriting Guidelines of the Seller as of the date provided and until Buyer approves any changes to the Underwriting Guidelines identified by Seller to Buyer.

 

(u)                                 Tangible Net Worth. Guarantor’s Tangible Net Worth is not less than the amount set forth in the Variable Terms Letter.

 

(v)                                 Adverse Selection. Seller has not selected the Purchased Repo Assets in a manner so as to adversely affect Buyer’s interests.

 

(w)                               Agreements. Neither Seller, any Guarantor nor any Subsidiary thereof is a party to any agreement, instrument, or indenture or subject to any restriction materially and adversely affecting its business, operations, assets or financial condition, except as disclosed in the financial statements described in Section 10(a) hereof. Neither Seller nor any Subsidiary of Seller is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement, instrument, or indenture which default could have a Material Adverse Effect. No holder of any indebtedness of Seller or any Guarantor or of any Subsidiaries thereof has given notice of any asserted default thereunder.

 

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(x)                                 No Reliance. Seller and each Guarantor has made its own independent decisions to enter into the Repurchase Facility Documents and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including without limitation, legal counsel and accountants) as it has deemed necessary. Neither Seller nor any Guarantor is relying upon any advice from Buyer as to any aspect of the Transactions, including without limitation, the legal, accounting or tax treatment of such Transactions.

 

(y)                                 Plan Assets. Neither Seller nor any Guarantor is an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code, and the Purchased Repo Assets are not “plan assets” within the meaning of 29 CFR §2510.3 101 as amended by Section 3(42) of ERISA, in the Seller’s hands, and transactions by or with Seller or any Guarantor are not subject to any state or local statute regulating investments or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.

 

(z)                                  No Prohibited Persons. Neither the Seller nor any of its officers, directors, partners or members, is an entity or person (or to the Seller’s knowledge, owned or controlled by an entity or person): (i) that is listed in the Annex to, or is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001 (“EO13224”); (ii) whose name appears on the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t1 1sdn.pdf); (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in EO13224; or (iv) who is otherwise affiliated with any entity or person listed above (any and all parties or persons described in clauses (i) through (iv) above are herein referred to as a “Prohibited Person”).

 

(aa)                          Eligible Repo Assets. Each Purchased Repo Asset is an Eligible Repo Asset.

 

The representations and warranties set forth in this Agreement shall survive transfer of the Purchased Repo Assets to Buyer and shall continue for so long as the Purchased Repo Assets are subject to this Agreement. Upon discovery by Seller, any Guarantor, Servicer or Buyer of any breach of any of the representations or warranties set forth in this Agreement, the party discovering such breach shall promptly give notice of such discovery to the others. Buyer has the right to require, in its unreviewable discretion, Seller to repurchase within 1 Business Day after receipt of notice from Buyer any Purchased Repo Asset for which a breach of one or more of the representations and warranties referenced in Section 10(bb) exists and which breach has a material adverse effect on the value of such Mortgage Loan or the interests of Buyer.

 

11.                               Affirmative Covenants. Seller hereby covenants and agrees with Buyer that, as long as this Agreement shall be in effect and any Secured Obligations remain unpaid, Seller shall:

 

(a)                                 Financial Statements. Furnish to Buyer:

 

(1)                                 Within ninety (90) days after the last day of each fiscal year,

 

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financial statements (consolidated and consolidating) showing the financial position and results of operations of Seller and its Subsidiaries for the year ended on such date, audited by a firm of independent certified public accountants acceptable to Buyer, together with a balance sheet and statement of income (consolidated and consolidating) which has been subjected to the audit procedures applied in the examination of Seller’s consolidated financial statements. Such financial statements shall be prepared in conformity with GAAP (or such regulatory accounting procedures as may be applicable to Seller) consistently applied and present fairly the financial position of Seller and its Subsidiaries and the results of their operations as of the end of such period and for the period then ended, which financial statements shall be accompanied by an unqualified report of such independent certified public accountants; and

 

(2)                                 Within sixty (60) days following the last day of each calendar quarter, consolidated quarterly financial statements showing the consolidated financial position and results of operations of Seller and its Subsidiaries for such three-month period, and as of and for the period from the beginning of the current fiscal year to such date, together with a certificate executed by the principal financial officer or principal accounting officer or treasurer of Seller certifying that, to the best of such officer’s knowledge, such financial statements were prepared in conformity with GAAP (or such regulatory accounting procedures as may be applicable to Seller) consistently applied (subject to year-end audit adjustments) and present fairly the financial position of Seller and its Subsidiaries, and the results of operations as of the end of such period and for the period then ended.

 

(3)                                 Upon Buyer’s request, true and complete copies of Seller’s and Guarantor’s annual federal income tax returns and all information returns required by applicable federal Laws.

 

(4)                                 Such other information regarding the financial condition, operations, or business of Seller and any Guarantor as Buyer may reasonably request.

 

(b)                                 Certificates; Reports; Other Information. Furnish or cause to be furnished to Buyer upon Buyer’s request:

 

(1)                                 No later than ten (10) Business Days following Buyer’s request therefor, a copy of the most recent monthly loan statement from each third party lender providing Seller a warehouse line of credit or master repurchase arrangement to fund Seller’s loans, if applicable;

 

(2)                                 No later than thirty (30) days following the end of each calendar quarter, a quarterly compliance certificate certifying compliance by the Seller with all of the covenants of the Seller set forth in this Agreement and good standing with state and federal regulatory agencies having jurisdiction over the Seller;

 

(3)                                 Where Seller incurs additional Permitted Indebtedness in excess of $500,000, within thirty (30) days of execution thereof by Seller, copies of all relevant loan documents executed by the Seller and a summary of major terms and conditions thereof;

 

(4)                                 Promptly, such additional financial and other information and reports, in form satisfactory to Buyer, including, without limitation, financial statements of the

 

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Guarantor, as Buyer may from time to time reasonably request.

 

(c)                                  Maintenance of Existence. Maintain all rights, privileges, licenses, approvals and franchises necessary or desirable in the normal conduct of its business, and comply with all material Contractual Obligations and all applicable Requirements of Law.

 

(d)                                 Inspection of Property; Books and Records; Discussions. Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all applicable Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of Buyer to visit and inspect any of its properties and examine and make abstracts from any of its books and records at Seller’s cost and during normal business hours as often as may reasonably be desired, and to discuss the business, operations, properties and financial and other condition of Seller and its Subsidiaries with officers and employees of Seller and its Subsidiaries, with its independent certified public accountants and with the Guarantors, if any.

 

(e)                                  Notices. Promptly give notice to Buyer of:

 

(1)                                 The occurrence of any Event of Default;

 

(2)                                 All litigation, actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are threatened or pending) or other legal or arbitration proceedings affecting Seller, Guarantor or any of their Subsidiaries or affecting any of the Property of any of them before any Governmental Authority that (i) questions or challenges the validity or enforceability of any of the Repurchase Facility Documents or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a claim individually in an aggregate amount greater than $500,000.00, or (iii) which, individually or in the aggregate, if adversely determined, could be reasonably likely to have a Material Adverse Effect. Seller and each Guarantor, as applicable, will promptly provide notice of any judgment, which with the passage of time, could cause an Event of Default hereunder.

 

(3)                                 A change in the business, operations, property or financial or other condition of Seller or any Subsidiary that has resulted, or is reasonably likely to result in a Material Adverse Effect;

 

(4)                                 Any change in the status of a Purchased Repo Asset transferred to Buyer as an Eligible Repo Asset.

 

(5)                                 Copies of any material and adverse notices (including, without limitation, notices of defaults, breaches, potential defaults or potential breaches) and any material financial information that is not otherwise required to be provided by Seller or Guarantors hereunder which is given to Seller’s or any Guarantor’s lenders.

 

(6)                                 A change in the insurance coverage required of Seller, Servicer or any other Person pursuant to any Repurchase Facility Document, with a copy of evidence of same attached;

 

(7)                                 Any material change in accounting policies or financial reporting practices of Seller or Servicer

 

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(8)                                 With respect to any Purchased Repo Asset, that the underlying Mortgaged Property has been materially damaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty, or otherwise damaged so as to affect adversely the value of the Mortgage Loan associated with such Purchased Repo Asset;

 

(9)                                 Any material issues raised upon examination of Seller or Seller’s facilities by any Governmental Authority;

 

(10)                          Any material change in the Indebtedness of the Seller, including, without limitation, any default, renewal, non-renewal, termination, increase in available amount or decrease in available amount related thereto that has resulted, or is reasonably likely to result in a Material Adverse Effect,;

 

(11)                          Any material default related to any Purchased Repo Asset or any lien or security interest (other than security interests created hereby or by the other Repurchase Facility Documents) on, or claim asserted against, any of the Purchased Repo Assets;

 

(12)                          Any other event, circumstance or condition with respect to Seller or Servicer that has resulted, or has a possibility of resulting, in a Material Adverse Effect;

 

(13)                          The occurrence of any material employment dispute and a description of the strategy for resolving it that has the possibility of resulting in a Material Adverse Effect; and

 

(f)                                   Expenses. Pay upon demand all reasonable out-of-pocket expenses of Buyer (including fees and disbursements of counsel) incident to the transactions contemplated by the Repurchase Facility Documents, including, but not limited to, the preparation and negotiation of the Repurchase Facility Documents, any amendments to or waivers of the provisions of the Repurchase Facility Documents, the protection of the rights of Buyer under the Repurchase Facility Documents, the enforcement of payment of the Secured Obligations, whether by judicial proceedings or otherwise, including, without limitation, in connection with bankruptcy, insolvency, liquidation, reorganization, moratorium or other proceedings involving Seller, and the reasonable fees and disbursements of counsel to Buyer in connection with the preparation and negotiation of the Repurchase Facility Documents. The obligations of Seller under this Section 11(f) shall be effective and enforceable whether or not any Eligible Repo Asset or any other Repo Asset is purchased by Buyer hereunder and shall survive payment of the Secured Obligations. Attorneys’ fees and disbursements incurred in enforcing, or on appeal from, a judgment pursuant hereto shall be recoverable separately from and in addition to any other amount included in such judgment, and this clause is intended to be severable from the other provisions of this Agreement and to survive and not be merged into such judgment.

 

(g)                                  Repurchase Facility Documents. Comply with and observe all terms and conditions of the Repurchase Facility Documents.

 

(h)                                 Insurance. Obtain and maintain insurance with responsible companies in such amounts and against such risks as are usually carried by corporations engaged in similar businesses similarly situated, including, without limitation, errors and omissions coverage and fidelity coverage in form and substance acceptable under FNMA or FHLMC guidelines, and

 

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furnish Buyer on request full information as to all such insurance.

 

(i)                                     Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before maturity or before it becomes delinquent, defaulted or accelerated, as the case may be, all its Indebtedness (including taxes), except Indebtedness being contested in good faith by appropriate proceedings and for which provision is made to the satisfaction of Buyer for the payment thereof in the event Seller is found to be obligated to pay such Indebtedness and which Indebtedness is thereupon promptly paid by Seller.

 

(j)                                    Change in Management. Seller shall provide to Buyer: (1) not less than ten Business Days’ prior written notice (in circumstances in which such prior notice is possible), of any anticipated Change of Management and immediate written notice of any unanticipated Change of Management, and (2) in no event later than ten Business Days following the provision of the notice required pursuant to subsection (1) of this Section 11(k), a detailed management succession plan for Seller in form and substance acceptable to Buyer.

 

(k)                                 No Adverse Claims. Seller warrants and will defend, and shall cause any Servicer to defend, the right, title and interest of Buyer in and to all Purchased Repo Assets against all material adverse claims and demands.

 

(l)                                     Security Interest. Seller shall do all things necessary to preserve the Repo Assets so that they remain subject to a first priority perfected security interest hereunder. Without limiting the foregoing, Seller will comply with all rules, regulations and other laws of any Governmental Authority and cause the Repo Assets to comply with all applicable rules, regulations and other laws. Seller will not allow any default for which Seller is responsible to occur under any Repo Assets or any Repurchase Facility Document and Seller shall fully perform or cause to be performed when due all of its obligations under any Repo Assets and any Repurchase Facility Document.

 

(m)                             Taxes. Seller and each Guarantor shall timely file all tax returns that are required to be filed by them and shall timely pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its property, as well as any other lawful claims which, if unpaid, might become a Lien upon such properties or any part thereof, prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained.

 

(n)                                 True and Correct Information. All information, reports, exhibits, schedules, financial statements or certificates of Seller, Guarantor, or any of their officers furnished to Buyer hereunder and during Buyer’s diligence of Seller and Guarantors are and will be true and complete and do not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All required financial statements, information and reports delivered by Seller and each Guarantor to Buyer pursuant to this Agreement shall be prepared in accordance with GAAP.

 

(o)                                 Quality Control. Seller shall maintain an internal quality control program that verifies, on a regular basis, the existence and accuracy of all legal documents, credit documents, property appraisals, and underwriting decisions related to Mortgage Loans and shall

 

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provide a report on the results of such quality control program to Buyer upon Buyer’s request. Such program shall be capable of evaluating and monitoring the overall quality of Seller’s loan production and servicing activities. Such program shall (i) ensure that the Mortgage Loans are originated and serviced in accordance with prudent mortgage banking practices and accounting principles; (ii) guard against dishonest, fraudulent, or negligent acts; and (iii) guard against errors and omissions by officers, employees, or other authorized persons.

 

(p)                                 Most Favored Status. Seller, Guarantor and the Buyer each agree that should Seller or Guarantor enter into a repurchase agreement or credit facility with any Person other than the Buyer or an Affiliate of the Buyer which by its terms provides for increased financial covenants (a “More Favorable Agreement”), the terms of this Agreement shall be deemed automatically amended to increase the financial covenants herein to match the covenants contained in such More Favorable Agreement. The Seller, the Guarantors, and the Buyer further agree to execute and deliver any new guaranties, agreements or amendments to this Agreement evidencing such provisions, provided that the execution of such amendment shall not be a precondition to the effectiveness of such amendment, but shall merely be for the convenience of the parties hereto. Promptly upon Seller or any Guarantor or any Affiliate thereof entering into a repurchase agreement or other credit facility with any Person other than the Buyer, the Seller shall deliver to the Buyer a true, correct and complete copy of such repurchase agreement, loan agreement, guaranty or other financing documentation.

 

(q)                                 Additional Repurchase or Warehouse Facility. Seller shall maintain throughout the term of this Agreement, with a nationally recognized and established counterparty (other than Buyer) one or more loan repurchase or warehouse facilities for wet and dry mortgage loans of a credit quality similar to the Repo Assets to be purchased hereunder, acquired by Seller, in an aggregate amount not less than $3,000,000.00, which facility or facilities shall provide a secondary source of funding for the types of loans set forth in the Variable Terms Letter and have terms and conditions comparable to those provided under this Agreement, including as to the financial condition of Seller, such that Seller’s business is not dependent upon Buyer funding any individual mortgage loan and Seller’s determination whether or not to fund any individual mortgage loan is not dependent upon Buyer purchasing such Mortgage Loan pursuant to this Agreement.

 

(r)                                    Anti-Money Laundering (“AML”) and Suspicious Activity Report (“SAR”) programs. Comply with the FinCEN Rules at 31 CFR Part 1029—Loan or Finance Companies, as applicable to a “residential mortgage lenders and originators,” as defined at 31 CFR section 1010.100(lll). Seller acknowledges that its activities under this Agreement come within the definition of a “residential mortgage loan originator” under the FinCEN Rules.

 

(1)                                 Seller shall adopt an AML program and provide Buyer with evidence of the program. The AML program shall include the following:

 

(i)                                     Policies, procedures and internal controls based upon Seller’s assessment of money laundering and terrorist financing risks associated with products and services offered or provided by Seller;

 

(ii)                                  Designate a compliance officer responsible for ensuring that the AML program: (A) is implemented effectively, including monitoring compliance by Seller’s agents and brokers with obligations under the program;

 

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(B) is updated as necessary; and (C) provides for on-going training of appropriate personnel;

 

(iii)                               Provide for independent testing, including testing to determine compliance of Seller’s agents and brokers with obligations under the program; and

 

(iv)                              The program must be approved by Seller’s senior management and a copy must be made available to FinCEN or Buyer upon request.

 

(2)                                 Seller shall file SARs with FinCEN as required by 31 CFR section 1029.320. Where permitted or required by FinCEN Rules such filing may be in electronic form. Seller shall keep all SARs strictly confidential and shall not copy or show them to Buyer or any other third party unless expressly permitted by FinCEN Rules.

