1
EXHIBIT 10.24
ADDENDUM TO MORTGAGE PURCHASE AGREEMENT
FOR
AUTOMATED UNDERWRITING SERVICES
This Addendum to Mortgage Purchase Agreement for Automated Underwriting
Services (the "Addendum") is made and entered into this 13th day of August,
1998, by and between RESOURCE BANCSHARES MORTGAGE GROUP, INC. (hereinafter
referred to as "Buyer") and E-Loan Inc. (hereinafter referred to as "Seller").
WHEREAS, Buyer and Seller have previously entered into a Mortgage
Purchase Agreement (the "Agreement"), dated May 1, 1998, pursuant to which
Seller has agreed to sell and Buyer has agreed to purchase certain Mortgage
Loans on the terms and conditions contained in such Agreement; and
WHEREAS, Seller desires that Buyer or a third party contract underwriter
satisfactory to the Buyer (the "Third Party Underwriter") perform the
underwriting of certain conventional Mortgage Loans intended for sale to Buyer,
pursuant to the terms and conditions of this Addendum (the "Underwriting
Function"); and
WHEREAS, Buyer is willing to accept loans in which the Underwriting
Function has been performed by The Third Party Underwriter.
NOW, THEREFORE, in consideration of the benefits flowing to each party
hereunder, Buyer and Seller agree as follows:
1. Seller agrees that it will submit to the Third Party Underwriter via
facsimile the documentation required for Underwriting Function to be performed
through an automated underwriting system, in accordance with Buyer's procedures,
which Seller acknowledges receiving. Seller further agrees that if the
underwriting decision is other than Loan Prospector "accept", or Desktop
Underwriter "approve/eligible" the Third Party Underwriter will perform a
subsequent underwriting review through a nonautomated procedure.
2. Seller agrees that its representations and warranties in the
agreement concerning compliance with Buyer's underwriting contingencies for each
Mortgage Loan in the Agreement will remain in effect even though the
underwriting is performed by the Third Party Underwriter.
3. Seller agrees that Buyer is entitled to rely on the underwriting
decision of the Third Party Underwriter.
4. Buyer agrees that if the Third Party Underwriter denies the Mortgage
Loan, Buyer will send to Seller the adverse action statement required by the
Equal Credit Opportunity Act. If no credit is offered to the applicant by any
lender, or if credit is not accepted by the applicant, Seller shall deliver
Buyer's adverse action notice to the related applicant.
5. Seller agrees that if Buyer performs the Underwriting Function, and
denies the loan, its decision will govern, and Seller will not subsequently
submit the mortgage credit package to the Third Party Underwriter.
Page 1 of 2
2
6. Seller agrees that it is obligated to pay to the Third Party
Underwriter the underwriting fee that is charged for each Mortgage Loan, as set
forth in Buyer's procedures, as may be amended from time to time, for each
Mortgage Loan reviewed by the Third Party Underwriter pursuant to the terms of
this Addendum, and Seller indemnifies Buyer against any claim, loss, damages,
costs and expenses in connection with or resulting from Seller's failure to pay
the underwriting fee. Seller further agrees that Buyer may apply any service
release premiums due Seller with respect to a Mortgage Loan, to any underwriting
fees owed to Buyer by Seller pursuant to this Amendment and Buyer's procedures,
and outstanding.
7. Buyer reserves the right to suspend or terminate Seller's
participation under the terms of this Addendum upon written notice to Seller,
sent by registered or certified mail, postage prepaid, or by express courier
service.
8. Except as expressly amended hereby, the terms of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
duly executed and sealed as of the day and year first above written.
(CORPORATE SEAL) SELLER:
ATTEST:
[ILLEGIBLE] E-LOAN, INC.
---------------------------------- -----------------------------------------
Its: Sr. Underwriter By: [ILLEGIBLE]
----------------------------- -------------------------------------
Name and Title: [ILLEGIBLE]
-------------------------
Director, Mortgage
Banking
BUYER:
(CORPORATE SEAL) RESOURCE BANCSHARES MORTGAGE GROUP, INC.
ATTEST:
[ILLEGIBLE] By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------------
Its: VP Name and Title: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------ -------------------------
[Title ILLEGIBLE]
Page 2 of 2
3
RESOURCE BANCSHARES MORTGAGE GROUP, INC.
MORTGAGE PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into this 1st day
of [ILLEGIBLE], 199[ILLEGIBLE], by and between RESOURCE BANCSHARES MORTGAGE
GROUP, INC. (hereinafter referred to as "Buyer") and E-Loan Inc.,(hereinafter
referred to as "Seller") in consideration of the mutual premises and conditions
hereinafter set forth.
1. Purchase and Sale of Mortgage Loans. From time to time pursuant to
this Agreement, Seller shall sell and Buyer shall buy mortgage loans on real
estate (hereinafter collectively called the "Mortgage Loans" and individually
the "Mortgage Loan"). This Agreement shall govern the sale and transfer of such
Mortgage Loans by Seller to Buyer and each such Mortgage Loan shall be subject
to the warranties, representations, and agreements set forth herein, subject,
however, to the terms and conditions of any separate written offering or
commitment letters applying to the Mortgage Loans.
