Document:

Ex-10.1

 

EXHIBIT 10.1

FEDERAL HOME LOAN BANK OF CINCINNATI

Blanket Agreement for Advances

and

Security Agreement

Cincinnati, Ohio

______________ ______, 2004

                                                                                                                                                                                                        

the principal place of business of which is located at _________________________________________

(hereinafter called the “Borrower”), in consideration of advances (as further defined in Section 1
below) or other financial accommodations heretofore or at anytime hereafter made or granted to
Borrower and any affiliate of Borrower by the FEDERAL HOME LOAN BANK OF CINCINNATI (hereinafter
called the “Bank”), hereby grants to the Bank a security interest in and collateral assignment of
all of the Borrower’s assets or rights to the extent listed and defined in Section 2 below and
hereunder, and in any Addendum hereto, now or hereafter acquired, and all proceeds and products
thereof, cash or non-cash, to secure the payment of all such advances and all other indebtedness
and liabilities of the Borrower to the Bank, now existing or hereafter arising, plus interest
thereon and all costs of collection and legal expenses incurred by the Bank in collecting and/or
enforcing any of such liabilities or realizing on the security given hereby (hereinafter
collectively called the “Obligations”).

     1. APPLICATION AND AUTHORITY FOR ADVANCES; REPAYMENT; INTEREST AFTER MATURITY.
Pursuant to the Federal Home Loan Bank Act of 1932, as amended, and all relevant rules and
regulations in effect thereunder (hereinafter collectively the “Act”), the Bank makes available
loans to its members and certain qualified non-member mortgagees (hereinafter referred to as
“advances”), which advances shall be used by such members and their affiliates for the purposes
specified in the Act. The procedures and the form of application for such advances shall be as
specified within the “Advance Programs” in effect from time to time as adopted by the Board of
Directors of the Bank as part of its “Credit Policy”. The Borrower shall furnish to the Bank a
certified copy of a resolution of the Borrower’s Board of Directors (or other governing body)
specifying certain of the Borrower’s officers or other employees who are authorized to apply for,
amend and renew such advances from the Bank. Generally, all applications for advances shall be
made by such specified persons in writing, except that applications may be made by facsimile on the
conditions set out in the Credit Policy only if applications for advances by facsimile are then
permitted by the Credit Policy. However, unless the Bank shall be otherwise notified by the
Borrower in writing, the Bank may honor any form of request, including an oral request, for
disbursements of previously-approved applications for advances. The Bank’s records of such
advances to the Borrower shall be rebuttable evidence of such advance and of the Borrower’s
agreement to repay same in accord with the Advance Programs. Further, notwithstanding the
particular repayment schedule or interest rates specified in the Advance Programs, or within the
notice of approval from the Bank as to any such advance, interest shall be assessed against
past-due principal

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and/or interest (whether past due because of maturity, acceleration or otherwise), or, at the
Bank’s option upon any event of default occurring and continuing hereunder, at a default rate as
outlined in the Credit Policy.

     2. SECURED PROPERTY LISTING AND DEFINITION. The following collateral shall be
included in the Bank’s security interest (as noted in the box by each category) and all of such
items, together with all shares of the Bank owned by Borrower and such other collateral as may from
time to time be specified in separate agreements between the Bank and the Borrower or between the
Bank and any affiliate of the Borrower (each such separate agreement hereinafter sometimes called
an “Addendum”), or which are otherwise pledged to the Bank or in which the Bank takes a security
interest or collateral assignment, if any, shall hereinafter collectively be called the “secured
property”:

          
(a) o Obligations of the United States of America, or obligations fully

guaranteed by the United States of America, or other securities (whether certificated or
uncertificated), investment property, financial assets, security entitlements, accounts or other
equity or ownership interests in any corporation, partnership, limited liability company, trust or
other entity, association or organization, including without limitation any affiliate which holds
or may hold, directly or indirectly, transferred assets of the Borrower, which obligations or
securities are approved by the Bank as eligible collateral security and delivered to the Bank’s
possession or (at the Bank’s sole discretion) are otherwise in the Bank’s control or subject to an
acceptable negative pledge, which obligations or securities are to be treated as secured property
(whether hereunder or pursuant to other agreements with the Bank), and all replacements therefor
and proceeds thereof (hereinafter called “Securities Collateral”).

          
(b) o 100% of the Borrower’s one to four family mortgage portfolio i.e., each
and every one to four family residential mortgage or one to four family residential deed of trust
in favor of the Borrower or an affiliate of Borrower, as the case may be, as mortgagee, and the
notes or other instruments evidencing indebtedness secured thereby, or any participation or
residual interest therein, complying with the requirements of the Act and meeting the requirements
of Sections 5(b) and 5(e) below, whether now existing or hereafter acquired) and all replacements
therefor and proceeds thereof (hereinafter sometimes called “Blanket One to Four Mortgage
Collateral”).

          
(c) o 100% of the Borrower’s multi-family mortgage portfolio (i.e., each and
every five or more family residential mortgage or five or more family residential deed of trust in
favor of the Borrower or an affiliate of Borrower, as the case may be, as mortgagee, and the notes
or other instruments evidencing indebtedness secured thereby, or any participation or residual
interest therein, complying with the requirements of the Act and meeting the requirements of
Sections 5(b) and 5(e) below, whether now existing or hereafter acquired) and all replacements
therefor and proceeds thereof (hereinafter the “Blanket Multi-Family Mortgage Collateral,” and,
along with the interests of the Bank specified in Section 2(c) above, collectively called “Blanket
Mortgage Collateral”).

     3. EVIDENCE OF SECURED PROPERTY: MAINTENANCE OF COLLATERAL LEVEL. The Borrower agrees
to deliver to the Bank such evidence of eligibility to borrow hereunder, its interest in the
secured property and of availability of same for use as collateral pursuant hereto, in accordance
with the Credit Policy and as the Bank may in good faith request. The

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Borrower agrees that all secured property shall be subject to audit and verification by or on
behalf of the Bank at the sole expense of the Borrower. The Borrower will at all times maintain,
as minimum secured property hereunder, secured property having an aggregate collateral value
acceptable to the Bank, which shall make such determination in good faith and in conformity with
the requirements of Section 5(b) below, and if the Borrower fails to do so (a) the Borrower will,
within three (3) days of receipt of written notification from the Bank, reduce its unpaid advances
or other Obligations as requested in writing by the Bank or (b) the Borrower, upon the written
request of the Bank, will immediately deposit additional collateral and/or agree to additional
security interests satisfactory to the Bank.

     4. SECURITIES COLLATERAL. If item 2(a) above is included in the secured property,
Securities Collateral shall be given to the Bank in aggregate principal amounts as required by the
Bank and, if in certificated or other tangible form, such Securities Collateral (or custodial
receipts for same acceptable to the Bank) shall be deposited with the Bank, together with
indorsements acceptable to the Bank. In said connection, the Bank will be deemed to be an
entitlements holder of and in sole control, within the meaning of Article 8 of the Uniform
Commercial Code, of any Securities Collateral, with full power to hold and dispose of same as
financial assets under Article 8 of the Uniform Commercial Code (including, without limitation,
full power to exercise voting rights and to receive any income resulting from stock splits, stock
dividends, cash dividends or otherwise), and the Borrower agrees to take and/or consent to such
further actions as the Bank may deem appropriate to take and maintain control over any Securities
Collateral, including obtaining the agreement of the issuer of any Securities Collateral to comply
with instructions originated by the Bank without further consent by the Borrower and the agreement
of any securities intermediary to comply with entitlement orders originated by the Bank without
further consent by the Borrower. The Bank, upon the occurrence and during the continuation of an
event of default (should the Bank have not already accelerated the Obligations), may retain any
interest or principal payments, or dividends or other distributions, collected by it as to such
Securities Collateral and apply same against interest or principal of the Obligations in its sole
discretion.

     5. MORTGAGE COLLATERAL. The Borrower acknowledges that the Bank is permitting it to
retain in its possession all Specific and Blanket Mortgage Collateral (together or separately the
“Mortgage Collateral”) for purposes of servicing, collection and foreclosure, and the Borrower
acknowledges that the Borrower will hold such Mortgage Collateral, and all proceeds and payments
therefrom, in trust as the Bank’s security and for the benefit and subject to the direction and
control of the Bank, and upon the following additional terms and conditions:

          (a) At the Bank’s request and sole option, the Borrower shall immediately deliver to the Bank
an Assignment of each item of Mortgage Collateral in the Bank’s form for the same. Further, at the
Bank’s request and sole option, the Borrower will physically deliver to the Bank all documentation
as to Specific Mortgage Collateral and/or Blanket Mortgage Collateral (including, without
limitation, any participation certificates or other evidence thereof) and/or endorse in favor of
the Bank all or any portion of same. Except as authorized by the Bank, the Borrower shall not
withdraw any Specific Mortgage Collateral prior to its payment in full of all Obligations. The
Borrower shall promptly notify the Bank in writing (i) whenever principal payments in excess of ten
percent (10%) of the remaining unpaid balance are made by Borrower’s customers on any item of
Specific Mortgage Collateral, (ii) whenever any item of Specific Mortgage Collateral is paid off in
full by Borrower’s customers or involved in any foreclosure action, and/or (iii) whenever any
building on property serving as Specific Mortgage Collateral is damaged by casualty or otherwise in
excess of twenty-five percent (25%) of its appraised value (if the Borrower does not reasonably
believe that such building can be promptly repaired). Such written notices shall not initially be
required where a Borrower’s Blanket Mortgage

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Collateral provides collateral for the Obligations (i.e., if Sections 2(c) or 2(d) above has been
utilized by the Borrower).

