Exhibit 10.6
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (the "Agreement") is hereby made as of the 7 day of
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July, 1999, by and between NMMC, Inc. dba New Mortgage Millennium Corp. (the
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"Mortgage Originator"), with an address of Six Centerpointe Dr. #360 Lake
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and STERLING BANK AND TRUST, FSB (the "Participant"), with an
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address of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH
The Mortgage Originator is the holder from time to time of various mortgage
loans (the "Mortgage Loans") evidenced by notes and secured by first mortgages
and/or deeds of trust (referred to collectively herein as "mortgages") on
improved one- to four-family residential real properties. The Mortgage Loans
will be eligible for purchase in the secondary market by FNMA or FHLMC or other
investors, or are eligible to serve as collateral for mortgage-backed securities
issued by GNMA. The Mortgage Originator desires to sell a senior participation
interest (each a "Participation") in each of the Mortgage Loans from time to
time to the Participant, and the Participant is willing to purchase such
Participations under the terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, it is agreed:
1. Purchase of Participations. The Participant agrees to purchase from time to
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time from the Mortgage Originator, but only in accordance with the terms and
conditions hereof, one or more loan participation certificates (the
"Participation Certificates"), substantially in the form of Exhibit A hereto,
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each of which represents the Participant's Participation in a Mortgage Loan
originated by the Mortgage Originator. The principal balance of each
Participation (the "Participation Principal Balance") shall be set out in the
related Participation Certificate and shall decrease as any portion of the
principal collections with respect to the Mortgage Loans are paid to the
Participant. The principal terms relating to the purchase of each Participation,
including but not limited to the maximum participation percentage, the purchase
price and the interest rate on the Participation Principal Balance may be set
out in the terms addendum attached hereto as Exhibit B, as the same may be
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amended from time to time (the "Terms Addendum"). Each Participation shall bear
interest on the related Participation Principal Balance at the rate specified as
the "Interest Rate" on the Terms Addendum; provided, however, that from the
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date on which any Event of Default (defined below) shall be deemed to have
occurred until the earlier of (i) the date on which the default is, in
Participant's sole discretion, waived in writing or (ii) the date on which the
Participation is paid in full, the Participation shall bear interest at the
Default Rate set forth on the Terms Addendum. The aggregate outstanding
principal balance of all Participations on any day shall not exceed the amount
specified as the "Maximum Participation Amount" on the Terms Addendum.
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2. Mechanics of Purchase and Repurchase. The Mortgage Loan subject to a
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Participation shall be listed on Schedule I to the related Participation
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Certificate (the "Mortgage Loan Schedule"). The Mortgage Originator shall be
responsible for delivering a Mortgage Loan Schedule.
(a) From time to time prior to the termination of this Agreement, the
Mortgage Originator may request that the Participant purchase a Participation.
If no Event of Default exists or no event that with the passage of time would
become an Event of Default, the Participant, in its sole discretion, may accept
the Participation for purchase and the Participant shall pay the Mortgage
Originator or, on behalf of the Mortgage Originator, a settlement agent, in the
Participant's sole discretion, an amount equal to the purchase price.
(b) The Mortgage Originator shall deliver the Participation Certificate
simultaneously with the documents referenced in Section 10 and if Participant
accepts the same, Participant shall make the payment referenced in Section 2(a)
above. The Participation Certificate and the documents referenced in Section 10
shall be forwarded to Participant, or they may, in the sole discretion of the
Participant, be delivered to a settlement agent approved by Participant. The
Mortgage Originator shall submit the names of settlement agents for approval by
Participant, accompanied by such information regarding the settlement agents as
Participant shall require. Each such settlement agent shall execute an escrow
instruction letter with Participant on terms satisfactory to Participant.
(c) If the Mortgager Originator delivers to the Participant the
Participation Certificate and other documents referenced in Section 10 at the
time participant makes the payment referenced in Section 2(a) above, then the
purchase is referred to in this Agreement (and in exhibits hereto and other
documentation relating to the purchase and sale of Participations by Participant
and Mortgage Originator) as a "Dry Funding." If the Mortgager Originator
delivers to the settlement agent pursuant to Section 2(b) above the
Participation Certificate and other documents referenced in Section 10 at the
time Participant makes the payment referenced in Section 2(a) above, then the
purchase is referred to in this Agreement (and in exhibits hereto and other
documentation relating to the purchase and sale of Participations by Participant
and Mortgage Originator) as a "Wet Funding."
