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Exhibit 10.8
MORTGAGE LOAN PARTICIPATION AGREEMENT
TABLE OF CONTENTS
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MORTGAGE LOAN PARTICIPATION AGREEMENT
Mortgage Loan Participation Agreement (“ Agreement ”), dated as of the date set forth on the cover page hereof, between UBS WARBURG REAL ESTATE SECURITIES INC. (“ Participant ”) and the Seller whose name is set forth on the cover page hereof (“ Seller ”).
PRELIMINARY STATEMENT
Seller desires to sell to Participant from time to time Participation Certificates evidencing a 100% undivided ownership interest in certain Mortgage Loans eligible in the aggregate to back Securities with the terms described in related Take-Out Commitments.
Participant desires and may in its sole discretion purchase such Participation Certificates from Seller in accordance with the terms and conditions set forth in this Agreement. Seller, subject to the terms hereof, will cause (a) Mortgage Loans evidenced by a Participation Certificate to back a GNMA Security issued by Seller and guaranteed by GNMA, a FNMA Security issued and guaranteed by FNMA or a FHLMC Security issued and guaranteed by FHLMC and (b) Delivery of such GNMA Security, FNMA Security or FHLMC Security by GNMA, FNMA or FHLMC to Participant or its designee, which GNMA Security, FNMA Security or FHLMC Security will be purchased by a Takeout Investor.
Participant’s willingness to purchase any Participation Certificate evidencing particular Mortgage Loans is based on Participant’s expectation, in reliance upon Seller’s representations and warranties herein, that such Mortgage Loans in the aggregate, constitute a pool or pools of mortgage loans that are eligible to back a Security and that the Security, in the amount and with the terms described in the related Take-Out Commitment, will be issued and Participant will receive Delivery thereof within the time period agreed upon between Participant and Seller and reflected in the terms of such Participation Certificate.
The amount of the Purchase Price and the Performance Fee to be paid by Participant to Seller with respect to each Participation Certificate will be calculated on the expectation of Participant, based upon the representations and warranties of the Seller herein, that Participant will receive Delivery of the Security to be backed by the Mortgage Loans evidenced by the Participation Certificate purchased by Participant on the specified Anticipated Delivery Date and that failure to receive such Delivery will result in a material decrease in the market value of the Participation Certificate and the underlying Mortgage Loans considered as a whole. During the period from the purchase of a Participation Certificate to Delivery of the related Security, Participant expects to rely entirely upon Seller to service the Mortgage Loans evidenced by the applicable Participation Certificate, it being acknowledged that the continued effectiveness of Seller’s Agency Approvals during such period constitutes an essential factor in the calculation by Participant of the Purchase Price and the Performance Fee paid to Seller for the related Participation Certificate and that loss of such Agency Approvals by Seller would result in a material decrease in the market value of the Participation Certificate and the underlying Mortgage Loans considered as a whole.
The parties hereto hereby agree as follows:
Section 1. Definitions .Capitalized terms used but not defined herein shall have the meanings set forth in the Custodial Agreement. As used in this Agreement, the following terms shall have the following meanings:
“ Accepted Servicing Practices ”: With respect to each Mortgage Loan, such standards which comply with the applicable standards and requirements under: (i) an applicable Agency Program and related provisions of the applicable Agency Guide pursuant to which the related Mortgage Loan is intended to be purchased, and/or (ii) any applicable FHA and/or VA program and related provisions of applicable FHA and/or VA servicing guidelines.
“ Act of Insolvency ”: With respect to Seller, (a) the commencement by Seller as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, moratorium, dissolution, delinquency or similar law, or Seller’s seeking the appointment or election of a receiver, conservator, trustee, custodian or similar official for Seller or any substantial part of its property, or the convening of any meeting of creditors for purposes of commencing any such case or proceeding against Seller, or another seeking such an appointment or election, (b) the commencement of any such case or proceeding against Seller, or another’s seeking such appointment, or the filing against Seller of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (1) is consented to or not timely contested by Seller, (2) results in the entry of an order for relief, such an appointment or election, the issuance of such a protective decree or the entry of an order having a similar effect, or (3) is not dismissed within fifteen (15) days, (c) the making by Seller of a general assignment for the benefit of creditors, or (d) the admission in writing by Seller of Seller’s inability to pay its debts as they become due or the nonpayment generally by Seller of its debts as they become due.
“ Agency ”: The Government National Mortgage Association (“ GNMA ”), the Federal National Mortgage Association (“ Fannie Mae ”), and the Federal Home Loan Mortgage Corporation (“ Freddie Mac ”), as applicable.
