AMENDMENT NO. 1 TO AMENDED AND RESTATED FLOW COMMERCIAL MORTGAGE LOAN PURCHASE AGREEMENT

Exhibit 10.8

 

 

AMENDMENT NO. 1

TO AMENDED AND RESTATED FLOW COMMERCIAL MORTGAGE LOAN PURCHASE AGREEMENT

 

This Amendment No. 1 to the Amended and Restated Flow Commercial Mortgage Loan Purchase Agreement dated and effective as of June 1, 2016 (this “Amendment”) is made as of September 27, 2017 by and between PENNYMAC CORP., as Purchaser, and PENNYMAC LOAN SERVICES, LLC, as Seller.

RECITALS

WHEREAS, the Purchaser and the Seller previously entered into an Amended and Restated Flow Commercial Mortgage Loan Purchase Agreement, dated as of June 1, 2016 (the “Existing Purchase Agreement”);

 

WHEREAS, Purchaser has entered into that certain Mortgage Selling and Servicing Contract, Addendum to Mortgage Selling And Servicing Contract, Reserve Agreement, and Master Loss Sharing Agreement, each effective as of August 1, 2017, (collectively, together with the ▇▇▇▇▇▇ ▇▇▇ Guide, the “Lender Contract”) with ▇▇▇▇▇▇ Mae, a corporation duly organized under the Federal National Mortgage Association Charter Act, as amended, 12 U.S.C. §1716 et seq., and duly organized and existing under the laws of the United States of America (“▇▇▇▇▇▇ ▇▇▇”);

 

WHEREAS, the Seller desires to sell, from time to time, to the Purchaser, and the Purchaser desires to purchase, from time to time, from the Seller, certain first-lien commercial mortgage loans (the “Mortgage Loans”), including Fannie Mortgage Loans, on a servicing released basis as described herein, and which shall be delivered individually on various dates as provided herein (each, a “Closing Date”); and,

 

WHEREAS, the parties hereto have requested that the Existing Purchase Agreement be amended on the terms and subject to the conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree that the Existing Purchase Agreement be amended to reflect certain agreed upon revisions as follows:

SECTION 1.Defined Terms.  Section 1.01 of the Existing Purchase Agreement is hereby amended as follows:

1.1New Defined Terms: Section 1.01 of the Existing Purchase Agreement is hereby amended by adding the following definitions in the appropriate alphabetical order:

“▇▇▇▇▇▇ ▇▇▇”: The Federal National Mortgage Association or any successor thereto.

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“▇▇▇▇▇▇ Mae Guide” means the ▇▇▇▇▇▇ ▇▇▇ Multifamily Selling and Servicing Guide, including any exhibits, appendices or other referenced forms, as such Guide is amended, modified, supplemented, restated or superseded from time to time. The ▇▇▇▇▇▇ Mae Multifamily Selling and Servicing Guide currently contains only Part I: the Glossary, Part II: Lender Contractual Relationship, and Part III: New Underwriting, consisting of three (3) Subparts: Part IIIA: Base Underwriting Requirements, Part IIIB: Underwriting for Special Asset Classes, and Part IIIC: Underwriting for Special Product Features or Executions, Part IV: Mortgage Loan Commitment, Delivery, and Purchase Procedures, and Part V: Servicing and Asset Management. Additional Parts will be published by ▇▇▇▇▇▇ ▇▇▇ from time to time. For the purposes of this First Amendment, provisions in the Guide applicable to DUS loans shall apply to the Fannie Mortgage Loans, unless otherwise provided herein.

“Fannie Mortgage Loan” means a “Small Mortgage Loan” as defined in the ▇▇▇▇▇▇ Mae Guide or a Mortgage Loan providing financing for the acquisition or refinance of conventional multifamily housing on a Mortgaged Property with five to fifty units and eligible for delivery to ▇▇▇▇▇▇ ▇▇▇ under the terms of the ▇▇▇▇▇▇ Mae Guide and the Lender Contract.

