liquidation, dissolution or similar law, or a request by that Person for the appointment of a receiver, trustee, custodian or similar official for that Person or any substantial part of its property; (b) the commencement of any such case or proceeding against that Person, or another’s seeking such appointment, or the filing against that Person of an application for a protective decree which (i) is consented to or not timely contested by that Person, or (ii) results in the entry of an order for relief, such an appointment, the issuance of such a protective decree or the entry of an order having similar effect, or (iii) is not dismissed within fifteen (15) days; (c) the making by that Person of a general assignment for the benefit of creditors; (d) the admission in writing by that Person (or, if a non-natural Person, by any of the President, the Chief Financial Officer or the board of directors or managers of that Person) that it is unable to pay its debts as they become due, or the nonpayment of its debts generally as they become due; or (e) the board of directors, managers, members or partners, as the case may be, of that Person taking any action in furtherance of any of the foregoing.

 

“ Additional Purchased Mortgage Loans ” means Mortgage Loans provided by Seller to Buyer pursuant to Paragraph 4(a) .

 

“ Adjusted LIBOR Rate ” has the meaning set forth in the Side Letter.

 

“Adjusted Tangible Net Worth” means, with respect to Seller and its Subsidiaries on a consolidated basis at any date, an amount equal to (i) the Tangible Net Worth of Seller and its Subsidiaries on a consolidated basis at such date, plus (ii) the lesser of (A) one percent (1%) of the unpaid principal balances of all Mortgage Loans at such date for which Seller and its Subsidiaries owns the Servicing Rights and (B) the capitalized value of Seller’s and its Subsidiaries’ Servicing Rights, plus (iii) the unpaid principal amount of all Qualified Subordinated Debt of Seller and its Subsidiaries at such date, minus (iv) an amount equal to 50% of the net book value of Mortgage Loans held by Seller for investment purposes at such date, minus (v)  an amount equal to 50% of the net book value of net REO Property held by Seller at such date, minus (vi) an amount equal to 50% of the net book value of other illiquid investments held by Seller at such date.

 

“ Affiliate ” means, as to a specified Person, any other Person (a) that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the specified Person; (b) that is a director, manager, trustee, general partner or executive officer of the specified Person or serves in a similar capacity in respect of the specified Person; (c) that, directly or indirectly through one or more intermediaries, is the beneficial owner of ten percent (10%) or more of any class of equity securities of the specified Person; or (d) of which the specified Person is directly or indirectly the owner of ten percent (10%) or more of any class of equity securities (or equivalent equity interests).

 

“ Agency ” (and, with respect to two or more of the following, “ Agencies ”) means FHA, Fannie Mae, Ginnie Mae, Freddie Mac or VA.

 

“ Agency Guidelines ” means those requirements, standards and procedures which may be adopted by the Agencies from time to time with respect to their purchase or guaranty of residential mortgage loans, which requirements govern the Agencies’ willingness to purchase or guaranty such loans.

 

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“ Aggregate Purchase Price ” means, at any time, the sum of the Purchase Prices paid by Buyer for all Purchased Mortgage Loans that are subject to Transactions outstanding at that time.

 

“ Agreement ” means this Master Repurchase Agreement dated as of the date hereof, between Seller and Buyer (including any supplemental terms or conditions contained in the Exhibits hereto and the Side Letter), as the same shall be amended, restated, supplemented or otherwise modified from time to time.

 

“ Approved Takeout Investor ” means any of (i) Fannie Mae, Freddie Mac and any of the other entities listed on Schedule I , as such schedule is updated from time to time by Buyer, in its sole discretion, with written notice to Seller; (ii) CL, or (iii) an entity which is acceptable to Buyer, as notified to Seller in writing by Buyer; provided , however, that, notwithstanding the foregoing, any entity described in the foregoing clauses (i) through (iii) that fails to perform any of its material obligations under its Takeout Agreement shall cease to be an Approved Takeout Investor upon such failure.

 

“ Available Warehouse Facilities ” means, at any time, the aggregate amount of used and unused available warehouse lines of credit, purchase facilities, repurchase facilities and off-balance sheet funding facilities (whether committed or uncommitted) available to Seller at such time.

 

“ Bailee Letter ” means a bailee letter in the form attached hereto as Exhibit J or such other form as is satisfactory to Buyer in its sole discretion.

 

“ Bankruptcy Code ” means Title 11 of the United States Code (11 U.S.C. Paragraph 101 et seq. ), as amended by the Bankruptcy Reform Act and as further amended from time to time, or any successor statute.

 

“ Bankruptcy Reform Act ” means the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, effective as of October 17, 2005.

 

“ Business Day ” means a day other than a Saturday or Sunday when (i) banks in Dallas, Texas, Houston, Texas and New York, New York are generally open for commercial banking business and (ii) federal funds wire transfers can be made.

 

“Cash Equivalents” means any of the following: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within three (3) months or less after the date of the applicable financial statement reporting such amounts; and (b) certificates of deposit, time deposits or Eurodollar time deposits having maturities of three (3) months or less after the date of the applicable financial statement reporting such amounts, or overnight bank deposits, issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000 and rated at least A- by S&P or A3 by Moody’s.

 

“ Cash Pledge Account ”  means the internal demand deposit account held at JPM Chase for the benefit of Buyer, and styled as follows:

 

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JPMorgan Chase Bank, N.A. Secured Party

Cash Pledge Account for Home Loan Center, Inc.

 

“Change in Control” means either of the following events (a) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended) of outstanding shares of voting stock (or equivalent equity interests) of Seller or any Guarantor at any time if after giving effect to such acquisition such Person or Persons owns fifty percent (50%) or more of such outstanding voting stock (or equivalent equity interests) or (b) the Parent shall for any reason cease to own and control, directly or indirectly, all of the outstanding equity interests of Seller.

 

“ Change in Requirement of Law ” means (a) the adoption of a Requirement of Law after the date of this Agreement, (b) any change in a Requirement of Law or (c) compliance by Buyer (or by any applicable lending office of Buyer) with any Requirement of Law made or issued after the date of this Agreement.

 

“ CL ” means JPM Chase, operating through its unincorporated division commonly known as its Correspondent Lending group.

 

“ CL Loan ” means an Eligible Mortgage Loan for which CL is the Approved Takeout Investor.

 

“ CMWF Web ” means the website maintained by Buyer and used by Seller and Buyer to administer the Transactions, the notices and reporting requirements contemplated by the Transaction Documents and other related arrangements.

 

“ Completed Repurchase Advice ” means with respect to any Purchased Mortgage Loan, receipt by Buyer of:

 

(i) funds into the Funding Account in an amount equal to or greater than (x) the Repurchase Price of such Purchased Mortgage Loan minus (y) any unpaid Price Differential to be paid by Seller on the next Remittance Date;

 

(ii) in the event that the funds described in clause (i) above are less than an amount equal to (x) the Repurchase Price of such Purchased Mortgage Loan minus (y) any unpaid Price Differential to be paid by Seller on the next Remittance Date, confirmation that funds in an amount equal to such deficiency are on deposit in the Operating Account and available for payment to Buyer after taking into account all other payments required to be made by Seller out of funds on deposit in the Operating Account;

 

(iii) confirmation from the related Approved Takeout Investor that the funds received in the Funding Account are for the purchase of that Purchased Mortgage Loan; and

 

(iv) an updated Loan Purchase Detail from Seller showing the removal of that Purchased Mortgage Loan from the list of Purchased Mortgage Loans subject to the outstanding Transactions under this Agreement.

 

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“Compliance Certificate” means a compliance certificate substantially in the form of Exhibit C , completed, executed and submitted by the chief financial officer of Seller.

 

“ Confirmation ” means a confirmation substantially in the form attached hereto as Exhibit A and delivered pursuant to Paragraph 3 .

 

“ Conventional Conforming Loan ” means a Mortgage Loan which conforms to Agency Guidelines.  The term Conventional Conforming Loan shall not include a Mortgage Loan which is a Government Loan.

 

“Cooperative Corporation” means with respect to any Cooperative Loan, the cooperative apartment corporation that holds legal title to the related Cooperative Project and grants occupancy rights to units therein to stockholders through Proprietary Leases or similar arrangements.