          (b) The aggregate of the (i) market value of Securities Collateral and (ii) principal balances
due under Mortgage Collateral shall be maintained at all times by the Borrower in an amount not
less than that percentage of outstanding advances required by the Credit Policy.

          (c) Upon written direction from the Bank, the Borrower will deposit all collections from
Mortgage Collateral in a separate bank account designated as required by the Bank as a source of
which to withdraw interest and principal payments on the Obligations.

          (d) Unless and until otherwise directed in writing by the Bank after the occurrence of an
event of default and only during the continuation of such event of default (should the Bank have
not accelerated the maturity of the Obligation involved), the Borrower shall have the right to make
and retain all collections from time to time coming due on Mortgage Collateral, to execute and
deliver satisfactions of or releases of such Mortgage Collateral paid in full, and to take all
necessary legal action to enforce collection of delinquent payments, including foreclosure, without
disclosing this security arrangement and trust, and to use all collections so made by the Borrower
in its ordinary course of business.

          (e)(i) The Borrower shall keep and maintain all Mortgage Collateral at all times free and
clear of pledges, liens, participation interests (unless taken or held by an affiliate of Borrower,
of which the Borrower owns or controls, directly or indirectly, 100% of the voting stock of such
affiliate), and encumbrances, unless the Bank approves, or is deemed to have approved, any such
pledge, lien, participation interest or encumbrance, as provided in this Section 5(e)(i). Borrower
shall promptly give the Bank specific and detailed written notice of any security interest or
participation in Mortgage Collateral taken by third party lenders, affiliates or others. If at the
time of such notice, no outstanding advances by Bank to Borrower are secured either wholly or
partially by collateral pledged by Borrower or any affiliate of Borrower and if the Bank does not
reply in writing to such notice by Borrower within thirty (30) days following receipt of it, such
security interest or participation of a third party lender or affiliate shall be deemed approved.

          (ii) Whenever it is commercially reasonable, the Borrower shall obtain the Bank’s written
approval prior to the actual sale or transfer of (or the granting of any participation in) such
Mortgage Collateral. However, in case of pledge of Blanket Mortgage Collateral (i.e. notation by
the Borrower of Sections 2(c) or 2(d) above), and if the Bank has not yet demanded or acquired
physical possession of documentation related to such Mortgage Collateral, and when it is not
commercially reasonable to obtain a release of such Mortgage Collateral prior to the sale or
transfer of mortgages, then the Borrower is not required to comply with this subsection 5(e)(ii) of
the Agreement provided the Borrower submits to the Bank within ten (10) business days after the
contractual sale or transfer date, or any earlier sale or transfer date, a properly executed
original Notice and Release Request in which the Borrower warrants to the Bank that an aggregate
pledged mortgage portfolio equal in book value to at least that percentage of outstanding advances
required by the Credit Policy still remains unsold and not participated in or encumbered by others.

          (f) The buildings located on each mortgaged property constituting Mortgage Collateral shall be
covered by all risk hazard insurance and by insurance against all other risks customary and
generally required by mortgage lenders in the area in which the mortgaged property is located for
the type of mortgage loan involved in an amount not less than the unpaid balance due the Borrower
by its customer on each such item of Mortgage Collateral. The Borrower will cause such insurance
policies to

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include the Borrower and its “successors and assigns” as loss payee under a standard mortgagee
endorsement to evidence the Bank’s mortgagee/assignee interest therein and, if the Bank so
requires, to give the Bank ten (10) days prior notice of any policy cancellation. At the Bank’s
demand, the Borrower will physically deliver to the Bank any such insurance policies. The Bank may
cause any secured property to be insured if the Borrower fails to do so, and any such expense shall
be an additional Obligation hereunder.

     6. WARRANTIES AND FURTHER COVENANTS.

          (a) Borrower hereby represents and warrants that the Borrower and/or any pledging affiliate is
the true and lawful owner of all the Securities Collateral and/or Mortgage Collateral free and
clear of all claims, liens, encumbrances, rights of set-off, mortgages and security interests of
any nature whatsoever (except this security interest and as may be further specified below) and
Borrower covenants that it shall defend the Securities Collateral and/or the Mortgage Collateral
against the claims and demands of all persons.

          (b) Borrower hereby represents and warrants that (i) the existence of all necessary power to
enter into and execute this Agreement, (ii) this Agreement is not in violation of its Articles,
Charter, Regulations or By-Laws, or of any federal, state or local laws or administrative or
judicial rulings, (iii) no consent or approval of any securities exchange is necessary for the
valid pledge of the Securities Collateral under this Agreement, and (iv) this Agreement is
enforceable in accordance with its terms.

          (c) Borrower hereby represents and warrants that it is either a member of the Bank or a
qualified and eligible nonmember mortgagee with full powers to borrow hereunder.

          (d) Borrower hereby agrees to execute and deliver financing statements under the Uniform
Commercial Code, and statements or amendments thereof or supplements thereto, recordable
Assignments of Mortgage Collateral, and such other instruments as the Bank may from time to time
require in order to evidence, perfect, secure, preserve, protect and enforce the security interest
hereby granted. The Bank is hereby irrevocably appointed as Attorney-In-Fact for the Borrower in
all matters pertaining to all such perfection, preservation, protection and enforcement and
evidencing same hereunder.

          (e) Borrower hereby represents and warrants that to the best of its knowledge the secured
property, including any property subject to the lien of any Mortgage Collateral, is free from any
and all environmental hazards. Borrower shall indemnify Bank, hold Bank harmless, and, at the
option of Bank, defend Bank with counsel satisfactory to Bank, from all liabilities, costs,
damages, claims or expenses (including attorneys’ fees and environmental consultant’s fees),
suffered, paid or incurred by Bank resulting from or arising out of any requirement under any
applicable federal, state or local law, statute, regulation, order, judgment or decree requiring
that any release of a hazardous material, solid waste, pollutant or contaminant at any of the
secured property be remedied, cleaned up or lawfully disposed of.

          (f) Except as permitted under Section 5(e) above, the Borrower hereby agrees that it shall not
(i) sell, offer to sell or otherwise transfer the secured property, nor pledge, mortgage or create,
or suffer to exist a security interest claim, lien, encumbrance, right of set-off or other security
interest or collateral assignment of any kind whatsoever in the secured property or the proceeds or
products thereof in favor of any person other than the Bank without prior written consent of the
Bank,

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or (ii) transfer physical possession of notes and mortgages constituting Mortgage Collateral
hereunder to any third party or affiliate without the prior written consent of the Bank.

          (g) At any time that any advances to Borrower are outstanding that are secured wholly or
partially with collateral pledged by an affiliate of Borrower pursuant to a PLEDGE AND SECURITY
AGREEMENT (as permitted under the Credit Policy), Borrower hereby agrees that it shall cause such
affiliate to comply with all terms and conditions of such PLEDGE AND SECURITY AGREEMENT.

          (h) All taxes, assessments and governmental charges levied or assessed or imposed upon or with
respect to the secured property, including any property subject to the lien of any Mortgage
Collateral, shall be paid and if Borrower fails to promptly pay such taxes, assessments or
governmental charges, Bank may (but shall not be required to) pay the same and any such expense
shall be an additional Obligation hereunder.

          (i) Borrower will notify Bank promptly in writing of any change in the location of its
principal place of business or jurisdiction of incorporation, organization or formation. Borrower
shall promptly inform Bank of any change in location of any of the secured property from the
Borrower’s principal place of business or otherwise. Borrower shall promptly respond to any
inquiry by Bank concerning the location of Borrower’s principal place of business, jurisdiction of
incorporation, organization or formation or the location of any of the secured property.