 

12.                               Audit Rights. Seller grants the Buyer the right to regularly audit Seller to ensure ongoing compliance with the AML and SAR requirements. Upon request, Seller will provide Buyer with access to audit reports, policies, procedures, certifications, training records, and any other documentation that may be necessary in order for Buyer to satisfy this requirement.

 

13.                               Negative Covenants. Seller hereby covenants and agrees with Buyer that, as long as this Agreement remains in effect and any Secured Obligations remain unpaid, Seller shall not at any time, directly or indirectly:

 

(a)                                 Liens. Create, incur, assume or suffer to exist any mortgage, pledge, Lien, charge or other encumbrance of any nature whatsoever upon any of the Repo Assets whether real, personal or mixed, now or hereafter owned, other than the Liens created in connection with the transactions contemplated by this Agreement; nor shall Seller cause any of the Repo Assets to be sold, pledged, assigned or transferred except as permitted hereunder.

 

(b)                                 Indebtedness. Create, incur, assume or suffer to exist, or otherwise become or be liable in respect of, any Indebtedness except Permitted Indebtedness.

 

(c)                                  Consolidation and Merger. Liquidate or dissolve or enter into any consolidation, merger, partnership, joint venture, syndicate or other combination, except that Seller may be consolidated with or merged with any corporation, provided that (1) in any such merger or consolidation Seller shall be the surviving or resulting corporation and (2) immediately after the effectiveness of such merger or consolidation there shall not have occurred and be continuing an Event of Default.

 

(d)                                 Acquisitions. Purchase or acquire or incur liability for the purchase or acquisition of any or all of the assets or business of any Person.

 

(e)                                  Payment of Dividends. Permit Guarantor to declare or pay any dividends or make other cash distributions upon its shares of capital stock or other equity interests now or hereafter outstanding or make any other distribution of assets to its stockholders in their capacity as such, whether in cash, property or securities other than Permitted Distributions.

 

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(f)                                   Purchase or Retirement of Stock. Permit Guarantor to acquire, purchase, redeem or retire any shares of its capital stock or other equity interests now or hereafter outstanding, where such transaction would cause Guarantor to breach any of its financial covenants after the transaction.

 

(g)                                  Sale or Transfer of Stock. Sell or transfer any shares of its capital stock or other equity interests now or hereafter outstanding.

 

(h)                                 Investments; Advances. Make or commit to make any advance, loan or extension of credit (other than Mortgage Loans made by Seller in the ordinary course of its mortgage banking business) or capital contribution to, or purchase any stocks, bonds, notes, debentures or other securities of, or make any other investment in, any Person other than (1) Permitted Investments and (2) advances (other than mortgage loans in the ordinary course of business) to related third parties including officers, shareholders, directors, employees, Affiliates and Subsidiaries of the Seller in an aggregate amount not to exceed $50,000 per Person at any time outstanding.

 

(i)                                     Sale of Assets. Sell, lease, assign, transfer or otherwise dispose of any of its assets (other than obsolete or worn out property), whether now owned or hereafter acquired, other than in the ordinary course of business as presently conducted and at fair market value (it being expressly agreed and understood that the sale or other disposition of mortgage loans with or without servicing released and of mortgage servicing rights is in the ordinary course of business).

 

(j)                                    Limitation on Other Business. Engage in any business other than mortgage lending.

 

(k)                                 Affiliate Transactions. In no event shall Seller utilize or retain any closing agent, escrow agent, closing attorney or title insurer that is an Affiliate without the prior written consent of Buyer.

 

(l)                                     Accounting and Reporting Practices. Change its accounting practices from those existing on the date of this Agreement other than as required pursuant to GAAP or change the methodology of its reporting practices.

 

(m)                             Financial Covenants.

 

(1)                                 Maintenance of Tangible Net Worth. Permit, at any time, the Tangible Net Worth of Guarantor to be less than the amount required in the Variable Terms Letter under the heading “Minimum Required Tangible Net Worth.”

 

(2)                                 Current Ratio. Permit Guarnator’s Current Ratio to be less than the amount required in the Variable Terms Letter under the heading “Minimum Required Current Ratio” at any time.

 

(3)                                 Profitability. Permit, for any test period, Net Income of Guarantor for such test period, before income taxes for such test period and distributions made during such test period, to be below the requirement listed in the Variable Terms Letter under the heading “Profitability.”

 

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(4)                                 Leverage Ratio. Permit Guarantor’s ratio of Total Liabilities over Tangible Net Worth to be greater than the requirement listed in the Variable Terms Letter under the heading “Maximum Permitted Leverage Ratio” at any time.

 

(5)                                 Maintenance of Liquidity. Permit at any time cash and Cash Equivalents (excluding restricted cash or cash pledged to any Person) of Guarantor to be less than the requirement listed in the Variable Terms Letter under the heading “Minimum Required Liquidity.”

 

(n)                                 Material Change to Business. Neither Seller nor any Guarantor shall make any material change in the nature of its business as carried on at the date hereof.

 

(o)                                 Underwriting Guidelines. Without the prior written consent of Buyer, Seller shall not amend or otherwise modify the Underwriting Guidelines. Without limiting the foregoing, in the event that Seller makes any amendment or modification to the Underwriting Guidelines, Seller shall promptly deliver to Buyer a complete copy of the amended or modified Underwriting Guidelines.

 

(p)                                 Chief Executive Office; Jurisdiction of Organization. Seller shall not move its chief executive office from the address referred to in Section 10(o) or change its jurisdiction of organization from the jurisdiction referred to in Section 10(o) unless it shall have provided Buyer 30 days’ prior written notice of such change.

 

(q)                                 Plan Assets. Neither Seller nor any Guarantor shall be an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code and the Seller shall not use “plan assets” within the meaning of 29 CFR §2510.3 101, as amended by Section 3(42) of ERISA to engage in this Agreement or any Transaction hereunder. Transactions by or with Seller or any Guarantor shall not be subject to any state or local statute regulating investments of or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA.

 

(r)                                    Guarantees. Seller shall not create, incur, assume or suffer to exist any Guarantees, except (i) to the extent reflected in Seller’s financial statements or notes thereto and (ii) to the extent the aggregate Guarantees of Seller do not exceed $100,000.

 

14.                               Events of Default. Upon the occurrence of any of the following events (each, an “Event of Default”):

 

(a)                                 Seller fails to transfer Purchased Repo Assets upon the applicable Purchase Date; or

 

(b)                                 Seller fails to repurchase Purchased Repo Assets by the Targeted Repurchase Date for such Purchased Repo Assets; or

 

(c)                                  Seller shall fail to pay the Price Differential and/or the Repurchase Price on the date when due; or

 

(d)                                 (i) Seller shall fail to maintain its organizational existence or (ii) shall default in the observance or performance of any covenant or agreement contained in Sections 11(a), (b), (c), (h), (i), (m), (o), or (q) above or Section 12 above or (iii) shall fail to comply with

 

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Section 4 above and, with respect to this clause (iii) only, such failure to comply with such Section shall remain unremedied for a period of five (5) days; or

 

(e)                                  Seller shall breach any other covenant contained in the Repurchase Facility Documents and such breach shall continue unremedied for a period of twenty (20) days; or

 

(f)                                   An Act of Insolvency occurs with respect to Seller or Guarantor; or

 

(g)                                  Any representation made by Seller under any Repurchase Facility Documents shall have been inaccurate or incomplete in any material respect when made or repeated or deemed to have been made or repeated; or

 

(h)                                 Seller or any of its Subsidiaries shall default in any payment of principal of or interest on any Indebtedness in an aggregate amount in excess of $10,000.00 (other than the Secured Obligations) or any other event shall occur, the effect of which other event is to permit such Indebtedness to be declared or otherwise to become due prior to its stated maturity; or

 

(i)                                     (1) Seller, any Guarantor or any ERISA Affiliate of such Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code) involving any Plan, (2) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, (1) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or institution of proceedings is, in the reasonable opinion of Buyer, likely to result in the termination of such Plan for purposes of Title IV of ERISA, and, in the case of a Reportable Event, the continuance of such Reportable Event unremedied for ten days after notice of such Reportable Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the continuance of such proceedings for ten (10) days after commencement thereof, as the case may be, (4) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (5) any withdrawal liability to a Multiemployer Plan shall be incurred by Seller or any Commonly Controlled Entity, or (6) any other event or condition shall occur or exist; and in each case in clauses (1) through (5) above, such event or condition, together with all other such events or conditions, if any, could subject Seller or any Subsidiary to any tax, penalty or other liabilities in the aggregate material in relation to the business, operations, property or financial or other condition of Seller and its consolidated Subsidiaries, taken as a whole; or

 

(j)                                    One or more judgments or decrees in an amount in excess of $25,000.00 or aggregating more than $100,000.00 shall be entered against Seller or any of its Subsidiaries involving claims not paid or fully covered by insurance and all such judgments or decrees shall not have been vacated, discharged, or stayed or bonded pending appeal within thirty (30) days from the entry thereof; or

 

(k)                                 Any of the Guarantors shall fail to perform any of its obligations under its guaranty of the Secured Obligations or shall notify Buyer of its intention, or shall otherwise attempt, to rescind, modify, terminate or revoke its guaranty with respect to future transactions or otherwise, or any material representation or warranty made by any Guarantor under any Repurchase Facility Document shall be inaccurate or incomplete in any respect on or as of the

 

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date made; or all or any substantial part of the property of Seller shall be condemned, seized or otherwise appropriated, or custody or control of such property shall be assumed by any Governmental Authority and shall be retained for a period of thirty (30) days or more; or

 

(l)                                     Buyer shall cease to either own all rights in each Purchased Repo Asset or have a first priority perfected security interest in such Purchased Repo Asset; or

 

(m)                             There shall occur a Material Adverse Effect; or

 

(n)                                 There shall occur a Change of Control; or

 

(o)                                 Seller or Guarantor shall be in default under any warehouse or repurchase facility or other credit facility or other Indebtedness, in the aggregate, in excess of $5,000,000.00, or (b) 50% of the Tangible Net Worth of Seller, any Guarantor or any Affiliate thereof which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness; or

 

(p)                                 Assignment or attempted assignment by Seller or any Guarantor of this Agreement or any rights hereunder without first obtaining the specific written consent of Buyer, or the granting by Seller of any security interest, lien or other encumbrances on any Purchased Repo Assets to any person other than Buyer; or

 

(q)                                 Any Governmental Authority or any person, agency or entity acting or purporting to act under governmental authority (1) shall have imposed any limitations on any business licenses of Seller or Guarantor (2) shall have imposed any civil monetary penalties against Seller or Guarantor in excess of $100,000 or (3) shall have issued any cease and desist orders against Seller or Guarantor; or

 

(r)                                    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 Seller or Guarantor, or shall have taken any action to displace the management of Seller or Guarantor or to curtail its authority in the conduct of the business of Seller or Guarantor, or takes any action in the nature of enforcement to remove, limit or restrict the approval of Seller as an issuer, buyer or a seller/servicer of Mortgage Loans or securities backed thereby, and such action provided for in this Section 15(s) shall not have been discontinued or stayed within 30 days; or

 

(s)                                   An officer of Seller or any Guarantor shall admit its inability to, or its intention not to, perform any of Seller’s obligations hereunder or any Guarantor’s obligations hereunder or under the Guaranty; or

 

(t)                                    This Agreement shall for any reason cease to create a valid, first priority security interest in any material portion of the Purchased Repo Assets purported to be covered hereby; or

 

(u)                                 Seller’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 Seller as a “going concern” or a reference of similar import.

 

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THEN:

 

(1)                                 Buyer may, at its option (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of Insolvency), declare an Event of Default to have occurred hereunder and, upon the exercise or deemed exercise of such option, the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). Buyer shall (except upon the occurrence of an Act of Insolvency) give notice to Seller of the exercise of such option as promptly as practicable,

 

(2)                                 If Buyer exercises or is deemed to have exercised the option referred to in subsection (1) above, Seller’s obligations in such Transactions to repurchase all Purchased Repo Assets, at the Repurchase Price therefor on the Repurchase Date determined in accordance with subsection (1) above, shall thereupon become immediately due and payable, all Income paid after such exercise or deemed exercise shall be retained by Buyer and applied to the aggregate unpaid Repurchase Prices and any other amounts owing by Seller hereunder, and Seller shall immediately deliver to Buyer any Purchased Repo Assets subject to such Transactions then in Seller’s possession or control.

 

(3)                                 If Buyer exercises or is deemed to have exercised the option referred to in subsection (1) above, Buyer, without prior notice to Seller, may immediately sell or otherwise dispose of any Purchased Repo Asset at one or more public or private sales or otherwise to any investor or purchaser as determined by Buyer in its sole discretion, whether or not such Purchased Repo Asset is present at the place of sale, for cash or credit or future delivery and without assumption of any credit risk, on such terms and in such manner as Buyer may determine in its sole discretion.

 

(4)                                 Seller shall be liable to Buyer for (i) the amount of all legal or other expenses (including, without limitation, all costs and expenses of Buyer in connection with the enforcement of this Agreement or any other agreement evidencing a Transaction, whether in action, suit or litigation or bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally, further including, without limitation, the reasonable fees and expenses of counsel (including the costs of internal counsel of Buyer) incurred by Buyer in connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (including all fees, expenses and commissions) of entering into replacement in connection with or as a result of an Event of Default, and (iii) any other loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default in respect of a Transaction. Expenses incurred in connection with an Event of Default shall include without limitation those costs and expenses reasonably incurred by Buyer as a result of the early termination of any repurchase agreement or reverse repurchase agreement entered into by Buyer in connection with the Transaction then in default.

 

(5)                                 Buyer also shall have the right to obtain physical possession, and to commence an action to obtain physical possession, of all records and files of Seller relating to the Purchased Repo Assets and all documents relating to the Purchased Repo Assets (including, without limitation, any legal, credit or servicing files with respect to the Purchased Repo Assets)

 

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which are then or may thereafter come in to the possession of Seller or any third party acting for Seller.

 

(6)                                 All rights of Seller to receive payments which it would otherwise be authorized to receive pursuant to Section 5 above shall cease, and all such rights shall thereupon become vested in Buyer, which shall thereupon have the sole right to receive such payments and apply them to the aggregate unpaid Repurchase Price owed by Seller. All payments that are received by Seller contrary to the provisions of the preceding sentence shall be received in trust for the benefit of Buyer and shall be segregated from other funds of Seller and immediately paid over to Buyer.

 

(7)                                 Buyer shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or applicable law or in equity, including, but not limited to, the right to have a receiver appointed over Seller and/or its assets, the right to realize upon any or all of its security, and to do so in any order. Furthermore, the rights and remedies set forth in this Section 13 are not exclusive, and Buyer may avail itself of any individual right or remedy set forth in this Agreement, or available at law or in equity, without utilizing any other right or remedy.

 

(8)                                 Buyer is hereby appointed to act as the attorney-in-fact of Seller for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments that Buyer may deem necessary to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest; provided, however, that Buyer shall not exercise such attorney-in-fact unless there shall have occurred and be continuing an Event of Default. Without limiting the generality of the foregoing, Buyer shall have the right and power after the occurrence and during the continuation of any Event of Default to receive, endorse and collect all checks made payable to the order of Seller representing any payment on account of the principal of or interest on any of the Purchased Repo Assets and to give full discharge for the same.

 

(9)                                 Upon the happening of one or more Events of Default, Buyer may apply any proceeds from the liquidation of the Purchased Repo Assets to the Repurchase Prices hereunder and all other obligations of Seller hereunder in the manner Buyer deems appropriate in its sole discretion.

 

(10)                          To the extent permitted by applicable law, Seller shall be liable to Buyer for interest on any amounts owing by Seller hereunder, from the date Seller becomes liable for such amounts hereunder until such amounts are (i) paid in full by Seller or (ii) satisfied in full by the exercise of Buyer’s rights hereunder. Interest on any sum payable by Seller under this subsection (10) shall accrue at a rate equal to the Past Due Rate.

 

(11)                          Buyer may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives any defenses Seller might otherwise have to require Buyer to enforce its rights by judicial process. Seller also waives any defense (other than a defense of payment or performance) Seller might otherwise have arising from the use of nonjudicial process, enforcement and sale of all or any portion of the Purchased Repo Assets, or from any other election of remedies. 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.

 

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(12)                          Buyer shall have the right to perform reasonable due diligence with respect to Seller and the Purchased Repo Assets, which review shall be at the expense of Seller.