 

“Cooperative Loan” means a mortgage loan that is secured by a Lien on and perfected security interest in Cooperative Shares and the related Proprietary Lease granting exclusive rights to occupy the related Cooperative Unit in the building owned by the related Cooperative Corporation.

 

“Cooperative Project” means, with respect to any Cooperative Loan, all real property and improvements thereto and rights therein and thereto owned by a Cooperative Corporation including without limitation the land, separate dwelling units and all common elements, all of which shall be located in any state of the United States or the District of Columbia.

 

“Cooperative Shares” means, with respect to any Cooperative Loan, the shares of stock issued by a Cooperative Corporation and allocated to a Cooperative Unit and represented by a stock certificate.

 

“Cooperative Unit” means, with respect to a Cooperative Loan, a specific unit in a Cooperative Project.

 

“Credit File” means, with respect to a Mortgage Loan, all of the paper and documents required to be maintained pursuant to the related Takeout Commitment or the related Hedging Arrangement, as applicable, and all other papers and records of whatever kind or description, whether developed or created by Seller or others, required to Originate, document or service the Mortgage Loan.

 

“ Current Assets ” means, with respect to any Person at any date, those assets set forth in the consolidated balance sheet of the Person, prepared in accordance with GAAP, as current assets, defined as those assets that are now cash or will be by their terms or disposition converted to cash within one year from the date of calculation.

 

“ Current Liabilities ” means, with respect to any Person at any date, those liabilities set forth in the consolidated balance sheet of the Person, prepared in accordance with GAAP, as current liabilities, defined as those liabilities due upon demand or within one year from the date of calculation.

 

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“ Current Ratio ” means, with respect to any Person at any date, the sum of the amounts set forth in the consolidated balance sheet of the Person, prepared in accordance with GAAP, as Current Assets divided by the sum of the amounts set forth in such consolidated balance sheet as Current Liabilities.

 

“ Debt ” means, with respect to any Person, at any date (a) all indebtedness or other obligations of such Person (and, if applicable, that Person’s Subsidiaries, on a consolidated basis) which, in accordance with GAAP, would be included in determining total liabilities as shown on the liabilities side of a balance sheet of such Person at such date; and (b) all indebtedness or other obligations of such Person (and, if applicable, that Person’s Subsidiaries, on a consolidated basis) for borrowed money or for the deferred purchase price of property or services; provided , however , that, for purposes of this Agreement, there shall be excluded from Debt at any date loan loss reserves, deferred taxes arising from capitalized excess service fees, operating leases and Qualified Subordinated Debt.

 

“ Default ” means any condition or event that, with the giving of notice or lapse of time or both, would constitute an Event of Default.

 

“ Defaulted Loan ” means a Mortgage Loan (i) as to which any payment, escrow payment, or part thereof, remains unpaid for 30 days or more from the original due date for such payment (whether or not Seller has allowed any grace period or extended the due date thereof by any means), (ii) as to which another material default has occurred and is continuing, including the commencement of foreclosure proceedings; (iii) as to which an Act of Insolvency has occurred with respect to the Mortgagor thereof or any cosigner, guarantor, endorser, surety, assumptor or grantor with respect thereto, or (iv) which, consistent with Seller’s collection policies, has been or should be written off as uncollectible in whole or in part.

 

“Defective Mortgage Loan” means a Mortgage Loan that is not an Eligible Mortgage Loan.

 

“ Early Repurchase Date ” has the meaning set forth in Paragraph 3(h)(ii) .

 

“ Electronic Tracking Agreement ” means the Electronic Tracking Agreement substantially dated the date hereof by and among, Buyer, Seller, MERS and MERSCORP, Inc. (the “ Electronic Agent ”); as the same shall be amended, supplemented or otherwise modified from time to time.

 

“ Eligible Mortgage Loan ” means, on any date of determination, a Mortgage Loan:

 

(i)            for which each of the representations and warranties set forth on Exhibit B are true and correct as of such date of determination;

 

(ii)           which is either a Conventional Conforming Loan or a Government Loan;

 

(iii)          which has an Origination Date no more than thirty (30) days prior to the Purchase Date for the initial Transaction to which that Mortgage Loan was subject;

 

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(iv)          which is eligible for sale to an Approved Takeout Investor under its Takeout Guidelines;

 

(v)           which has a scheduled Repurchase Date not later than thirty (30) days after the Purchase Date for the initial Transaction to which that Mortgage Loan was subject;

 

(vi)          which does not have a Loan-to-Value Ratio in excess of 103%, in the case of a Government Loan, or 95%, in the case of a Conventional Conforming Loan (or, in each case, such other percentage determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time) and, if its Loan-to-Value Ratio is in excess of 80% (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time), it has private mortgage insurance in an amount required by the applicable Agency Guidelines, unless pursuant to Agency Guidelines in existence at the time such Mortgage Loan was originated, private mortgage insurance is not required for such Mortgage Loan;

 

(vii)         which, if a Government Loan, the related Mortgagor has a FICO Score of at least 620 (or such other minimum FICO Score as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time);

 

(viii)        which, if a Conventional Conforming Loan, the related Mortgagor has a FICO Score of at least 620 (or such other minimum FICO Score as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time);

 

(ix)           for which a complete Loan File has been delivered to Buyer, or, in the case of a Wet Loan, for which the items listed in items (i) through (iv) of the definition of Loan File have been delivered to Buyer;

 

(x)            for which, if a Wet Loan on the applicable Purchase Date, all applicable items listed in items (v) through (xii) of the definition of Loan File have been delivered to Buyer at or prior to its Wet Funding Deadline;

 

(xi)           which, if a Wet Loan, its Purchase Price, when added to the sum of the Purchase Prices of all other Wet Loans that are then subject to Transactions, is less than or equal to (i) 50% (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time) of the Facility Amount on any day that is one of the first five (5) or the last five (5) Business Days of any calendar month or (ii) 30% (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time) of the Facility Amount on any other day;

 

(xii)          which, if a Government Loan, its Purchase Price, when added to the sum of the Purchase Prices of all other Government Loans that are then subject to Transactions, is less than or equal to 50% (or such other percentage as may be determined by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time) of the Facility Amount;

 

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(xiii)         for which, if not a CL Loan, Buyer has approved the underwriting, the Takeout Commitment or Hedging Arrangement, as applicable, the appraisal and other related information;

 

(xiv)        which, if subject to a Takeout Commitment, is not (a) subject to a Takeout Agreement with respect to which Seller is in default, or (b) rejected or excluded for any reason (other than default by Buyer) from the related Takeout Commitment by the Approved Takeout Investor;

 

(xv)         which, if subject to a Hedging Arrangement, is not (a) subject to a Hedging Arrangement with respect to which Seller is in default, or (b) rejected or excluded for any reason (other than default by Buyer) from the related Hedging Arrangement by the Person with whom such Hedging Arrangement is maintained;

 

(xvi)        which is not a Mortgage Loan that Seller has failed to repurchase when required by the terms of this Agreement;

 

(xvii)       for which, if subject to a Takeout Commitment, the related Takeout Commitment has not expired or been terminated or cancelled by the Approved Takeout Investor;

 

(xviii)      for which, if subject to a Hedging Arrangement, the related Hedging Arrangement has not expired or been terminated or cancelled by the Person with whom such Hedging Arrangement is maintained;

 

(xix)         for which the related Mortgage Note has not been out of the possession of Buyer pursuant to a Trust Release Letter for more than five (5) Business Days after the date of that Trust Release Letter;

 

(xx)          for which neither the related Mortgage Note nor the Mortgage has been out of the possession of Buyer pursuant to a Bailee Letter for more than the number of days specified in such Bailee Letter; and

 

(xxi)         which is not a Defaulted Loan.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974 and all rules and regulations promulgated thereunder, as amended from time to time and any successor statute, rules and regulations.

 

“ Event of Default ” has the meaning set forth in Paragraph 12 .

 

“ Facility Amount ” has the meaning set forth in the Side Letter.

 

“ Fannie Mae ” means the Federal National Mortgage Association or any successor.

 

“FDIC” means the Federal Deposit Insurance Corporation or any successor.

 

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“ FHA ” means the Federal Housing Administration, which is a sub-division of HUD, or any successor.  The term “FHA” is used interchangeably in this Agreement with the term “HUD”.