(d) From time to time prior to the termination of this Agreement, the
Mortgage Originator may request to repurchase a Participation by (i) delivering
a written request to the Participant, substantially in the form attached as
Exhibit C, and (ii) tendering to the Participant the related "Repurchase Amount"
for each such Participation. The request for repurchase shall specify that a
Participation is being repurchased for one of the following reasons: (A) the
Mortgage Loan has been paid in full; (B) the Mortgage Loan is being sold
pursuant to a Takeout Commitment; (C) the Participation has been outstanding for
more than ninety (90) days; (D) a representation or warranty contained or
provided for in Section 8 or 9 of this Agreement has been breached; (B) the
Mortgage Loan has become more than thirty (30) days delinquent; or (F)
foreclosure proceedings are being started with respect to the Mortgage Loan. If
the Participant permits such repurchase, which it may do in its sole discretion,
upon receipt of the Repurchase Amount, the Participant shall return to the
Mortgage Originator (or such other party as the Mortgage Originator may direct)
the related note,
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mortgage, and assignment of mortgage, to the extent such documents were
delivered to the Participant and have not previously been redelivered to the
Mortgage Originator.
(c) For purposes hereof, the "Repurchase Amount" means the amount set forth
in Section 13(c).
3. Restrictions on Transfer by Mortgage Originator. The Mortgage Originator
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shall not sell, transfer or assign its retained interest in the Mortgage Loans
without the prior written consent of the Participant.
4. Required Repurchases. The Participant, in its sole discretion, may require
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the Mortgage Originator to repurchase a Participation, in accordance with
Section 2(d) above, (i) if any Mortgage Loan underlying a Participation becomes
more than thirty (30) days delinquent, (ii) if any representation or warranty
pertaining to a Mortgage Loan is untrue, (iii) if any legal action is initiated
or threatened which, if successful, would in any way impair the value of
Participant's interest in the Participation, as determined by the Participant in
its sole judgment, or (iv) if a Participation has been outstanding for a period
of more than ninety (90) days. In the event that Participant requires Mortgage
Originator to repurchase a Participation, the Repurchase Amount must be received
by Participant within ten (10) days after Participant sends notice to Mortgage
Originator.
5. Applications of Unscheduled Payments and Takeout Proceeds. If a Mortgage
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Loan is foreclosed upon or is otherwise liquidated or if the Mortgage Loan is to
be sold to a takeout investor, the related Participation shall be repaid in
full, together with any accrued interest thereon, from the proceeds of such
liquidation, foreclosure or takeout sale prior to the payment of any amount to
the Mortgage Originator with respect to such Mortgage Loan.
6. Servicing. In consideration of the Participant's agreement to purchase
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Participations from the Mortgage Originator, the Mortgage Originator hereby
agrees to act as the servicer of the Mortgage Loans subject to each
Participation. So long as any indebtedness remains outstanding on any of the
Mortgage Loans, the Mortgage Originator shall service such Mortgage Loans until
all payments due with respect to the related Participation are paid in full, and
to that end will, by way of illustration only and without limitation:
(a) Proceed with reasonable diligence to collect all payments on the
Mortgage Loans as and when they shall become due and payable, exercising the
same standard of care and using the same methods that the Mortgage Originator
would use in servicing mortgage loans held in its portfolio or, if higher, the
standard of care and methods used in the mortgage loan servicing industry for
the servicing of loans held by others;
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(b) Remit to the Participant on or before the tenth day of each month,
except as Participant may change this due day in any billing schedule or other
written notice sent to the Mortgage Originator, (i) the participant's pro rata
share of the amount of principal collected on each of the outstanding Mortgage
Loans during the previous month and (ii) accrued interest on the outstanding
Participation Principal Balance for each Participation as set forth in Section 1
above; provided, however, that if any collections on a Mortgage Loan are due to
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foreclosure or other liquidation of the Mortgage Loan, then such collections
shall be applied in accordance with Section 5 above;
(c) Cause the related mortgagor to maintain hazard insurance policies,
including but not limited to policies of flood insurance if required, covering
the mortgaged premises in an amount at least equal to the outstanding mortgage
balance;
(d) Keep records pertaining to each mortgage note and the collections
thereon and permit the Participant to examine these and other records pertaining
to each of the Mortgage Loans at such times as the Participant may elect during
the Mortgage Originator's business hours; and
(e) Cause the taxes on the mortgaged premises securing each Mortgage Loan
to be examined annually and report any delinquent taxes to the Participant.