     7. EVENTS OF DEFAULT: ACCELERATION. Any one or more of the following shall
constitute events of default hereunder: (a) default by Borrower in the payment or performance,
when due or payable, of any of the Obligations; (b) the making by the Borrower of any
misrepresentation to the Bank hereunder, or otherwise for the purpose of obtaining loan advances or
an extension of same; (c) failure of the Borrower after request by the Bank to furnish promptly
financial information or to permit promptly the inspection of books or records; (d) failure of
Borrower to perform or observe any of the provisions of this Agreement or of any other instrument
pertaining to the Obligations or secured property (subject to a ten (10) day cure period after
written notice from the Bank is received by the Borrower); (e) issuance of an injunction or
attachment against property of the Borrower which the Bank in good faith considers materially
adverse to such Borrower’s financial condition; (f) appointment of a receiver or liquidator of any
part of the property of the Borrower, or if the management of Borrower is assumed by any
supervisory authority; (g) the commencement by or against the Borrower of any proceeding under any
bankruptcy, arrangement, reorganization, insolvency or similar law for the relief of debtors; (h)
termination for any reason of Borrower’s membership in the Bank or its status as a nonmember
mortgagee and/or state housing finance agency eligible for advances hereunder; (i) an event of
default occurs under any PLEDGE AND SECURITY AGREEMENT between any affiliate of Borrower and Bank;
(j) the occurrence of such a change in the condition or affairs (financial or otherwise) of the
Borrower, or of an affiliate supplying secured property securing the Obligations, as in the good
faith opinion of the Bank impairs the Bank’s security or increases its risk; or (k) if the Bank in
good faith deems itself insecure. Upon occurrence of any of the events of default and failure by
the Borrower to cure within the applicable cure period, if any, any or all of the Obligations
shall, at the option of the Bank and notwithstanding any time or credit allowed by any instrument
evidencing or document relating to the Obligations, be immediately due and payable without notice
or demand (except for the events of default noted in Subsections (j) and (k) above, for which the
Bank must give written notice to the Borrower). The Bank may then, without first resorting to any
other property securing the Obligations from other parties (including, without limitation, property
provided by any affiliate of Borrower), exercise any one or more of the rights and remedies granted
pursuant to this Agreement and/or the Credit Policy and also

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exercise any or all of the rights and remedies afforded to a secured party under the Uniform
Commercial Code as enacted in Ohio or the Borrower’s state of operation or to the Bank under the
Act. In case of any event of default hereunder, Borrower agrees, upon the request of the Bank, to
promptly dissolve or cause the dissolution of any subsidiary or affiliate providing secured
property under a PLEDGE AND SECURITY AGREEMENT and the distribution of such secured property to
Borrower. Upon repossession or recovery of the secured property by the Bank, it may, after
reasonable written notification to the Borrower, sell the secured property at public or private
sale, at which sale the Bank may become the purchaser. The proceeds of sale of the secured
property shall be applied to the Obligations in such manner and order of priority as the Bank may
determine. Pending any such action, the Bank may liquidate the secured property and/or continue to
use and exercise rights of ownership pertaining to the secured property. Borrower does hereby
make, constitute and appoint Bank as its true and lawful attorney-in-fact to deal with the secured
property and, in the Borrower’s name and stead to sell, assign, collect, compromise, settle and
release of record any portion of the secured property as fully as Borrower could do if acting for
itself. The Borrower hereby agrees to be liable to the Bank for any deficiency that may result
upon such liquidation and sale of the secured property and waives all claims for damages by reason
of any seizure, repossession, retention, use or sale of said secured property. The requirement of
reasonable notice, if necessary, shall be met if such notice is mailed, postage prepaid, to the
first of the places of business of the Borrower shown in this Agreement at least ten (10) days
before the time of the sale or other disposition. While exercising its rights as a secured party
hereunder, including use and receipt of benefits from the secured property, and provided the Bank’s
actions are commercially reasonable under the circumstances or do not constitute negligence or
willful misconduct, the Bank shall not be liable in any fashion to the Borrower or third party
(including without limitation Borrower’s customers or shareholders) for any damages arising from
such use, or any obligations, duties or liabilities of the Borrower in connection therewith
(including without limitation Borrower’s contracts, agreements, guarantees, commitments or
warranties). Each of the rights, powers and remedies provided herein or now or hereafter existing
at law or in equity or otherwise shall be cumulative and concurrent and shall be in addition to
every other right, power or remedy provided for in this Agreement or hereafter existing at law or
in equity or otherwise. The exercise of any such rights, powers or remedies shall not preclude the
simultaneous or later exercise of any or all other such rights, powers or remedies.

     8. WAIVERS: CONTINUED LIABILITY. The Bank shall not be deemed to have waived any of
its rights in this Agreement or to the secured property unless such waiver is in writing and signed
by the Bank and such waiver shall not operate as a waiver of any other default or of the same
default on a subsequent occasion. No renewal or extension of time of payment of the Obligations at
any rate of interest, no release, surrender, exchange or modification of the secured property, no
release of any person primarily or secondarily liable on the Obligations (including any maker,
endorser, guarantor or surety), no delay in enforcement of payment of the Obligations and no delay,
omission or forbearance in exercising any right or power with respect to the Obligations, the
secured property, or this Agreement shall affect the liability of the Borrower to the Bank.

     9. DURATION. The term of this Agreement shall commence with the date hereof and end
on the termination date, which is the date when the Borrower has paid in full all of the
Obligations secured hereby, and either: (i) the Bank gives written notice to the Borrower that no
further advances are to be made hereunder, or (ii) the Borrower gives written notice to the Bank
that it does not intend to apply for further advances hereunder. Until such termination, this
Agreement shall be a continuing one, and after such termination any liabilities hereunder of the
Borrower to the Bank not satisfied prior to such termination shall survive and remain in full force
and effect until satisfied.

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     10. ATTORNEY-IN-FACT. Borrower hereby appoints the Bank its irrevocable
attorney-in-fact, with full power of substitution, in its name or otherwise, but at the Borrower’s
sole cost and expense (i) to transfer any shares of stock or Securities Collateral hereby or
otherwise secured to Bank into the name of the Bank or its designee or assignee, (ii) to endorse on
behalf of the Borrower any promissory notes or other instruments delivered by the Borrower to the
Bank, (iii) to execute and/or record such documents and instruments as the Bank, in its sole
judgment, deems necessary or appropriate to further evidence or perfect or affect a transfer of the
security interest granted to the Bank herein or otherwise, and (iv) to record this Agreement as a
power of attorney where the Bank deems appropriate.

     11. NOTICE. (a) Any written notice, approval, or direction provided for in this
Agreement to be given by the Bank to the Borrower shall include and be satisfied by notice given to
the Borrower by: (i) hand delivery, regular first class mail, or any other form of physical
delivery, or (ii) facsimile, whether or not receipt of such facsimile is confirmed with the
Borrower or a follow-up hard copy is mailed or otherwise physically delivered to the Borrower, and
(b) any written notice provided for in this Agreement to be given by the Borrower to the Bank shall
only include and be satisfied by notice given to the Bank by: (i) registered or certified mail
(postage prepaid, return receipt requested) or some other form of delivery whereby receipt is
confirmed, or (ii) facsimile, but only if receipt by the Bank is confirmed by the Borrower and a
follow-up hard copy is delivered to the Bank by the means specified in subsection (b)(i) of this
Section 11.

     12. GENERAL. All rights and liabilities hereunder shall be governed and limited by
and construed in accordance with the Act and the laws of the State of Ohio (matters related to
eligibility for advances and the rate of interest assessed by the Bank on advances or other
Obligations shall be governed solely by the Act). This Agreement shall inure to the benefit and
bind the Bank and the Borrower and their respective successors and assigns. Any provision hereof
which may prove limited or unenforceable, under any laws or judicial rulings shall not affect the
validity or enforcement of the remainder of the provision or of any other provision.

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	FEDERAL HOME LOAN BANK

           OF CINCINNATI	 	 	 	BORROWER:
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	By	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its Senior Vice President	 	 	 	[Signature of Officer Authorized By Board
to Execute This Agreement]
	 
	 	 	 	 	 	 	 	 
	By
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its Vice President,	 	 	 	Type Name of Authorized Officer and Title
	   Credit Risk Management	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	And	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	[Signature of Officer Authorized By Board
to Execute This Agreement]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Type Name of Authorized Officer and Title
	 
	 	 	 	 	 	 	 	 
	Two Witnesses to Signature of	 	 	 	 	 	 
	Borrower’s Officers:	 	 	 	[IMPRESS CORPORATE SEAL HERE OR
	 	 	 	 	 	 	INDICATE “NO CORPORATE SEAL”]
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

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STATE OF                                                                                 )

COUNTY OF                                                                                 ) S:

     On this ___, before me appeared
___, to me personally known, who being by me duly sworn, did say that
he or she is ___President of the above-named Borrower, a corporation; that the seal
affixed to the foregoing instrument is the seal of said corporation; that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of Directors; and said
___President acknowledged said instrument to be the free act and deed of said corporation
and his or her free act and deed as such officer, for the uses and purposes in said instrument
mentioned.