All future purchases of Mortgage Loans by Buyer from Seller shall be
governed by the terms contained herein unless the parties shall agree in writing
before or at the time such purchases are made that the purchases shall be
governed by a different agreement. The purchase price and service release
premiums paid for each Mortgage Loan shall be established by written agreement
between the parties. The terms and conditions of any separate offering or
commitment letters signed by the parties hereto and pursuant to which the Buyer
shall agree to buy and the Seller shall agree to sell any Mortgage Loans shall
survive and be deemed to be part of this Agreement. To the extent that the terms
of this Agreement conflict with the terms and conditions of any such offering or
commitment letter, the terms and conditions of the offering or commitment letter
shall supersede the terms and conditions of this Agreement and this Agreement
shall be deemed modified and amended to conform to the terms and conditions of
such offering or commitment letter with respect to the Mortgage Loans purchased
thereunder. However, such modification and amendment shall be made only to the
extent of the non-conformity and all other terms and conditions of this
Agreement shall apply.
2. Definitions. Unless the context requires otherwise, the following
terms shall, for all purposes of this Agreement, have the meanings hereinafter
specified.
(a) The term "Mortgage Note" shall mean a valid and enforceable note or
evidence of indebtedness secured by a Mortgage (as hereinafter defined).
(b) The term "Mortgage" shall mean a valid and enforceable mortgage,
deed of trust or other security instrument creating a first lien upon
described real property that secures a Mortgage Note.
-1-
4
(c) The term "Mortgage Loan" shall mean (i) a Mortgage Note and
Mortgage; (ii) all documents, agreements, or instruments relating to the
Mortgage Note and Mortgage and Seller's rights and benefits therein; and
(iii) Seller's rights and benefits as owner of the Mortgage Note and
Mortgage including, without limitation, its right to receive payments
thereunder.
3. Seller's Representations, Warranties, and Covenants. Seller
represents, warrants, and covenants as follows:
A. With respect to Seller:
(a) Seller is and will continue to be duly organized, validly
existing, and in good standing under the laws of the United States or
under the laws of the jurisdiction in which it was incorporated or
organized, as applicable, and has and will continue to maintain all
licenses, registrations, and certifications necessary to carry on its
business as now being conducted, and is and will continue to be
licensed, registered, qualified, and in good standing in each state
where property securing a Mortgage Loan is located if the laws of such
state require licensing, registration, or qualification in order to
conduct business of the type conducted by Seller.
(b) Seller has and will maintain the full corporate or
partnership power and authority to execute and deliver the documents
contemplated by this Agreement and to perform in accordance with each of
the terms thereof and the terms of the Correspondent Manual. The
execution, delivery, and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby, have been duly and
validly authorized. This Agreement is a legal valid, binding, and
enforceable obligation of Seller, and all requisite corporate or
partnership action has been taken by Seller to make this Agreement valid
and binding upon Seller, and enforceable in accordance with its terms.
(c) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of Seller, and the
transfer, assignment, and conveyance of the Mortgage Notes and Mortgages
by Seller are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
(d) Neither the execution and delivery of this Agreement, the
acquisition and/or making of the Mortgage Loans by Seller, the sale of
the Mortgage Loans to Buyer or the transactions contemplated thereby,
nor the fulfillment of or compliance with the terms and conditions of
this Agreement, will conflict with or result in a breach of any of the
terms, conditions, or provisions of Seller's articles of incorporation,
charter, by-laws, partnership agreement, or other organizational
documents, or of any legal restriction or regulatory directive or any
agreement or instrument to which Seller is a party or by which it is
bound.
(e) Seller has the ability to perform each and every obligation
of and/or satisfy each and every requirement imposed on Seller pursuant
to this Agreement, and no offset, counterclaim, or defense exists to the
full performance by Seller of the requirements of this Agreement.
-2-
5
(f) There is no action, suit, proceeding, inquiry, review, audit,
or investigation pending or threatened by or against Seller that, either
in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition,
properties, or assets of Seller, or in any material liability on the
part of Seller, or that would draw into question the validity or
enforceability of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of Seller
contemplated in this Agreement, or that would be likely to impair
materially the ability of Seller to perform under the terms of this
Agreement.
(g) No consent, approval, authority, or order of any court or
governmental agency or body is required for the execution and
performance by Seller of, or compliance by Seller with, this Agreement,
the sale of any of the Mortgage Loans, or the consummation of any of the
transactions contemplated by this Agreement.
(h) Neither the Correspondent Application, this Agreement, nor
any statement, report, or other document furnished or to be furnished by
Seller pursuant to this Agreement contains any untrue statement of
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
(i) Seller has complied with, and has not violated any law,
ordinance, requirement, regulation, rule or other order applicable to
its business or properties, the violation of which might adversely
affect the operations or financial condition of Seller to consummate the
transactions contemplated by this Agreement.
(j) Seller will comply with all provisions of this Agreement and
the Correspondent Manual and will promptly notify Buyer of any
occurrence, act, or omission regarding Seller, the Mortgage Loan, the
property securing the Mortgage Loan, or the mortgagor of which Seller
has knowledge, which occurrence, act or omission may materially affect
Seller, the Mortgage Loan, the property securing the Mortgage Loan, or
the mortgagor.