 

15.                               Single Agreement. Buyer and Seller 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 of Buyer and Seller agrees (a) 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, (b) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (c) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.

 

16.                               Notices and Other Communications. Except as otherwise expressly provided herein, all notices, statements, demands or other communications hereunder may be given by a party to the other by confirmed facsimile, certified mail, or nationally recognized overnight courier to the address specified in the Variable Terms Letter, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other.

 

17.                               Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

18.                               Non-Assignability; Termination. The rights and obligations of Seller under this Agreement and under any Transaction shall not be assigned by Seller without the prior written consent of Buyer, and any such assignment without the prior written consent of Buyer shall be null and void. Subject to the foregoing this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns.

 

This Agreement and all Transactions outstanding hereunder shall terminate automatically without any requirement for notice on the Purchase Contract Expiration Date set forth in the Variable Terms Letter; provided, however, that this Agreement and any Transaction outstanding hereunder may be extended by mutual agreement of Buyer and Seller given in each such party’s sole and absolute discretion.

 

19.                               Governing Law. This Agreement shall be governed by the laws of the State of Delaware without giving effect to the conflict of law principles thereof.

 

20.                               No Waivers, Etc. No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to

 

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give a notice pursuant to Section 4(a) hereof will not constitute a waiver of any right to do so at a later date.

 

21.                               Use of Employee Plan Assets.

 

(a)                                 If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed.

 

(b)                                 Subject to the last sentence of subsection (a) of this Section, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition.

 

(c)                                  By entering into a Transaction pursuant to this Section, Seller shall be deemed (i) to represent to Buyer that since the date of Seller’s latest such financial statements, there has been no change in Seller’s financial condition which Seller has not disclosed to Buyer that has resulted, or is reasonably likely to result in a Material Adverse Effect, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party.

 

22.                       Intent.

 

(a)                                 The parties 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, and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended.

 

(b)                                 It is understood that either party’s right to liquidate Eligible Repo Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Section 13 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended.

 

(c)                                  The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

 

(d)                                 It is understood that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).

 

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(e)                                  This Agreement is intended to be a “repurchase agreement” and a “securities contract,” within the meaning of Section 555 and Section 559 under the Bankruptcy Code.

 

(f)                                   Each party agrees that this Agreement is intended to create mutuality of obligations among the parties, and as such, the Agreement constitutes a contract which (i) is between all of the parties and (ii) places each party in the same right and capacity.

 

23.                       Disclosure Relating to Certain Federal Protections. The parties acknowledge that they have been advised that:

 

(a)                                 In the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC” under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder;

 

(b)                                 In the case of Transactions in which one of the parties, is a government securities broker or a government securities dealer registered with the SEC under Section 13C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and

 

(c)                                  In the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.

 

24.                               Counterparts. This Agreement may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument.

 

25.                               Amendment. Neither this Agreement nor any of the other Repurchase Facility Documents may be amended and no provision thereof may be waived except in a writing duly executed by Buyer and Seller.

 

26.                               Indemnification. In addition to the payment of expenses pursuant to Section 11(f) above, whether or not the transactions contemplated hereby shall be consummated, Seller hereby agrees to indemnify Buyer and its officers, directors, employees, agents, bailees, custodians and representatives (the “Indemnitees”) and hold the Indemnitees harmless from and against any and all claims, liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (including, without limitation, attorneys’ fees) of any kind whatsoever which may at any time be imposed on, assessed against or incurred by the Indemnitees in any way (1) relating to or arising out of the Repurchase Facility Documents or any documents contemplated by or referred to therein or in the transactions contemplated hereby or thereby or any action taken or omitted to be taken by any Indemnitee in connection with the foregoing; provided, however, that Seller shall not be liable for any portion of any such claims, liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs or disbursements arising out of or resulting from the gross negligence or willful misconduct of any Indemnitee, or (2) in

 

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any manner resulting from any action taken or omitted to be taken by any Indemnitee with respect to the Repo Assets in accordance with the written instruction of Seller given as permitted hereunder. The indemnification obligations of Seller under this Section 26 shall survive termination of this Agreement and payment in full of the Secured Obligations. Attorneys’ fees and disbursements incurred in enforcing, or on appeal from, a judgment pursuant hereto shall be recoverable separately from and in addition to any other amount included in such judgment, and this clause is intended to be severable from the other provisions of this Agreement and to survive and not be merged into such judgment.

 

27.                               Sharing of Information. Seller hereby acknowledges and agrees that Buyer may from time to time share information related to its business activities, including but not limited to information related to Seller and the repurchase facility evidenced by this Agreement, with one or more of Buyer’s lenders and/or investors and with Buyer’s Affiliates. Such shared information may include, among other things, items considered confidential or proprietary, such as financial statements, credit and operational data, and investor relationships, in each case involving Seller, its officers, directors, principals and/or any Guarantor.

 

28.                               Conditions Precedent.

 

(a)                                 As conditions precedent to the effectiveness hereof and to the initiation of the first Transaction hereunder:

 

(1)                                 Seller and Guarantors, as applicable, shall have delivered or shall have caused to be delivered to Buyer, in form and substance satisfactory to Buyer, each of the following:

 

(i)                                     A duly executed copy of this Agreement and the Variable Terms Letter, with, in the case of the Variable Terms Letter, all required Schedules thereto approved by Buyer and attached;

 

(ii)                                  A duly executed copy of a Guaranty from the Guarantors;

 

(iii)                               Originals of the fully executed Repurchase Facility Documents;

 

(iv)                              Duly executed copies of all financing statements and other documents, instruments and agreements deemed necessary or appropriate by Buyer to create in favor of Buyer a first priority perfected security interest in and lien upon the Repo Assets;

 

(v)                                 Certified copies of resolutions or other applicable authorizing documentation of each of Seller and each Guarantor as Buyer shall require of Seller, each Guarantor and any Person holding an interest in Seller or a Guarantor, approving the execution and delivery of, as applicable, all Repurchase Facility Documents to which such Person is party and authorizing the transactions contemplate by this Agreement or such other matters as Buyer shall require;

 

(vi)                              True and correct copies of Seller’s and each Guarantor’s organizational documents (including, without limitation, the duly filed, certified

 

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and/or executed documents or instruments evidencing or confirming the lawful formation and existence of Seller, each Guarantor and such other Persons, and all written consents and certifications required by Buyer from Persons having management and/or ownership interests in Seller, each Guarantor and/or such other Persons), certificate(s) of fictitious business name, and financial statements, all of which documents must be first reviewed and approved by Buyer, its counsel, or both;

 

(vii)                           A certificate of an executive officer of Seller in the form of that attached hereto as Exhibit B dated as of the date of this Agreement;

 

(viii)                        A certified copy of a good standing certificate from the jurisdiction of organization of Seller, dated as of no earlier than the date ten (10) Business Days prior to the Purchase Date with respect to the initial Transaction hereunder;

 

(ix)                              A true and correct copy of the Underwriting Guidelines;

 

(x)                                 Evidence that Seller has added Buyer as an additional loss payee under the Seller’s Fidelity Insurance;

 

(xi)                              If required by Buyer, an opinion of counsel to Seller in form and substance and issued by counsel reasonably satisfactory to Buyer; and

 

(xii)                           All Required Fees required to be paid prior to or on the initial Purchase Date in immediately available funds.

 

(2)                                 All acts and conditions precedent (including, without limitation, the obtaining of any necessary regulatory approvals and the making of any required filings, recordings or registrations) required to be done and performed and to have happened prior to the execution, delivery and performance of the Repurchase Facility Documents and to constitute the same legal, valid and binding obligations, enforceable in accordance with their respective terms, shall have been done and performed and shall have happened in due and strict compliance with all applicable laws.

 

(3)                                 All documentation, including, without limitation, documentation for corporate and legal proceedings in connection with the transactions contemplated by the Repurchase Facility Documents, shall be satisfactory in form and substance to Buyer and its counsel.

 

(b)                                 As conditions precedent to each Transaction hereunder, including the first Transaction:

 

(1)                                 There shall have been delivered to Buyer a Purchase Request therefor:

 

(2)                                 The representations and warranties of Seller and the Guarantors contained in the Repurchase Facility Documents shall be accurate and complete in all respects as if made on and as of the Purchase Date thereof;

 

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(3)                                 There shall not have occurred and be continuing an Event of Default;

 

(4)                                 Following the funding of the requested Transaction, the aggregate outstanding Purchase Price of Purchased Repo Assets sold to and owned by Buyer will not exceed the Aggregate Purchase Price Limit;

 

(5)                                 Without limiting the generality of Section 35 hereof, Buyer shall have completed, to its satisfaction, its due diligence review of the related Mortgage Loans and Seller, Guarantors and the Servicer.

 

(6)                                 None of the following shall have occurred and/or be continuing:

 

(i)                                     an event or events shall have occurred in the good faith determination of Buyer resulting in the effective absence of a “repo market” or comparable “lending market” for financing debt obligations secured by mortgage loans or securities or an event or events shall have occurred resulting in Buyer not being able to finance Purchased Repo Assets through the “repo market” or “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; or

 

(ii)                                  an event or events shall have occurred resulting in the effective absence of a “securities market” for securities backed by mortgage loans or an event or events shall have occurred resulting in Buyer not being able to sell securities backed by mortgage loans at prices which would have been reasonable prior to such event or events; or

 

(iii)                               there shall have occurred a change in the financial condition of Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of Buyer to fund its obligations under this Agreement or that has resulted, or is reasonably likely to result in a Material Adverse Effect.

 

and

 

(7)                                 Except with respect to Wet Mortgage Loans, the Mortgage Loan Documents for the Eligible Repo Assets subject to such Transaction shall have been received by Buyer.

 

By delivering a Purchase Request to Buyer hereunder, Seller shall be deemed to have represented and warranted the accuracy and completeness of the statements set forth in subsections (b)(2) through (b)(5) above.

 

29.                               Requirement of Law.

 

(a)                                 If any Requirement of Law (other than with respect to any amendment made to Buyer’s certificate of incorporation and bylaws or other organizational or governing documents) including those regarding capital adequacy, or any change in the interpretation or application of any Requirement of Law thereof or compliance by Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental

 

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Authority made subsequent to the date hereof:

 

(1)                                 shall subject Buyer to any Tax or increased Tax of any kind whatsoever or change the basis of taxation of payments to Buyer;

 

(2)                                 shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, or other extensions of credit by, or any other acquisition of funds by, any office of Buyer;

 

(3)                                 shall impose on Buyer any other condition;

 

and the result of any of the foregoing is to increase the cost to Buyer, by an amount which Buyer deems to be material, of entering, continuing or maintaining any Transaction or to reduce any amount due or owing hereunder in respect thereof, or shall have the effect of reducing Buyer’s rate of return then, in any such case, Seller shall promptly pay Buyer such additional amount or amounts as calculated by Buyer in good faith as will compensate Buyer for such increased cost or reduced amount receivable on an after-tax basis.

 

(b)                                 If Buyer shall have determined that the adoption of or any change in any Requirement of Law (other than with respect to any amendment made to Buyer’s certificate of incorporation and bylaws or other organizational or governing documents) regarding capital adequacy or in the interpretation or application thereof or compliance by Buyer or any corporation controlling Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by Buyer to be material, then from time to time, Seller shall promptly pay to Buyer such additional amount or amounts as will compensate Buyer for such reduction.

 

(c)                                  If Buyer becomes entitled to claim any additional amounts pursuant to this Section 28, it shall promptly notify Seller of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section submitted by Buyer to Seller shall be conclusive in the absence of manifest error.

 

30.                               Custodian. Seller may elect, in its reasonable discretion, to nominate a custodian (the “Custodian”) to settle the transactions contemplated hereby. Seller shall direct all future deliveries of documents and funds hereunder to such Custodian at the address/wiring instructions furnished to Seller in writing by the Custodian. Seller shall accept performance by such Custodian as if it were performance by Buyer hereunder. Seller hereby acknowledges that Custodian, if any, is acting as agent for, and for the benefit of, Buyer and/or its assignees.

 

31.                               Waiver of Right to Trial by Jury; Judicial Reference in the event of Jury Trial Waiver Unenforceability. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED

 

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OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY. NOTWITHSTANDING THE FOREGOING TO THE CONTRARY, IN THE EVENT THAT THE JURY TRIAL WAIVER CONTAINED HEREIN SHALL BE HELD OR DEEMED TO BE UNENFORCEABLE, EACH PARTY HERETO HEREBY EXPRESSLY AGREES TO SUBMIT TO JUDICIAL REFERENCE ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING HEREUNDER FOR WHICH A JURY TRIAL WOULD OTHERWISE BE APPLICABLE OR AVAILABLE. PURSUANT TO SUCH JUDICIAL REFERENCE, THE PARTIES AGREE TO THE APPOINTMENT OF A SINGLE REFEREE AND SHALL USE THEIR BEST EFFORTS TO AGREE ON THE SELECTION OF A REFEREE. IF THE PARTIES ARE UNABLE TO AGREE ON A SINGLE REFEREE, A REFEREE SHALL BE APPOINTED BY THE COURT TO HEAR ANY DISPUTES HEREUNDER IN LIEU OF ANY SUCH JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT THE APPOINTED REFEREE SHALL HAVE THE POWER TO DECIDE ALL ISSUES IN THE APPLICABLE ACTION OR PROCEEDING, WHETHER OF FACT OR LAW, AND SHALL REPORT A STATEMENT OF DECISION THEREON; PROVIDED, HOWEVER, THAT ANY MATTERS WHICH WOULD NOT OTHERWISE BE THE SUBJECT OF A JURY TRIAL WILL BE UNAFFECTED BY THIS WAIVER AND THE AGREEMENTS CONTAINED HEREIN. THE PARTIES HERETO HEREBY AGREE THAT THE PROVISIONS CONTAINED HEREIN HAVE BEEN FAIRLY NEGOTIATED ON AN ARM’S-LENGTH BASIS, WITH BOTH SIDES AGREEING TO THE SAME KNOWINGLY AND BEING AFFORDED THE OPPORTUNITY TO HAVE THEIR RESPECTIVE LEGAL COUNSEL CONSENT TO THE MATTERS CONTAINED HEREIN. ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY AND THE AGREEMENTS CONTAINED HEREIN REGARDING THE APPLICATION OF JUDICIAL REFERENCE IN THE EVENT OF THE INVALIDITY OF SUCH JURY TRIAL WAIVER.

 

Seller and Buyer have initialed this Section 29 to further indicate their awareness and acceptance of each and every provision hereof.

 

	
 
    	
/s/ Sreeniwas V. Prabhu
    	
 
    	
/s/ Zoila Price
    
	
 
    	
Seller’s Initials
    	
 
    	
Buyer’s Initials
    

 

32.                               Funding. Buyer shall be entitled to fund all or any portion of the Purchase Price for Purchased Repo Assets in any manner it may determine in its sole discretion, including, without limitation, in any market or from any source within or outside the United States. Seller expressly acknowledges that, in agreeing to purchase Eligible Repo Assets hereunder, Buyer has been or may in the future be extended credit by other financial institutions, and that Buyer’s commitment to purchase Eligible Repo Assets hereunder is expressly contingent upon the continued funding of Buyer by such financial institutions. Notwithstanding any other provisions of this Agreement, in the event that Buyer is unable to procure or receive funding from its

 

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customary and usual sources whether by virtue of a default by Buyer under its financing arrangements, the inability or unwillingness of a financial institution to extend credit to Buyer, or a disruption in the lending market for mortgage loans or the repurchase market for warehousing arrangements (1) any commitment by Buyer hereunder to purchase Eligible Repo Assets as contemplated by this Agreement shall forthwith be terminated, (2) the Repurchase Date shall automatically be deemed to have occurred upon the earlier of (x) the date required by any financial institution providing funds to Buyer, (y) sale of the Purchased Repo Assets then held by Buyer in accordance with the terms of this Agreement and (z) the date as of which Buyer determines that to continue owning such Purchased Repo Assets is infeasible or impractical, in view of Buyer’s other business requirements and funding priorities. The provisions hereof shall survive the termination of this Agreement and payment of all other Obligations.