7. Servicing Compensation. The Mortgage Originator shall be entitled to
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retain, as its sole compensation for servicing the Mortgage Loans subject to
Participations hereunder, all late charges payable and collected under the terms
of the Mortgage Loans. The Mortgage Originator shall not be entitled to any
additional fees for the performance of its duties as servicer of any Mortgage
Loan.
8. Representations and Warranties with Respect to Mortgage Loans. The Mortgage
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Originator represents and warrants to the Participant as to each Mortgage Loan
as of the date of the purchase of the related Participation that:
(a) proceeds equal to the note amount have been disbursed to or for the
account of the mortgagor;
(b) it holds a mortgagee title insurance policy or a valid first lien
letter from a title insurance company acceptable to Participant with an insured
closing letter from the underwriter, showing the related mortgage to be a first
mortgage lien on the mortgaged premises subject only to such easements,
restrictions, title irregularities and similar matters which do not have any
adverse effect on the ownership, appraised value or use of the mortgaged
premises;
(c) no more than three (3) days have elapsed between the closing of the
Mortgage Loan and the related Participation being presented to Participant for
purchase;
(d) the note and mortgage are genuine instruments binding and enforceable
against the mortgagor and subject to no defenses of any kind or nature;
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(e) there are no defaults existing under the note or mortgage;
(f) the mortgage has been duly recorded or has been forwarded to the proper
governmental office (and is in the proper form and accompanied by appropriate
fees) for recording;
(g) the principal balance remaining unpaid is the amount shown on the
Mortgage Loan Schedule attached to the related Participation Certificate;
(h) it holds a policy of insurance covering the mortgaged premises insuring
against loss or damage by fire and other hazards not less extensive than
extended coverage insurance, with an appropriate mortgagee loss payable
endorsement in favor of the Mortgage Originator and its assigns as mortgagee;
(i) at all times each Mortgage Loan and each party was in compliance with
all of the applicable provisions of applicable federal and state law and
regulations: by way of illustration and not limitation, all Mortgage Loans which
are subject to Section 226.32 of Federal Reserve Regulation Z have been
accurately identified, accurate disclosures have been provided to the Mortgagor
and Participant with respect to such Mortgage Loans, such Mortgage Loans do not
contain any prohibited terms as specified in Section 226.32(d) and the Mortgage
Originator has not engaged in any prohibited acts or practices as specified in
Section 226.32(c);
(j) all information provided to the Participant with respect to each
Mortgage Loan is true, complete and accurate and no person or entity involved in
the origination or servicing of the Mortgage Loan has made any false
representation or has failed to provide information that is true, complete and
accurate in connection with such transaction;
(k) the mortgage securing the Mortgage Loan is a valid, existing and
enforceable first lien on the mortgaged property;
(l) the Mortgage Originator has no knowledge of any circumstances or
condition with respect to the Mortgage Loan or the related mortgagor's credit
standing that can reasonably be expected to cause the Mortgage Loan to become an
unacceptable investment or delinquent or to adversely affect the value of any
Participation;
(m) the Mortgage Originator is the sole owner and holder of the Mortgage
Loan, the Mortgage Originator has not assigned or pledged the Mortgage Loan to
secure any obligation other than the related Participation and the Mortgage
Originator has good and marketable title to the Mortgage Loan;
(n) the Mortgage Loan is subject to a contractual arrangement between the
Mortgage Originator and a takeout investor, the arrangement and takeout investor
both being acceptable to the Participant in its sole discretion (including an
agency of the United States government, a seller-servicer approved by an agency
of the United States government or any other institutional
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investor) pursuant to which such purchaser agrees to purchase such Mortgage Loan
or guarantee another party's purchase of the Mortgage loan (a "Takeout
Commitment");
(o) the Mortgage Loan has been underwritten in accordance with standard
underwriting requirements as specified by the Participant or the related takeout
investor, whichever are more stringent;
(p) the Mortgage Loan complies with all requirements set forth in the
Participant's seller-servicer guide as amended from time to time; and
(q) the Mortgage Loan is not subject to any right of rescission, setoff,
recoupment, abatement, counterclaim or defense (including the defense of usury),
other than any such rights provided under applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors rights in general and general principles
of equity, and none of the Mortgagor or takeout investor has asserted or
manifested an intention to assert any right of rescission, setoff, recoupment,
counterclaim or defense, affecting any Mortgage Loan or Takeout Commitment which
is related to the Participation. The Mortgage Originator covenants that it shall
notify the Participant if it receives notice that any Mortgagor or takeout
investor asserts or manifests any intention to assert any such right.