“Lender Contract” has the meaning specified in the ▇▇▇▇▇▇ ▇▇▇ Guide, including those agreements referred to in Recital B of this Agreement.

“Loss Sharing Agreement” means the ▇▇▇▇▇▇ Mae Master Loss Sharing Agreement between the Purchaser and ▇▇▇▇▇▇ ▇▇▇ (as amended or restated from time to time).

“Reserve Agreement” means the ▇▇▇▇▇▇ Mae Reserve Agreement among the Purchaser, U.S. Bank, N.A., and ▇▇▇▇▇▇ ▇▇▇ (as amended or restated from time to time).

“Servicing Fee”: A fee that Purchaser receives, pursuant to the ▇▇▇▇▇▇ Mae Guide and Lender Contract, for the collection of payments and management of operational procedures related to a Mortgage Loan.

“Servicing Strip” has the meaning specified in the ▇▇▇▇▇▇ ▇▇▇ Guide and is limited to the portion of the Purchaser’s Servicing Fee in excess of 25% of the Servicing Fee.

1.2Replacement Defined Terms.  Section 1.01 of the Existing Purchase Agreement is hereby amended by replacing each of the following definitions in its entirety as follows:

“Initial Rate”: The stated Mortgage Rate with respect to an ARD Loan, a ▇▇▇▇▇▇▇ Mac SBL Loan, or a Fannie Mortgage Loan which is a Hybrid ARM under the Guide or ▇▇▇▇▇▇ ▇▇▇ Guide, respectively, as of the Cut-off Date.

 

“Purchase Price and Terms Agreement”: With respect to each Mortgage Loan, an agreement, in the form attached hereto as Exhibit B, by and between the Seller and the Purchaser. For ▇▇▇▇▇▇▇ Mac SBL Loans, the alternative form of Schedule 3 in Exhibit B shall be used.  For Fannie Mortgage Loans, the alternative form of Schedule 4 in Exhibit B shall be used.

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1.3Capitalized Terms Not Defined.  A new Section 1.02 is added to the Existing Purchase Agreement as follows:

Section 1.02 Capitalized Terms Not Defined.  With respect to Fannie Mortgage Loans, any capitalized terms not defined in this Agreement shall have the meaning set forth in the ▇▇▇▇▇▇ ▇▇▇ Guide.

SECTION 2.Sale and Conveyance of Mortgage Loans; Delivery of Mortgage Loan Documents.  A new Section 2.01(h) is added to the Existing Purchase Agreement as follows:

(h) In the event that Purchaser agrees to offer a portion of its Servicing Strip as part of the Purchase Price, Seller expressly acknowledges that:

(i)each Fannie Mortgage Loan that is the subject of the Agreement is owned by ▇▇▇▇▇▇ ▇▇▇;

(ii)▇▇▇▇▇▇ Mae has the right to terminate the Purchaser’s right to service any Mortgage Loan at any time and to remove from the Purchaser the files and records related to that Mortgage Loan;

(iii)all rights of Seller to any portion of the Servicing Fee from each Mortgage Loan are unsecured and totally subordinate to the rights of ▇▇▇▇▇▇ ▇▇▇ at all times, and are immediately terminated without notice upon the termination of the Purchaser’s right to service the Mortgage Loan;

(iv)▇▇▇▇▇▇ Mae is not required to pay any compensation to Seller under this Agreement or otherwise; and

(v)in case of inconsistencies between this Agreement and the ▇▇▇▇▇▇ ▇▇▇ Guide or Lender Contract, the ▇▇▇▇▇▇ Mae Guide and Lender Contract must control.

SECTION 1.Prohibited Activities.  A new Section 2.10 is added to the Existing Purchase Agreement as follows:

 

Section 2.10 Prohibited Activities.  With respect to Fannie Mortgage Loans and except as otherwise expressly permitted by ▇▇▇▇▇▇ Mae, Seller is prohibited from:

(vi)using ▇▇▇▇▇▇ Mae’s name or logo in any manner;

(vii)indicating implicitly or explicitly that Seller is authorized to provide services to or originate Mortgage Loans for sale to ▇▇▇▇▇▇ Mae; or

(viii)otherwise indicating that Seller is a participant in any ▇▇▇▇▇▇ ▇▇▇ product line.