My commission expires:

	 	 	 
	 

	 	Notary Public,                                                            
	 

	 	(signature)
	 
	 	 
	                                        

	 	County of                                                             
	 
	 	 
	 

	 	State of                                                             
	 
	 	 
	[IMPRESS NOTARY SEAL HERE]
	 	 

10Ex-10.2

 

EXHIBIT 10.2

MORTGAGE PURCHASE PROGRAM

MORTGAGE SELLING AND SERVICING MASTER AGREEMENT

 

Dated _______________________, 20 _________

THE FEDERAL HOME LOAN BANK OF
CINCINNATI (“FHLB”) and
[________________________]
(“Participating Financial

Insert Members Bank
Name

Institution” or “PFI”), agree to the terms and conditions of selling and Servicing Mortgages pursuant to this
agreement (the “Master Agreement”) as follows:

I. Recitals

     WHEREAS, the parties to this Master Agreement desire to establish the PFI as an approved
Seller of Mortgages to FHLB;

     WHEREAS, the PFI, once approved by FHLB, may sell Mortgages to FHLB pursuant to the terms and
conditions of sales contained herein;

     WHEREAS, the parties to this Master Agreement desire to establish the PFI as an approved
Servicer of Mortgages on behalf of FHLB; and

     WHEREAS, the PFI, once approved by FHLB, shall service Mortgages it sells to FHLB, agrees to
Service said Mortgages pursuant to the terms and conditions of Servicing contained herein and in
the Guide.

     NOW, THEREFORE, in consideration of the purpose of this Master Agreement and of all the
provisions and mutual promises contained herein, the PFI and FHLB agree as follows:

A. Definitions

     FHLB issues the Mortgage Purchase Program Guide (the “Guide”) detailing selling and Servicing
requirements for the Mortgage Purchase Program. Whenever there is a reference to the Guide in this
Master Agreement or any other Program Document, it means the Guide as it

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exists now and as it may be amended or supplemented in writing. FHLB may amend or supplement it, at
its sole discretion, by furnishing amendments or supplementary matter to the PFI. The term “Guide”
also includes anything that, in whole or in part, supersedes or is substituted for the Guide.
Capitalized terms as used herein without definition shall have the meanings set forth in the Guide.

     B. Incorporation by Reference

     Incorporated by reference herewith and herein are:

     1. The Guide

     2. Program Documents

     3. FHLB Guidelines

     C. Eligibility Requirements for PFIs

     Wherever or whenever the Master Agreement, Program Documents and/or the Guide conflict with
FHLB Guidelines, FHLB Guidelines shall control.

	 	1.	 	Meet FHLB Standards. The PFI must be an FHLB-approved
Mortgagee. The PFI must be a member or housing associate of the Federal Home
Loan Bank System. In addition, the PFI, in FHLB’s judgment, must have at all
times the capacity to originate and sell Mortgages that meet FHLB’s purchase
standards and the standards generally imposed by private institutional mortgage
investors, and must at all times have the capacity to Service such mortgages
for FHLB under those standards and the FHLB Guidelines.
	 
	 	2.	 	Have Qualified Staff and Adequate Facilities. The PFI
must, at all times, have employees who are well trained and qualified to
perform the functions required of the PFI under this Master Agreement. In
addition, the PFI must maintain facilities that are adequate to perform its
functions under this Master Agreement.
	 
	 	3.	 	Maintain Fidelity Bonds and Errors and Omissions
Coverage. The PFI must maintain, at its own expense, a fidelity bond and
errors and omissions insurance as required by the Guide.
	 
	 	4.	 	Report Basic Changes. The PFI must notify FHLB promptly
in writing of any changes that occur in its principal purpose, activities,
staffing or facilities that could adversely affect its ability to perform its
obligations hereunder.

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	 	5.	 	Failure To Comply With Eligibility Standards. It is a
breach of this Master Agreement if the PFI fails at any time to meet FHLB
standards set forth in the FHLB Guidelines for eligible Mortgage Sellers or
Servicers so that, in FHLB’s sole opinion, the PFI’s ability to comply with
FHLB Guidelines, this Master Agreement, any other Program Documents, or the
Guide is adversely affected.

     D. Status of PFI

The PFI must immediately
notify FHLB of a change in its status or ownership, including sale or transfer of a majority interest in it, merger, consolidation, or change in legal
structure.

     E. Access to PFI’s Records

     The PFI agrees to permit FHLB employees or designated representatives to examine or audit
records or accounts relating to Mortgages sold or Serviced under this Master Agreement. All records
relative to the PFI’s continued eligibility to sell or Service Mortgages under this Master
Agreement may also be examined or audited. Any examination or audit made on FHLB’s behalf will be
conducted during regular business hours unless the PFI agrees otherwise.

II. Sale of Mortgages

     A. Purchases

     Purchases of Mortgages will be governed by the Master Commitment Contract, the Mandatory
Delivery Contract, the Guide, this Master Agreement and the other Program Documents.

     B. Eligible Mortgages

     The Mortgages purchased by FHLB must meet the requirements in effect under the Guide, and this
Master Agreement, on the day FHLB executes a Mandatory Delivery Contract. Each Mortgage purchased
by FHLB under the Mortgage Purchase Program shall be either a 15- or 30-year fixed rate, fully-
amortizing, level-payment Mortgage that meets FHLB’s underwriting standards.

     C. FHLB Has No Obligation to Purchase

     This Master Agreement does not obligate FHLB to purchase or to make a commitment to purchase
any Mortgage from the PFI. The PFI must also execute a Master Commitment Contract, which is a best
efforts contract to sell Mortgages to FHLB, and pursuant thereto,

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Mandatory Delivery Contracts which obligate the PFI to sell a specified dollar amount of
Mortgages with specified characteristics to FHLB at a specified Purchase Price for a specified
Settlement Date.

     D. Delegated Underwriting

     By executing this agreement, FHLB hereby delegates underwriting authority to the PFI, and PFI
agrees to meet FHLB Underwriting Guidelines for each Mortgage.

III. Representations and Warranties

     A. Representations and Warranties Regarding the PFI

     All the representations, warranties and covenants contained in this Master Agreement are made
by the PFI to FHLB and its successors and assigns, with respect to such matters, and at such times,
as specified below unless expressly waived in writing by FHLB. Each representation, warranty and
covenant is binding on the PFI regardless of whether the subject matter thereof was under the
control of the PFI or a third party. The representations, warranties and covenants made in this
Master Agreement shall survive delivery of the Mortgages to FHLB and shall inure to the benefit of
FHLB notwithstanding any examination of the Mortgage documentation by FHLB. The PFI represents and
warrants the following as of the date of this Master Agreement, and as of each Mandatory Delivery
Date and Settlement Date under each Mandatory Delivery Contract:

	 	1.	 	Organization and Good Standing. The PFI is duly organized, validly
existing and in good standing under the laws of the jurisdiction under which it was
organized and is qualified to do business and is properly licensed or registered as a
mortgage banker or lender in each jurisdiction in which the PFI does business, or is
exempt under applicable law from such qualification or licensing and no demand for such
qualification or licensing has been made upon the PFI by any jurisdiction.
	 
	 	2.	 	Authority and Capacity. The PFI has all requisite corporate power,
authority and capacity to enter into each Program Document to which it is a party and
to perform the obligations required of it thereunder. Each Program Document (assuming
the due authorization and execution by FHLB) constitutes a valid and legally binding
agreement of the PFI enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization and
similar laws, and by equitable principles affecting the enforceability of the rights of
creditors. No consent, approval, authorization or order of or registration or filing
with, or notice to, any governmental authority or court is required, under state or
federal law prior to the execution, delivery and performance of or compliance by the
PFI with the Master Agreement or any other Program Document or the consummation by the
PFI of any other transaction contemplated thereby.

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	 	3.	 	No Conflict. Neither the execution and delivery of the Master
Agreement or any other Program Document nor the consummation of the transactions
contemplated by the Master Agreement or any other Program Document nor compliance with
the terms and conditions contained herein and therein, shall conflict with or result in
the breach of, or constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance of any nature upon the properties or assets of the
PFI (except as contemplated by the Program Documents), any of the terms, conditions or
provisions of the PFI’s charter or by-laws or any similar corporate documents of the
PFI or any mortgage, indenture, deed of trust, loan or credit agreement or other
agreement or instrument to which the PFI is now a party or by which it is bound.
	 
