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EXHIBIT 10.1
LOAN SALE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This LOAN SALE AGREEMENT dated as of February 27, 1997 (the
"Agreement"), is made and entered into by and between FIRSTPLUS INVESTMENT
CORPORATION, as purchaser (together with its successors and assigns, being
referred to herein as "Purchaser"), and FIRSTPLUS FINANCIAL, INC., as seller
(together with its successors and assigns, being referred to herein as "FFI").
W I T N E S S E T H:
WHEREAS, FFI is engaged in the business of underwriting, originating
or acquiring property improvement and debt consolidation loans secured by
mortgages on residential property;
WHEREAS, FFI desires to sell to Purchaser and Purchaser desires to
purchase from FFI on a whole loan basis the Initial Home Loans and all monies
due and to become due thereunder after January 31, 1997;
WHEREAS, FFI desires to sell to Purchaser and Purchaser desires to
purchase from FFI on a whole loan basis the Subsequent Home Loans and all
monies due and to become due thereunder after the related Cut-Off Date;
WHEREAS, Purchaser intends to transfer the Home Loans to FIRSTPLUS
Home Loan Owner Trust 1997-1 (the "Trust") in order to facilitate the issuance
by the Trust of a series of asset backed notes and certificates (the "Asset
Backed Securities");
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements herein set forth, Purchaser and FFI each agree as follows:
SECTION 1. Representations and Warranties.
FFI hereby represents and warrants to the Purchaser and the Issuer,
with respect to each Subsequent Home Loan, as of the applicable Subsequent
Transfer Date; and with respect to each Initial Home Loan, as of the date
hereof (each, a "Closing Date") and with respect to itself, as follows:
A. Home Loan Information. The information with respect to each Home
Loan set forth in the Home Loan Schedule is true and correct in all material
respects as of the applicable Cut-Off Date.
B. Delivery of Home Loan Documents. All of the original or certified
documentation required to be delivered to the Indenture Trustee or to the
Custodian on or prior to the Closing Date
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or the Subsequent Transfer Date, as applicable, or as otherwise provided in
this Agreement has or will be so delivered.
C. Payments Current. As of the applicable Cut-off Date, no more than
0.15% (by aggregate Cut-off Date Principal Balance) of the Initial Home Loans
are more than 30 days but not more than 60 days delinquent, based on the terms
under which the related Mortgages and Debt Instruments have been made and none
of the Home Loans are more than 60 days delinquent. FFI has not advanced funds,
or induced, solicited or knowingly received any advance of funds from a party
other than the related Obligor, directly or indirectly, for the payment of any
amount required by any Home Loan.
D. No Waiver or Modification. The terms of each Debt Instrument and
Mortgage, have not been impaired, waived, altered or modified in any respect,
except by written instruments reflected in the Indenture Trustee's Home Loan
File and no provision of any Mortgage or Debt Instrument has been "▇▇▇▇▇▇ out"
or erased unless such modification has been initialed by each of the parties to
the related Home Loan. No instrument of waiver, alteration, modification or
assumption has been executed except for the instruments that are part of the
Indenture Trustee's Home Loan File and the terms of which are reflected in the
Indenture Trustee's Home Loan File.
E. No Defenses. No Debt Instrument or Mortgage is subject to any
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of any Debt Instrument or Mortgage or the
exercise of any right thereunder, render such Debt Instrument or Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been asserted in any
proceeding or was asserted in any state or federal bankruptcy or insolvency
proceeding at the time the related Home Loan was originated.
F. Compliance with Laws. Any and all requirements of any federal,
state or local law applicable to each Home Loan have been complied with
including, without limitation, all consumer, usury, truth-in-lending, consumer
credit protection, equal credit opportunity or disclosure laws applicable to
each Home Loan; each Home Loan was originated in compliance with all applicable
laws and no fraud or misrepresentation was committed by any Person in
connection therewith.
G. No Satisfaction or Release of Lien. No Mortgage has been satisfied,
canceled, subordinated or rescinded, in whole or in part. No Mortgaged Property
has been released from the lien of the related Mortgage in whole or in part,
nor has any instrument been executed that would effect any such release,
cancellation, subordination or rescission, other than the subordination of the
lien of such Mortgage securing a Home Loan with respect to which a related
Superior Lien was released in connection with the refinancing of the mortgage
loan relating to such Superior Lien.