9. Further Assurances. The Mortgage Originator agrees to make such further
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representations and warranties with respect to each Mortgage Loan and to take
such actions in connection with each Mortgage Loan (including the reaffirmation
of the representations and warranties contained herein) as the Participant may
require.
10. Delivery of Documents. Simultaneously with the purchase of any
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Participation, or, in the case of a Wet Funding, no later than five (5) days
after the closing of the Mortgage Loan, the Mortgage Originator shall deliver to
the Participant, or the settlement agent in accordance with Section 2(b) hereof,
with respect to each Mortgage Loan, the following documents:
(a) The original, fully executed mortgage note for such Mortgage Loan,
endorsed in blank without recourse, which note is hereby pledged to the
Participant to secure the performance of all of the Mortgage Originator's
obligations to the Participant incurred hereunder. The Participant will from
time to time, at the request of the Mortgage Originator and in accordance with
this Agreement, return to the Mortgage Originator such notes as have been paid
by the mortgagor or, as determined by Participant in its sole discretion, are
otherwise needed by the Mortgage Originator to facilitate the servicing of the
Mortgage Loans.
(b) The fully executed mortgage with respect to such Mortgage Loan with
evidence of recording thereon, or, if such document has not been returned by the
applicable recording office, a certified true and complete copy of such
document.
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(c) A fully executed assignment of mortgage in recordable form of the
individual mortgage which secures the Mortgage Loan. Assignments delivered under
this Agreement may be recorded by the Participant at any time in the sole
discretion of the Participant.
(d) A copy of the Takeout Commitment relating to such Mortgage Loan, the
rights under such Takeout Commitment being assigned to the Participant.
(e) All title insurance, hazard and/or homeowners insurance, PMI, and other
policies (or copies thereof) relating to the Mortgage Loan.
11. Assignment of Rights. By the sale of each Participation to the Participant,
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the Mortgage Originator hereby assigns to Participant those instruments and
documents set forth in Section 10 above (but, with respect to the Takeout
Commitment, only Mortgage Originator's rights therein), and all Mortgage
Originator's rights thereunder, and further conveys and transfers to the
Participant all right, title and interest in any property (real or personal)
including cash, deeds or titles received in exchange for all or part of the
Mortgage Loan.
12. Events of Default. The Mortgage Originator shall be in default upon the
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occurrence of any one or more of the following events (each, an "Event of
Default"):
(a) The Mortgage Originator shall fail to remit to the Participant any
principal or interest on a Participation as such amounts become due and payable
under the terms of this Agreement;
(b) The Mortgage Originator shall fail to timely repurchase a Participation
whose repurchase is required under Section 4 of this Agreement;
(c) In the case of any Wet Funding, Participant shall not have received the
documents set forth in Section 10 within five (5) days after the closing of the
Mortgage Loan.
(d) The Mortgage Originator shall default in the performance of any other
agreement herein contained and such default continues for twenty-one (21) days
after written notice thereof shall be given the Mortgage Originator by the
Participant;
(e) The Mortgage Originator shall become insolvent or bankrupt, or make an
assignment for the benefit of its creditors, or a receiver or trustee is
appointed for the Mortgage Originator, or if bankruptcy, reorganization or
liquidation proceedings are instituted by or against the Mortgage Originator; or
(f) Any license or registration reasonably necessary for the conduct of the
Mortgage Originator's business shall be revoked, suspended, or otherwise limited
by any state or federal regulatory, administrative, or quasi-governmental agency
(including, without limitation, FNMA
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and FHLMC), or any such state or federal regulatory, administrative, or quasi-
governmental agency in any way restricts Mortgage Originator's authority to
conduct its business in any state.
13. Remedies. Upon the occurrence of an Event of Default by the Mortgage
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Originator:
(a) The Participant's commitment to purchase Participations under this
Agreement shall cease to be in effect.