“ Agency Approvals ”: As defined in Section 8(a)(viii) of this Agreement.
“ Agency Guide ”: The GNMA Mortgage-Backed Securities Guide; the Fannie Mae Selling Guide and the Fannie Mae Servicing Guide; the Freddie Mac Sellers’ and Servicers’ Guide; as applicable, in each case as such Agency Guide may be amended from time to time.
“ Agency Program ”: The specific purchase program under the relevant Agency Guide or as otherwise approved by the Agency.
“ Anticipated Delivery Date ”: With respect to a Security, the date specified in the related Form HUD 11705 (Schedule of Subscribers), Fannie Mae Form 2014 (Delivery Schedule), or FHLMC Form 939 (Settlement and Information Multiple Registration Form), as applicable, on which it is anticipated that Delivery of the Security by the Applicable Agency will be made.
“ Applicable Agency ” As defined in Section 3(a)(l).
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“ Assignee ”: As defined in Section 6.
“ Assignment of Mortgage ”: As defined in Section 6.
“ Authorized Signatory ”: An officer of the Seller who is authorized and empowered to cause Participation Certificates evidencing Mortgage Loans to back a Security issued by Seller and guaranteed by an Agency, and is indicated on the Authorized Signatories of the Seller attached hereto as Exhibit F.
“ Claim ”: Any right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or any right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
“ Collateral ”: As defined in Section 7(c).
“ Custodial Account ”: As defined in Section 4(b).
“ Custodial Agreement ”: The Custodial Agreement, dated as of the date set forth on the cover sheet thereof, among Seller, Participant and Custodian.
“ Custodian ”: The Custodian (which, under the appropriate circumstance, may include FHLMC or FNMA as Custodian) set forth on the cover page hereof and its permitted successors under the Custodial Agreement.
“ Defective Mortgage Loan ”: With respect to a Participation Certificate, a mortgage loan that is not in Strict Compliance with the GNMA Program, FNMA Program or FHLMC Program, as applicable.
“ Delivery ”: The later to occur of (a) the issuance of the related Security and (b) the transfer of all of the right, title and ownership interest in that Security to Participant.
“ Discount ”: With respect to each Participation Certificate, the amount of the adjustment to the Trade Price of the related Security agreed upon by Seller and Participant to reserve for the possibility that Seller may be unable to perform its obligations under this Agreement in accordance with their terms.
“ Electronic Agent ”: MERSCORP, Inc., and its successors in interest.
“ Electronic Tracking Agreement ”: The Electronic Tracking Agreement, dated as of the date hereof, among Participant, Seller, MERSCORP, Inc. and Mortgage Electronic Registration Systems, Inc.; provided, that if no Mortgage Loans are or will be MERS Designated Mortgage Loans, all references herein to the Electronic Tracking Agreement shall be disregarded.
“ FDIC ”: Federal Deposit Insurance Corporation or any successor thereto.
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“ FHA ”: The Federal Housing Administration or any successor thereto.
“ FHLMC ”: Federal Home Loan Mortgage Corporation or any successor thereto.
“ FHLMC as Custodian ”: With respect to FHLMC Participation Certificates, the circumstances in which Seller elects to appoint FHLMC (as opposed to some other third party as permitted by the FHLMC Guide) as Custodian for the FHLMC Mortgage Loans subject to the FHLMC Participation Certificates to be purchased by Participant hereunder.
“ FHLMC Guide ”: The Freddie Mac Sellers’ and Servicers’ Guide , as such Guide may hereafter from time to time be amended.
“ FHLMC Mortgage Loan ”: With respect to any FHLMC Participation Certificate or any FHLMC Security, a mortgage loan that is in Strict Compliance with the eligibility requirements specified for the applicable FHLMC Program described in the FHLMC Guide.
“ FHLMC Participation Certificate ”: With respect to the FHLMC Program, a certificate, in the form of Exhibit A, issued by Seller and authenticated by Custodian, evidencing the 100% undivided ownership interest in the Mortgage Loans that are either (a) set forth on a copy of the FHLMC Form 11 (Mortgage Submission Schedule) attached to such Participation Certificate or (b) identified on a computer tape compatible with MIDANET as belonging to the mortgage loan pool described in such Participation Certificate.
“ FHLMC Program ”: The FHLMC Home Mortgage Guarantor Program or the FHLMC FHA/VA Home Mortgage Guarantor Program, as described in the FHLMC Guide.