 

“ FICO Score ” means, with respect to any Mortgagor, the statistical credit score prepared by Fair Isaac Corporation, Experian Information Solutions, Inc., TransUnion LLC or such other Person as may be approved in writing by Buyer in its sole discretion.

 

“ Financial Institution ” means JPM Chase in its capacity of the bank at which the Accounts are held.

 

“ Freddie Mac ” means the Federal Home Loan Mortgage Corporation or any successor.

 

“Funding Account” means the internal demand deposit account held at JPM Chase for the benefit of Buyer, and styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Funding Account for Home Loan Center, Inc.

 

“ GAAP ” means generally accepted accounting principles consistently applied in the United States.

 

“ Ginnie Mae ” means the Government National Mortgage Association or any successor.

 

“ GLB Act ” means the Gramm-Leach Bliley Act of 1999 (Public Law 106-102, 113 Stat 1338), as it may be amended from time to time.

 

“ Government Loan ” means a Mortgage Loan which is insured by the FHA or guaranteed by the Department of Veterans Affairs.  The term Government Loan shall not include any Mortgage Loan which is a Conventional Conforming Loan.

 

“ Governmental Authority ” means and includes the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, any governmental or quasi-governmental department, commission, board, bureau or instrumentality, any court, tribunal or arbitration panel, and, with respect to any Person, any private body having regulatory jurisdiction over any Person or its business or assets (including any insurance company or underwriter through whom that Person has obtained insurance coverage).

 

“ Guarantors ” means each of Tree.com, Inc., Lending Tree Holdings Corp. and Lending Tree, LLC, and any Person who hereafter executes a guaranty to support the obligations of Seller under this Agreement and the other Transaction Documents.

 

“ Guaranty ” means each guaranty dated the date hereof, executed by each Guarantor in favor of Buyer or any other guaranty executed and delivered to Buyer by a Guarantor, in each

 

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case, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“ Hedging Arrangement ” means any forward sales contract, forward trade contract, interest rate swap agreement, interest rate cap agreement, or other contract pursuant to which Seller has protected itself from the consequences of a loss in the value of a Mortgage Loan or its portfolio of Mortgage Loans because of changes in interest rates or in the market value of mortgage loan assets.

 

“ HLC Escrow ” means HLC Escrow and Settlement Services, Inc., a California corporation.

 

“ HUD ” means the U.S. Department of Housing and Urban Development or any successor department or agency.

 

“ Income ” means, with respect to any Purchased Mortgage Loan, (i) all payments of principal, payments of interest, proceeds of Takeout Commitments, proceeds of Hedging Arrangements, cash collections, dividends, sale or insurance proceeds and other cash proceeds received relating to the Purchased Mortgage Loan and other Mortgage Assets, (ii) any other payments or proceeds received in relation to the Purchased Mortgage Loan and other Mortgage Assets (including, without limitation, any liquidation or foreclosure proceeds with respect to the Purchased Mortgage Loan and payments under any guarantees relating to the Purchased Mortgage Loan), (iii) all escrow withholds and escrow payments for Property Charges and (iv) all other “proceeds” as defined in Section 9-102(64) of the UCC.

 

“ Indemnified Party ” has the meaning set forth in Paragraph 16(b) .

 

“ Insured Closing Letter ” means a letter of indemnification from a title insurer addressed to Seller and/or Buyer, with coverage that is customarily acceptable to Persons engaged in the Origination of mortgage loans, identifying the Settlement Agent covered thereby and indemnifying Seller and/or Buyer against losses incurred due to malfeasance or fraud by the Settlement Agent or the failure of the Settlement Agent to follow the specific closing instructions specified by Buyer in the escrow letter with respect to the closing of the Mortgage Loan.  The Insured Closing Letter shall be either with respect to the individual Mortgage Loan being purchased pursuant hereto or a blanket Insured Closing Letter which covers closings conducted by the Settlement Agent in the jurisdiction in which the closing of such Mortgage Loan takes place.

 

“ Interim Servicing Term ” has the meaning set forth in Paragraph 13(a) .

 

“ IRC ” means the Internal Revenue Code of 1986, as amended from time to time and any successor statute.

 

“ JPM Chase ” means JPMorgan Chase Bank, N.A., a national banking association, in its individual capacity, and its successors and assigns.

 

“ Last Endorsee ” means with respect to each Mortgage Loan, the last Person to whom such Mortgage Loan was assigned or the related Mortgage Note was endorsed, as applicable.

 

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“Leverage Ratio” means that ratio of a Person’s Debt (including off balance sheet financings) to its Adjusted Tangible Net Worth.

 

“ Lien ” means any security interest, mortgage, deed of trust, charge, pledge, hypothecation, assignment, deposit arrangement, equity, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC (other than any such financing statement filed for informational purposes only) or comparable law of any jurisdiction to evidence any of the foregoing.

 

“ Liquidity ” means, at any time, Seller’s unencumbered and unrestricted cash and Cash Equivalents (including the balance on deposit in the Cash Pledge Account, but excluding any restricted cash or cash pledged to third parties) at such time plus, with respect to any Purchased Mortgage Loans subject to this Agreement or other Mortgage Loans subject to similar agreements with other third parties, the excess, if any, of the maximum Purchase Price (or equivalent term under a similar agreement) available to Seller pursuant to the terms hereof (or thereof) for such Purchased Mortgage Loans (or such other Mortgage Loans) over the aggregate outstanding Purchase Price (or equivalent term) for such Purchased Mortgage Loans (or such other Mortgage Loans) at such time.

 

“ Litigation ” means, as to any Person, any action, lawsuit, investigation, claim, proceeding, judgment, order, decree or resolution pending against such Person or the business, operations, properties or assets of such Person before, or by, any Governmental Authority.

 

“ Loan File ” means, with respect to each Mortgage Loan, the following documents:

 

(i)             if a Wet Loan, a fully executed Insured Closing Letter from the related Settlement Agent involved in the Wet Funding of that Mortgage Loan;

 

(ii)            if a Government Loan, a valid eligibility certification from VA or FHA, as applicable, or such other documentation as may be required by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time, with respect to such Purchased Mortgage Loan;

 

(iii)           if a Conventional Conforming Loan, a valid eligibility certification from Fannie Mae or Freddie Mac, as applicable, or such other documentation as may be required by Buyer in its sole discretion and specified in a written notice from Buyer to Seller from time to time, with respect to such Mortgage Loan;

 

(iv)           such other documents required by Buyer in its sole discretion;

 

(v)            the original Mortgage Note, endorsed in blank without recourse by the Last Endorsee thereof, together with all intervening endorsements showing an unbroken chain of endorsement from the originator of such Mortgage Loan to the Last Endorsee, or, if the original has been lost, a lost note affidavit in form and substance acceptable to Buyer and executed by the Last Endorsee;

 

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(vi)           the original recorded Mortgage, or, if the original has been lost or if such Mortgage is in the process of being recorded, a copy of the original Mortgage together with an Officer’s Certificate (which may be included on the face of such copy) certifying (x) that such copy is a true, correct and complete copy and (y) that such Mortgage has been transmitted to the appropriate recording office for recordation;

 

(vii)          the originals of all assumption, modification, consolidation, substitution and extension agreements, if any, with evidence of recordation thereon, or copies of such original agreements together with an Officer’s Certificate certifying (x) that such copy is a true, correct and complete copy and (y) that such agreements have been transmitted to the appropriate recording office for recordation;

 

(viii)         all guarantees, supporting obligations and collateral, if any, received with respect to, or supporting repayment of, such Purchased Mortgage Loan;

 

(ix)            evidence satisfactory to Buyer that each Mortgage Loan subject to such Transaction is a MERS Designated Mortgage Loan and Buyer is designated as “Interim Funder” on the MERS System with respect to each such Mortgage Loan;

 

(x)             if, at any point in the future, Buyer so designates, by giving at least ten (10) Business Days’ written notice to a Seller, that Sellers will, on a going forward basis, be responsible for giving the same ( it being understood and agreed that unless and until Buyer gives such notice to a Seller, Buyer will be responsible for giving such notices to Mortgagors and this item will not be included in the Loan Files), a notice letter in form and substance acceptable to Buyer in its sole discretion, delivered by Seller on behalf of Buyer to Mortgagor setting forth the information regarding Buyer as the “new creditor” and such other information required by Section 404 of The Helping Families Save Their Homes Act of 2009 (amending the Truth in Lending Act of 1968 (as amended)), and acknowledged in writing by Mortgagor unless Buyer has notified Seller in writing that such notice is no longer required;

 

(xi)            if a Cooperative Loan:

 

(A)  the original Cooperative Shares with original Stock Power with a signature guarantee in form and substance satisfactory to Buyer;

 

(B)  the original Proprietary Lease;

 

(C)  the original Recognition Agreement; and

 

(D) an acknowledgement copy of the UCC-1 financing statement filed in connection with the Mortgage related thereto; and

 

(xii)           such additional documents required by Buyer in its sole discretion from time to time by written notice to Seller.