B. With respect to each Mortgage Loan offered for sale under this
Agreement:
(a) The Mortgage and the Mortgage Note have been duly executed by
the mortgagor and create valid and legally binding obligations of the
mortgagor, and the Mortgage has been duly acknowledged and recorded and
is a valid and prior first lien on the real property securing the
Mortgage Note that is superior to all other liens or other claims.
(b) The Seller is the sole owner of the Mortgage Loan and has
absolute authority to sell, transfer, and assign the same on the terms
set forth herein, and there has been no prior assignment, sale, or
hypothecation of the Mortgage Loan by the Seller.
(c) There are no actions, suits, or proceedings pending or
threatened against Seller in any court or before any administrative
agency the adverse outcome of which
-3-
6
would have an effect on its title to any Mortgage Loan and servicing
rights that may be sold or purchased hereunder.
(d) As to each Mortgage Loan purchased by Buyer, (i) the full
principal amount of the Mortgage Loan has been advanced to the
mortgagor, either by payment directly to him or by payment made on his
request or approval; (ii) the unpaid principal balance is as set forth
on that certain statement to be provided by Seller to Buyer pursuant to
Section 4(g) hereof; (iii) all costs, taxes, fees, and expenses incurred
in making and closing the Mortgage Loan and in recording and assigning
the Mortgage have been paid; (iv) no part of the mortgaged property has
been released from the lien of the Mortgage; (v) the terms of the
Mortgage Loan have in no way been changed or modified; (vi) all payments
required under the terms of the Mortgage Loan are current and are not in
default including, but not limited to, payments of principal and
interest and escrow payments for mortgage insurance, taxes, and hazard
insurance; and (vii) unless otherwise negotiated, on the date of
delivery of the Mortgage Loan to Buyer, no more than ten (10) months
shall have elapsed following the closing of the Mortgage Loan or
recordation of the Mortgage, whichever shall have occurred last.
(e) The Seller has not made or knowingly received from others any
direct or indirect advance of funds in connection with the Mortgage Loan
on behalf of the mortgagor. This warranty does not cover payment of
interest from the earlier of:
(i) the date of the Mortgage Note; or
(ii) the date on which the Mortgage Loan proceeds were disbursed;
or
(iii) the date one month before the first installment of
principal and interest on the Mortgage Loan is due.
(f) Each Mortgage Loan that Seller represents to be insured by a
private mortgage insurance company is so insured with an insurer that
has either been approved by the Federal National Mortgage Association
("FNMA") or by the Federal Home Loan Mortgage Corporation ("FHLMC") or
otherwise has been approved by the Buyer. Each Mortgage Loan that Seller
represents to be insured by the Federal Housing Administration ("FHA")
or to be guaranteed by the Veterans Administration ("VA") is so insured
by FHA under the National Housing Act or Title V of the Housing Act of
1949 or other applicable laws or regulations or is so guaranteed by the
VA under the Servicemen's Readjustment Act of 1944 or Chapter 37 of
Title 38 of the United States Code or other applicable laws or
regulations, and such insurance or guaranty is valid and enforceable in
accordance with its terms.
(g) There is in force a paid-up mortgagee title insurance policy
on the Mortgage Loan (in an amount that is at least equal to the
outstanding principal balance of the Mortgage Loan) issued by a title
insurance company that has been approved by the Buyer, and there is an
insured closing agreement for each Mortgage Loan issued by the title
insurance company that issued the mortgagee title insurance policy. If
the Mortgage Loan is a graduated payment mortgage, the policy shall be
for an amount at least equal to
-4-
7
the highest anticipated outstanding principal balance of the Mortgage
Loan. If the Mortgage Loan provides for or permits negative
amortization, the policy shall be for an amount that is not less than
the highest allowable outstanding principal balance of the Mortgage
Loan. If the Mortgage Loan is a variable rate mortgage loan, the policy
shall contain a variable rate endorsement. If the property secured by
the Mortgage is located in a condominium or planned unit development
("PUD"), the policy shall contain an appropriate condominium or PUD
endorsement. If the improvements on the property secured by the Mortgage
include a manufactured home, the policy shall contain an ALTA 7 or
equivalent endorsement.
(h) There is a valid paid-up hazard insurance policy in force at
the time of the purchase of the Mortgage Loan by Buyer issued or written
by an insurance company approved by Buyer and with a Best's Key Rating
Guide financial size category of Class III and at least a "B" general
policyholder's rating. The hazard insurance policy shall be for an
amount at least equal to the full replacement value of the improvements
on the property secured by the Mortgage. Unless a higher maximum amount
is required by state law, the maximum deductible should be the lesser of
$1,000.00 or 1% of the policy face amount. The policy shall be of a type
at least as protective as fire and extended coverage and shall contain a
mortgagee clause and loss payable clause to the Buyer in the form of the
standard New York mortgagee clause, and shall contain suitable
provisions for payment on all present and future mortgages on such
premises in order of precedence. For properties in special flood hazard
areas, there is in force a flood insurance policy as required under
applicable federal law and regulations, the maximum available coverage
has been obtained, and the application for flood insurance or the
original flood insurance policy will be provided. If property securing
the Mortgage Loan is located in a condominium or PUD project, a
certificate of insurance naming Buyer as the insured plus a certified
true copy of the Master Hazard and Liability Policy will be provided.