	 	4.	 	Compliance with Laws. There is no action, suit, proceeding or
investigation pending, or to the PFI’s knowledge threatened, against the PFI before any
court, administrative agency or other tribunal (a) asserting the invalidity of the
Master Agreement or other Program Document, (b) seeking to prevent the consummation of
any of the transactions contemplated hereby or thereby or (c) which might materially
and adversely affect the performance by the PFI of its obligations under, or the
validity or enforceability of, the Master Agreement or other Program Document.
	 
	 	5.	 	Performance. The PFI does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in the
Master Agreement or other Program Document.
	 
	 	6.	 	Ordinary Course Transaction. The consummation of the transactions
contemplated by the Master Agreement or any other Program Document are in the ordinary
course of business of the PFI, and the sale, transfer, assignment and conveyance of
Mortgages and the related Servicing rights, by the PFI pursuant to the Master Agreement
or other Program Documents are not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction.
	 
	 	7.	 	Litigation; Compliance with Laws. There is no litigation, proceeding
or governmental investigation pending, or any order, injunction or decree outstanding
that might materially and adversely affect the Mortgages or the related Servicing
rights to be sold pursuant to the Master Agreement or other Program Document.
Additionally, there is no litigation, proceeding or governmental investigation existing
or pending or to the knowledge of the PFI threatened, or any order, injunction or
decree outstanding against or relating to the PFI, that has not been disclosed by the
PFI to FHLB in writing that could have an adverse effect upon the Mortgages or the
related Servicing rights to be purchased by FHLB under the Master Agreement or other
Program Document, nor does the PFI know of any basis for any such litigation,
proceeding or governmental investigation. The PFI has not violated any applicable law,
regulation, ordinance, order, injunction or decree, or any other requirement of any
governmental body or court, which may materially and adversely affect the Mortgages or
the related

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	 	 	 	Servicing rights to be sold pursuant to the Master Agreement or other Program
Document.
	 
	 	8.	 	Statements Made. No representation, warranty or written statement made
by the PFI in the Master Agreement or other Program Document, or in any schedule,
written statement, electronic media, or certificate furnished to FHLB by the PFI in
connection with the Master Agreement or other Program Documents or the transactions
contemplated hereunder or thereunder contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
	 
	 	9.	 	Approved PFI. The PFI meets all of the eligibility requirements set
forth in the Guide, this Master Agreement, other Program Documents.

       B. Representations and Warranties Regarding the Mortgages

     With respect to each Mortgage sold by the PFI to FHLB, the PFI represents and warrants the
following as of each Settlement Date under each Mandatory Delivery Contract:

	 	1.	 	Mortgage Characteristics

	 	a)	 	Underwriting. The PFI represents that
the Mortgage is underwritten according to FHLB Guidelines.
	 
	 	b)	 	Valid First Lien. The Mortgage is a
valid, subsisting, enforceable and perfected first lien on the
Mortgaged Property and such Mortgaged Property is owned by the
Mortgagor in fee simple.
	 
	 	c)	 	Deeds of Trust. In the event the
Mortgage 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 the deed of trust, and no fees or
expenses are or will become payable by FHLB to the trustee under the
deed of trust, except in connection with a trustee’s sale after default
by the Mortgagor.
	 
	 	d)	 	Full Disbursement of Proceeds. The
proceeds of the loan to which the Mortgage pertains have been fully
disbursed and there is no requirement for future advances of such loan
thereunder, and, except as specifically permitted by FHLB, any and all
requirements as to completion of any on-site or off-site improvement
and as to disbursements of any escrow funds therefore have been
complied with. All costs, fees, and expenses incurred in making or
closing of the loan to which the Mortgage pertains 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 or Mortgage.

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	 	e)	 	No Defenses. The Mortgage is not
subject to any right of rescission, set-off, counterclaim or defense,
including without limitation the defense of usury; neither will the
operation of any of the terms of the mortgage note or any other
document comprising the Mortgage, or the exercise of any right
thereunder, render either the mortgage note or any other document
comprising the Mortgage unenforceable, in whole or in part, or subject
to any right of rescission, set-off, counterclaim or defense, including
without limitation the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage was
originated.
	 
	 	f)	 	Payments Current. All payments due on
the Mortgage have been made by the related Mortgagor, the Mortgage has
not been delinquent (i.e. no payment due from Mortgagor was
more than 30 days past due) more than once in the preceding 12 months
and such delinquency lasted for no more than 30 days.
	 
	 	g)	 	No Defaults. There is no default,
breach, violation or event of acceleration existing under the Mortgage
or the mortgage note or any other document comprising the Mortgage, 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 of acceleration, and neither the PFI nor its
predecessors have waived any default, breach, violation or event of
acceleration.
	 
	 	h)	 	No Outstanding Charges. There are no
defaults in complying with the terms of the Mortgage, and 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. The PFI has not advanced funds,
or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment
of any amount required under the Mortgage, except of interest accruing
from the date of the mortgage note or date of the first disbursement of
the proceeds of the loan to which the Mortgage pertains, whichever is
earlier, to the day which precedes by one (1) month the due date of the
first installment of principal and interest.

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	 	i)	 	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.
	 
	 	j)	 	Ownership. Immediately prior to FHLB’s
purchase of the Mortgage, the PFI or its affiliate was the sole owner
of record and holder of the Mortgage. The Mortgage had not been
assigned or pledged, and the PFI had good and marketable title thereto,
and had full right to transfer and sell the Mortgage to FHLB free and
clear of any encumbrance, equity, participation interests, lien,
pledge, charge, claim or security interest, and had full right and
authority subject to no interest or participation of, or agreement
with, any other party, to sell and assign the Mortgage pursuant to the
Master Agreement and on the purchase date FHLB received good and
marketable title to the Mortgage free of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security
interest.
	 
	 	k)	 	Occupancy of the Mortgaged Property.
Except where FHLB has specifically agreed to the contrary, the
Mortgaged Property is lawfully occupied by the Mortgagor 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.
	 
	 	l)	 	No Satisfaction of Mortgage. The
Mortgage has not been materially modified, 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, modification, satisfaction, subordination
or rescission. The PFI has not waived the performance by the Mortgagor
of any action, if the Mortgagor’s failure to perform such action would
cause the Mortgage to be in default resulting from any action or
inaction by the Mortgagor.
	 
	 	m)	 	No Refinance Agreements. Neither the
PFI nor any of the PFI’s affiliates have entered into an agreement,
formal or informal, with the Mortgagor during the initial origination
process of the Mortgage to refinance the Mortgage at some future date
as an inducement for the Mortgagor to enter into the original Mortgage
transaction.

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	 	n)	 	No Adverse Selection. The PFI used no
adverse selection procedures in selecting the Mortgage from among the
outstanding first lien residential Mortgages owned by it which were
available for sale to FHLB.

	 	2.	 	Mortgage Information and Documentation

	 	a)	 	Mortgage as Described. The information
contained in all commitments, advices, schedules, computer tapes or
other documents or media prepared by the PFI or on behalf of the PFI
relating to the Mortgage is complete, true and correct.
	 
	 	b)	 	Documents. The mortgage note and the
other documents comprising the Mortgage are on forms acceptable to
FHLB, and the PFI has not made any representation to the Mortgagor
which are inconsistent with such documents. 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, (a) in the case of a Mortgage designated as a deed of trust,
by trustee’s sale and (b) otherwise, by judicial foreclosure. Upon
default by the Mortgagor and foreclosure sale, or trustee’s sale of,
the Mortgaged Property pursuant to the proper procedures, good and
merchantable title to the Mortgaged Property will be deliverable.
There is no homestead or other exemption available to the Mortgagor
which would interfere with the right to sell the Mortgaged Property at
a trustee’s sale or the right to foreclosure sale of the Mortgaged
Property pursuant to the Mortgage subject to applicable federal and
state laws and judicial precedent with respect to bankruptcy and right
of redemption. Payments under the mortgage note that is part of each
Mortgage are due on the first day of each calendar month with interest
payable in arrears.
	 
	 	c)	 	Due on Sale. The Mortgage contains an
enforceable provision for the acceleration of the payment of the UPB of
the Mortgage in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the Mortgagee
thereunder; by the terms of the mortgage note that is part of each
Mortgage, however, the provision for acceleration may not be exercised
at the time of a transfer if prohibited by federal law.

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	 	d)	 	Appraisals. The appraisal obtained in
connection with the origination of the Mortgage, as well as the
appraiser who performed it, meet all of the applicable FHLB Guidelines.
The value of the Mortgaged Property is at least equal to the appraised
value stated in the appraisal.
	 
	 	e)	 	Original Terms Unmodified. The terms
of the mortgage note and the other documents comprising the Mortgage
have not been impaired, waived, altered or modified in any respect.
	 
	 	f)	 	Validity of Mortgage Documents. The
mortgage note and the other documents comprising the Mortgage, and any
security agreements, chattel mortgages, or equivalent documents
relating to it, 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 and the other documents
comprising the Mortgage and any other related agreement had legal
capacity to enter into the Mortgage and to execute and deliver the
mortgage note and the other documents comprising the Mortgage and any
other related agreement, and the mortgage note and the other documents
comprising the Mortgage and any other related agreement have been duly
and properly executed by such parties. The documents, instruments and
agreements submitted for loan underwriting in connection with obtaining
the Mortgage 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. No fraud was committed in connection with the origination
of the Mortgage.

