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EXHIBIT 10.3
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FEDERAL NATIONAL MORTGAGE ASSOCIATION
DELEGATED UNDERWRITING AND SERVICING
MASTER LOSS SHARING AGREEMENT
BETWEEN
FEDERAL NATIONAL MORTGAGE ASSOCIATION
AND
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.
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FEDERAL NATIONAL MORTGAGE ASSOCIATION
DELEGATED UNDERWRITING AND SERVICING
MASTER LOSS SHARING AGREEMENT
SECTION HEADING PAGE
RECITALS ......................................................................1
STATEMENT OF AMENDMENT AND CONSOLIDATION ......................................2
ARTICLE 1
DEFINED TERMS .................................................................2
ARTICLE 2
SALE OF MORTGAGE LOANS.........................................................7
Section 2.01. Conveyance of Mortgage Loans......................7
Section 2.02. Loss Sharing......................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LENDER ......................................8
Section 3.01. No Consents.......................................8
Section 3.02. Existence and Power...............................8
Section 3.03. Authorization and
Non-contravention.................................8
Section 3.04. Binding Effect....................................8
Section 3.05. Governmental Consents.............................8
Section 3.06. Litigation........................................8
Section 3.07. Eligible Lender...................................9
Section 3.08. Compliance with Laws..............................9
ARTICLE 4
COVENANTS OF LENDER ...........................................................9
Section 4.01. Performance of Obligations........................9
Section 4.02. Good Standing.....................................9
Section 4.03. Compliance with Laws..............................9
Section 4.04. Agreement as Official Record of
Lender...........................................10
ARTICLE 5
LENDER'S SERVICING OF MORTGAGE LOANS..........................................10
Section 5.01 Compliance with Delegated Underwriting and
Servicing Guide..................................10
Section 5.02. Monthly Payments Equal to Principal
and Interest; Delinquency Advances...............10
Section 5.03. Servicing Advances...............................10
Section 5.04. Repurchase of Mortgage Loans.....................11
Section 5.05. Interim Loss Sharing Adjustments.................11
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Section 5.06. Unavailability of Net Operating
Income..........................................13
Section 5.07. Partial Payments................................13
ARTICLE 6
LOSS SHARING.................................................................13
Section 6.01. General ........................................13
Section 6.02. Asset Valuation Date............................14
Section 6.03. Determination of Asset Value....................14
Section 6.04. Calculation and Allocation of Loss
Sharing.........................................15
Section 6.05. Final Settlement of Loss........................15
Section 6.06. Third Party Assumption of Lender's
Share of Loss...................................16
Section 6.07. Determination of Loss Level.....................16
Section 6.08. Effect of Workouts on Loss Sharing..............16
ARTICLE 7
EVENTS OF DEFAULT............................................................17
Section 7.01. Events of Default...............................17
ARTICLE 8
REMEDIES.....................................................................18
Section 8.01. Remedies Available to ▇▇▇▇▇▇ ▇▇▇................18
Section 8.02. Remedies Not Exclusive..........................19
Section 8.03. Delay or Omission Not Waiver....................19
Section 8.04. Restoration of Rights and Remedies..............19
ARTICLE 9
MISCELLANEOUS................................................................19
Section 9.01. Benefit of Agreement............................19
Section 9.02. Notices.........................................20
Section 9.03. Severability....................................20
Section 9.04. Multiple Counterparts...........................20
Section 9.05. Termination of Delegated
Underwriting and Servicing Master
Loss Sharing Agreement..........................21
Section 9.06. Survival........................................21
Section 9.07. Relationship to DUS Guide.......................21
Section 9.08. Governing Law; Submission to
Jurisdiction; Waiver of Jury Trial..............21
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LIST OF EXHIBITS
EXHIBIT A - Mortgage Loan Certificate........................................A-1
EXHIBIT B - Loss Sharing Formula.............................................B-1
EXHIBIT C - Existing Mortgage Loan Schedule..................................C-1
EXHIBIT D - Consent to Interim Loss Sharing Adjustment.......................D-1
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THIS DELEGATED UNDERWRITING AND SERVICING MASTER LOSS SHARING AGREEMENT (the
"Agreement") is made between Federal National Mortgage Association, a
corporation organized and existing under the laws of the United States of
America ("▇▇▇▇▇▇ Mae") and Washington Mortgage Financial Group, Ltd., a
Delaware corporation (the "Lender")
RECITALS:
A. ▇▇▇▇▇▇ ▇▇▇ offers a multifamily mortgage purchase product line called
Delegated Underwriting and Servicing, under which ▇▇▇▇▇▇ Mae purchases
multifamily mortgage loans from approved multifamily mortgage lenders that
underwrite, originate, sell and service such mortgage loans.
B. ▇▇▇▇▇▇ ▇▇▇ has approved Lender for Delegated Underwriting and Servicing, and
▇▇▇▇▇▇ Mae and Lender have entered into certain agreements pertaining to
Delegated Underwriting and Servicing, including the Contract and the Reserve
Agreement (as each such term is defined below).
C. From time to time, Lender has delivered, or will deliver, Mortgage Loans (as
defined below) for sale to ▇▇▇▇▇▇ ▇▇▇ under Delegated Underwriting and
Servicing.
D. Lender and ▇▇▇▇▇▇ Mae will share in any losses on Mortgage Loans under
Delegated Underwriting and Servicing, and, to secure Lender's obligations under
Delegated Underwriting and Servicing, Lender is required to establish a reserve
and to deliver Acceptable Collateral to Custodian in accordance with the
Reserve Agreement (as each such term is defined below).
E. Custodian, as agent and bailee of ▇▇▇▇▇▇ ▇▇▇, will hold collateral that
Lender delivers to Custodian to secure Lender's obligations under the Reserve
Agreement.
F. ▇▇▇▇▇▇ Mae and Lender desire to provide in this Agreement the manner in
which ▇▇▇▇▇▇ ▇▇▇ and Lender will share in any losses that may arise with
respect to any Mortgage Loan, and for certain remedies of ▇▇▇▇▇▇ Mae if Lender
defaults under this Agreement or the Reserve Agreement or is in breach of the
Contract.
G. If Lender is a depository institution, Lender and ▇▇▇▇▇▇ ▇▇▇ intend that
this Agreement, together with the Contract and the Reserve Agreement, be a
"securities contract" as that term is defined in 11 U.S.C. Section 741, as
amended by 12 U.S.C. Section 1821(e)(8)(D)(ii), and that ▇▇▇▇▇▇ Mae have
the rights of a party to a Qualified Financial Contract (as defined in 12
U.S.C. Section 1821(e)(D)(i)) as set forth in 12 U.S.C. Section 1821, as
such sections may be amended from time to time.
H. It is the intention of the parties that this Agreement shall amend, and
constitute the consolidation and entire
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restatement of, all "Loss Sharing Agreements" delivered or assumed by Lender
prior to the effective date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth in this Agreement, and other good and valuable consideration, the receipt
and sufficiency of which is acknowledged, ▇▇▇▇▇▇ ▇▇▇ and Lender incorporate the
above recitals and agree as follows:
STATEMENT OF AMENDMENT AND CONSOLIDATION
This Agreement constitutes an amendment of each "Loss Sharing Agreement"
(i) executed and delivered by ▇▇▇▇▇▇ Mae and Lender with respect to Mortgage
Loans identified on Exhibit C (the "Existing Mortgage Loan Schedule" as defined
below) or (ii) assumed by Lender with the approval of ▇▇▇▇▇▇ ▇▇▇ with respect
to Mortgage Loans identified on Exhibit C. It is the intention of the parties
that this Agreement shall fully restate in their entirety, and effect the
consolidation of, all Loss Sharing Agreements delivered or assumed by Lender
prior to the effective date of this Agreement in the form of a single
agreement. Lender acknowledges that the representations and warranties made in
connection with Mortgage Loans set forth on the Existing Mortgage Loan Schedule
remain in full force and effect notwithstanding the execution of this
Agreement. Lender further agrees that ▇▇▇▇▇▇ Mae, after the effective date of
this Agreement shall amend Exhibit C to add Mortgage Loans, if any, delivered
by Lender prior to the effective date of this Agreement. ▇▇▇▇▇▇ ▇▇▇ shall
deliver a copy of revised Exhibit C to Lender.
ARTICLE 1
DEFINED TERMS
Capitalized terms in this Agreement shall have the following meanings:
Acceptable Collateral: Acceptable Collateral delivered to Custodian in
compliance with, and as defined in, the Reserve Agreement.
Asset Valuation Date: As defined in Section 6.02 of this Agreement.
Asset Value: The dollar amount with respect to a Mortgaged Property as
determined under Section 6.03 of this Agreement.
Borrower: The Person(s) obligated under a Note, Security Instrument and
other documents executed and delivered with respect to a Mortgage Loan.
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Business Day: Any day except a Saturday, Sunday or other day on which
▇▇▇▇▇▇ Mae is not open for business.
Commitment Date: The date of a commitment to purchase a Mortgage Loan
under Delegated Underwriting and Servicing as shown on the Commitment
Confirmation (as defined in the DUS Guide) that is sent by ▇▇▇▇▇▇ ▇▇▇ to Lender
with respect to that Mortgage Loan or, if there is a written commitment
agreement other than or in addition to a Commitment Confirmation between the
Lender and ▇▇▇▇▇▇ Mae with respect to that Mortgage Loan pursuant to which the
Loss Sharing Agreement will apply to such loan, the date such commitment
agreement is accepted by the Lender.
Contract: The Mortgage Selling and Servicing Contract between Lender and
▇▇▇▇▇▇ ▇▇▇, as amended by the Delegated Underwriting and Servicing Addendum,
and as may be further amended from time to time.
Custodian: The Custodian as defined in the Reserve Agreement.
Date of Default: As to any Mortgage Loan, the date of the first uncured
Payment Default or Performance Default.
Delinquency Advances: Any payments that Lender makes, in whole or in part,
out of its own funds and in accordance with Section 5.02 of this Agreement, in
amounts equal to principal and interest owed to ▇▇▇▇▇▇ Mae under a Mortgage
Loan, calculated at the Pass-Through Rate (not at the default interest rate),
solely pursuant to Lender's obligations to ▇▇▇▇▇▇ ▇▇▇ and not with respect to
the Borrower's obligations under that Mortgage Loan.
