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EX-10.28
AMENDED AND RESTATED
MASTER LOAN PURCHASE AND SERVICING AGREEMENT
GREENWICH CAPITAL MARKETS, INC.
Initial Purchaser
MEGO MORTGAGE CORPORATION
Seller and Servicer
MEGO FINANCIAL CORP.
Guarantor
Dated as of October 1, 1996
FHA Loans
and Conventional Loans
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TABLE OF CONTENTS
Page
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Agreement to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3. Loan Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5. Examination of Loan Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6. Conveyance from Seller to Initial Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7. Representations, Warranties and Covenants; Remedies for Breach . . . . . . . . . . . . . . . . . 16
SECTION 8. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9. Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 11. Seller's Servicing Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12. Removal of Loans from Inclusion Under this Agreement Upon a Whole Loan
Transfer or a Pass-Through Transfer on One or More Reconstitution Dates. . . . . . . . . . . . . . 27
SECTION 13. The Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 14. Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 15. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 16. Successor to the Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 17. Transfer of FHA Insurance Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 18. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 19. Mandatory Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 20. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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Page
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SECTION 21. Severability Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 22. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 23. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 24. Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 25. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 26. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 27. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 28. General Interpretive Principles . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 29. Reproduction of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 30. Further Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 31. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 32. Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
EXHIBITS
EXHIBIT 1A SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 1B GUARANTOR'S OFFICER'S CERTIFICATE
EXHIBIT 2 SECURITY RELEASE CERTIFICATION
EXHIBIT 3 ASSIGNMENT AND CONVEYANCE
EXHIBIT 4 CONTENTS OF EACH LOAN FILE
EXHIBIT 5 [COLLECTION ACCOUNT] [SPREAD ACCOUNT] LETTER AGREEMENT
EXHIBIT 6 SERVICING ADDENDUM
EXHIBIT 7 PRICING LETTER
EXHIBIT 8 REO ACCOUNT LETTER AGREEMENT
EXHIBIT 9A SELLER'S OFFICER'S CERTIFICATE OF CHIEF FINANCIAL OFFICER
EXHIBIT 9B GUARANTOR'S OFFICER'S CERTIFICATE OF GENERAL COUNSEL
EXHIBIT 10 CUSTODIAL AGREEMENT
EXHIBIT 11 WARRANT AGREEMENT
SCHEDULE I LOAN SCHEDULE
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AMENDED AND RESTATED
MASTER LOAN PURCHASE AND SERVICING AGREEMENT
This is an AMENDED AND RESTATED MASTER LOAN PURCHASE AND
SERVICING AGREEMENT (the "Agreement"), dated as of October 1, 1996, by and
among Greenwich Capital Markets, Inc., having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Initial Purchaser", and the Initial
Purchaser or the Person, if any, to which the Initial Purchaser has assigned
its rights and obligations as permitted hereunder as Purchaser with respect to
a Loan, and each of their respective successors and permitted assigns, the
"Purchaser"), Mego Mortgage Corporation, having an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Seller") and Mego Financial
Corp., having an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Guarantor").
W I T N E S S E T H :
WHEREAS, the Seller desires to sell from time to time to
the Initial Purchaser, and the Initial Purchaser desires to purchase from time
to time from the Seller, Loans (exclusive of the Excess Yield) as described
herein on a servicing-retained basis, which shall be delivered in groups of
whole loans on various dates as provided herein (each a "Closing Date");
WHEREAS, each Loan is either secured by a mortgage, deed of
trust or other security instrument creating a lien on, or was otherwise
originated to finance improvements to, a residential dwelling located in the
jurisdiction indicated on the Loan Schedule for the related Loan Package (or
was originated under any other program which has been approved in advance by
the Purchaser), which is to be annexed hereto on each Closing Date as Schedule
I with a designation for the appropriate Loan Package Number;
WHEREAS, the Initial Purchaser and the Seller wish to
prescribe the manner of the conveyance, servicing and control of the Loans and
the Excess Yield;
WHEREAS, the Seller has agreed to establish and maintain
the Spread Account, and to transfer funds to the Spread Account from time to
time from the Excess Yield pursuant to Subsection 11.16 (Exhibit 6);
WHEREAS, the Seller and Greenwich Capital Financial
Products, Inc. ("GCFP") entered into a Master Loan Purchase and Servicing
Agreement dated as of April 1, 1995 (the "Original Agreement"), as amended by
an Amendment dated February 1, 1996 and an Amendment ▇▇. ▇ ("▇▇▇▇▇▇▇▇▇ ▇▇. ▇")
dated as of July 1, 1996;
WHEREAS, the Initial Purchaser, with the consent of the
Seller, has agreed to replace GCFP as a party to this Agreement and to assume
the obligations of GCFP under the Original Agreement, as amended;
WHEREAS, the Initial Purchaser and the Seller desire to
amend and restate the Original Agreement to reflect the terms of Amendment No.
2 and certain additional terms set forth in a letter between the Seller and the
Purchaser dated September 17, 1996; and
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WHEREAS, as an additional inducement to the Initial
Purchaser to so amend and restate the Original Agreement, the Guarantor is
willing to grant certain warrants to the Initial Purchaser and has agreed,
subject to certain conditions, to guarantee the performance of the Seller's
obligations hereunder;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Initial Purchaser
and the Seller agree as follows:
SECTION 1. Definitions. For purposes of this Agreement
the following capitalized terms shall have the respective meanings set forth
below.
Agreement: This Amended and Restated Master Loan Purchase
and Servicing Agreement including all exhibits, schedules, amendments and
supplements hereto.
Assignment and Conveyance: An assignment and conveyance of
the Loans purchased on a Closing Date in the form annexed hereto as Exhibit 3.
Assignment of Mortgage: With respect to each Mortgage
Loan, an individual assignment of a Mortgage, notice of transfer or equivalent
instrument in recordable form, sufficient under the laws of the jurisdiction
wherein the related Improved Property is located to give record notice of the
sale of the Mortgage to the Purchaser.
Bankruptcy Act: The Bankruptcy Reform Act of 1978, as
amended (Title 11 of the United States Code).
BIF: The Bank Insurance Fund of the FDIC, or any successor
thereto.
Business Day: Any day other than a Saturday or Sunday, or
a day on which banking and savings and loan institutions in the State of
Georgia are authorized or obligated by law or executive order to be closed.
Closing Date: The date or dates on which the Purchaser
from time to time shall purchase from the Seller, and the Seller from time to
time shall sell to the Purchaser, the Loans listed on the related Loan Schedule
with respect to the related Loan Package.
Closing Documents: With respect to any Closing Date, the
documents required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, or any successor
statute thereto.
Collection Account: The separate account or accounts, each
of which shall be an Eligible Account, created and maintained pursuant to this
Agreement, which shall be entitled "Mego Mortgage Corporation, as servicer, in
trust for Greenwich Capital Markets, Inc. as Purchaser under that certain
Amended and Restated Master Loan Purchase and Servicing
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Agreement, dated as of October 1, 1996, among Greenwich Capital Markets, Inc.,
Mego Mortgage Corporation and Mego Financial Corp. for FHA and Conventional
Home Improvement Loans", initially established at The First National Bank of
Boston, or any other bank which has been approved in advance by the Purchaser
and the Seller.
Condemnation Proceeds: With respect to a Mortgage Loan,
all awards, compensation and settlements in respect of a taking of all or part
of an Improved Property by exercise of the power of condemnation or the right
of eminent domain.
Conventional Loan: A home improvement or other type of
loan not subject to an FHA Insurance Contract. All such conventional loans
shall be originated in compliance with underwriting guidelines which have been
approved in advance in writing by the Purchaser.
Custodial Agreement: The agreement, in the form annexed
hereto as Exhibit 10, governing the retention of the originals of each Note,
Mortgage, Assignment of Mortgage and each other Loan Document.
Custodian: The custodian under the Custodial Agreement, or
its successor in interest or permitted assign, or any successor to the
Custodian under the Custodial Agreement, as therein provided.
Cut-off Date: With respect to a Closing Date, the close of
business on the date selected by the Seller, which shall appear on the Pricing
Letter and Loan Schedule and which shall be no later than 6 days prior to, and
no earlier than 30 days prior to, such Closing Date.
Deleted Loan: A Loan replaced or to be replaced by a
Qualified Substitute Loan.
Delinquent Loan: As to any date of determination, a Loan
that is more than 60 days contractually delinquent in payment of scheduled
principal or interest as of such date and that has not been subject to a
Purchaser Disposition.
Determination Date: With respect to each Distribution
Date, the last Business Day of the preceding calendar month.
Distribution Date: The twentieth (20th) day of each month,
commencing for any Loan Package on the twentieth (20th) day of the month next
following the month in which the related Cut-off Date occurs, or if such
twentieth (20th) day is not a Business Day, the first Business Day immediately
following such twentieth (20th) day.
Due Date: The day of the month on which the Monthly
Payment is due on a Loan, exclusive of any days of grace.
Due Period: With respect to each Distribution Date, the
calendar month preceding the month of the Distribution Date.
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Eligible Account: Either (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company the short-term unsecured debt obligations of which (or, in the case of
a depository institution or trust company that is the principal subsidiary of a
holding company, the short-term unsecured debt obligations of such holding
company) are rated A-2 or higher by S&P or Prime-1 by Moody's (or a comparable
rating if another rating agency is specified by the Initial Purchaser by
written notice to the Seller) at the time any amounts are held on deposit
therein, (ii) an account or accounts the deposits in which are fully insured by
the FDIC or (iii) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity. Eligible Accounts may bear interest.
Event of Default: Any one of the events enumerated in
Subsection 14.01.
Excess Yield: When used with respect to distributions on a
Distribution Date, with respect to a Loan, an amount equal to the product of
the related Excess Yield Rate and the stated principal balance of the Loan,
calculated on the same principal balance and for the same period as interest
and pass-through interest on the related Loan at the Loan Interest Rate was
calculated.
Excess Yield Holder: Mego Mortgage Corporation and its successors and assigns.
Excess Yield Rate: With respect to each Loan, a per annum
rate of interest equal to: (a) the related Loan Interest Rate minus (b) the sum
of (i) the Pass-Through Rate and (ii) the Servicing Fee Rate.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHA: The Federal Housing Administration, an agency within
the United States Department of Housing and Urban Development, or any successor
thereto and including the Federal Housing Commissioner and the Secretary of
Housing and Urban Development where appropriate under the FHA Regulations.
FHA Approved Mortgagee: A financial institution which
holds a valid Title I contract of insurance and continues to be approved by FHA
under 24 CFR part 202 to originate, purchase, service, and/or sell loans
insured by FHA.
FHA Insurance Contract: The contractual obligation of FHA
respecting the insurance of the FHA Loans pursuant to Title I of the National
Housing Act, as amended.
FHA Insurance Proceeds: With respect to each FHA Loan, the
proceeds of the FHA Insurance Contract.
FHA Insurance Reserves: The insurance coverage reserve
account established for the Seller by the FHA with respect to the FHA Loans in
the Seller's portfolio.
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FHA Loan: A home improvement loan subject to an FHA
Insurance Contract.
FHA Regulations: Regulations promulgated by HUD under the
National Housing Act, codified in 24 Code of Federal Regulations, and other HUD
issuances relating to FHA loans, including the related handbooks, circulars,
notices and mortgagee letters.
Final Closing Date: The Closing Date with respect to the
purchase and sale of the final Loan Package purchased hereunder, which date
shall be the earlier of (i) September 30, 2001 and (ii) the Closing Date on
which the aggregate unpaid principal balance of Loans purchased by the
Purchaser pursuant to this Agreement from and including the date hereof through
and including such Closing Date first equals at least $2 billion
($2,000,000,000).
Final Recovery Determination: With respect to any
defaulted Loan or any REO Property (other than a Loan or REO Property purchased
by the Seller pursuant to this Agreement), a determination made by the Seller
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Seller, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered. The Seller
shall maintain records, prepared by a servicing officer of the Seller, of each
Final Recovery Determination.
HUD: The United States Department of Housing and Urban
Development or any successor thereto.
Impound Payments: Any payments in respect of FHA insurance
premiums required to be made by an Obligor pursuant to a rider to the related
Note.
Improved Property: The Obligor's real property improvements
which are financed by a Loan which, in the case of a Mortgage Loan, secures
repayment of a related Note, consisting of a fee simple interest in a single
parcel of real property improved by a Residential Dwelling.
Initial Closing Date: The Closing Date on which the Initial
Purchaser purchases and the Seller sells the first Loan Package hereunder.
Initial Purchaser: Greenwich Capital Markets, Inc. or any
successor.
Insurance Proceeds: With respect to each Loan, the proceeds
of any insurance policies insuring the Loan or the related Improved Property,
including, in the case of each FHA Loan, the FHA Insurance Proceeds.
Liquidation Event: With respect to any Loan or REO
Property, either of the following events: (i) a Final Recovery Determination
is made as to such Loan or REO Property; or (ii) such Loan or REO Property is
removed from this Agreement by reason of its being
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repurchased, sold or replaced pursuant to or as contemplated by any provision
of this Agreement.
Liquidation Proceeds: Amounts, other than Insurance
Proceeds and Condemnation Proceeds, received in connection with the liquidation
of a defaulted Loan through trustee's sale, foreclosure sale or otherwise,
other than amounts received following the acquisition of REO Property.
Loan: Each FHA Loan and each Conventional Loan sold,
assigned and transferred to the Purchaser pursuant to this Agreement and the
related Pricing Letter, and identified on the Loan Schedule annexed to the
respective Pricing Letter on such Closing Date, which Loan includes without
limitation the Loan File, the Monthly Payments, Principal Prepayments,
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, any REO
Disposition proceeds, and all other rights, benefits, proceeds and obligations
arising from or in connection with such Loan.
Loan Documents: The following documents pertaining to any
Loan:
(a) the original Note bearing all
intervening endorsements to the Seller and endorsed "Pay to the order
of _____________, without recourse" and signed in the name of the
Seller by an officer. To the extent that there is no space on the
face of the Notes for endorsements, the endorsement may be contained
on an allonge, if state law so allows. If the Loan was acquired by
the Seller in a merger, the endorsement must be by "[Seller],
successor by merger to [name of predecessor]". If the Loan was
acquired or originated by the Seller while doing business under
another name, the endorsement must be by "[Seller], formerly known as
[previous name]";
(b) with respect to each Mortgage Loan,
the original Assignment of Mortgage for each Loan, in form and
substance acceptable for recording executed by the Seller with the
assignee's name and identifying number in blank. If the Loan was
acquired by the Seller in a Merger, the Assignment of Mortgage must be
made by "[Seller], successor by merger to [name of predecessor]". If
the Loan was acquired or originated by the Seller while doing business
under another name, the Assignment of Mortgage must be by "[Seller],
formerly known as [previous name]";
(c) with respect to each Mortgage Loan,
the original Mortgage with evidence of recording thereon. If in
connection with any Loan, the Seller cannot deliver or cause to be
delivered the original Mortgage with evidence of recording thereon
prior to the related Closing Date because of a delay caused by the
public recording office where such Mortgage has been delivered for
recordation or because such Mortgage has been lost or because such
public recording office retains the original recorded Mortgage, the
Seller shall deliver or cause to be delivered to the Initial
Purchaser, a photocopy of such Mortgage, together with (i) in the case
of a delay caused by the public recording office, an Officer's
Certificate of the Seller stating that such Mortgage has been
delivered to the appropriate public recording office for recordation
and that the original recorded
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Mortgage or a copy of such Mortgage certified by such public recording
office to be a true and complete copy of the original recorded
Mortgage will be promptly delivered to the Initial Purchaser upon
receipt thereof by the Seller; or (ii) in the case of a Mortgage where
a public recording office retains the original recorded Mortgage or in
the case where a Mortgage is lost after recordation in a public
recording office, a copy of such Mortgage with the recording
information thereon certified by such public recording office to be a
true and complete copy of the original recorded Mortgage;
(d) the originals of all assumption,
modification, consolidation or extension agreements, with evidence of
recording thereon, if any;
(e) with respect to each Mortgage Loan,
the originals of all intervening Assignments of Mortgage with evidence
of recording thereon, or if any such intervening Assignment of
Mortgage has not been returned from the applicable recording office or
has been lost or if such public recording office retains the original
recorded Assignments of Mortgage, the Seller shall deliver or cause to
be delivered to the Initial Purchaser, a photocopy of such intervening
Assignment of Mortgage, together with (i) in the case of a delay
caused by the public recording office, an Officer's Certificate of the
Seller stating that such intervening Assignment of Mortgage has been
delivered to the appropriate public recording office for recordation
and that such original recorded intervening Assignment of Mortgage or
a copy of such intervening Assignment of Mortgage certified by the
appropriate public recording office to be a true and complete copy of
the original recorded intervening Assignment of Mortgage will be
promptly delivered to the Initial Purchaser upon receipt thereof by
the Seller; or (ii) in the case of an intervening Assignment of
Mortgage where a public recording office retains the original recorded
intervening Assignment of Mortgage or in the case where an intervening
Assignment of Mortgage is lost after recordation in a public recording
office, a copy of such intervening Assignment of Mortgage with
recording information thereon certified by such public recording
office to be a true and complete copy of the original recorded
intervening Assignment of Mortgage; and
(f) any other documents to be retained
by the Custodian as may be specified in the Custodial Agreement.
Loan File: The items pertaining to a particular Loan
referred to in Exhibit 4 annexed hereto, and any additional documents required
to be added to the Loan File pursuant to this Agreement.
Loan Interest Rate: With respect to each Loan, the annual
rate at which interest accrues on such Loan in accordance with the provisions
of the related Note, which rate shall be the rate set forth in the related Loan
Schedule.