H. Valid Lien. With respect to each Debt Instrument, the related
Mortgage is or creates a valid, subsisting and enforceable lien on the related
Mortgaged Property, including, in the case of a Mortgage securing a Home
Improvement Loan, the land and all buildings on the related Mortgaged Property.
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I. Validity of Home Loan Documents. Each Debt Instrument and each
Mortgage is genuine and each is the legal, valid and binding obligation of the
Obligor thereof, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting creditors' rights in general and by general
principles of equity. All parties to each Debt Instrument and each Mortgage had
legal capacity at the time to enter into the related Home Loan and to execute
and deliver such Debt Instrument and Mortgage, and such Debt Instrument and
Mortgage have been duly and properly executed by such parties.
J. Full Disbursement of Proceeds. As of the applicable Cut-Off Date,
the proceeds of each Home Loan have been fully disbursed and there is no
requirement for future advances thereunder, all costs, fees and expenses
incurred in making or closing each Home Loan and the recording of the Mortgage
were disbursed, the Obligor is not entitled to any refund of any amounts paid
or due under the Debt Instrument or any related Mortgage and any and all
requirements set forth in the related Home Loan documents have been complied
with.
K. Ownership. Immediately prior to the conveyance thereof to the
Seller, FFI had good and marketable title to each Home Loan, Debt Instrument
and Mortgage was the sole owner thereof and had full right to sell each Home
Loan, Debt Instrument and Mortgage to the Seller and upon the conveyance
thereof by FFI to the Seller, the Seller became the sole owner of each Home
Loan, Debt Instrument and Mortgage free and clear of any encumbrance, equity,
lien, pledge, charge, claim or security interest.
L. Ownership of Mortgaged Property. With respect to each Home Loan,
the related Servicer's Home Loan File contains a title document reflecting that
title to the related Mortgaged Property is held at least 50% by the Obligor
under such Home Loan.
M. No Defaults. Except with respect to any delinquent scheduled
payment set forth in subsection (c) above, there is no default, breach,
violation or event of acceleration existing under any Mortgage or any Debt
Instrument and, to the best of FFI's knowledge, there is no event which, with
the passage of time or with notice and/or the expiration of any grace or cure
period, would constitute such a default, breach, violation or event of
acceleration and neither FFI nor its predecessors have waived any such default,
breach, violation or event of acceleration, except as set forth in an
instrument of waiver, alteration, modification or assumption that is included
in the Indenture Trustee's Home Loan File.
N. No Condemnation or Damage. To the best of FFI's knowledge, the
physical condition of each Mortgaged Property has not deteriorated since the
date of origination of the related Home Loan (normal wear and tear excepted)
and there is no proceeding pending for the total or partial condemnation of any
Mortgaged Property.
O. Mortgage Remedies Adequate. Each Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the related Mortgaged Property of
the benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise,
by judicial foreclosure.
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P. Underwriting of Home Loans. Each Home Loan has been underwritten by
the originator thereof in accordance with such originator's then current
underwriting guidelines.
Q. Terms of Home Loans. Each Home Loan is a fixed rate loan; each Debt
Instrument has an original term to maturity of not less than 24 months nor more
than 25 years and three months from the date of origination; each Debt
Instrument is payable in monthly installments of principal and interest, with
interest payable in arrears, and requires a monthly payment which is sufficient
to amortize the original principal balance over the original term and to pay
interest at the related Home Loan Interest Rate; and no Debt Instrument
provides for any extension of the original term.
R. Security. No Debt Instrument is, or has been, secured by any
collateral except the lien of the related Mortgage.
S. Deed of Trust. If a Mortgage for a Home Loan constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves as such and is named in such
Mortgage, or a valid substitution of trustee has been recorded or may be
recorded and no extraordinary fees or expenses are, or will become, payable by
FFI to the trustee under the deed of trust, except in connection with default
proceedings and a trustee's sale after default by the related Obligor.
T. Types of Home Loans. Each Home Loan is either (i) a Home
Improvement Loan, (ii) a Debt Consolidation Loan, (iii) a Combination Loan, or
(iv) a first or junior lien purchase money loan. No Home Loan was originated
for the express purpose of purchasing a manufactured home.