Delinquency Resolution Costs: As to any Mortgage Loan, any costs, limited
as provided below, paid or incurred by Lender or ▇▇▇▇▇▇ Mae: (i) to commence
and pursue foreclosure proceedings and appointment of a receiver, (ii) to
restructure a Mortgage Loan (except for costs associated with any Lender
Workout as discussed in the DUS Guide) on the related Mortgaged Property that
are directly related to such foreclosure proceedings or restructurings and
(iii) to commence and pursue collection (to the extent paid or incurred prior
to the Asset Valuation Date) under a guaranty or similar obligation, including
exceptions to non-recourse under the Mortgage Loan, under documents assigned to
or otherwise benefitting ▇▇▇▇▇▇ ▇▇▇. Delinquency Resolution Costs are limited
to reasonable attorneys' fees, court costs, recordation and transfer fees,
environmental assessments, appraisal costs (but only if obtained in connection
with bankruptcy proceedings or under the written direction of ▇▇▇▇▇▇ Mae) and
similar costs necessary to achieve foreclosure, appointment of a receiver, or
restructuring, all as approved by ▇▇▇▇▇▇ ▇▇▇.
Delivery Date: The date of delivery of a Mortgage Loan to ▇▇▇▇▇▇ Mae.
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DUS Guide: The ▇▇▇▇▇▇ ▇▇▇ Delegated Underwriting and Servicing Guide, as
amended or supplemented from time to time by ▇▇▇▇▇▇ Mae, including any DUS
Lender Memos, announcements or guide updates, providing for certain terms and
conditions applicable to Lender's sale and assignment of Mortgage Loans to
▇▇▇▇▇▇ ▇▇▇ and Lender's servicing obligations with respect to such Mortgage
Loans.
Event of Default: Any one or more of the events described in Article 7 of
this Agreement.
Existing Mortgage Loan Schedule: A schedule, in the form of Exhibit C,
setting forth, as of the effective date of this Agreement, all of the Mortgage
Loans previously delivered to ▇▇▇▇▇▇ Mae for which Lender has loss sharing
obligations, which schedule shall include any amendment made by ▇▇▇▇▇▇ ▇▇▇ to
add Mortgage Loans delivered by Lender prior to the effective date of this
Agreement.
Final Settlement of Loss: The determination by ▇▇▇▇▇▇ Mae, pursuant to
this Agreement (including either Exhibit B to this Agreement with respect to
any Mortgage Loan listed on Exhibit C or the Loss Sharing Formula in the DUS
Guide as in effect on the Commitment Date for any other Mortgage Loan), of the
final allocation of losses to be borne by ▇▇▇▇▇▇ ▇▇▇ and Lender in respect of a
defaulted Mortgage Loan and the payment of any amounts pursuant to such
determination.
5% Amount: As defined in Section 5.05 of this Agreement.
Governmental Body: Any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
Lender Deductible Amount: The amount calculated by multiplying the actual
unpaid principal balance of a Mortgage Loan on the last day immediately
preceding the Asset Valuation Date for such Mortgage Loan by the percentage
specified in Exhibit B for Mortgage Loans listed on Exhibit C or, for any other
Mortgage Loan, the Loss Sharing Formula in the DUS Guide as in effect on the
Commitment Date for such Mortgage Loan, for calculating the Lender Deductible
Amount as applicable to the Loss Level for that Mortgage Loan determined as
provided in this Agreement.
▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇: The three loss sharing designations
described as such in the DUS Guide.
Loss Level: Any of Level I, Level II or Level III, as applicable.
Loss Sharing Formula: With respect to any Mortgage Loan listed on Exhibit
C, the provisions set forth in Exhibit B, or, for any other Mortgage Loan, the
provisions of the DUS Guide (excluding
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the examples and procedures) in effect on the Commitment Date for such Mortgage
Loan, that set forth how the loss on a Mortgage Loan will be calculated and
allocated between ▇▇▇▇▇▇ Mae and the Lender and how the Final Settlement of
Loss will be determined.
Mortgage Loan: A multifamily mortgage loan that is or will be either
originated and sold by Lender to ▇▇▇▇▇▇ ▇▇▇ under Delegated Underwriting and
Servicing or with respect to which Lender has assumed or will assume the loss
sharing obligations under Delegated Underwriting and Servicing, which mortgage
loan upon delivery to ▇▇▇▇▇▇ Mae is evidenced by a Note and is secured by a
Security Instrument and other documents executed and delivered with respect to
that mortgage loan and with respect to which either a Mortgage Loan Certificate
has been or will be delivered or deemed delivered to ▇▇▇▇▇▇ ▇▇▇ or which is
listed on Exhibit C.
Mortgage Loan Certificate: A certificate, in the form of Exhibit A,
delivered by Lender to ▇▇▇▇▇▇ Mae with each Mortgage Loan delivered after the
effective date of this Agreement.
Mortgaged Property: The property that secures a Note, which consists of
the land, as described in the related Security Instrument, and all buildings
and other improvements, including the multifamily housing project, made to and
located on the land, together with all fixtures, equipment and furniture
affixed or attached thereto or located thereon, as more specifically provided
in the applicable Security Instrument.
Note: A promissory note, including any addendum thereto, that evidences
the debt secured by a Security Instrument and that Lender either has
transferred and endorsed to ▇▇▇▇▇▇ ▇▇▇ or with respect to which Lender has
assumed the loss sharing obligations, under Delegated Underwriting and
Servicing.
Payment Default: The failure of a Borrower to pay when due and in full any
payment(s) required with respect to the related Mortgage Loan, including, but
not limited to, principal, interest, late charges, default interest, prepayment
premium, escrows or other collateral accounts for taxes, insurance premiums and
assessments, other collateral accounts and the Replacement Reserve. For
example, scheduled principal and interest payments are past due on the second
day of a calendar month.
Payment Obligation: The obligation of Lender to make certain payments to
▇▇▇▇▇▇ Mae in accordance with the terms of the Contract, the DUS Guide and this
Agreement.
Person: An individual, corporation, partnership, association, trust,
limited liability company, or any other entity or organization, including a
Governmental Body or political subdivision or an agency or instrumentality
thereof.
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Performance Default: The failure of a Borrower to perform any promise or
covenant under the related Mortgage Loan other than a failure that constitutes
a Payment Default.
Reimbursement Base: The dollar amount calculated with respect to a
particular Mortgage Loan, as determined in accordance with Section 6.04 of
this Agreement and either Exhibit B with respect to any Mortgage Loan listed on
Exhibit C or, for any other Mortgage Loan, the Loss Sharing Formula in the DUS
Guide as in effect on the Commitment Date for that Mortgage Loan.
Release Date: The date on and as of which Lender shall be released from
its obligation to make any future Delinquency Advance or Servicing Advance and
to pay Delinquency Resolution Costs with respect to a particular Mortgage Loan,
which date shall be the earliest to occur of the following:
(i) The date on which such Mortgage Loan is paid in full, the
Borrower's obligations thereunder are fully paid and finally
released, and the preference period under applicable federal and
state bankruptcy laws has passed;
(ii) the date on which ▇▇▇▇▇▇ ▇▇▇, in its sole discretion, shall have
fully and finally released Lender in writing from its Payment
Obligations with respect to such Mortgage Loan;
(iii) the date upon which an Asset Valuation Date arises with respect
to such Mortgage Loan under Section 6.02; or
(iv) the date on which Lender repurchases such Mortgage Loan pursuant
to Section 5.04.
Replacement Reserve: Any reserve or collateral account that is established
or delivered by or on behalf of a Borrower and held by Lender or ▇▇▇▇▇▇ Mae in
connection with a Mortgage Loan for maintenance of the Mortgaged Property as
more specifically provided in an agreement between Lender and Borrower with
respect to such account.
Reserve Agreement: The Delegated Underwriting and Servicing Reserve
Agreement among ▇▇▇▇▇▇ ▇▇▇, Lender and Custodian, as such agreement may be
amended by the parties thereto from time to time.
Security Instrument: The deed of trust, deed to secure debt or mortgage,
including any rider thereto, that secures a Note and that Lender either has
transferred and assigned to ▇▇▇▇▇▇ Mae or with respect to which Lender has
assumed the loss sharing obligations, under Delegated Underwriting and
Servicing.
Servicing Advances: The payments Lender makes out of its own funds and in
accordance with Section 5.03 of this Agreement for
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taxes, assessments, insurance premiums and other items (other than principal
and interest) owed or expended with respect to a Mortgaged Property solely
pursuant to Lender's obligations to ▇▇▇▇▇▇ ▇▇▇ and not with respect to the
Borrower's obligations under the Mortgage Loan.
Total Lender Loss: As defined in Exhibit B for the Mortgage Loans listed
on Exhibit C or, for all other Mortgage Loans, in the Loss Sharing Formula in
the DUS Guide as in effect on the Commitment Date for each such Mortgage Loan.
ARTICLE 2
SALE OF MORTGAGE LOANS
Section 2.01. Conveyance of Mortgage Loans. In connection with the sale of
each Mortgage Loan by Lender and the purchase of such Mortgage Loan by ▇▇▇▇▇▇
Mae on and after the date Lender executes this Agreement, Lender will endorse
the related Note, and assign the related Security Instrument and other related
Mortgage Loan documents as required under the DUS Guide for delivery of that
Mortgage Loan to ▇▇▇▇▇▇ ▇▇▇. In each case, Lender shall deliver to ▇▇▇▇▇▇ Mae a
Mortgage Loan Certificate with respect to such Mortgage Loan.
Section 2.02. Loss Sharing. Notwithstanding the endorsement of each Note
by Lender "without recourse," Lender acknowledges and agrees that it shall be
liable for the payment of the Lender Deductible Amount, if any, and its
allocated share of the Reimbursement Base, Delinquency Resolution Costs and
other amounts applicable to each such Mortgage Loan, all as provided under this
Agreement, and otherwise shall be bound by and subject to all the terms and
provisions of this Agreement, the Contract, the Reserve Agreement and the DUS
Guide, and ▇▇▇▇▇▇ ▇▇▇ shall have the right to exercise all of its rights and
remedies against Lender under the same. Lender acknowledges and agrees that,
with respect to each Mortgage Loan it delivers to ▇▇▇▇▇▇ Mae, that it shall
deliver, and if it fails to so deliver, shall be deemed to have delivered, a
Mortgage Loan Certificate and that the representations and warranties set forth
in this Agreement with respect to Mortgage Loans will be applicable to each
such delivered Mortgage Loan. Lender further acknowledges and agrees that any
errors in or omissions from the Mortgage Loan Certificate with respect to a
Mortgage Loan shall not diminish in any respect Lender's obligations as
provided in this Agreement in respect of such Mortgage Loan.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LENDER
Lender represents and warrants to ▇▇▇▇▇▇ ▇▇▇ (a) on the date of execution
by Lender of this Agreement, and (b) on each Delivery Date that:
Section 3.01. No Consents. No consents or approvals of any Person are
required that have not been obtained for the execution, delivery and
performance of this Agreement by Lender.