(i) All applicable federal, state, and local laws, rules and
regulations have been complied with including, but not limited to, the
Real Estate Settlement Procedures Act and Regulation X, the Equal Credit
Opportunity Act and Regulation B, the Federal Truth-in-Lending Act and
Regulation Z, the Fair Credit Reporting Act, the Flood Disaster
Protection Act, the Fair Housing Act, and federal, state, and local
laws, rules or regulations, including, but not limited to, those
relating to licensing and those that prohibit or limit fees, charges, or
costs that lenders may impose on borrowers.
(j) There are no defenses, counterclaims, or rights of setoff
affecting any Mortgage Loan or affecting the validity or enforceability
of any private mortgage insurance or FHA insurance applicable to any
Mortgage Loan or any VA guaranty with respect to any Mortgage Loan.
(k) The assignment of the Mortgage Loan from the Seller to Buyer
is valid and sufficient to assign to and perfect in Buyer all of
Seller's right, title, and interest in and to the Mortgage Loan. The
Mortgage Loan is freely assignable and transferable by Buyer and the
sale and transfer of the Mortgage Loan from Seller to Buyer is free and
clear of any and all claims or encumbrances.
-5-
8
(l) The real property secured by the Mortgage has been improved
as a single-family (1-4 unit) dwelling or by a condominium/PUD unit that
is approved by the FHA, VA, FNMA, or FHLMC, as applicable to the related
Mortgage Loan.
(m) All documents submitted by Seller pursuant to this Agreement
are genuine; the Mortgage, the Mortgage Note and any other documents
submitted by Seller to Buyer that Buyer requires to be original
documents are original documents; all certified copies of original
documents are true copies of the originals; and all other
representations by Seller as to each Mortgage Loan are true and correct
and meet the applicable requirements and specifications of this
Agreement.
(n) Nothing involving the Mortgage Loan, the real property
secured by the Mortgage, the mortgagor, or the mortgagor's credit
standing can reasonably be expected to:
(i) cause private institutional investors to regard the
Mortgage Loan as an unacceptable investment; or
(ii) cause the Mortgage Loan to become delinquent; or
(iii) adversely affect the Mortgage Loan's value or
marketability; or
(iv) if the Mortgage Loan is an FHA or VA loan, render the
Mortgage Loan ineligible for inclusion in a GNMA or FNMA pool.
(o) No Mortgage Loan sold and purchased pursuant to this
Agreement shall have a payment past due more than thirty (30) days.
(p) As demonstrated by a survey of the real property secured by
the Mortgage, all improvements secured by the Mortgage are wholly within
the boundaries and comply with all building restriction laws or the
mortgagee's title insurance policy insuring the Mortgage affirmatively
insures against loss or damage by reason of any violation, variation,
encroachment, or other adverse circumstance disclosed by the survey.
(q) No Mortgage Loan sold and purchased pursuant to this
agreement shall have real estate taxes, assessments, etc. due within
sixty (60) days of the loan closing. In the event that real estate
taxes, assessments, etc. due within sixty (60) days of closing have not
been paid, Seller shall be liable to Buyer for an amount equal to any
interest and penalty charged for late payment.
(r) The property securing the Mortgage Loan is not damaged by
fire, wind or other cause of loss. There are no proceedings pending for
the partial or total condemnation of the property.
(s) The Mortgage Loan complies with any special investor
requirements and/or underwriting contingencies communicated to Seller
prior to closing.
-6-
9
(t) In the event that FHA or VA loans are sold hereunder, Seller
is an approved mortgagee in good standing with FHA or VA, as the case
may be, and Seller also has any further FHA or VA approvals required for
origination, closing, and sale to Buyer of the Mortgage Loans.
(u) There is no mechanic's or similar lien or claim that has been
filed for work, labor, or material (and no rights are outstanding that
under applicable law could give rise to such a lien or claim), affecting
the related property, which is or may be a lien prior to, or equal with,
the lien of the related Mortgage.
4. Delivery of Documents. Seller agrees to do all acts necessary to
perfect title to the Mortgage Loans in Buyer and shall sell, assign, and deliver
to Buyer, with respect to the purchase of each such Mortgage Loan, the documents
set forth hereinafter, all subject to the approval of Buyer and its legal
counsel as to proper form and execution. No later than ten (10) business days
following the closing and disbursement (or at such earlier time as may be
required by Buyer in the Correspondent Manual), Seller shall forward to Buyer
the Mortgage Loan file including:
(a) The original Mortgage Note properly endorsed by Seller.
(b) The Mortgage, duly recorded and accompanied by a properly
executed assignment of the Mortgage and the Mortgage Note appropriate in
the jurisdiction in which the real property described in the Mortgage is
located and in recordable form or a certified "clocked-in" copy thereof.
The assignment is to be recorded at Seller's expense to perfect Buyer's
interest in the Mortgage.
(c) A signed copy of the most recently conducted report of
appraisal or certification of valuation of the property secured by the
Mortgage. In addition, if the Mortgage Loan is not an FHA insured loan
or a loan guaranteed at least 25% by the VA, Seller shall obtain and
deliver to Buyer a valid appraisal report of the real estate securing
the Mortgage Loan, which appraisal shall be made by a qualified
appraiser approved by Buyer who has no direct or indirect interest in
the real estate securing the Mortgage Loan.