SECTION 2.Additional ▇▇▇▇▇▇ Mae Services.  Section 3.02 of the Existing Purchase Agreement is deleted in its entirety and replaced with the following:

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Section 3.02 Representations and Warranties as to Individual Mortgage Loans.

With respect to each Mortgage Loan other than a ▇▇▇▇▇▇▇ Mac SBL Loan or a Fannie Mortgage Loan, the Seller hereby makes the representations and warranties set forth on Exhibit C-1 to the Purchaser as of the related Closing Date. With respect to each ▇▇▇▇▇▇▇ Mac SBL Loan, the Seller hereby makes the representations and warranties set forth on Exhibit C-2 to the Purchaser as of the related Closing Date. With respect to each Fannie Mortgage Loan, the Seller hereby makes the representations and warranties set forth on Exhibit C-3 to the Purchaser as of the related Closing Date.  To the extent that any of the representations and warranties set forth on Exhibit C- 2 or Exhibit C-3 is inconsistent with the requirements of the Guide or the ▇▇▇▇▇▇ ▇▇▇ Guide, respectively, the Guide or the ▇▇▇▇▇▇ Mae Guide, as applicable, shall control and such representation or warranty shall be interpreted to be given meaning consistent with the terms of the Guide or the ▇▇▇▇▇▇ ▇▇▇ Guide, as applicable.

SECTION 3.Section 3.04 of the Existing Purchase Agreement is deleted in its entirety and replaced with the following:

 

Section 3.04 Non-Solicitation.

The Seller agrees that it shall not solicit any Mortgagors, and with respect to ▇▇▇▇▇▇▇ Mac SBL Loans or Fannie Mortgage Loans, any sponsors related to the Mortgage Loans (in writing or otherwise) to refinance any of the Mortgage Loans; provided, however, that (1) mass advertising or mailings (such as placing advertisements on television, on radio, in magazines or in newspapers or including messages in billing statements) that is not exclusively directed towards the Mortgagors, or (2) a solicitation for business from the Seller, its parent or affiliated companies to a Mortgagor that does not derive from a full or partial list of the Mortgagors shall not constitute “solicitation” and shall not violate this covenant. For the avoidance of doubt, the Seller and Purchaser are each free to solicit the Mortgagors and, with respect to ▇▇▇▇▇▇▇ Mac SBL Loans and Fannie Mortgage Loans, any sponsors related to the Mortgage Loans for loan products to finance properties other than the Mortgaged Properties.

SECTION 4.Section 4.01 of the Existing Purchase Agreement is deleted in its entirety and replaced with the following:

 

Section 4.01 Indemnification; Third Party Claims.

(a)Without limiting Section 3.03 hereof, but subject to the limitations set forth below, the Seller agrees to indemnify and hold harmless the Purchaser against any and all claims, losses, penalties, fines, forfeitures, legal fees and related costs, judgments, and any other costs, fees and expenses that the Purchaser may incur or sustain in any way related to any acts or omissions by Seller occurring with respect to any of the Mortgage Loans prior to the related Closing Date, including without limitation any lender liability claims and other claims based on the alleged wrongful actions of Seller (collectively, “Claims”). The Seller shall immediately assume the defense of any such Claim and pay all expenses in connection therewith, including counsel fees, and promptly pay, discharge and satisfy any judgment or decree which may be entered against it or the Purchaser in respect of such Claim. Nothing contained herein shall prohibit the Purchaser, at Seller’s expense, from retaining its own counsel to assist in such proceedings or to observe such proceedings.