“ FHLMC Security ”: A modified pass-through mortgage-backed participation certificate, evidenced by a book-entry credit made by a Securities Intermediary that is a participant of the Federal Reserve Bank of New York, issued and guaranteed, with respect to timely payment of interest and ultimate payment of principal, by FHLMC and backed by a pool of FHLMC Mortgage Loans, in substantially the principal amount and with substantially the other terms as specified with respect to such FHLMC Security in the related Takeout Commitment, if any.
“ FNMA ” or “ Fannie Mae ”: Federal National Mortgage Association or any successor thereto.
“ FNMA as Custodian ”: With respect to FNMA Participation Certificates, the circumstances in which Seller elects to appoint FNMA (as opposed to some other third party as permitted by the FNMA Guide) as Custodian for the FNMA Mortgage Loans subject to the FNMA Participation Certificates to be purchased by Participant hereunder.
“ FNMA Guide ”: The Fannie Mae MBS Selling and Servicing Guide , as such Guide may hereafter from time to time be amended.
“ FNMA Mortgage Loan ”: With respect to any FNMA Participation Certificate or any FNMA Security, a mortgage loan that is in Strict Compliance with the eligibility requirements specified for the applicable FNMA Program described in the FNMA Guide.
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“ FNMA Participation Certificate ”: With respect to the FNMA Program, a certificate, in the form of Exhibit A, authenticated by Custodian, evidencing the 100% undivided ownership interest in the Mortgage Loans set forth on Fannie Mae Form 2005 (Schedule of Mortgages).
“ FNMA Program ”: The FNMA Guaranteed Mortgage-Backed Securities Programs, as described in the FNMA Guide.
“ FNMA Security ”: An ownership interest in a pool of FNMA Mortgage Loans, evidenced by a book-entry credit made by a Securities Intermediary that is a participant of the Federal Reserve Bank of New York, in substantially the principal amount and with substantially the other terms as specified with respect to such FNMA Security in the related Takeout Commitment, if any.
“ GNMA ”: Government National Mortgage Association or any successor thereto.
“ GNMA Guide ”: The GNMA Mortgage-Backed Securities Guide I or II , as such Guide may hereafter from time to time be amended.
“ GNMA Mortgage Loan ”: With respect to any GNMA Participation Certificate or any GNMA Security, a mortgage loan that is in Strict Compliance with the eligibility requirements specified for the applicable GNMA Program in the applicable GNMA Guide.
“ GNMA Participation Certificate ”: With respect to the GNMA Program, a certificate, in the form of Exhibit A, issued by Seller and authenticated by Custodian, evidencing the 100% undivided ownership interest in the Mortgage Loans set forth on the Form HUD 11706 (Schedule of Pooled Mortgages).
“ GNMA Program ”: The GNMA Mortgage-Backed Securities Programs, as described in a GNMA Guide.
“ GNMA Security ”: A fully-modified pass-through mortgage-backed certificate guaranteed by GNMA, evidenced by a book-entry credit made by a Securities Intermediary that is a participant of the Participant’s Trust Company and backed by a pool of GNMA Mortgage Loans, in substantially the principal amount and with substantially the other terms as specified with respect to such GNMA Security in the related Takeout Commitment, if any.
“ HUD ”: The United States Department of Housing and Urban Development or any successor thereto.
“ Interim Funder ”: With respect to each MERS Designated Mortgage Loan, the Person named on the MERS® System as the interim funder pursuant to the MERS Procedures Manual.
“ Investor ”: With respect to each MERS Designated Mortgage Loan, the Person named on the MERS® System as the investor pursuant to the MERS Procedures Manual.
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“ Issuance Date ”: With respect to a Security, the first day of the month in which the Security is issued.
“ Losses ”: Any and all losses, claims, damages, liabilities or expenses (including reasonable attorneys’ fees) incurred by any person specified; provided, however , that “Losses” shall not include any losses, claims, damages, liabilities or expenses which would have been avoided had such person taken reasonable actions to mitigate such losses, claims, damages, liabilities or expenses.
“ MERS Designated Mortgage Loan ”: Mortgage Loans for which (a) the Seller has designated or will designate MERS as, and has taken or will take such action as is necessary to cause MERS to be, the mortgagee of record, as nominee for the Seller, in accordance with MERS Procedure Manual and (b) the Seller has designated or will designate the Participant as the Investor and Interim Funder on the MERS® System.