U. Completion of Improvements. With respect to all Home Improvement
Loans and Combination Loans that have been originated through a home
improvement contractor, all improvements to be made to each Mortgaged Property
with the proceeds of the related Home Loan have been completed. All obligations
of a seller under all Debt Consolidation Loans, Purchase or Refinance Loans and
Combination Loans have been completed in accordance with the terms of the Debt
Consolidation Loan as of the Closing Date, and no additional goods or services
will be, or are required to be provided by such seller after the Closing Date.
V. Origination Practices. The origination practices used by each
originator of the Home Loans and the servicing and collection practices used by
FFI with respect to each Home Loan have been in all material respects legal,
proper, prudent and customary with respect to the loan origination and
servicing business as applicable to the respective loan type.
W. Servicing Practices. Each Home Loan has been serviced in accordance
with all applicable laws and, to the best of FFI's knowledge, no fraud or
misrepresentation was committed by any Person in connection therewith.
X. No Bulk Transfer. The sale, transfer, assignment, conveyance and
grant of the Debt Instruments and the Mortgages by FFI to the Seller were not
subject to the bulk transfer laws or any similar statutory provisions in effect
in any applicable jurisdiction.
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Y. Relief Act Matters. No Obligor has notified FFI, and no relief has
been requested by or allowed to an Obligor under the Soldiers' and Sailors'
Civil Relief Act of 1940.
Z. Selection Criteria. The Home Loans were not selected by FFI for
sale to the Seller or the Issuer on any basis intended to adversely affect the
Seller or the Issuer.
AA. Superior Lien Delinquencies. No obligation secured by a Superior
Lien was more than 30 days past due at the time of origination of the related
Home Loan.
BB. Treasury Regulation ss.301.7701. On the Closing Date and on each
Subsequent Transfer Date, 55% or more (by aggregate principal balance) of the
Home Loans do not constitute "real estate mortgages" for the purpose of
Treasury Regulation ss.301.7701 under the Code. For this purpose a Home Loan
does not constitute a "real estate mortgage" if:
(a) The Home Loan is not secured by an interest in real
property, or
(b) The Home Loan is not an "obligation principally secured
by an interest in real property." For this purpose an obligation is
"principally secured by an interest in real property" if it satisfies
either the test set out in paragraph (1) or the test set out in
paragraph (2) below.
(1) The 80-percent test. An obligation is principally
secured by an interest in real property if the fair
market value of the interest in real property
securing the obligation
(a) was at least equal to 80 percent of the
adjusted issue price of the obligation at
the time the obligation was originated (or,
if later, the time the obligation was
significantly modified); or
(b) is at least equal to 80 percent of the
adjusted issue price of the obligation on
the Closing Date or Subsequent Transfer
Date, as applicable.
For purposes of this paragraph (1), the fair market
value of the real property interest must be first
reduced by the amount of any lien on the real
property interest that is senior to the obligation
being tested, and must be further reduced by a
proportionate amount of any lien that is in parity
with the obligation being tested, in each case
before the percentages set forth in (1)(A) and
(1)(B) are determined. The adjusted issue price of
an obligation is its issue price plus the amount of
accrued original issue discount, if any, as of the
date of determination.
(2) Alternative test. An obligation is principally
secured by an interest in real property if
substantially all of the proceeds of the obligation
were used to acquire or to improve or protect an
interest in real property that, at the origination
date, is the only security for the obligation. For
purposes of this
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test, loan guarantees made by the United States or
any state (or any political subdivision, agency, or
instrumentality of the United States or of any
state), or other third party credit enhancement are
not viewed as additional security for a loan. An
obligation is not considered to be secured by
property other than real property solely because the
obligor is personally liable on the obligation. For
this purpose only substantially all of the proceeds
of the obligation means more than 66-2/3% of the
gross proceeds.
CC. Good Repair. To the best of FFI's knowledge, the related Mortgaged
Property described in each Mortgage is free of damage and in good repair or
will be free of damage and in good repair following the completion of any
improvements or repairs to be financed by the related Home Loan.
DD. Home Loan Interest Method. Interest for each Home Loan is
calculated at a rate of interest computed by the simple interest method or the
actuarial method.
EE. Retail Installment Contracts. Some of the Homes Loans are retail
installment contracts for goods or services, and some of the Home Loans are
home improvement loans for goods or services, which are either "consumer credit
contracts" or "purchase money loans" as such terms are defined in 16 C.F.R.
Part 433.1.
