SECOND AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENT

Exhibit 10.1

 

 

SECOND AMENDED AND RESTATED

WAREHOUSING CREDIT AND SECURITY AGREEMENT

AMONG

CENTERLINE MORTGAGE CAPITAL INC.,

a Delaware corporation

AND

CENTERLINE MORTGAGE PARTNERS INC.,

a Delaware corporation

AND

BANK OF AMERICA, N.A., as Agent

AND

THE LENDERS PARTY HERETO

Dated as of September 28, 2009

 

 

 

SECOND AMENDED AND RESTATED

WAREHOUSING CREDIT AND SECURITY AGREEMENT

 

1.	DEFINITIONS.

1.2.   Other Definitional Provisions .  Unless otherwise specified in the Loan Documents:

 

 

1.3.          Accounting Principles .  All accounting and financial terms used in the Loan Documents and the compliance with each financial covenant therein shall be determined in accordance with GAAP, and all accounting principles shall be applied on a consistent basis so that the accounting principles in a current period are comparable in all material respects to those applied during the preceding comparable period.  The Borrower shall notify the Agent of any change in GAAP from that in effect on the date hereof which would in any way effect the operation of any covenant in any Loan Documents, whereupon, the Agent and the Borrower shall attempt for a reasonable period (not to exceed ten (10) Business Days unless the Agent and the Borrower agrees to extend such time period) to agree upon appropriate amendments to the affected covenants to eliminate such effect and to produce equivalent results, failing which, for purposes of calculating such financial covenants, GAAP will mean generally accepted accounting principles on the date just prior to the date on which any such change in GAAP became effective.

 

2.   THE CREDIT.

 

2.1.          The Commitment .

 

(a)     Subject to the terms and conditions of this Agreement and provided no Default or Event of Default has occurred and is continuing, each Lender severally and not jointly agrees, from time to time during the period from the date hereof up to, but not including the Maturity Date, to make Advances to the Borrower, provided, however, that (1) the sum of the total aggregate principal amount outstanding at any one time of all such Advances shall not exceed the Commitment, and (2) no Lender’s portion of the Advances shall exceed such Lender’s Commitment Amount.  The aggregate amount of all Advances outstanding from time to time hereunder may hereinafter collectively be referred to as the “Loan.”  Within the Commitment, the Borrower may borrow, repay and reborrow.  All Advances under this Agreement shall constitute a single indebtedness, and all of the Collateral shall be security for the Notes and for the performance of all the Obligations of the Borrower.

 

 

 

 

 

(b)       Advances shall be used by the Borrower solely for the purpose of funding the origination of Eligible Loans as specified in the Advance Request, and none other, and shall be made at the request of the Borrower in the manner hereinafter provided in Section 2.2, against the pledge of such Mortgage Loans, and such other collateral as is set forth in Section 3.1 hereof as Collateral therefor.

 

(c)       In addition to the limitations set forth in this Agreement, each Advance to fund an Eligible Loan shall be limited to the lesser of (x) the Mortgage Note Amount, or (y) the Committed Purchase Price amount.

 

(d)     In the event at any time the outstanding principal balance of the Loan should exceed the lesser of (x) the Commitment or (y) the aggregate Collateral Value of all Eligible Loans against which Advances are then outstanding, the Borrower shall repay such excess amount on demand to the Agent so that the outstanding principal balance of the Loan is in compliance with the terms and provisions hereof.

 

(e)       The Lenders shall have no obligation to make any Advances hereunder to fund the origination of Fannie Mae DUS Mortgage Loans, Other Fannie Mae Mortgage Loans or Freddie Mac Loans if Standard & Poor’s reduces the credit rating of Fannie Mae (with respect to Fannie Mae DUS Mortgage Loans or Other Fannie Mae Mortgage Loans) or Freddie Mac (with respect to Freddie Mac Loans) to A or lower (or another Rating Agency reduces such credit rating to a comparable rating).

 

2.2.        Procedures for Obtaining Advances .

 

(a)       The Borrower may obtain an Advance hereunder, subject to the satisfaction of the conditions set forth in Sections 4.1 and 4.2 hereof, upon compliance with the procedures set forth in this Section 2.2 and in the applicable Exhibit C attached hereto and made a part hereof.  Requests for Advances shall be initiated by the Borrower (i) by delivering to the Agent not later than 1 Business Day before the Business Day on which the Borrower desires the Advance, a completed and signed request for an Advance (an “Advance Request”) in the form of Exhibit A attached hereto and made a part hereof,  The Agent shall have the right, on not less than three (3) Business Days’ prior Notice to the Borrower, to modify the form of the Advance Request or any exhibits hereto, subject to the prior written consent of the Borrower, not to be unreasonably withheld, and, as so modified, said Advance Request or exhibits shall be deemed a part hereof.

 

(b)       Subject to the delivery of an Advance Request, and the satisfaction of the conditions set forth in Sections 4.1 and 4.2, the Borrower is entitled to obtain an Advance under this Agreement upon compliance with the procedures set forth in this Section and in the applicable Exhibit C , including delivery to the Agent of all required Collateral Documents.

 

(c)       To make an Advance, the Agent shall credit the Borrower’s Funding Account upon compliance by the Borrower with the terms of this Agreement.

 

 

 

 

 

2.3.         Notes .  The Borrower’s obligation to pay the principal of, and accrued and unpaid interest on, all Advances made by the Lenders shall be evidenced by the Notes of the Borrower in favor of each Lender.  All terms and provisions of the Notes are hereby incorporated herein.

 

2.4.         Interest .

 

(a)       Except as provided in Section 2.4(c) below, the unpaid amount of each Advance hereunder shall bear interest from the date of such Advance until paid in full, at the Applicable Rate.

 

(b)       All interest shall be:  (a) payable in arrears on the first day of each calendar month and on the Maturity Date; and (b) calculated on the basis of a 360 day year and the actual number of days elapsed.  If Borrower does not pay interest when due following the invoice pursuant to Section 2.7, Borrower authorizes Agent to charge the Operating Account for the payment of accrued and unpaid interest for any calendar month; Agent shall notify Borrower of such charge.

 

(c)       Obligations not paid when due (whether at stated maturity, upon acceleration following the occurrence of an Event of Default or otherwise) shall bear interest, from the date due until paid in full, at a rate of interest (“Default Rate”) at all times equal a floating rate of interest which is equal two percent (2%) per annum over the Applicable Rate, said interest to be payable on demand by Agent.

 

(d)       The Borrower shall pay, upon billing therefor, a “Late Charge” equal to five percent (5%) of the amount of any payment of principal, other than principal due at the Maturity Date (or the date on which the Agent accelerates the time for payment of the Loan after the occurrence of an Event of Default), interest, or other Obligations, which are not paid within ten (10) days of the due date thereof.  Late Charges are: (a) payable in addition to, and not in limitation of, the Default Rate, (b) intended to compensate Agent and the Lenders for administrative and processing costs incident to late payments, (c) not interest, and (d) not subject to refund or rebate or credit against any other amount due.