 

“ Loan Purchase Detail ” means a data tape or schedule of information prepared and transmitted electronically by Seller to Buyer in the format and with such fields of information set

 

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forth in Exhibit I regarding the Purchased Mortgage Loans, as such required format or information fields may be changed from time to time by Buyer with prior written notice to Seller.

 

“ Loan-to-Value Ratio ” means, for each Mortgage Loan as of the related Purchase Date, a fraction (expressed as a percentage) having as its numerator the original principal amount of the Mortgage Note and as its denominator the appraised value of the related Mortgaged Property of such Mortgage Loan indicated in the appraisal obtained in connection with the Origination of such Mortgage Loan.

 

“ Manufactured Home ” means a single-family home constructed at a factory and shipped in one or more sections to a housing site.

 

“ Margin Amount ” means at any time with respect to any Purchased Mortgage Loan, the amount equal to (a) the applicable Margin Percentage for that Purchased Mortgage Loan at that time multiplied by (b) the Market Value for that Purchased Mortgage Loan at that time.

 

“ Margin Deficit ” has the meaning specified in Paragraph 4(a) .

 

“ Margin Percentage ” has the meaning set forth in the Side Letter.

 

“Margin Stock” has the meaning assigned to that term in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

 

“ Market Value ” means, at any time with respect to any Purchased Mortgage Loan, the fair market value of such Purchased Mortgage Loan at such time as determined by Buyer in its sole good faith discretion.

 

“ Material Adverse Effect ” means any (i) material adverse effect upon the validity, performance or enforceability of any Transaction Document, (ii) material adverse effect upon the assets, business or condition, financial or otherwise, of Seller (and its Subsidiaries, on a consolidated basis) or any Guarantor, (iii) material adverse effect upon the ability of Seller to fulfill its obligations under this Agreement or the ability of any Guarantor to fulfill its obligations under its Guaranty, or (iv) material adverse effect on the value or salability of the Purchased Mortgage Loans subject to this Agreement, taken as a whole.

 

“Maximum Warehouse Capacity Ratio” means, at any time with respect to any Person, the ratio of (a) Available Warehouse Facilities at such time, to (b) that Person’s Adjusted Tangible Net Worth at such time.

 

“ MERS ” means Mortgage Electronic Registration Systems, Inc. and its successors and assigns.

 

“ MERS Designated Mortgage Loan ” means a Mortgage Loan that satisfies the definition of the term “MERS Designated Mortgage Loan” contained in the Electronic Tracking Agreement.

 

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“ MERS ®  System ” has the meaning given that term in the Electronic Tracking Agreement.

 

“ MIN ” means the eighteen digit MERS Identification Number permanently assigned to each MERS Designated Mortgage Loan.

 

“ MOM Loan ” means a MERS Designated Mortgage Loan that was registered on the MERS ®  System at the time of its Origination and for which MERS appears as the record mortgagee or beneficiary on the related Mortgage.

 

“ Moody’s ” means Moody’s Investors Service and any successor.

 

“ Mortgage ” means a mortgage, deed of trust or other security instrument creating a Lien on the Mortgaged Property.

 

“ Mortgage Assets ” has the meaning specified in Paragraph 6 .

 

“ Mortgage Loan ” means a whole mortgage loan or Cooperative Loan which is secured by a Mortgage on residential real estate, and shall include all Servicing Rights with respect thereto.

 

“ Mortgage Loan Documents ” means the Mortgage Note, the Mortgage and all other documents evidencing, securing, guaranteeing or otherwise related to a Mortgage Loan.

 

“ Mortgage Note ” means the original, executed promissory note or other primary evidence of indebtedness of a Mortgagor on a Mortgage Loan.

 

“ Mortgaged Property ” means the residential real estate securing the Mortgage Note, which shall be either (i) in the case of a Mortgage Loan that is not a Cooperative Loan, a fee simple estate in the real property located in any state of the United States (including, without limitation, all buildings, improvements and fixtures thereon and all additions, alterations and replacements made at any time with respect to the foregoing) purchased with the proceeds of the Mortgage Loan or (ii) in the case of a Cooperative Loan, the Proprietary Lease and related Cooperative Shares.

 

“ Mortgagor ” means the obligor on a Mortgage Note or the grantor or mortgagor on a Mortgage, as the context requires.

 

“ Officer’s Certificate ” means a certificate signed by a Responsible Officer of Seller and delivered to Buyer.

 

“Operating Account” means the internal demand deposit account held at JPM Chase for the benefit of Buyer, and styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Operating Account for Home Loan Center, Inc.

 

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“ Originate ” or “ Origination ” means a Person’s actions in taking applications for, underwriting and closing Mortgage Loans.

 

“ Origination Date ” means the date of the Mortgage Note and the related Mortgage.

 

“ Outstanding Principal Balance ” of a Mortgage Loan means, at any time, the then unpaid outstanding principal balance of such Mortgage Loan.

 

“ Parent ” means Tree.com, Inc.

 

“ Party ” means each of Buyer and Seller.

 

“ Permitted Dividend ” means (a) as to any taxable period of Seller during which Seller makes an S corporation election with the Internal Revenue Service, an annual or quarterly distribution necessary to enable each shareholder of Seller to pay federal or state income taxes attributable to such shareholder resulting solely from the allocated share of income of Seller for such period (“Permitted Tax Distributions”) and (b) a regular cash dividend declared by Seller and paid to its shareholders, provided that such regular cash dividends do not exceed, in the aggregate, during any fiscal year one hundred percent (100%) of Seller’s net income for such fiscal year after payment of the Permitted Tax Distributions (as calculated on its annual statement of income).

 

“ Person ” means an individual, partnership, corporation (including a business trust), joint-stock company, limited liability company, trust, unincorporated association, joint venture, any Governmental Authority or other entity.

 

“Post-Origination Period” means the period of time between a Mortgage Loan’s Origination Date and its subsequent sale to an Approved Takeout Investor.

 

“ Price Differential ” means with respect to any Transaction hereunder, for each month (or portion thereof) during which that Transaction is outstanding, the sum of the following amount for each day during that month (or portion thereof):  the weighted average of the applicable Pricing Rates for such day multiplied by the aggregate outstanding Purchase Price on such day divided by 360.  The Price Differential for each Transaction shall accrue during the period commencing on (and including) the day on which the Purchase Price is transferred into the Funding Account (or otherwise paid to Seller) for such Transaction and ending on (but excluding) the date on which the Repurchase Price is paid.

 

“ Pricing Rate ” means the per annum percentage rate (or rates) to be applied to determine the Price Differential, which rate (or rates) shall be determined in accordance with the Side Letter.

 

“ Prime Rate ” means the rate of interest per annum announced from time to time by Buyer as its prime rate.  The Prime Rate is a variable rate and each change in the Prime Rate is effective from and including the date the change is announced as being effective.  THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE BUYER’S LOWEST RATE.

 

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“ Privacy Requirements ” means (a) Title V of the GLB Act, (b) federal regulations implementing such act codified at 12 CFR Parts 40, 216, 332 and 573, (c) the Interagency Guidelines Establishing Standards For Safeguarding Customer Information and codified at 12 CFR Parts 30, 208, 211, 225, 263, 308, 364, 568 and 570 and (d) any other applicable federal, state and local laws, rules, regulations and orders relating to the privacy and security of Seller’s Customer Information, as such statutes, regulations, guidelines, laws, rules and orders may be amended from time to time.

 

“Property Charges” means all taxes, fees, assessments, water, sewer and municipal charges (general or special) and all insurance premiums, leasehold payments or ground rents.