Section 3.02. Existence and Power. Lender is the type of entity set forth
by the first paragraph of this Agreement duly organized, validly existing and
in good standing under the laws governing its creation and existence and has
all necessary corporate or partnership, as applicable, powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and to enter into this Agreement. If
applicable, each general partner of Lender (other than any natural Person who
is a general partner) is duly organized, validly existing and in good standing
under the laws governing its creation and existence and has all powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
Section 3.03. Authorization and Non-contravention. The execution, delivery
and performance by Lender of this Agreement are within Lender's corporate or
partnership, as applicable, power and have been duly authorized by all
necessary corporate or partnership, as applicable, action on the part of Lender
and, if applicable, any Person with an ownership interest in Lender whose
action is required and will not: (i) violate or contravene any law, regulation,
judgment, injunction, order, decree or other instrument currently binding on
Lender; or (ii) violate, contravene or constitute a default under any provision
of the governing documents of Lender or of any material agreement, contract,
mortgage or other instrument currently binding on Lender.
Section 3.04. Binding Effect. This Agreement constitutes a valid and
binding agreement of Lender enforceable against Lender in accordance with its
terms.
Section 3.05. Governmental Consents. No consent, approval, authorization
or order of any Governmental Body is required, and no filing need be made with
any Governmental Body, in connection with the execution, delivery and
performance by Lender of the transactions contemplated by this Agreement.
Section 3.06. Litigation. There are no actions, suits, or proceedings
pending or to the best knowledge of Lender threatened against it or, if
applicable, any general partner of Lender, in any court or before any Federal,
state, municipal or other governmental
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department or commission, board, bureau, agency or instrumentality that if
adversely determined will materially and adversely affect its business or
financial condition or the validity and enforceability of this Agreement or its
ability to perform in accordance with this Agreement.
Section 3.07. Eligible Lender. Lender is eligible to participate in
Delegated Underwriting and Servicing and is in material compliance with all of
the eligibility requirements set forth in the DUS Guide and the Contract.
Section 3.08. Compliance with Laws. Neither Lender nor, if applicable, any
general partner of Lender is in violation of any statute, rule or regulation of
any Governmental Body or any order of any court or arbitrator, the violation of
which, considered in the aggregate, could materially adversely affect the
business, operations or properties of Lender or, if applicable, any general
partner of Lender. if Lender is a depository institution, Lender has complied
with the requirements of 12 U.S.C. Section 1823(e), as amended from time to
time, in connection with the authorization, execution, delivery and retention
of all documents under Delegated Underwriting and Servicing.
ARTICLE 4
COVENANTS OF LENDER
Section 4.01. Performance of Obligations. Lender covenants to keep and
perform faithfully all of the covenants and undertakings contained in this
Agreement, the Reserve Agreement, the DUS Guide and the Contract.
Section 4.02. Good Standing. Lender covenants to maintain its good
standing under all applicable laws and regulations and to commit no act that
would alter the status of Lender as represented in Section 3.02 above. In the
event Lender has not maintained such status, it shall immediately notify ▇▇▇▇▇▇
▇▇▇ to such effect.
Section 4.03. Compliance with Laws. Neither Lender nor, if applicable, any
general partner of Lender will violate any statute, rule or regulation of any
Governmental Body or any order of any court or arbitrator, the violation of
which, considered in the aggregate, could materially and adversely affect the
business, operations or properties of Lender or, if applicable, any general
partner of Lender. Lender agrees to forward, immediately upon receipt, any
notices it receives of any such violation or non-compliance. If Lender is a
depository institution, Lender will comply with the requirements of 12 U.S.C.
Section 1823(e), as amended from time to time, in connection with the
authorization, execution and delivery of all documents under Delegated
Underwriting and Servicing.
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Section 4.04. Agreement as Official Record of Lender. If Lender is a
depository institution, Lender covenants that this Agreement (including the
Mortgage Loan Certificates and the Exhibits and amendments to this Agreement)
is, and will be maintained continuously as, an official record of Lender as
contemplated in 12 U.S.C. Section 1823(e)(4), as amended from time to time.
ARTICLE 5
LENDER'S SERVICING OF MORTGAGE LOANS
Section 5.01. Compliance with Delegated Underwriting and Servicing Guide;
Delinquency Resolution Costs. Lender shall be responsible for servicing each
Mortgage Loan in accordance with the terms and provisions set forth in this
Agreement, the DUS Guide and the Contract. Lender shall pay Delinquency
Resolution Costs as provided in this Agreement.
Section 5.02. Monthly Payments Equal to Principal and Interest;
Delinquency Advances. Whether or not any Borrower pays to Lender the full
amount due under a Mortgage Loan, Lender, subject to Section 5.05 (if
applicable), will remit to ▇▇▇▇▇▇ Mae monthly amounts equal to all principal
and interest then owed under each Mortgage Loan in the manner and at the time
Lender is required to make remittances under the DUS Guide. On and after the
Release Date with respect to a Mortgage Loan, Lender shall not be obligated to
make any future Delinquency Advances for that Mortgage Loan. Lender's agreement
to make Delinquency Advances in respect of a Mortgage Loan is a part of
Lender's loss sharing obligations under this Agreement, constitutes a separate
contractual obligation of Lender to ▇▇▇▇▇▇ ▇▇▇ and is not a guarantee or surety
of any obligation of the related Borrower.
Section 5.03. Servicing Advances. Whether or not Borrower makes payments
to Lender, Lender shall pay when due (and prior to the imposition of any
penalties or charges), subject to Section 5.05 (if applicable), amounts equal
to (i) all taxes and assessments against each Mortgaged Property, (ii) all
insurance premiums for insurance for each Mortgaged Property to insurance
carrier(s) acceptable to ▇▇▇▇▇▇ Mae, in accordance with the DUS Guide, and
(iii) any other payment, as determined by ▇▇▇▇▇▇ Mae, necessary to preserve and
protect the Mortgaged Property or to exercise any legal or equitable remedies
(other than foreclosure) against the Borrower or the Mortgaged Property
(including attorney, appraisal or other professional fees) or any other
obligations relating to the Mortgaged Property as set forth in the Mortgage
Loan documents. After a Date of Default with respect to any Mortgage Loan,
Lender remains obligated to pay when due (and prior to the imposition of any
penalties, or charges), subject to Section 5.05 (if applicable), the amounts
set forth in the first sentence of this Section 5.03; provided, however, Lender
shall not be
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required to make Servicing Advances to fund escrows or custodial accounts for
taxes, assessments and insurance premiums or to make payments to the
Replacement Reserve; provided, further, however, that the Lender must apply any
partial payments (including any net operating income from the Mortgaged
Property that, under applicable state law, is then available for use by ▇▇▇▇▇▇
▇▇▇) in the manner specified in Sections 5.06 and 5.07. On and after the
Release Date with respect to a Mortgage Loan, Lender shall not be obligated to
make any future Servicing Advances for that Mortgage Loan.
Section 5.04. Repurchase of Mortgage Loans. Lender shall have the right to
repurchase any Mortgage Loan following the Borrower's first uncured Payment
Default, provided that at least 120 days have elapsed since the date of the
Borrower's delinquency under such Mortgage Loan. The repurchase price shall be
equal to (i) the unpaid principal balance of such Mortgage Loan as of the date
of repurchase, plus (ii) the amount of any accrued and unpaid interest and
other sums (except late charges and default interest) then due under such
Mortgage Loan, plus (iii) for any Mortgage Loan purchased for cash by ▇▇▇▇▇▇
Mae, the amount of any prepayment premium, calculated using the applicable
Pass-Through Rate (as defined in the DUS Guide) rather than the applicable Note
rate, that would be payable by the related Borrower if such Mortgage Loan were
prepaid on such date, or for any Mortgage Loan purchased by issuance of a
▇▇▇▇▇▇ ▇▇▇ MBS using the applicable MBS prepayment premium formula in Exhibit B
for all Mortgage Loans listed on Exhibit C or in the Loss Sharing Formula in
the DUS Guide as in effect on the Commitment Date for any other Mortgage Loan.
Section 5.05. Interim Loss Sharing Adjustments.
(a) Provided Lender is not in default under the Contract, the DUS Guide,
the Reserve Agreement or this Agreement, Lender may request the application of
the interim loss sharing adjustment set forth in Section 5.05(g) below with
respect to any Mortgage Loan then at Loss Level I if the aggregate amount of
all Delinquency Advances, Servicing Advances, and any Delinquency Resolution
Costs made by Lender and determined to be allowable by ▇▇▇▇▇▇ Mae equals or
exceeds, or is in good faith anticipated by Lender to equal or exceed, 5% of
the actual unpaid principal balance of such Mortgage Loan on the Date of
Default ("5% Amount").
(b) Lender must make such request to ▇▇▇▇▇▇ ▇▇▇ at least 60 days prior to
the date Lender requests that the interim loss sharing adjustment become
effective, but Lender may give such notice to ▇▇▇▇▇▇ Mae at least 60 days prior
to the date on which Lender in good faith estimates that the 5% Amount will
have been expended by Lender.
(c) In connection with any interim loss sharing adjustment request,
including any reimbursement request, Lender shall submit information to ▇▇▇▇▇▇
▇▇▇ to document all of the payments made by
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the Borrower on, and the Lender with respect to, such Mortgage Loan and any
additional information ▇▇▇▇▇▇ Mae may request.
(d) If Lender's request that an interim loss sharing adjustment be made is
submitted prior to the time Lender actually expends the 5% Amount, Lender must
provide a supplemental accounting to ▇▇▇▇▇▇ ▇▇▇ as required under the DUS
Guide.