 

(e)       Notwithstanding any other provision of this Agreement, if, pursuant to this Agreement, the Agent debits the Borrower’s Operating Account to honor an item presented against the Operating Account and that debit or direction results in an overdraft, the Agent may, but in no event shall be obligated to, make an additional Advance to fund that overdraft (an “Overdraft Advance”).  The Borrower shall pay the outstanding amount of any Overdraft Advance within one (1) Business Day after the date of the Overdraft Advance.

 

2.5.     Principal Payments .

 

(a)     Upon acceleration of the Loan, if the Loan has been accelerated by the Agent (or the Facility has been automatically terminated) upon an Event of Default, or at the Maturity Date, all accrued and unpaid interest, principal and other Obligations due with respect to the Loan shall be due and payable in full, and the principal balance and such other Obligations, but not unpaid interest, shall continue to bear interest at the Default Rate until so paid.

 

 

 

 

 

(b)     The Borrower shall have the right to prepay the outstanding Advances in whole or in part, from time to time, without premium or penalty, provided that: (i) the Agent shall have actually received from the Borrower prior written Notice of (a) the Borrower’s intent to prepay, (b) the amount of principal which will be prepaid (the “Prepaid Principal”), and (c) the date on which the prepayment will be made; (ii) each prepayment shall be in a minimum amount of $1,000,000 or more (unless the prepayment retires the outstanding balance of a Warehouse Advance with respect to a particular Pledged Asset or the Loan in full); and (iii) each prepayment shall be in the amount of 100% of the Prepaid Principal, plus accrued unpaid interest thereon to the date of prepayment, plus any other Obligations relating specifically to the Prepaid Principal or which otherwise have become due and payable to the Agent and Lenders under the Loan Documents on or before the date of prepayment but have not been paid.

 

(c)     The Borrower shall be obligated to pay to the Agent on behalf of the Lenders, without the necessity of prior demand or Notice from the Agent or any Lender, and the Borrower authorizes the Agent on behalf of the Lenders to charge the Operating Account or any other accounts of the Borrower in Agent’s possession for the amount of any outstanding Advance against a specific Pledged Asset upon the earliest occurrence of any of the following events:

 

1.       Upon the earlier to occur of (x) the payment of the Committed Purchase Price from an Investor with respect to any Pledged Asset or (y) that date which is sixty (60) days from the date of the funding of such Advance;

 

2.       On the date an Advance was made if the Pledged Loan that was to have been funded by that Advance is not closed and funded;

 

3.       Three (3) Business Days elapse from the date an Advance was made against a Pledged Loan, without receipt by the Agent of the Collateral Documents relating to that Pledged Loan required to be delivered on that date, or such Collateral Documents, upon examination by the Agent, are found not to be in compliance with the requirements of this Agreement or the related Purchase Commitment and the Borrower fails to cure such non-compliance within three (3) Business Days after written Notice thereof;

 

4.       Ten (10) Business Days elapse without the return of a Collateral Document delivered by the Agent to the Borrower under a Trust Receipt for correction or completion;

 

5.       Three (3) Business Days after Borrower has received written Notice that a Pledged Loan is determined to have been originated or issued based on materially untrue, incomplete or inaccurate information or otherwise to be subject to fraud, whether or not the Borrower had knowledge of the misrepresentation, incomplete or incorrect information or fraud;

 

6.       On the date the Pledged Loan or a Lien prior to the Pledged Loan is defaulted and, if the default is non-monetary, remains in default for a period of thirty (30) days or more;

 

 

 

 

 

7.       On the mandatory delivery date of the related Purchase Commitment if the related Pledged Asset has not been delivered under the Purchase Commitment prior to such mandatory delivery date, or on the date the related Purchase Commitment expires or is terminated;

 

8.       Three (3) Business Days after the date a Pledged Asset is rejected for purchase by an Investor unless another Purchase Commitment is provided within that 3 Business Day period;

 

9.     On the date the Pledged Loan does not qualify as an Eligible Loan; and

 

10.    Upon the sale, other disposition or prepayment of any Pledged Asset or, with respect to a Pledged Loan included in an Eligible Mortgage Pool, upon the sale or other disposition of the related Agency Security.

(d)   In addition to the payments required pursuant to Section 2.5(c), if the principal amount of any Pledged Loan is prepaid in whole or in part while a Advance is outstanding against the Pledged Loan, the Borrower must pay to Agent, without the necessity of prior demand or Notice from Agent, the amount of the prepayment, to be applied against such Advance.

 

(e)     The proceeds of the sale or other disposition of Pledged Assets must be paid directly by the Investor to the Cash Collateral Account.  The Borrower must give Notice to Agent (by telephone or electronic mail, and if by telephone, followed promptly by written Notice) of the Pledged Assets for which proceeds have been received.  Upon receipt of such Notice from the Borrower, Agent will apply any proceeds deposited into the Cash Collateral Account to the payment of the Advance related to the Pledged Assets identified by the Borrower in its Notice, and those Pledged Assets will be considered to have been redeemed from pledge.  Agent is entitled to rely upon the Borrower’s affirmation that deposits in the Cash Collateral Account represent payments from Investors for the purchase of the Pledged Assets specified by the Borrower in its Notice.  If the payment from an Investor for the purchase of Pledged Assets is less than the outstanding Advance against the Pledged Assets identified by the Borrower in its Notice (the “Deficiency”), the Borrower shall immediately deposit into the Cash Collateral Account the amount of such Deficiency in collected funds, and the Borrower authorizes Agent to charge the Borrower’s Cash Collateral Account for the amount deposited by the Borrower to cover such Deficiency to be applied against such Advance.  As long as no Default exists, Agent will transfer into the Borrower’s Operating Account any excess payment from an Investor for Pledged Assets.

 

2.6.       Expiration of Commitment .  Unless extended or terminated earlier as permitted hereunder, the Commitment shall expire of its own term, and without the necessity of action by the Lenders or the Agent, at the close of business on the Maturity Date.  However, the remainder of this Agreement shall remain in full force and effect until all amounts due on the Obligations have been paid in full.  The Lenders have not made, and do not hereby make, any commitment to renew, extend, rearrange or otherwise refinance the outstanding and unpaid principal of the Notes or accrued interest thereon.  In the event, however, the Lenders from time to time renew, extend, rearrange, increase and/or otherwise refinance any portion or all of any Obligation and any accrued interest thereon at any time, such refinancing shall be evidenced by appropriate promissory notes in form and substance satisfactory to the Lenders and, unless otherwise noted or modified at such time or times by the terms of such promissory note or any agreements executed in connection therewith, any such promissory notes and refinancing evidenced thereby shall be governed in all respects by the terms of this Agreement.  Notwithstanding the foregoing, Borrower may terminate the Commitment upon not less than thirty (30) days prior written Notice to the Agent.  All Obligations of the Borrower shall automatically become due and payable, without demand or Notice of any kind, on the effective date of such termination including, but not limited to, all Advances, accrued and unpaid interest, accrued and unpaid Non-Usage Fees and Agent’s Fees through the effective date.