Loan Package: The Loans listed on a Loan Schedule
delivered to the Purchaser at least five (5) Business Days prior to the related
Closing Date and attached as Schedule I to the related Pricing Letter on the
related Closing Date.
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Loan Package Number: The number, if any, assigned to a
Loan Package as set forth in the related Pricing Letter (for example,
"1995-4").
Loan Schedule: With respect to each Loan Package, the
schedule of Loans to be annexed as Schedule I (or a supplement thereto) to the
related Pricing Letter on each Closing Date for the Loan Package delivered on
such Closing Date in both hard copy and magnetic form, such schedule setting
forth the following information with respect to each Loan in the Loan Package:
(1) the Seller's Loan identifying number; (2) the Obligor's first and last
name; (3) the street address of the Improved Property including the state and
zip code; (4) the original months to maturity; (5) the original date of the
Mortgage; (6) the Loan Interest Rate; (7) the date on which the first Monthly
Payment was due on the Loan; (8) the stated maturity date; (9) the amount of
the Monthly Payment; (10) the last Due Date on which a Monthly Payment was
actually applied to the unpaid principal balance; (11) the original principal
amount of the Loan; (12) the actual unpaid principal balance of the Loan as of
the Cut-off Date; (13) the Servicing Fee Rate; (14) a code indicating whether
Impound Payments are applicable to the Loan; and (15) the name of any dealer,
correspondent or contractor associated with such Loan and the identification
number which the Seller has assigned to such dealer, correspondent or
contractor. With respect to the Loan Package in the aggregate, the Loan
Schedule shall set forth the following information, as of the related Cut-off
Date: (1) the number of Loans; (2) the aggregate actual unpaid principal
balance of the Loans; (3) the weighted average Loan Interest Rate of the Loans;
and (4) the weighted average maturity of the Loans. Schedule I hereto shall be
supplemented as of each Closing Date to reflect the addition of the Loan
Schedule with respect to the related Loan Package.
Monthly Advance: With respect to any Loan, the aggregate of
the advances made by the Seller on any Distribution Date pursuant to Subsection
11.15.
Monthly Payment: With respect to any Loan, the scheduled
combined payment of principal and interest payable by an Obligor under the
related Note on each Due Date.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor
in interest.
Mortgage: With respect to each Mortgage Loan, the mortgage,
deed of trust or other instrument creating a lien on the Improved Property
securing the Note.
Mortgage Loan: A Loan secured by a Mortgage.
Nonrecoverable Advance: Any Monthly Advance or Servicing
Advance previously made or proposed to be made in respect of a Loan or REO
Property that, in the good faith business judgment of the Seller, will not, or,
in the case of a proposed Monthly Advance or Servicing Advance, would not be,
ultimately recoverable from related late payments, Insurance Proceeds or
Liquidation Proceeds on such Loan or REO Property as provided herein.
Note: The original executed note or other evidence of the
Loan indebtedness of an Obligor.
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Noteholder: The holder of the Note and, if applicable, the
related Mortgage.
Obligor: The obligor on a Note.
Officer's Certificate: A certificate signed by either the
President, a Vice President, the Secretary or one of the Assistant Treasurers
or Assistant Secretaries of the Person on behalf of whom such certificate is
being delivered.
Opinion of Counsel: A written opinion of counsel, who may
be salaried counsel for the Person on behalf of whom the opinion is being
given, reasonably acceptable to each Person to whom such opinion is addressed.
Pass-Through Rate: With respect to any Loan (or any
related REO Property), as of any date of determination, the per annum rate of
interest to be received by the Purchaser in connection with the related Loan
Package, as set forth in the related Pricing Letter.
Pass-Through Transfer: The sale or transfer of some or all
of the Loans by the Purchaser to a trust to be formed as part of a publicly
issued or privately placed mortgage-backed securities transaction.
Permitted Investments: One or more of the following:
(i) obligations of, or guaranteed as to principal and interest
by, the United States or any agency or instrumentality thereof, when such
obligations are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than one month from the date of acquisition thereof;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an original
maturity of not more than ninety (90) days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than 365 days
or a remaining maturity of more than thirty (30) days denominated in United
States dollars of any U.S. depository institution or trust company incorporated
under the laws of the United States or any state thereof or of any domestic
branch of a foreign depository institution or trust company;
(iv) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the United
States or any state thereof rated investment grade or better by S&P or ▇▇▇▇▇'▇;
and
(v) a money market fund or a qualified investment fund.
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Person: An individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
Pricing Letter: With respect to a Loan Package, a letter
agreement between the Initial Purchaser and the Seller in the form of Exhibit
7.
Principal Prepayment: Any payment or other recovery of
principal on a Loan which is received in advance of its scheduled Due Date
which is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the
month of prepayment.
Purchase Price: The price paid on the related Closing Date
by the Purchaser to the Seller pursuant to the related Pricing Letter in
exchange for the Loans purchased on such Closing Date as calculated as provided
in Section 4.
Purchase Price Percentage: With respect to the Loans
purchased on any Closing Date, the percentage of par specified in the related
Pricing Letter for the type of Loans in the related Loan Package (which
percentage shall be a function of the rate required to produce a par
transaction upon securitization). The Purchase Price Percentage for the Initial
Closing Date shall be 103% for FHA Loans and 100% for Conventional Loans.
Purchaser Disposition: With respect to any Loan purchased
hereunder, the resale by the Purchaser or the transfer into a trust by the
Purchaser for the purpose of a Pass-Through Transfer or Whole Loan Transfer.
Qualified Substitute Loan: A loan substituted for a
Deleted Loan pursuant to the terms of this Agreement which must, on the date of
such substitution, (i) have an outstanding principal balance, not in excess of
the Stated Principal Balance of the Deleted Loan as of the date on which the
substitution occurs, (ii) have a Loan Interest Rate not less than (and not more
than one percentage point in excess of) the Loan Interest Rate of the Deleted
Loan, (iii) have a Pass-Through Rate identical to the Pass-Through Rate of the
Deleted Loan, (iv) have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Loan and (v) conform to each
representation and warranty set forth in Subsection 7.02 of this Agreement. In
the event that one or more loans are substituted for one or more Deleted Loans,
the amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Loan Interest Rates described in clause (ii)
hereof shall be determined on the basis of weighted average Loan Interest
Rates, the Pass-Through Rates described in clause (iii) hereof shall be
satisfied as to each such loan, the terms described in clause (iv) shall be
determined on the basis of weighted average remaining terms to maturity, and,
except to the extent otherwise provided in this sentence, the representations
and warranties described in clause (v) hereof must be satisfied as to each
Qualified Substitute Loan or in the aggregate, as the case may be.
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Realized Loss: With respect to each Loan as to which a
Final Recovery Determination has been made, an amount (not less than zero) as
of the date of the Final Recovery Determination equal to:
(i) the Stated Principal Balance of the Loan as of the
date of the Final Recovery Determination; plus
(ii) interest on such Stated Principal Balance at the
related Pass-Through Rate from the Due Date as to which interest was last paid
by the Obligor or advanced by the Seller up to the date on which the Final
Recovery Determination was made; minus
(iii) the amount of all Insurance Proceeds (including
related FHA Insurance Proceeds), Condemnation Proceeds and Liquidation
Proceeds, if any, received during the month in which the Final Recovery
Determination was made, net of all amounts payable or reimbursable therefrom
with respect to such Loan for unpaid Servicing Fees and unreimbursed advances
made pursuant to Subsections 11.15 or 11.03(b) of the Servicing Addendum, or
unreimbursed Servicing Advances.
With respect to each REO Property sold or otherwise disposed of, an amount (not
less than zero) as of the date on which such REO Property was acquired pursuant
to Subsection 11.08 equal to:
(i) the Stated Principal Balance of the related Loan as of
the date on which such REO Property was acquired by the Seller on behalf of the
Purchaser; plus
(ii) interest on such Stated Principal Balance at the
Pass-Through Rate for the related Loan from the Due Date as to which interest
was last paid by the Obligor or advanced by the Seller up to the date on which
such REO Property was sold or otherwise disposed of; minus
(iii) any amounts previously distributed to the Purchaser
in respect of such REO Property pursuant to Subsection 11.08; minus
(iv) any proceeds derived from the disposition of such REO
Property, net of all amounts payable or reimbursable therefrom with respect to
such REO Property or the related Loan for unpaid Servicing Fees and
unreimbursed advances made pursuant to Subsection 11.15 or 11.03(b) of the
Servicing Addendum, or unreimbursed Servicing Advances.
Reconstitution Agreement: The agreement or agreements
entered into by the Seller and the Purchaser and/or certain third parties on
the Reconstitution Date or Dates with respect to any or all of the Loans
serviced hereunder, in connection with a Whole Loan Transfer or a Pass-Through
Transfer as provided in Section 12 hereof.
Reconstitution Date: With respect to any Loan serviced
under this Agreement, the date on which such Loan is removed from this
Agreement and reconstituted as part of a Whole Loan Transfer or Pass-Through
Transfer pursuant to Section 12 hereof.
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Record Date: With respect to each Distribution Date, the
last Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
REO Account: The separate trust account or accounts created
and maintained pursuant to this Agreement which shall be entitled "Mego
Mortgage Corporation in trust for Greenwich Capital Markets, Inc. as Purchaser
under that certain Amended and Restated Master Loan Purchase and Servicing
Agreement, dated as of October 1, 1996, among Greenwich Capital Markets, Inc.,
Mego Mortgage Corporation and Mego Financial Corp. for FHA and Conventional
Home Improvement Loans".
REO Disposition: The final sale by the Seller of any REO
Property.
REO Property: An Improved Property acquired as a result of
the liquidation of a Mortgage Loan.
Repurchase Price: With respect to any Loan, a price equal
to (i) the Stated Principal Balance of such Loan plus (ii) interest on such
Stated Principal Balance at the Pass-Through Rate from and including the last
Due Date through which interest has been paid by or on behalf of the Obligor
(including, but not limited to, a Monthly Advance made by the Seller) to the
first day of the month following the date of repurchase, less amounts received
in respect of such repurchased Loan which are being held in the Collection
Account for distribution to the Purchaser in connection with such Loan.
Residential Dwelling: Any one of the following: (i) a
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a condominium project, or (iv) a detached
one-family dwelling in a planned unit development, none of which is a
co-operative or a mobile or manufactured home which is not real property under
applicable state law.
SAIF: The Savings Association Insurance Fund, or any
successor thereto.
Seller Public Offering: The initial public offering of
debt and equity securities of the Seller, proposed to be commenced in or about
November 1996.
Seriously Delinquent Loan: As to any date of determination,
a Loan that is more than 150 days contractually delinquent in payment of
scheduled principal or interest as of such date and that has not been subject
to a Purchaser Disposition.
Servicing Addendum: The terms and conditions attached
hereto as Exhibit 6 which will govern the servicing of the Loans by the Seller.
Servicing Advances: All customary, reasonable and
necessary "out-of-pocket" costs and expenses incurred by the Seller in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) preservation, restoration and repair of an Improved
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Property, (ii) any enforcement or judicial proceedings with respect to a Loan,
including foreclosure actions and (iii) the management and liquidation of REO
Property.
Servicing Fee: With respect to any Loan, the fee payable to
the Seller as servicer for each calendar month, in arrears, which is equal to
one-twelfth of the product of the Servicing Fee Rate and the unpaid principal
balance of the related Loan calculated on the same balance and for the same
period as the related interest at the Loan Interest Rate is calculated. The
right of the Seller to receive the Servicing Fee is limited to, and payable
solely from, the interest portion of related Monthly Payments collected by the
Seller and otherwise as provided in Subsection 11.03.
Servicing Fee Rate: One and one-quarter percent (1.25%)
per annum.
Servicing File: With respect to each Loan, the file
retained by the Seller consisting of originals of all documents in the Loan
File which are not delivered to the Purchaser or Custodian and copies of the
Loan Documents.
S&P: Standard & Poor's Ratings Group or its successor in
interest.
Spread Account: The account or accounts maintained pursuant
to Subsection 11.16, each of which shall be an Eligible Account.
Spread Account Depository: The First National Bank of
Boston or any successor Spread Account Depository under this Agreement which
has been approved in advance by the Purchaser and the Seller.
Stated Principal Balance: As to each Loan as of any date of
determination, (i) the unpaid principal balance of the Loan as of the related
Cut-off Date after giving effect to payments of principal received on or before
such Cut-off Date including any principal prepayments received on or before the
Cut-off Date minus (ii) all amounts previously distributed to the Purchaser
with respect to the related Loan representing payments or recoveries of
principal.
Whole Loan Transfer: Any sale or transfer of some or all
of the Loans by the Purchaser to a third party in whole loan or participation
format, which sale or transfer is not a Pass-Through Transfer. Any actual
transfer of whole Loans that are FHA Loans shall be made only to an FHA
Approved Mortgagee.
SECTION 2. Agreement to Purchase; Required
Securitizations. (a) Subject to the terms and conditions set forth in this
Agreement, the Seller shall agree to sell, and the Purchaser shall agree to
purchase, from time to time (and as frequently as weekly, at the Seller's
request) on or before the Final Closing Date, Loans (exclusive of the related
Excess Yield) having an aggregate principal balance on the related Cut-off Date
in an amount as set forth in the related Pricing Letter, or in such other
amount as agreed to by the Purchaser and the Seller as evidenced by the actual
aggregate principal balance of the Loans accepted by the
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Purchaser on the related Closing Date (any such agreement to be evidenced by a
Pricing Letter); provided, however, that (i) the aggregate principal balance of
Loans to be sold by the Seller on any given Closing Date shall be at least $5
million ($5,000,000), (ii) at any time, the aggregate principal balance of
Loans sold to the Purchaser (excluding all Loans resold or transferred by the
Purchaser pursuant to a Purchaser Disposition prior to such time) shall not
exceed $100 million ($100,000,000) (such limit (as amended from time to time,
the "Portfolio Limit") to be reassessed on a quarterly basis), (iii) the
aggregate principal balance of Loans that the Purchaser is committed to
purchase from the Seller pursuant to this Agreement shall be $2 billion
($2,000,000,000) and (iv) the percentage of Conventional Loans owned by the
Purchaser at any one time and acquired pursuant to this Agreement shall not
exceed 65% of the total amount of Loans owned by the Purchaser at such time and
acquired pursuant to this Agreement.
(b) As more fully described in Section 12, the Seller
acknowledges that it shall cooperate fully with the Purchaser and any
prospective purchaser with respect to all customary procedures reasonably
appropriate in completing a Purchaser Disposition. The Seller acknowledges
that it is the Purchaser's intention to complete such Purchaser Dispositions
once every three months commencing no later than December 31, 1996. The Seller
shall use its best efforts to assist the Purchaser in selling to third parties
pursuant to one or more Whole Loan Transfers any and all Loans purchased by the
Purchaser that, for any reason whatsoever (including without limitation the
delinquency status of such Loans, low Loan Interest Rates associated with such
Loans, or the ineligibility of such Loans to be assets of a "real estate
mortgage investment conduit"), are not resold or transferred by the Purchaser
pursuant to a Pass-Through Transfer.
(c) The Seller acknowledges that the Initial Purchaser may
enter into a purchase and sale agreement with GCFP (the "Affiliate Purchase
Agreement") pursuant to which GCFP will agree to purchase Loans from the
Initial Purchaser to the same extent the Initial Purchaser is obligated to
purchase Loans from the Seller hereunder. The Seller agrees that during the
term of the Affiliate Purchase Agreement, to the extent GCFP agrees to purchase
a Loan Package directly from the Seller, the Seller shall deal directly with
GCFP and shall look only to GCFP for performance of such purchase obligations.
The Initial Purchaser acknowledges that the Seller shall be obligated to deal
with GCFP on the sale of any Loan Package only to the extent GCFP's obligations
with respect to such Loan Package are identical to the Initial Purchaser's
corresponding obligations hereunder. In addition, the Initial Purchaser
acknowledges that notwithstanding any obligations assumed by GCFP with respect
to a particular Loan Package, the Initial Purchaser shall remain obligated with
respect to future purchases of Loans hereunder.
(d) The Initial Purchaser hereby assumes all of the
obligations of GCFP under the Original Agreement, as amended, as though it were
a party signatory thereto.
SECTION 3. Loan Schedules. The Seller shall deliver the
Loan Schedule for a Loan Package to be purchased on a particular Closing Date
to the Purchaser at least five (5) Business Days prior to the related Closing
Date.
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SECTION 4. Purchase Price; Fee to Purchaser. (a) On
each Closing Date, the Purchaser shall pay to the Seller the amount (the
"Purchase Price") stated in the related Pricing Letter, which amount shall be
equal to the aggregate of the percentage set forth in such Pricing Letter for
each Loan to be purchased multiplied by the Cut-off Date principal balance of
each such Loan, plus accrued interest on each such principal balance at the
Pass-Through Rate from (and including) the day following the date through which
interest has, as of the Cut-off Date, been paid by the Obligor to (but not
including) the related Closing Date for such Loan. In no instance shall the
Purchaser pay more than thirty days of accrued interest on any one Loan.
The Purchaser shall own and be entitled to receive with
respect to each Loan purchased, (1) all scheduled principal received after the
related Cut-off Date, (2) all other recoveries of principal collected after the
related Cut-off Date, and (3) all payments received after the Cut-off Date of
interest on the Loans at the Pass-Through Rate.
The Purchaser shall pay to the Seller a Profit Sharing
Payment (as defined in the related Pricing Letter).
The "Cut-off Date Balance" of a Loan will reflect the
application of all payments of principal received on or before the Cut-off
Date.