	 	3.	 	Compliance

	 	a)	 	Compliance with Applicable Laws. All
laws including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity, fair housing and lending disclosure laws applicable to the
Mortgage have been complied with.
	 
	 	b)	 	Servicing Performance. Prior to the
purchase date, the Mortgage has been properly serviced in accordance
with all applicable FHLB Guidelines, all applicable laws, the terms of
the Mortgage, mortgage note and related Mortgage Documents. With
respect to escrow deposits and Escrow Payments, all such payments are
in the possession of the PFI and there exist no deficiencies in
connection

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	 	 	 	therewith for which customary arrangements for repayment thereof have
not been made. All Escrow Payments have been collected in full
compliance with all applicable laws. An escrow of funds has been
established in an amount sufficient to pay for every item which remains
unpaid and which has been assessed but is not yet due and payable. No
escrow deposits or Escrow Payments or other charges or payments due the
PFI have been capitalized under the Mortgage or the mortgage note
included in the Mortgage.
	 
	 	c)	 	Acceptable Investment. The PFI has no
knowledge of any circumstances or conditions with respect to the
mortgage note, the Mortgage, the Mortgaged Property, the Mortgagor or
the Mortgagor’s credit standing that could be expected to cause private
institutional investors to regard the Mortgage as an unacceptable
investment, cause the Mortgage to become delinquent, or adversely
affect the value or marketability of the Mortgage.
	 
	 	d)	 	Doing Business. All parties which have
had any interest in the Mortgage, whether as Mortgagee, assignee,
pledgee or otherwise, are (or, during the period in which they held and
disposed of such interest, were) (a) in compliance with any and all
applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located and (b) (i) organized under the laws of
such state, (ii) qualified to do business in such state, (iii) a
federal savings and loan association or national bank having principal
offices in such state, or (iv) not doing business in such state.
	 
	 	e)	 	Underwriting. The Mortgage was
underwritten in accordance with the FHLB Guidelines and any
underwriting conditions relating to the Mortgage were fully satisfied,
the satisfaction of those underwriting conditions is properly
documented in accordance with standard industry practices.
	 
	 	f)	 	Compliance with Guide and FHLB
Guidelines. The Mortgage and all documents related thereto,
comply, in all material respects, to all applicable terms, conditions
and requirements set forth in the Guide, Master Agreement, other
Program Documents, and FHLB Guidelines.

	 	4.	 	Insurance

	 	a)	 	Title Insurance. Except for the
Properties located in states in which title insurance policies are not
customarily issued, the Mortgage is covered by an ALTA form of lender’s
title insurance policy or other

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	 	 	 	generally acceptable form of policy of insurance acceptable to FHLB,
issued by, and the binding obligation of, a title insurer acceptable to
FHLB and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the PFI, its successors and
assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage, and against any loss by reason of the
invalidity or unenforceability of the lien resulting from the
provisions for the Mortgage providing for adjustment in the Mortgage
Rate and monthly payment. The PFI, its successors and assigns, is the
sole insured of such lender’s title insurance policy, and such lender’s
title insurance policy is in full force and effect and will be in force
and effect upon the consummation of the transactions contemplated by
the Master Agreement and the transfer of said Mortgage pursuant to the
applicable Master Commitment Contract and Mandatory Delivery Contract,
and will inure to the benefit of FHLB without any further act. No
claims have been made under such lender’s title insurance policy. For
Properties located in states where title insurance is not customarily
issued, the mortgage file must include an attorney’s opinion stating
that the Mortgage is a valid first lien.
	 
	 	b)	 	Hazard and Flood Insurance. The
improvements upon the Mortgaged Property are insured against loss by
fire and other hazards as required by the FHLB, including flood
insurance if required under the National Flood Insurance Act of 1968,
as amended. The Mortgage requires the Mortgagor to maintain such
casualty insurance at the Mortgagor’s expense, and upon the Mortgagor’s
failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at the Mortgagor’s expense and to seek
reimbursement therefore from the Mortgagor. The hazard insurance
policy is the valid and binding obligation of the insurer, and is in
full force and effect. All flood insurance and hazard insurance
premiums have been paid when due.
	 
	 	c)	 	Coverage of Insurance. 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 insurance policy or
guarantee including, but not limited to, a title insurance policy, a
hazard insurance policy, or MI coverage, obtained in connection with
the Mortgage. In connection with the placement of any such insurance
or guarantee, no commission, fee, other unlawful compensation or value
of any kind has been or will be received by the PFI or any designee of
the PFI or any corporation in which the PFI or any officer, director or
employee of the PFI had a financial interest at the time of placement
of such insurance and, to the best of PFI’s knowledge, no such, fee,
other

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	 	 	 	unlawful compensation or value of any kind has been received by any
attorney, firm or other person or entity.
	 
	 	d)	 	Primary Mortgage Insurance. All
Mortgages with loan-to-values greater than 80 percent must be insured
with primary MI at the time of origination, in accordance with the FHLB
Guidelines, and all insurance premiums due on or before the purchase
date shall be paid in full.

	 	5.	 	Mortgaged Property

	 	a)	 	No Additional Collateral. The mortgage
note included in the Mortgage is not and has not been secured by any
collateral except the collateral subject to the lien of the
corresponding Mortgage.
	 
	 	b)	 	Location of Improvements. 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, or the policy of title
insurance affirmatively insures against loss or damage by reason of any
violation, variation, encroachment or adverse circumstance which is
either disclosed or would have been disclosed by an accurate survey.
No improvement located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation.
	 
	 	c)	 	Environmental Matters. There is no
action or proceeding pending, or to the best of the PFI’s knowledge,
threatened, involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue. Nothing further
remains to be done to satisfy in full all requirements of each
applicable environmental law, rule or regulation which is a
prerequisite to use and enjoyment of the Mortgaged Property.
Notwithstanding the foregoing, this warranty shall be deemed not to
have been made if a title policy or other insurance acceptable to FHLB
affording, in substance, the same protection to FHLB is furnished to
FHLB by the PFI.
	 
	 	d)	 	No Encroachments. No improvements on
adjoining properties encroach upon the Mortgaged Property in any
respect so as to effect the value or marketability of the Mortgage or
the Mortgaged Property.
	 
	 	e)	 	No Condemnation and Mortgaged Property
Undamaged. 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,

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	 	 	 	windstorm, flood, tornado or other casualty so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage or the
use for which the premises were intended.
	 
	 	f)	 	Detrimental Conditions. As of the
origination date and the purchase date of the Mortgage, the PFI did not
know, nor did the PFI have any reason to know, that the Mortgaged
Property and the improvements constructed thereon were subject to any
detrimental conditions which could reasonably be expected to adversely
affect the market value of the Mortgaged Property. The term
“detrimental conditions” includes, but is not limited to, expansive
soils, underground mines, soil subsidence, landfills, superfund sites,
special study zones, and other conditions which affect the stability of
the improvements erected on the Mortgaged Property or the drainage on
or from the Mortgaged Property.
	 
	 	g)	 	Location and Type of Mortgaged
Property. The Mortgaged Property consists of an owner-occupied
single parcel of real property with a detached single family residence
erected thereon, a one- to four-family dwelling, or an individual
condominium unit in a condominium project. No portion of the Mortgaged
Property is used for commercial purposes.

     C. Covenants Regarding Servicing

	 	1.	 	General Covenants

The PFI, without limitation and in addition to any other covenants made in
the Guide, the Master Agreement and other Program Documents with respect to
Mortgages sold to FHLB, covenants the following:

	 	a)	 	Documents. All information contained
in any form or communication sent or given to FHLB or its agents by or
on behalf of the PFI shall be true, correct and complete.
	 
	 	b)	 	Inspection of Records. The PFI shall
permit FHLB or its agents during normal business hours to inspect all
books and records of the PFI pertaining to its mortgage lending
operations, any Mortgage purchased by FHLB from the PFI or any Mortgage
Serviced by the PFI on behalf of FHLB, or such Servicing as has been
transferred to a subservicer in accordance with the Guide and Program
Documents.
	 
	 	c)	 	Credit Information. With respect to
each Mortgage offered for sale to FHLB by the PFI, the PFI has full
right and authority and is not precluded by law or contract from
furnishing FHLB with the applicable consumer report (as defined in the
Fair Credit Reporting Act, Public Law 91-508) and all other credit
information relating to such Mortgage. The foregoing shall not be
construed to impose any

14

 

	 	 	 	obligation on FHLB, or any of FHLB’s assignees of any Mortgage, to keep
the above described materials confidential or to otherwise comply with
the Fair Credit Reporting Act or any similar laws.