 

 

 

 

 

2.7.       Payments .  Except as otherwise specifically provided herein, all payments hereunder shall be made to the Agent on behalf of the Lenders not later than the close of business on the date when due unless such date is a non-Business Day, in which case, such payment shall be due not later than 2:00 p.m. on the first Business Day thereafter, and shall be made in lawful money of the United States of America in immediately available funds.  Any such payment made after 2:00 p.m. shall be deemed to be received on the next Business Day and, if applicable, interest thereon shall continue to accrue until such next Business Day.  No Lender directly invoices Borrower for – and only Agent invoices Borrower for – interest under the Loan Documents.  Agent may submit monthly billings reflecting payments due; however, any changes in the interest rate which occur between the date of billing and the due date may be reflected in the billing for a subsequent month.  Neither the failure of Agent to submit a billing nor any error in any such billing shall excuse the Borrower from the obligation to make full payment of all the Borrower’s payment Obligations when due.  All payments shall be applied first to the payment of all fees, expenses, and other amounts due to the Lenders under this Agreement (excluding principal and interest), then to accrued interest, and the balance on account of outstanding principal, provided, however, that after the occurrence and during the continuation of an Event of Default, payments will be applied to the Obligations as the Agent determines, subject to the provisions of Section 8.3.

 

2.8.     Loan Fees .

 

          (a)     Commitment Fee .  The Borrower shall pay the commitment fee described in the Fee Letter.

 

                      (b)     Unused Fee .  An unused fee in an amount equal to the Daily Unused Amount (if a positive number), multiplied by twenty-five (25) basis points per annum.  As used herein, “Daily Unused Amount” means the Commitment then in effect, minus the outstanding principal balance of the Advances.  The unused fee shall be calculated for each day of a calendar quarter (or portion thereof) and shall be payable by the Borrower to the Agent (for the ratable benefit of the Lenders) quarterly in arrears on the last Business Day of June, September, and December and on the Maturity Date.

 

                      (c)     Miscellaneous Fees .  The Borrower shall pay to the Agent, promptly following an invoice therefor,  miscellaneous fees including:

 

 

 

 

 

(i)     Wire transfer fees customarily charged by the Agent;

 

(ii)     Customary handling fees of $100 per transaction involving the  Collateral;

 

(iii)     Customary handling fees of $50 per transaction involving Mortgage-backed Securities; and

 

(iv)     Custody account fees based on the Agent’s schedule of charges and fees that are customary for similar services.

 

(d)         Administrative Fees .  If, for any reason, (a) the Borrower repays an Advance on the same day that it was made by the Lenders, or (b) the Borrower instructs Agent not to make a previously requested Advance after the Lenders have reserved funds or made other arrangements necessary to enable such Lenders to fund that Advance, Borrower agrees to pay to each Lender an administrative fee equal to one day of interest on that Advance at the Applicable Rate.  Administrative fees are due and payable in the same manner as interest is due and payable under this Agreement.

 

2.9.        Reserved .

 

2.10.     Increased Costs; Capital Requirements .  In the event there is a change after the date of this Agreement in any applicable law, order, regulation or directive issued by any governmental or monetary authority, or any change after the date of this Agreement in the governmental or judicial interpretation or application thereof, and such change:

 

(a)     Does or shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement or any Advances made hereunder, or change the basis of taxation on payments to such Lender of principal, fees, interest or any other amount payable hereunder (except for change in the rate of tax on the overall gross or net income of such Lender by the jurisdiction in which such Lender’s principal office is located);

 

(b)     Does or shall impose, modify or hold applicable any reserve, capital requirement, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender which are not otherwise included in the determination of the interest rate as calculated hereunder;

 

and the result of all of the foregoing taken as a whole is to increase the cost to such Lender of making, renewing or maintaining any Advance or to reduce any amount receivable in respect thereof or to reduce the rate of return on the capital of such Lender or any Person controlling such Lender as it relates to credit facilities in the nature of that evidenced by this Agreement, then, in any such case, the Borrower shall promptly pay any additional amounts necessary to compensate such Lender for such additional cost or reduced amounts receivable or reduced rate of return as reasonably determined by such Lender with respect to this Agreement or Advances made hereunder or such Lender’s obligations hereunder.  If a Lender becomes entitled to claim any additional amounts pursuant to this Section, it shall notify the Borrower through the Agent of the event by reason of which it has become so entitled and the Borrower shall pay such amount within fifteen (15) days thereafter. Notwithstanding the foregoing, the Borrower shall not be obligated to pay any such additional amounts attributable to the period (the “Excluded Period”) ending ninety (90) days prior to the date the Borrower receives written Notice of the law, order, regulation, directive, change or request by reason of which such additional amounts are payable, except to the extent such additional amounts accrued during the Excluded Period due to the retroactive application of such law, order, regulation, directive, change or request, in which case the limitation set forth in this sentence shall not apply. A certificate as to any additional amount payable pursuant to the foregoing sentence containing the calculation thereof in reasonable detail submitted by a Lender, through the Agent, to the Borrower shall be conclusive in the absence of manifest error. The obligations of the Borrower under this Section shall survive the payment of all other Obligations and the termination of this Agreement.

 

 

 

 

 

2.11.     Taxes .

 

(a)       Any and all payments by the Borrower to or for the account of the Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding , in the case of the Agent and each Lender, taxes imposed on or measured by its overall net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which the Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as “ Taxes ”).  If the Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), each of the Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, the Borrower shall furnish to the Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof.

 

(b)       In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as “Other Taxes”).

 

(c)       If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to the Agent or any Lender, the Borrower shall also pay to the Agent or to such Lender, as the case may be, at the time interest is paid, such additional amount that the Agent or such Lender specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that the Agent or such Lender would have received if such Taxes or Other Taxes had not been imposed.

 

 

 

 

 

(d)       The Borrower agrees to indemnify the Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Agent and such Lender, (ii) amounts payable under Section 2.11(c) and (iii) any liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  Payment under this subsection (d) shall be made within 30 days after the date the Lender or the Agent makes a demand therefor.

 

The Agreement of the Borrower contained in this Section 2.11 shall survive the expiration or termination of this Agreement and the payment in full of the Notes.