 

33.                               Nature and Place of Payments; Authorization to Debit. All payments required to be made by Seller hereunder shall be made without setoff or counterclaim in lawful money of the United States of America in immediately available same day funds, free and clear of and without deduction for any taxes, fees or other charges of any nature whatsoever imposed by any taxing authority. Any payment not received by Buyer by 2:30 p.m. (Pacific time) on the day of payment (other than with respect to those payments made pursuant to Section 4), will be considered to have been made on the next succeeding business day and the amount of the required payment shall be recalculated to include such extended period. If any payment required to be made by Seller hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and the amount of the required payment shall be recalculated to include such extended period. All payments required to be made by Seller hereunder shall be made to such office or account as Buyer shall from time to time designate. Upon the occurrence and during the continuance of an Event of Default, Seller hereby expressly authorizes Buyer, and appoints Buyer as its attorney- in-fact, to instruct the applicable depositary institution to debit any accounts maintained by Seller with such depositary institution in respect of payments required hereunder.

 

34.                               Authorization to Verify Transactions. Seller hereby irrevocably authorizes Buyer to independently confirm the existence, status and terms of Mortgage Loans proposed by Seller for purchase by Buyer hereunder prior to such purchase. No investigation by Buyer shall in any manner or to any extent affect the rights, powers and remedies of Buyer under the Repurchase Facility Documents, including, without limitation, with respect to the breach of representations and warranties made by Seller with respect to any Mortgage Loan, regardless of whether such investigation disclosed or should have disclosed to Buyer information inconsistent with such representations and warranties.

 

35.                               Set-off. In addition to any rights and remedies of the Buyer hereunder and by law, the Buyer shall have the right, without prior notice to the Seller or Guarantors, any such notice being expressly waived by the Seller and Guarantors to the extent permitted by applicable law to set-off and appropriate and apply against any obligation from Seller or Guarantor to Buyer or any of its Affiliates any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other obligation (including to return excess margin), 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 or due from the Buyer or any Affiliate thereof to or for the credit or the account of the Seller or Guarantor. The Buyer agrees promptly to notify the Seller or Guarantor after any such set off and application made by the Buyer; provided that the failure to give such notice shall not affect the validity of such set off

 

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and application.

 

36.                               Periodic Due Diligence Review. Seller and each Guarantor acknowledges that Buyer has the right to perform continuing due diligence reviews with respect to the Seller and each Guarantor and the Purchased Repo Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, for the purpose of performing quality control review of the Purchased Repo Assets or otherwise, and Seller agrees that upon reasonable (but no less than one (1) Business Day’s) prior notice unless an Event of Default shall have occurred, in which case no notice is required, to Seller, Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Mortgage Files and any and all documents, data, records, agreements, instruments or information relating to such Purchased Repo Assets (including, without limitation, quality control review) in the possession or under the control of Seller. Seller also shall make available to Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Mortgage Files and the Purchased Repo Assets. Without limiting the generality of the foregoing, Seller acknowledges that Buyer may purchase Eligible Mortgage Loans from Seller based solely upon the information provided by Seller to Buyer and the representations, warranties and covenants contained herein, and that Buyer, at its option, has the right at any time to conduct a partial or complete due diligence review on some or all of the Eligible Mortgage Loans purchased in a Transaction, including, without limitation, ordering broker’s price opinions, new credit reports and new appraisals on the related Mortgaged Properties and otherwise re-generating the information used to originate such Eligible Mortgage Loan. Buyer may underwrite such Mortgage Loans itself or engage a mutually agreed upon third party underwriter to perform such underwriting. Seller agrees to cooperate with Buyer and any third party underwriter in connection with such underwriting, including, but not limited to, providing Buyer and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Mortgage Loans in the possession, or under the control, of Seller. Seller further agrees that Seller shall pay all out-of-pocket costs and expenses incurred by Buyer in connection with Buyer’s activities pursuant to this Section 35.

 

37.                               Acknowledgment of Anti-Predatory Lending Policies. Buyer has in place internal policies and procedures that expressly prohibit its purchase of any High Cost Mortgage Loans.

 

38.                               Documents Mutually Drafted. The Seller and the Buyer agree that this Agreement and each other Repurchase Facility Document prepared in connection with the Transactions set forth herein have been mutually drafted and negotiated by each party, and consequently such documents shall not be construed against either party as the drafter thereof.

 

39.                               Acknowledgment. The Seller acknowledges that (i) the internal recordkeeping system used by the Buyer is supplied to the Buyer by an independent third party vendor, (ii) such recordkeeping system contains a number of references to the Buyer as a “lender” and to the Seller as a “borrower”, and to the transactions between the Buyer and the Seller as loan or credit transactions, and (iii) such independent third party vendor has advised the Buyer that it is unable to change such recordkeeping system to reflect the true nature of the arrangement between the Buyer and the Seller (i.e., a repurchase arrangement, and not a credit transaction). The Seller agrees and acknowledges that the arrangement reflected by this Agreement is a repurchase arrangement, and not a credit transaction, regardless of the terminology that the Buyer is compelled to use in its recordkeeping system.

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

 

	
 
    	
Angel Oak Mortgage, Inc., as Seller
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sreeniwas V. Prabhu
    
	
 
    	
Name:
    	
Sreeniwas V. Prabhu
    
	
 
    	
Title:
    	
Managing Partner
    
	
 
    	
 
    
	
 
    	
Angel Oak Mortgage Fund TRS, as Seller
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sreeniwas V. Prabhu
    
	
 
    	
Name:
    	
Sreeniwas V. Prabhu
    
	
 
    	
Title:
    	
Managing Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Banc of California National Association, as Buyer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Zoila Price
    
	
 
    	
Name:
    	
Zoila Price
    
	
 
    	
Title:
    	
Managing Director
    

 

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SCHEDULE 1

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO PURCHASED FIXNFLIP MORTGAGE LOANS, NO ESCROW FIXNFLIP MORTGAGE LOANS, AND NON-QM MORTGAGE LOANS

 

Seller represents and warrants to Buyer, with respect to each FixNFlip Mortgage Loan, No Escrow FixNFlip Mortgage Loan, or Non-QM Mortgage Loan, that as of the Purchase Date for the purchase of Purchased Repo Assets by Buyer from Seller and as of the date of this Agreement and any Transaction hereunder and at all times while the Repurchase Facility Documents and any Transaction hereunder is in full force and effect, that the following are true and correct. For purposes of this Schedule 1 and the representations and warranties set forth herein, a breach of a representation or warranty shall be deemed to have been cured with respect to a Mortgage Loan if and when Seller has taken or caused to be taken action such that the event, circumstance or condition that gave rise to such breach no longer adversely affects such Mortgage Loan. With respect to those representations and warranties which are made to the best of Seller’s knowledge, if it is discovered by Seller or Buyer that the substance of such representation and warranty is inaccurate, notwithstanding Seller’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty.

 

(a)                                 Payments Current. All payments required to be made up to the Purchase Date for the Mortgage Loan under the terms of the Mortgage Note have been made and credited. No payment required under the Mortgage Loan is Delinquent nor has any payment under the Mortgage Loan been Delinquent at any time since the origination of the Mortgage Loan. The first Monthly Payment shall be made, or shall have been made, with respect to the Mortgage Loan on its Due Date or within the grace period, all in accordance with the terms of the related Mortgage Note.

 

(b)                                 No Outstanding Charges. All taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which previously became due and owing have been paid, or an escrow of funds has been established in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable. Seller has not advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Obligor, directly or indirectly, for the payment of any amount required under the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the proceeds of the Mortgage Loan, whichever is earlier, to the day which precedes by one month the Due Date of the first installment of principal and/or interest thereunder.

 

(c)                                  Original Terms Unmodified. The terms of the Mortgage Note and Mortgage have not been impaired, waived, altered or modified in any material respect, from the date of origination; except by a written instrument which has been recorded, if necessary to protect the interests of Buyer, and which has been delivered to the Buyer. The substance of any such waiver, alteration or modification has been approved by the title insurer, to the extent required. No Obligor in respect of the Mortgage Loan has been released, in whole or in part, except in connection with an assumption agreement approved by the title insurer, to the extent required by such policy, and which assumption agreement has been delivered to Buyer.

 

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(d)                                 No Defenses. The Mortgage Loan is not subject to any right of rescission, set-off, counterclaim or defense, including, without limitation, the defense of usury, nor will the operation of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any right thereunder, render either the Mortgage Note or the Mortgage unenforceable, in whole or in part and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto, and no Obligor in respect of the Mortgage Loan was a debtor in any state or Federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was originated. Obligor did not have a prior bankruptcy. Obligor did not previously own property that was the subject of a foreclosure during the time the Obligor was the owner of record. Seller has no knowledge nor has it received any notice that any Obligor in respect of the Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency proceeding. Seller has no knowledge of any circumstances or condition with respect to the Mortgage, the Mortgaged Property, the Obligor or the Obligor’s credit standing that could reasonably be expected to cause investors to regard the Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become delinquent or materially adversely affect the value or marketability of the Mortgage Loan.

 

(e)                                  Hazard Insurance. The Mortgaged Property is insured by a fire and extended perils insurance policy, issued by a Qualified Insurer, and such other hazards as are customary in the area where the Mortgaged Property is located, and to the extent required by Seller as of the date of origination consistent with the Underwriting Guidelines, against earthquake and other risks insured against by Persons operating like properties in the locality of the Mortgaged Property, in an amount not less than the greatest of (i) 100% of the replacement cost of all improvements to the Mortgaged Property, (ii) the outstanding principal balance of the Mortgage Loan, or (iii) the amount necessary to avoid the operation of any co-insurance provisions with respect to the Mortgaged Property, and consistent with the amount that would have been required as of the date of origination in accordance with the Underwriting Guidelines. If any portion of the Mortgaged Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (1) the outstanding principal balance of the Mortgage Loan (2) the full insurable value of the Mortgaged Property, and (3) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1974. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming Seller, its successors and assigns (including, without limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled without 30 days’ prior written notice to the mortgagee. No such notice has been received by Seller. All premiums on such insurance policy have been paid. The related Mortgage obligates the Obligor to maintain all such insurance and, at such Obligor’s failure to do so, authorizes the mortgagee to maintain such insurance at the Obligor’s cost and expense and to seek reimbursement therefor from such Obligor. Where required by state law or regulation, the Obligor has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “master” or “blanket” hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. The hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. Seller has not engaged in, and has no knowledge of the Obligor’s having engaged in, any act or omission which would impair the coverage of any such policy, the

 

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benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Seller.

 

(f)                                   Environmental Compliance. There does not exist on the Mortgaged Property any hazardous substances, hazardous wastes or solid wastes, as such terms are defined in the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act of 1976, or other applicable federal, state or local environmental laws including, without limitation, asbestos, in each case in excess of the permitted limits and allowances set forth in such environmental laws to the extent such laws are applicable to the Mortgaged Property. There is no pending action or proceeding directly involving the Mortgaged Property in which compliance with any environmental law, rule or regulation is an issue; there is no violation of any applicable environmental law (including, without limitation, asbestos), rule or regulation with respect to the Mortgaged Property; and nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation constituting a prerequisite to use and enjoyment of said property.

 

(g)                                  Compliance with Applicable Laws. Any and all requirements of any federal, state or local law including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws applicable to the Mortgage Loan have been complied with, the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations, and Seller shall maintain or shall cause its agent to maintain in its possession, available for the inspection of Buyer, and shall deliver to Buyer, upon demand, evidence of compliance with all such requirements.

 

(h)                                 No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled, subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such release, cancellation, subordination or rescission. Seller has not waived the performance by the Obligor of any action, if the Obligor’s failure to perform such action would cause the Mortgage Loan to be in default, nor has Seller waived any default resulting from any action or inaction by the Obligor.

 

(i)                                     Location and Type of Mortgaged Property. The Mortgaged Property is located in an acceptable state under the Underwriting Guidelines and consists of a single parcel of real property with a detached single family residence erected thereon, or a two- to four-family dwelling, or an individual condominium unit in a condominium project, or an individual unit in a planned unit development or a de minimis planned unit development; provided, however, that any condominium unit or planned unit development shall conform to the Underwriting Guidelines and that no residence or dwelling is a mobile home. No portion of the Mortgaged Property is used for commercial purposes; provided, that, the Mortgaged Property may be a mixed use property if such Mortgaged Property conforms to Underwriting Guidelines previously approved by Buyer.

 

(j)                                    Valid First Lien. The Mortgage is a valid, subsisting, enforceable and perfected first lien Mortgage Loan, with a first priority lien and first priority security

 

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interest on the real property included in 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:

 

a.                                      the lien of current real property taxes and assessments not yet due and payable;

 

b.                                      covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording acceptable to prudent mortgage lending institutions generally and specifically referred to in Buyer’s title insurance policy delivered to the originator of the Mortgage Loan and (a) referred to or otherwise considered in the appraisal made for the originator of the Mortgage Loan or (b) which do not adversely affect the appraised value of the Mortgaged Property set forth in such appraisal;

 

c.                                       other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by the Mortgage or the use, enjoyment, value or marketability of the related Mortgaged Property.

 

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 on the property described therein and Seller has full right to pledge and assign the same to Buyer. The Mortgaged Property was not, as of the date of origination of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or other security instrument creating a lien subordinate to the lien of the Mortgage.

 

With respect to a first lien Mortgage Loan that is a Co-op Loan, the Mortgage creates a first lien or a first priority ownership interest in the stock ownership and leasehold rights associated with the cooperative unit securing the related Mortgage Note. The Mortgagor has full right to sell and assign the same, subject only to (a) liens of the cooperative for unpaid assessments representing the Mortgagor’s pro rata share of the cooperative’s payments for its blanket mortgage, current and future real property taxes, insurance premiums, maintenance fees and other assessments to which like collateral is commonly subject and (b) other matters to which like collateral is commonly subject which do not materially interfere with the benefits of the security intended to be provided by the Mortgage.

 

(k)                                 Validity of Mortgage Documents. The Mortgage Note and the Mortgage and any other agreement executed and delivered by a Obligor or guarantor, if applicable, in connection with a Mortgage Loan are genuine, and each is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms. All parties to the Mortgage Note, the Mortgage and any other such related agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage and any such agreement, and the Mortgage Note, the Mortgage and any other such related agreement have been duly and properly executed by such related parties. No fraud, error, omission, misrepresentation, negligence or similar occurrence with respect to a Mortgage

 

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Loan has taken place on the part of any Person, including, without limitation, the Obligor, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan. Seller has reviewed all of the documents constituting the Mortgage File and has made such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein. To the best of Seller’s knowledge, except as disclosed to Buyer in writing, all tax identifications and property descriptions are legally sufficient; and tax segregation, where required, has been completed.

 

(l)                                     Full Disbursement of Proceeds. Except for Approved FixNFlip Loans and Approved No Escrow FixNFlip Loans, there is no further requirement for future advances under the Mortgage Loan, and any and all requirements as to completion of any on-site or off-site improvement and as to disbursements of any escrow funds therefor have been complied with. For Approved FixNFlip Loans, an Approved Escrow Account has been established and fully funded with the Draw Proceeds in an amount sufficient to complete the rehabilitation of the Mortgaged Property in compliance with the Underwriting Guidelines. For Approved No Escrow FixNFlip Loans, prior to the initial Purchase Request from Seller, unless such Mortgage Loan is a Wet Mortgage Loan, said Mortgage Loan was originally funded by Seller, and prior to any Purchase Request from Seller for the purchase of any subsequent draws by the Borrower for said Mortgage Loan, said draws were funded by Seller after proof satisfactory to Seller that such draws were used for the rehabilitation of the Mortgaged Property, and such work was completed to the satisfaction of the Seller to complete the rehabilitation of the Mortgaged Property in compliance with the Underwriting Guidelines. All costs, fees and expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage were paid, and the Obligor is not entitled to any refund of any amounts paid or due under the Mortgage Note or Mortgage. All broker fees have been properly assessed to the Obligor and no claims will arise as to broker fees that are double charged and for which the Obligor would be entitled to reimbursement.

 

(m)                             Ownership. Seller has full right to sell the Mortgage Loan to Buyer free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and has full right and authority subject to no interest or participation of, or agreement with, any other party, to sell each Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage Loan, Buyer will own such Mortgage Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest except any such security interest created pursuant to the terms of this Agreement.

 

(n)                                 Doing Business. All parties which have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (i) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (ii) either (A) organized under the laws of such state, (B) qualified to do business in such state, (C) a federal savings and loan association, a savings bank or a national bank having a principal office in such state, or (D) not doing business in such state.