(b) The Participant may, at its option, take record title to each Mortgage
Loan, may endorse the notes in its favor, may record the assignments of mortgage
and shall have the right to service each of the Mortgage Loans. For such
purposes, the Mortgage Originator agrees that upon demand by the Participant, it
will turn over to the Participant all of its records pertaining to the Mortgage
Loans and all documents pertaining thereto, including, but not limited to, title
insurance policies, hazard insurance policies, mortgages, surveys and related
papers. In addition, the Mortgage Originator hereby grants full power and
authority to the Participant, acting in its name alone, or in its name as
attorney-in-fact for the Mortgage Originator, to do and perform any and all of
the undertakings of the Mortgage Originator hereunder, and in addition hereto,
the power and authority to demand, collect, ▇▇▇ for all monies due or to become
due on any of the Mortgage Loans, to foreclose any of the Mortgage Loans by
exercise of the power of sale or by court action, and to exercise any and all
other powers and rights that the Mortgage Originator may now have or hereafter
acquire with respect to any of the Mortgage Loans. This power is declared to be
coupled with an interest and is irrevocable so long as the Participant shall
have any interest in a Participation hereunder.
(c) The Participant shall be entitled, at the Participant's option, to
require the Mortgage Originator to repurchase the Participation Certificate
relating to any Participation at an amount equal to the related Participation
Principal Balance as of the date of repurchase plus (i) any accrued and unpaid
interest on such Participation Principal Balance, (ii) any accrued and unpaid
fees owed to the Participant, and (iii) any out-of-pocket expenses paid by the
Participant for which the Participant is entitled to be reimbursed under the
terms of this Agreement.
14. Operations Training Manual. Participant may provide to Mortgage Originator
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from time to time an Operations Training Manual (the "Manual") setting forth
guidelines and conditions applicable to Mortgage Loans and to the purchase and
sale of Participations under this Agreement. Such guidelines and conditions may
include, without limitation, reporting and monitoring requirements to be
observed by Mortgage Originator and Participant's reservation of rights to audit
and verify information pertaining to the purchase and sale of Participations
under this Agreement. The Manual is hereby incorporated into this Agreement.
Participant may, in its discretion, amend the Manual from time to time. The
amended Manual shall apply to all Mortgage Loans and to all matters relating to
the purchase and sale of Participations under this Agreement twenty-one (21)
days after Participant sends the amendment to the Mortgage Originator.
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15. Guaranty and Security. The Mortgage Originator's obligations hereunder
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shall be guarantied and secured in a manner satisfactory to the Participant;
provided that any guaranty shall be deemed satisfactory if substantially
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in the form of Exhibit D.
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16. Servicing by Participant. When the Participant is servicing the Mortgage
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Loans or exercising the power and authority granted by Section 13 above, it
shall be entitled to receive the late charges referred to in Section 7 above.
17. Fees and Expenses. Upon the purchase or repurchase of a Participation, the
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Mortgage Originator shall pay to the Participant the fees and expenses set forth
in the Terms Addendum.
18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
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ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
19. Entire Agreement; Severability. This Agreement shall supersede any existing
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agreement and shall constitute the entire agreement between the parties relating
to the subject matter hereof. 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.
20. Notices and Other Communications. Any and all notices, statements, demands
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or other communications hereunder may be given by a party to the other by mail,
facsimile, telegraph, messenger or otherwise to the address listed below, or
such other address as may be specified in a notice of change of address
hereafter received by the other:
MORTGAGE ORIGINATOR: New Mortgage Millennium Corp.
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▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇ - ▇▇▇ ▇▇▇
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Lake ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
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Telephone: 503/▇▇▇-▇▇▇▇
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Facsimile: 603/670-9033
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PARTICIPANT: Sterling Bank and Trust, FSB
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with copy to: Sterling Bank and Trust, FSB
Office of the General Counsel
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
All notices, demands and requests hereunder may be made orally, to be confirmed
promptly in writing, or by other communication as specified in the preceding
sentence.
21. Waiver; Amendment. No express or implied waiver of any Event of Default by
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either party shall constitute a waiver of any other Event of Default and no
exercise of any remedy hereunder by any party shall constitute a waiver of its
right to exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure herefrom
shall be effective unless in writing and duly executed by both of the parties
hereto.