 

3.           COLLATERAL.

 

3.1.     Grant of Security Interest .  As security for the payment of the Notes and for the payment and performance of all of the Borrower’s Obligations hereunder, the Borrower hereby assigns and transfers all of its rights, titles and interests in and to and grants a security interest to the Agent for the benefit of the Lenders in the following described property, whether now owned or hereafter acquired by the Borrower (the “Collateral”):

 

(a)       All amounts advanced by Lenders to or for the account of the Borrower under this Agreement to fund a Mortgage Loan until that Mortgage Loan is closed and those funds disbursed.

 

(b)       All Mortgage Loans, including all Mortgage Notes and Mortgages evidencing or securing those Mortgage Notes, and all assignments of the same, that from time to time are delivered or caused to be delivered to the Agent for the benefit of the Lenders, come into the possession, custody or control of the Agent for the purpose of assignment or pledge or in respect of which an Advance has been made by the Lenders hereunder (the “Pledged Loans”).

 

(c)       All Mortgage-backed Securities that are created in whole or in part on the basis of Pledged Loans or are delivered or caused to be delivered to the Agent for the benefit of the Lenders, or are otherwise in the possession of the Agent or its agent, bailee or custodian as assignee, or pledged to the Agent, or for such purpose are registered by book-entry in the name of, the Agent (including delivery to or registration in the name of a third party on behalf of the Agent or any Lender) hereunder or in respect of which from time to time an Advance has been made by the Lenders hereunder (the “Pledged Securities”).

 

(d)       All commitments issued by FHA to insure or guarantee any Mortgage Loans included in the Pledged Loans; all Purchase Commitments held by the Borrower covering Pledged Assets, and all proceeds from the sale of Pledged Assets to Investors pursuant to those Purchase Commitments; and all personal property, contract rights, servicing and servicing fees and income or other proceeds, amounts and payments payable to the Borrower whether as compensation or reimbursement, accounts or general intangibles of whatsoever kind relating to Pledged Assets, FHA Commitments and the Purchase Commitments (subject to any restrictions on the pledge thereof under the applicable requirements of Fannie Mae and Freddie Mac), and all other documents or instruments relating to Pledged Assets, including any interest of the Borrower in any fire, casualty or hazard insurance policies and any awards made by any public body or decreed by any court of competent jurisdiction for a taking or for degradation of value in any eminent domain proceeding as the same relate to Pledged Assets.

 

 

 

 

 

 

(e)       All documents, instruments, files, surveys, certificates, correspondence, appraisals, computer programs, tapes, discs, cards, accounting records (including all information, records, tapes, data, programs, discs and cards necessary or helpful in the administration or servicing of the foregoing Collateral) and other information and data of the Borrower relating to the foregoing Collateral.

 

(f)       All cash, whether now existing or acquired after the date of this Agreement, delivered to or otherwise in the possession of Agent or any Lender, or their respective agents, bailees or custodians (provided, that with respect to funds held by the Borrower in trust or escrow for any other Person with the Agent or any Lender, only the Borrower’s interest in earnings on such funds shall be Collateral) or designated on the books and records of the Borrower as assigned and pledged to Agent for the benefit of the Lenders, including all cash deposited in the Cash Collateral Account.

 

(g)       All Accounts or General Intangibles (as those terms are defined in the New York Uniform Commercial Code owned by the Borrower (“Receivables”) related to the Collateral referenced in Sections 3.1(a) through and including 3.1(c) for the payment of money against (1) FHA or a private mortgage insurer under an FHA or private insurer’s mortgage insurance policy insuring payment of, or any other Person under any other agreement (excluding a Servicing Contract) relating to, all or part of a defaulted Mortgage Loan repurchased by the Borrower from an investor or out of a pool of Mortgage Loans serviced by the Borrower, (2) obligors and their accounts, or any Investor, insurer or guarantor covering, or out of the proceeds of any sale of or foreclosure sale in respect of, any Mortgage Loan being serviced by any Borrower, in either case, for the reimbursement of real estate taxes or assessments, or casualty or liability insurance premiums, paid by the Borrower in connection with Mortgage Loans and (3) obligors and their accounts, or any other Investor, insurer or guarantor under or in respect of, or out of the proceeds of any sale or foreclosure sale in respect of, any Mortgage Loans serviced by the Borrower for repayment of advances made by the Borrower to cover shortages in principal and interest payments.

 

(h)       All Hedging Arrangements related to the Collateral referenced in Section 3.1(a) through and including 3.1(c) (“Pledged Hedging Arrangements”) and the Borrower’s accounts in which those Hedging Arrangements are held (“Pledged Hedging Accounts”), including all rights to payment arising under the Pledged Hedging Arrangements and the Pledged Hedging Accounts, except that Agent’s security interest in the Pledged Hedging Arrangements and Pledged Hedging Accounts is limited to benefits, including rights to payment, related to the Collateral.

 

(i)       All Accounts, Chattel Paper, Instruments, General Intangibles, Certificated Securities, Uncertificated Securities, and Investment Property, as those terms are defined in the New York Uniform Commercial Code, arising from or relating to any of the foregoing Collateral.

 

 

 

 

 

(j)       All cash and non-cash proceeds of the foregoing Collateral, including all dividends, distributions and other rights in connection with, and all additions to, modifications of and replacements for, the foregoing Collateral, and all products and proceeds of the foregoing Collateral, together with whatever is receivable or received when the foregoing Collateral or proceeds thereof are sold, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary, including, without limitation, all rights to payment with respect to any cause of action affecting or relating to the foregoing Collateral or proceeds thereof.

 

(k)       The Cash Collateral Account, the Funding Account, and the Operating Account, all amounts now or hereafter on deposit therein and all interest or other amounts now or hereafter accrued thereon.

 

           3.2.       Authenticated Record .  This Agreement constitutes an authenticated record which authorizes the Agent to file such financing statements as the Agent determines as appropriate to perfect or protect the security interests created by this Agreement.

 

           3.3.       Release of Security Interest in Pledged Assets .

 

(a)       Except as provided in Section 3.3(b) below, Pledged Loans will be released from Agent’s security interest only against payment to Agent of the Release Amount in connection with those Pledged Loans.  If Pledged Loans are transferred to a pool custodian or an investor for inclusion in a Mortgage Pool and Agent’s security interest in the Pledged Loans included in the Mortgage Pool is not released before the issuance of the related Mortgage-backed Security, then that Mortgage-backed Security, when issued, is a Pledged Security, Agent’s security interest continues in the Pledged Loans backing that Pledged Security and Agent is entitled to possession of the Pledged Security in the manner provided in this Agreement.