	 	2.	 	Servicing Covenants
	 
	 	 	 	With respect to each Mortgage Serviced by the PFI on behalf of FHLB:

	 	a)	 	Servicing of the Mortgages. The PFI
shall service the Mortgage in accordance with (a) all applicable FHLB
Guidelines, and all other applicable laws, (b) the terms of the
Mortgage, including the related mortgage note and related Mortgage
Documents and (c) the Guide, Master Agreement and other Program
Documents. Without limiting the foregoing, all escrow practices, as
well as all Mortgage payments, will be made in full compliance with all
applicable FHLB Guidelines, and all other applicable laws, and the
terms of the Mortgage, including the related mortgage note and related
Mortgage Documents.
	 
	 	b)	 	Compliance By Others. In the event
that any third party performs any of the PFI’s obligations to the
extent permitted by the Guide and Program Documents, the performance of
such obligations shall be in full compliance with the Guide, this
Master Agreement, and Program Documents.
	 
	 	c)	 	Normal Servicing Procedures Applied.
The PFI shall exercise the same degree of care in Servicing the
Mortgage as it exercises in connection with its overall Servicing
portfolio, but in no event less than the degree of care which would be
exercised by a prudent mortgage servicer Servicing mortgages for its
own account.
	 
	 	d)	 	Custodial Accounts. The Custodial
Accounts established pursuant to the Guide shall at all times be demand
accounts, shall not be pledged or encumbered in any manner and shall
otherwise meet all of the requirements of the Guide.
	 
	 	e)	 	Suspension or Disqualification. The
PFI shall immediately notify FHLB in writing by certified mail if its
Servicing rights are suspended or terminated by any institution
including, but not limited to, HUD, Fannie Mae, Freddie Mac or GNMA.
	 
	 	f)	 	Discovery of Fraud. In the event that
the PFI discovers or has reasonable grounds to suspect that fraud was
committed in connection with the origination of a Mortgage, the PFI
shall immediately notify FHLB in writing of such discovery. Upon
FHLB’s receipt of such notice or FHLB’s independent discovery or

15

 

	 	 	 	reasonable suspicion of fraud in connection with the origination of a
Mortgage, FHLB may, in its sole and absolute discretion, report such
fraud to investors, agencies, mortgage industry clearing houses and any
other third parties FHLB believes have an interest in the fraud.
	 
	 	g)	 	Failure To Properly Foreclose Or
Liquidate. In the event that a Mortgage is in default and the PFI
is required or has decided to seek foreclosure sale of the Mortgaged
Property or liquidate the Mortgage, the PFI must take prompt and
diligent action consistent with FHLB Guidelines to seek such sale or
otherwise appropriately liquidate such Mortgage and to perform all
incident actions.
	 
	 	h)	 	Failure To Properly Manage, Dispose Of, Or
Effect Proper Conveyance Of Title. In the event that any
foreclosure sale of the Mortgaged Property subject to any Mortgage
Serviced under this Master Agreement occurs or the possession or title
to the property has been taken by FHLB or on FHLB’s behalf, the PFI
must properly manage, dispose of or effect proper conveyance of title
to the Mortgaged Property in accordance with FHLB Guidelines.
	 
	 	i)	 	Escrow Custodial Accounts. The
Servicer must certify that it is complying with the Guide, and any
laws, regulations and contracts related to the Mortgagor’s Escrow
Custodial Accounts or other collateral accounts (including those that
require the PFI to pay interest on Mortgagor’s Escrow Custodial
Accounts). Some jurisdictions require that interest be paid on the
funds in the Mortgagor’s Escrow Custodial Account. In the event that
these requirements apply, the Servicer must pay the interest.

     D. Consequences of Untrue Warranties

     FHLB may require the PFI to repurchase a Mortgage sold to FHLB if any representation or
warranty made by the PFI about the Mortgage is untrue (whether the representation or
warranty is in this Master Agreement or other Program Document). FHLB may require
repurchase whether or not the PFI had actual knowledge of the untruth. FHLB may also enforce
any other available remedy. The PFI must pay FHLB as provided in the Guide. In addition,
untrue representations or warranties may be treated as a breach of contract that could
result in the withdrawal of FHLB approval of a PFI and the termination of this Master
Agreement or any other Program Document.

     E. Indemnification

     The PFI shall indemnify FHLB against, and hold FHLB harmless from, all costs arising
out of any breach of a representation, warranty or covenant made by the PFI under this
Master Agreement, the Guide or any Program Documents, or any breach or violation

16

 

of FHLB Guidelines. The foregoing indemnification shall include any costs incurred by
FHLB in connection with enforcing its rights under the Master Agreement, the Guide, any
Program Documents, or any breach or violation of FHLB Guidelines, or defending against any
claim, demand or assertion against FHLB by a third party arising out of a breach of a
representation, warranty or covenant made by the PFI in this Master Agreement, the Guide or
any Program Documents. The PFI’s indemnification pursuant to this section shall survive the
purchase and delivery of the Mortgages, their liquidation or repurchase and any suspension
or termination of the PFI’s selling privileges or the termination of this Master Agreement
or any other Program Documents.

     F. Offset

     FHLB may offset against the Purchase Proceeds for any Mortgage delivered for purchase
by the PFI, or against any other amounts owed by FHLB to the PFI pursuant to the Program
Documents or any other contract or instrument between FHLB and PFI, any outstanding amounts
owed to FHLB by the PFI or any affiliate of the PFI including, but not limited to:

	 	1.	 	Fees, penalties and expenses arising out of the
PFI’s failure to timely deliver any final documentation;
	 
	 	2.	 	Pair-off Fees, penalties or charges relating to
delivered or undelivered Mortgages;
	 
	 	3.	 	Costs and expenses arising out of the PFI’s
breach of any of its representations, warranties or covenants under the
Program Documents; and
	 
	 	4.	 	Costs and expenses incurred by FHLB as a result
of action taken by FHLB based on FHLB’s reasonable belief that the PFI
is no longer able to fulfill its obligations under this Master
Agreement or other Program Documents, including its repurchase and
indemnification obligations.

     G. Transfer, Suspension or Termination of Selling and Servicing Rights

     TERMINATON OF SERVICING RIGHTS

     1. Voluntary Transfer of Servicing Rights

     The PFI, with prior approval from FHLB, may transfer its Servicing rights to a
third party Servicer. A third party Servicer must comply with all Eligibility
Requirements in Chapter 2 of the Guide, except that the third party Servicer does
not need to be a Member. Third party Servicers, once approved, must comply with
FHLB Guidelines, this Guide, and applicable Program Documents. The assignment of
Servicing should be documented by a separate contract between the PFI and the
assignee servicer, which provides for a transfer of the Servicing of the

17

 

Mortgages and provides that by accepting an assignment of Servicing, the
assignee Servicer agrees to Service the Mortgages in accordance with FHLB
Guidelines, and applicable Program Documents, and assumes all contractual
obligations related to the Mortgages, including selling warranties and other
liabilities that arise in connection with the origination of the Mortgages or the
Servicing of the Mortgages prior to the assignment. An assignment of Servicing
does not release the PFI from any liabilities to FHLB with respect to the Mortgages
or the Servicing of them prior to the assignment of Servicing. Both the PFI and the
assignee Servicer will be jointly and severally liable to FHLB for the obligations
and liabilities related to the assigned Mortgages.

     2. Suspension or Termination of Selling Rights

     FHLB may, in its sole and absolute discretion, suspend or terminate the PFI’s
selling rights for any reason including, but not limited to, the PFI’s failure to
perform any of its obligations under the FHLB Guidelines, the Master Agreement, the
Guide, or Program Documents.

     Unless otherwise specified by FHLB, FHLB shall purchase Mortgages under
Mandatory Delivery Contracts outstanding at the time of termination or suspension.
FHLB shall, in its sole and absolute discretion, determine the duration of any
period of suspension and shall prescribe the terms and conditions for reinstatement.

     3. Termination of Servicing Rights

	 	a)	 	Termination of Servicing
Rights For Cause. FHLB may declare a termination of the
PFI’s Servicing rights if the PFI fails to perform any of its
obligations or meet any requirements under FHLB Guidelines, the
Master Agreement, the Guide, and all Program Documents.
	 
	 	 	 	If FHLBank declares a termination of Servicing for any of the
reasons set forth above, FHLBank and the PFI will mutually
determine the current fair market value of the servicing
privileges being terminated. FHLBank will then purchase the
Servicing, or cause the Servicing to be purchased, for such
amount minus any fees arising out of transfer and any
outstanding balances owed FHLBank. Servicing shall immediately
terminate and vest in FHLBank without further action by any
party.
	 