FF. Inspections to Improvements; and No Encroachment. To the best of
FFI's knowledge, all required inspections, licenses and certificates with
respect to the improvements and the use and occupancy of all occupied portions
of all Mortgaged Property have been made, obtained or issued as applicable. To
the best of FFI's knowledge, all improvements which were considered in
determining the appraised value of the Mortgaged Property lay wholly within the
boundaries and building restrictions lines of the related property and no
improvements on adjoining properties encroach upon such property and no
improvement located on or being a part of such property is in violation of any
applicable zoning laws or regulation.
GG. Remedies Against Originators. In the event that any Home Loan was
originated by an entity (such entity, the "Originator") other than FFI and to
the extent that FFI has failed to fulfill or is not capable of fulfilling its
obligations to cure, substitute or repurchase such Home Loan as required
hereunder, then the Securities Insurer or the Indenture Trustee on behalf of
the Securityholders may enforce any remedies for breach of representations and
warranties made by the Originator with respect to such Home Loan.
HH. Consent of Superior Lienholder. With respect to each Home Loan
that is not a first mortgage loan, either (i) no consent for the Home Loan is
required by the holder of the related prior lien or (ii) such consent has been
obtained and has been delivered to the Indenture Trustee.
II. Flood Insurance. If required by federal or state law, each
Mortgaged Property is covered by flood insurance with a standard mortgagee
clause and extended coverage in an amount which is not less than the value of
such Mortgaged Property. All such insurance policies meet the requirements of
the current guidelines of the Federal Insurance Administration, conform to the
requirements of the FNMA Sellers' Guide and the FNMA Servicers' Guide, and are
of standard type
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and quality for the locale where the related Mortgaged Property is located. All
acts required to be performed to preserve the rights and remedies of the
Indenture Trustee in any such insurance policies have been performed including,
without limitation, any necessary notifications of insurers and assignments of
policies or interests therein.
JJ. No Fraudulent Conveyance. The Home Loans are not being transferred
with any intent to hinder, delay or defraud any creditors.
KK. Value and Marketability. To the best of FFI's knowledge, there do
not exist any circumstances, conditions or information with respect to the Home
Loan, the related Mortgaged Property the Obligor or the Obligor's credit
standing that reasonably can be expected to cause private institutional
investors investing in same type of home loan to regard such Home Loan as an
unacceptable investment, to increase the likelihood that such Home Loan will
become delinquent, or adversely affect the value or marketability of such Home
Loan.
LL. Environmental Compliance. To the best of FFI's knowledge, the
Mortgaged Property is free from any and all toxic or hazardous substances and
there exists no violation of any local, state or federal environmental law,
rule or regulation.
MM. Description Conforms to Prospectus Supplement. Each Initial Home
Loan conforms, and all Initial Home Loans in the aggregate conform, in all
material respects, to the description thereof set forth in the Prospectus
Supplement.
NN. No Buydown, GPM or Shared Appreciation Loans. No Home Loan
contains any provisions pursuant to which principal and interest payments are
paid or partially paid with funds deposited in any separate account established
by FFI, the Obligor or anyone else on behalf of the Obligor, or paid by any
source other than the Obligor. No Home Loan contains any other similar
provision which may constitute a "buydown" provision. No Home Loan is a
graduated payment mortgage loan. No Home Loan has a shared appreciation or
other contingent interest feature.
OO. No Chattel Paper. Each Debt Instrument is comprised of one
original promissory note and each such promissory note constitutes an
"instrument" for purposes of Section 9-105(1)(i) of the UCC. No Debt Instrument
constitutes or is comprised of "chattel paper" as such term is defined in
Section 9-105(1)(b) of the UCC. Each Debt Instrument has been delivered to the
Indenture Trustee.
PP. Entire Agreement. The Debt Instrument and the Mortgage contain the
entire agreement between the related Obligor and the lender and all obligations
of the lender under the related Home Loan, and no other agreement defines,
modifies, or expands the obligations of the lender under the Home Loan.
In light of FFI's underwriting guidelines, FFI has reviewed all of the
documents constituting each Servicer's Home Loan File and each Indenture
Trustee's Home Loan File and has made such inquiries as it deems reasonable
under the circumstances to make and confirm the accuracy of the representations
set forth herein.
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SECTION 2. Purchase and Delivery.