 

(b)       If Pledged Loans are transferred to an Approved Custodian and included in an Eligible Mortgage Pool, Agent’s security interest in the Pledged Loans included in the Eligible Mortgage Pool will be released upon the delivery of the Agency Security to Agent (including delivery to or registration in the name of a third party on behalf of Agent), and that Agency Security is a Pledged Security.  Agent’s security interest in that Pledged Security will be released only against payment to Agent of the Release Amount in connection with the Mortgage Loans backing that Pledged Security.

 

(c)       The Agent for the benefit of the Lenders has the exclusive right to possession of all Pledged Securities or, if Pledged Securities are issued in book-entry form or issued in certificated form and delivered to a clearing corporation (as such term is defined in the UCC) or its nominee, Agent has the right to have the Pledged Securities registered in the name of a securities intermediary (as such term is defined in the UCC) in an account containing only customer securities and credited to an account of Agent.  Agent has no duty or obligation to deliver Pledged Securities to an Investor or to credit Pledged Securities to the account of an Investor or the Investor’s designee except against payment of the Release Amount for those Pledged Securities, unless the Agent shall have entered into a master agreement with such Investor on terms and conditions satisfactory to the Agent.  The Borrower acknowledges that Agent may enter into one or more standing arrangements with securities intermediaries with respect to Pledged Securities issued in book entry form or issued in certificated form and delivered to a clearing corporation or its nominee, under which the Pledged Securities are registered in the name of the securities intermediary, and the Borrower agrees, upon request of Agent, to execute and deliver to those securities intermediaries the Borrower’s written concurrence in any such standing arrangements.

 

 

 

 

 

(d)       If no Event of Default has occurred and is continuing, the Borrower may redeem a Pledged Loan or Pledged Security from Agent’s security interest by notifying Agent of its intention to redeem the Pledged Loan or Pledged Security from pledge and paying, or causing an Investor to pay, to Agent the Release Amount in connection with the Pledged Loan or the Pledged Loans backing that Pledged Security.

 

(e)       If an Event of Default has occurred and is continuing, Agent may, with no liability to the Borrower or any Person, continue to release its security interest in any Pledged Asset against payment of the Release Amount in connection with that Pledged Asset.

 

(f)       The amount (“Release Amount”) to be paid by the Borrower to obtain the release of Agent’s security interest in a Pledged Asset will be (1) unless and until an Event of Default occurs and is continuing, the principal amount of the Advances outstanding against the Pledged Asset, and (2) while an Event of Default exists, the full Committed Purchase Price therefor, or amount paid to Agent in a commercially reasonable disposition of that Pledged Asset by the Agent in the exercise of its rights and remedies under this Agreement.

 

3.4.       Delivery of Collateral Documents .

 

(a)   If no Event of Default has occurred and is continuing, the Agent will deliver documents relating to the Collateral to the Borrower for correction or completion under a Trust Receipt.

 

(b)   If no Event of Default has occurred and is continuing, upon delivery by the Borrower to the Agent of shipping instructions pursuant to the applicable Exhibit C , the Agent will transmit Pledged Loans or Pledged Securities, together with all related loan documents and pool documents in the Agent’s possession, to the applicable Investor, Approved Custodian or other party acceptable to Agent in its sole discretion.

 

(c)   Upon receipt of Notice from the Borrower, and payment of the Release Amount with respect to a Pledged Loan identified by the Borrower, Agent will release to the Borrower any Collateral Documents relating to the redeemed Pledged Loan or the Pledged Loans backing a Pledged Security that Agent has in its possession and that have not been delivered to an Investor or Approved Custodian.

 

3.5.       Collection and Servicing Rights .  So long as no Event of Default shall have occurred and is continuing, the Borrower shall have a revocable and nontransferable license to service and retain subservicers, and receive and collect directly all sums payable to the Borrower in respect of the Collateral other than proceeds of any Purchase Commitment or proceeds of the sale of any Collateral.  During the continuance of any Event of Default, the Agent or its designee may revoke such license by Notice to the Borrower (or its successor, trustee, or receiver) whereupon the Borrower’s rights to so service the Collateral shall terminate.  Agent or its designee shall thereafter be entitled to service and receive and collect all sums payable to the Borrower in respect of the Collateral, and in such case (a) the Agent or its designee in its discretion may, in its own name or in the name of the Borrower or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so, (b) the Borrower shall, if the Agent so requests, forthwith deliver the credit files and the servicing files for the Collateral to the Agent or its designee and pay to the Agent, on behalf of the Lenders, at its principal office all amounts thereafter received by the Borrower upon or in respect of any of the Collateral, advising the Agent as to the source of such funds, and (c) all amounts so received and collected by the Agent shall be held by it for the benefit of the Lenders as part of the Collateral.

 

 

 

 

 

3.6.       Return or Release of Collateral at End of Commitment .  If (a) the Commitment shall have expired or been terminated, and (b) no Advances, interest or other Obligations evidenced by the Loan Documents or due under this Agreement shall be outstanding and unpaid, the Agent shall deliver or release all Collateral in its possession to the Borrower.  The receipt of the Borrower for any Collateral released or delivered to the Borrower pursuant to any provision of this Agreement shall be a complete and full acquittance for the Collateral so returned, and the Agent and the Lenders shall thereafter be discharged from any liability or responsibility therefor.

 

4.          CONDITIONS PRECEDENT.

 

4.1.   Initial Advance .  The obligation of the Lenders to make any Advance under this Agreement is subject to the satisfaction, in the sole discretion of the Agent, on or before the date thereof, of the following conditions precedent, save and except that Agent may, at its sole option, waive any one or more of the following conditions prior to the Initial Advance but such waiver shall not prevent Agent from requiring compliance of such condition(s) prior to any subsequent Advance to the extent set forth in a supplemental agreement entered into between the Borrower and Agent:

 

(a)       Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto and, shall be in full force and effect and shall be in form and substance satisfactory to each of the Lenders.

 

(b)       UCC, tax lien and judgment searches of the appropriate public records for the Borrower that do not disclose the existence of any prior Lien on the Collateral other than in favor of Agent or as permitted under this Agreement, or other than a Lien in favor of any Person which Lien shall be terminated in accordance with the provisions of this Agreement.

 

(c)     Agent shall have received from the Borrower a copy, certified as of a recent date by the appropriate officer of the State in which such Person is organized to be true and complete, of the corporate charter and any other organization documents of such Person as in effect on such date of certification.  The Borrower shall furnish evidence satisfactory to the Agent that they are each duly qualified and in good standing in each jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify, except where the failure to so qualify could not have a materially adverse effect on the business, assets, or financial condition of the Borrower.

 

 

 

 

 

(d)       UCC financing statements naming the Borrower as debtor and the Agent as secured party covering the Collateral shall have been duly recorded and filed to the satisfaction of Agent and its counsel.

 

(e)       Agent shall have received evidence, in form, scope and substance and with such insurance carriers, satisfactory to the Agent, for all insurance policies required under any of the Loan Documents.