(d) A mortgage title insurance binder, including copies of
exceptions, issued by a title insurance company approved by Buyer and in
such form and subject to such exceptions as are approved by Buyer and
the Buyer's legal counsel.
(e) A survey of the property secured by the Mortgage to the
extent required by applicable state law or required in order to enable
Buyer to sell the Mortgage to or place the Mortgage with the Federal
National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC"), or the Government National Mortgage Association
("GNMA").
(f) A hazard insurance policy with paid receipt issued or written
by an insurance company that has been approved by Buyer and meeting the
requirements set forth in Section 3(h) hereof.
-7-
10
(g) A statement showing the unpaid principal balance of the
Mortgage Loan, the amount of periodic installments, and the date(s) to
which principal, interest, and any escrows have been paid; and, if
requested by Buyer, a ledger card or ledger history reflecting all
receipts and disbursements from the inception of the Mortgage Loan
including the date of each receipt or disbursement.
(h) A flood insurance policy or copy of the application, if
applicable, with a copy of letter requesting an endorsement naming Buyer
as mortgagee.
(i) With respect to any Mortgage Loan that is also secured by a
junior lien or second mortgage, such documentation as is required by
Buyer to indicate that the liens on the property securing the Mortgage
do not exceed applicable loan-to-value ratio requirements imposed by
Buyer or any other requirement relating to secondary financing as
determined by FHA, VA, FNMA, FHLMC, or by any other subsequent investor
or purchaser of the Mortgage Loan.
(j) A completed tax information sheet together with a copy of the
paid receipt.
(k) A copy of the Settlement Statement (HUD-1) and
Truth-in-Lending Disclosure Statement prepared in connection with the
Mortgage Loan indicating that the mortgagor has received the disclosures
required by the Truth-in-Lending Act and Real Estate Settlement
Procedures Act and, when applicable, any required adjustable rate
mortgage disclosures.
(l) Seller shall deliver to Buyer such other follow-up
documentation as reasonably requested.
Buyer shall, within three (3) business days after receipt of the
above referenced documents, fund the purchase price of the Mortgage Loan being
purchased, net of any applicable discount points, purchase fees, escrow items,
or interim interest but including service release premiums and accrued interest,
by wire transfer of funds as directed by Seller.
No later than ninety (90) days following the purchase of the
Mortgage Loan by Buyer, Seller shall deliver to Buyer the following:
(a) The original recorded Mortgage.
(b) The original recorded assignments of the Mortgage and
the Mortgage Note.
(c) The final title insurance policy insuring the lien of
the Mortgage and including an indemnity from Seller against any changes
in the final title insurance policy.
(d) Any and all documents, agreements or instruments
related to the Mortgage or the Mortgage Note and Seller's right and
benefits therein (including but not
-8-
11
limited to the FHA Mortgage Insurance Certificate or the VA Loan
Guaranty Certificate), all documents relating to the making and closing
of the Mortgage Loan and any other documents, agreements, or instruments
related to the Mortgage Loan or required by Buyer in order to perfect
its right, title, and interest in and to the Mortgage Loan or required
by Buyer in order to enable Buyer to sell the Mortgage Loan to or place
the Mortgage Loan with GNMA, FNMA, FHLMC, or a private investor.
In the event Seller shall fail to deliver a fully
documented loan package as specified hereinabove, Seller shall be
subject to a delinquency penalty of Twenty-Five and no/100 Dollars
($25.00) per missing document per week, which penalty shall be paid by
Seller within 30 days of Buyer's request. In addition, Buyer reserves
the right to withhold service release premiums if required documentation
is not received in a timely manner or if the penalty described above is
not paid in a timely manner. Buyer's rights to demand payment of such a
penalty and to withhold payment of service release premiums shall be in
addition to and not in lieu of Buyer's other remedies hereunder
(including the remedy of repurchase as provided in Section 6), and
Buyer's exercise of such rights shall not be deemed an election of
remedies or a waiver of such other remedies. Buyer shall be entitled to
offset against service release premiums or other amounts payable to
Seller any costs or expenses incurred by Buyer in resolving Seller's
documentation deficiencies.
Seller acknowledges and agrees: (1) that all documents in the
mortgage file and all other documents and records of whatever kind or
description (whether prepared by Seller or by others on behalf of
Seller) that are related to the origination, processing, closing,
delivery, sale, or servicing of any Mortgage Loan sold by Seller to
Buyer hereunder (the "Documents") will be, and will remain at all times,
the property of Buyer; (2) that any such Documents in the possession of
Seller are retained by Seller in a custodial capacity only; (3) that
(except as required in the ordinary course of business) Seller shall not
transfer the Documents to a party other than Buyer without Buyer's
written permission; (4) that Seller will permit Buyer, at any time, to
inspect the Documents in the possession of Seller; (5) that Seller shall
transfer the Documents to Buyer (or Buyer's designee) promptly upon
Buyer's request; and (6) that Seller shall be liable to Buyer for and
shall indemnify Buyer and hold Buyer harmless for any loss, damage, or
expense (including court costs and reasonable attorney fees) that Buyer
may incur as a result of Seller's retention of such Documents.