 

“Proprietary Lease” means the lease on a Cooperative Unit evidencing the possessory interest of the owner of the Cooperative Shares in such Cooperative Unit.

 

“ Purchase Date ” means the date with respect to each Transaction on which the Mortgage Loans subject to such Transaction are transferred by Seller to Buyer hereunder; provided , however, that in any case, the Purchase Date shall occur no later than 30 days after the Origination Date of each related Mortgage Loan.

 

“ Purchase Price ”  has the meaning set forth in the Side Letter.

 

“ Purchased Mortgage Loans ” means, with respect to any Transaction, the Mortgage Loans sold by Seller to Buyer in such Transaction hereunder (each of which sales shall be on a servicing released basis), including any Additional Purchased Mortgage Loans delivered pursuant to Paragraph 4(a)  and excluding any Purchased Mortgage Loans repurchased by Seller or transferred to Seller.  Unless the context shall otherwise require, the term “ Purchased Mortgage Loans ” shall refer to all Purchased Mortgage Loans under all Transactions.

 

“Qualified Subordinated Debt” means, with respect to any Person, all unsecured Debt of such Person, for borrowed money, which is, by its terms or by the terms of a subordination agreement (which terms shall have been approved by Buyer), in form and substance satisfactory to Buyer, effectively subordinated in right of payment to all other present and future obligations and all indebtedness of such Person, of every kind and character, owed to Buyer and which terms or subordination agreement, as applicable, include, among other things, standstill and blockage provisions approved by Buyer, restrictions on amendments without the consent of Buyer, non-petition provisions and maturity date or dates for any principal thereof at least 395 days after the date hereof.

 

“Recognition Agreement” means, with respect to a Cooperative Loan, an agreement among a Cooperative Corporation, a lender and a Mortgagor whereby such parties (i) acknowledge that such lender may make, or intends to make, such Cooperative Loan and (ii) make certain agreements with respect to such Cooperative Loan.

 

“ Remittance Date ” means the 15 th  day of each month, or if such day is not a Business Day, the next succeeding Business Day.

 

“ REO Property ” means a Mortgaged Property acquired by Seller through foreclosure or deed in lieu of foreclosure.

 

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“ Repurchase Date ” means, with respect to each Transaction, the date on which Seller is required to repurchase from Buyer the Purchased Mortgage Loans which are subject to that Transaction.  The Repurchase Date shall occur (i) for Transactions terminable on a date certain, on the date that is 30 days after the related Purchase Date, or such later date as permitted by Buyer in its sole discretion, (ii) for Transactions to be terminable on demand (as permissible under this Agreement), the earlier to occur of (a) the date specified in Buyer’s demand or (b) the date that is 30 days after the related Purchase Date, if no demand is sooner made, or such later date as permitted by Buyer in its sole discretion and (iii) for repurchases of Defective Mortgage Loans under Paragraph 3(h) , the Early Repurchase Date; provided, however , that in any case, the Repurchase Date with respect to each Transaction shall occur no later than the earlier of (1) the date declared by Buyer pursuant to Paragraph 12(b)(i) and (2) the Termination Date.

 

“ Repurchase Price ” means, with respect to each Transaction, the price at which Purchased Mortgage Loans subject to such Transaction are to be resold by Buyer to Seller upon termination of such Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the accrued and unpaid Price Differential as of the date of such termination; provided that such Price Differential may be paid on a day other than the Repurchase Date in accordance with the terms of this Agreement.

 

“ Required Amount ” has the meaning set forth in Paragraph 5(b) .

 

“Requirement(s) of Law” means any law, treaty, ordinance, decree, requirement, order, judgment, rule, regulation (or interpretation of any of the foregoing) of any Governmental Authority having jurisdiction over Buyer, Seller, any Guarantor, any Approved Takeout Investor or any person with whom any Hedging Arrangement is maintained, any of their respective Subsidiaries or their respective properties or any agreement by which any of them is bound.

 

“ Rescission ” means the Mortgagor’s exercise of any right to rescind the related Mortgage Note and related documents pursuant to applicable law.

 

“ Responsible Officer ” means, as to any Person, the chief executive officer or, with respect to financial matters, the chief financial officer of such Person; provided, however , that in the event any such officer is unavailable at any time he or she is required to take any action hereunder, Responsible Officer means any officer authorized to act on such officer’s behalf as demonstrated by a certificate of corporate resolution or similar document and an incumbency certificate.

 

“ S&P ” means Standard and Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor.

 

“ Seller’s Accounts ” means each of the Funding Account and the Operating Account.

 

“ Seller’s Customer ” means any natural person who has applied to Seller for a financial product or service, has obtained any financial product or service from Seller or has a Mortgage Loan that is serviced or subserviced by Seller.

 

“ Seller’s Customer Information ” means any information or records in any form (written, electronic or otherwise) containing a Seller’s Customer’s personal information or

 

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identity, including such Seller’s Customer’s name, address, telephone number, loan number, loan payment history, delinquency status, insurance carrier or payment information, tax amount or payment information and the fact that such Seller’s Customer has a relationship with Seller.

 

“Servicing File” means with respect to each Mortgage Loan, all documents relating to the servicing thereof, which may consist of (i) copies of the documents contained in the related Credit File and Loan File, as applicable, (ii) the credit documentation relating to the underwriting and closing of such Mortgage Loan(s), (iii) copies of all related documents, correspondence, notes and all other materials of any kind, (iv) copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, (v) all other information or materials necessary or required to board such Mortgage Loan onto the applicable servicing system and (vi) all other related documents required to be delivered pursuant to any of the Transaction Documents.

 

“ Servicing Records ” means all servicing records created and/or maintained by Seller in its capacity as interim servicer for Buyer with respect to a Purchased Mortgage Loan, including but not limited to any and all servicing agreements, files, documents, records, databases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records and any other records relating to or evidencing the servicing thereof.

 

“ Servicing Rights ” means all rights and interests of Seller or any other Person, whether contractual, possessory or otherwise to service, administer and collect Income with respect to Mortgage Loans, and all rights incidental thereto.

 

“ Settlement Agent ” means a title company, escrow company or attorney that is acceptable to Buyer in its sole discretion and that is (i) a division, subsidiary or licensed agent of a title insurance company reasonably acceptable to Buyer and (ii) insured against errors and omissions in such amounts and covering such risks as are at all times customary for its business and with industry standards, to which the proceeds of any purchase of a Mortgage Loan are to be wired in accordance with local law and practice in the jurisdiction where such Mortgage Loan is being Originated.

 

“ Shipping Instructions ” means the advice in the form of Exhibit D , sent by Seller to Buyer electronically through the CMWF Web, which instructs Buyer to send one or more Mortgage Notes and the related Mortgages to an Approved Takeout Investor.

 

“ Side Letter ” means the letter agreement, dated as of the date hereof, between Buyer and Seller, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“ Stock Power ” means, with respect to a Cooperative Loan, an assignment of the stock certificate or an assignment of the Cooperative Shares issued by the Cooperative Corporation.

 

“Subservicer” has the meaning set forth in Paragraph 13(a)(ii) .

 

“Subservicer Instruction Letter” means a letter agreement between Seller and each Subservicer substantially in the form of Exhibit H .

 

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“Subservicing Agreement” has the meaning set forth in Paragraph 13(a)(ii) .

 

“ Subsidiary ” means any corporation, association or other business entity in which more than fifty percent (50%) of the total voting power or shares of stock (or equivalent equity interest) entitled to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more of the other Subsidiaries of that Person or a combination thereof.

 

“Successor Servicer” has the meaning set forth in Paragraph 13(e) .

 

“ Takeout Agreement ” means an agreement, in form and substance acceptable to Buyer, between an Approved Takeout Investor and Seller, pursuant to which such Approved Takeout Investor has committed to purchase from Seller certain of the Purchased Mortgage Loans, as such agreement may be amended, restated, supplemented or otherwise modified from time to time with the prior written consent of Buyer.

 

“ Takeout Commitment ” means, with respect to each Approved Takeout Investor, the commitment to purchase a Purchased Mortgage Loan from Seller pursuant to a Takeout Agreement, and that specifies (a) the type of Purchased Mortgage Loan to be purchased, (b) a purchase date or purchase deadline date and (c) a purchase price or the criteria by which the purchase price will be determined.