“ MERS Procedure Manual ”: The MERS Procedures Manual attached as Exhibit B to the Electronic Tracking Agreement, as it may be amended, supplemented or otherwise modified from time to time.
“ MERS Report ”: The schedule listing MERS Designated Mortgage Loans and other information prepared by the Electronic Agent pursuant to the Electronic Tracking Agreement.
“ MERS® System ”: The Electronic Agent’s mortgage electronic registry system, as more particularly described in the MERS Procedures Manual.
“ MIDANET ”: The FHLMC automated system by which sellers and servicers of mortgage loans to FHLMC transfer mortgage summary and record data or mortgage accounting and servicing information from their computer system or service bureau to FHLMC, as more fully described in the FHLMC Guide.
“ Mortgage ”: A mortgage, deed of trust or other security instrument, securing a Mortgage Note.
“ Mortgage Loan ”: A GNMA Mortgage Loan, a FNMA Mortgage Loan or a FHLMC Mortgage Loan.
“ Mortgage Note ”: A promissory note evidencing a Mortgage Loan.
“ OTS ”: Office of Thrift Supervision or any successor thereto.
“ Parent Company ”: A corporation or other entity owning at least 50% of the outstanding shares of voting stock of Seller.
“ Participant ”: UBS Warburg Real Estate Securities Inc. and its successors in interest, including, but not limited to, any lender, designee or assignee to whom a Participation Certificate or a Security shall be pledged or assigned.
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“ Participation Certificate ”: A GNMA Participation Certificate, a FNMA Participation Certificate or a FHLMC Participation Certificate.
“ Pass-Through Rate ”: With respect to a Participation Certificate, the rate of interest specified as the Pass-Through Rate in such Participation Certificate, which rate shall continue in effect until the latest of (a) the Settlement Date of the related Security, (b) either the date on which Receipt of the Security occurs or, if such Receipt occurs on such date after 12:00 noon, New York City time the next business day on which Participant is permitted under applicable laws and regulations to make delivery of the Security to the Takeout Investor and, if applicable, (c) the date on which Seller completes its Performance of its obligations under Section 3(c)(2).
“ Performance Fee ”: With respect to each Participation Certificate, an amount equal to the Discount plus the Yield Compensation Adjustment, less any reduction pursuant to Section 3(b), which amount shall be payable to Seller by Participant as compensation to Seller for its services in connection with the issuance of a Security.
“ Purchase Date ”: With respect to a Participation Certificate, the date on which Participant elects to purchase such Participation Certificate.
“ Purchase Price ”: With respect to each Participation Certificate, the Trade Price of the Security to be backed by the Mortgage Loans evidenced by the Participation Certificate, less the Discount. Accrued interest shall be allocated in accordance with Section 3(a)(3).
“ Receipt ”: The Delivery of a Security, upon notice by Seller to Participant, not later than 12:00 noon, New York City time, on the second business day prior to the applicable Settlement Date, of (a) the amount of any change in the principal amount of the Mortgage Loans backing such Security, and (b) with respect to FHLMC Securities, the FHLMC Mortgage Loan pool number applicable to such Security. If the Seller fails to so notify Participant, “Receipt” shall be deemed to have occurred on the later of (1) the second business day after the date on which Seller provides such notification to Participant and (2) the date on which Participant receives Delivery of the Security.
“ RTC ”: Resolution Trust Corporation or any successor thereto.
“ Securities Intermediary ”: As defined in Section 8-102(a)(14) of the Uniform Commercial Code.
“ Security ”: A GNMA Security, a FNMA Security or a FHLMC Security.
“ Servicing Rights ”: Any and all of the following: (a) any and all rights to service the Mortgage Loans; (b) any payments to or monies received by Seller or any other Person for servicing the Mortgage Loans; (c) any late fees, penalties or similar payments with respect to the Mortgage Loans; (d) all agreements or documents creating, defining or evidencing any such servicing rights to the extent they relate to such servicing rights and all rights of Seller or any other Person thereunder; (e) escrow payments or other similar payments with respect to the Mortgage Loans and any amounts actually collected by Seller or any other Person with respect thereto; and (f) all accounts and other rights to payment related to the Mortgage Loans.
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“ Settlement Date ”: The date specified in a Takeout Commitment upon which the related Security is scheduled to be delivered, against payment, to the specified Takeout Investor.