(e) After review of the information submitted by Lender, if (i) ▇▇▇▇▇▇ Mae
concurs with Lender's determination that the 5% Amount has been expended, (ii)
the Loss Level for that Mortgage Loan remains at Level I and (iii) Lender is
not in default under the Contract, the DUS Guide, the Reserve Agreement or this
Agreement, then ▇▇▇▇▇▇ ▇▇▇ shall deliver to Lender the consent set forth in
Exhibit D with respect to that Mortgage Loan.
(f) If, on the Business Day prior to the initiation of the interim loss
sharing adjustment, payments by Lender with respect to Delinquency Advances,
Servicing Advances, and Delinquency Resolution Costs determined to be allowable
by ▇▇▇▇▇▇ Mae exceed the 5% Amount, then ▇▇▇▇▇▇ ▇▇▇ will reimburse Lender for
75% of the amount of the excess above the 5% Amount within 60 days of the date
▇▇▇▇▇▇ Mae confirms that the 5% Amount has been exceeded.
(g) The following provisions shall apply on and after the effective date
set forth in the consent delivered by ▇▇▇▇▇▇ ▇▇▇ to Lender:
(i) Lender's obligation to make Delinquency Advances shall be 25% of
the amount Lender would otherwise be required under this
Agreement and the DUS Guide to advance or pay in respect of such
Mortgage Loan.
(ii) Lender shall pay when due (and prior to the imposition of any
penalty or charges) all amounts with respect to taxes,
assessments and insurance premiums with respect to the related
Mortgaged Property. After having paid all amounts when due with
respect to such taxes, assessments and insurance premiums,
Lender, no more frequently than once a calendar month for all
Mortgage Loans for which Lender has been authorized for Interim
Loss Sharing Adjustment, may request that ▇▇▇▇▇▇ Mae reimburse
Lender for up to 75% of such payments. Without limiting Lender's
obligations to make payments as provided in the first sentence
of this Section 5.05(g)(ii), Lender shall not be required to
fund escrows or custodial accounts for taxes, assessments and
insurance premiums and to make payments to the Replacement
Reserve but Lender must apply any partial payments in the manner
specified in Section 5.07.
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(iii) Lender shall pay Servicing Advances, other than those set forth
in (ii) above, promptly as required by the DUS Guide or as
directed by ▇▇▇▇▇▇ ▇▇▇ and, no more frequently than once a
calendar month for all Mortgage Loans for which Lender has been
authorized for Interim Loss Sharing Adjustment, may request that
▇▇▇▇▇▇ Mae reimburse Lender for up to 75% of such other
allowable Servicing Advances.
(iv) Lender shall pay Delinquency Resolution Costs and, no more
frequently than once a calendar month for all Mortgage Loans for
which Lender has been authorized for Interim Loss Sharing
Adjustment, may request that ▇▇▇▇▇▇ ▇▇▇ reimburse it for 75% of
such Delinquency Resolution Costs.
Reimbursement made by ▇▇▇▇▇▇ Mae under (ii), (iii) or (iv) of this Section
5.05(g) shall be calculated on amounts in excess of the 5% Amount.
(h) Lender agrees that its obligations with respect to the Total Lender
Loss and Final Settlement of Loss with respect to a Mortgage Loan shall not be
reduced by any Interim Loss Sharing Adjustment applicable to such Mortgage Loan
and that its obligations in respect of any other Mortgage Loan shall not be
modified by virtue of the application of this Section 5.05 to a specific
Mortgage Loan.
(i) No Mortgage Loan at Level II or Level III is eligible for the interim
loss sharing adjustment.
Section 5.06. Unavailability of Net Operating Income. Lender's obligation
to make Delinquency Advances and Servicing Advances shall not be reduced by net
operating income with respect to a Mortgaged Property that, under the
provisions of applicable state law, is not then available for use by ▇▇▇▇▇▇
▇▇▇.
Section 5.07. Partial Payments. Lender must apply any partial payments
made by or on behalf of a Borrower in the manner specified in the applicable
Mortgage Loan documents and the DUS Guide.
ARTICLE 6
LOSS SHARING
Section 6.01. General. In the event of an uncured Payment Default with
respect to a Mortgage Loan (unless Lender elects to repurchase such Mortgage
Loan pursuant to Section 5.04), ▇▇▇▇▇▇ Mae shall determine the amount of any
loss in respect of such Mortgage Loan and the allocation thereof between Lender
and ▇▇▇▇▇▇ ▇▇▇ in
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accordance with this Article 6. ▇▇▇▇▇▇ Mae shall determine the loss settlement
by calculating and allocating the Reimbursement Base and other amounts
applicable to such Mortgage Loan (as provided under Section 6.04 below), based
on the determination of the Asset Valuation Date (as provided under Section
6.02 below) and the Asset Value (as provided under Section 6.03 below).
Section 6.02. Asset Valuation Date. With respect to any Mortgage Loan, the
Asset Valuation Date shall be the earliest to occur of the dates on which:
(i) Title to the related Mortgaged Property is vested in ▇▇▇▇▇▇ ▇▇▇,
whether as a result of a judicial foreclosure sale, a
nonjudicial foreclosure sale or a deed in lieu of foreclosure,
but without regard to any applicable equity of redemption right
or statutory redemption period;
(ii) ▇▇▇▇▇▇ Mae receives the proceeds of any regularly conducted
foreclosure sale in respect of such Mortgage Loan;
(iii) Lender gives notice to ▇▇▇▇▇▇ ▇▇▇ requesting that the Asset
Value of such Mortgage Loan be calculated after (A) a Payment
Default has not been cured, (B) Lender has recommended to ▇▇▇▇▇▇
Mae, in accordance with the requirements set forth in the DUS
Guide, that ▇▇▇▇▇▇ ▇▇▇ institute foreclosure or other lien
enforcement proceedings, as applicable, under the Security
Instrument and (C) ▇▇▇▇▇▇ Mae has rejected Lender's
recommendation;
(iv) Lender or ▇▇▇▇▇▇ ▇▇▇ gives notice to the other party requesting
that the Asset Value of such Mortgage Loan be calculated,
provided, however, such notice may be given no earlier than two
years after the Date of Default;
(v) A court of competent jurisdiction confirms a plan of
reorganization affecting the owner of the Mortgaged Property
under Chapter 11 of the Federal Bankruptcy Code, as then in
effect, if ▇▇▇▇▇▇ Mae or Lender gives notice to the other party
specifying that the Asset Value of such Mortgage Loan be
calculated; or
(vi) ▇▇▇▇▇▇ ▇▇▇ receives the proceeds of any sale of the Mortgaged
Property directed by a court of competent jurisdiction in a
bankruptcy proceeding.
Section 6.03. Determination of Asset Value. The Asset Value of a Mortgage
Loan shall be the dollar amount equal, as applicable, to: (i) the proceeds of
the sale to a third party that is not ▇▇▇▇▇▇ Mae, Lender or an entity
affiliated with Lender of the applicable Mortgaged Property at any regularly
conducted foreclosure sale or at any sale directed by a court of competent
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jurisdiction in a bankruptcy proceeding; or (ii) the appraised value of such
Mortgaged Property, as of the Asset Valuation Date, as determined by "as-is"
appraisals conducted in accordance with the terms of this Agreement. ▇▇▇▇▇▇ ▇▇▇
and Lender shall each order a separate appraisal to be completed within 60 days
of the Asset Valuation Date. Each such appraisal shall value the Mortgaged
Property as of the Asset Valuation Date and shall be completed by a qualified
independent fee appraiser having experience in the area where the Mortgaged
Property is located and otherwise in accordance with the requirements and
procedures set forth in the DUS Guide for appraisals required prior to delivery
of a Mortgage Loan to ▇▇▇▇▇▇ Mae; provided, however, that any such appraisal
shall be an "as is" appraisal, as defined and required for this purpose by the
DUS Guide. If the lower of the two appraised values differs from the higher of
the two appraised values by 5% or less, then the Asset Value will be the
average of the two appraised values. If the two appraised values differ by more
than 5%, the two appaisers cannot agree on a value, and ▇▇▇▇▇▇ ▇▇▇ and Lender
cannot agree on a value, then ▇▇▇▇▇▇ Mae and Lender shall select a third
appraiser, who will be engaged and paid by ▇▇▇▇▇▇ ▇▇▇, to conduct an
independent appraisal within 60 days and value the Mortgaged Property as of the
Asset Valuation Date in accordance with the requirements and procedures
described in this Section 6.03. The third appraisal shall be binding upon
Lender and ▇▇▇▇▇▇ Mae. If Lender fails to cause an appraisal to be conducted as
provided above, the appraised value of a Mortgaged Property shall be determined
exclusively by an appraiser selected by ▇▇▇▇▇▇ ▇▇▇ and otherwise using the
procedures set forth in this Section 6.03, and Lender waives any right to
challenge such valuation. In such event, Lender shall have no right to obtain a
copy of the appraisal.
Section 6.04. Calculation and Allocation of Loss Sharing. The
Reimbursement Base, Lender Deductible Amount, Delinquency Resolution Costs and
all other items used in the calculation of Total Lender Loss and determination
of Final Settlement of Loss applicable to any Mortgage Loan shall be calculated
and, if applicable, allocated between Lender and ▇▇▇▇▇▇ Mae are in accordance
with the applicable Loss Level for such Mortgage Loan as provided in (a)
Exhibit B for all Mortgage Loans listed on Exhibit C, or (b) for all other
Mortgage Loans, the Loss Sharing Formula in the DUS Guide in effect on the
Commitment Date of such Mortgage Loan.
Section 6.05. Final Settlement of Loss. Promptly after ▇▇▇▇▇▇ Mae's
determination of the loss settlement applicable to a Mortgage Loan under this
Article 6, ▇▇▇▇▇▇ Mae shall notify Lender of the results of such determination
and the amount payable by ▇▇▇▇▇▇ ▇▇▇ or Lender to the other party, as
applicable. If amounts are owed to ▇▇▇▇▇▇ Mae, Lender agrees to make payment of
any such amounts by wire transfer of immediately available funds within five
(5) Business Days of the date of ▇▇▇▇▇▇ Mae's notice to Lender of
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such loss settlement determination. So long as Lender is not in default under
the Contract, the DUS Guide, the Reserve Agreement or this Agreement, ▇▇▇▇▇▇
Mae agrees to make payment to Lender of any amounts owed to Lender by wire
transfer within five (5) Business Days of ▇▇▇▇▇▇ Mae's determination of the
related loss settlement.