 

“ Takeout Guidelines ” means (i) the eligibility requirements established by the Approved Takeout Investor that must be satisfied by a Mortgage Loan originator to sell Mortgage Loans to the Approved Takeout Investor and (ii) the specifications that a Mortgage Loan must meet, and the requirements that it must satisfy, to qualify for the Approved Takeout Investor’s program of Mortgage Loan purchases, as such requirements and specifications may be revised, supplemented or replaced from time to time.

 

“ Takeout Value ” means, with respect to any Purchased Mortgage Loan subject to a Takeout Commitment, the price that an Approved Takeout Investor has agreed to pay Seller for such Purchased Mortgage Loan and, with respect to any Purchased Mortgage Loan subject to a Hedging Arrangement, the weighted average price of portfolio hedges or forward trades for such Purchased Mortgage Loan.

 

“Tangible Net Worth” means, without respect to any Person at any date, the sum of total shareholders’ equity in such Person (including capital stock, additional paid-in capital and retained earnings, but excluding treasury stock, if any), on a consolidated basis; provided , however , that, for purposes of this definition, there shall be excluded from assets the following: the aggregate book value of all intangible assets of such Person (as determined in accordance with GAAP), including, without limitation, goodwill, trademarks, trade names, service marks, copyrights, patents, licenses, franchises, capitalized servicing rights, excess capitalized servicing rights, each to be determined in accordance with GAAP consistent with those applied in the preparation of such Person’s financial statements; advances of loans to shareholders or Affiliates, advances of loans to employees (unless such advances are against future commissions), investments in Affiliates, deferred tax assets, assets pledged to secure any liabilities not included

 

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in the Debt of such Person and any other assets which would be deemed by Buyer, CL or the Agencies to be unacceptable in calculating tangible net worth.

 

“ Tax and Insurance Amount ” means, at any time, the amount determined by Buyer from time to time in its sole discretion with written notice to Seller, as the amount approximately equal to the escrowed tax and insurance payments made by the Mortgagors with respect to the Purchased Mortgage Loans, at that time.

 

“ Termination Date ” means the earliest of (i) that Business Day which Seller designates as the Termination Date by written notice to Buyer at least thirty (30) days prior to such date, (ii) the date of declaration of the Termination Date pursuant to Paragraph 12(c) , (iii) the Business Day which Buyer designates as the Termination Date pursuant to Paragraph 11(aa) , and (iv) 364 days after the date hereof.

 

“ Third Party Originator ” means any Person, other than a permanent employee of Seller, who engages in the solicitation, procurement, packaging, processing or performing of any other Origination function with regard to a Mortgage Loan.

 

“ TPO Loan ” means a Mortgage Loan which has been solicited, procured, packaged, processed or otherwise Originated by a Third Party Originator.

 

“ Transaction ” has the meaning set forth in Paragraph 1 of this Agreement.

 

“ Transaction Documents ” means this Agreement, each Confirmation, each Bailee Letter, each Trust Release Letter, the Side Letter, the Electronic Tracking Agreement, each Takeout Agreement, each Takeout Commitment, each Insured Closing Letter, each Guaranty and each other agreement, document or instrument executed or delivered in connection therewith, in each case as amended, restated, supplemented or otherwise modified from time to time.

 

“ Trust Release Letter ” means a letter in substantially the form of Exhibit L , appropriately completed and authenticated by Seller, or such other form as may be approved by Buyer in writing in its sole discretion.

 

“ UCC ” means the Uniform Commercial Code, as amended from time to time, as in effect in the relevant jurisdiction.

 

“ VA ” means the U.S. Department of Veterans Affairs or any successor department or agency.

 

“ Wet Funding ” means the purchase of a Mortgage Loan that is Originated by Seller on the Purchase Date under escrow arrangements satisfactory to Buyer pursuant to which Seller is permitted to use the Purchase Price proceeds to close the Mortgage Loan prior to Buyer’s receipt of the complete Loan File.

 

“ Wet Funding Deadline ” means, with respect to any Wet Loan, the fifth (5th) Business Day after the Origination Date for such Wet Loan, or such later Business Day as Buyer, in its sole discretion, may specify from time to time.

 

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“ Wet Loan ” means a Mortgage Loan for which the completed Loan File was not delivered to Buyer prior to funding.

 

3.                                       Initiation; Confirmations; Termination

 

(a)                                  Initiation .  Any agreement to enter into a Transaction shall be made in writing at the initiation of Seller through the CMWF Web prior to the Termination Date.  In the event that Seller desires to enter into a Transaction hereunder, Seller shall deliver to Buyer no earlier than three (3) Business Days prior to, and no later than (x) if no fraud detection report is submitted with a request, 2:30 p.m., Houston, Texas time, or (y) if a fraud detection report from a third-party mortgage fraud detection service acceptable to Buyer is submitted with a request, 3:00 p.m., Houston, Texas time, on, the date of the proposed Purchase Date, a request for Buyer to purchase an amount of Eligible Mortgage Loans on such Purchase Date; provided that Buyer may obtain additional fraud detection reports with respect to Mortgage Loans in respect of which Seller submits fraud detection reports.  All such purchases shall be on a servicing released basis and shall include the Servicing Rights with respect to such Eligible Mortgage Loan.  Such request shall state the Purchase Price and shall include the Confirmation related to the proposed Transaction.

 

(b)                                  Purchase by Buyer .  Subject to the terms of the Side Letter and satisfaction of the conditions precedent set forth in this Paragraph 3 and in Paragraph 7 , on the requested Purchase Date for each Transaction, Buyer shall transfer to Seller an amount equal to the Purchase Price for purchase of the Eligible Mortgage Loans that is the subject of such Transaction on that Purchase Date, less any amounts to be netted against such Purchase Price.  The transfer of funds to the Settlement Agent to be used to fund the Mortgage Loan, and if applicable, the netting of amounts for value, on the Purchase Date for any Transaction will constitute full payment by Buyer of the Purchase Price for such Transaction. Within five (5) days following the Purchase Date, Seller shall (i) take such steps as are necessary and appropriate to effect the transfer of the Purchased Mortgage Loan to Buyer on the MERS ®  System and (ii) in the case of a Wet Funding, deliver all remaining items of the related Loan File to Buyer.  Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, Buyer shall have no obligation to enter into any Transaction on or after the Termination Date.

 

(c)                                   Confirmations .  The Confirmation for each Transaction shall (i) include the Loan Purchase Detail with respect to the Mortgage Loans subject to such Transaction, (ii) identify Buyer and Seller and (iii) set forth (A) the Purchase Date, (B) the Purchase Price, (C) the Repurchase Date, (D) the Pricing Rate applicable to the Transaction and (E) any additional terms or conditions of the Transaction mutually agreeable to Buyer and Seller.  In the event of any conflict between the terms of a Confirmation and this Agreement, such Confirmation shall prevail.

 

(d)                                  Failed Fundings .  Seller agrees to report to Buyer by facsimile transmission or electronic mail as soon as practicable, but in no event later than one (1) Business Day after each Purchase Date any Mortgage Loans which failed to be funded to the related Mortgagor, otherwise failed to close for any reason or failed to be purchased hereunder.  Seller further agrees to (i) return, or cause the Settlement Agent to return, to Buyer the portion of the Purchase Price allocable to such Mortgage Loans as soon as practicable, but in no event later than one (1) Business Day after the related Purchase Date, and (ii) indemnify Buyer for any loss, cost or

 

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expense incurred by Buyer as a result of the failure of such Mortgage Loans to close; provided that Seller shall not be required to indemnify Buyer for any loss, cost or expense arising as a result of Buyer’s failure to fund the Purchase Price for an Eligible Mortgage Loan by the end of the day on the related Purchase Date in accordance with Paragraph 3(b) if Buyer is obligated to so fund pursuant to Paragraph 3(b).