“ Strict Compliance ” shall mean compliance of Seller and the Mortgage Loans with the requirements of the GNMA Guide, FNMA Guide or FHLMC Guide, as applicable and as amended by any agreements between Seller and the Applicable Agency, sufficient to enable Seller to issue and GNMA to guarantee or FNMA or FHLMC to issue and guarantee a Security, provided, that until copies of any such agreements between Seller and the Applicable Agency have been provided to Participant by Seller, such agreements shall be deemed, as between Seller and Participant, not to amend the requirements of the GNMA Guide, FNMA Guide or FHLMC Guide, as applicable.
“ Successor Servicer ”: An entity with the necessary Agency Approvals, as the circumstances may require, and designated by Participant, in conformity with Section 3(c)(2), to replace Seller as issuer and servicer, mortgagee or seller/servicer of the Mortgage Loans or the Securities related thereto.
“ Takeout Commitment ”: A trade confirmation from the Takeout Investor to Seller confirming the details of a forward trade between the Takeout Investor and Seller with respect to one or more Securities, which trade confirmation shall be enforceable and in full force and effect, and shall be validly and effectively assigned to Participant pursuant to a Trade Assignment, and relate to pools of Mortgage Loans that satisfy the “good delivery standards” of the Public Securities Association as set forth in the Public Securities Association Uniform Practices Guide .
“ Takeout Investor ”: A securities dealer or other financial institution, acceptable to Participant, who has made a Takeout Commitment.
“ Trade Assignment ”: A letter substantially in the form of Exhibit B.
“ Trade Price ”: The price specified in a Takeout Commitment at which a Takeout Investor is obligated to purchase the Security specified in such Takeout Commitment.
“ UCC ” or “ Uniform Commercial Code ”: The Uniform Commercial Code as in effect in the State of New York as of the date of this Agreement.
“ VA ”: The United States Veterans Administration or any successor thereto.
“ Warehouse Lender ”: Any lender providing financing to the Seller for the purpose of originating Mortgage Loans, which has a security interest in such Mortgage Loans as collateral for the obligations of Seller to such lender.
“ Wire Instructions ”: The wire instructions set forth opposite the name of the Warehouse Lender in a letter, in the form of Exhibit G to the Custodial Agreement, executed by Seller and Custodian, receipt of which has been acknowledged by Participant.
“ Yield Compensation Adjustment ”: Subject to any further adjustment provided in this Agreement, an amount (which may be a negative number) equal to:
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A(BC-DE)
where (i) A equals the number of days in the period beginning on the date Participant purchases such Participation Certificate to but not including the Settlement Date, (ii) B equals the aggregate principal amount of the Mortgage Loans evidenced by a Participation Certificate, (iii) C equals the interest rate (expressed as a decimal) on the Security backed by the Mortgage Loans subject to such Participation Certificate, (iv) D equals the Purchase Price and (v) E equals the Pass-Through Rate (expressed as a decimal) specified in such Participation Certificate.
Section 2. Procedures for Purchases of Participation Certificates .(a) Participant may, in its sole discretion from time to time, purchase one or more Participation Certificates from Seller. Seller, on behalf of Participant, shall arrange for the Delivery to Participant of a Security backed by the Mortgage Loans evidenced by any Participation Certificate so purchased, which Security shall be subject to a Takeout Commitment. Participant’s obligation to purchase any Participation Certificate which Participant elects to purchase, shall be subject to the receipt by the Participant of the documents listed in Exhibit C from Seller, in form and substance satisfactory to Participant, and the execution of the Custodial Agreement relating to the Participation Certificate by Seller and Custodian and delivery thereof to Participant. Notwithstanding the satisfaction of the conditions specified in this Section 2(a), Participant is not obligated to purchase any Participation Certificate offered to it hereunder.(b) If Participant elects to purchase any Participation Certificate, Participant shall pay to Seller, on the Purchase Date, the amount of the Purchase Price for such Participation Certificate. In the event that Participant does not transmit the Purchase Price, (i) any Participation Certificate delivered by Custodian to Participant in anticipation of such purchase shall automatically be null and void, (ii) Participant will not consummate the transactions contemplated in the applicable Trade Assignment and (iii) to the extent that Participant shall nevertheless receive the Security backed by the Mortgage Loans to which such Participation Certificate relates prior to its becoming null and void as provided in clause (i) above, Participant shall take all reasonable actions necessary to ensure that such Security shall be delivered in accordance with Seller’s delivery instructions specified in Annex A.(c) The terms and conditions of the purchase of each Participation Certificate shall be as set forth in this Agreement. Each Participation Certificate shall be deemed to incorporate, and Seller shall be deemed to make as of the applicable dates specified in Section 8, for the benefit of Participant and each Assignee of such Participation Certificate, the representations and warranties set forth in Section 8 in respect of such Participation Certificate and the Mortgage Loans evidenced by such Participation Certificate.Section 3. Issuance of Securities .(a) (1) With respect to Mortgage Loans evidenced by a Participation Certificate which Participant has elected to purchase, Seller shall instruct (and, if Seller fails to instruct, then Participant may instruct) Custodian to deliver to GNMA, FNMA or FHLMC, as applicable (the “ Applicable Agency ”), the documents listed in Exhibits C-l, C-2 or C-3 of the