(b) Concurrently with the Initial Purchaser's execution of
this Agreement, (i) the Seller shall pay the Initial Purchaser a one-time cash
fee of $150,000 and (ii) the Guarantor shall grant the Initial Purchaser
warrants to purchase one million (1,000,000) shares of voting common stock of
the Guarantor, as set forth in the form of Warrant Agreement attached hereto as
Exhibit 11.
SECTION 5. Examination of Loan Files. The Initial
Purchaser has the right to underwrite the Loans and review the Loan Files prior
to the related Closing Date. If the Initial Purchaser makes such examination
prior to the related Closing Date and identifies any Loans that do not conform
to the representations and warranties in Subsection 7.02, such Loans may, at
the Initial Purchaser's option, be rejected for purchase by the Initial
Purchaser. If not purchased by the Initial Purchaser, such Loans shall be
deleted from the related Loan Schedule. The Initial Purchaser may, at its
option and without notice to the Seller, purchase all or part of any Loan
Package without conducting any partial or complete examination. The fact that
the Initial Purchaser has conducted or has determined not to conduct any
partial or complete examination of the Loan Files shall not affect the Initial
Purchaser's (or any of its successors' or assigns') rights to demand repurchase
or other relief or remedy provided for in this Agreement.
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SECTION 6. Conveyance from Seller to Initial
Purchaser.
Subsection 6.01. Conveyance of Loans; Possession of
Servicing Files.
The Seller, simultaneously with the payment of the Purchase
Price, shall execute and deliver to the Initial Purchaser an Assignment and
Conveyance with respect to the related Loan Package in the form attached hereto
as Exhibit 3. The Servicing File retained by the Seller with respect to each
Loan pursuant to this Agreement shall be appropriately identified in the
Seller's computer system to reflect clearly the sale of such related Loan to
the Purchaser. The Seller shall release from its custody the contents of any
Servicing File retained by it only in accordance with this Agreement, except
when such release is required in connection with a repurchase of any such Loan
pursuant to Subsection 7.03.
Subsection 6.02. Books and Records.
Record title to each Note and, with respect to each
Mortgage Loan, the related Mortgage, as of the related Closing Date shall be in
the name of the Seller pending recordation of the Assignments of Mortgage, and
thereafter in the name of one or more designees of the Purchaser, as the
Purchaser shall designate. Notwithstanding the foregoing, beneficial ownership
of each Note and, with respect to each Mortgage Loan, the related Mortgage, in
each case exclusive of the Excess Yield, shall be vested solely in the
Purchaser. All rights arising out of the Loans including, but not limited to,
all funds received by the Seller after the related Cut-off Date on or in
connection with a Loan as provided in Section 4 shall be vested in the
Purchaser (exclusive of the Excess Yield); provided, however, that all such
funds received on or in connection with a Loan as provided in Section 4 shall
be received and held by the Seller in trust for the benefit of the Purchaser as
the owner of the Loans pursuant to the terms of this Agreement.
It is the express intention of the parties hereto that the
transactions contemplated by this Agreement be, and be construed as, a sale of
the Loans, exclusive of the Excess Yield by the Seller and not a pledge of the
Loans by the Seller to the Purchaser to secure a debt or other obligation of
the Seller. However, in the event that the Loans are held to be property of
the Seller, or if for any reason this Agreement is held or deemed to create a
security interest in the Loans then it is intended that (a) this Agreement
shall also be deemed to be a security agreement within the meaning of the
Uniform Commercial Code of any applicable jurisdiction; (b) to the extent
allowed under FHA Title I rules and regulations, in order to secure the
obligations of the Seller to the Purchaser hereunder with respect to the FHA
Loans, the Seller hereby shall be deemed to have granted to the Purchaser a
security interest in all of the Seller's right (including the power to convey
title thereto), title and interest, whether now owned or hereafter acquired, in
and to (A) the FHA Loans; (B) the FHA Insurance Reserves, all of the Seller's
other contractual rights against the FHA in relation to the Loans, and all
documents in the possession or under the control of the Seller with respect
thereto; (C) all amounts payable pursuant to the FHA Insurance Contract in
accordance with the terms thereof; and (D) any and all general intangibles
consisting of, arising from or relating to any of the foregoing, and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments,
20
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securities or other property, including, without limitation, all amounts from
time to time held or invested in the Spread Account, any REO Account or the
Collection Accounts, whether in the form of cash, instruments, securities or
other property; (c) the possession by the Purchaser of the related Notes or
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party", or possession by a purchaser or a person designated by such secured
party, for purposes of perfecting the security interest pursuant to the Uniform
Commercial Code of any applicable jurisdiction (including, without limitation,
Section 9-305, 8-313 or 8-321 thereof); (d) notifications to persons holding
such property, and acknowledgments, receipts or confirmations from persons
holding such property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Purchaser for the purpose of perfecting such security
interest under applicable law; and (e) for purposes of the Agreement and the
Pricing Letter, "Loan Documents" shall include UCC-1 financing statements in
form acceptable for filing in the applicable jurisdictions in which are located
the principal place of business and the executive offices of the Seller and
executed by the Seller in favor of the Purchaser.
Subsection 6.03. Delivery of Loan Documents.
The Seller shall from time to time in connection with each
Closing Date, on or prior to such Closing Date, deliver and release to the
Custodian those Loan Documents as required by this Agreement or the Custodial
Agreement with respect to each Loan to be purchased and sold on the related
Closing Date and set forth on the related Loan Schedule.
The Custodian shall certify its receipt of all such Loan
Documents required to be delivered pursuant to the Custodial Agreement for the
related Closing Date, as evidenced by the Trust Receipt and Initial
Certification or Trust Receipt and Final Certification, as the case may be, of
the Custodian in the forms annexed to the Custodial Agreement. The fees and
expenses of the Custodian shall be paid by the Seller pursuant to the terms of
the Custodial Agreement.
The Seller shall forward to the Custodian original
documents evidencing an assumption, modification, consolidation or extension of
any Loan entered into in accordance with this Agreement within two (2) weeks of
their execution, provided, however, that the Seller shall provide the Custodian
with a certified true copy of any such document submitted for recordation
within two (2) weeks of its execution, and shall provide the original of any
document submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within ninety (90) days of its submission for recordation.
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Subsection 6.04. Excess Yield.
Notwithstanding any other provisions of this Agreement, (i)
the sale and delivery of the Loans to the Initial Purchaser is exclusive of the
Excess Yield Holder's right, title and interest in, to, and under the Excess
Yield and (ii) subject to Subsection 11.16 of the Servicing Addendum, the right
of the Excess Yield Holder to the Excess Yield with respect to each Loan shall
be absolute and unconditional, and shall survive any Event of Default by the
Seller, any termination of the Seller as servicer hereunder and any other
event.
It is understood and intended, and is expressly covenanted
by the Purchaser and the Seller as the Excess Yield Holder, each to the other,
that neither the Excess Yield Holder nor the Purchaser shall have any right in
any manner whatsoever by virtue of the provisions of this Agreement (i) to
affect, disturb or prejudice the rights of the other, (ii) to seek to obtain
priority over or preference to the other with respect to their respective
interests in the Loans, except as provided in Subsection 11.16 of the Servicing
Addendum, or (iii) to enforce any right under this Agreement, except in the
manner herein provided and as the respective interests of the Purchaser and the
Excess Yield Holder are provided for pursuant to this Agreement.
The Excess Yield Holder and the Purchaser each agree to
execute and deliver from time to time such other instruments and documents as
may be reasonably requested by the other to further effectuate the provisions
of this Subsection 6.04.
SECTION 7. Representations, Warranties and
Covenants; Remedies for Breach.
Subsection 7.01. Representations and Warranties
Respecting the Seller.
The Seller represents, warrants and covenants to the
Purchaser as of the Initial Closing Date and each subsequent Closing Date or as
of such date specifically provided herein or in the applicable Assignment and
Conveyance:
(i) The Seller is duly organized, validly existing and in
good standing under the laws of Delaware and is and will remain in compliance
with the laws of each state in which any Improved Property is located to the
extent necessary to ensure the enforceability of each Loan and the servicing of
the Loan in accordance with the terms of this Agreement;
(ii) The Seller has the full power and authority to hold
each Loan, to sell each Loan, and to execute, deliver and perform, and to enter
into and consummate, all transactions contemplated by this Agreement. The
Seller has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by the Purchaser and the
Guarantor, constitutes a legal, valid and binding obligation of the Seller
enforceable against it in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
reorganization;
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(iii) The execution and delivery of this Agreement by the
Seller and the performance of and compliance with the terms of this Agreement
will not violate the Seller's certificate of incorporation or by-laws or
constitute a default under or result in a breach or acceleration of, any
material contract, agreement or other instrument to which the Seller is a party
or which may be applicable to the Seller or its assets;
(iv) The Seller is not in violation of, and the execution
and delivery of this Agreement by the Seller and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction over the Seller or
its assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;
(v) The Seller is an FHA Approved Mortgagee in good
standing to service mortgages and has not been suspended as a mortgagee or
servicer by the FHA;
(vi) The Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vii) The Note, the Mortgage, the Assignment of Mortgage and
any other documents required to be delivered with respect to each Loan pursuant
to the Custodial Agreement, have been delivered to the Custodian all in
compliance with the specific requirements of the Custodial Agreement. With
respect to each Loan, the Seller is in possession of a complete Loan File in
compliance with Exhibit 4, except for such documents as have been delivered to
the Custodian;
(viii) Immediately prior to the payment of the Purchase Price
for each Loan, the Seller was the owner of record of the indebtedness evidenced
by each Note and, with respect to each Mortgage Loan, the related Mortgage, and
upon the payment of the Purchase Price by the Purchaser, in the event that the
Seller retains record title, the Seller shall retain such record title to each
Mortgage Note, the related Loan Files with respect thereto and, with respect to
each Mortgage Loan, the related Mortgage, in trust for the Purchaser as the
owner thereof and only for the purpose of servicing and supervising the
servicing of each Loan;
(ix) There are no actions or proceedings against, or
investigations of, the Seller before any court, administrative or other
tribunal (A) that might prohibit its entering into this Agreement, (B) seeking
to prevent the sale of the Loans or the consummation of the transactions
contemplated by this Agreement, or (C) that might prohibit or materially and
adversely affect the performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement;
(x) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery
and performance by the Seller of, or
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compliance by the Seller with, this Agreement or the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained prior to
the Closing Date;
(xi) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Notes and the Mortgages by the
Seller pursuant to this Agreement are not subject to the bulk transfer or any
similar statutory provisions;
(xii) Neither this Agreement nor any written statement,
report or other document prepared and furnished or to be prepared and furnished
by the Seller pursuant to this Agreement or in connection with the transactions
contemplated hereby 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; and
(xiii) With respect to each FHA Loan, the Seller has complied
and shall comply with the applicable provisions of the National Housing Act, as
amended and supplemented, all rules and regulations issued thereunder, and all
administrative publications published pursuant thereto including all FHA
requirements for FHA Title I loans.
Subsection 7.02. Representations and Warranties
Regarding Individual Loans.
The Seller hereby represents and warrants to the Purchaser
that, as to each Loan, as of the related Closing Date for such Loan:
(i) The information set forth in each of the related Loan
Schedule and Assignment and Conveyance is complete, true and correct;
(ii) With respect to each FHA Loan, the amount and the
original term to maturity of such FHA Loan comply with the FHA Regulations at
the time of origination unless the requirements with respect to such FHA Loan
are specifically waived by HUD with respect to such FHA Loan;
(iii) Each Loan was originated and underwritten by the Seller
in accordance with the underwriting criteria established by the Seller and, in
the case of each FHA Loan, the FHA and HUD;
(iv) Each Loan (a)(i) is an FHA Title I property improvement
loan (as defined in 24 CFR Section 201.2(aa)) underwritten by the Seller or an
entity which at the time of origination, was a lender approved by the FHA for
participation in the programs under Title I of the National Housing Act, in
accordance with the FHA requirements for the Title I loan program as set forth
in 24 CFR Parts 201 and 202, and is the subject of FHA Insurance, (ii) was
originated and underwritten in accordance with applicable FHA requirements, and
(iii) was made to provide financing for eligible home improvements for a
Residential Dwelling or (b)(i) is a
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conventional home improvement loan underwritten by the Seller or an entity
acceptable to the Initial Purchaser and (ii) was made to provide financing for
home improvements for a Residential Dwelling or (c) is a Loan originated
pursuant to underwriting guidelines approved in advance in writing by the
Initial Purchaser;
(v) The Loan is in compliance with all requirements set
forth in the Pricing Letter, and the characteristics of the related Loan
Package as set forth in the related Pricing Letter are true and correct;
(vi) As of the Cut-off Date, the Loan is not more than one
payment delinquent nor has it been more than one payment delinquent, measured
as of month-end, more than twice during (a) the last twelve months in the event
the Loan was acquired but not originated by the Seller, or (b) since
origination, in the event the Loan was originated by the Seller; the Seller has
not advanced funds, or induced, solicited or knowingly received any advance of
funds from a party other than the owner of the related Improved Property,
directly or indirectly, for the payment of any amount required by the Note or
Mortgage;
(vii) The terms of the Note and, with respect to each
Mortgage Loan, the Mortgage have not been impaired, waived, altered or modified
in any respect, except by written instruments, recorded in the applicable
public recording office if necessary to maintain the lien priority of the
Mortgage, and which have been delivered to the Custodian and the terms of which
are reflected in the related Loan Schedule. No instrument of waiver,
alteration or modification has been executed, and no Obligor has been released,
in whole or in part, except in connection with an assumption agreement, which
assumption agreement has been delivered to the Purchaser and the terms of which
are reflected in the related Loan Schedule;
(viii) The Note and, if applicable, the Mortgage are not
subject to any right of rescission, set-off, counterclaim or defense, including
the defense of usury, nor will the operation of any of the terms of the Note
and the Mortgage, or the exercise of any right thereunder, render the Note or
the Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(ix) If upon origination of the Loan, the Improved Property
was in an area identified on a Flood Hazard Map or Flood Insurance Rate Map
issued by the Federal Emergency Management Agency as having special flood
hazards (and such flood insurance has been made available) a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect, which policy, in the case of each FHA
Loan, conforms to the requirements of FHA. The Loan obligates the Obligor
thereunder to maintain all such insurance at the Obligor's cost and expense,
and on the Obligor's failure to do so, authorizes the holder of the Mortgage to
maintain such insurance at Obligor's cost and expense and to seek reimbursement
therefor from the Obligor;
(x) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth in lending, real estate
settlement procedures, consumer credit
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protection, equal credit opportunity or disclosure laws, applicable to the
origination and servicing of the Loan, have been complied with;
(xi) In the case of a Mortgage Loan, the Mortgage has not
been satisfied, cancelled, subordinated or rescinded, in whole or in part, and
the Improved Property has not been released from the lien of the Mortgage, in
whole or in part, nor has any instrument been executed that would effect any
such satisfaction, cancellation, subordination, rescission or release;
(xii) In the case of a Mortgage Loan, the Mortgage was
recorded or submitted for recordation in the appropriate public recording
office so as to perfect the lien of the Mortgage under the law of the
jurisdiction in which the Improved Property is located and is a valid, existing
and enforceable lien on the Improved Property and the Seller has full right to
sell and assign the same to the Purchaser;
(xiii) The Note and, if applicable, the related Mortgage are
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms;
(xiv) The proceeds of the Loan have been fully disbursed to
or for the account of the Obligor and there is no obligation for the mortgagee
to advance additional funds thereunder and there are no escrows of such funds.