Section 6.06. Third Party Assumption of Lender's Share of Loss. No Person
that is not a party to this Agreement shall assume, insure or participate in
ail or any portion of Lender's share of the loss applicable to any Mortgage
Loan under this Agreement without ▇▇▇▇▇▇ Mae's prior written approval, and any
attempt to so assume, insure or participate shall be void.
Section 6.07. Determination of Loss Level. The Loss Level for each
Mortgage Loan shall be Level I unless (a) pursuant to Section 8.01(d) ▇▇▇▇▇▇
▇▇▇ determines that Level II or Level III shall be applicable or (b) Lender
elects, with the prior approval of ▇▇▇▇▇▇ Mae (which approval may be given by a
provision of the DUS Guide or otherwise), to set the Loss Level at Level II or
Level III. The Loss Level at which the loss sharing calculations and
allocations will be made with respect to a Mortgage Loan is the Loss Level on
the Date of Default for such Mortgage Loan; provided, however, that if:
(i) The Date of Default occurs within 365 days after ▇▇▇▇▇▇ Mae's
purchase of a Mortgage Loan, then the Loss Level may be adjusted
by ▇▇▇▇▇▇ Mae as provided in this Agreement within 180 days
after such Date of Default; or
(ii) ▇▇▇▇▇▇ ▇▇▇ determines that there was fraud, material
misrepresentation or gross negligence by the Lender, its
officers, agents or employees, in the Lender's underwriting,
closing, delivery or servicing of that Mortgage Loan, then the
Loss Level may be adjusted by ▇▇▇▇▇▇ ▇▇▇ as provided in this
Agreement at any time.
Section 6.08. Effect of Workouts on Loss Sharing. In the event of a
conflict between this Agreement and an existing written agreement between the
Lender and ▇▇▇▇▇▇ Mae regarding the loss sharing effects of a Mortgage Loan
workout with a Borrower, the terms of the applicable workout-related agreement
shall govern. After the effective date of this Agreement, any new
workout-related agreement between the Lender and ▇▇▇▇▇▇ ▇▇▇ regarding the loss
sharing effects of a Mortgage Loan workout with a Borrower shall be subject to
this Agreement except as specifically modified by the applicable
workout-related agreement.
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ARTICLE 7
EVENTS OF DEFAULT
Section 7.01. Events of Default. Any one or more of the following acts or
occurrences shall constitute an Event of Default under this Agreement:
(a) Any representation, warranty or statement made by Lender to
▇▇▇▇▇▇ Mae that was incorrect in any material respect when made;
(b) Lender's material failure to underwrite and deliver any Mortgage
Loan in accordance with the terms and conditions of the DUS
Guide;
(c) Lender's material failure in connection with any Mortgage Loan
to comply with the environmental hazards management and
assessment requirements and procedures set forth in the DUS
Guide;
(d) Lender's material failure to service any Mortgage Loan in
accordance with the terms and conditions of the DUS Guide;
(e) Lender's material failure to observe or perform any covenant or
agreement contained in this Agreement including, without
limitation, the payment of any amount required to be made by
Lender;
(f) Lender's insolvency or, if Lender is a depository institution,
the appointment of a conservator or receiver;
(g) Lender's acts or omissions in the performance of any of Lender's
obligations under this Agreement that constitute (A) fraud or
(B) negligence that has a material, adverse effect on ▇▇▇▇▇▇
Mae's rights or interests;
(h) Lender's sale or transfer of Lender's obligation to service a
Mortgage Loan without obtaining ▇▇▇▇▇▇ Mae's prior written
approval;
(i) Lender's material breach of the Contract or the DUS Guide;
(j) An Event of Default under the Reserve Agreement; or
(k) If a Lender is a depository institution for which a conservator
or receiver has been appointed, the failure of such conservator
or receiver to affirm the Contract within a reasonable period
following the appointment of such conservator or receiver.
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ARTICLE 8
REMEDIES
Section 8.01. Remedies Available to ▇▇▇▇▇▇ ▇▇▇. Upon the occurrence of any
Event of Default under this Agreement, ▇▇▇▇▇▇ Mae may take, at its option, any
one or more of the following steps:
(a) Require Lender to cure the default within a designated period of
time (which, in the case of a non-monetary default, shall be no
less than 30 days);
(b) Transfer the right of Lender to service any or all of the
Mortgage Loans without payment of any termination fee under the
Contract;
(c) Require Lender to repurchase each Mortgage Loan as to which the
Event of Default specifically relates at a price equal to (i)
the unpaid principal balance of such Mortgage Loan as of the
date of ▇▇▇▇▇▇ Mae's tender of repurchase, plus (ii) the amount
of any accrued and unpaid interest and other sums (other than
late charges and default interest) then due under such Mortgage
Loan, plus (iii) for any Mortgage Loan purchased for cash by
▇▇▇▇▇▇ Mae, the amount of the prepayment premium, calculated
using the applicable Pass-Through Rate rather than the
applicable Note rate, that then would be payable by the related
Borrower if such Mortgage Loan were prepaid on the date of
Lender's repurchase, or for any Mortgage Loan purchased by
issuance of a ▇▇▇▇▇▇ ▇▇▇ MBS using the applicable MBS prepayment
premium formula in Exhibit B for all Mortgage Loans listed on
Exhibit C or in the Loss Sharing Formula in the DUS Guide as in
effect on the Commitment Date for any other Mortgage Loan;
(d) Require the Loss Level applicable to any Mortgage Loan to which
an Event of Default specifically relates be increased from Level
I to Level II or Level III or from Level II to Level III;
(e) Require Lender to deliver to Custodian, for a specified period
of time, servicing income from each Mortgage Loan as to which an
Event of Default relates or, at ▇▇▇▇▇▇ Mae's option, servicing
income from all Mortgage Loans delivered to ▇▇▇▇▇▇ ▇▇▇ and
currently being serviced by Lender, which servicing income
shall, after the date of notice of such requirement, be
delivered to Custodian and held and applied as provided in the
Reserve Agreement;
(f) Draw upon, liquidate or otherwise realize against any collateral
held under the Reserve Agreement and retain and apply such
proceeds as provided in the Reserve
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Agreement and require Lender to deliver Acceptable Collateral
under the Reserve Agreement in an amount equal to the amount
drawn upon, liquidated or realized against; or
(g) Take any other action at law or in equity that may appear
necessary or desirable to enforce any obligation, covenant or
agreement of Lender under this Agreement.
Section 8.02. Remedies Not Exclusive. Unless otherwise expressly provided,
no remedy conferred in this Agreement or reserved to ▇▇▇▇▇▇ Mae is intended to
be exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
in this Agreement or now or hereafter existing at law or in equity.
Section 8.03. Delay or Omission Not Waiver. No delay or omission of ▇▇▇▇▇▇
▇▇▇ to exercise any right or remedy under this Agreement upon an Event of
Default (except a delay or omission pursuant to a written waiver) shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
acquiescence therein. Every right and remedy provided by this Article 8 or by
law to ▇▇▇▇▇▇ Mae may be exercised from time to time, and as often as may be
deemed expedient by ▇▇▇▇▇▇ ▇▇▇. In order to entitle ▇▇▇▇▇▇ Mae to exercise any
remedy reserved to it in this Article 8, it shall not be necessary to give any
notice, other than such notice as may be required by this Article 8.
Section 8.04. Restoration of Rights and Remedies. If ▇▇▇▇▇▇ ▇▇▇ shall have
instituted any proceeding to enforce any right or remedy under this Agreement
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to ▇▇▇▇▇▇ Mae, then and in every such case ▇▇▇▇▇▇ ▇▇▇
and Lender, subject to any determination in their proceeding, shall be restored
severally and respectively to their former positions, and thereafter all rights
and remedies of ▇▇▇▇▇▇ Mae shall continue as though no such proceeding had been
instituted.
ARTICLE 9
MISCELLANEOUS
Section 9.01. Benefit of Agreement. Any reference to any of the parties to
this Agreement shall be deemed to include the successors and assigns of such
party. All covenants and agreements contained in this Agreement are for the
benefit of the Lender and ▇▇▇▇▇▇ ▇▇▇ and their respective successors and
assigns only, and nothing expressed or implied in this Agreement is intended to
be for the benefit of any other Person. It is the express intention of the
parties to this Agreement that Lender's obligations to make Delinquency
Advances and Servicing Advances and to pay Delinquency Resolution Costs in
connection with its loss sharing obligations
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under this Agreement are solely for the benefit of ▇▇▇▇▇▇ Mae and its
successors and assigns. The payment by Lender of any Delinquency Advance,
Servicing Advance or Delinquency Resolution Cost shall not release, diminish or
relieve the obligation of the related Borrower from making all payments
required by Borrower under the related Mortgage Loan.
Section 9.02. Notices. Each notice, request, instruction demand, consent,
or other approval (collectively, "notices" and singly "notice") given under
this Agreement shall be in writing to the other party at its address set forth
on the signature page of this Agreement or at such other address as such party
may designate by notice to the other party and shall be deemed given (a) three
(3) Business Days after mailing, by certified or registered U.S. mail, return
receipt requested, postage prepaid, (b) one (1) Business Day after delivery,
fee prepaid, to a national overnight delivery service (such as Federal Express,
Purolator Courier, or U.P.S. Next Day Air), (c) when delivered, if personally
delivered with proof of delivery thereof, or (d) on the date of transmission of
notice sent by facsimile machine if sent on a Business Day, otherwise on the
next Business Day. If notice is sent by facsimile machine, a copy also must be
sent by one of the methods set forth in (a) - (c) above, but notice will be
deemed given as provided in clause (d) above.
Each party to this Agreement agrees that it will not refuse or reject
delivery of any notice given under this Agreement, that it will acknowledge, in
writing, the receipt of the same upon request by the other party and that any
notice rejected or refused by it shall be deemed for all purposes of this
Agreement to have been received by the rejecting party on the date so refused
or rejected, as conclusively established by the records of the U.S. Postal
Service or the delivery or courier service.