 

(o)                                 Title Insurance. The Mortgage Loan is covered by either (i) an attorney’s opinion of title and abstract of title, the form and substance of which is acceptable to prudent

 

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mortgage lending institutions making mortgage loans in the area wherein the Mortgaged Property is located or (ii) an ALTA lender’s title insurance policy or other generally acceptable form of policy or insurance acceptable to FNMA or FHLMC and each such title insurance policy is issued by a title insurer acceptable to FNMA or FHLMC and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring Seller, its successors and assigns, as to the first priority lien of the Mortgage, as applicable, in the original principal amount of the Mortgage Loan, with respect to a Mortgage Loan (or to the extent a Mortgage Note provides for negative amortization, the maximum amount of negative amortization in accordance with the Mortgage), subject only to the exceptions contained in clauses (a), (b) and (c) of paragraph (i) of this Schedule 1, and in the case of adjustable rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly Payment. Where required by state law or regulation, the Obligor has been given the opportunity to choose the carrier of the required mortgage title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress and against encroachments by or upon the Mortgaged Property or any interest therein. The title policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or to replace the standard survey exception with a specific survey reading. Seller, its successors and assigns, are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Agreement. No claims have been made under such lender’s title insurance policy, and no prior holder or servicer of the related Mortgage, including Seller, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy, including without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Seller.

 

(p)                                 No Defaults. There is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event has occurred which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration, and neither Seller nor its predecessors have waived any default, breach, violation or event of acceleration.

 

(q)                                 No Mechanics’ Liens. There are no mechanics’ or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under the law could give rise to such liens) affecting the Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the Mortgage.

 

(r)                                    Location of Improvements; No Encroachments. All improvements which were considered in determining the appraised value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of the Mortgaged Property, and no improvements on adjoining properties encroach upon the Mortgaged Property. No improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning and building law, ordinance or regulation. All seller and/or builder concessions have been subtracted from the appraised value of the Mortgaged Property for purposes of determining the Loan-to-Value Ratio.

 

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(s)                                   Origination; Payment Terms. The Mortgage Loan was originated by or in conjunction with a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act, a savings and loan association, a savings bank, a commercial bank, credit union, insurance company or similar banking institution which is supervised and examined by a federal or state authority. Principal and/or interest payments on the Mortgage Loan commenced no more than 60 days after funds were disbursed in connection with the Mortgage Loan. No Mortgage Loan has a balloon payment feature. The Obligor contributed at least five percent (5%) of the purchase price for the Mortgaged Property from their own funds, unless some lesser percentage or a contribution toward the purchase price for the Mortgaged Property provided to the Obligor as a gift is permitted by the Underwriting Guidelines. Interest on the Mortgage Loan is calculated on the basis of a 360-day year consisting of twelve 30-day months. With respect to adjustable rate Mortgage Loans, the Mortgage Interest Rate is adjusted on each Interest Rate Adjustment Date to equal the Index plus the Gross Margin (rounded up or down to the nearest .125%), subject to the Mortgage Interest Rate Cap. The Mortgage Note is payable on the first day of each month in equal monthly installments of principal and/or interest (subject to an “interest only” period in the case of Interest Only Mortgage Loans), which installments of interest (a) with respect to adjustable rate Mortgage Loans are subject to change on the Interest Rate Adjustment Date due to adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment Date and (b) with respect to Interest Only Mortgage Loans are subject to change on the Interest Only Adjustment Date due to adjustments to the Mortgage Interest Rate on each Interest Only Adjustment Date, in both cases with interest calculated and payable in arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity date, over an original term of not more than 30 years from commencement of amortization.

 

(t)                                    Customary Provisions. The Mortgage Note has a stated maturity. The Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial foreclosure. Upon default by an Obligor on a Mortgage Loan and foreclosure on, or trustee’s sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage Loan will be able to deliver good and merchantable title to the Mortgaged Property. There is no homestead or other exemption or other right available to the Obligor or any other person, or restriction on the Seller or any other person, including without limitation, any federal, state or local, law, ordinance, decree, regulation, guidance, attorney general action, or other pronouncement, whether temporary or permanent in nature, that would interfere with, restrict or delay, either (y) the ability of the Seller, Buyer or any servicer or any successor servicer to sell the related Mortgaged Property at a trustee’s sale or otherwise, or (z) the ability of the Seller, Buyer or any servicer or any successor servicer to foreclose on the related Mortgage.

 

(u)                                 Occupancy of the Mortgaged Property. As of the Purchase Date the Mortgaged Property is lawfully occupied under applicable law. All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities. Seller has not received notification from any

 

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Governmental Authority that the Mortgaged Property is in material non-compliance with such laws or regulations, is being used, operated or occupied unlawfully or has failed to have or obtain such inspection, licenses or certificates, as the case may be. Seller has not received notice of any violation or failure to conform with any such law, ordinance, regulation, standard, license or certificate. With respect to any Mortgage Loan originated with an “owner-occupied” Mortgaged Property, the Obligor represented at the time of origination of the Mortgage Loan that the Obligor would occupy the Mortgaged Property as the Obligor’s primary residence.

 

(v)                                 No Additional Collateral. The Mortgage Note is not and has not been secured by any collateral except the lien of the corresponding Mortgage and the security interest of any applicable security agreement or chattel mortgage referred to in clause (i) above.

 

(w)                               Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a trustee, authorized and duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in the Mortgage, and no fees or expenses are or will become payable by the Buyer to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Obligor.

 

(x)                                 Acceptable Investment. There are no circumstances or conditions with respect to the Mortgage, the Mortgaged Property, the Obligor, the Mortgage File or the Mortgagor’s credit standing that can reasonably be expected to cause private institutional investors to regard the Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become delinquent, or adversely affect the value or marketability of the Mortgage Loan, or cause the Mortgage Loans to prepay during any period materially faster or slower than the mortgage loans acquired by Seller generally.

 

(y)                                 Transfer of Mortgage Loans. Except with respect to Mortgage Loans registered with MERS, the Assignment of Mortgage is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located. The transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by Seller are not subject to the bulk transfer or similar statutory provisions in effect in any applicable jurisdiction.

 

(z)                                  Due-On-Sale. The Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder.

 

(aa)                          No Buydown Provisions; No Graduated Payments or Contingent Interests. The Mortgage Loan does not contain provisions pursuant to which Monthly Payments are paid or partially paid with funds deposited in any separate account established by Seller, the Obligor, or anyone on behalf of the Obligor, or paid by any source other than the Obligor nor does it contain any other similar provisions which may constitute a “buydown” provision, except for certain Mortgage Loan with temporary buydown provisions approved by Buyer, such as the 2-1 temporary buydown provisions. The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared appreciation or other contingent interest feature.

 

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(bb)                          Consolidation of Future Advances. Any future advances made to the Obligor prior to the Purchase Date have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. The lien of the Mortgage securing the consolidated principal amount is expressly insured as having first lien priority by a title insurance policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other title evidence acceptable to FNMA and FHLMC. The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan.

 

(cc)                            Mortgaged Property Undamaged; No Condemnation Proceedings. There is no proceeding pending or threatened for the total or partial condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended and each Mortgaged Property is in good repair.

 

(dd)                          Servicing and Collection Practices; Escrow Deposits; Interest Rate Adjustments. The origination and collection practices used by the originator, each servicer of the Mortgage Loan and Seller with respect to the Mortgage Loan have been in all respects in compliance with Accepted Servicing Practices, applicable laws and regulations, and have been in all respects legal and proper. With respect to escrow deposits and escrow payments, all such payments are in the possession of, or under the control of, Seller and there exist no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made. All escrow payments have been collected in full compliance with state and federal law. An escrow of funds is not prohibited by applicable law and has been established in an amount sufficient to pay for every item that remains unpaid and has been assessed but is not yet due and payable. No escrow deposits or escrow payments or other charges or payments due Seller have been capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note. Any interest required to be paid pursuant to state, federal and local law has been properly paid and credited. If any Mortgage Loan is subject to any servicing arrangement with any Person other than Seller, said servicing rights are not subject to any Lien or negative pledge in favor of any Person other than as expressly permitted hereunder.

 

(ee)                            Conversion to Fixed Interest Rate. Except as allowed by FNMA or FHLMC or otherwise as expressly approved in writing by Buyer, with respect to adjustable rate Mortgage Loans, the Mortgage Loan is not convertible to a fixed interest rate Mortgage Loan.

 

(ff)                              Other Insurance Policies. No action, inaction or event has occurred and no state of facts exists or has existed that has resulted or will result in the exclusion from, denial of, or defense to coverage under any applicable special hazard insurance policy, PMI Policy or bankruptcy bond, irrespective of the cause of such failure of coverage. In connection with the placement of any such insurance, no commission, fee, or other compensation has been or will be received by Seller or by any officer, director, or employee of Seller or any designee of Seller or any corporation in which Seller or any officer, director, or employee had a financial interest at the time of placement of such insurance.

 

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(gg)                            Servicemembers Civil Relief Act. The Obligor has not notified Seller, and Seller has no knowledge, of any relief requested or allowed to the Obligor under the Servicemembers Civil Relief Act of 2003.

 

(hh)                          Appraisal. The Mortgage File contains an appraisal of the related Mortgaged Property signed prior to the funding of the Mortgage Loan by a qualified appraiser, duly appointed by Seller, who had no interest, direct or indirect in the Mortgaged Property or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy the requirements of FNMA or FHLMC and Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 as amended and the regulations promulgated thereunder, all as in effect on the date the Mortgage Loan was originated. As of the origination date, no appraisal is more than one hundred and twenty (120) days old.

 

(ii)                                  Disclosure Materials. The Obligor has executed a statement to the effect that the Obligor has received all disclosure materials required by applicable law with respect to the making of adjustable rate mortgage loans, and Seller maintains such statement in the Mortgage File.

 

(jj)                                Construction or Rehabilitation of Mortgaged Property. No Mortgage Loan was made in connection with the construction or rehabilitation of a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged Property.

 

(kk)                          Value of Mortgaged Property. Seller has no knowledge of any circumstances existing that could reasonably be expected to adversely affect the value or the marketability of any Mortgaged Property or Mortgage Loan or to cause the Mortgage Loans to prepay during any period materially faster or slower than similar mortgage loans held by Seller generally secured by properties in the same geographic area as the related Mortgaged Property.

 

(ll)                                  No Defense to Insurance Coverage. No action has been taken or failed to be taken, no event has occurred and no state of facts exists or has existed on or prior to the Purchase Date (whether or not known to Seller on or prior to such date) which has resulted or will result in an exclusion from, denial of, or defense to coverage under any private mortgage insurance (including, without limitation, any exclusions, denials or defenses which would limit or reduce the availability of the timely payment of the full amount of the loss otherwise due thereunder to the insured) whether arising out of actions, representations, errors, omissions, negligence, or fraud of Seller, the related Obligor or any party involved in the application for such coverage, including the appraisal, plans and specifications and other exhibits or documents submitted therewith to the insurer under such insurance policy, or for any other reason under such coverage, but not including the failure of such insurer to pay by reason of such insurer’s breach of such insurance policy or such insurer’s financial inability to pay.

 

(mm)                  Capitalization of Interest. The Mortgage Note does not by its terms provide for the capitalization or forbearance of interest.

 

(nn)                          No Equity Participation. No document relating to the Mortgage Loan provides

 

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for any contingent or additional interest in the form of participation in the cash flow of the Mortgaged Property or a sharing in the appreciation of the value of the Mortgaged Property. The indebtedness evidenced by the Mortgage Note is not convertible to an ownership interest in the Mortgaged Property or the Obligor and Seller has not financed nor does it own directly or indirectly, any equity of any form in the Mortgaged Property or the Obligor.

 

(oo)                          Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have not been and shall not be used to satisfy, in whole or in part, any debt owed or owing by the Obligor to Seller or any Affiliate or correspondent of Seller, except in connection with a refinanced Mortgage Loan; provided, however, no such refinanced Mortgage Loan shall have been originated pursuant to a streamlined mortgage loan refinancing program.

 

(pp)                          Recordation. Each original Mortgage was recorded in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located and, except for those Mortgage Loans subject to the MERS identification system, all subsequent assignments of the original Mortgage (other than the assignment to Buyer) have been recorded in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of Seller, or is in the process of being recorded.

 

(qq)                          Documents Genuine. Such Purchased Mortgage Loan and all accompanying collateral documents are complete and authentic and all signatures thereon are genuine. Such Purchased Mortgage Loan is a “closed” loan fully funded by Seller and held in Seller’s name.

 

(rr)                                Bona Fide Loan. Such Purchased Mortgage Loan arose from a bona fide loan, complying with all applicable State and Federal laws and regulations, to persons having legal capacity to contract and is not subject to any defense, set-off or counterclaim.

 

(ss)                              Other Encumbrances. To the best of Seller’s knowledge, any property subject to any security interest given in connection with such Purchased Mortgage Loan is not subject to any other encumbrances other than a stated first mortgage, if applicable, and encumbrances which may be allowed under the Underwriting Guidelines.

 

(tt)                                Underwriting Guidelines. Each Purchased Mortgage Loan has been originated in accordance with the Underwriting Guidelines (including all supplements or amendments thereto) previously provided to Buyer.

 

(uu)                          Primary Mortgage Guaranty Insurance. Each Mortgage Loan with a Loan-to- Value Ratio at origination in excess of eighty percent (80%) is insured as to payment defaults by a policy of primary mortgage guaranty insurance in the amount required by the Underwriting Guidelines where applicable, and all provisions of such primary mortgage guaranty insurance have been and are being complied with, such policy is in full force and effect, and all premiums due thereunder have been paid. There are no defenses, counterclaims, or rights of setoff affecting the Mortgage Loans or affecting the validity or enforceability of any private mortgage insurance applicable to the Mortgage Loans.

 

(vv)                          Tax Service Contract; Flood Certification Contract. Each Mortgage Loan is covered by a paid in full, life of loan, tax service contract and a paid in full, life of

 

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loan, flood certification contract and each of these contracts is assignable to Buyer.

 

(ww)              Credit Information. As to each consumer report (as defined in the Fair Credit Reporting Act, Public Law 91-508) or other credit information furnished by Seller to Buyer, that Seller has full right and authority and is not precluded by law or contract from furnishing such information to Buyer and Buyer is not precluded from furnishing the same to any subsequent or prospective purchaser of such Mortgage.

 

Each Mortgage Loan has a minimum FICO or other credit score as set forth in the Underwriting Guidelines or as set forth in the Variable Terms Letter. The Obligor’s credit score was no more than ninety (90) days old at the time the Mortgage Loan was originated. Full, complete and accurate information with respect to the Obligor’s credit file was furnished to Equifax, Experian and Trans Union Credit Information in accordance with the Fair Credit Reporting Act and its implementing regulations.

 

Seller shall hold Buyer harmless from any and all damages, losses, costs and expenses (including attorney’s fees) arising from disclosure of credit information in connection with Buyer’s secondary marketing operations and the purchase and sale of Mortgage Loans.

 

(xx)

 

(1)                                 Buyer has received a telefacsimile transmission of a copy of the original promissory note evidencing the indebtedness of the Obligor under such Mortgage Loan on or before the close of business of Buyer on the third Business Day following the Purchase Date of such Mortgage Loan;

 

(2)                                 The Mortgage Loan Documents are received by Buyer within the Permissible Wet Mortgage Repurchase Facility Document Delivery Period; and

 

(3)                                 The Purchase Price for said Mortgage Loan when added to the Purchase Price of all other Mortgage Loans purchased and owned by Buyer for which Buyer has not received the Mortgage Loan Documents does not exceed the Wet Mortgage Loan Limit.

 

(yy)                          Ohio Stated Income Exclusion. Each Mortgage Loan with an origination date on or after January 1, 2007 which is secured by Mortgaged Property located in Ohio was originated pursuant to a program which requires verification of the borrower’s income in accordance with “Full and Alternative Documentation” programs as described within the Underwriting Guidelines.

 

(zz)                            Origination. No predatory or deceptive lending practices, including, without limitation, the extension of credit without regard to the ability of the Mortgagor to repay and the extension of credit which has no apparent benefit to the Obligor, were employed in the origination of the Mortgage Loan.

 

(aaa)                   Single-premium Credit or Life Insurance Policy. In connection with the origination of any Mortgage Loan, no proceeds from any Mortgage Loan were used to purchase any single premium credit insurance policy (e.g., life, mortgage, disability, accident, unemployment, or health insurance product) or debt cancellation agreement as a

 

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condition of obtaining the extension of credit. No Obligor obtained a prepaid single-premium credit insurance policy (e.g., life, mortgage, disability, accident, unemployment, or health insurance product) or debt cancellation agreement in connection with the origination of the Mortgage Loan; no proceeds from any Mortgage Loan were used to purchase single premium credit insurance policies (e.g., life, mortgage, disability, accident, unemployment, or health insurance product) or debt cancellation agreements as part of the origination of, or as a condition to closing, such Mortgage Loan.