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(b)Without limiting Section 3.03 hereof, if a failure or breach of any of the foregoing representations and warranties set forth in Sections 3.01 or 3.02 exists as to or affects any Fannie Mortgage Loan, and ▇▇▇▇▇▇ ▇▇▇ (i) requires Purchaser to pay an interim or final loss pursuant to the Loss Sharing Agreement, or (ii) requires Purchaser to deposit additional reserves in accordance with the terms of the Reserve Agreement, in any case related to such Fannie Mortgage Loan, Seller shall pay to Purchaser any such amounts by wire transfer of immediately available funds within five (5) Business Days after receiving notice from Purchaser of such amounts.  At final settlement of any loss between Purchaser and ▇▇▇▇▇▇ ▇▇▇, (a) if Seller has made interim loss sharing payments or reserve payments with respect to such Fannie Mortgage Loan, Seller shall receive a credit for such payments, and (b) if amounts are owed from ▇▇▇▇▇▇ ▇▇▇ to Purchaser, Purchaser agrees to pay to Seller any excess amounts previously paid by Seller by wire transfer of immediately available funds.  Seller shall not be responsible to pay for increases in reserves pursuant to the Loss Sharing Agreement, Reserve Agreement, or Guide that are based solely on Purchaser’s election to change loss sharing methods, adverse changes in Purchaser’s net worth, liquidity or financial condition, or changes by ▇▇▇▇▇▇ Mae in its formula for Restricted Liquidity.

SECTION 5.A new additional Schedule 3 (FANNIE MORTGAGE LOANS) to Exhibit B (Form of Purchase Price and Terms Agreement) is added, immediately following Schedule 3 (▇▇▇▇▇▇▇ MAC SBL LOANS), to the Existing Purchase Agreement as follows:

 

SCHEDULE 3

(FANNIE MORTGAGE LOANS)

TO THE PURCHASE PRICE AND TERMS AGREEMENT

Refer to any approved Waiver requests in the written Pre-Review approval provided by the ▇▇▇▇▇▇ Mae Deal Team in accordance with the requirements of the ▇▇▇▇▇▇ ▇▇▇ Guide.

SECTION 6.A new Exhibit C-3 REPRESENTATIONS AND WARRANTIES (FANNIE MORTGAGE LOANS) is added to the Existing Purchase Agreement as follows:

 

(Attached to this Amendment as Exhibit A)

 

SECTION 7.Conditions Precedent.  This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent:

7.1Delivered Documents.  On the Amendment Effective Date, each party shall have received the following documents, each of which shall be satisfactory to such party in form and substance:

(a)this Amendment, executed and delivered by the duly authorized officers of the parties hereto; and

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(b)such other documents as such party or counsel to such party may reasonably request.

SECTION 8.Representations and Warranties.  Each party represents that it is in compliance in all material respects with all the terms and provisions set forth in the Existing Repurchase Agreement on its part to be observed or performed.

SECTION 9.Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

SECTION 10.Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

SECTION 11.Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment in Portable Document Format (PDF) or by facsimile shall be effective as delivery of a manually executed original counterpart of this Amendment.

SECTION 12.GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered by their duly authorized officers or trustees as of the date first written above.

 

 

 

 

 

 

 

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EXHIBIT A

(Exhibit C-3 Representations and Warranties (Fannie Mortgage Loans)

Exhibit C-3

REPRESENTATIONS AND WARRANTIES (FANNIE MORTGAGE LOANS)

For purposes of these representations and warranties, the phrase “to the knowledge of Seller” or “to Seller’s knowledge” will mean, except where otherwise expressly set forth below, the actual state of knowledge of Seller or any servicer acting on its behalf regarding the matters referred to, after Seller’s having conducted such inquiry and due diligence into such matters as would be customarily required by ▇▇▇▇▇▇ Mae’s underwriting standards represented in the ▇▇▇▇▇▇ Mae Guide. Capitalized terms not otherwise defined in this Exhibit C-3 will have the meaning set forth in the ▇▇▇▇▇▇ ▇▇▇ Guide.

Seller represents and warrants, subject to the exceptions set forth in Schedule 1 to the Commitment, with respect to each Mortgage Loan, that as of the Funding Date, unless ▇▇▇▇▇▇ Mae specifies a different date, the following representations and warranties are true and correct in all material respects:

 

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