Section 9.03. Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable, such provision shall be severable from the
remaining provisions of this Agreement, and the validity, illegality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. If any covenant, stipulation, obligation or agreement of
Lender contained in this Agreement shall for any reason be held to be in
violation of law, then such covenant, stipulation, obligation or agreement
shall be deemed to be the covenant, stipulation, obligation or agreement of
Lender to the full extent permitted by law.
Section 9.04. Multiple Counterparts. This Agreement may be simultaneously
executed in multiple counterparts, all of which shall constitute one and the
same instrument and each of which shall be, and shall be deemed to be, an
original.
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Section 9.05. Termination of Delegated Underwriting and Servicing Master
Loss Sharing Agreement. Subject to the provisions of Section 8.01, this
Agreement shall terminate on the date that both of the following shall have
occurred: (i) Lender shall have completely and fully satisfied all of its
Payment Obligations with respect to all Mortgage Loans and no Mortgage Loans
remain outstanding; and (ii) Lender ceases to be an approved lender under
Delegated Underwriting and Servicing under the Contract.
Section 9.06. Survival. The terms and provisions of this Agreement shall
continue unimpaired without regard to any subsequent conveyance of any Mortgage
Loan by ▇▇▇▇▇▇ ▇▇▇ to a trust formed by or on behalf of ▇▇▇▇▇▇ Mae for purposes
of selling ownership interests in such Mortgage Loan under ▇▇▇▇▇▇ Mae's
programs relating to Mortgage-Backed Securities. All covenants,
representations, warranties and obligations of Lender set forth in this
Agreement shall survive any subsequent conveyance by ▇▇▇▇▇▇ Mae of a Mortgage
Loan. The obligations of Lender under Article 6 shall survive the termination
of this Agreement (or the transfer of servicing of all or any of the Mortgage
Loans).
Section 9.07. Relationship to DUS Guide. In the event of an inconsistency
between the DUS Guide and this Agreement, the provisions of this Agreement
shall govern.
Section 9.08. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
FEDERAL LAWS OF THE UNITED STATES, AND, TO THE EXTENT THERE IS NO APPLICABLE
FEDERAL LAW, THE LAWS OF THE DISTRICT OF COLUMBIA. LENDER AND ▇▇▇▇▇▇ ▇▇▇ SUBMIT
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF COLUMBIA AND OF ANY DISTRICT OF COLUMBIA COURT SITTING IN THAT
JURISDICTION FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. LENDER AND ▇▇▇▇▇▇ MAE
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. LENDER AND
▇▇▇▇▇▇ ▇▇▇ IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties to this Agreement have caused it to be
duly executed by their duly authorized officers or representatives. This
Agreement shall be effective as of one day after the date of its execution by
▇▇▇▇▇▇ Mae.
FEDERAL NATIONAL MORTGAGE ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President for
Multifamily Activities
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Multifamily Activities
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Date: As of March 1, 1994
--------------------
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive officer
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Date: February 14, 1994
------------------
22
27
EXHIBIT A
MORTGAGE LOAN CERTIFICATE
This Mortgage Loan Certificate ("Certificate") forms an integral part of
the Master Loss Sharing Agreement (the "Agreement") between the Federal
National Mortgage Association and the Lender named below as in effect on the
date of the Certificate.
This Certificate is designed to identify the Mortgage Loan described below
as a Mortgage Loan to which the Agreement relates. By delivery to ▇▇▇▇▇▇ ▇▇▇ of
the Mortgage Loan identified below, the Lender agrees that the representations
and warranties set forth in the Agreement with respect to Mortgage Loans shall
be applicable to the Mortgage Loan described in this Certificate. Lender
certifies to ▇▇▇▇▇▇ Mae that the following description of the Mortgage Loan is
true and correct in all respects.
DESCRIPTION OF MORTGAGE LOAN
▇▇▇▇▇▇ ▇▇▇ Commitment/Pool Number:
--------------------------
Commitment Date:
--------------------------------------------
Borrower:
---------------------------------------------------
Project Name:
-----------------------------------------------
Original Principal Balance:
---------------------------------
Gross Note Rate:
--------------------------------------------
Maturity Date:
----------------------------------------------
Lender is delivering this Mortgage Loan with an initial Loss Sharing Level of
___________.
Lender:
---------------------------------
----------------------------------------
a
---------------------------------------
By:
-------------------------------------
Printed Name:
---------------------------
Title:*
---------------------------------
Date:
-----------------------------------
* Must be signed by the President or a Vice President or by a General
Partner with authority to bind Lender.
A-1
28
EXHIBIT B
LOSS SHARING FORMULA
PART VII - LOSS SHARING
This Part -- Loss Sharing -- describes the procedure for determining the
Lender's and ▇▇▇▇▇▇ Mae's respective shares of any loss that occurs on a
Mortgage Loan sold to ▇▇▇▇▇▇ Mae under Delegated Underwriting and Servicing.
First, the Reimbursement Base is calculated and allocated between ▇▇▇▇▇▇ ▇▇▇
and the Lender. Next, the Lender Deductible Amount is calculated. Finally, an
accounting is made to determine the required financial settlement and the Final
Settlement of Loss occurs.
This part consists of eight chapters:
Chapter 1 Total Lender Loss
Chapter 2 - Calculation of Reimbursement Base
Chapter 3 - Allocation of the Reimbursement Base
Chapter 4 - Lender Deductible Amount
Chapter 5 - Final Settlement of Loss
Chapter 6 - Accounting for Additional Collateral and Any
Property Funds Held by Lender
Chapter 7 - Examples
Chapter 8 - Procedures
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29
CHAPTER 1. TOTAL LENDER LOSS
SECTION 101. TOTAL LENDER LOSS
"Total Lender Loss" with respect to a Mortgage Loan means the sum of:
(i) The Lender's allocated share of the Reimbursement Base as set
forth in Part VII, Chapters 2 and 3;
(ii) The Lender Deductible Amount described in Part VII, Chapter 4,
Section 401;
(iii) The one-third portion of the total Delinquency Resolution Costs
that is not included in the Reimbursement Base;
(iv) Any amounts attributable to Missing Collateral (as set forth in
Part VII, Chapter 2); and
(v) Costs related to a Lender Workout, but the sum of (i), (ii) and
(iii) is subject to the limitation set forth in Section 102
below.
For MBS/DUS loans, payment of the Guaranty Fee as provided in Part XI is
an obligation of Lender and is not part of the loss sharing calculation.
SECTION 102. LIMITATION ON TOTAL LENDER LOSS
The sum of the amounts listed in Section 101(i), (ii), and (iii) above
with respect to a Mortgage Loan may never exceed the amount calculated by
multiplying the original principal balance of that Mortgage Loan by the maximum
lender loss percentage shown below for the Loss Level on the Date of Default
for the applicable Mortgage Loan:
Loss Level at Maximum Lender Loss
Date of Default Percentage
--------------- -------------------
I 20%
II 30%
III 40%
SECTION 103. DEFINED TERMS
For purposes of this Part VII (and, unless a different definition is
otherwise provided in the Glossary, for purposes of the Guide), the following
definitions are applicable:
(2/4/94)
30
Asset Valuation Date: As defined in the Loss Sharing Agreement, with
respect to any Mortgage Loan, the Asset Valuation Date shall be the earliest to
occur of the dates on which:
(i) Title to the related Mortgaged Property is vested in ▇▇▇▇▇▇ Mae,
whether as a result of a judicial foreclosure sale, a
non-judicial foreclosure sale or a deed-in-lieu of foreclosure,
but without regard to any applicable equity of redemption right
or statutory redemption period;
(ii) ▇▇▇▇▇▇ ▇▇▇ receives the proceeds of any regularly conducted
foreclosure sale in respect of such Mortgage Loan;
(iii) Lender gives notice to ▇▇▇▇▇▇ Mae requesting that the Asset
Value of such Mortgage Loan be calculated after (A) a Payment
Default has not been cured, (B) Lender has recommended to ▇▇▇▇▇▇
Mae, in accordance with the requirements set forth in the DUS
Guide, that ▇▇▇▇▇▇ ▇▇▇ institute foreclosure or other lien
enforcement proceedings, as applicable, under the Security
Instrument and (C) ▇▇▇▇▇▇ Mae has rejected Lender's
recommendation;
(iv) Lender or ▇▇▇▇▇▇ ▇▇▇ gives notice to the other party requesting
that the Asset Value of such Mortgage Loan be calculated;
provided, however, such notice may be given no earlier than two
years after the Date of Default;
(v) A court of competent jurisdiction confirms a plan of
reorganization affecting the owner of the Mortgaged Property
under Chapter 11 of the Federal Bankruptcy Code, as then in
effect, if ▇▇▇▇▇▇ Mae or Lender gives notice to the other party
specifying that the Asset Value of such Mortgage Loan be
calculated; or
(vi) ▇▇▇▇▇▇ ▇▇▇ receives the proceeds of any sale of the Mortgaged
Property directed by a court of competent jurisdiction in a
bankruptcy proceeding.
Asset Value: As defined in the Loss Sharing Agreement, the dollar amount
equal, as applicable, to:
(i) the proceeds of the sale to a third party that is not ▇▇▇▇▇▇
Mae, the Lender or an entity affiliated with the Lender of the
applicable Mortgaged Property at any regularly conducted
foreclosure sale or at any sale directed by a court of competent
jurisdiction in a bankruptcy proceeding; or
2
(2/4/94)
31
(ii) the appraised value of such Mortgaged Property, as of the Asset
Valuation Date, as determined by "as-is" appraisal(s) conducted
in accordance with the terms of the Loss Sharing Agreement.
Business Day: As defined in the Loss Sharing Agreement, any day except a
Saturday, Sunday or other day on which ▇▇▇▇▇▇ ▇▇▇ is not open for business.
Commitment Date: As defined in the Loss Sharing Agreement, the date of a
commitment to purchase a Mortgage Loan under Delegated Underwriting and
Servicing as shown on the Commitment Confirmation (as defined in the DUS Guide)
that is sent by ▇▇▇▇▇▇ Mae to Lender with respect to that Mortgage Loan or, if
there is a written commitment agreement other than or in addition to a
Commitment Confirmation between the Lender and ▇▇▇▇▇▇ ▇▇▇ with respect to that
Mortgage Loan pursuant to which the Loss Sharing Agreement will apply, the date
such commitment agreement is accepted by the Lender.