22. Termination of Agreement; Renewal(s).
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(a) If this Agreement has not otherwise been terminated pursuant to its
terms or by an act of the Participant or Mortgage Originator, this Agreement
shall terminate SIX months from the date hereof. The Mortgage Originator or
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Participant may terminate this Agreement by written notice to the other of its
intent to do so, which notice shall take effect not sooner than ninety (90) days
after such notice is given. If either the Mortgage Originator or the Participant
delivers notice of intent to terminate this Agreement, or if the termination
date described in the first sentence of this Section passes without renewal of
this Agreement pursuant to Section 22(b), the Mortgage Originator shall not be
entitled to sell Participations after the earlier of the date so described or
the termination date specified in such notice. Notwithstanding termination of
this Agreement, however, the Mortgage Originator's obligations hereunder shall
not be terminated until the Participant has received all amounts due with
respect to all Participations.
(b) This Agreement may be renewed in Participant's discretion for an
additional like period of time as set forth in Section 22(a)(A) upon delivery
by Mortgage Originator to Participant of (i) a complete copy of Mortgage
Originator's financial statements, (ii) copies of reports arising from any
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regulatory audits conducted by any state or federal regulalory, administrative,
or quasi-governmental agency (including, without limitation, FNMA and FHLMC),
(iii) proof that the Mortgage Originator has in full force and effect errors and
omissions insurance at a coverage level appropriate in light of the Mortgage
Originator's business activity and loss history, and (iv) such other
documentation and information as Participant may require; and (B) upon
satisfaction of such other conditions as Participant may require.
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their authorized officers the day and year
first above written.
NMMC, Inc. dba New Mortgage Millennium Corp.
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as "Mortgage Originator"
by: /s/ ▇▇▇▇▇▇▇ ▇. Guy
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▇▇▇▇▇▇▇ ▇. Guy
its: Chief Executive Officer
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Sterling Bank and Trust, FSB
as "Participant"
by: _____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
its: Managing Director, Mortgage Banking Division
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TERMS ADDENDUM
Terms Addendum dated as of July 7, 1999 to that certain Participation Agreement
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(the "Agreement") of even date between NMMC, Inc. dba New Mortgage Millennium
Corp. (the "Mortgage Originator"), and STERLING BANK AND TRUST, FSB (the
"Participant").
This Terms Addendum is hereby incorporated into and made a part of the Agreement
and shall be binding as if fully set forth therein. The purpose of this Terms
Addendum is to: (i) state the principal terms of the Participations that the
Participant may purchase and have outstanding at any one time from Mortgage
Originator, (ii) separately state all fees and charges to be made by the
Participant to the Mortgage Originator during the effective term of the
Agreement, and (iii) set forth further requirements for the eligibility of
Mortgage Loans in which Participations will be sold by Mortgage Originator to
Participant. Mortgage Originator recognizes its responsibility for the fees and
charges stated and the right of Participant to debit any proceeds received on
behalf of Mortgage Originator or Mortgage Originator's Maintenance Account, as
such term is defined below, in the amount and at the time any such fee or charge
becomes due. Any capitalized term used and not defined herein shall have the
respective meaning given thereto in the Agreement. This Terms Addendum
supersedes any other addendum that may have been incorporated into the Agreement
previously.
A. Principal terms of each Participation:
1. Maximum Participation Amount: $5,000,000,00.
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2. Participation Percentage will be 98% of the Note Amount unless a
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Sterling Bank & Trust account is opened for 1% of the Maximum
Participation amount in which case the Participation Percentage will be
98% of the Take-out price not to exceed par.
3. Purchase price for any participation will be 100% of par of the
Participation Principal Balance.
B. The fees and charges are as follows:
1. Interest Rate:
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(a) Shall be Prime plus 4.0% per annum for Wet fundings, computed on a
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daily basis from the date Participant wires funds to a closing agent
until such date as Participant receives in its possession original
executed documents, and shall be Prime plus 2.0% per annum
thereafter. ----
(b) Shall be Prime plus 2.0% per annum for Dry Fundings.
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Interest shall be computed on a daily basis with respect to the amount
outstanding under the Participation Certificate and, at the discretion of
Participant, may be billed monthly or debited against any collections
received in the Account, as such term is defined below, for any Mortgage
Loans listed on Schedule I of the Participation Certificate.