In consideration for the sale and transfer of the Home Loans to
Purchaser by FFI, and upon transfer of such Home Loans to Purchaser or
Purchaser's designee from FFI on the date hereof with respect to the Initial
Home Loans, and on the applicable Subsequent Transfer Date with respect to the
Subsequent Home Loans, the Purchaser shall pay or cause to be paid to FFI good
and valuable consideration, (the "Purchase Price") including (without
limitation) (a) the net proceeds of the sale of the Asset Backed Securities and
(b) certain residual classes of securities subordinate to the Asset Backed
Securities . The transfer of funds from Purchaser to FFI for the Purchase Price
for all Home Loans purchased shall be made by wire transfer of immediately
available funds to the bank account designated by FFI.
On the date hereof with respect to the Initial Home Loans, and on the
Subsequent Transfer Date with respect to the Subsequent Home Loans, FFI shall
transfer, assign and convey to Purchaser all of FFI's right, title and interest
in and to each Home Loan and the related Home Loan File, free and clear of any
adverse claims, rights or interests therein. FFI shall, or shall cause its
agent to, deliver to Purchaser or Purchaser's designee the related Home Loan
File.
On the date hereof with respect to the Initial Home Loans, and on the
Subsequent Transfer Date with respect to the Subsequent Home Loans, FFI shall
promptly transfer to Purchaser or its designee good title to the related
Mortgage, if applicable, pursuant to an Assignment of Mortgage and legal title
to the related Debt Instrument pursuant to the endorsement thereof in the name
of the Purchaser or its designee; provided that such Assignment of Mortgage, if
applicable, and endorsement of such Debt Instrument shall be prepared and
executed in the manner as specified in writing by the Purchaser. FFI shall
provide to Purchaser, at FFI's cost, a duly executed Assignment of Mortgage, if
applicable, and a blank endorsement of the related Debt Instrument. Purchaser
shall bear the cost and expense of completing and recording such Assignment of
Mortgage, if applicable, and completing the endorsement of such Debt Instrument
to the Purchaser or its designee.
SECTION 3. Sale Treatment.
It is the express intent of the parties hereto that the conveyance of
the Home Loans by FFI to the Purchaser, as contemplated by this Agreement be
and be treated as an absolute transfer and conveyance of all of FFI's right,
title, ownership and other interest in the Home Loans. In the event that,
notwithstanding the intent of the parties, the Home Loans are held by a court
to be the property of FFI, then (i) this Agreement shall be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the applicable
Uniform Commercial Code; (ii) the transfer of the Home Loans provided for
herein shall be deemed to be a grant by FFI to the Purchaser of a security
interest (and/or an assignment of any security interest that FFI may hold) in
all of the FFI's right, title, ownership and other interest in and to the Home
Loans and all amounts payable to the holders of the Home Loans in accordance
with the terms thereof and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, to the extent the Purchaser would otherwise be entitled to own such
Home Loans and proceeds thereof; (iii) the possession by the Purchaser or the
Indenture Trustee of the Debt Instruments and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to
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Section 9-305 (or comparable provision) of the applicable Uniform Commercial
Code; and (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Purchaser for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Purchaser pursuant to any provision
hereof or pursuant to the Sale and Servicing Agreement shall also be deemed to
be an assignment of any security interest created hereby. FFI and the Purchaser
shall, to the extent consistent with this Agreement, take such actions as may
be reasonably necessary to ensure that, if this Agreement were deemed to create
a security interest in the Home Loans, such security interest would be deemed
to be a perfected first priority security interest under applicable law and
will be maintained as such throughout the term of the Sale and Servicing
Agreement.
SECTION 4. Binding Effect.
This Loan Sale Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Purchaser and FFI.
SECTION 5. Governing Law.
This Loan Sale Agreement shall be governed by and construed under the
laws of the State of New York.
SECTION 6. Capitalized Terms.
Capitalized terms used and not otherwise defined herein have the
meanings assigned to them in the Sale and Servicing Agreement, dated as of
February 1, 1997, by and between FFI, as Transferor and Servicer, the
Purchaser, as Seller, FIRSTPLUS HOME LOAN TRUST 1997-1, as Issuer and First
Bank National Association, as Indenture Trustee and Co-Owner Trustee.
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IN WITNESS WHEREOF, the undersigned Purchaser and FFI have executed
this Loan Sale Agreement as of the 27th day of February, 1997.
FIRSTPLUS FINANCIAL, INC., as Seller
By:
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▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
FIRSTPLUS INVESTMENT CORPORATION,
as Purchaser
By:
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▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
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