Date of Default: As defined in the Loss Sharing Agreement, as to any
Mortgage Loan, the date of the first uncured Payment Default or Performance
Default.
Delinquency Advances: As defined in the Loss Sharing Agreement, any
payments that Lender makes, in whole or in part, out of its own funds and in
accordance with Section 5.02 of the Loss Sharing Agreement, in amounts equal to
principal and interest owed to ▇▇▇▇▇▇ Mae under a Mortgage Loan, calculated at
the Pass-Through Rate (not at the default interest rate), solely pursuant to
Lender's obligations to ▇▇▇▇▇▇ ▇▇▇ and not with respect to the Borrower's
obligations under that Mortgage Loan.
Delinquency Resolution Costs: As defined in the Loss Sharing Agreement, as
to any Mortgage Loan, any costs, limited as provided below, paid or incurred by
Lender or ▇▇▇▇▇▇ Mae: (i) to commence and pursue foreclosure proceedings and
appointment of a receiver; (ii) to restructure a Mortgage Loan (except for
costs associated with any Lender Workout as discussed in the DUS Guide) on the
related Mortgaged Property that are directly related to such foreclosure
proceedings or restructurings and (iii) to commence and pursue collection (to
the extent paid or incurred prior to the Asset Valuation Date) under a guaranty
or similar obligation, including exceptions to non-recourse under the Mortgage
Loan, under documents assigned to or otherwise benefitting ▇▇▇▇▇▇ ▇▇▇.
Delinquency Resolution Costs are limited to reasonable attorneys' fees, court
costs, recordation and transfer fees, environmental assessments, appraisal
costs (but only if obtained in connection with bankruptcy proceedings or under
the written direction of ▇▇▇▇▇▇ Mae) and similar costs necessary to achieve
foreclosure, appointment of a receiver, or restructuring, all as approved by
▇▇▇▇▇▇ ▇▇▇.
- 3 -
(2/4/94)
32
Final Settlement of Loss: As defined in the Loss Sharing Agreement, the
determination by ▇▇▇▇▇▇ Mae, pursuant to the Loss Sharing Agreement (including
either Exhibit B to such Agreement with respect to any Mortgage Loan listed on
Exhibit C to such Agreement or the Loss Sharing Formula in the DUS Guide as in
effect on the Commitment Date for any other Mortgage Loan), of the final
allocation of losses to be borne by ▇▇▇▇▇▇ ▇▇▇ and Lender in respect of a
defaulted Mortgage Loan and the payment of any amounts pursuant to such
determination.
5% Amount: As defined in the Loss Sharing Agreement, 5% of the actual
unpaid principal balance of the Mortgage Loan on the Date of Default.
Interim Loss Sharing Adjustment: As described in the Loss Sharing
Agreement.
Lender Deductible Amount: As described in Part VII, Section 401.
Lender Outlays: Actual expenditures with respect to a Mortgage Loan made
by the Lender and evidenced to ▇▇▇▇▇▇ Mae's satisfaction for (i) Delinquency
Advances, not including amounts exceeding the 5% Amount that are returned by
▇▇▇▇▇▇ ▇▇▇ to the Lender under an Interim Loss Sharing Adjustment, (ii)
Servicing Advances not reimbursed or otherwise paid by ▇▇▇▇▇▇ Mae, and (iii)
that portion of two-thirds of the total Delinquency Resolution Costs not
reimbursed or otherwise paid by ▇▇▇▇▇▇ ▇▇▇.
Loss Level: As defined in the Loss Sharing Agreement, any of Level, I,
Level II or Level III, as applicable.
Loss Sharing Formula: As defined in the Loss Sharing Agreement, with
respect to any Mortgage Loan listed on Exhibit C to the Loss Sharing Agreement,
the provisions set forth in Exhibit B to the Loss Sharing Agreement, or, for
any other Mortgage Loan, the provisions of the DUS Guide (excluding the
examples and the procedures) in effect on the Commitment Date for such Mortgage
Loan, that set forth how the loss on a Mortgage Loan will be calculated and
allocated between ▇▇▇▇▇▇ Mae and the Lender and how the Final Settlement of
Loss will be determined.
Mortgage Loan: As defined in the Loss Sharing Agreement, a multifamily
mortgage loan that is or will be either originated and sold by Lender to ▇▇▇▇▇▇
▇▇▇ under Delegated Underwriting and Servicing or with respect to which Lender
has assumed or will assume the loss sharing obligations under Delegated
Underwriting and Servicing, which mortgage loan upon delivery to ▇▇▇▇▇▇ Mae is
evidenced by a Note and is secured by a Security Instrument and other documents
executed and delivered with respect to that mortgage loan and with respect to
which either a Mortgage Loan Certificate has been or will be delivered or
deemed delivered to
- 4 -
(2/4/94)
33
▇▇▇▇▇▇ ▇▇▇ or which is listed on Exhibit C to the Loss Sharing Agreement.
Mortgage Loan Certificate: As defined in the Loss Sharing Agreement, a
certificate in the form of Exhibit A to the Loss Sharing Agreement, delivered
by Lender to ▇▇▇▇▇▇ Mae with each Mortgage Loan delivered after the effective
date of such agreement.
Mortgaged Property: As defined in the Loss Sharing Agreement, the property
that secures a Note, which consists of the land, as described in the related
Security Instrument, and all buildings and other improvements, including the
multifamily housing project, made to and located on the land, together with all
fixtures, equipment and furniture affixed or attached thereto or located
thereon, as more specifically provided in the applicable Security Instrument.
Pass-Through Rate: That portion of the stated interest rate on a Mortgage
Loan that is required to be passed through to ▇▇▇▇▇▇ ▇▇▇ after reduction for
the Servicing Fee retained by the servicer of that Mortgage Loan and, if ▇▇▇▇▇▇
Mae has issued a Mortgage-Backed Security (MBS) with respect to that Mortgage
Loan, the Guaranty Fee.
Payment Default: As defined in the Loss Sharing Agreement, the failure of
a Borrower to pay when due and in full any payment(s) required with respect to
the related Mortgage Loan, including, but not limited to, principal, interest,
late charges, default interest, prepayment premium, escrows or other collateral
accounts for taxes, insurance premiums and assessments, other collateral
accounts and the Replacement Reserve. For example, scheduled principal and
interest payments are past due on the second day of a calendar month.
Performance Default: As defined in the Loss Sharing Agreement, the failure
of a Borrower to perform any promise or covenant under the related Mortgage
Loan other than a failure that constitutes a Payment Default.
Prepayment Premium: The prepayment premium required to be paid under the
terms of a Mortgage Loan, calculated and determined as described in the
applicable Loan Documents.
Property Disposition Costs: Either (a) if the disposition of the Mortgage
Property occurs on or prior to the Asset Valuation Date, the actual amounts
expended in the sale or other transfer of a Mortgaged Property to a party other
than the Lender or ▇▇▇▇▇▇ ▇▇▇ (or their nominees, agents or affiliates)
following acquisition of title to the property by or on behalf of ▇▇▇▇▇▇ Mae
for attorney's fees and expenses, title insurance, real estate commissions and
brokerage fees; or (b) if the disposition of Mortgaged Property has not
occurred on or prior to the Asset Valuation Date, the amount determined by
multiplying the Asset Value by (i) 3%, if the Asset
- 5 -
(2/4/94)
34
Value is more than $10 million, (ii) 4.5%, if the Asset Value is more than $5
million but not more than $10 million, or (iii) 6%, if the Asset Value is $5
million or less.
Reimbursement Base: As described in Part VII, Section 201.
Scheduled Unpaid Principal Balance: The unpaid principal balance of a
Mortgage Loan as of a particular date that is scheduled to be unpaid under the
amortization schedule applicable to that Mortgage Loan but also taking into
account all actual unscheduled principal prepayments (for example, a prepayment
due to a partial condemnation or a drawing of an achievement letter of credit).
Servicing Advances: As defined in the Loss Sharing Agreement, the payments
Lender makes out of its own funds and in accordance with Section 5.03 of the
Loss Sharing Agreement for taxes, assessments, insurance premiums and other
items (other than principal and interest) owed or expended with respect to a
Mortgaged Property solely pursuant to Lender's obligations to ▇▇▇▇▇▇ ▇▇▇ and
not with respect to the Borrower's obligations under the Mortgage Loan.
Total Lender Loss: As described in Part VII, Section 101.
- 6 -
(2/4/94)
35
Chapter 2. Calculation of Reimbursement Base
Section 201. Calculation of Reimbursement Base
The Reimbursement Base is the portion of loss on a Mortgage Loan to be
allocated between the Lender and ▇▇▇▇▇▇ Mae and is calculated as described in
this Chapter 2. The Reimbursement Base will be determined only after the Asset
Valuation Date and the Asset Value have been established, the Lender has
submitted the materials required by Part VII (or, if the Lender fails to submit
such information, ▇▇▇▇▇▇ ▇▇▇ has made a determination of the related amounts) ,
and ▇▇▇▇▇▇ Mae has reviewed the materials and determined the allowable amount
of any Delinquency Advances, Servicing Advances, Delinquency Resolution Costs
and the amount of any additions or deductions listed below.
The Property Regional Office will calculate the Reimbursement Base and
notify the Lender of the allocation of loss within 30 days of ▇▇▇▇▇▇ Mae's
receipt from the Lender of all of the materials required by Part VII and, if
the Asset Value is determined by appraisal, receipt of the final appraisal. The
Lender must submit all materials no later than 30 days after the Lender
receives the as-is appraisal ordered by the Lender. If the Lender does not
timely submit all of the required information, ▇▇▇▇▇▇ Mae will ascertain the
necessary information and determine the amount of the Reimbursement Base.