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Custodial Agreement in respect of such Mortgage Loans, in the manner and at the time set forth in the Custodial Agreement. Seller shall thereafter promptly deliver to the Applicable Agency any and all additional documents requested by the Applicable Agency to enable the Applicable Agency to make Delivery to Participant of a Security backed by such Mortgage Loans on the related Anticipated Delivery Date. Seller shall not revoke such instructions to Custodian and shall not revoke its instructions to the Applicable Agency to make Delivery to Participant or its designee of a Security backed by such Mortgage Loans.(2) Seller shall notify Participant, not later than 12:00 noon, New York City time, on the second business day prior to the applicable Settlement Date, (i) of the amount of any change in the principal amount of the Mortgage Loans backing each such Security related to such Settlement Date and (ii) with respect to FHLMC Securities, the FHLMC mortgage loan pool number applicable to each Security to which such Settlement Date relates. Upon Delivery of such Security to Participant or its designee, Participant shall cease to have any interest under such Participation Certificate in the Mortgage Loans backing such Security, notwithstanding anything to the contrary in the Participation Certificate.(b) With respect to each Participation Certificate that Participant elects to purchase hereunder, Participant shall owe to Seller, on the later to occur of four business days after the Purchase Date or on the date of Receipt by Participant of the related Security, a Performance Fee. If a Participation Certificate is purchased by Participant after the first day of the month in which the Settlement Date occurs, Participant shall also pay to Seller on the date of Receipt by Participant of the Security backed by the related Mortgage Loans an amount equal to the accrued interest on the related Security at the rate specified in the related Takeout Commitment from the first day of such month to and including the day immediately preceding the date Participant purchased such Participation Certificate. If a Participation Certificate is purchased by Participant in the month prior to the month in which the Settlement Date occurs, Seller, as servicer, shall pay to Participant all interest payments which accrue on such Participation Certificate during the period from the date of purchase of such Participation Certificate through and including the last day of the month prior to the month in which such Settlement Date occurs. Notwithstanding the foregoing, no amounts shall be owed by Participant to Seller upon issuance of such Security in the circumstances contemplated in Section 3(c)(2). Except as otherwise provided in this Section 3(a)(3) and in Section 3(b), and subject to Participant’s right of set-off set forth in Section 3(g), any Performance Fee owed by Participant with respect to a Participation Certificate shall be paid by Participant to Seller not later than the Settlement Date of the related Security. It is understood by Seller and Participant that, if Seller requests and Participant agrees to pay the Performance Fee prior to the Settlement Date of the related Security, the amount of such Performance Fee shall be adjusted as mutually agreed by Seller and Participant.(c) Unless Receipt of a Security backed by the Mortgage Loans evidenced by a Participation Certificate purchased hereunder has occurred by 12:00 noon, New York City time, on the related Settlement Date, (1) the Performance Fee relating to such Participation Certificate shall be reduced daily for the period from the Settlement Date to but not including the earlier of the date of Receipt of such Security and the date of satisfaction of the obligations of Seller pursuant to the exercise by Participant of any remedial election authorized by this Section 3 by an amount equal to (A) the Purchase Price of such Participation Certificate
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multiplied by (B) the result obtained by dividing (i) the Pass-Through Rate for such Participation Certificate plus one percent by (ii) three hundred and sixty (360) and (2) the Performance Fee, if any, relating to such Participation Certificate shall not be payable until the end of the period specified in clause (1) of this paragraph.(d) (1) If a breach by Seller of this Agreement results in any Mortgage Loan being a Defective Mortgage Loan at the time of the delivery of the related Participation Certificate to Participant, Participant in its sole discretion may require that Seller, upon receipt of notice from Participant of its exercise of such right, either (i) immediately repurchase Participant’s ownership interest in such Defective Mortgage Loan by remitting to Participant the allocable amount paid by Participant for such Defective Mortgage Loan plus interest at the Pass-T |
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