5. Escrow Deposits. Seller hereby transfers, assigns, and conveys
to Buyer all of Seller's right, title, and interest in and to all escrow
deposits and other trusts or escrowed funds held in connection with all
Mortgage Loans and related agreements, and all unreimbursed advances
made by the Seller for principal, interest, taxes, hazard insurance,
mortgage insurance or similar items in connection with the Mortgage or
related agreements, and all of Seller's right to collect, recover, and
be reimbursed for the same.
6. Repurchase of Mortgage Loans. Seller agrees to repurchase any
Mortgage Loan subject to this Agreement upon the terms and conditions
hereinafter set forth in the event that:
-9-
12
(a) Any misstatement of material fact is discovered by
Buyer or its representative or assigns or disclosed to Buyer or
its representative or assigns by inspection by Buyer or its
representatives, or otherwise; or
(b) Any term of this Agreement is breached by the Seller;
or
(c) Any representation or warranty of the Seller under
Section 3 is determined by Buyer to have been false; or
(d) Any FHA insurance, VA guaranty, or private mortgage
insurance insuring or guaranteeing the loan secured by the
Mortgage lapses as a result of any act or omission by Seller or
the failure by Seller to obtain such insurance or guaranty within
ninety (90) days from the date of funding; or
(e) Buyer is required to repurchase any Mortgage Loan sold
to GNMA, FNMA, FHLMC, or other investor, due to a deficiency in
or omission with respect to the documents, instruments, and
agreements pertaining to any Mortgage Loan; or
(f) Seller does not comply with all of Buyer's
underwriting contingencies.
(g) Any material third party fraud or misrepresentation is
determined to exist through the post-closing quality control
review by Buyer or another investor. This includes, but is not
limited to, any misrepresentation of income, funds on deposit, or
employment.
Except as provided below, the repurchase price for any Mortgage
Loan that Seller is required to repurchase from Buyer shall be an amount equal
to the then unpaid principal balance of the Mortgage Loan plus accrued interest
through the date of repurchase (plus any premium paid to Seller by Buyer for
servicing), and the costs and expenses (including attorney's fees) incurred by
Buyer in connection with the repurchase.
In the event that Buyer is required to repurchase a Mortgage Loan
sold by Buyer to GNMA, FNMA, FHLMC, or any other investor, or pledged or placed
by Buyer in a mortgage pool for any of the reasons set forth in Subsections (a)
through (g) of this Section 6, the price to be paid by Seller to Buyer on
repurchase of the Mortgage Loan by Seller shall be an amount equal to the sum
Buyer was required to pay in order to repurchase the Mortgage Loan plus accrued
interest from the date of the repurchase of the Mortgage Loan by Buyer through
the date of the repurchase of the Mortgage Loan by Seller plus any service
release premium paid to Seller by Buyer plus any costs and expenses (including
reasonable attorney's fees) incurred by Buyer in connection with the
transaction.
7. Option to Repurchase or Indemnify as to Delinquent Loans. In
the event that a Mortgage Loan purchased hereunder (other than a Mortgage Loan
underwritten by Buyer
-10-
13
prior to purchase) becomes sixty (60) calendar days or more delinquent during
the first four (4) months following the first payment due to Buyer and is
subsequently recommended for foreclosure within twelve (12) months following the
first payment due to Buyer, then Seller shall either--
(i) repurchase such Mortgage Loan and the servicing rights related
thereto in the manner described in Section 6 above, or
(ii) indemnify Buyer in lieu of repurchase as follows: Seller shall
deposit with Buyer a foreclosure expense deposit of $2,500.00 and a foreclosure
processing fee of $500.00 and shall reimburse Buyer for the price paid for the
servicing rights for the related Mortgage Loan. Buyer will complete the
foreclosure process and file the claim with FHA, VA, or the applicable Private
Mortgage Insurance company. Seller shall be responsible for all losses, costs,
and expenses resulting from foreclosure and/or disposition of the property,
including but not limited to all of Buyer's out-of-pocket costs, Buyer's
unreimbursed cost of funds, and any losses resulting from any VA "no-bid" loan.
Upon determination of the final settlement amount, Buyer will furnish to Seller
an accounting of the claim and shall either (a) refund any unused portion of the
foreclosure expense deposit or (b) ▇▇▇▇ the Seller for payment of the excess of
all losses, costs and expenses over the foreclosure expense deposit. Seller
shall pay any amount billed within ten days of the billing date. It is expressly
understood and agreed that the foreclosure processing fee of $500.00 is designed
to compensate Buyer for its internal administrative costs in processing the
foreclosure and shall not be applied against other amounts for which Seller is
responsible. In the event that a VA Mortgage Loan becomes a "no-bid" loan, Buyer
will so advise Seller and will work with Seller to mitigate any eventual loss.
8. Refund of Service Release Premiums. If any Mortgage Loan is
prepaid within six (6) months following the date of purchase by Buyer, Seller
shall refund to Buyer all service release premiums received from Buyer with
respect to that Mortgage Loan.