Specifically, the "Reimbursement Base" with respect to a Mortgage Loan
means the amount calculated as follows:
(a) Add all of the following amounts:
(i) The Scheduled Unpaid Principal Balance of the Mortgage Loan on
the last day immediately preceding the Asset Valuation Date;
(ii) Delinquency Advances, actually made by the Lender and evidenced
to ▇▇▇▇▇▇ Mae's satisfaction, but not including amounts
exceeding the 5% Amount that are returned by ▇▇▇▇▇▇ Mae to the
Lender under any Interim Loss Sharing Adjustment made with
respect to that Mortgage Loan;
(iii) Amounts equal to the scheduled principal and interest payments
on that Mortgage Loan at the Pass-Through Rate on and after the
Date of Default excluding amounts advanced as Delinquency
Advances by the Lender or paid, in whole or in part, by or on
behalf of the Borrower;
(iv) Servicing Advances (excluding those for amounts described in
paragraph (v) below), evidenced to
- 7 -
(2/4/94)
36
▇▇▇▇▇▇ Mae's satisfaction, actually made by the Lender (and
determined by ▇▇▇▇▇▇ Mae to be allowable), and amounts
reimbursed or otherwise paid by ▇▇▇▇▇▇ ▇▇▇ for items that, if
paid by Lender, would be includable as such Servicing Advances;
(v) An amount equal to the sum of all Property related taxes,
assessments and impositions (including real estate taxes) and
Property related insurance premiums, whether paid or unpaid,
allocable to the period prior to the Asset Valuation Date,
except to the extent paid by or on behalf of the Borrower;
(vi) Two-thirds of total allowable Delinquency Resolution Costs; and
(vii) Either (A) the Prepayment Premium owed under the Note
calculated using the Pass-Through Rate as if that Mortgage Loan
had been accelerated on the Asset Valuation Date, if that
Mortgage Loan were purchased by ▇▇▇▇▇▇ Mae for cash, or (B) the
Prepayment Premium calculated as set forth in Part VII, Section
202, if that Mortgage Loan were purchased by ▇▇▇▇▇▇ ▇▇▇ under
MBS/DUS.
(b) Subtract from the sum calculated in (a) the sum of all of the
following amounts:
(i) The Asset Value (net of Property Disposition Costs);
(ii) All cash or funds in escrows, reserves, Custodial Accounts or
other collateral held by the Lender or ▇▇▇▇▇▇ Mae in connection
with the Property and any not yet drawn balance under a Letter
of Credit that may still be drawn that is held by the Lender or
▇▇▇▇▇▇ ▇▇▇ in connection with the Property, provided that such
cash, funds, proceeds or other amounts are in the possession of
▇▇▇▇▇▇ Mae or the Lender and are available to satisfy the
Borrower's obligations under the Mortgage Loan (collectively,
the "Additional Collateral");
(iii) The amount of any escrow, reserve or other collateral required
by this Guide that erroneously was not collected or was
erroneously disbursed by the Lender, the value of any other
collateral against which a lien required by this Guide was not
perfected or continued due to the Lender's failure properly to
file Uniform Commercial Code
- 8 -
(2/4/94)
37
financing statements, and the amount of any Letter of Credit
required by this Guide which the Lender erroneously returned or
failed to draw prior to expiration (collectively, the "Missing
Collateral");
(iv) The Lender Deductible Amount, as provided in Part VII, Chapter
4, Section 401; and
(v) Any amount recovered on or prior to the Asset Valuation Date
from a guaranty, indemnification or similar obligation made with
respect to the Mortgage Loan that benefits ▇▇▇▇▇▇ ▇▇▇.
SECTION 202. PREPAYMENT PREMIUM FOR MORTGAGE LOANS PURCHASED UNDER MBS/DUS
If the Asset Valuation Date occurs in a Loan Year in which a Prepayment
Premium would be due as a result of an acceleration under a Mortgage Loan
purchased by ▇▇▇▇▇▇ Mae under MBS/DUS, the Prepayment Premium for purposes of
calculating the Reimbursement Base will be calculated in accordance with the
following formula:
GF x P x UPB
-------
GF + SF
Where: GF = Guaranty Fee rate for that Mortgage
Loan
SF = Servicing Fee rate for that Mortgage
Loan
P = Prepayment Premium percentage for
the applicable Loan Year, as
described in the Note for that
Mortgage Loan
UPB = actual unpaid principal balance of
the Mortgage Loan on the last day
immediately preceding the Asset
Valuation Date
- 9 -
(2/4/94)
38
CHAPTER 3. ALLOCATION OF THE REIMBURSEMENT BASE
SECTION 301. ALLOCATION OF THE REIMBURSEMENT BASE
(a) If the Reimbursement Base is a positive number, the sharing of the
losses included in the Reimbursement Base will be determined based
upon the following ratios:
(i) Initial Reimbursement Base Allocation. The portion of the
Reimbursement Base which is less than or equal to 20 percent of
the actual unpaid principal balance of the Mortgage Loan on the
last day immediately preceding the Asset Valuation Date is
allocated as follows:
Loss Level at ▇▇▇▇▇▇ ▇▇▇ Lender
Date of Default Allocation Allocation
--------------- ----------- ----------
I 75% 25%
II 60% 40%
III 50% 50%
(ii) Remaining Reimbursement Base Allocation. Any remaining portion
of the Reimbursement Base is allocated as follows:
Loss Level at ▇▇▇▇▇▇ Mae Lender
Date of Default Allocation Allocation
--------------- ----------- ----------
I 90% 10%
II 75% 25%
III 70% 30%
(b) If the Reimbursement Base is a negative number, then the entire
negative Reimbursement Base (as a negative number) is allocated to
the Lender in calculating the Total Lender Loss, as provided in Part
VII, Section 101.
- 10 -
(2/4/94)
39
CHAPTER 4. LENDER DEDUCTIBLE AMOUNT
SECTION 401. LENDER DEDUCTIBLE AMOUNT
The "Lender Deductible Amount" means the amount calculated by multiplying
the actual unpaid principal balance of a Mortgage Loan on the last day
immediately preceding the Asset Valuation Date for such Mortgage Loan by the
percentage specified below that is applicable for the Loss Level for that
Mortgage Loan determined as provided in the Loss Sharing Agreement:
Loss Level Lender Deductible
at Date of Default Amount Percentage
------------------- -------------------
I 5%
II 10%
III 15%
For purposes of calculating the Lender Deductible Amount, default interest is
not added to principal in determining the actual unpaid principal amount.
- 11 -
(2/4/94)
40
CHAPTER 5. FINAL SETTLEMENT OF LOSS
SECTION 501. FINAL SETTLEMENT OF LOSS
After the Reimbursement Base is calculated, ▇▇▇▇▇▇ ▇▇▇ will give the Lender
notice of the loss settlement determination and ▇▇▇▇▇▇ Mae and the Lender will
settle the loss on a Mortgage Loan as follows:
(a) ▇▇▇▇▇▇ ▇▇▇ will verify and approve the amount of Lender Outlays the
Lender has made with respect to that Mortgage Loan.
(b) If the Total Lender Loss is a positive number and exceeds the sum of
(i) the Lender Outlays, (ii) the portion of the one-third of total
Delinquency Resolution Costs not included in the Reimbursement Base
and paid by Lender (but not reimbursed by ▇▇▇▇▇▇ Mae), and (iii) any
costs related to a Lender Workout, then the Lender owes ▇▇▇▇▇▇ ▇▇▇
the amount of that difference.
(c) If the Total Lender Loss is a positive number and is less than the
sum of (i) the Lender Outlays, (ii) the portion of the one-third of
total Delinquency Resolution Costs not included in the Reimbursement
Base and paid by Lender (but not reimbursed by ▇▇▇▇▇▇ Mae), and (iii)
any costs related to a Lender Workout, then ▇▇▇▇▇▇ ▇▇▇ owes the
Lender the amount of that difference.
(d) If the Total Lender Loss (calculated without regard to costs related
to a Lender Workout) is a negative number, then ▇▇▇▇▇▇ Mae owes the
Lender the sum of the Lender Outlays and the portion of the one-third
of the Delinquency Resolution Costs that were paid by Lender and not
reimbursed by ▇▇▇▇▇▇ ▇▇▇.
(e) The Lender or ▇▇▇▇▇▇ Mae, as applicable, must make payment of any
amount owed in (b), (c) or (d) above by wire transfer of immediately
available funds within five Business Days of the date of ▇▇▇▇▇▇ Mae's
notice to the Lender of such loss settlement determination. As more
specifically provided in the Loss Sharing Agreement, ▇▇▇▇▇▇ Mae's
obligation to make any such payment is conditioned upon the Lender's
not being in default under its Contract, Reserve Agreement or Loss
Sharing Agreement or the DUS Guide.
- 12 -
(2/4/94)
41
CHAPTER 6. ACCOUNTING FOR ADDITIONAL COLLATERAL AND ANY OTHER PROPERTY
HELD BY LENDER
SECTION 601. PAYMENT TO ▇▇▇▇▇▇ ▇▇▇
Within five Business Days of the date of ▇▇▇▇▇▇ Mae's notice to the Lender
of the loss settlement determination with respect to a Mortgage Loan, the
Lender must deliver to ▇▇▇▇▇▇ ▇▇▇ all Additional Collateral, sales proceeds,
net operating income, amounts recovered under a guaranty or other similar
documentation and any other amounts in the Lender's possession or under its
control with respect to that mortgage Loan or Mortgaged Property that are not
already held by ▇▇▇▇▇▇ Mae.
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42
EXHIBIT C [OMITTED]
EXHIBIT D
CONSENT TO INTERIM LOSS SHARING ADJUSTMENT
Date:
--------------
[Lender]
-------------------
-------------------
Dear :
---------------
▇▇▇▇▇▇ ▇▇▇ consents to the application of the Interim Loss Sharing
Adjustment(1), as set forth in Section 5.05 of the Master Loss Sharing Agreement
between you and ▇▇▇▇▇▇ Mae, as currently in effect, to the Mortgage Loan
described below:
Mortgage Loan on [Project Name]:
--------------------------------------
▇▇▇▇▇▇ ▇▇▇ Commitment/Pool No.:
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Project Location:
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Borrower:
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Effective for payments due beginning __________[month]_____________,
______[year]_____, your obligation to make Delinquency Advances and Servicing
Advances and to pay Delinquency Resolution Costs (each as defined in the Master
Loss Sharing Agreement) is reduced to the level required under the Interim Loss
Sharing Adjustment provisions of that agreement and ▇▇▇▇▇▇ Mae will make
reimbursements of Servicing Advances and Delinquency Resolution Costs as
provided in that Agreement.
Sincerely,
[Vice President/Property
Regional Office]
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(1) The Interim Loss Sharing Adjustment is available only for loans at
Level I to a Lender not in default under any agreement with ▇▇▇▇▇▇ ▇▇▇.
D-1