 

(e)                                   Repurchase Required .  Seller shall repurchase Purchased Mortgage Loans from Buyer on or prior to each related scheduled Repurchase Date.  Each obligation to repurchase exists without regard to any prior or intervening liquidation or foreclosure with respect to any Purchased Mortgage Loan.  Seller is obligated to obtain the Purchased Mortgage Loans from Buyer or its designee at Seller’s expense on the related Repurchase Date. On the Repurchase Date, termination of the Transaction will be effected by resale by Buyer to Seller or its designee of the Purchased Mortgage Loans on a servicing released basis against Seller’s submission to Buyer of a Completed Repurchase Advice, all in form and substance satisfactory to Buyer.  After receipt of the payment of the Repurchase Price from Seller, Buyer shall deliver, or cause to be delivered, to Seller all Mortgage Loan Documents previously delivered to Buyer and take such steps as are necessary and appropriate to effect the transfer of the Purchased Mortgage Loan to Seller on the MERS ®  System.

 

(f)                                    Repurchase Advice .  If Buyer receives the Completed Repurchase Advice with respect to a Purchased Mortgage Loan at or prior to 3:00 p.m. Houston, Texas time, on any Business Day, then the Repurchase Date will occur with respect to such Purchased Mortgage Loan on such day.  If Buyer receives the Completed Repurchase Advice with respect to any Purchased Mortgage Loan after 3:00 p.m. Houston, Texas time, on any Business Day, then the Repurchase Date will occur with respect to such Purchased Mortgage Loan on the next Business Day.  In connection with any repurchase pursuant to a Completed Repurchase Advice, Buyer will debit the Funding Account and the Operating Account, if applicable, for the amount of the Repurchase Price (less any amount of Price Differential to be paid on the next Remittance Date).  Without limiting Seller’s obligations hereunder, at any time after the occurrence and during the continuance of a Default or an Event of Default, Seller shall not be permitted to repurchase less than all of the Purchased Mortgage Loans without the prior written consent of Buyer.

 

(g)                                   Reliance .  With respect to any Transaction, Buyer may conclusively rely upon, and shall incur no liability to Seller in acting upon, any request or other communication that Buyer reasonably believes to have been given or made by a Person authorized to enter into a Transaction on Seller’s behalf.

 

(h)                                  Defective Mortgage Loans .  (i)  If, after Buyer purchases a Mortgage Loan, Buyer determines or receives notice (whether from Seller or otherwise) that a Purchased Mortgage Loan is (or has become) a Defective Mortgage Loan, Buyer shall promptly notify Seller, and Seller shall repurchase such Purchased Mortgage Loan at the Repurchase Price on the Early Repurchase Date (as such term is defined below).

 

(ii)  If Seller becomes obligated to repurchase a Mortgage Loan pursuant to subparagraph (h)(i)  above, Buyer shall promptly give Seller notice of such repurchase obligation and a calculation of the Repurchase Price therefor.  On the same day Seller receives such notice (the “ Early Repurchase Date ”), Seller shall repurchase the Defective Mortgage Loan by making

 

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a payment to Buyer of an amount equal to the Repurchase Price, and shall submit a Completed Repurchase Advice.  Buyer is authorized to charge any of Seller’s Accounts for such amount unless the parties have agreed in writing to a different method of payment and Seller has paid such amount by such agreed method.  If Seller’s Accounts do not contain sufficient funds to pay in full the amount due Buyer under this subparagraph, or if the amount due is not paid by any applicable alternative method of payment previously agreed to by the Parties, Seller shall promptly deposit funds in the Operating Account sufficient to pay such amount due Buyer and notify Buyer of such deposit.  After receipt of the payment of the Repurchase Price from Seller, Buyer shall deliver, or cause to be delivered, to Seller all documents for the Mortgage Loan previously delivered to Buyer and take such steps as are necessary and appropriate to effect the transfer of the Mortgage Loan to Seller on the MERS ®  System.

 

4.                                       Margin Maintenance

 

(a)                                  Margin Deficit .  If at any time the sum of the Margin Amounts of all Purchased Mortgage Loans is less than the Aggregate Purchase Price (a “ Margin Deficit ”), then Buyer, by notice to Seller (a “ Margin Call ”), may require Seller to transfer to Buyer, at Buyer’s option, either (x) cash to be applied by Buyer to the payment of the Repurchase Prices of the Purchased Mortgage Loans that are subject to the related Transactions, (y) additional Eligible Mortgage Loans reasonably acceptable to Buyer (“ Additional Purchased Mortgage Loans ”) or (z) a combination, as determined by Buyer, of cash and Additional Purchased Mortgage Loans, so that, immediately after such transfer(s), the sum of (i) such cash, if any, so transferred to Buyer plus (ii) the aggregate of the Margin Amounts of all Purchased Mortgage Loans for all Transactions outstanding at that time, including any such Additional Purchased Mortgage Loans, will be at least equal to the Aggregate Purchase Price at that time.

 

(b)           Margin Maintenance .  If the notice to be given by Buyer to Seller under Paragraph (a) above is given at or prior to 10:00 a.m. Houston, Texas time on a Business Day, Seller shall transfer cash or Additional Purchased Mortgage Loans to Buyer prior to 5:00 p.m. Houston, Texas time on the date of such notice, and if such notice is given after 10:00 a.m. Houston, Texas time, Seller shall transfer cash or Additional Purchased Mortgage Loans prior to 9:30 a.m. Houston, Texas time on the Business Day following the date of such notice.  All cash required to be delivered to Buyer pursuant to this Paragraph shall be deposited by Seller into the Funding Account. Buyer’s election, in its sole and absolute discretion, not to make a Margin Call at any time there is a Margin Deficit shall not in any way limit or impair its right to make a Margin Call at any other time a Margin Deficit exists.

 

(c)                                   Margin Excess .  If on any day after Seller has transferred cash or Additional Purchased Mortgage Loans to Buyer pursuant to Paragraph (b)  above, the sum of (i) the cash paid to Buyer and (ii) the aggregate of the Margin Amounts of all Purchased Mortgage Loans for all Transactions at that time, including any such Additional Purchased Mortgage Loans, exceeds the sum of the outstanding Purchase Prices for all outstanding Transactions at that time, then at the request of Seller, Buyer shall return a portion of the cash or Additional Purchased Mortgage Loans to Seller so that the remaining sum of (i) and (ii) does not exceed the sum of the outstanding Purchase Prices for all outstanding Transactions at that time; provided that the sum of the cash plus the value of Additional Purchased Mortgage Loans returned shall be strictly limited to an amount, after the return of which, no Margin Deficit will exist.

 

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(d)                                  Market Value Determinations .  Buyer may determine the Market Value of any Purchased Mortgage Loans from time to time and with such frequency and taking into consideration such factors, as it may elect, in its sole good faith discretion, including, but not limited to, current market conditions and the fact that the Purchased Mortgage Loans may be sold or otherwise disposed of under circumstances where Seller is in default under this Agreement; provided , however , that a Market Value of zero shall be assigned to any Purchased Mortgage Loan that, at the time of determination, is not an Eligible Mortgage Loan.  Buyer’s determination of Market Value shall be conclusive upon the Parties.

 

5.                                       Accounts; Income Payments

 

(a)                                  Accounts .  Prior to the date hereof, Seller shall establish or cause to be established each of the Accounts at Financial Institution.  Seller’s taxpayer identification number will be designated as the taxpayer identification number for each Account and Seller shall be responsible for reporting and paying taxes on any income earned with respect to the Accounts.  Each Account shall be under the sole dominion and control of Buyer, and Seller agrees that (i) Seller shall have no right or authority to withdraw or otherwise give any directions with respect to the Accounts or the disposition of any funds held in the Accounts; provided that Seller may cause amounts to be deposited into any Account at any time, and (ii) Financial Institution may comply with instructions originated by Buyer directing disposition of the funds in the Accounts without further consent of Seller.  Only employees of Buyer shall be signers with respect to the Accounts.   Pursuant to Paragraph 6 , Seller has pledged, assigned, transferred and granted a security interest to Buyer in all Accounts in which Seller has rights or power to transfer rights and all Accounts in which Seller later acquires ownership, other rights or the power to transfer rights.  Seller and Buyer hereby agree that Buyer has “control” of the Accounts within the meaning of Section 9-104 of the UCC.