9. Eligibility of Mortgage Loans for Sale or Transfer. Seller
agrees to take such action and to prepare, execute, assign, and deliver to Buyer
such documents, including but not limited to the Mortgage, assignment of the
Mortgage and Mortgage Note to Buyer, and Mortgage Note properly endorsed, in
such form as shall enable Buyer at Buyer's option to place or pledge any FHA
insured or VA guaranteed Mortgage Loan in a mortgage pool under the Government
National Mortgage Association's Mortgage-Backed Securities Program or to place
or pledge any conventional Mortgage Loan in a mortgage pool under the Federal
National Mortgage Association's Conventional Mortgage-Backed Securities Program
or to sell the Mortgage Loans to GNMA, FNMA, FHLMC, or a private investor.
10. Indemnification. Seller will indemnify, defend, and hold
Buyer harmless from and against any and all claims, losses, costs, or damages,
including, but not limited to, reasonable attorney's fees and expenses (i)
arising out of any act or omission of Seller or any employee or agent of Seller;
(ii) arising in connection with or out of the failure of Seller to comply with
any applicable statutes, rules, or regulations; or (iii) arising out of Seller's
failure to perform any of its obligations hereunder; or (iv) arising out of or
in connection with any falsity,
-11-
14
incorrectness, or incompleteness in any material respect of any representation
or warranty made by Seller herein. Buyer may ▇▇▇▇ Seller for, and Seller shall
pay within ten days of billing, any amounts due to Buyer in connection with
transactions under this Agreement (including but not limited to amounts
determined to be due as a result of errors or adjustments in the funding of
loans), and Buyer shall be entitled to offset against service release premiums
or other amounts payable to Seller any such amounts due to Buyer.
Seller understands that Buyer may enter into commitments to sell
mortgage-backed securities to be based on or backed by the Mortgage Loans
deliverable by Seller to Buyer under this Agreement, or that Buyer otherwise may
enter into commitments to sell such Mortgage Loans to investors, and that Buyer
may incur claims, losses, expenses, and other liabilities if it repudiates,
breaches, or defaults under such commitments to sell mortgage-backed securities
or to sell such Mortgage Loans. If Seller enters into any agreement or
commitment for the sale of Mortgage Loans to Buyer hereunder, Seller agrees to
indemnify Buyer and hold Buyer harmless against any such claims, losses,
expenses, and liabilities that arise from Seller's failure to deliver any such
Mortgage Loans, if closed, to Buyer, in accordance with the provisions of the
Correspondent Manual. Buyer shall be entitled to offset against service release
premiums or other amounts payable to Seller any amounts due to Buyer as
described above.
11. Financial Statements. Seller shall furnish to Buyer for as
long as this Agreement is in effect, as soon as available, and in any event
within ninety (90) days after the end of each fiscal year of Seller, audited
financial statements of Seller consisting of a balance sheet as of the end of
such fiscal year together with related statements of income or loss and
reinvested earnings and changes in financial position of Seller for such fiscal
year, prepared by independent certified public accountants in accordance with
generally accepted accounting principles. In addition, Seller shall also provide
to Buyer, from time to time, upon reasonable request and sixty (60) days notice,
any other financial reports or statements required by Buyer.
12. Insurance. Seller shall maintain in full force Errors and
Omissions and Fidelity Bond insurance coverage in such amounts as Buyer may
reasonably require to indemnify it from any loss or damage incurred in
connection with the transactions contemplated by this Agreement.
13. Assignment. Buyer shall have the right to assign this
Agreement and its duties, obligations, or rights hereunder upon written notice
to Seller. In the event that Buyer sells or assigns all or part or its interest
in any Mortgage Loans that are subject to this Agreement to a third party, such
third party shall succeed to all of the rights of Buyer hereunder with respect
to such Mortgage Loans. Seller shall not have the right to assign this Agreement
or any of its duties, obligations, or rights hereunder without the prior written
consent of Buyer.
14. Events of Default. Each of the following shall constitute an
Event of Default on the part of Seller under this Agreement: (i) any breach by
Seller of any of Seller's representations, warranties, or covenants set forth in
this Agreement; (ii) the failure of Seller to perform any of its obligations
under this Agreement; (iii) the occurrence of an act of insolvency or bankruptcy
concerning Seller; and (iv) Seller's failure to meet any capital, leverage, or
other
-12-
15
financial standard imposed by any applicable regulatory authority, or in Buyer's
sole discretion, any material adverse change occurs in the financial condition
of Seller.
15. Amendment/Termination. Buyer shall have the right to amend
this Agreement with written notice to the Seller. At Buyer's request, Seller
shall acknowledge changes to the Agreement in writing, but Seller's failure to
provide written acknowledgment of any amendment shall not impair the
enforceability of such amendment. This Agreement may also be terminated with
respect to future purchases of Mortgage Loans by either party at any time by
giving written notice of termination to the other party. In addition, upon the
occurrence of any Event of Default as described in Section 14, and without
affecting any other rights or remedies available to Buyer under this Agreement
or at law or in equity, Buyer may immediately suspend all registrations and
lock-ins and may refuse to fund any or all Mortgage Loans, pending the cure, to
Buyer's satisfaction, of such Event of Default. Termination of this Agreement
shall not in any respect change, alter, or modify the obligations of Buyer and
Seller with respect to Mortgage Loans that have been purchased by Buyer from
Seller prior to the date of such termination or (except as provided in the
preceding sentence) with respect to Mortgage Loans that are the subject of then
outstanding written commitments or agreements between Buyer and Seller at the
time of such termination.