All costs, fees and expenses incurred in making or closing the Loan and the
recording of the Mortgage have been paid, and the Obligor is not entitled to
any refund of any amounts paid or due to the Obligor pursuant to the Note or
Mortgage;
(xv) All parties to the Note and the Mortgage had legal
capacity to enter into the Loan and to execute and deliver the Note and the
Mortgage to the extent necessary to maintain the enforceability of the Note
and, in the case of each FHA Loan, the existence of the FHA Insurance Contract
without offset, defense, surcharge or other impairment; the Note and the
Mortgage have been duly and properly executed and delivered by all parties
thereto. The Obligor is a natural person;
(xvi) The Seller is the sole legal, beneficial and equitable
owner of the Note and, if applicable, the Mortgage and has full right to
transfer and sell the Loan to the Purchaser free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest;
(xvii) All parties which have had any interest in the Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) in compliance
with any and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Improved Property is located to the extent
necessary to preserve the enforceability of the Note and, in the case of each
FHA Loan, the existence of the FHA Insurance Contract, without offset, defense,
surcharge or other impairment;
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(xviii) There is no default, breach, violation or event of
acceleration existing under the Note or, if applicable, the Mortgage, and no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event of
acceleration, and the Seller has not waived any default, breach, violation or
event of acceleration;
(xix) Principal payments on the Loan commenced no more than
sixty days after the proceeds of the Loan were disbursed; the Loan bears
interest at the Loan Interest Rate and the Note is payable in Monthly Payments
which are sufficient to fully amortize the original principal balance over the
original term thereof and to pay interest at the related Loan Interest Rate
(except for Loans identified in the Loan Schedule, annexed to each respective
Pricing Letter, as having a balloon payment which the Purchaser has agreed to
purchase);
(xx) The origination, collection and servicing practices
used by the Seller with respect to each Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry and, in the case of each FHA Loan, have satisfied all FHA
requirements. The Loan has been serviced by the Seller and any predecessor
servicer in accordance with the terms of the Note;
(xxi) To the best of the Seller's knowledge, the Improved
Property is free of damage and waste and there is no proceeding pending for the
total or partial condemnation thereof;
(xxii) The Note and, if applicable, the Mortgage contain
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the Improved
Property of the benefits of the security provided thereby, including, (a) in
the case of a Mortgage designated as a deed of trust, by trustee's sale, and
(b) otherwise by statutory or judicial foreclosure. There is no homestead or
other exemption available to the Obligor which would interfere with the right
to sell the Improved Property at a trustee's sale or the right to foreclose the
Mortgage. The Obligor has not notified the Seller, and the Seller has no
knowledge, of any relief requested or allowed to the Obligor under the Soldiers
and Sailors Civil Relief Act of 1940;
(xxiii) With respect to each FHA Loan, the Note and, if
applicable, the Mortgage are on forms acceptable to FHA;
(xxiv) The Note is not and has not been secured by any
collateral except the lien of the applicable corresponding Mortgage on the
Improved Property and the security interest of any applicable security
agreement;
(xxv) With respect to any Mortgage Loan, in the event the
Mortgage constitutes a deed of trust, a trustee, duly qualified under
applicable law to serve as such, has been properly designated and currently so
serves and is named in the Mortgage, and no fees or expenses are or will become
payable by the Purchaser to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Obligor;
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(xxvi) The Seller has not received notice that the Obligor has
filed for protection under applicable bankruptcy laws or that the Improved
Property has been subject to foreclosure proceedings, in connection with the
enforcement of a prior lien;
(xxvii) No Loan contains provisions pursuant to which Monthly
Payments are (a) paid or partially paid with funds deposited in any separate
account established by the Seller, the Obligor, or anyone on behalf of the
Obligor, (b) paid by any source other than the Obligor or (c) contains any
other similar provisions which may constitute a "buydown" provision. The Loan
is not a graduated payment loan and the Loan does not have a shared
appreciation or other contingent interest feature;
(xxviii) No instrument of release or waiver has been executed in
connection with the Loan, and no Obligor has been released, in whole or in
part, except in connection with an assumption agreement which has been approved
by the Purchaser (and, in the case of FHA Loans, by the FHA to the extent
required by the applicable FHA Insurance Contract) and which has been delivered
to the Purchaser, and except such Loan which contains in the related Loan File
evidence of a release or waiver; and any assumption agreement which discharged
the original borrower from all of the debt obligations in connection with the
related Loan provides for the assumption of all such debt obligations by the
party assuming the obligations under the Loan;
(xxix) Each Assignment of Mortgage is in recordable form and
is acceptable for recording under the laws of the jurisdiction in which the
Improved Property is located;
(xxx) Each FHA Loan was originated and has been serviced in a
manner such that it will be eligible for the maximum amount of insurance made
available by the FHA pursuant to Title I of the National Housing Act (subject
to the aggregate limitation on the amount of FHA insurance available for the
Seller), without any right of offset, counterclaim or any other defense by the
FHA. The Seller has reported the origination of the FHA Loan to the FHA and
has obtained or shall obtain a case number for the FHA Loan from the FHA;
(xxxi) The Obligor has executed statements to the effect that
the Obligor has received all disclosure materials required by applicable law
with respect to the making of fixed rate mortgage loans and rescission
materials with respect to the making of such fixed rate mortgage loans, and
such statements are and will remain in the Loan File;
(xxxii) The Seller has no knowledge of any circumstances or
condition with respect to the Mortgage, the Improved Property, the Obligor or
the Obligor's credit standing that can reasonably be expected to cause the Loan
to become delinquent, or adversely affect the value of the Loan;
(xxxiii) The Improved Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Improved Property and,
with respect to the use and occupancy of the same, including but not limited to
certificates of occupancy, have been made or obtained from the
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appropriate authorities to the extent necessary to maintain the enforceability
of the Note and, in the case of each FHA Loan, the existence of the FHA
Insurance Contract without offset, defense, surcharge or other impairment;
(xxxiv) No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Loan has taken place on the part
of any person, including without limitation the Obligor, any appraiser, any
builder or developer, or any other party involved in the origination of the
Loan or in the application of any insurance in relation to such Loan that would
render the Note unenforceable or, in the case of each FHA Loan, impair the
existence of the FHA Insurance Contract or render it subject to any offset,
defense, surcharge or other impairment;
(xxxv) Any principal advances made to the Obligor prior to the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term;
(xxxvi) With respect to each Loan originated by a dealer or
contractor, the Seller is in possession of the completion certificate for the
related improvement to the extent required by FHA, in the case of FHA Loans, or
as otherwise required under the Seller's underwriting guidelines, in the case
of Conventional Loans;
(xxxvii) Seller has or will cause an amount of FHA Insurance
Reserves with respect to FHA Loans equal to 10% of the outstanding principal
balance of the FHA Loans as of the related Cut-off Date to be transferred or
approved for transfer on or prior to the related Closing Date to the
Purchaser's account maintained by the FHA; and
(xxxviii) No FHA insurance premiums with respect to an FHA Loan
are due and unpaid, and all such premiums for subsequent periods shall be
timely paid.
Subsection 7.03. Remedies for Breach of
Representations and Warranties.
It is understood and agreed that the representations and
warranties set forth in Subsections 7.01 and 7.02 shall survive the sale of the
Loans to the Initial Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Note or
Assignment of Mortgage or the examination or lack of examination of any Loan
File. Upon discovery by either the Seller or the Purchaser of a breach of any
of the foregoing representations and warranties which materially and adversely
affects the value of the Loans or the interest of the Purchaser therein (or
which materially and adversely affects the interests of the Purchaser in the
related Loan in the case of a representation and warranty relating to a
particular Loan), the party discovering such breach shall give prompt written
notice to the other.
Within sixty (60) days (ten (10) days in the case of a breach
of the representation in Subsection 7.01(a)(vii) arising from any nondelivery
of any Transfer of Note Report (as defined in the Custodial Agreement)) of the
earlier of either discovery by or notice to the Seller of any breach of a
representation or warranty which materially and adversely affects the value
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of a Loan or the interest of the Purchaser therein, the Seller shall promptly
use all reasonable efforts to cure such breach in all material respects and, if
such breach cannot be cured, the Seller shall, at the Purchaser's option,
repurchase such Loan at the Repurchase Price using its own funds and shall not
use funds in the Spread Account for such repurchases. The Seller shall, at the
request of the Purchaser and assuming that Seller has a Qualified Substitute
Loan, rather than repurchase the Loan as provided above, remove such Loan and
substitute in its place a Qualified Substitute Loan or Loans; provided that
such substitution shall be effected not later than 120 days after the related
Closing Date. If the Seller has no Qualified Substitute Loan, it shall
repurchase the deficient Loan. Any repurchase of a Loan pursuant to the
foregoing provisions of this Subsection 7.03 shall occur on a date designated
by the Purchaser and shall be accomplished by deposit in the Collection Account
of the amount of the Repurchase Price for distribution to the Purchaser on the
next scheduled Distribution Date.
At the time of repurchase of any deficient Loan, the Purchaser
and the Seller shall arrange for the reassignment and transfer of the
repurchased Loan and, if applicable, the related FHA Insurance Reserve to the
Seller and the delivery to the Seller of any documents held by the Custodian
relating to the repurchased Loan. In the event the Repurchase Price is
deposited in the Collection Account, the Seller shall, simultaneously with such
deposit, give written notice to the Purchaser that such deposit has taken
place. Upon such repurchase the related Loan Schedule shall be amended to
reflect the withdrawal of the repurchased Loan from this Agreement.
As to any Deleted Loan for which the Seller substitutes a
Qualified Substitute Loan or Loans, the Seller shall effect such substitution
by delivering to the Purchaser for such Qualified Substitute Loan or Loans the
Note, the Mortgage, the Assignment of Mortgage and such other documents and
agreements as are required by this Agreement, with the Note endorsed as
required therein. The Seller shall deposit in the Collection Account an amount
equal to the Monthly Payment less (a) the Servicing Fee and (b) any Impound
Payments (if applicable) received on such Qualified Substitute Loan or Loans in
the month following the date of such substitution, together with any interest
shortfall suffered by the Purchaser arising from the substitution of Loans
having differing Due Dates. Monthly Payments received with respect to
Qualified Substitute Loans in the month of substitution will be retained by the
Seller. For the month of substitution, distributions to the Purchaser will
include the Monthly Payment received on such Deleted Loan in the preceding
month, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by the Seller in respect of such Deleted Loan. The
Seller shall give written notice to the Purchaser that such substitution has
taken place and shall amend the Loan Schedule to reflect the removal of such
Deleted Loan from the terms of this Agreement and the substitution of the
Qualified Substitute Loan. Upon such substitution, such Qualified Substitute
Loan or Loans shall be subject to the terms of this Agreement in all respects,
and the Seller shall be deemed to have made with respect to such Qualified
Substitute Loan or Loans, as of the date of substitution, the covenants,
representations and warranties set forth in Subsections 7.01 and 7.02.
For any month in which the Seller substitutes one or more
Qualified Substitute Loans for one or more Deleted Loans, the Seller will
determine the amount (if any) by which
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the aggregate principal balance of all such Qualified Substitute Loans as of
the date of substitution is less than the aggregate Stated Principal Balance of
all such Deleted Loans (after application of principal payments received in the
month of substitution). The amount of such shortfall shall be distributed by
the Seller in the month following the month of substitution pursuant to the
Servicing Addendum. Accordingly, in the month of such substitution, the Seller
will deposit from its own funds into the Collection Account an amount equal to
such amount.
In addition to such cure, repurchase and substitution
obligation, the Seller shall indemnify the Purchaser and hold it harmless
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and other costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of the Seller's representations and
warranties contained in this Section 7. It is understood and agreed that the
obligations of the Seller set forth in this Subsection 7.03 to cure or
repurchase a defective Loan or to substitute a Qualified Substitute Loan and to
indemnify the Purchaser as provided in this Subsection 7.03 constitute the sole
remedies of the Purchaser respecting a breach of the foregoing representations
and warranties.
Any cause of action against the Seller relating to or arising
out of the breach of any representations and warranties made in Subsections
7.01 or 7.02 shall accrue as to any Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Loan as specified above, and
(iii) demand upon the Seller by the Purchaser for compliance with the relevant
provisions of this Agreement.
Subsection 7.04 Representations and Warranties Respecting the
Purchaser.
The Purchaser represents, warrants and covenants to the Seller
as of the Initial Closing Date and each subsequent Closing Date or as of such
date specifically provided herein or in the applicable Assignment and
Conveyance:
(i) the Purchaser is an FHA-Approved Mortgagee;
(ii) no consent, approval, authorization, license or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Purchaser of, or compliance by the Purchaser
with, this Agreement or the consummation of the transactions contemplated by
this Agreement, except for such consents, approvals, authorizations, licenses
or orders, if any, that have been obtained prior to the Closing Date; and
(iii) the Purchaser has the full power and authority to
execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Purchaser has duly authorized
the execution, delivery and performance of this Agreement, has duly executed
and delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Seller, constitutes a legal, valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization.
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Subsection 7.05. Representations and
Warranties Respecting the
Guarantor.
The Guarantor represents, warrants and covenants to the
Purchaser as of the Initial Closing Date and each subsequent Closing Date or as
of such date specifically provided herein or in the applicable Assignment and
Conveyance:
(i) The Guarantor is duly organized, validly existing and
in good standing under the laws of New York;
(ii) The Guarantor has the full power and authority to
execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Guarantor has duly authorized
the execution, delivery and performance of this Agreement, has duly executed
and delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Purchaser and the Seller, constitutes a legal,
valid and binding obligation of the Guarantor enforceable against it in
accordance with its terms except as the enforceability thereof may be limited
by bankruptcy, insolvency or reorganization;
(iii) The execution and delivery of this Agreement by the
Guarantor and the performance of and compliance with the terms of this
Agreement will not violate the Guarantor's certificate of incorporation or
by-laws or constitute a default under or result in a breach or acceleration of,
any material contract, agreement or other instrument to which the Guarantor is
a party or which may be applicable to the Guarantor or its assets;
(iv) The Guarantor is not in violation of, and the execution
and delivery of this Agreement by the Guarantor and its performance and
compliance with the terms of this Agreement will not constitute a violation
with respect to, any order or decree of any court or any order or regulation of
any federal, state, municipal or governmental agency having jurisdiction over
the Guarantor or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or the
operation of the Guarantor or its assets or might have consequences that would
materially and adversely affect the performance of its obligations and duties
hereunder;
(v) The Guarantor does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vi) There are no actions or proceedings against, or
investigations of, the Guarantor before any court, administrative or other
tribunal (A) that might prohibit its entering into this Agreement, (B) seeking
to prevent the consummation of the transactions
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contemplated by this Agreement, or (C) that might prohibit or materially and
adversely affect the performance by the Guarantor of its obligations under, or
the validity or enforceability of, this Agreement; and
(vii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery
and performance by the Guarantor of, or compliance by the Guarantor with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders, if
any, that have been obtained prior to the Closing Date.
SECTION 8. Closing. The closing for each Loan Package
shall take place on the related Closing Date. At the Purchaser's option, the
closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree, or conducted in person, at such place as the parties shall
agree.
The closing for the Loans to be purchased on each Closing Date shall
be subject to each of the following conditions:
(a) all of the representations and warranties of the Seller
under this Agreement shall be true and correct as of
the related Closing Date and no event shall have
occurred which, with notice or the passage of time,
would constitute a default under this Agreement;
(B) the Initial Purchaser shall have received, or the
Initial Purchaser's attorneys shall have received in
escrow, all Closing Documents as specified in Section
9, in such forms as are agreed upon and acceptable to
the Purchaser, duly executed by all signatories other
than the Purchaser as required pursuant to the terms
hereof;
(c) the Seller shall have delivered and released to the
Custodian all documents required pursuant to this
Agreement; and
(d) all other terms and conditions of this Agreement shall
have been complied with.
Subject to the foregoing conditions, the Initial Purchaser shall
pay to the Seller on the related Closing Date the Purchase Price (which shall
include accrued interest, as set forth in Section 4) by wire transfer of
immediately available funds to the account designated by the Seller.
SECTION 9. Closing Documents.
(a) On or before the Initial Closing Date, the Seller shall
submit to the Initial Purchaser fully executed originals of the following
documents:
1. this Agreement, in four (4) counterparts;
2. the Custodial Agreement, in six (6) counterparts in the
form attached as Exhibit 10 hereto;
3. Collection Account and Spread Account Letter Agreements
in the form attached as Exhibit 5 hereto;
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4. Officer's Certificates, in the form of Exhibit 1A and
Exhibit 1B hereto, including all attachments thereto;
and
5. a Seller's Officer's Certificate of Chief Financial
Officer and a Guarantor's Officer's Certificate of
General Counsel, in the form of Exhibit 9A and Exhibit
9B, respectively, hereto.
(b) The Closing Documents for the Loans to be purchased on each
Closing Date shall consist of fully executed originals of the following
documents:
1. the related Pricing Letter;
2. the related Loan Schedule;
3. Officer's Certificates, in the form of Exhibit 1A and
Exhibit 1B hereto, including all attachments thereto;
4. a Security Release Certification, in the form of
Exhibit 2 hereto executed by any Person, as requested
by the Initial Purchaser, if any of the Loans has at
any time been subject to any security interest, pledge
or hypothecation for the benefit of such Person;
5. a certificate or other evidence of merger or change of
name, signed or stamped by the applicable regulatory
authority, if any of the Loans were acquired by the
Seller by merger or acquired or originated by the
Seller while conducting business under a name other
than its present name, if applicable;
6. an Assignment and Conveyance in the form of Exhibit 3
hereto;
7. a Custodian's Trust Receipt and Initial Certification
or Trust Receipt and Final Certification, as required
under the Custodial Agreement in the form annexed
thereto; and
8. A Certificate of Good Standing of the Seller dated
within 5 days of the Closing Date.
SECTION 10. Costs. The Purchaser shall pay any
commissions due its salesmen and the legal fees and expenses of its attorneys.
All other costs and expenses incurred in connection with the transfer and
delivery of the Loans, including without limitation, the fees of the Custodian,
governmental recording fees for recording Assignments of Mortgage and the
Seller's attorneys' fees, shall be paid by the Seller.
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SECTION 11. Seller's Servicing Obligations. The Seller,
as independent contract servicer, shall service and administer the Loans in
accordance with the terms and provisions set forth in the Servicing Addendum
attached as Exhibit 6, which Servicing Addendum is incorporated herein by
reference.
SECTION 12. Removal of Loans from Inclusion Under this
Agreement Upon a Whole Loan Transfer or a Pass-Through Transfer on One or More
Reconstitution Dates.
The Seller acknowledges and the Purchaser agrees that with
respect to some or all of the Loans, the Purchaser shall effect either:
(1) one or more Whole Loan Transfers; and/or
(2) one or more Pass-Through Transfers.