 

(f)       There shall be no pending or threatened litigation involving the Borrower which could reasonably be expected to result in a Material Adverse Change, and no judgment, order, injunction or other similar injunction or other similar restraint prohibiting any of the transactions contemplated hereby shall exist.

 

(g)       All action on the part of the Borrower necessary for the valid execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents shall have been duly and effectively taken, and evidence thereof satisfactory to the Agent shall have been provided to the Agent.  Agent shall have received from the Borrower true copies of resolutions adopted by the their respective boards of directors authorizing the transactions described herein, each certified by each of their secretaries as of a recent date to be true and complete.

 

(h)       Agent shall have received from the Borrower an incumbency certificate, dated as of the Closing Date, signed by a duly authorized officer of the Borrower and giving the name and bearing a specimen signature of each individual who shall be an Authorized Representative: (a) to sign, in the name and on behalf of such Person, each of the Loan Documents to which such Person is or is to become a party; (b) with respect to the Borrower, to make requests for Advances; and (c) to give Notices and to take other action on behalf of the Borrower under the Loan Documents.

 

(i)       Copies of the certificates, documents or other written instruments that evidence the Borrower’s eligibility described in Section 5.11, together with copies of all seller/servicer contracts to which the Borrower is a party, all in form and substance satisfactory to Agent.

 

(j)       Borrower shall have paid to the Agent all fees and expenses required pursuant to this Agreement and the other Loan Documents.

 

(k)       The Agent shall be satisfied that (i) the Borrower has obtained all material and appropriate authorizations and approvals of all governmental authorities (including, without limitation, any approvals required by any of Fannie Mae, FHA, Freddie Mac, Ginnie Mae, HUD), required for the due execution, delivery and performance by the Borrower of each of the Loan Documents and for the perfection of or the exercise by the Agent and each Lender of their respective rights and remedies under the Loan Documents, and (ii) all transactions contemplated hereby shall be in material compliance with, and the Borrower shall have obtained all material and appropriate approvals pertaining to, all applicable laws, rules, regulations and orders, including, without limitation, all governmental, environmental, ERISA, retiree health benefits, workers’ compensation and other requirements, regulations and laws and shall not contravene any charter, by-law, debt instrument or other material contact or agreement to which Borrower is a party.

 

 

 

 

 

(l)       No Material Adverse Change shall have occurred since the Statement Date and the Interim Date.

 

(m)      Borrower shall have provided such additional instruments and documents to the Agent and the Lenders as the Agent and the Agent’s counsel may have reasonably requested.

 

4.2.     Each Advance .  The obligation of the Lenders to make any Advance under this Agreement is subject to the satisfaction, in the sole discretion of the Agent, as of the date of each such Advance, of the following additional conditions precedent, save and except that Agent may, at its sole option, waive any one or more of the following conditions prior to the requested Advance but such waiver shall not prevent Agent from requiring compliance of such condition(s) prior to any subsequent Advance:

 

(a)       In connection with an Advance, the Borrower shall have delivered to the Agent the Advance Request, and the Collateral Documents, called for under, and shall have satisfied the procedures set forth in, Section 2.2 hereof and the applicable Exhibit C hereto described in that Section, according to the type of the requested Advance.  All items delivered to the Agent shall be satisfactory to the Agent, in form and content, and the Agent may reject such of them as do not meet the requirements of this Agreement or of the related Purchase Commitment.

 

(b)       The Agent shall have received evidence satisfactory to it as to the making and/or continuation of any book entry or the due filing and recording in all appropriate offices of all financing statements and other instruments as may be necessary to perfect the security interest of the Agent in the Collateral under the Uniform Commercial Code of New York or other applicable law.

 

(c)       The representations and warranties of the Borrower contained in Article 5 hereof shall be accurate and complete in all material respects as if made on and as of the date of each Advance (except to the extent of changes resulting from transactions contemplated and permitted by this Agreement and the other Loan Documents and changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse, and except to the extent that such representations and warranties relate expressly to an earlier date, and, unless Agent and each of the Lenders is notified to the contrary prior to the disbursement of the requested Advance).

 

(d)       The Borrower shall have performed all agreements to be performed by it hereunder, including without limitation, the payment of all fees when due hereunder, and, as of the date of the Advance Request, and after giving effect to the requested Advance, there shall exist no Default or Event of Default hereunder.

 

(e)       No change shall have occurred in any Legal Requirement that in the reasonable opinion of any Lender would make it illegal for such Lender to make such Advance, and each Lender shall have received such statements in substance and form reasonably satisfactory to such Lender as such Lender shall require for the purpose of compliance with any applicable regulations of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System.

 

 

 

 

 

(f)       No Material Adverse Change shall have occurred since the date of this Agreement.

 

Acceptance of the proceeds of the requested Advance by the Borrower shall be deemed a representation by the Borrower that all conditions set forth in this Article 4 shall have been satisfied as of the date of such Advance.

 

Notwithstanding the foregoing, or anything herein to the contrary, the Lenders shall have no obligation to make any Advances under this Agreement if, at any time, there shall have occurred any change in the ownership of the capital stock of Centerline Servicing, Inc., a Delaware corporation, from that existing on the date hereof, unless and until the Agent, in its sole direction, approves of any third-party servicer retained by CMC.

 

4.3.        Post-Closing Deliverables .  The Borrower shall cause each of the following conditions to be performed and completed within the applicable timeframe after the Closing Date as provided for such condition (as applicable to each such condition, the “Completion Date”).  If the Borrower fails to complete any of the conditions by the applicable Completion Date, such failure shall, at the Agent’s option, be deemed to be an Event of Default under this Agreement:

 

(a)       within ten (10) days following the Closing Date, Agent shall have received a favorable written opinion of counsel to the Borrower, in form, scope, and substance satisfactory to the Agent, addressed to the Agent and the Lenders.

 

(b)       within two (2) days following the Closing Date, Agent shall have received from the Borrower financial statements of the Borrower (and its Subsidiaries, on a consolidated basis) containing a balance sheet as of December 31, 2008 (the “Statement Date”) and related statements of income, changes in stockholders’ equity and cash flows for the period ended on the Statement Date and a balance sheet as of June 30, 2009 (“Interim Date”) and related statement of income for the period ended on the Interim Date, all prepared in accordance with GAAP applied on a basis consistent with prior periods and in the case of the statements as of the Statement Date, audited by independent certified public accountants of recognized standing acceptable to the Agent, together with an Officer Certificate prepared as of the Interim Date and executed by any officer of the Borrower.