 

(bbb)                   TILA Qualified Mortgage. Unless the Mortgage Loan is identified on the Mortgage Loan Schedule as “Non-QM,” or “Not Covered,” such Mortgage Loan (i) is a “qualified mortgage” within the meaning of Section 1026.43(e)(2) of 12 C.F.R. Part 1026 (“Regulation Z”) without reference to Section 1026.43(e)(4), (5), (6) or (f) of Regulation Z, (ii) complies with the total points and fees limitations for a qualified mortgage set forth in Section 1026.43(e)(3) of Regulation Z (including the inflation adjustments provided for in Section 1026.43(e)(3)(ii) of Regulation Z), (iii) is not a “higher-priced covered transaction” within the meaning of Section 1026.43(b)(4) of Regulation Z, (iv) only includes a prepayment charge permitted by Section 1026.43(g) of Regulation Z, (v) does not provide for a balloon payment and (vi) qualifies for the safe harbor set forth in Section 1026.43(e)(1)(i) of Regulation Z.

 

(ccc)                      Ability to Repay. For any Mortgage Loan where an application for the Mortgage Loan was taken on or after January 10, 2014, unless the Mortgage Loan Schedule indicates that such Mortgage Loan is “Not Covered,” such Mortgage Loan complied with the “ability to repay” standards as set forth in Section 129C(a) of the federal Truth-in-Lending Act, 15 U.S.C. 1639c(a), and Section 1026.43(c) of Regulation Z and evidence demonstrating such compliance is included in the related Mortgage File.

 

(ddd)                   Mortgage Loan Qualifies for REMIC: Each Mortgage Loan constitutes a qualified mortgage under Section 860G(a)(3)(A) of the Code and Treasury Regulations Section 1.860G-2(a)(l).

 

(eee)                      Regarding the Mortgagor. The Mortgagor is one or more natural persons and/or trustees for an Illinois land trust or a trustee under a “living trust” and such “living trust” is in compliance with FNMA guidelines for such trusts.

 

(fff)                         Predatory Lending Regulations; High Cost Loans. No Mortgage Loan (i) is classified as a “High Cost” or predatory Mortgage Loan under federal or any state statue or regulation, or (ii) is subject to any law, regulation or rule that (A) imposes liability on a mortgagee or a lender to a mortgagee for upkeep to a Mortgaged Property prior to completion of foreclosure thereon, or (B) imposes liability on a lender to a mortgagee for acts or omissions of the mortgagee or otherwise defines a mortgagee in a manner that would include a lender to a mortgagee.

 

(ggg)                      Subprime Mortgage Loans. No Mortgage Loan is a “Subprime Home Loan” as defined in New York Banking Law 6-m, effective September 1, 2008.

 

(hhh)                   Balloon Mortgage Loans. No Mortgage Loan is a balloon mortgage loan that has an original stated maturity of less than seven (7) years.

 

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(iii)                               Adjustable Rate Mortgage Loans. Each Mortgage Loan that is an adjustable rate Mortgage Loan complies in all material respects with the Interagency Statement on Subprime Mortgage Lending, 72 FR 37569 (July 10, 2007), regardless of whether the Mortgage Loan’s originator or Seller is subject to such statement as a matter of law. Such Mortgage Loan is not a Negative Amortization Mortgage Loan.

 

(jjj)                            Nontraditional Mortgage Loan. Each Mortgage Loan that is a “nontraditional mortgage loan” within the meaning of the Interagency Guidance on Nontraditional Mortgage Product Risks, 71 FR 58609 (October 4, 2006) complies in all material respects with such guidance, regardless of whether the Mortgage Loan’s originator or Seller is subject to such guidance as a matter of law.

 

(kkk)           Mandatory Arbitration. No Mortgage Loan is subject to mandatory arbitration.

 

(lll)                       Co-op Loan. With respect to each Co-op Loan:

 

(i)             the Mortgage File contains (a) a copy of the Co-op Lease and the assignment of such Co-op Lease to the originator of the Mortgage Loan, with all intervening assignments showing a complete chain of title and an assignment thereof by Seller; (b) the stock certificate together with an undated stock power relating to such stock certificate executed in blank; (c) the recognition agreement in substantially the same form as a standard “AZTECH” form; (d) copies of the UCC-1 financing statement filed by the originator as secured party and, if applicable, a filed UCC-3 Assignment of the subject security interest showing a complete chain of title, together with an executed UCC-3 Assignment of such security interest by the Seller in a form sufficient for filing.

 

(ii)          (a) each original UCC financing statement, continuation statement or other governmental filing or recordation necessary to create or preserve the perfection and priority of the first priority lien and security interest in the cooperative shares and Co-op Lease has been timely and properly made and (b) a search for filings of financing statements has been made by a company competent to make the same, which company is acceptable to Fannie Mae and qualified to do business in the jurisdiction where the cooperative unit is located, and such search has not found any liens against or security interest in the cooperative shares relating to each Co-op Loan which would have priority over the Seller’s security interest in such cooperative shares or otherwise materially and adversely affect the Co-op Loan (except for unpaid maintenance, assessments and other amounts owed to the related cooperative which individually or in the aggregate will not have a material adverse effect on such Co-op Loan);

 

(iii).    the related cooperative corporation that owns title to the related cooperative apartment building is a “cooperative housing corporation” within the meaning of Section 216 of the Code, and is in material compliance with applicable federal, state and local laws which, if not complied with, could have a material adverse effect on the Mortgaged Property; and

 

(iv).   (a) the terms of the related Co-op Lease is longer than the terms of the Co-op Loan, (b) there is no provision in any Co-op Lease which requires the Mortgagor to offer for sale the cooperative shares owned by such

 

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Mortgagor first to the cooperative corporation, (c) there is no prohibition against pledging the shares of the cooperative corporation or assigning the Co-op Lease and (d) the Recognition Agreement is on a form of agreement published by the Aztech Document Systems, Inc. or includes provisions which are no less favorable to the lender than those contained in such agreement.

 

(mmm) MERS Designated Loan. If said Mortgage Loan is a MERS Designated Loan, said Mortgage Loan is registered on the MERS® System, on the books and records of MERSCORP Holdings, Inc. and, no later than FIVE ( 5 ) Business Days following the delivery of the Mortgage Loan Documents for said Mortgage Loan to Buyer: (1) MERS, as nominee for Seller, shall be reflected on the MERS® System as the mortgagee with respect to said Mortgage Loan, and (2) Buyer shall be listed on the MERS® System as the “Interim Funder” in the Primary Section with respect to said Mortgage Loan.

 

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SCHEDULE 2

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO PURCHASED COMMERCIAL REAL ESTATE MORTGAGE LOANS AND MULTI-FAMILY MORTGAGE LOANS

 

Seller represents and warrants to Buyer, with respect to each Commercial Real Estate Mortgage Loan or Multi-family Mortgage Loan, that as of the Purchase Date for the purchase of Purchased Repo Assets by Buyer from Seller and as of the date of this Agreement and any Transaction hereunder and at all times while the Repurchase Facility Documents and any Transaction hereunder is in full force and effect, that the following representations and warranties are true and correct; provided that, notwithstanding anything to the contrary in this Schedule 2, Buyer acknowledges and agrees that a Mortgage Loan may constitute an Eligible Repo Asset subject to purchase by Buyer in a Transaction hereunder if such Mortgage Loan is originated in accordance with the Underwriting Guidelines and subject to substantially similar representations and warranties.

 

For purposes of this Schedule 2 and the representations and warranties set forth herein, a breach of a representation or warranty shall be deemed to have been cured with respect to a Mortgage Loan if and when Seller has taken or caused to be taken action such that the event, circumstance or condition that gave rise to such breach no longer adversely affects such Mortgage Loan. With respect to those representations and warranties which are made to the best of Seller’s knowledge, if it is discovered by Seller or Buyer that the substance of such representation and warranty is inaccurate, notwithstanding Seller’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty.

 

Notwithstanding the foregoing to the contrary but subject to Buyer’s acknowledgment in the first paragraph above, in the event that any of the following representations or warranties are not true and correct in any material respect, with respect to any Purchased Repo Asset, the sole and exclusive consequence of same shall be to declare that such Purchased Repo Asset shall cease to be an Eligible Repo Asset and shall be repurchased by Seller as provided hereunder.

 

For purposes of these representations and warranties, the phrases “the Seller’s knowledge” or “the Seller’s belief” and other words and phrases of like import shall mean, except where otherwise expressly set forth herein, the actual state of knowledge or belief of the Seller, its officers and employees directly responsible for the underwriting, origination, servicing or sale of the Mortgage Loans regarding the matters expressly set forth herein.

 

1. Complete Mortgage File. With respect to each Mortgage Loan, except for any Loans that were wet-funded, (i) a copy of the Mortgage File for each Mortgage Loan and (ii) originals or copies of all financial statements, appraisals, environmental reports, engineering reports, seismic assessment reports, leases, rent rolls, Insurance Policies and certificates, legal opinions and tenant estoppels that relate to such Mortgage Loan, have been delivered to the Custodian.

 

2. Whole Loan; Ownership of Mortgage Loans. Each Mortgage Loan is a whole

 

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loan and not a participation interest in a Mortgage Loan. At the time of the sale, transfer and assignment to Buyer, no Mortgage Note or Mortgage was subject to any assignment (other than assignments to the Seller), participation or pledge, and the Seller had good title to, and was the sole owner of, each Mortgage Loan free and clear of any and all liens, charges, pledges, encumbrances, participations, any other ownership interests and other interests on, in or to such Mortgage Loan. Seller has full right and authority to sell, assign and transfer each Mortgage Loan, and the assignment to Buyer constitutes a legal, valid and binding assignment of such Mortgage Loan free and clear of any and all liens, pledges, charges or security interests of any nature encumbering such Mortgage Loan.

 

3. Loan Document Status. Each related Mortgage Note, Mortgage, Assignment of Leases (if a separate instrument), guaranty and other agreement executed by or on behalf of the related Obligor or guarantor in connection with such Mortgage Loan is the legal, valid and binding obligation of the related Obligor or guarantor (subject to any non-recourse provisions contained in any of the foregoing agreements and any applicable state anti-deficiency or market value limit deficiency legislation), as applicable, and is enforceable in accordance with its terms, except as such enforcement may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law) and except that certain provisions in such Mortgage Loan documents (including, without limitation, provisions requiring the payment of default interest, late fees or prepayment/yield maintenance premiums) may be further limited or rendered unenforceable by applicable law, but (subject to the limitations set forth above) such limitations or unenforceability will not render such loan documents invalid as a whole or materially interfere with the mortgagee’s realization of the principal benefits and/or security provided thereby (clauses (i) and (ii) collectively, the “Standard Qualifications”).

 

Except as set forth in the immediately preceding sentences, there is no valid offset, defense, counterclaim or right of rescission available to the related Obligor with respect to any of the related Mortgage Notes, Mortgages or other Mortgage Loan documents, including, without limitation, any such valid offset, defense, counterclaim or right based on intentional fraud by Seller in connection with the origination of the Mortgage Loan, that would deny the mortgagee the principal benefits intended to be provided by the Mortgage Note, Mortgage or other Mortgage Loan documents.

 

4. Mortgage Provisions. The Mortgage Loan documents for each Mortgage Loan, together with applicable state law, contain provisions that render the rights and remedies of the holder thereof adequate for the practical realization against the Mortgaged Property of the principal benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, nonjudicial foreclosure subject to the limitations set forth in the Standard Qualifications.

 

5. Mortgage Status; Waivers and Modifications. Since origination and except by written instruments set forth in the related Mortgage File or as otherwise provided in the related Mortgage Loan documents (a) other than as set forth in written notice to Buyer, the material terms of such Mortgage, Mortgage Note, Mortgage Loan guaranty, and related Mortgage Loan documents have not been waived, impaired, modified, altered, satisfied, canceled, subordinated or rescinded in any respect; (b) no related Mortgaged Property or any portion thereof has been

 

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released from the lien of the related Mortgage in any manner which materially interferes with the security intended to be provided by such Mortgage or the use or operation of the remaining portion of such Mortgaged Property; and (c) neither borrower nor any guarantor has been released from its material obligations under the Mortgage Loan.

 

6. Lien; Valid Assignment. Subject to the Standard Qualifications, each endorsement or assignment of Mortgage and assignment of Assignment of Leases from the Seller constitutes a legal, valid and binding endorsement or assignment from the Seller. Each related Mortgage and Assignment of Leases is freely assignable without the consent of the related Obligor. Each related Mortgage is a legal, valid and enforceable first lien on the related Obligor’s fee interest in the Mortgaged Property in the principal amount of such Mortgage Loan or allocated loan amount (subject only to Permitted Encumbrances (as defined below)), except as the enforcement thereof may be limited by the Standard Qualifications. Such Mortgaged Property (subject to Permitted Encumbrances) as of origination and, to the Seller’s knowledge, as of the Purchase Date, is free and clear of any recorded mechanics’ or materialmen’s liens and other recorded encumbrances, and as of origination and, no rights exist which under law could give rise to any such lien or encumbrance that would be prior to or equal with the lien of the related Mortgage, except those which are bonded over, escrowed for or insured against by the applicable Title Policy (as defined below). Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid and enforceable lien on property described therein subject to the Permitted Encumbrances, except as such enforcement may be limited by Standard Qualifications.

 

7. Permitted Liens; Title Insurance. Each Mortgaged Property securing a Mortgage Loan is covered by an American Land Title Association loan title insurance policy or a comparable form of loan title insurance policy approved for use in the applicable jurisdiction (or, if such policy is yet to be issued, by a pro forma policy, a preliminary title policy or a “marked up” commitment, in each case with escrow instructions and binding on the title insurer) (the “Title Policy”) in the original principal amount of such Mortgage Loan after all advances of principal (including any advances held in escrow or reserves), that insures for the benefit of the owner of the indebtedness secured by the Mortgage, the first priority lien of the Mortgage, which lien is subject only to (a) the lien of current real property taxes, water charges, sewer rents and assessments not yet due and payable; (b) covenants, conditions and restrictions, rights of way, easements and other matters of public record specifically identified in the Title Policy; (c) the exceptions (general and specific) and exclusions set forth in such Title Policy; (d) other matters to which like properties are commonly subject; (e) the rights of tenants (as tenants only) under leases (including subleases) pertaining to the related Mortgaged Property; and (f) condominium declarations of record and identified in such Title Policy, provided that none of which items (a) through (f), individually or in the aggregate, materially interferes with the value, current marketability or principal use of the Mortgaged Property, the security intended to be provided by such Mortgage, or the current ability of the related Mortgaged Property to generate net cash flow sufficient to service the related Mortgage Loan or the Obligor’s ability to pay its obligations when they become due (collectively, the “Permitted Encumbrances”). Except as contemplated by clause (f) of the preceding sentence none of the Permitted Encumbrances are mortgage liens that are senior to or coordinate and co-equal with the lien of the related Mortgage. Such Title Policy (or, if it has yet to be issued, the coverage to be provided thereby) is in full force and effect, all premiums thereon have been paid and no claims have been made by the Seller thereunder and no claims have been paid

 

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thereunder. Neither the Seller, nor to the Seller’s knowledge, any other holder of the Mortgage Loan, has done, by act or omission, anything that would materially impair the coverage under such Title Policy. Each Title Policy contains no exclusion for, or affirmatively insures (except for any Mortgaged Property located in a jurisdiction where such affirmative insurance is not available in which case such exclusion may exist), (a) that the Mortgaged Property shown on the survey is the same as the property legally described in the Mortgage and (b) to the extent that the Mortgaged Property consists of two or more adjoining parcels, such parcels are contiguous.

 

8. Junior Liens. There are no subordinate mortgages or junior mortgage liens encumbering the related Mortgaged Property other than Permitted Encumbrances.

 

9. Assignment of Leases and Rents. There exists as part of the related Mortgage File an Assignment of Leases (either as a separate instrument or incorporated into the related Mortgage). Subject to the Permitted Encumbrances, each related Assignment of Leases creates a valid first-priority collateral assignment of, or a valid first-priority lien or security interest in, rents and certain rights under the related lease or leases, subject only to a license granted to the related Obligor to exercise certain rights and to perform certain obligations of the lessor under such lease or leases, including the right to operate the related leased property, except as the enforcement thereof may be limited by the Standard Qualifications. The related Mortgage or related Assignment of Leases, subject to applicable law and the Standard Qualifications, provides that, upon an event of default under the Mortgage Loan, a receiver may be appointed for the collection of rents or for the related mortgagee to enter into possession to collect the rents or for rents to be paid directly to the mortgagee.