With respect to each Whole Loan Transfer or Pass-Through
Transfer, as the case may be, entered into by the Purchaser, the Seller agrees:
(1) to cooperate fully with the Purchaser and any
prospective purchaser with respect to all reasonable
requests and due diligence procedures including
participating in meetings with rating agencies, bond
insurers and such other parties as the Purchaser shall
designate and participating in meetings with
prospective purchasers of the Loans or interests
therein and providing information reasonably requested
by such purchasers;
(2) to execute all Reconstitution Agreements provided that
each of the Seller and the Purchaser is given an
opportunity to review and reasonably negotiate in good
faith the content of such documents not specifically
referenced or provided for herein;
(3) with respect to any Whole Loan Transfer or Pass-Through
Transfer, the Seller shall make the representations and
warranties regarding the Seller and, if such Whole Loan
Transfer or Pass- Through Transfer occurs within
eighteen (18) months of the Closing Date or such later
period as specified in the related Pricing Letter, the
Loans, as of the date of the Whole Loan Transfer or
Pass-Through Transfer, modified to the extent necessary
to accurately reflect the pool statistics of the Loans
as of the date of such Whole Loan Transfer or
Pass-Through Transfer and any events or circumstances
existing subsequent to the related Closing Date;
(4) to deliver to the Purchaser for inclusion in any
prospectus or other offering material such publicly
available information regarding the Seller, its
financial condition and its mortgage loan delinquency,
foreclosure and loss experience and any additional
information requested by the Purchaser, and to deliver
to the Purchaser any similar non public, unaudited
financial
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information (which the Purchaser may, at its option and
at the Seller's cost, have audited by certified public
accountants) and such other information as is
reasonably requested by the Purchaser and which the
Seller is capable of providing without unreasonable
effort or expense, and to indemnify the Purchaser and
its affiliates for material misstatements contained in
or omissions from such information;
(5) to deliver to the Purchaser and to any Person
designated by the Purchaser, at the Seller's expense,
such statements and audit letters of reputable,
certified public accountants pertaining to information
provided by the Seller pursuant to paragraph 4 above as
shall be reasonably requested by the Purchaser;
(6) to deliver to the Purchaser, and to any Person
designated by the Purchaser, such legal documents and
Opinions of Counsel as are customarily delivered by
originators or servicers, as the case may be, and
reasonably determined by the Purchaser to be necessary
in connection with Whole Loan Transfers or Pass-Through
Transfers, as the case may be, such Opinions of Counsel
for a Pass- Through Transfer to be in a form reasonably
acceptable to the Purchaser, it being understood that
the cost of any opinions of outside special counsel
that may be required for a Whole Loan Transfer or
Pass-Through Transfer, as the case may be, shall be the
responsibility of the Seller; and
(7) to cooperate fully with the Purchaser and any
prospective purchaser with respect to the preparation
(including, but not limited to, the endorsement,
delivery, assignment, and execution) of the Loan
Documents and other related documents, and with respect
to requirements reasonably requested by the rating
agencies and credit enhancers.
SECTION 13. The Seller.
Subsection 13.01. Additional Indemnification by the
Seller.
In addition to the indemnification provided in Subsection
7.03, and subject to Subsection 13.03, the Seller shall indemnify the Purchaser
and hold the Purchaser harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and any other costs, fees and expenses that the Purchaser may
sustain in any way related to the failure of the Seller to perform its
obligations under this Agreement including but not limited to its obligation to
service and administer the Loans in strict compliance with the terms of this
Agreement or any Reconstitution Agreement entered into pursuant to Section 12.
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Subsection 13.02. Merger or Consolidation of the Seller.
The Seller shall keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the state of its
incorporation except as permitted herein, and shall obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Loans, and to enable the Seller
to perform its duties under this Agreement.
Any Person into which the Seller may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Seller shall be a party, or any Person succeeding to
the business of the Seller, shall be the successor of the Seller hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person shall be an
institution whose deposits are insured by FDIC or a company whose business is
the origination and servicing of loans, shall be an FHA Approved Mortgagee and
shall satisfy any requirements of Section 16 with respect to the qualifications
of a successor to the Seller.
Subsection 13.03. Limitation on Liability of the Seller
and Others.
Neither the Seller nor any of the officers, employees or
agents of the Seller shall be under any liability to the Purchaser for any
action taken or for refraining from the taking of any action in good faith in
connection with the servicing of the Loans pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect
the Seller or any such person against any breach of warranties or
representations made herein, or failure to perform its obligations in strict
compliance with any standard of care set forth in this Agreement, or any
liability which would otherwise be imposed by reason of any breach of the terms
and conditions of this Agreement. The Seller and any officer, employee or agent
of the Seller may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute
or defend any legal action which is not incidental to its obligation to sell,
or duty to service, the Loans in accordance with this Agreement and which in
its opinion may result in its incurring any expenses or liability; provided,
however, that the Seller may, with the consent of the Purchaser, undertake any
such action which it may deem necessary or desirable in respect to this
Agreement and the rights and duties of the parties hereto. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities for which the Purchaser shall be
liable and the Seller shall be entitled to reimbursement therefor from the
Purchaser upon written demand except when such expenses, costs and liabilities
are subject to the Seller's indemnification under Subsections 7.03 or 13.01.
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Subsection 13.04. Seller Not to Resign.
The Seller shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Seller and the Purchaser or upon the determination that its servicing duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by the Seller in which event the Seller may resign as servicer.
Any such determination permitting the resignation of the Seller as servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Purchaser which Opinion of Counsel shall be in form and substance acceptable to
the Purchaser and shall be provided at the cost of the Seller. No such
resignation shall become effective until a successor shall have assumed the
Seller's responsibilities and obligations hereunder in the manner provided in
Section 16.
Subsection 13.05. No Transfer of Servicing.
The Seller acknowledges that the Purchaser has acted in
reliance upon the Seller's independent status, the adequacy of its servicing
facilities, plant, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this Section, the Seller shall not either assign this
Agreement or the servicing hereunder or delegate its rights or duties hereunder
or any portion thereof, or sell or otherwise dispose of all or substantially
all of its property or assets, without the prior written approval of the
Purchaser, which consent shall not be unreasonably withheld.
SECTION 14. Default.
Subsection 14.01. Events of Default.
In case one or more of the following Events of Default by the
Seller shall occur and be continuing, that is to say:
(i) any failure by the Seller to remit to the
Purchaser any payment required to be made under the terms of this Agreement
which continues unremedied for a period of three (3) Business Days after the
date upon which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller by the Purchaser; or
(ii) failure on the part of the Seller duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Seller set forth in this Agreement which
continues unremedied for a period of thirty (30) days (except that such number
of days shall be fifteen (15) in the case of a failure to pay any premium for
any insurance policy required to be maintained under this Agreement) after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller by the Purchaser; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction for the appointment of a conservator
or receiver or liquidator in any
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insolvency, bankruptcy, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Seller and such decree or order
shall have remained in force undischarged or unstayed for a period of sixty
(60) days; or
(iv) the Seller shall consent to the appointment
of a conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Seller or of or relating to all or
substantially all of its property; or
(v) the Seller shall admit in writing its
inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or
(vi) failure by the Seller to be in compliance
with the "doing business" or licensing laws of any jurisdiction where an
Improved Property is located; or
(vii) the Seller ceases to meet the qualifications
of, or ceases to be, an FHA Approved Mortgagee; or
(viii) the Seller attempts to assign its right to
its servicing compensation hereunder or the Seller attempts, without the
consent of the Purchaser, to sell or otherwise dispose of all or substantially
all of its property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
thereof;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Seller may, in
addition to whatever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, terminate all the rights
and obligations of the Seller as servicer and any obligation of Initial
Purchaser to purchase additional Loans under this Agreement. On or after the
receipt by the Seller of such written notice, all authority and power of the
Seller to service the Loans under this Agreement shall on the date set forth in
such notice pass to and be vested in the successor appointed pursuant to
Section 16.
Upon written request from the Purchaser in connection with any
such termination, the Seller shall prepare, execute and deliver, any and all
documents and other instruments, place in the Purchaser's possession all Loan
Files, and do or accomplish all other acts or things necessary or appropriate
to effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Loans and related documents, or
otherwise, at the Seller's sole expense. The Seller agrees to cooperate with
the Purchaser and such successor in effecting the termination of the Seller's
responsibilities and rights hereunder as servicer, including, without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by the Seller to the Collection
Account or REO Account or thereafter received with respect to the Loans.
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Subsection 14.02. Waiver of Defaults.
The Purchaser may waive any default by the Seller in the
performance of its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
SECTION 15. Termination. The respective obligations and
responsibilities of the Seller, as servicer, shall terminate upon the earlier
of: (i) the distribution to the Purchaser of the final payment or liquidation
with respect to the last Loan (or advances of same by the Seller); or (ii) the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure with respect to the last Loan and the remittance of all funds due
hereunder unless terminated with respect to all or a portion of the Loans on an
earlier date at the option of the Purchaser pursuant to this Section 15 or
pursuant to Section 14; or (iii) by mutual written agreement of the Seller and
the Purchaser.
SECTION 16. Successor to the Seller. Prior to
termination of the Seller's responsibilities and duties under this Agreement
pursuant to Section 14, the Purchaser shall (i) succeed to and assume all of
the Seller's responsibilities, rights, duties and obligations under this
Agreement but not any rights in or to the Excess Yield, or (ii) appoint a
successor which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Seller as servicer under this
Agreement but not any rights in or to the Excess Yield. Any successor to the
Seller hereunder shall be an FHA Approved Mortgagee. In connection with such
appointment and assumption, the Purchaser may make such arrangements for the
compensation of such successor out of payments on Loans as it and such
successor shall agree. In the event that the Seller's duties, responsibilities
and liabilities as servicer under this Agreement should be terminated pursuant
to the aforementioned Section, the Seller shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement, and shall
take no action whatsoever that might impair or prejudice the rights or
financial condition of the Purchaser or such successor. The termination of the
Seller as servicer pursuant to the aforementioned section shall not become
effective until a successor shall be appointed pursuant to this Section 16 and
shall in no event relieve the Seller of the representations and warranties made
pursuant to Subsections 7.01 and 7.02 and the remedies available to the
Purchaser under Subsection 7.03. It is understood and agreed that the
provisions of such Subsections 7.01, 7.02 and 7.03 shall be applicable to the
Seller notwithstanding any resignation or termination of the Seller, or the
termination of this Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Seller and to the Purchaser an instrument
accepting such appointment, whereupon such successor shall become fully vested
with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Seller, with like effect as if originally named as a party
to this
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Agreement provided, however, that such successor shall not assume, and Seller
shall indemnify such successor for, any and all liabilities arising out of the
Seller's acts as servicer. Any termination of the Seller as servicer pursuant
to Section 15 shall not affect any claims that the Purchaser may have against
the Seller arising prior to any such termination or resignation or remedies
with respect to such claims.
The Seller shall timely deliver to the successor the funds in
the Collection Account, the Spread Account and the REO Account and the Loan
Files and related documents and statements held by it hereunder and the Seller
shall account for all funds. The Seller shall execute and deliver such
instruments and do such other things all as may reasonably be required to more
fully and definitely vest and confirm in the successor all such rights, powers,
duties, responsibilities, obligations and liabilities of the Seller as
servicer. The successor shall make arrangements as it may deem appropriate to
reimburse the Seller for amounts the Seller actually expended as servicer
pursuant to this Agreement which the successor is entitled to retain hereunder
and which would otherwise have been recovered by the Seller pursuant to this
Agreement but for the appointment of the successor servicer.
SECTION 17. Transfer of FHA Insurance Reserves. With
respect to each Loan Package that includes any FHA Loans, no later than 15 days
following the later of (i) the receipt by the Seller from FHA of the FHA case
number for each FHA Loan and (ii) the applicable Closing Date the Seller shall
execute documents necessary to transfer the related FHA Insurance Reserves
allocable to such Loan Package to the Purchaser, or such other entity as the
Purchaser may designate by notice in writing to the Seller provided that such
entity is an FHA Approved Mortgagee. The originals of such executed documents
shall be sent to the Purchaser or the Purchaser's designee in the manner
indicated by the Purchaser.
SECTION 18. Financial Statements. The Seller understands
that the Purchaser may make available to a prospective purchaser of the Loans
from the Purchaser the Seller's annual financial statements. The Seller, if it
has not already done so, agrees to furnish promptly to the Purchaser copies of
the statements specified above.
The Seller also shall make available to the Purchaser
information on its servicing performance with respect to loans serviced for
others, including delinquency ratios. The Seller also agrees to allow access
to knowledgeable financial, accounting, origination and servicing officers of
the Seller for the purpose of answering questions asked by any prospective
purchaser regarding recent developments affecting the Seller, its loan
origination or servicing practices or the financial statements of the Seller.
The Purchaser agrees to maintain full confidentiality with regard to non-public
information of the Seller released under this section.
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SECTION 19. Mandatory Purchase. The purchase of each
Loan (exclusive of the related Excess Yield) on or before the related Closing
Date, subject to the terms and conditions of the Pricing Letter, is mandatory.
SECTION 20. Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed, by registered or certified mail, return receipt
requested, or, if by other means, when received by the other party at the
address as follows:
(i) if to the Seller:
Mego Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
With copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Mego Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
(ii) if to the Guarantor:
Mego Financial Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
With copy to:
Mego Financial Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(iii) if to the Purchaser:
Greenwich Capital Markets, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attn: General Counsel
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 21. Severability Clause. Any part, provision,
representation or warranty of this Agreement which is prohibited or which is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement which
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Loan shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable law,
the parties hereto waive any provision of law which prohibits or renders void
or unenforceable any provision hereof. If the invalidity of any part,
provision, representation or warranty of this Agreement shall deprive any party
of the economic benefit intended to be conferred by this Agreement, the parties
shall negotiate, in good faith, to develop a structure the economic effect of
which is nearly as possible the same as the economic effect of this Agreement
without regard to such invalidity.
SECTION 22. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.
SECTION 23. Governing Law. The Agreement shall be
construed in accordance with the laws of the State of New York without regard
to any conflicts of law provisions and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with the laws of the
State of New York, except to the extent preempted by federal law.
SECTION 24. Intention of the Parties. It is the
intention of the parties that the Initial Purchaser is purchasing, and the
Seller is selling, the Loans (exclusive of Excess Yield) and not a debt
instrument of the Seller or another security. Accordingly, the parties hereto
each intend to treat the transaction for federal income tax purposes as a sale
by the Seller, and a purchase by the Purchaser, of the Loans. The Initial
Purchaser shall have the right to review the Loans and the related Loan Files
to determine the characteristics of the Loans which shall affect the federal
income tax consequences of owning the Loans and the Seller shall cooperate with
all reasonable requests made by the Initial Purchaser in the course of such
review.
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SECTION 25. Successors and Assigns. This Agreement shall
bind and inure to the benefit of and be enforceable by the Seller and the
Purchaser and the respective successors and permitted assigns of the Seller and
the Purchaser. This Agreement shall not be assigned, pledged or hypothecated
by the Seller to a third party without the prior written consent of the
Purchaser, and shall not be assigned by the Initial Purchaser or any subsequent
Purchaser other than to an affiliate thereof without the prior written consent
of the Seller.
SECTION 26. Waivers. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 27. Exhibits. The exhibits to this Agreement are
hereby incorporated and made a part hereof and are an integral part of this
Agreement.
SECTION 28. General Interpretive Principles. For
purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires:
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to "Articles," "Sections,"
"Subsections," "Paragraphs," and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and
other subdivisions of this Agreement;
(d) reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
SECTION 29. Reproduction of Documents. This Agreement
and all documents relating thereto, including, without limitation, (a)
consents, waivers and modifications which may hereafter be executed, (b)
documents received by any party at the closing, and (c) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the
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original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 30. Further Agreements. The Seller and the
Purchaser each agree to execute and deliver to the other such reasonable and
appropriate additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.
SECTION 31. Entire Agreement. This Agreement, together
with each Pricing Letter, constitutes the entire agreement of the parties and
supersedes all prior agreements, oral and written, between the parties with
respect to the subject matter hereof, and the provisions of both this Agreement
and each Pricing Letter shall survive the closing of the transactions
contemplated herein. In the event that there exist inconsistencies between
this Agreement and any Pricing Letter, this Agreement shall control.
SECTION 32. Guaranty. The Guarantor hereby guarantees,
in favor of the Initial Purchaser and its successors and permitted assigns, the
full and satisfactory performance of all commitments, obligations, covenants
and agreements (in each case financial or otherwise) of the Seller hereunder.
The foregoing guaranty shall remain in effect until such time, if any, as the
Seller Public Offering shall have been completed.
45
IN WITNESS WHEREOF, the Initial Purchaser, the Seller and
the Guarantor have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the date first above written.
GREENWICH CAPITAL MARKETS, INC.
(Initial Purchaser)
By: /s/
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
MEGO MORTGAGE CORPORATION
(Seller)
By: /s/
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
MEGO FINANCIAL CORP.
(Guarantor)
By: /s/
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
46
EXHIBIT 1A
SELLER'S OFFICER'S CERTIFICATE
I, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, hereby certify that I am the duly
elected President of Mego Mortgage Corporation, a Delaware corporation (the
"Seller"), and further certify, on behalf of the Seller as follows:
1. Attached hereto as Attachment I are a true
and correct copy of the Certificate of Incorporation and by-laws of the
Seller as are in full force and effect on the date hereof. No event has
occurred since [Month] ___, 199_ which has affected the good standing of the
Seller under the laws of the State of Delaware.
2. No proceedings looking toward merger,
liquidation, dissolution or bankruptcy of the Seller are pending or
contemplated.
3. Each person who, as an officer or
attorney-in-fact of the Seller, signed (a) the Amended and Restated Master
Loan Purchase and Servicing Agreement (the "Purchase Agreement"), dated as
of October 1, 1996, by and among the Seller, Greenwich Capital Markets, Inc.
(the "Purchaser") and Mego Financial Corp.; (b) the Pricing Letter, dated as
of [month] ____, 199_, between the Seller and the Purchaser (the "Pricing
Letter"); and (c) the Custodial Agreement dated as of April 1, 1995 among
Greenwich Capital Markets, Inc. (as assignee of Greenwich Capital Financial
Products, Inc.), First Trust National Association and the Seller and (d) any
other document delivered prior hereto or on the date hereof in connection
with the sale and servicing of the Loans in accordance with the Purchase
Agreement and the Pricing Letter was, at the respective times of such
signing and delivery, and is as of the date hereof, duly elected or
appointed, qualified and acting as such officer or attorney-in-fact, and the
signatures of such persons appearing on such documents are their genuine
signatures.