 

5.          REPRESENTATIONS AND WARRANTIES.

 

The Borrower hereby represents and warrants to the Agent and the Lenders, as of the date of this Agreement and (unless otherwise notified in writing by the Borrower and Agent, in its sole discretion, approves in writing) as of the date of each Advance Request and the making of each Advance, that:

 

5.1.       Organization; Good Standing; Subsidiaries .  The Borrower and each Subsidiary of the Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the full legal power and authority to own its property and to carry on its business as currently conducted and is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction in which the transaction of its business makes such qualification necessary, except in jurisdictions, if any, where a failure to be in good standing could not reasonably be expected to result in a Material Adverse Change.  For the purposes hereof, good standing shall include qualification for any and all licenses and payment of any and all taxes required in the jurisdiction of its incorporation and in each jurisdiction in which the Borrower transacts business.  The Borrower has no Subsidiaries except as set forth on Schedule 5.1 hereto.   Schedule 5.1 sets forth with respect to each such Subsidiary, its name, address, place of incorporation, each state in which it is qualified as a foreign corporation, and the percentage ownership of the Borrower in such Subsidiary.

 

 

 

 

 

5.2.       Authorization and Enforceability .  The Borrower has all requisite corporate power and authority to execute, deliver, create, issue, comply and perform this Agreement, the Notes and all other Loan Documents to which the Borrower is party and to make the borrowings hereunder.  The execution, delivery and performance by the Borrower of this Agreement, the Notes and all other Loan Documents to which the Borrower is party and the making of the borrowings hereunder and thereunder, have been duly and validly authorized by all necessary corporate action on the part of the Borrower (none of which actions has been modified or rescinded, and all of which actions are in full force and effect) and do not and will not conflict with or violate any provision of law or of the articles of incorporation or by-laws of the Borrower, conflict with or result in a breach of or constitute a default or require any consent under any contracts to which Borrower is a party, or result in the creation of any Lien upon any property or assets of the Borrower other than the Lien on the Collateral granted hereunder, or result in or require the acceleration of any Indebtedness of the Borrower pursuant to any agreement, instrument or indenture to which the Borrower is a party or by which the Borrower or its property may be bound or affected.  This Agreement, the Notes and all other Loan Documents contemplated hereby or thereby constitute legal, valid, and binding obligations of the Borrower, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or other such laws affecting the enforcement of creditors’ rights generally.

 

5.3.       Financial Condition .  The balance sheet of the Borrower provided to Agent pursuant to Section 4.3(b) hereof (and if applicable, its Subsidiaries, on a consolidating and consolidated basis) as at the Statement Date, and the related statements of income, changes in stockholders’ equity, and cash flows for the fiscal year ended on the Statement Date, heretofore furnished to the Agent, fairly present in accordance with GAAP the financial condition of the Borrower and its Subsidiaries as at the Statement Date and the Interim Date and the results of its and their operations for the fiscal period ended on the Statement Date and the Interim Date.  The Borrower had, on the Statement Date and the Interim Date no known material liabilities of a kind required to be disclosed on a balance sheet or the notes thereto in accordance with GAAP, or any known redemption obligations, hedging liabilities, or other off-balance sheet financial transactions as to which there is recourse to the Borrower. Said financial statements were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved.  Since the Interim Date, there has been no Material Adverse Change, nor is the Borrower aware of any state of facts particular to the Borrower which (with or without Notice or lapse of time or both) could reasonably be expected to result in a Material Adverse Change.

 

 

 

 

 

5.4.       Litigation .  Except as disclosed on Schedule 5.4 , there are no actions, claims, suits or proceedings pending, or to the knowledge of the Borrower, threatened or reasonably anticipated against or affecting the Borrower or any Subsidiary of the Borrower in any court or before any arbitrator or before any government commission, board, bureau or other administrative agency which could reasonably be expected to, either in any case or in the aggregate, result in a Material Adverse Change or materially impair the right of such Person to carry on business substantially as now conducted by it, or result in any substantial liability not adequately covered by insurance, or for which adequate reserves are not maintained on the balance sheet of such Person (considering the Borrower and its Subsidiaries as a single Person for purposes of this Section 5.4), or which question the validity of this Agreement or any of the other Loan Documents, or any action taken or to be taken pursuant hereto or thereto.

 

5.5.       Compliance with Laws .  Neither the Borrower nor any Subsidiary of the Borrower is in violation of any provision of any law, or of any judgment, award, rule, regulation, order, decree, writ or injunction of any court or public regulatory body or authority which could reasonably be expected to result in a Material Adverse Change.

 

5.6.       Regulation U and X .  The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of any Advances made hereunder will be used for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R.  Parts 221 and 224.

 

5.7.       Holding Company and Investment Company Act .  None of the Borrower nor any of its Subsidiaries is a “holding company”, or a “subsidiary company” of a “holding company”, or an “affiliate” of a “holding company”, as such terms are defined in the Public Utility Holding Company Act of 1935; nor is it an “investment company”, or an “affiliated company” or a “principal underwriter” of an “investment company”, as such terms are defined in the Investment Company Act of 1940.

 

5.8.       Agreements .  Neither the Borrower nor any Subsidiary of the Borrower is a party to any agreement, instrument or indenture, or subject to any restriction, materially and adversely affecting its business, operations, assets or financial condition, except as disclosed in the financial statements described in Section 5.3 hereof.  The Borrower and each Subsidiary of the Borrower are not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement, instrument, or indenture, which default could reasonably be expected to result in a Material Adverse Change.  No holder of any Indebtedness for money borrowed having a principal amount of $500,000 or more by the Borrower or of any of its Subsidiaries has given Notice of any alleged default thereunder or, if given, the same has been cured or will be cured by Borrower within the cure period provided therein, and no liquidation or dissolution of the Borrower or any of its Subsidiaries and no receivership, insolvency, bankruptcy, reorganization or other similar proceedings relative to the Borrower or any of its Subsidiaries or any of their respective properties is pending, or to the knowledge of the Borrower, threatened.

 

 

 

 

 

5.9.       Title to Properties .  The Borrower and each Subsidiary of the Borrower has good, valid, and in the case of real property insurable and marketable title to all of its material properties and assets (whether real or personal, tangible or intangible) reflected on the financial statements described in Section 5.3 hereof, and all such properties and assets are free and clear of all Liens except as disclosed in such financial statements and not prohibited under this Agreement.