 

(b)                                  Cash Pledge Account .  On or prior to the date hereof, Seller shall deposit an amount equal to 1.00% of the Facility Amount (the “ Required Amount ”) into the Cash Pledge Account.  Seller shall cause an amount not less than the Required Amount to be on deposit in the Cash Pledge Account at all times.  If on any Remittance Date, the amount on deposit in the Cash Pledge Account is greater than the Required Amount, provided that no Default or Event of Default has occurred, upon Seller’s request such excess will be disbursed to Seller on such Remittance Date after application by Buyer to the payment of any amounts owing by Seller to Buyer on such date.  At any time upon or after the occurrence of an Event of Default, Buyer, in its sole discretion, may apply the amounts on deposit in the Cash Pledge Account in accordance with the provisions of Paragraph 5(f) .

 

(c)                                   Funding Account .  The Funding Account shall be used for fundings of the Purchase Price and the Repurchase Price with respect to each Purchased Mortgage Loan in accordance with Paragraph 3 .  Seller shall cause all amounts to be paid in respect of the Takeout Commitments to be remitted by the Approved Takeout Investors directly to the Funding Account without any notice to or consent of Seller.  On each Repurchase Date which occurs pursuant to Paragraph 3(e)  with respect to any Purchased Mortgage Loan, Buyer will apply the applicable amounts on deposit in the Funding Account to the unpaid Repurchase Price due to Buyer for such Purchased Mortgage Loan.  At any time upon or after the occurrence of an Event of Default,

 

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Buyer, in its sole discretion, may apply the amounts on deposit in the Funding Account in accordance with the provisions of Paragraph 5(f) .

 

(d)                                  [Reserved]

 

(e)                                   Operating Account .  The Operating Account shall be used for the purposes of (i) Seller’s payment of Price Differential and any other amounts owing to Buyer under this Agreement, the Side Letter or any other Transaction Document, (ii) Seller’s funding of the shortfall between the original outstanding balance of a Mortgage Loan and the Purchase Price paid by Buyer for that Mortgage Loan and (iii) Seller’s payment of any difference between the Repurchase Price and the amount received by Buyer from the applicable Approved Takeout Investor in connection with the repurchase of a Purchased Mortgage Loan pursuant to Paragraph 3(f) .   On or prior to the fourth (4th) Business Day prior to each Remittance Date, Buyer will notify Seller in writing of the Price Differential and other amounts due to Buyer on that Remittance Date.  On or prior to the Business Day preceding each Remittance Date, Seller shall deposit into the Operating Account an amount sufficient to pay such amounts due to Buyer on that Remittance Date.  On each Remittance Date, Buyer shall withdraw funds from amounts on deposit in the Operating Account to effect such payment to the extent of funds available.  In the event that the funds on deposit in the Operating Account are insufficient to pay the amounts due to Buyer in full, Seller shall pay the amount of the shortfall on the date such payment is due by wire transfer of such amount to the Operating Account.  At any time upon or after the occurrence of an Event of Default, Buyer, in its sole discretion, may apply the amounts on deposit in the Operating Account in accordance with the provisions of Paragraph 5(f) .

 

(f)                                    Application of Funds .  After the occurrence and during the continuance of an Event of Default, at such times as Buyer may direct in its sole discretion, Buyer shall apply all Income and such other amounts on deposit in all or any of the Accounts other than escrow amounts held in any account and required to be used for the payment of taxes and insurance on any Purchased Mortgage Loan (i)  first , to pay all actual and reasonable costs and expenses incurred by Buyer in connection with or as a result of a Default or an Event of Default (including, without limitation, legal fees, consulting fees, accounting fees, file transfer and inventory fees, costs and expenses incurred in respect of a transfer of the servicing of the Purchased Mortgage Loans and costs and expenses incurred in connection with a disposition of the Purchased Mortgage Loans), (ii)  second , to Buyer for the payment of all accrued and unpaid Price Differential for all Transactions, (iii)  third , to Buyer for the payment of the aggregate remaining unpaid Repurchase Price then due and payable, (iv)  fourth , to Buyer to be applied by Buyer to the payment of all other accrued and unpaid obligations of Seller hereunder and under the other Transaction Documents and (v)  fifth , any remaining proceeds to Seller or other Person legally entitled thereto.

 

(g)                                   Income .  Where a particular Transaction’s term extends over the date on which Income is paid by the Mortgagor on any Purchased Mortgage Loan subject to that Transaction, that Income will be the property of Buyer until Seller has paid Buyer the full Repurchase Price in respect of such Transaction.  Notwithstanding the foregoing, and provided no Default or Event of Default has occurred and is continuing and no Margin Deficit then exists, Buyer agrees that Seller or its designee shall be entitled to receive and retain that Income to the full extent it would be so entitled if the Purchased Mortgage Loans had not been sold to Buyer; provided that any

 

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Income received by Seller while the related Transaction is outstanding shall be deemed to be held by Seller solely in trust for Buyer pending the payment of the Repurchase Price in respect of such Transaction and the repurchase of the related Purchased Mortgage Loans.  If a Default or an Event of Default has occurred and is continuing, or a Margin Deficit exists, as of the date Income is paid on a Purchased Mortgage Loan subject to a Transaction hereunder, if directed by Buyer, Seller shall cause such Income to be deposited directly into an account designated by Buyer.

 

(h)                                  Seller’s Obligations .  The provisions of this Paragraph 5 shall not relieve Seller from its obligations to pay the Repurchase Price on the applicable Repurchase Date and to satisfy any other payment obligation of Seller hereunder or under any other Transaction Document.

 

6.                                       Security Interest; Assignment of Takeout Commitments

 

(a)                                  Security Interest.   Although the parties intend that all Transactions hereunder be absolute sales and purchases and not loans, to secure the payment and performance by Seller of its obligations, liabilities and indebtedness under each such Transaction and Seller’s obligations, liabilities and indebtedness hereunder and under the other Transaction Documents, Seller hereby pledges, assigns, transfers and grants to Buyer a security interest in the Mortgage Assets in which Seller has rights or power to transfer rights and all of the Mortgage Assets in which Seller later acquires ownership, other rights or the power to transfer rights.  “ Mortgage Assets ” means (i) the Purchased Mortgage Loans with respect to all Transactions hereunder (including, without limitation, all Servicing Rights with respect thereto), (ii) all Servicing Records, Loan Files, Mortgage Loan Documents, including, without limitation, the Mortgage Note and Mortgage, and all of Seller’s claims, liens, rights, title and interests in and to the Mortgaged Property related to such Purchased Mortgage Loans, (iii) all Liens securing repayment of such Purchased Mortgage Loans, (iv) all Income with respect to such Purchased Mortgage Loans, (v) the Accounts, (vi) the Takeout Commitments and Takeout Agreements to the extent Seller’s rights thereunder relate to the Purchased Mortgage Loans, (vii) all Hedging Arrangements relating to the Purchased Mortgage Loans and (viii) all proceeds of the foregoing.  Seller hereby authorizes Buyer to file such financing statements relating to the Mortgage Assets as Buyer may deem appropriate, and irrevocably appoints Buyer as Seller’s attorney-in-fact to take such other actions as Buyer deems necessary or appropriate to perfect and continue the Lien granted hereby and to protect, preserve and realize upon the Mortgage Assets.  Seller shall pay all fees and expenses associated with perfecting such Liens including, without limitation, the cost of filing financing statements and amendments under the UCC, registering each Purchased Mortgage Loan with MERS and recording assignments of the Mortgages as and when required by Buyer in its sole discretion.

 

(b)                                  Assignment of Takeout Commitment .The sale of each Mortgage Loan to Buyer shall include Seller’s rights (but none of the obligations) under the applicable Takeout Commitment and Takeout Agreement to deliver the Mortgage Loan to the Approved Takeout Investor and to receive the net sum therefor specified in the Takeout Commitment from the Approved Takeout Investor.  Effective on and  after the Purchase Date for each Mortgage Loan purchased by Buyer hereunder, Seller assigns to Buyer, free and clear of any Lien, all of Seller’s right, title and interest in any applicable Takeout Commitment and Takeout Agreement for such Mortgage Loan; provided that Buyer shall not assume or be deemed to have assumed any of the obligations of Seller under any Takeout Agreement or Takeout Commitment.

 

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7.                                       Conditions Precedent

 

(a)                                  Conditions Precedent to the Effectiveness of this Agreement .  The effectiveness of this Agreement shall be subject to the satisfaction of each of the following conditions precedent:

 

(i)                                      on or before the date hereof, Seller shall deliver or cause to be delivered each of the documents listed on Exhibit E (other than those listed under the heading