4. Attached hereto as Attachment II is a true
and correct copy of the resolutions duly adopted by the board of directors
of the Seller on [date] (the "Resolutions") with respect to the
authorization and approval of the sale and servicing of the Loans; said
Resolutions have not been amended, modified, annulled or revoked and are in
full force and effect on the date hereof.
5. Attached hereto as Attachment III is a
Certificate of Good Standing of the Seller dated [month] _________ 199_.
6. All of the representations and warranties of
the Seller contained in Subsections 7.01 and 7.02 of the Purchase Agreement
were true and correct in all material respects as of the date of the
Purchase Agreement and are true and correct in all material respects as of
the date hereof.
7. The Seller has performed all of its duties
and has satisfied all the material conditions on its part to be performed or
satisfied prior to the related Closing Date pursuant to the Purchase
Agreement and the Pricing Letter.
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All capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of the Seller.
Dated:
-------------------------------------
[Seal]
MEGO MORTGAGE CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title: President
I, ___________________, Assistant Secretary of
______________ hereby certify that _______________ is the duly elected,
qualified and acting President of the Seller and that the signature appearing
above is such person's genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
-------------------------------------
[Seal]
MEGO MORTGAGE CORPORATION
By:
--------------------------------
Name:
------------------------------
Title: Assistant Secretary
48
EXHIBIT 1B
GUARANTOR'S OFFICER'S CERTIFICATE
I, [▇▇▇▇▇▇ ▇. ▇▇▇▇▇], hereby certify that I am the duly
elected President of Mego Financial Corp., a New York corporation (the
"Guarantor"), and further certify, on behalf of the Guarantor as follows:
1. Attached hereto as Attachment I are a true
and correct copy of the Certificate of Incorporation and by-laws of the
Guarantor as are in full force and effect on the date hereof. No event has
occurred since [Month] ___, 199_ which has affected the good standing of the
Guarantor under the laws of the State of New York.
2. No proceedings looking toward merger,
liquidation, dissolution or bankruptcy of the Guarantor are pending or
contemplated.
3. Each person who, as an officer or
attorney-in-fact of the Guarantor, signed (a) the Amended and Restated
Master Loan Purchase and Servicing Agreement (the "Purchase Agreement"),
dated as of October 1, 1996, by and among Mego Mortgage Corporation,
Greenwich Capital Markets, Inc. (the "Purchaser") and the Guarantor and (b)
any other document delivered prior hereto or on the date hereof in
connection with the sale and servicing of the Loans in accordance with the
Purchase Agreement was, at the respective times of such signing and
delivery, and is as of the date hereof, duly elected or appointed, qualified
and acting as such officer or attorney-in-fact, and the signatures of such
persons appearing on such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true
and correct copy of the resolutions duly adopted by the board of directors
of the Guarantor on [date] (the "Resolutions") with respect to the
authorization and approval of the Guarantor's entry into the Purchase
Agreement; said Resolutions have not been amended, modified, annulled or
revoked and are in full force and effect on the date hereof.
5. Attached hereto as Attachment III is a
Certificate of Good Standing of the Guarantor dated [month] _________ 199_.
6. All of the representations and warranties of
the Guarantor contained in Subsections 7.01 and 7.02 of the Purchase
Agreement were true and correct in all material respects as of the date of
the Purchase Agreement and are true and correct in all material respects as
of the date hereof.
7. The Guarantor has performed all of its duties
and has satisfied all the material conditions on its part to be performed or
satisfied prior to the related Closing Date pursuant to the Purchase
Agreement.
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All capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of the Guarantor.
Dated:
-------------------------------------
[Seal]
MEGO FINANCIAL CORP.
By:
------------------------------
Name:
----------------------------
Title:
I, ___________________, Assistant Secretary of
______________ hereby certify that _______________ is the duly elected,
qualified and acting [title] of the Guarantor and that the signature appearing
above is such person's genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
-------------------------------------
[Seal]
MEGO FINANCIAL CORP.
By:
--------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Secretary
50
EXHIBIT 2
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
________________________________, hereby relinquishes any
and all right, title and interest it may have in and to the Loans described in
Exhibit A attached hereto upon purchase thereof by Greenwich Capital Markets,
Inc. from the Seller named below pursuant to that certain Amended and Restated
Master Loan Purchase and Servicing Agreement, dated as of October 1, 1996, as
of the date and time of receipt by __________________________ of $_____________
for such Loans (the "Date and Time of Sale"), and certifies that all notes,
mortgages, assignments and other documents in its possession relating to such
Loans have been delivered and released to the Seller named below or its
designees as of the Date and Time of Sale.
Name and Address of Financial Institution
-------------------------------------------
(Name)
------------------------------------------
(Address)
By:
---------------------------------------------
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II. Certification of Release
The Seller named below hereby certifies to Greenwich
Capital Markets, Inc. that, as of the Date and Time of Sale of the above
mentioned Loans to Greenwich Capital Markets, Inc., the security interests in
the Loans released by the above named corporation comprise all security
interests relating to or affecting any and all such Loans. The Seller warrants
that, as of such time, there are and will be no other security interests
affecting any or all of such Loans.
MEGO MORTGAGE CORPORATION
Seller
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
52
EXHIBIT 3
ASSIGNMENT AND CONVEYANCE
On this ____________ day of _____________, 199__, Mego
Mortgage Corporation ("Seller") as the Seller under that certain Amended and
Restated Master Loan Purchase and Servicing Agreement, dated as of October 1,
1996 (the "Agreement"), does hereby sell, transfer, assign, set over and convey
to Greenwich Capital Markets, Inc. as Purchaser under the Agreement, without
recourse, but subject to the terms of the Agreement, all right, title and
interest of the Seller in and to the Loans (with the exception of the Excess
Yield) listed on the Loan Schedule attached hereto, together with the related
Loan Files and all rights and obligations arising under the documents contained
therein. Pursuant to Subsection 6.03 of the Agreement, the Seller has delivered
to the Purchaser the documents for each Loan to be purchased. The contents of
each related Servicing File required to be retained by the Seller to service
the Loans pursuant to the Agreement and thus not delivered to the Purchaser or
the Custodian are and shall be held in trust by the Seller for the benefit of
the Purchaser as the owner thereof. The Seller's possession of any portion of
each such Servicing File is for the sole purpose of facilitating servicing of
the related Loan pursuant to the Agreement, and such retention and possession
by the Seller shall be in a custodial capacity only. The ownership of each
Note, Mortgage, and the contents of the Loan File and Servicing File is vested
in the Purchaser, except for the Excess Yield, and the ownership of all records
and documents with respect to the related Loan prepared by or which come into
the possession of the Seller shall immediately vest in the Purchaser and shall
be retained and maintained, in trust, by the Seller at the will of the
Purchaser in such custodial capacity only.
The Seller confirms to the Purchaser that the
representations and warranties set forth in Subsections 7.01 and 7.02 of the
Agreement are true and correct as of the date hereof and makes the following
additional representations and warranties to the Purchaser, which additional
representations and warranties are hereby incorporated into Subsection 7.02 of
the Agreement:
(1) No Loan had a principal balance at
origination in excess of $_____________ nor
less than $____________ and the average
principal balance of the Loans on the Cut-off
Date was not less than $_____________;
(2) Each Loan has a Loan Interest Rate of at
least _________%. The Loans have a weighted
average Loan Interest Rate of _______% as of
the Cut-off Date; and
(3) No Loan had an original term to maturity of
more than ___ months[.][;]
[Other]
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Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Agreement.
MEGO MORTGAGE CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
54
EXHIBIT 4
CONTENTS OF EACH LOAN FILE
With respect to each Loan, the Loan File shall include
all documents reasonably necessary to service the Loan and, in the case of each
FHA Loan, necessary to document the Loan in accordance with FHA requirements,
which shall be available for inspection by the Purchaser and which shall be
retained by the Seller or delivered to the Purchaser.
55
EXHIBIT 5
[COLLECTION ACCOUNT] [SPREAD ACCOUNT] LETTER AGREEMENT
___________________, 199_
To:
----------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
(the "Depository")
As Seller under the Amended and Restated Master Loan
Purchase and Servicing Agreement, dated as of October 1, 1996, we hereby
authorize and request you to establish an account, as a Collection Account, to
be designated as "Mego Mortgage Corporation in trust for Greenwich Capital
Markets, Inc. as Purchaser under that certain Amended and Restated Master Loan
Purchase and Servicing Agreement, dated as of October 1, 1996, among Greenwich
Capital Markets, Inc., Mego Mortgage Corporation and Mego Financial Corp. for
FHA and Conventional Home Improvement Loans." All deposits in the account shall
be subject to withdrawal therefrom by order signed by the Seller. This letter
is submitted to you in duplicate. Please execute and return one original to us.
MEGO MORTGAGE CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Date:
--------------------------------------
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The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ____________
at the office of the Depository indicated above, and agrees to honor
withdrawals on such account as provided above. The amount deposited at any time
in the account will be insured by the Federal Deposit Insurance Corporation
through the Bank Insurance Fund ("BIF") or the Savings Association Insurance
Fund ("SAIF") subject to applicable insurance maximums.
------------------------------------------
Depository
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Date:
-------------------------------------
57
EXHIBIT 6
SERVICING ADDENDUM
SECTION 11. Servicing
Subsection 11.01 Seller to Act as Servicer.
The Seller shall administer and master service the Loans
in accordance with the Agreement and customary servicing procedures, and shall
have full power and authority, to do or cause to be done any and all things in
connection with such administration which the Seller may deem necessary or
desirable and consistent with the terms of the Agreement, including, in the
case of each FHA Loan, taking all actions that an FHA Approved Mortgagee is
permitted or required to take by the FHA.
Consistent with the terms of this Agreement, the Seller
may waive, modify or vary any term of any Loan or consent to the postponement
of strict compliance with any such term or in any manner grant indulgence to
any Obligor if in the Seller's reasonable and prudent determination such
waiver, modification, postponement or indulgence is not materially adverse to
the Purchaser or the Excess Yield Holder; provided, however, that the Seller
shall not permit any modification with respect to any Loan that would change
the Loan Interest Rate, defer or forgive the payment thereof or of any
principal or interest payments, reduce the outstanding principal amount (except
for actual payments of principal), make additional advances, extend the final
maturity date or adversely affect any FHA Insurance Contract with respect to
such Loan. Without limiting the generality of the foregoing, the Seller shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself, and the Purchaser and the Excess Yield Holder, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Loans and,
in the case of a Mortgage Loan, with respect to the Improved Property. If
reasonably required by the Seller, the Purchaser and the Excess Yield Holder
shall furnish the Seller with any powers of attorney and other documents
necessary or appropriate to enable the Seller to carry out its servicing and
administrative duties under this Agreement.
In servicing and administering the Loans, the Seller
shall employ procedures including collection procedures and exercise the same
care that it customarily employs and exercises in servicing and administering
loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Purchaser's and the
Excess Yield Holder's reliance on the Seller.
It is understood and agreed that the Seller may delegate
certain servicing duties to qualified sub-servicers with the Purchaser's prior
written approval; provided, however, that the Seller shall remain responsible
to the Purchaser for all servicing activities notwithstanding such delegation.
The Seller shall make such inspections of an Improved
Property, if any, as are consistent with standard servicing procedures
customary to the applicable loan type and, in the case of each FHA Loan, as
required by FHA Regulations if the Seller has actual notice of
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any related condition which materially and adversely affects or may materially
and adversely affect such Improved Property. Such inspection shall be conducted
in accordance with customary servicing procedures and, in the case of each FHA
Loan, FHA servicing requirements for delinquent mortgages.
The Seller shall take all actions necessary to assure
that a case number is assigned to each FHA Loan by the FHA.
Subsection 11.02 Collection of Loan Payments.
Continuously from the date hereof until the principal and
interest on all Loans are paid in full, the Seller shall proceed diligently to
collect all payments due under each Loan when the same shall become due and
payable and shall, to the extent such procedures shall be consistent with this
Agreement, follow such collection procedures as it follows with respect to
loans comparable to the Loans held for its own account.
Subsection 11.03 Repurchase of or Realization Upon
Defaulted Loans.
(a) In the event that two or more Monthly
Payments are delinquent on or after the Due Date of succeeding Monthly Payments
with respect to a Loan, the Seller may at its option repurchase such Loan by
depositing the Repurchase Price therefor into the Collection Account. Such
repurchased Loans shall cease to be subject to this Agreement, and the
Purchaser shall convey such Loans to the Seller as contemplated by Subsection
7.03. The Seller shall use all reasonable efforts, consistent with the
procedures that the Seller would use in servicing loans for its own account
and, in the case of each FHA Loan, the requirements of FHA, with respect to any
Loan as comes into and continues in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Subsection 11.01, either (i) in the case of an FHA Loan, to assign the Loan to
the FHA and obtain FHA Insurance Proceeds with respect thereto or (ii) in the
case of a Mortgage Loan, with Purchaser's consent, which will not be
unreasonably withheld or delayed, to foreclose upon or otherwise comparably
convert the ownership of the related Improved Property, and, in the case of a
Loan that is not a Mortgage Loan, to collect from the Obligor amounts that are
due and unpaid. The Seller shall use all reasonable efforts to realize upon
defaulted Loans in such a manner as will maximize the receipt of principal and
interest at the Pass-Through Rate by the Purchaser, taking into account, among
other things, the timing of foreclosure proceedings, if applicable. In the
event that the Seller fails, on a timely basis, to (i) in the case of an FHA
Loan, assign the Loan to the FHA and obtain FHA Proceeds with respect thereto
or (ii) in the case of a Mortgage Loan, with purchaser's consent, which will
not be unreasonably withheld or delayed, to foreclose upon or otherwise
comparably convert the ownership of the related Improved Property or (iii) in
the case of a Loan that is not a Mortgage Loan, the Seller shall use its best
efforts to cause the obligor to bring such Loan current or (iv) deposit all FHA
Insurance Proceeds into the Collection Account, the Seller shall, at the
Purchaser's request, repurchase such Loan at the Repurchase Price.
59
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(b) Notwithstanding the foregoing provisions of
this Subsection 11.03, with respect to any Mortgage Loan as to which the Seller
has received actual notice of, or has actual knowledge of, the presence of any
toxic or hazardous substance on the related Improved Property the Seller shall
not either (i) obtain title to such Improved Property as a result of or in lieu
of foreclosure or otherwise, or (ii) otherwise acquire possession of, or take
any other action, with respect to, such Improved Property if, as a result of
any such action, the Purchaser would be considered to hold title to, to be a
mortgagee-in-possession of, or to be an owner or operator of such Improved
Property within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
comparable law, unless the Seller has also previously determined, based on his
reasonable judgment and a prudent report prepared by a Person who regularly
conducts environmental audits using customary industry standards, that:
(1) such Improved Property is in compliance with
applicable environmental laws or, if not, that it would be in the best
economic interest of the Purchaser to take such actions as are necessary to
bring the Improved Property into compliance therewith; and
(2) there are no circumstances present at such
Improved Property relating to the use, management or disposal of any
hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials for which investigation, testing, monitoring,
containment, clean-up or remediation could be required under any federal,
state or local law or regulation, or that if any such materials are present
for which such action could be required, that it would be in the best
economic interest of the Purchaser to take such actions with respect to the
affected Improved Property.
The cost of the environmental audit report contemplated
by this Subsection 11.03 shall be advanced by the Seller, subject to the
Seller's right to be reimbursed therefor from the Collection Account as
provided in Subsection 11.05(v).
If the Seller determines, as described above, that it is
in the best economic interest of the Purchaser to take such actions as are
necessary to bring any such Improved Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Improved Property, then
the Seller shall take such action as it deems to be in the best economic
interest of the Purchaser. The cost of any such compliance, containment,
cleanup or remediation shall be advanced by the Seller, subject to the Seller's
right to be reimbursed therefor from the Collection Account as provided in
Subsection 11.05(v).
(c) Proceeds received in connection with any
Final Recovery Determination, as well as any recovery resulting from a partial
collection of Insurance Proceeds or Liquidation Proceeds in respect of any
Loan, will be applied in the following order of priority: first, to any unpaid
Servicing Fees pursuant to Subsection 11.05(ii); second, to accrued and unpaid
interest on the Loan at the Pass-Through Rate, pursuant to Subsection 11.09, to
the
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date of the Final Recovery Determination, or to the Due Date prior to the
Distribution Date on which such amounts are to be distributed if not in
connection with a Final Recovery Determination; third, to any related
unreimbursed Servicing Advances and Monthly Advances and other advances
pursuant to Subsection 11.05(v); fourth, as a recovery of principal on the
Loan; and fifth, to Excess Yield pursuant to Subsection 11.09.
Subsection 11.04 Establishment of Collection
Accounts; Deposits in Collection
Accounts.
The Seller shall segregate and hold all funds collected
and received pursuant to each Loan separate and apart from any of its own funds
and general assets and shall establish and maintain one or more Collection
Accounts, in the form of time deposit or demand accounts. The creation of any
Collection Account shall be evidenced by a Collection Account Letter Agreement
in the form of Exhibit 5.