 

5.10.       ERISA .  Neither the Borrower nor any entity that could be treated as a single employer with the Borrower under Internal Revenue Code Section 414(b), (c), (m), (n) or (o), now or at any time during the sixty month period ending on the date hereof, sponsor(ed), maintain(ed) or contribute(d) to (or have or had an obligation to contribute to) any pension, profit sharing, stock option, insurance or other arrangement or plan for current or former employees that is subject to Title IV of the Employer Retirement Income Security Act of 1974, as now or hereafter amended (“ERISA”) or ERISA Section 302 except as may be identified to Agent in writing (which writing shall be supplemented, within 30 days of Agent’s request, by a copy of the arrangement or plan, and the financial statements and accountant’s reports for such arrangement or plan) by the Borrower from time to time (“ERISA Plan”) and no “Reportable Event,” as defined for purposes of Section 4043 of ERISA, has occurred with respect to any such ERISA Plan.  The granting of the Loan, the performance by the Borrower of its obligations under the Loan Documents, and the Borrower’s conducting of its operations do not and will not violate any provisions of ERISA or any ERISA Plan.

 

5.11.       Eligibility .  Except as permitted in Section 7.2 hereof, Borrower is and will remain at all times approved and qualified and in good standing as a lender or seller/servicer, as set forth below, and meets all requirements applicable to its status as:

 

(a)     for CMC and solely with respect to Pledged Loans that are FHA fully insured Mortgage Loans, a FHA approved mortgagee, eligible to originate, purchase, hold, sell and service FHA fully insured Mortgage Loans.

 

(b)       for CMC and solely with respect to Pledged Securities that are guaranteed by Ginnie Mae, a Ginnie Mae approved seller/servicer of Mortgage Loans and issuer of Mortgage-backed Securities guaranteed by Ginnie Mae.

 

(c)       for CMC, a Fannie Mae approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans to be sold to Fannie Mae.

 

(d)       for CMC, a Fannie Mae approved and qualified Delegated Underwriting and Servicing Lender, eligible to process, underwrite, hold, sell to Fannie Mae and service Fannie Mae Mortgage Loans under the DUS Program.

 

(e)       for CMC and CMP, a Freddie Mac approved seller/servicer of Mortgage Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans to be sold to Freddie Mac.

 

 

 

 

 

5.12.       Special Representations Concerning Collateral .  The Borrower hereby represents and warrants to the Agent and each Lender, as of the date of this Agreement and as of the date of each Advance, that:

 

(a)       The Borrower has not selected the Collateral in a manner so as to affect adversely the Agent’s interests.

 

(b)       The Borrower is the legal and equitable owner and holder of the Pledged Assets, free and clear of all Liens, other than Liens granted under this Agreement and assignments of Mortgages to Fannie Mae and Freddie Mac, which Fannie Mae and Freddie Mac, as applicable, have agreed to assign back to the Agent if Fannie Mae or Freddie Mac, as applicable, does not acquire the corresponding Pledged Asset.  All Pledged Assets and related Purchase Commitments have been duly authorized and validly issued to the Borrower, and all of the foregoing items of Collateral comply with all of the requirements of this Agreement, and have been and will continue to be validly pledged or assigned to Agent, subject to no other Liens.

 

(c)       The Borrower has, and will continue to have, the full right, power and authority to pledge the Collateral pledged and to be pledged by it hereunder.

 

(d)       Each Mortgage Loan and each related document included in the Pledged Loans (1) has been duly executed and delivered by the parties to that Mortgage Loan and that related document, (2) has been made in compliance with all applicable laws, rules and regulations (including all laws, rules and regulations relating to usury), (3) is and will continue to be a legal, valid and binding obligation, enforceable in accordance with its terms, without setoff, counterclaim or defense in favor of the mortgagor under the Mortgage Loan or any other obligor on the Mortgage Note and (4) has not been modified, amended or any requirements of which waived, except in a writing that is part of the Collateral Documents.  No party to any Mortgage Loan or related document included in the Pledged Loans is in violation of any applicable law, rule or regulation if the violation would impair the collectibility of the Mortgage Loan or the performance by the mortgagor or any other obligor of its obligations under the Mortgage Note or any related document.

 

(e)       Each Pledged Loan is secured by a Mortgage on real property located in one of the states of the United States or the District of Columbia.

 

(f)       Each Pledged Loan has been closed or will be closed and funded with the Advance made against it.

 

(g)       Each Pledged Loan that is not an FHA Construction Mortgage Loan has been fully advanced in the face amount of its Mortgage Note.  The Agent acknowledges and agrees that in certain instances, a portion of the proceeds of a Pledged Loan, although advanced to the borrower thereunder, will be held by the Borrower in escrow to be disbursed upon the completion of repairs to the subject property or upon the achievement of specified factors.

 

(h)       Each First Mortgage Loan is secured by a first Lien on the premises described in that Mortgage and each second Mortgage Loan or third Mortgage Loan is secured by a second or third Lien on the premises described in that Mortgage, and with respect to each second Mortgage Loan or third Mortgage Loan, the Borrower shall be the servicer and the Purchase Commitment shall be from the same Investor which holds the senior Lien on the premises.  Each Pledged Loan has or will have a title insurance policy, in ALTA form or equivalent, from a recognized title insurance company, insuring the priority of the Lien of the Mortgage and meeting the usual requirements of Investors purchasing those Mortgage Loans.

 

 

 

 

 

(i)       Each Property has been evaluated or appraised in accordance with Title XI of FIRREA, to the extent required.

 

(j)       The Mortgage Note for each Pledged Loan is (1) payable or endorsed to the order of the Borrower, (2) an “instrument’ within the meaning of Section 9-102 of the Uniform Commercial Code of all applicable jurisdictions and (3) is denominated and payable in United States dollars.

 

(k)       No monetary default and, to the Borrower’s knowledge, no other default has existed for 60 days or more under any Mortgage Loan included in the Pledged Loans.

 

(l)       The Borrower has complied and will continue to comply with all laws, rules and regulations in respect of the FHA insurance of each Mortgage Loan included in the Pledged Loans designated by the Borrower as an FHA insured or VA guaranteed Mortgage Loan, and such insurance or guarantee is and will continue to be in full force and effect.

 

(m)       All fire and casualty policies covering Mortgaged Property encumbered by a Pledged Loan (1) name the Borrower and its successors and assigns as the insured under a standard mortgagee clause, (2) are and will continue to be in full force and effect, and (3) afford and will continue to afford insurance against fire and such other risks as are usually insured against in the broadest form of extended coverage insurance from time to time available.

 

(n)       Pledged Loans encumbering Mortgaged Property located in a special flood hazard area designated as such by the Secretary of HUD and/or the Director of the Federal Emergency Management Agency are and shall continue to be covered by special flood insurance under the National Flood Insurance Program.

 

(o)       Each Pledged Loan against which a Advance is made on the basis of a Purchase Commitment meets all of the requirements of that Purchase Commitment, and each Pledged Security against which an Advance is outstanding meets all of the requirements of the related Purchase Commitment.

 

(p)       Pledged Loans that are intended to be exchanged for Agency Securities comply or, prior to the issuance of the Agency Securities will comply, with the requirements of any governmental instrumentality, department or agency or any other Person issuing or guaranteeing the Agenc