16. Notices. Any notice or demand that is required or permitted
to be given by a provision of this Agreement shall be deemed to have been
sufficiently given if either served personally or sent by prepaid first class,
registered, or certified mail, addressed to the party at its address set forth
below:
Seller: E-Loan, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇. #▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ [ILLEGIBLE]
Buyer: Resource Bancshares Mortgage Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ [ILLEGIBLE]
With Copy to: Resource Bancshares Mortgage Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Either party may change its address by written notice to the
other.
17. Correspondent Manual. In addition to all of the obligations
and agreements specifically set forth herein, Seller hereby agrees to comply
with all of the provisions
-13-
16
of the Correspondent Manual (including any policies and procedures contained in
program announcements, memoranda, or other similar communications) delivered to
Seller, as may be modified or amended from time to time. Notwithstanding the
provisions of Section 18, modifications and additions to the Correspondent
Manual by Buyer shall not require the signature of Seller to be effective and
shall become effective upon receipt.
18. Entire Agreement. This Agreement and the Correspondent Manual
contain the entire agreement of the parties with respect to the subject matter
hereof, and there are no representations, inducements, or other provisions other
than those expressed in writing and therein. All changes, additions, or
deletions to this Agreement must be made in writing and signed by each of the
parties hereto. This Agreement restates, amends, and supersedes any and all
prior Mortgage Purchase Agreements between the parties.
19. Survival of Provisions; Severability. All of the covenants,
agreements, representations, and warranties made herein by the parties hereto
shall survive and continue in effect after the termination of the Agreement or
the consummation of the transactions contemplated hereby. All section headings
contained herein are for convenience only and shall not be construed as part of
this Agreement. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction, and, to this end, the provisions hereof are
severable. This Agreement may be executed in counterparts, all of which taken
together shall constitute one and the same instrument.
20. Governing Law, Jurisdiction, and Venue. This Agreement shall
be governed by and construed in accordance with the laws of the State of South
Carolina and any applicable federal laws. Each of the parties irrevocably
submits to the jurisdiction of any state or federal court located in Richland
County, South Carolina, over any action, suit or proceeding to enforce or defend
any right under this Agreement or otherwise arising from any transaction
existing in connection with this Agreement, and each of the parties irrevocably
agrees that all claims in respect of any such action or proceeding shall be
heard or determined in such state or federal court. Each of the parties
irrevocably waives the defense of an inconvenient forum to the maintenance of
any such action or proceeding and any other substantive or procedural objection
it may have with respect to the maintenance of any such action or proceeding in
any such forum. Each of the parties agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment or in any other manner provided by law.
Each of the parties further agrees not to institute any legal actions or
proceedings against the other party or any director, officer, employee,
attorney, agent or property of the other party, arising out of or relating to
this Agreement, in any court other than as hereinabove specified in this Section
20.
21. Attorney's Fees. In the event Seller defaults in any of its
warranties, representations, or obligations under this Agreement or in any
document or obligation relating to this Agreement, Seller shall pay Buyer its
reasonable attorney's fees incurred in enforcing its rights hereunder.
-14-
17
22. No Agency. This Agreement and transactions entered into
pursuant hereto shall not create between Seller and Buyer a relationship of
agency, legal representation, joint venture, partnership, or employment, and
Seller and Buyer agree that neither party is in any way authorized to make any
contract, agreement, warranty, or representation, or to create any obligation,
express or implied, on behalf of the other.
23. Change in Ownership of Seller. A sale or other transfer of a
substantial portion of the assets of Seller or any change in the ownership of a
majority interest in Seller, whether by sale of assets, merger, consolidation,
sale of stock interest in Seller, or any other circumstances where the effect is
to pass ownership of a majority interest in Seller, shall be deemed an
assignment for purposes of Section 13.
24. Waiver. No modification or waiver of any provision of this
Agreement, nor any consent to any departure by Seller therefrom shall in any
event be effective unless the same shall be in writing, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to nor demand on the Seller in any case shall entitle the
Seller to any other or further notice or demand in the same, similar, or other
circumstances. Neither any failure nor any delay on the part of the Buyer in
exercising any right, power, or privilege hereunder shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege.
25. Endorsement of Instruments. Seller hereby irrevocably
authorizes and empowers Buyer, without notice to Seller, whether in its name or
in the name of Seller, to endorse in the name of Seller any checks, drafts or
other orders payable to Seller for application to the respective Mortgage Loan,
and this authority shall be irrevocable until the Mortgage Loan has been fully
paid and discharged.
26. Acceptance. This Agreement shall become binding upon
acceptance by Buyer at its home office in Columbia, South Carolina.
-15-
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and sealed as of the day and year first above written.
SELLER:
(CORPORATE SEAL) NO CORP SEAL
[ILLEGIBLE] By: [ILLEGIBLE]
---------------------------------- --------------------------------------
Its: Senior Underwriter Its:[ILLEGIBLE]
----------------------------- -------------------------------------
BUYER:
(CORPORATE SEAL) RESOURCE BANCSHARES MORTGAGE GROUP, INC.
ATTEST:
[ILLEGIBLE] By: [ILLEGIBLE]
---------------------------------- -------------------------------------
Its: Vice President Its: [ILLEGIBLE]
----------------------------- ------------------------------------
-16-