Note: The Interest Rate and all interest charges shall be based on the
Prime Rate as published from time to time in the Money Rates column of the
Wall Street Journal (Eastern Edition) as effective for each such day for
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which interest shall be attributable plus the additional percentage as
indicated above.
2. Default Rate: Shall be the applicable Interest Rate (Wet or Dry) plus
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2.0% to be computed on a daily basis with respect to any Participation
that has not been repurchased and paid in full within the number of
days specified in Section 4 of the Agreement or that is otherwise
deemed to be in default by the Participant. The Default Rate shall
apply until payment thereof.
3. A $125 loan processing fee shall be payable with respect to each
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Mortgage Loan package delivered to Participant which may at
Participant's option be debited against any collections
1
received in the Account for such Mortgage Loan, unless the loans is to
be delivered to Sterling Bank & Trust at which time a $50.00 processing
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fee shall apply.
4. Participation Percentage shall be upgraded from 98% to 100% if loans
-- ---
are sold to Sterling Bank & Trust.
5. A $100 fee for any Mortgage Loan submitted to Participant for review
and potential purchase 1ess than 24 hours prior to the proposed closing
of said Mortgage Loan, which may at Participant's option be debited
against any collections received in the Account for such Mortgage Loan
to be debited against any collections received in the Account for such
Mortgage Loan.
6. A $25 fee plus all shipping costs incurred by Participant with respect
to each Mortgage Loan for which the Mortgage Originator fails to supply
the appropriate shipping packages for shipment to a takeout investor or
such shipping cannot be charged to the Mortgage Originator's account
for any reason, which may at Participant's option be debited against
any collections received in the Account for such Mortgage Loan.
7. Any other amounts due pursuant to the Agreement.
8. Any other charges incurred by Participant on behalf of the Mortgage
Originator.
9. Participant reserves the right to reduce the Maximum Participation
Amount based on the extent of Mortgage Originator's use of the
facility.
10. In the event that the Mortgage Originator makes no sales of
Participations during a three month consecutive period, Participant
reserves the right to impose a fee equal to 25 basis points (based on
the average unused portion of the Maximum Participation Amount).
C. No Mortgage Loan shall be considered to be an eligible Mortgage Loan under
the Agreement unless it (i) complies in all respects with the requirements
set forth herein and in the Agreement, and (ii) complies in all respects
with the following additional requirements:
1. The dollar amount of any individual Mortgage Loan shall not exceed
$350,000.
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2. Is first lien secured by a residential 1-4 family.
3. Is deliverable to the Take-Out Investor issuing the corresponding Take-
Out Agreement within 60 days.
In addition, a Mortgage Loan shall not qualify as an eligible Mortgage Loan
if any of the following statements is true with regard to such Mortgage
Loan:
1. Is a Mortgage Loan to an officer, principal, manager or Guarantor of the
Mortgage Originator.
2. The borrower(s) on the Mortgage Loan have two (2) loans outstanding with
this facility.
3. The Mortgage Loan is a construction or other "draw" type loan.
4. The Mortgage Loan property has deferred maintenance of more than 10% of
the appraised value.
5. Is a Mortgage Loan not generally salable in the secondary market.
D. Participant shall establish and maintain an account (the "Account") at
Comerica Bank. Detroit, or such other bank as Participant may from time to
time designate, into which Mortgage Originator agrees to deposit or cause
to be deposited all collections of principal, interest, purchase proceeds
and such other amounts from time to time due and owing on the Mortgage
Loan.
E. Mortgage Originator shall maintain at all times a balance in an account
(the "Maintenance Account") established by Participant at Sterling Bank &
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Trust, or such other bank as Participant may from time to time designate,
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of $5,000.00. Participant shall be entitled to debit, from time to time,
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Mortgage Originator's balance in the Maintenance Account for any sum due
and owing Participant from Mortgage Originator.
IN WITNESS WHEREOF, the parties have caused this Terms Addendum to be executed
in their respective corporate names and their corporate seals to be affixed and
attested to by their respective duly authorized officers, as of the date first
set forth above.
NMMC, Inc. dba New Mortgage Millennium Corp.
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as "Mortgage Originator"
by: /s/ ▇▇▇▇▇▇▇ ▇. Guy
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▇▇▇▇▇▇▇ ▇. Guy
its: Chief Executive Officer
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Sterling Bank and Trust, FSB
as "Participant"
by: _____________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
its: Managing Director of Mortgage Banking