	 	 	 	In the event of a termination, the PFI shall promptly deliver
all documents, files, records (including computerized records)
and moneys (i.e., escrow funds) to an FHLB-approved designee
chosen by FHLB.

18

 

	 	b)	 	Termination Without
Cause. FHLB may declare a termination of the PFI’s
Servicing rights for any reason, at its sole discretion, and
compensation will be paid to the PFI and such Servicing rights
shall immediately terminate and vest in FHLB without further
action by any party. FHLB will notify the PFI in writing in the
event that FHLB elects to terminate the PFI’s Servicing rights
without cause. Within 60 days of its receipt of such
notification, the PFI shall sell FHLB’s Servicing portfolio to a
FHLB-approved Servicer. FHLB’s written approval of the
transaction must be obtained before the transfer. The PFI is
responsible for all costs incurred in connection with the
transfer and may retain any fees arising out of the transaction.
	 
	 	 	 	If the PFI does not arrange a voluntary transfer of the
Servicing rights within the period prescribed above, FHLB and
the PFI will mutually determine the current fair market value
of the Servicing privileges being terminated and FHLB will
purchase the Servicing privileges, or cause the Servicing
privileges to be purchased, for such amount.
	 
	 	 	 	If FHLB and the PFI cannot agree on a fair market value of the
Servicing rights, then each one will select an unaffiliated,
nationally recognized Servicing broker, and those two brokers
will independently estimate the current fair market value of
the Servicing rights. The average of the estimates provided by
the brokers will be used as the current fair market value. FHLB
and the PFI will be responsible for the respective cost of the
broker’s valuation solicited by such party.
	 
	 	 	 	In the event of a termination of Servicing rights without
cause, the PFI shall promptly deliver all Mortgage Documents,
file records (including computerized records) and moneys (i.e.,
escrow funds) (a) to an FHLB-approved Servicer to whom the PFI
has transferred the Servicing rights, if such a transfer has
occurred within the prescribed time period or (b) to FHLB or
its designee, if the Servicing rights have not been transferred
by the PFI within the prescribed time period.
	 
	 	 	 	Survival of Liability. No suspension of the PFI’s selling
privileges, or termination of the PFI’s selling or Servicing
privileges, shall release the PFI from any of its obligations
under the Master Agreement, the Guide or any other Program
Document, including without limitation the obligation of the
PFI to insure that payments due to FHLB, its successors and

19

 

	 	 	 	assigns, under Mortgagor that FHLB has purchased from the PFI,
are paid when due.

     H. Remedies Cumulative

     All rights and remedies of FHLB under the Master Agreement, Program Documents
and the Guide are in addition to all other rights and remedies available to FHLB in
law or equity. FHLB may exercise its rights and remedies concurrently, independently
or in succession and all such rights and remedies shall inure to the benefit of
FHLB, its successors and/or assigns. The failure of FHLB to exercise any of its
remedies under the Master Agreement or the Guide with respect to a breach or default
of the PFI does not constitute a waiver of such remedy with respect to such breach
or default or any subsequent breach or default.

I. Scope of Duties. The PFI will diligently perform all duties that are
necessary or incident to the Servicing of all Mortgages it is Servicing for FHLB on
the date this Master Agreement takes effect, and other Mortgages that the PFI is
required to Service by the terms of this Master Agreement or any other existing or
future agreement between FHLB and the PFI.

J. Service At PFI’s Own Expense. The cost of Servicing will be the PFI’s
expense.

K. Service Until Need Ends. The PFI must service each Mortgage continuously
for as long as FHLB owns the Mortgage, starting from the date its Servicing duties
begin until the Mortgage’s principal and interest have been paid-in-full, the
Mortgage has been liquidated and the Mortgaged Property properly disposed of (if the
PFI is required to do these things), the PFI’s Servicing duties are terminated, or
the PFI transfers Servicing in accordance with the Guide.

L. Compensation. The PFI’s compensation for Servicing Mortgages, including
the management and disposal of Properties, under this Master Agreement is specified
in the Mandatory Delivery Contract Confirmation.

M. Ownership of Records. All Mortgage records required by FHLB Guidelines
to document or properly Service any Mortgage owned by FHLB in its entirety are FHLB
property at all times. This is true whether or not the PFI developed or originated
them. The following are considered Mortgage records: all Mortgage Documents; tax
receipts; insurance policies; insurance premium receipts; ledger sheets; payment
records; insurance claim files and correspondence; foreclosure files and
correspondence; current and historical data files; and all other papers and records.

N. PFI as Document Custodian. The Mortgage records belong to FHLB. The PFI
can have possession of the Mortgage records only with FHLB approval and if the PFI
is acting as FHLB’s Document Custodian under a Custodial Agreement.

20

 

This is true whether the PFI receives the Mortgage records from an outside source or
prepares them itself.

O. Delivery. When asked in writing by FHLB, the PFI will deliver Mortgage
Documents to FHLB or someone FHLB chooses. The PFI must also send a list that
identifies each Mortgage, and must give other information requested to identify the
Mortgages so delivered. FHLB will not be required to sign or deliver any trust
receipts before the PFI delivers the Mortgage Documents requested. If FHLB asks the
PFI in writing for reproductions of any Mortgage records the PFI microfilmed or
condensed, the PFI will reproduce them promptly at no cost to FHLB or the party to
whom FHLB wants them delivered.

IV. Assignment

     The PFI may not, without prior written approval from FHLB, assign this Master Agreement under
any circumstances, either voluntarily or involuntarily, by operation of law, or otherwise, or
delegate its responsibility for Servicing individual Mortgages owned by FHLB.

V. Notice

     Any notice given under this Master Agreement must be in writing, delivered in person or sent
by registered or certified mail, with a return receipt requested; and addressed to the party to
which notice is being given. Delivery and notice is given when FHLB or the PFI mail or register
the notice with any post office.

VI. Address

     The addresses of the parties are those listed below. Any change of address must be given in
writing.

VII. Prior Agreements

     This Master Agreement supersedes any prior agreements between the PFI and FHLB that govern
selling or Servicing of Mortgages and to which this Master Agreement relates, except the Guide and
other Program Documents. In the event of conflict between this Master Agreement and the Guide and
other Program Documents, the Guide shall control. This section will not release the PFI from any
responsibility or liability under any prior agreements and understandings.

VIII. Severability and Enforcement

21

 

	     If any provision of this Master Agreement conflicts with applicable law, the other provisions
of this Master Agreement that can be carried out without the conflicting provision will not be
affected. All rights and remedies under this Master Agreement are distinct and cumulative not only
as to each other but as to any rights or remedies afforded by law or equity. They may be exercised
together, separately or successively. These rights and remedies are for FHLB’s benefit and its
successors and assigns.

IX. FHLB Capital Stock Purchase Requirement

     The FHLB and PFI recognize that the regulatory requirements regarding the capital structure of
FHLB are in transition. As such, PFI’s continued participation in the MPP may be dependent upon
PFI purchasing stock in FHLB. Any future requirement for stock purchase shall be as ultimately
established by the Board of Directors of FHLB.

X. Captions

     This Master Agreement’s captions and headings are for convenience only and are not part of the
Master Agreement.

XI. Scope of Master Agreement

     The following provisions apply, whether or not they are contrary to other provisions in this
Master Agreement.

	 	A.	 	Restriction of PFI. FHLB reserves the right to restrict the PFI’s
sale and Servicing of Mortgages to the type that the PFI and its employees have the
experience and ability to originate, sell or service.
	 
	 	B.	 	Types of Mortgage Products Covered. This Master Agreement covers only
the sale and Servicing of Mortgages within the following descriptions:
	 
	 	1.	 	15- or 30-year fixed rate, fully amortizing, level-payment mortgages for
primary, owner-occupied, detached residences, including single-family properties, and
2-, 3- and 4-unit properties;
	 
	 	2.	 	15- or 30-year fixed rate, fully amortizing, level-payment mortgages for
primary, owner-occupied, attached residences, including condominiums and PUDs;
	 
	 	3.	 	Second/vacation homes; and,
	 
	 	4.	 	All mortgages must meet FHLB Underwriting Guidelines.

22

 

XII. Signatures and Date

     By executing this Master Agreement, the PFI and FHLB agree to all of this Master Agreement’s
terms and provisions. This Master Agreement takes effect on the date first appearing above.

	 	 	 	 	 	 	 
	 	 	 	 	 
	PFI:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Address	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	City, State, Zip Code	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	   Title	 	 	 	 
	 
	 	 	 	 	 	 
	Federal

	 	Home Loan Bank of Cincinnati	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	   Title	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	   Title	 	 	 	 

23

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