The Seller shall deposit in the Collection Account on a
daily basis, and retain therein the following payments and collections received
by it subsequent to the Cut-off Date, or received by it prior to the Cut-off
Date but allocable to a period subsequent thereto, other than in respect of
principal and interest on the Loans received on or before the Cut-off Date:
(i) all payments on account of principal on the
Loans;
(ii) all payments on account of interest on the
Loans;
(iii) all Impound Payments received on the Loans;
(iv) all Liquidation Proceeds;
(v) all Insurance Proceeds including amounts
required to be deposited pursuant to Subsection 11.07 other than proceeds to be
applied to the restoration or repair of the Improved Property or released to
the Obligor in accordance with the Seller's normal servicing procedures, the
Loan Documents or applicable law;
(vi) all Condemnation Proceeds affecting any
Improved Property which are not released to the Obligor in accordance with the
Seller's normal servicing procedures, the Loan Documents or applicable law;
(vii) all Monthly Advances;
(viii) the Repurchase Price of any Loan repurchased
in accordance with Subsections 7.03 or 11.03, and all amounts required to be
deposited by the Seller in connection with shortfalls in principal amount of
Qualified Substitute Loans pursuant to Subsection 7.03;
(ix) any amounts required to be deposited by the
Seller in connection with any REO Property pursuant to Subsection 11.08;
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(x) any amounts required to be deposited in the
Collection Account pursuant to Subsections 11.14 or 11.16; and
(xi) any late charges and assumption fees.
The foregoing requirements for deposit in the Collection Account shall be
exclusive. Such Collection Account shall be an Eligible Account. Any interest
or earnings on funds deposited in the Collection Account by the depository
institution shall accrue to the benefit of the Seller and the Seller shall be
entitled to retain and withdraw such interest from the Collection Account
pursuant to Subsection 11 .05(ii). The Seller shall give notice to the
Purchaser and the Excess Yield Holder of the location of the Collection Account
when established and prior to any change thereof.
Subsection 11.05 Permitted Withdrawals From the
Collection Account.
Subject to the order of priorities set forth in
Subsection 11.03(c), the Seller may, from time to time, withdraw from the
Collection Account for the following purposes:
(i) to reimburse itself for premiums paid under
the FHA Insurance Contract, to the extent that the Seller has received Impound
Payments with respect thereto;
(ii) to pay to itself pursuant to Subsection 11.18
as servicing compensation (a) any interest earned on funds in the Collection
Account (all such interest to be withdrawn monthly not later than each
Distribution Date); (b) the Servicing Fee from that portion of any payment or
recovery as to interest on a particular Loan; and (c) any payments in the
nature of late payment charges and assumption fees and other charges, to the
extent permitted by Subsection 11.18;
(iii) to pay to itself with respect to each Loan
that has been repurchased pursuant to Subsection 7.03 or Subsection 11.03 all
amounts received thereon and not distributed as of the date on which the
related Repurchase Price is determined;
(iv) to reimburse itself for Monthly Advances, the
Seller's right to reimburse itself pursuant to this subclause (iv) being
limited to amounts received on the related Loan which represent late
collections including related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds and such other amounts as may be collected by the Seller,
from the Obligor or otherwise relating to the Mortgage Loan), it being
understood that, in the case of such reimbursement, (i) the Seller's right
thereto shall be prior to the rights of Purchaser, except that, where the
Seller is required to repurchase a Loan, pursuant to Subsection 7.03, the
Seller's right to such reimbursement shall be subsequent to the payment to the
Purchaser of the Repurchase Price pursuant to Subsection 7.03, and all other
amounts required to be paid to the Purchaser with respect to such Loans, and
(ii) the Seller shall not be permitted to reimburse itself pursuant to this
subclause (iv) from any amounts transferred into the Collection Account from
the Spread Account pursuant to Subsection 11.16(c);
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(v) to reimburse itself for unreimbursed
Servicing Advances, the Seller's right to reimburse itself pursuant to this
subclause (v) with respect to any Loan being limited to related Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds and such other amounts as
may be collected by the Seller from the Obligor or otherwise relating to the
Loan, it being understood that, in the case of such reimbursement, (i) the
Seller's right thereto shall be prior to the rights of the Purchaser, except
that, where the Seller is required to repurchase a Loan, pursuant to Subsection
7.03, the Seller's right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase Price pursuant to Subsection 7.03
and all other amounts required to be paid to the Purchaser with respect to such
Loans, and (ii) the Seller shall not be permitted to reimburse itself pursuant
to this subclause (v) from any amounts transferred into the Collection Account
from the Spread Account pursuant to Subsection 11.16(c);
(vi) to reimburse the Seller for any Monthly
Advance or Servicing Advance previously made which the Seller has determined to
be a Nonrecoverable Advance; provided that, the Seller shall not be permitted
to reimburse itself pursuant to this subclause (vi) from any amounts
transferred into the Collection Account from the Spread Account pursuant to
Subsection 11.16(c);
(vii) to make distributions to the Purchaser of all
amounts distributable to the Purchaser pursuant to this Agreement in the manner
provided for in Subsection 11.09, such amounts allocated first to interest at
the Pass-Through Rate and then to principal;
(viii) to pay into the Spread Account certain
amounts representing a portion of or all of the Excess Yield, to the extent
required pursuant to Subsection 11.16; and
(ix) to clear and terminate the Collection Account
on the termination of this Agreement.
Subsection 11.06 Transfer of Accounts.
The Seller may transfer the Collection Account and/or the
Spread Account and/or any REO Account to a different depository institution
from time to time. Such transfer shall be made only upon obtaining the prior
written consent of the Purchaser and the Excess Yield Holder, which consent
shall not be unreasonably withheld. In any case, the Collection Account, the
Spread Account and any REO Account shall be an Eligible Account.
Subsection 11.07 Collection of FHA Insurance
Proceeds; Other Remedies.
In the event of a default by the Obligor with respect to
any FHA Loan, the Seller shall, subject to the Seller's rights under Subsection
11.03, consistent with the provisions of Subsection 11.01 and all requirements
of the FHA, and provided that adequate FHA Insurance Reserves exist, use all
reasonable efforts to assign the related FHA Loan to the FHA and to collect the
related FHA Insurance Proceeds. In the event that the FHA Insurance Reserves
are
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inadequate to permit the FHA to pay the FHA Insurance Proceeds with respect to
such FHA Loan, or in the event that the FHA denies the Seller's claim for FHA
Insurance Proceeds for reasons other than reasons that would constitute a
breach of the Seller's representations and warranties under Subsection 7.01 or
Subsection 7.02, the Seller shall proceed to foreclose upon or otherwise
comparably convert the ownership of the related Improved Property with respect
to any Mortgage Loan that is an FHA Loan, and, with respect to any FHA Loan
that is not a Mortgage Loan, to undertake such actions as necessary and
appropriate to collect amounts due and owing under the related Note, consistent
with the related Loan Documents, FHA Regulations and all other applicable laws
and regulations. The Seller shall deposit all FHA Insurance Proceeds into the
Collection Account promptly upon receipt thereof.
Subsection 11.08 Title, Management and Disposition of
REO Property.
In the event that title to the Improved Property is
acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be taken in the name of the person designated by the
Purchaser, or in the event such person is not authorized or permitted to hold
title to real property in the state where the REO Property is located, or would
be adversely affected under the "doing business" or tax laws of such state by
so holding title, the deed or certificate of sale shall be taken in the name of
such Person or Persons as shall be consistent with an Opinion of Counsel
obtained by the Seller from an attorney duly licensed to practice law in the
state where the REO Property is located. Any Person or Persons holding such
title other than the Purchaser shall acknowledge in writing that such title is
being held as nominee for the benefit of the Purchaser.
The Seller shall either itself or through an agent
selected by the Seller, manage, conserve, protect and operate each REO Property
(and may with the prior written consent of the Purchaser temporarily rent the
same) in the same manner that it manages, conserves, protects and operates
other foreclosed property for its own account, and in the same manner that
similar property in the same locality as the REO Property is managed. The
Seller shall use all reasonable efforts to dispose of the REO Property as soon
as possible.
With respect to each REO Property, the Seller shall
segregate and hold all funds collected and received in connection with the
operation of the REO Property separate and apart from its own funds or general
assets and shall establish and maintain a separate REO Account for each REO
Property in the form of a non-interest bearing demand Eligible Account. The
creation of any REO Account shall be evidenced by a letter agreement in the
form shown in Exhibit 8. An original of such letter agreement shall be
furnished to the Purchaser upon request.
The Seller shall deposit or cause to be deposited, on a
daily basis in each REO Account all revenues received with respect to the
related REO Property and shall withdraw therefrom funds necessary for the
proper operation, management and maintenance of the REO Property, including the
fees of any managing agent acting on behalf of the Seller. The Seller shall not
be entitled to retain interest paid or other earnings, if any, on funds
deposited in such
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REO Account. On or before each Determination Date, the Seller shall withdraw
from each REO Account and deposit into the Collection Account the net income
from the REO Property on deposit in the REO Account.
The Seller shall furnish to the Purchaser on each
Distribution Date, an operating statement for each REO Property covering the
operation of each REO Property for the previous month. Such operating statement
shall be accompanied by such other information as the Purchaser shall
reasonably request.
Each REO Disposition shall be carried out by the Seller
at such price and upon such terms and conditions as the Seller deems to be in
the best interest of the Purchaser and the Excess Yield Holder. If as of the
date title to any REO Property was acquired by the Seller there were
outstanding unreimbursed Servicing Advances with respect to the REO Property,
the Seller, upon an REO Disposition of such REO Property, shall be entitled to
reimbursement for any related unreimbursed Servicing Advances from proceeds
received in connection with such REO Disposition. The proceeds from the REO
Disposition, net of any payment to which the Seller is entitled as provided
herein, shall be deposited in the REO Account and shall be transferred to the
Collection Account on the Determination Date in the month following receipt
thereof for distribution on the succeeding Distribution Date in accordance with
Subsection 11.09.
Subsection 11.09 Distributions.
On each Distribution Date, the Seller shall distribute to
the Purchaser all amounts credited to the Collection Account during the related
Due Period which are attributable to principal and interest (adjusted to the
related Pass-Through Rate) collected with respect to each Loan (including
Liquidation Proceeds, Condemnation Proceeds and Insurance Proceeds) plus all
Monthly Advances, if any, which the Seller is obligated to make pursuant to
Subsection 11.15, minus all amounts that the Seller is entitled to withdraw
from the Collection Account pursuant to Subsection 11.05(i) through (vi) plus
any amount distributable to the Purchaser pursuant to Subsection 11.16(c) of
the Agreement.
The Seller shall deposit into the Spread Account any
amount required to be deposited therein as specified in Subsection 11.16(a).
With respect to any remittance received by the Purchaser
on or after the second Business Day following the Business Day on which such
payment was due, the Seller shall pay to the Purchaser, as applicable, interest
on any such late payment at an annual rate equal to the rate of interest as is
publicly announced from time to time at its principal office by Chemical Bank,
New York, New York, as its prime lending rate, adjusted as of the date of each
change, plus three percentage points, but in no event greater than the maximum
amount permitted by applicable law. Such interest shall be paid by the Seller
to the Purchaser, as applicable, on the date such late payment is made and
shall cover the period commencing with the day following such second Business
Day and ending with the Business Day on which such payment is made, both
inclusive. Such interest shall be remitted along with such late payment.
65
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The payment by the Seller of any such interest shall not be deemed an extension
of time for payment or a waiver by the Purchaser of any Event of Default by the
Seller.
Subsection 11.10 Remittance Reports.
On the Distribution Date, the Seller shall furnish to the
Purchaser and the Excess Yield Holder or their designees a computer tape
containing, and a hard copy of, the Remittance Report, in such form as the
Purchaser may reasonably request.
Subsection 11.11 Statements to the Purchaser and the
Excess Yield Holder.
Not more than sixty days after the end of each calendar
year, the Seller shall furnish to each Person who was the Purchaser at any time
during such calendar year, (i) as to the aggregate of remittances for the
applicable portion of such year, an annual statement in accordance with the
requirements of applicable federal income tax law, and (ii) listing of the
principal balances of the Loans outstanding at the end of such calendar year.
The Seller shall prepare and file any and all tax
returns, information statements or other filings required to be delivered to
any governmental taxing authority or to any Purchaser pursuant to any
applicable law with respect to the Loans and the transactions contemplated
hereby. In addition, the Seller shall provide the Purchaser with such
information concerning the Loans as is necessary for the Purchaser to prepare
its federal income tax return as any Purchaser may reasonably request from time
to time.
Subsection 11.12 Real Estate Owned Reports.
Together with the statement furnished pursuant to
Subsection 11.08, with respect to any REO Property, the Seller shall furnish to
the Purchaser a statement covering the Seller's efforts in connection with the
sale of such REO Property and any rental of such REO Property incidental to the
sale thereof for the previous month, together with the operating statement.
Such statement shall be accompanied by such other information as the Purchaser
shall reasonably request.
Subsection 11.13 Liquidation Reports.
Upon the foreclosure sale of any Improved Property or the
acquisition thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure,
the Seller shall submit to the Purchaser a liquidation report with respect to
such Improved Property.
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Subsection 11.14 Satisfaction of Mortgages and
Release of Loan Files.
In the event the Seller satisfies or releases a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or should it otherwise prejudice any right the Purchaser may have
under the mortgage instruments, the Seller, upon written demand, shall remit to
the Purchaser the then outstanding principal balance of the related Loan by
deposit thereof in the Collection Account.
From time to time and as appropriate in connection with
the servicing, assignment to the FHA, foreclosure or other enforcement of a
Loan, the Purchaser shall, upon request of the Seller and delivery to the
Purchaser of a servicing receipt signed by a servicing officer of the Seller (a
"Servicing Officer"), release the requested portion of the Loan File held by
the Purchaser to the Seller, together with any assignments necessary to enable
the Seller to perform its obligations. Such servicing receipt shall obligate
the Seller to return the related Loan Documents to the Purchaser when the need
therefor by the Seller no longer exists, unless (a) the Loan has been
liquidated and the Liquidation Proceeds relating to the Loan have been
deposited in the Collection Account, or (b) the Loan File or such document has
been delivered to (i) the FHA in connection with an assignment of the Loan to
the FHA and collection of FHA Insurance Proceeds, or (ii) an attorney, for
purposes of initiating or pursuing legal action or other proceedings to collect
amounts due under the Loan (if such Loan is not a Mortgage Loan), or (iii) with
respect to a Mortgage Loan, an attorney or a public trustee or other public
official as required by law for purposes of initiating or pursuing legal action
or proceedings for the foreclosure of the Improved Property either judicially
or non-judicially, and the Seller has delivered to the Purchaser a certificate
of a Servicing Officer certifying as to the name and address of the Person to
which such Loan File or such document was delivered and the purpose or purposes
of such delivery. Upon receipt of a certificate of a Servicing Officer stating
that such Loan was liquidated, or the FHA Insurance Proceeds received, the
servicing receipt shall be returned by the Purchaser to the Seller.
Subsection 11.15 Monthly Advances by the Seller.
(a) Not later than the close of business on the
Business Day preceding each Distribution Date, the Seller shall deposit in the
Collection Account an amount equal to all payments not previously advanced by
the Seller, whether or not deferred pursuant to Subsection 11.01, of interest
not allocable to the period prior to the Cut-off Date, at the Pass-Through
Rate, which were due on a Loan and delinquent at the close of business on the
related Determination Date.
(b) The obligation of the Seller to make such
Monthly Advances is mandatory, notwithstanding any other provision of this
Agreement, and, with respect to any Loan or REO Property, shall continue until
a Final Recovery Determination in connection therewith; provided that,
notwithstanding anything herein to the contrary, no Monthly Advance shall be
required to be made hereunder by the Seller if such Monthly Advance would, if
made, constitute a Nonrecoverable Advance. The determination by the Seller that
it has made a
67
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Nonrecoverable Advance or that any proposed Monthly Advance or Servicing
Advance, if made, would constitute a Nonrecoverable Advance, shall be evidenced
by an Officer's Certificate delivered to the Purchaser.
Subsection 11.16 Spread Account.
(a) The Seller shall, for the benefit of the
Purchaser, establish and maintain with the Spread Account Depository one or
more accounts (collectively, the "Spread Account"), which shall be entitled
"Mego Mortgage Corporation in trust for Greenwich Capital Markets, Inc. as
Purchaser under that certain Amended and Restated Master Loan Purchase and
Servicing Agreement, dated as of October 1, 1996, among Greenwich Capital
Markets, Inc., Mego Mortgage Corporation and Mego Financial Corp. for FHA and
Conventional Home Improvement Loans". The Seller shall deposit or cause to be
deposited monthly into the Spread Account all interest received on the Loans at
the Excess Yield Rate to the extent required to increase the aggregate amount
on deposit in the Spread Account to an amount equal to the sum of (i) 25% of
the aggregate unpaid principal balance of all Delinquent Loans other than
Seriously Delinquent Loans, (ii) in the case of any FHA Loans which are
Seriously Delinquent Loans which have had HUD claims filed but have not yet
received final rejections of claim from HUD, 25% of the aggregate unpaid
principal balance of such FHA Loans, (iii) in the case of FHA Loans which are
Seriously Delinquent Loans which either (x) have not had HUD claims filed or
(y) have had HUD claims filed and have received final rejections from HUD on
such claims, 100% of the aggregate unpaid principal balance of such FHA Loans
and (iv) 100% of the aggregate unpaid principal balance of all Conventional
Loans that are Seriously Delinquent Loans, such balances to be computed as of
the immediately preceding Determination Date. The Seller shall cause the
Spread Account Depository to deposit into the Spread Account, from the
Collection Account, any Excess Yield required to be deposited therein. To the
extent that as of any Determination Date the amount on deposit in the Spread
Account exceeds the sum described in the second preceding sentence (computed as
of such Determination Date), at the Seller's request the Purchaser shall
instruct the Spread Account Depository to release the amount of such excess to
the Seller on the related Distribution Date. Similarly, to the extent that the
amount required to be deposited into the Spread Account pursuant to the third
preceding sentence is greater than the Excess Yield for such month, the Seller
shall deposit the amount of such deficiency into the Spread Account. The
Seller shall, upon the request of the Purchaser or the Excess Yield Holder,
provide evidence that the Spread Account has been established. The Purchaser
shall not have any interest in the Spread Account other than as a holder of a
security interest therein. Amounts held in the Spread Account from time to time
shall continue to be the property of the Excess Yield Holder until withdrawn
from the Spread Account pursuant to Subsection 11.16(c). The Seller, or the
Excess Yield Holder if different from the Seller, hereby grants to the
Purchaser a security interest in the Spread Account and such assets as are
deposited and held therein from time to time and any investments thereof,
together with any and all income, proceeds and payments with respect thereto.