 

10. Financing Statements. Subject to the Standard Qualifications, each Mortgage Loan or related security agreement establishes a valid security interest in, and a UCC 1 financing statement has been filed and/or recorded (or, in the case of fixtures, the Mortgage constitutes a fixture filing) in all places necessary at the time of the origination of the Mortgage Loan to perfect a valid security interest in, the personal property (creation and perfection of which is governed by the UCC) owned by Borrower and necessary to operate such Mortgaged Property in its current use other than (1) non-material personal property, (2) personal property subject to purchase money security interests and (3) personal property that is leased equipment. Each UCC 1 financing statement, if any, filed with respect to personal property constituting a part of the related Mortgaged Property and each UCC 2 or UCC 3 assignment, if any, filed with respect to such financing statement was in suitable form for filing in the filing office in which such financing statement was filed. Notwithstanding anything herein to the contrary, no representation is made as to the perfection of any security interest in rents or other personal property to the extent that possession or control of such items or actions other than the filing of Uniform Commercial Code financing statements is required to effect such perfection.

 

11. Appraisal. The Mortgage File contains an appraisal of the related Mortgaged Property with an appraisal date within 6 months of the Mortgage Loan origination date. The appraisal is signed by an appraiser that (i) was engaged directly by the originator of the Mortgage Loan or the Seller, and (ii) had no interest in the Mortgaged Property or the Borrower or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan. Each appraiser has represented in such appraisal or in a supplemental letter that the appraisal satisfies the requirements of the

 

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“Uniform Standards of Professional Appraisal Practice” as adopted by the Appraisal Standards Board of the Appraisal Foundation or The Financial Institution Reform, Recovery and Enforcement Act of 1989, as amended.

 

12. Condition of Property. An engineering report or property condition assessment (if required) was prepared in connection with the origination of each Mortgage Loan. Except as set forth on the Mortgage Loan Schedule setting forth repairs required to be reserved for or made, (a) all major building systems for the improvements of each related Mortgaged Property are in good working order, and (b) each related Mortgaged Property (i) is free of any material damage, and (ii) is in good repair and condition, and (iii) is free of patent and observable structural defects, except to the extent that any damage or deficiencies would not reasonably be expected to materially and adversely affect the use or operation of the Mortgaged Property or the security intended to be provided by such Mortgage, or repairs with respect to such damage or deficiencies are estimated to not exceed 5% of the original principal balance of the Mortgage Loan, and such repairs have either (i) been completed, or (ii) escrows in an aggregate amount not less than the estimated cost of such repairs have been established by the Lender and the rights thereto transferred by the Seller to the Buyer on the Purchase Date, or (iii) reserves in an aggregate amount not less than the estimated cost of such repairs have been established by the Lender and are included in the face amount of the Mortgage Note and the Mortgage.

 

To the Seller’s knowledge, based on the engineering report or property condition assessment, as applicable, and the Seller Diligence (as defined below), there are no issues with the physical condition of the Mortgaged Property that the Seller believes would have a material adverse effect on the current marketability or principal use of the Mortgaged Property other than those disclosed in the engineering report or Servicing File and those addressed in the above paragraph.

 

13. Taxes and Assessments. As of the date of origination and as of the Purchase Date, all taxes, governmental assessments and other outstanding governmental charges (including, without limitation, water and sewage charges) due with respect to the Mortgaged Property (excluding any related personal property) securing a Mortgage Loan that is or could become a lien on the related Mortgaged Property that became due and owing prior to the Purchase Date with respect to each related Mortgaged Property have been paid, or, if the appropriate amount of such taxes or charges is being appealed or is otherwise in dispute, the unpaid taxes or charges are covered by an escrow of funds or other security sufficient to pay such tax or charge and reasonably estimated interest and penalties, if any, thereon.

 

14. Condemnation. As of the date of origination and to the Seller’s knowledge as of the Purchase Date, there is no proceeding pending, and, to the Seller’s knowledge as of the date of origination and as of the Purchase Date, there is no proceeding threatened, for the total or partial condemnation of such Mortgaged Property that would have a material adverse effect on the value, use or operation of the Mortgaged Property.

 

15. Actions Concerning Mortgage Loan. To the Seller’s knowledge, as of origination there was no pending or filed action, suit or proceeding, arbitration or governmental investigation involving any Obligor, guarantor, or Obligor’s interest in the Mortgaged Property, an adverse outcome of which would reasonably be expected to materially and adversely affect

 

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(a) such Obligor’s title to the Mortgaged Property, (b) the validity or enforceability of the Mortgage, (c) such Obligor’s ability to perform under the related Mortgage Loan, (d) such guarantor’s ability to perform under the related guaranty, (e) the current marketability of the Mortgaged Property, (f) the principal benefit of the security intended to be provided by the Mortgage Loan documents, (g) the current ability of the Mortgaged Property to generate net cash flow sufficient to service such Mortgage Loan, or (h) the current principal use of the Mortgaged Property.

 

16. Escrow Deposits. All escrow deposits and escrow payments currently required to be escrowed with lender pursuant to each Mortgage Loan (including capital improvements and environmental remediation reserves) are in the possession, or under the control, of the Seller or its servicer, and there are no delinquencies (subject to any applicable grace or cure periods) in connection therewith, and the right to all such escrows and deposits that are required under the related Mortgage Loan documents are being conveyed by the Seller to Buyer. No escrow amounts have been released except in accordance with the terms and conditions of the related Mortgage Loan documents.

 

17. No Holdbacks. Except as set forth on the Mortgage Loan Schedule (for CRE Loans), the principal amount of the Mortgage Loan stated on the Mortgage Loan Schedule has been fully disbursed as of the Purchase Date and there is no requirement for future advances thereunder. When identified on the Mortgage Loan Schedule that the full amount of the Mortgage Loan has not been disbursed, the remaining undisbursed portion thereof is either (i) being held in escrow or (ii) held in reserve, pending the satisfaction of certain conditions relating to improvements or repairs, or other matters with respect to the related Mortgaged Property, and prior to any Purchase Request from Seller for the purchase of any subsequent draws by the Borrower for said Mortgage Loan, said draws were funded by Seller or Servicer after proof satisfactory to Seller that such draws were used for the improvement or repair of the Mortgaged Property, and such work was completed to the satisfaction of the Seller to complete the improvement or repair of the Mortgaged Property in compliance with the Underwriting Guidelines.

 

18. Insurance. Each related Mortgaged Property is, and is required pursuant to the related Mortgage to be, insured by a property insurance policy providing coverage for loss in accordance with coverage found under a “special cause of loss form” or “all risk form” that includes replacement cost valuation issued by an insurer meeting the requirements of the related loan documents and having a claims-paying or financial strength rating of at least “A- :VIII” from A.M. Best Company or “A3” (or the equivalent) from Moody’s Investors Service, Inc. or “A-” from Standard & Poor’s Ratings Service (collectively the “Insurance Rating Requirements”), in an amount (subject to customary deductibles) not less than the lesser of (1) the original principal balance of the Mortgage Loan and (2) the full insurable value on a replacement cost basis of the improvements, furniture, furnishings, fixtures and equipment owned by Obligor included in the Mortgaged Property (with no deduction for physical depreciation), but, in any event, not less than the amount necessary or containing such endorsements as are necessary to avoid the operation of any coinsurance provisions with respect to the related Mortgaged Property.

 

Each related Mortgaged Property is also covered, and required to be covered pursuant to the related Loan Documents, by business interruption or rental loss insurance (except where an applicable tenant lease does not permit the tenant to abate rent under any

 

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circumstances), which (i) covers a period of not less than 12 months, or a specified dollar amount which, in the reasonable judgment of the Seller, will cover no less than 12 months of rental income; and (ii) covers the actual loss sustained during restoration.

 

If any material part of the improvements, exclusive of a parking lot, located on a Mortgaged Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, the related Obligor is required to maintain insurance in the maximum amount available under the National Flood Insurance Program, plus such additional excess flood coverage in an amount as is generally required by the Seller for similar commercial and multifamily loans.

 

If windstorm and/or windstorm related perils and/or “named storms” are excluded from the primary property damage insurance policy the Mortgaged Property is insured by a separate windstorm insurance policy issued by an insurer meeting the Insurance Rating Requirements or endorsement covering damage from windstorm and/or windstorm related perils and/or named storms, in an amount not less than the lesser of (1) the original principal balance of the Mortgage Loan and (2) the full insurable value on a replacement cost basis of the improvements, furniture, furnishings, fixtures and equipment owned by the Obligor and included in the Mortgaged Property (with no deduction for physical depreciation), but, in any event, not less than the amount necessary or containing such endorsements as are necessary to avoid the operation of any coinsurance provisions with respect to the related Mortgaged Property by an insurer meeting the Insurance Rating Requirements.

 

The Mortgaged Property is covered, and required to be covered pursuant to the related Loan Documents, by a commercial general liability insurance policy issued by an insurer meeting the Insurance Rating Requirements including broad-form coverage for property damage, contractual damage and personal injury (including bodily injury and death) in amounts as are generally required by Seller for similar commercial and multifamily loans, and in any event not less than $1 million per occurrence and $2 million in the aggregate.

 

An architectural or engineering consultant has performed an analysis of each of the Mortgaged Properties located in seismic zones 3 or 4 in order to evaluate the seismic condition of such property, for the sole purpose of assessing the probable maximum loss or scenario expected loss (“PML”) for the Mortgaged Property in the event of an earthquake. In such instance, the PML was based on a 475-year return period, which correlates to a 10% probability of exceedance in an exposure period of 50 years. If the resulting report concluded that the PML would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Mortgaged Property was obtained by an insurer rated at least “A- :VIII” by A.M. Best Company or “A3” (or the equivalent) from Moody’s Investors Service, Inc. or “A-” by Standard & Poor’s Ratings Service in an amount not less than 100% of the PML.

 

The Loan Documents require insurance proceeds in respect of a property loss to be applied either (a) to the repair or restoration of all or part of the related Mortgaged Property, with respect to all property losses in excess of 5% of the then outstanding principal amount of the related Mortgage Loan, the lender (or a trustee appointed by it) having the right to hold and disburse such proceeds as the repair or restoration progresses, or (b) to the payment of the outstanding principal balance of such Mortgage Loan together with any accrued interest thereon.

 

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All premiums on all insurance policies referred to in this section that are required by the Loan Documents to be paid as of the Purchase Date have been paid, and such insurance policies name the lender under the Mortgage Loan and its successors and assigns as a loss payee under a mortgagee endorsement clause or, in the case of the general liability insurance policy, as named or additional insured. Each related Mortgage Loan obligates the related Obligor to maintain all such insurance and, at such Obligor’s failure to do so, authorizes the lender to maintain such insurance at the Obligor’s cost and expense and to charge such Obligor for related premiums. All such insurance policies (other than commercial liability policies) require at least 10 days’ prior notice to the lender of termination or cancellation arising because of nonpayment of a premium and at least 30 days prior notice to the lender of termination or cancellation (or such lesser period, not less than 10 days, as may be required by applicable law) arising for any reason other than non-payment of a premium and no such notice has been received by Seller.

 

19. Access; Utilities; Separate Tax Parcels. Each Mortgaged Property (a) is located on or adjacent to a public road and has direct legal access to such road, or has permanent access from a recorded easement or right of way permitting ingress and egress to/from a public road, (b) is served by or has access rights to public or private water and sewer (or well and septic) and other utilities necessary for the current use of the Mortgaged Property, all of which are adequate for the current use of the Mortgaged Property, and (c) constitutes one or more separate tax parcels which do not include any property which is not part of the Mortgaged Property or is subject to an endorsement under the related Title Policy insuring the Mortgaged Property, or in certain cases, an application has been made or is required to be made to the applicable governing authority for creation of separate tax parcels (or the Mortgage Loan documents so require such application in the future), in which case the Mortgage Loan requires the Obligor to escrow an amount sufficient to pay taxes for the existing tax parcel of which the Mortgaged Property is a part until the separate tax parcels are created.

 

20. No Encroachments. To the Seller’s knowledge based solely on surveys or survey updates obtained in connection with origination and the Title Policy obtained in connection with the origination of each Mortgage Loan, and except for encroachments that do not materially and adversely affect the current marketability or principal use of the Mortgaged Property: (a) all material improvements that were included for the purpose of determining the appraised value of the related Mortgaged Property at the time of the origination of such Mortgage Loan are within the boundaries of the related Mortgaged Property, except for encroachments that are insured against by the applicable Title Policy; (b) no material improvements on adjoining parcels encroach onto the related Mortgaged Property except for encroachments that are insured against by the applicable Title Policy; and (c) no material improvements encroach upon any easements except for encroachments that are insured against by the applicable Title Policy.

 

21. No Contingent Interest or Equity Participation. No Mortgage Loan has a shared appreciation feature, any other contingent interest feature or a negative amortization feature or an equity participation by Seller.

 

22. Compliance with Usury Laws. The Mortgage Rate (exclusive of any default interest, late charges, yield maintenance charge, or prepayment premiums) of such Mortgage

 

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Loan complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.

 

23. Authorized to do Business. To the extent required under applicable law, as of the origination date, the Seller was duly authorized and licensed to transact and do business in the jurisdiction in which each related Mortgaged Property is located, or exempt from such authorization and licensing.

 

24. Trustee under Deed of Trust. With respect to each Mortgage which is a deed of trust, a trustee, duly qualified under applicable law to serve as such, currently so serves and is named in the deed of trust or has been substituted in accordance with the Mortgage and applicable law or may be substituted in accordance with the Mortgage and applicable law by the related mortgagee, and, except in connection with a trustee’s sale after a default by the related Borrower or in connection with any full or partial release of the related Mortgaged Property or related security for such Mortgage Loan, no fees are payable to such trustee except for deminimis fees paid.

 

25. Local Law Compliance. To the Seller’s knowledge, based upon any of a letter from any governmental authorities, a legal opinion, an architect’s letter, a zoning consultant’s report, an endorsement to the related Title Policy, a survey or a survey update, or other affirmative investigation of local law compliance consistent with the investigation conducted by the Seller for similar commercial and multifamily mortgage loans, the improvements located on or forming part of each Mortgaged Property securing a Mortgage Loan are in material compliance with applicable laws, zoning ordinances, rules, covenants, and restrictions (collectively “Zoning Regulations”) governing the occupancy, use, and operation of such Mortgaged Property or constitute a legal non-conforming use or structure and any non-conformity with zoning laws constitutes a legal non-conforming use or structure which does not materially and adversely affect the use, operation or value of such Mortgaged Property. In the event of casualty or destruction, (a) the Mortgaged Property may be restored or repaired to the full extent necessary to maintain the use of the structure immediately prior to such casualty or destruction, (b) law and ordinance insurance coverage has been obtained for the Mortgaged Property in amounts customarily required by Seller for similar commercial and multifamily loans that provides coverage for loss of use to undamaged portions of the Mortgaged Property arising from the application of laws or ordinances, or (c) the inability to restore the Mortgaged Property to the full extent of the use or structure immediately prior to the casualty would not materially and adversely affect the value, use or operation of such Mortgaged Property.

 

26. Licenses and Permits. Each Borrower covenants in the Mortgage Loan documents that it shall keep all material licenses, permits, franchises, certificates of occupancy and applicable governmental approvals necessary for the operation of the Mortgaged Property in full force and effect, and to the Seller’s knowledge all such material licenses, permits, franchises, certificates of occupancy and applicable governmental approvals are in effect or the failure to obtain or maintain such material licenses, permits, franchises or certificates of occupancy and applicable governmental approvals does not materially and adversely affect either (i) the use and/or operation of the Mortgaged Property as it was used and operated as of the date of origination of the Mortgage Loan, or (ii) the rights of a holder of the related Mortgage Loan. The Mortgage Loan requires the related Borrower to be qualified to do business in the jurisdiction in which the related Mortgaged Property is located and for the

 

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Borrower and the Mortgaged Property to be in compliance in all material respects with all regulations, zoning and building laws.

 

27. Mortgage Releases. The terms of the related Mortgage or related Mortgage Loan documents do not provide for release of any material portion of the Mortgaged Property from the lien of the Mortgage except (a) upon payment in full of such Mortgage Loan, (b) releases of out-parcels that are unimproved or other portions of the Mortgaged Property which will not have a material adverse effect on the underwritten value of the Mortgaged Property and which were not afforded any value in the appraisal obtained at the origination of the Mortgage Loan and are not necessary for physical access to the Mortgaged Property or compliance with zoning requirements, or (c) as required pursuant to an order of condemnation.