Such grant is made to secure the obligations of the Seller (or the Excess Yield
Holder if different from the Seller) under this Subsection 11.16.
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The Seller (and the Excess Yield Holder, if such is not
the Seller) shall cause, at all times that the Loans are outstanding, a valid
and perfected lien on or security interest in the Spread Account to be
maintained, and a valid and perfected security interest of first priority under
the Uniform Commercial Code as in effect from time to time in the State wherein
the Spread Account is located to be maintained, in the amounts deposited in the
Spread Account and the investments thereof in order to secure the full and
timely performance of the obligations of the Excess Yield Holder pursuant to
this Subsection 11.16. Amounts properly distributed by the Spread Account
Depository to the Excess Yield Holder pursuant to Subsection 11.16(d) shall be
deemed released from the provisions of this Agreement and the security interest
established by this subsection, and the Excess Yield Holder will in no event be
required to refund any such distributed amounts. The Spread Account Depository
shall keep records that accurately reflect the funds on deposit in the Spread
Account. The amount held in the Spread Account shall be noted on the monthly
remittance reports provided to the Purchaser and the Excess Yield Holder
pursuant to Subsection 11.10.
(b) The Spread Account Depository shall at the
written direction of the Seller, so long as the Seller is the Excess Yield
Holder, invest the funds in such account in Permitted Investments, each of
which shall mature not later than one year following the date of such
investment. All such Permitted Investments shall be registered in the name of
the Spread Account Depository (in its capacity as such) or its nominee. All
income and gain realized from any such investment as well as any interest
earned on deposits in the Spread Account shall be deposited or retained in the
Spread Account and accumulated therein, pending any withdrawal or release from
the Spread Account pursuant to subsection (c) below. The Seller shall deposit
in the Spread Account (with respect to investments made hereunder of funds held
therein) an amount equal to the amount of any loss incurred in respect of any
such investment immediately upon realization of such loss. The Seller shall be
permitted, in its discretion, to liquidate any Permitted Investment. The
proceeds of such liquidated investment shall be deposited into the Spread
Account. The Spread Account Depository shall not be liable for the amount of
any loss incurred in respect of any investment, or lack of investment, of funds
held in the Spread Account, except for losses attributable to the Spread
Account Depository's failure to make payments on such Permitted Investments
issued by the Spread Account Depository, in its commercial capacity, in
accordance with their terms.
(c) On the Business Day prior to each
Distribution Date, the Seller shall deposit into the Collection Account for
distribution to the Purchaser on such Distribution Date pursuant to Subsection
11.09, an amount equal to the aggregate of all Realized Losses incurred with
respect to any Loans and REO Properties as to which Final Recovery
Determinations were made during the period ending on the related Determination
Date and any Realized Losses with respect to any Loans and REO Properties as to
which Final Recovery Determinations were made during prior periods but which
were not paid due to insufficient funds in the Spread Account. Amounts
distributable to the Purchaser shall be limited to funds represented by the
amounts then on deposit in the Spread Account (the "Spread Account Balance")
and the Seller shall not be required to supplement such funds with its own
funds except to the extent of any loss on a Permitted Investment with respect
to the Spread Account. The Spread Account Balance shall be reduced by the
amount of any Realized Losses. The Seller
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may, in satisfaction of its obligation described in this paragraph (c), cause
the Spread Account Depository to withdraw from the Spread Account and deposit
into the Collection Account the total amount to be deposited therein for such
Distribution Date pursuant to the preceding sentences.
Notwithstanding the foregoing, in the event that the
Seller is unable to assign an FHA Loan to the FHA and to collect FHA Insurance
Proceeds (i) due to insufficient FHA Insurance Reserves or (ii) due to the
FHA's denial of a claim for reasons not constituting a breach of a
representation or warranty under Subsection 7.01 or 7.02, which denial the
Seller believes in good faith to be final, the Seller shall either, at its
option, repurchase the related FHA Loan under Subsection 11.03 or proceed to
enforce its other remedies. In the event that the Seller pursues other remedies
but no Final Recovery Determination can be made within 12 months after the date
of default under an FHA Loan with respect to (i) above and within 12 months
after final denial by the FHA of a claim with respect to (ii) above, the Seller
shall cause to be withdrawn from the Spread Account and deposited in the
Collection Account, in the manner described in this subsection, an amount equal
to the amount that would be deemed a Realized Loss if a Final Recovery
Determination could be made, and the Spread Account shall be reduced by such
amount. Any amounts subsequently received by the Seller with respect to the
related FHA Loan or REO Property shall be deposited by the Seller into the
Spread Account.
(d) Upon the termination of this Agreement, any
and all amounts remaining in the Spread Account shall be distributed to the
Excess Yield Holder.
Subsection 11.17 [Intentionally Deleted]
Subsection 11.18 Servicing Compensation.
As compensation for its services hereunder the Seller
shall be entitled to withdraw from the Collection Account or to retain from
interest payments on the Loans the amounts provided for as the Seller's
Servicing Fee. Additional servicing compensation in the form of any assumption
fees and late payment charges or other charges shall be retained by the Seller
to the extent not required to be deposited in the Collection Account. The
Seller shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder and shall not be entitled to reimbursement
therefor except as specifically provided for.
Subsection 11.19 Statement as to Compliance.
The Seller will deliver to the Purchaser not later than
120 days following the end of each fiscal year of the Seller, which as of the
Closing Date ends on the last day in August 31, in each calendar year,
beginning with the fiscal year ending August 31, 1997, an Officers' Certificate
stating, as to each signatory thereof, that (i) a review of the activities of
the Seller during the preceding year and of performance under this Agreement
has been made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Seller has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known
70
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to such officer and the nature and status thereof. Copies of such statement
shall be provided by the Purchaser to any Person identified as a prospective
purchaser of the Loans.
Subsection 11.20 Independent Public Accountants'
Servicing Report.
Not later than 90 days following the end of each fiscal
year of the Seller, beginning with the fiscal year ending August 31, 1997, the
Seller at its expense shall cause a firm of independent public accountants
(which may also render other services to the Seller) which is a member of the
American Institute of Certified Public Accountants to furnish a statement to
the Purchaser or its designee to the effect that such firm has examined certain
documents and records relating to the servicing of the Loans under this
Agreement or of loans under servicing agreements (including the Loans and this
Agreement) substantially similar one to another (such statement to have
attached thereto a schedule setting forth the servicing agreements covered
thereby) and that, on the basis of such examination conducted substantially in
compliance with the Audit Guide for Use by Independent Public Accountants in
Audits of HUD-approved Non-Supervised Mortgagees, Loan Correspondents and
Coinsuring Mortgagees (the "Audit Guide"), such firm confirms that such
servicing has been conducted in compliance with such servicing agreements
except for such significant exceptions or errors in records that, in the
opinion of such firm, the Audit Guide requires it to report. Copies of such
statement shall be provided by the Purchaser to any Person identified as a
prospective purchaser of the Loans.
Subsection 11.21 Access to Certain Documentation.
The Seller shall provide to the Office of Thrift
Supervision, the FDIC and any other federal or state banking or insurance
regulatory authority that may exercise authority over the Purchaser or the
Excess Yield Holder access to the documentation regarding the Loans serviced by
the Seller required by applicable laws and regulations. Such access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the Seller. In addition, access to the
documentation will be provided to the Purchaser, the Excess Yield Holder or any
agent thereof identified to the Seller by the Purchaser or the Excess Yield
Holder without charge, upon reasonable request during normal business hours at
the offices of the Seller.
Subsection 11.22 Status of Completion Certificates.
Upon the request of the Purchaser from time to time, the
Seller shall identify to the Purchaser the Loans as to which the Seller has not
received a completion certificate, in the case of any FHA Loan, in the form
required by FHA, whether or not the deadline for delivery of such certificate
by the Obligor has passed, together with the status of such deadline.
71
EXHIBIT 7
PRICING LETTER
[Date], 199_
Greenwich Capital Markets, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
Ladies and Gentlemen:
Pursuant to Section 2 of that certain Amended and
Restated Master Loan Purchase and Servicing Agreement, dated as of October 1,
1996 (the "Purchase Agreement"), among Greenwich Capital Markets, Inc. (the
"Purchaser"), Mego Mortgage Corporation (the "Seller") and Mego Financial
Corp., the Seller agrees to sell, and the Purchaser agrees to purchase on
[date] or such other date mutually agreed to by the Seller and the Purchaser
not later than 14 days following such date (the "Closing Date"), Loans having
an aggregate principal balance not in excess of $_______ and originated by the
Seller between [date] and [date] (the "Cut-off Date"). The Loan Package shall
have an adjustable Pass-Though Rate equal to 200 basis points per annum in
excess of the London Inter Bank Offered Rate ("LIBOR") for U.S. dollar deposits
for one month as quoted on Page 3750 on the Telerate Service (or such other
page as may replace Page 3750 on that service or such other service as may be
nominated for the time being by the British Bankers Association as the
information vendor for the purpose of displaying British Bankers Association
Interest Settlement Rates). The Pass-Through Rate shall adjust monthly at
30-day intervals following the Closing Date based upon LIBOR as in effect two
Business Days prior to such adjustment date.
This Pricing Letter supersedes any prior Pricing Letters
the Purchaser and the Seller have agreed to.
Capitalized terms used but not defined herein shall have
the meanings set forth in the Purchase Agreement.
The Purchase Price for the Loan Package will be the sum
of (A) _____% multiplied by the balance of the FHA Loans, (B) _____% multiplied
by the aggregate unpaid principal balance of the Conventional Loans and (C)
accrued interest (as specified in Section 4 of the Purchase Agreement). The
Purchase Price shall be paid by the Purchaser to the Seller on the Closing Date
as directed by the Seller.
Pursuant to Subsection 11.16 of the Purchase Agreement,
all interest received on the Loans at the Excess Yield Rate shall be deposited
monthly in the Spread Account to be maintained at The First National Bank of
Boston (or another depository approved by the Purchaser), and retained therein,
subject to withdrawal solely for the purpose of remittance to the Purchaser in
respect of any Realized Losses.
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Each Loan purchased hereunder may be resold by the
Purchaser or transferred into a trust for the purpose of a Pass-Through
Transfer or Whole Loan Transfer (any such resale or transfer, a "Purchaser
Disposition") and, upon such a Purchaser Disposition, the Purchaser shall make
an additional payment (the "Disposition Payment") to the Seller in an amount
determined in this Pricing Letter to the extent that the Purchaser Disposition
is effected at a price greater than the price paid by the Purchaser.
The Disposition Payment will be equal to any amount by
which (a) the net proceeds realized by the Purchaser from a Purchaser
Disposition exceed (b) the sum of (i) the Disposition Fee payable to Greenwich
Capital Markets, Inc. ("GCM") pursuant to the engagement letter dated October
1, 1996 between GCM and the Seller and (ii) the aggregate Purchase Price paid
by the Purchaser to the Seller for the related Loans.
Amounts paid by the Purchaser hereunder shall be paid in
same day funds through the federal funds wire system.
The Purchaser shall use its reasonable best efforts to
minimize the amount of Excess Yield required to credit enhance the interest of
any investor in the Loans pursuant to any Reconstitution Agreement unless such
efforts under the then existing market conditions might reasonably lead to a
net resale price less than Par.
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Attached hereto as Schedule I is the Loan Schedule for
the Loan Package. The related Closing Date with respect to such Loan Package
shall be [date], 199_, and the Cut-off Date will be [date], 199_.
MEGO MORTGAGE CORPORATION,
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Agreed to and Accepted
GREENWICH CAPITAL MARKETS, INC.
By:
----------------------------
Name:
-----------------------
Title:
-------------------------
74
EXHIBIT 8
REO ACCOUNT LETTER AGREEMENT
, 199
--------------------- --
To:
-----------------------------
----------------------------------------
----------------------------------------
(the "Depository")
As Seller under the Amended and Restated Master Loan
Purchase and Servicing Agreement, dated as of October 1, 1996, we hereby
authorize and request you to establish an account, as an REO Account, to be
designated as "Mego Mortgage Corporation in trust for Greenwich Capital
Markets, Inc. as Purchaser under that certain Amended and Restated Master Loan
Purchase and Servicing Agreement, dated as of October 1, 1996, among Greenwich
Capital Markets, Inc., Mego Mortgage Corporation and Mego Financial Corp. for
FHA and Conventional Home Improvement Loans." All deposits in the account
shall be subject to withdrawal therefrom by order signed by the Seller. This
letter is submitted to you in duplicate. Please execute and return one original
to us.
MEGO MORTGAGE CORPORATION
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
Date:
------------------------------------------
75
-2-
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ____________
at the office of the Depository indicated above, and agrees to honor
withdrawals on such account as provided above. The amount deposited at any time
in the account will be insured by the Federal Deposit Insurance Corporation
through the Bank Insurance Fund ("BIF") or the Savings Association Insurance
Fund ("SAIF") subject to applicable insurance maximums.
------------------------------------------
Depository
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Date:
-------------------------------------
76
EXHIBIT 9A
SELLER'S OFFICER'S CERTIFICATE OF CHIEF FINANCIAL OFFICER
I, _____________, hereby certify that I am the duly
elected Vice President and Chief Financial Officer of Mego Mortgage
Corporation, a Delaware corporation (the "Seller"), and further certify, on
behalf of the Seller, as follows:
1. I am familiar with each of the material
agreements to which the Seller is a party or by which it is bound; and
2. Neither the sale nor delivery of the Loans to
the Purchaser, nor the consummation of the transactions contemplated by, nor
the fulfillment of the obligations of the Seller under the terms of the Amended
and Restated Master Loan Purchase and Servicing Agreement (the "Purchase
Agreement") dated as of October 1, 1996, among the Seller, Greenwich Capital
Markets, Inc. (the "Purchaser") and Mego Financial Corp., and the Custodial
Agreement, dated as of April 1, 1995, among Greenwich Capital Financial
Products, Inc., First Trust National Association and the Seller, materially
conflicts with or will materially conflict with, or results or will result in a
material breach of, or constitutes or will constitute a material default under,
the certificate of incorporation of the Seller, the terms of any indenture or
other agreement or instrument to which the Seller is a party or by which it is
bound or to which it is subject, or to any statute or order, rule, regulation,
writ, injunction or decree of any court, governmental authority or regulatory
body to which the Seller is subject or by which it is bound.
All capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the Purchase Agreement.
77
-2-
IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of the Seller.
Dated:
[Seal]
MEGO MORTGAGE CORPORATION
By:
----------------------------------------
Name:
Title: Vice President and Chief Financial
Officer
I, ________________, Assistant Secretary of
___________________________, hereby certify that ______________ is the duly
elected, qualified and acting Vice President and Chief Financial Officer of the
Seller and that the signature appearing above is such person's genuine
signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
[Seal]
MEGO MORTGAGE CORPORATION
By:
--------------------------------
Name:
Title: Assistant Secretary
78
EXHIBIT 9B
GUARANTOR'S OFFICER'S CERTIFICATE OF GENERAL COUNSEL
I, _____________, hereby certify that I am the duly
elected Executive Vice President and General Counsel of Mego Financial Corp., a
New York corporation (the "Guarantor"), and further certify, on behalf of the
Guarantor, as follows:
1. I am familiar with each of the material
agreements to which the Guarantor is a party or by which it is bound; and
2. The fulfillment of the obligations of the
Guarantor under the terms of the Amended and Restated Master Loan Purchase and
Servicing Agreement (the "Purchase Agreement") dated as of October 1, 1996,
among Mego Mortgage Corporation, Greenwich Capital Markets, Inc. (the
"Purchaser") and the Guarantor does not materially conflict with and will not
materially conflict with, will not result in a material breach of, or
constitute a material default under, the certificate of incorporation of the
Guarantor, the terms of any indenture or other agreement or instrument to which
the Guarantor is a party or by which it is bound or to which it is subject, or
to any statute or order, rule, regulation, writ, injunction or decree of any
court, governmental authority or regulatory body to which the Guarantor is
subject or by which it is bound.
All capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the Purchase Agreement.
79
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IN WITNESS WHEREOF, I have hereunto signed my name and
affixed the seal of the Guarantor.
Dated:
[Seal]
MEGO FINANCIAL CORP.
By:
-----------------------------------
Name:
Title: Executive Vice President and
General Counsel
I, ________________, Assistant Secretary of
_______________________, hereby certify that _____________ is the duly elected,
qualified and acting Vice President and General Counsel of the Guarantor and
that the signature appearing above is such person's genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
[Seal]
MEGO FINANCIAL CORP.
By:
---------------------------------
Name:
Title: Assistant Secretary
80
EXHIBIT 10
CUSTODIAL AGREEMENT
81
SCHEDULE I
LOAN SCHEDULE