 

28. Financial Reporting and Rent Rolls. Each Mortgage Loan requires the Borrower to provide the owner or holder of the Mortgage Loan with (a) quarterly (other than for single-tenant properties) and annual operating statements, (b) quarterly (other than for single-tenant properties) rent rolls for properties that have any individual lease which accounts for more than 5% of the in-place base rent, if applicable, and (c) annual financial statements.

 

29. Due on Sale or Encumbrance. Subject to specific exceptions set forth below, each Mortgage Loan contains a “due on sale” or other such provision for the acceleration of the payment of the unpaid principal balance of such Mortgage Loan if, without the consent of the holder of the Mortgage and/or complying with the requirements of the related Mortgage Loan documents (which provide for transfers without the consent of the lender which are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Mortgaged Property, including, but not limited to, transfers of worn-out or obsolete furnishings, fixtures, or equipment promptly replaced with property of equivalent value and functionality and transfers by leases entered into in accordance with the Mortgage Loan documents), (a) the related Mortgaged Property, or any controlling equity interest in the related Borrower, is directly pledged, transferred or sold, other than as related to (i) family and estate planning transfers or transfers upon death or legal incapacity, (ii) transfers to certain affiliates as defined in the related Mortgage Loan documents, (iii) transfers of less than a controlling interest in a Borrower, (iv) transfers to another holder of direct equity in the Borrower, a specific Person designated in the related Mortgage Loan documents or a Person satisfying specific criteria identified in the related Mortgage Loan documents, (v) transfers of common stock in publicly traded companies or (vi) a substitution or release of collateral otherwise permitted herein, or (b) the related Mortgaged Property is encumbered with a subordinate lien or security interest against the related Mortgaged Property, other than (i) any companion interest of any Mortgage Loan or any subordinate debt that existed at origination and is permitted under the related Mortgage Loan documents, (ii) purchase money security interests or (iii) Permitted Encumbrances.

 

30. Single-Purpose Entity. Each Mortgage Loan made to a Single-Purpose Entity requires the Borrower to be a Single-Purpose Entity for at least as long as the Mortgage Loan is outstanding. Each Mortgage Loan made to a Single-Purpose Entity with a Principal Balance of more than $7 million has a counsel’s opinion regarding non-consolidation of the Borrower. For this purpose, a “Single-Purpose Entity” shall mean an entity, other than an individual, whose organizational documents and the related Mortgage Loan documents provide substantially to the effect that it was formed or organized solely for the purpose of owning and operating the Mortgaged Property securing the Mortgage Loan and prohibit it from engaging in any business

 

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unrelated to such Mortgaged Property, and whose organizational documents further provide, or which entity represented in the related Mortgage Loan documents, substantially to the effect that it does not have any assets other than those related to its interest in and operation of such Mortgaged Property, or any indebtedness other than as permitted by the related Mortgage(s) or the other related Mortgage Loan documents, that it has its own books and records and accounts separate and apart from those of any other person, and that it holds itself out as a legal entity, separate and apart from any other person or entity.

 

31. Servicing. The servicing and collection of each Mortgage Loan complied with all applicable laws and regulations and was in all material respects legal, proper and in accordance with customary commercial mortgage servicing practices.

 

32. Origination and Underwriting. The origination practices of the Seller (or the related originator if the Seller was not the originator) with respect to each Mortgage Loan have been, in all material respects, legal and as of the date of its origination, such Mortgage Loan and the origination thereof complied in all material respects with, or was exempt from, all requirements of federal, state or local law relating to the origination of such Mortgage Loan.

 

33. Rent Rolls; Operating Histories. Seller has obtained a rent roll (the “Certified Rent Roll(s)”) other than with respect to single tenant properties certified by the related Obligor or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Mortgage Loan. Seller has obtained operating histories (the “Certified Operating Histories”) with respect to each Mortgaged Property certified by the related Obligor or the related guarantor(s) as accurate and complete in all material respects as of a date within 180 days of the date of origination of the related Mortgage Loan.

 

34. No Material Default; Payment Record. No Mortgage Loan is or has been more than 30 days delinquent, without giving effect to any grace or cure period, in making required payments in the prior 12 months (or since origination if such Mortgage Loan has been originated within the past 12 months). To the Seller’s knowledge, there is (a) no material default, breach, violation or event of acceleration existing under the related Mortgage Loan, or (b) no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default, breach, violation or event of acceleration, which default, breach, violation or event of acceleration, in the case of either (a) or (b), materially and adversely affects the value of the Mortgage Loan or the value, use or operation of the related Mortgaged Property, provided, however, that this representation and warranty does not cover any default, breach, violation or event of acceleration that specifically pertains to or arises out of an exception scheduled to any other representation and warranty made by the Seller in accordance with the terms and provisions of this Agreement. No person other than the holder of such Mortgage Loan may declare any event of default under the Mortgage Loan or accelerate any indebtedness under the Mortgage Loan documents.

 

35. Bankruptcy. As of the date of origination of the related Mortgage Loan up through and including the Purchase Date, neither the Mortgaged Property (other than any tenants of such Mortgaged Property), nor any portion thereof, is the subject of, and no Obligor, guarantor or tenant occupying a single-tenant property is a debtor in state or federal bankruptcy, insolvency or similar proceeding.

 

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36. Organization of Obligor. The Seller has obtained an organizational chart or other description of each Obligor which identifies all beneficial controlling owners of the Obligor (i.e., managing members, general partners or similar controlling person for such Obligor) (the “Controlling Owner”). The Seller (1) required questionnaires to be completed by each Controlling Owner and guarantor or performed other processes designed to elicit information from each Controlling Owner and guarantor regarding such Controlling Owner’s or guarantor’s prior history regarding any bankruptcies, any felony convictions in accordance with the standards utilized by the Seller in connection with the origination of similar commercial and multifamily loans, and (2) performed or caused to be performed searches of the public records or services such as Lexis/Nexis or NCO, or a similar service designed to elicit information about each Controlling Owner and guarantor regarding such Controlling Owner’s or guarantor’s prior history regarding any bankruptcies, any felony convictions, in accordance with the standards utilized by the Seller in connection with the origination of similar commercial and multifamily loans. ((1) and (2) collectively, the “Seller Diligence”). Based solely on the Seller Diligence, to the knowledge of the Seller, no Controlling Owner or guarantor (i) has been in a state or federal bankruptcy or insolvency proceeding within the past seven (7) years, (ii) has a prior record of having been in a state or federal bankruptcy or insolvency within the past seven (7) years, or (iii) had been convicted of a felony.

 

37. Environmental Conditions. A Phase I environmental site assessment (or update of a previous Phase I and or Phase II site assessment) and, with respect to certain Mortgage Loans, a Phase II environmental site assessment (collectively, an “ESA”) meeting ASTM requirements conducted by a reputable environmental consultant in connection with such Mortgage Loan within 12 months prior to its origination date (or an update of a previous ESA was prepared), and such ESA (i) did not identify the existence of recognized environmental conditions (as such term is defined in ASTM E1527-05 or its successor, hereinafter “Environmental Condition”) at the related Mortgaged Property or the need for further investigation, or (ii) if the existence of an Environmental Condition or need for further investigation was indicated in any such ESA, then at least one of the following statements is true: (A) an amount reasonably estimated by a reputable environmental consultant to be sufficient to cover the estimated cost to cure any material noncompliance with applicable Environmental Laws or the Environmental Condition has been escrowed by the related Obligor and is held or controlled by the Seller; (B) if the only Environmental Condition relates to the presence of asbestos-containing materials, radon in indoor air, lead based paint or lead in drinking water, the only recommended action in the ESA is the institution of such a plan, an operations or maintenance plan has been required to be instituted by the related Obligor that can reasonably be expected to mitigate the identified risk; (C) the Environmental Condition identified in the related environmental report was remediated or abated in all material respects prior to the date hereof, and, if and as appropriate, a no further action or closure letter was obtained from the applicable governmental regulatory authority (or the environmental issue affecting the related Mortgaged Property was otherwise listed by such governmental authority as “closed” or a reputable environmental consultant has concluded that no further action is required); (D) an environmental policy or a lender’s pollution legal liability insurance policy that covers liability for the identified circumstance or condition was obtained from an insurer rated no less than A- (or the equivalent) by Moody’s, S&P and/or Fitch; or (E) a party related to the Obligor having financial resources reasonably estimated to be adequate to address the situation is required to take action and has executed an indemnification agreement. To Seller’s knowledge, except as set forth in the ESA, there is no Environmental Condition (as such term is defined in ASTM E1527-05 or its successor) at the related Mortgaged Property.

 

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Notwithstanding the foregoing, Buyer acknowledges and agrees that when circumstances warrant, a desktop review may be utilized in conjunction with or in lieu of an ESA.

 

38. Lease Estoppels. With respect to each Mortgage Loan secured by retail, office or industrial properties, the Seller requested the related Obligor to obtain estoppels from each commercial tenant (except for tenants for whom the related lease income was excluded from the Seller’s underwriting) with leases comprising 25% or more of the related property. With respect to each Mortgage Loan predominantly secured by a retail, office or industrial property leased to a single tenant, the Seller reviewed such estoppel obtained from such tenant no earlier than 90 days prior to the origination date of the related Mortgage Loan, and to Seller’s knowledge, based on the related estoppel, as applicable, (x) the related lease is in full force and effect and (y) there exists no material default under such lease, either by the lessee thereunder or by the lessor subject, in each case, to customary reservations of tenant’s rights, such as with respect to CAM and pass-through audits and verification of landlord’s compliance with co-tenancy provisions.

 

39. Cross-Collateralization. No Mortgage Loan is cross-collateralized or cross-defaulted with any other Mortgage Loan.

 

40. Advance of Funds by the Seller. Except for loan proceeds advanced at the time of loan origination or other payments contemplated by the Mortgage Loan Documents, no advance of funds has been made by Seller to the related Obligor, and no funds have been received from any person other than the related Obligor or an affiliate, directly, or, to the knowledge of the Seller for, or on account of, payments due on the Mortgage Loan. Neither Seller nor any affiliate thereof has any obligation to make any capital contribution to any Borrower under a Mortgage Loan, other than contributions made on or prior to the date hereof.

 

42. Compliance with Anti-Money Laundering Laws. Seller has complied in all material respects with all applicable anti-money laundering laws and regulations, including without limitation the USA Patriot Act of 2001 with respect to the origination of the Mortgage Loan.

 

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SCHEDULE OF EXHIBITS

 

	
EXHIBIT
    	
 
    	
DOCUMENT
    
	
 
    	
 
    	
 
    
	
A
    	
 
    	
Form of Purchase   Request, Detailed Loan Level Information, Wet Funding Transaction Information   (if applicable), Collateral File Checklist and Seller’s Request and   Certification
    
	
 
    	
 
    	
 
    
	
B
    	
 
    	
Form of Officer’s   Certificate
    

 

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EXHIBIT A
    	
 
    

 

Warehouse Lending Division, 3 MacArthur Place, Santa Ana, CA 92707/ Phone 949.236.5380/ Fax 978.313.1463

 

Purchase Request

 

Name of Seller

Address

City, State, Zip Code

Tel.: (000) 000-0000

 

Detailed Loan Level Information

 

	
Wire Date:
    	
Wire Amount: $
    	
 
    
	
Borrower(s) Name:
    	
 
    	
Loan#:
    
	
Subject Property Address:
    	
 
    	
 
    
	
Note Amount:
    	
 
    	
 
    

 

Wet Funding Transactions (if applicable)

EXECUTED DOCUMENTATION WILL BE REQUIRED WITHIN THREE (3) BUSINESS DAYS FROM RELEASE OF THE WIRE

 

ITEMS TO BE UPLOADED (by 1:00 p.m. PST)

 

	
·                  Mortgage Loan Schedule   (Should include all purchases for specific date)

·                  Purchase Request

·                  Insured Closing Protection   Letter

·                  Prelim Page with   Legal Subject Property Address along with Closing Wire Instructions (Wet   States Amount of Insured)
    	
 
    	
·                  Loan Closing Instructions   (Must indicate that if loan does not disburse within 48 hours, funds will be   returned to Banc of California, N. A.)

·                  Underwriting Approval -   Lender conditions list cleared

·                  Investor Takeout   Commitment
    

 

Collateral File Checklist

(Item listed below with an asterisk need NOT be resent if previously submitted as a Wet Transaction)

 

	
·                  *Mortgage Loan Schedule   (Should include all purchases for specific date)

·                  *Purchase request

·                  *Insured Closing   Protection Letter

·                  * Prelim Page with   Legal Subject Property Address along with Closing Wire Instructions (Wet   States Amount of Insured)

·                  *Loan Closing Instructions   (Must indicate that if loan does not close within 48 hours, funds will be   returned to Banc of California, N.A.)

·                  Underwriting Approval -   Lender conditions list cleared
    	
 
    	
·                  Investor Shipping   Instructions ( via System )

·                  *Investor Takeout   Commitment

·                  Original Note with   Addendum and Allonge

·                  Certified Copy of Deed of   Trust/Mortgage

·                  Copy of Final Executed   Application (1003)

·                  Final HUD-1

·                  Copy of Appraisal

·                  Full Prelim Report

 
    

 

Seller’s Request and Certification

 

	
Mortgage Loans:
    	
 
    	
THE MORTGAGE LOAN(S) COVERED BY THE   PURCHASE CONFIRMATION ARE LISTED AND DESCRIBED IN THE ATTACHED MORTGAGE LOAN   SCHEDULE.
    
	
 
    	
 
    	
 
    
	
Sale:
    	
 
    	
For value received, the Seller hereby conveys to the   Purchaser all rights, title and interest in and to the following: The Mortgage Note and the related Mortgage for each   Mortgage Loan;(b) all rights to payment thereunder; (c) all rights   related thereto, such as financing statements, guaranties and insurance   policies (issued by governmental agencies or otherwise), including   (i) mortgage and title insurance policies, (ii) fire and extended   coverage insurance policies (including the right, if any, to any return   premiums), and (iii) if applicable, private mortgage insurance and all   rights, if any, in escrow deposits consisting of impounds, insurance   premiums, or other funds held in account thereof; (d) all right, title   and interest of the owner of such loan in the real property, including all   improvements thereon, and the personal property (tangible and intangible)   that are encumbered by such mortgage (or deed of trust) and /or security   agreements; (e) all rights to service, administer, and/or collect such   loan and all rights to the payment of money on account of such servicing,   administration and/or collection appraisals, computer programs, tapes, discs,   cards, accounting records, and other books, records, information, and data   relating to such loan necessary to the administration or servicing of such   loan; and (f) all accounts, contact, rights (including, but not limited   to, all contract rights with respect to such loans under the Master   Repurchase Agreement (entered into between Seller and Buyer) and the related   Takeout Commitment, and general intangibles constituting or related to such   loan.
    
	
 
    	
 
    	
 
    
	
Price:
    	
 
    	
The price paid for the above-described rights is as set   forth on the Variable Terms Letter. The Seller hereby reaffirms the   representations, warranties and covenants made in the Master Repurchase   Agreement with respect to the Mortgage Loans on and as of the date and hereby   remakes all such representations, warranties and covenants on and as of the   effective date of sale set forth above.
    
	
 
    	
 
    	
 
    
	
Definitions:
    	
 
    	
Terms used but not defined herein shall have the meanings   assigned to them in the Master Repurchase Agreement as executed between   Seller and Banc of California, National Association.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Seller Authorized Signature
    	
Date
    	
 
    	
Print Name and Title
    

 

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EXHIBIT B

 

FORM OF OFFICER’S CERTIFICATE

 

I,                   , a duly appointed Chief Executive Officer of                    , (the “Seller”), DO HEREBY CERTIFY as follows:

 

1.                                      The representations and warranties set forth in Paragraph 10 of that certain Master Repurchase Agreement, dated as of                    (the “Agreement”) by and between Seller and Banc of California, National Association and the other Repurchase Facility Documents (as defined therein), are accurate and complete on and as of the date hereof with the same effect as though such representations and warranties had been made on and as of the date hereof.

 

2.                                      Seller is in compliance with all the terms and provisions set forth in the Agreement and the other Repurchase Facility Documents on its part to be observed and performed, and no Event of Default (as are defined in the Agreement) has occurred and is continuing.

 

IN WITNESS WHEREOF, the undersigned has hereunto signed his name this                day of                   , 2018    .

 

	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

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