EXHIBIT 10.3
FLOW PURCHASE AGREEMENT
THIS FLOW PURCHASE AGREEMENT (the "Agreement") is entered into as of
November 24, 1998, by and between New Century Mortgage Corporation ("Seller")
and U.S. Bank National Association, ND ("Buyer").
WHEREAS, Seller is in the business of originating, servicing and selling
mortgage loans secured by one-to-four family residences;
WHEREAS, Buyer from time to time desires to purchase whole mortgage loans
("Mortgage Loans") on a servicing-retained basis;
WHEREAS, the parties desire to establish the framework for Buyer to bid on,
and potentially purchase, a significant volume of whole loans from Seller;
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 parties agree as follows:
1. Solicitation of Bid. Each month Seller will present to Buyer for bid a
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pool of Mortgage Loans with an aggregate principal balance of not less than
$50,000,000 (plus or minus 10%) having the characteristics set forth on Exhibit
A hereto. Seller will provide to Buyer such information regarding the offered
pool of Mortgage Loans as Buyer reasonably requires in order to submit a
purchase bid.
2. Buyer's Offer to Purchase. Within five (5) days of receipt of
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information regarding the pool, Buyer will make an offer to purchase on a
servicing-retained basis all or a randomly selected portion of the pool, but
with an aggregate principal balance of not less than $10,000,000. The offer
will be in the form of the Confirmation attached hereto as Exhibit B,
specifying, among other things, the Purchase Price Percentage to be paid by
Buyer. If Seller has not received an offer from Buyer by the sixth (6th) day
after presenting the pool to Buyer, Seller may proceed to offer the pool to
other prospective purchasers.
3. Acceptance or Rejection. Within 7 days of receipt of Buyer's offer, if
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any, Seller, in its sole discretion, must either accept or reject the offer. If
Seller accepts the offer, Seller will sign the Confirmation and the parties will
cooperate to consummate the sale by the Closing Date reflected in the
Confirmation. If Seller rejects the offer, then for a period of 30 days
thereafter, Seller will not sell the pool to a third party on terms less
favorable to Seller than those contained in Buyer's offer without once again
offering the pool to Buyer.
4. Terms of the Sale. For Mortgage Loan sale transactions hereunder, the
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parties will use sale documents in substantially the form of the Mortgage Loan
Purchase
and Sale Agreement attached hereto as Exhibit C, or such other form as the
parties mutually agree upon.
5. Servicing. Buyer will retain Seller to service all Mortgage Loans
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purchased pursuant to this Agreement for a 50 basis point fee plus deboarding
and other customary fees agreed to by the parties as consistent with industry
practice for the type of services to be practiced by Seller. Servicing will be
on an Actual/Actual basis. Seller will be entitled to retain late fees
collected on the Mortgage Loans, and Buyer will be entitled to keep prepayment
penalty fees.
6. Representations and Warranties of Seller. As an inducement to cause
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Buyer to enter into this Agreement Seller represents and warrants to Buyer that,
as of the date of this Agreement:
(a) Seller a corporation duly organized, validly existing, and in good
standing under the laws of the State of California, is duly qualified and in
good standing to transact business, and possesses all requisite authority,
power, licenses, permits and franchises to execute, deliver and comply with
its obligations under the terms of this Agreement, the execution, delivery and
performance of which have been duly authorized by all necessary corporate
action.
(b) The execution and delivery of this Agreement by Seller in the
manner contemplated herein and the performance and compliance with the terms
hereof by it shall not violate: (i) its articles of incorporation or bylaws,
or (ii) any laws that could have any material adverse effect whatsoever upon
the validity, performance or enforceability of any of the terms of this
Agreement applicable to Seller, and will not constitute a material default (or
an event that, with notice or lapse of time or both, would constitute a
material default) under, or result in the breach of, any material contract,
agreement or other instrument to which Seller is a party.
(c) The execution and delivery of this Agreement by Seller in the
manner contemplated herein and the performance and compliance with the terms
hereof by it do not require the consent or approval of any governmental
authority, or if such consent or approval is required, it has been obtained.
(d) Assuming due authorization, execution and delivery by each other
party hereto, this Agreement and all of the obligations of Seller hereunder
are the legal, valid and binding obligations of Seller, enforceable in
accordance with the terms of this Agreement, except as such enforcement may be
limited by applicable bankruptcy, conservatorship or similar debtor relief
laws affecting the enforcement of creditors' rights generally.
(e) There is no action, suit, proceeding or investigation pending or,
to the best of Seller's knowledge, threatened against Seller which, either in
any one instance or in the aggregate, may (i) result in any material adverse
change in business,
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operations, financial condition, properties or assets of Seller or in any
material impairment of the right or ability of Seller to carry on it business
substantially as now conducted or to perform under the terms of this Agreement
or (ii) which would draw in question the validity of this Agreement or the
Mortgage Loans.
(f) Seller is not in default with respect to any order or decree of
any court or order, regulation or demand of any federal, state, municipal or
governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or other) or
operations of Buyer or its properties or might have consequences that would
materially and adversely affect its performance hereunder.
7. Representations and Warranties of Buyer. As an inducement to cause
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Seller to enter into this Agreement Buyer represents and warrants to Seller
that, as of the date of this Agreement:
(a) Buyer is a national bank, duly organized, validly existing, and in
good standing under the laws of the United States and possess all requisite
authority, power, licenses, permits and franchises to execute, deliver and
comply with its obligations under the terms of this Agreement, the execution,
delivery and performance of which have been duly authorized by all necessary
corporate action.
(b) The execution and delivery of this Agreement by Buyer in the
manner contemplated herein and the performance and compliance with the terms
hereof by it shall not violate: (i) its articles of incorporation or bylaws,
or (ii) any laws that could have any material adverse effect whatsoever upon
the validity, performance or enforceability of any of the terms of this
Agreement applicable to Buyer, and will not constitute a material default (or
an event that, with notice or lapse of time or both, would constitute a
material default) under, or result in the breach of, any material contract,
agreement or other instrument to which Buyer is a party.
(c) The execution and delivery of this Agreement by Buyer in the
manner contemplated herein and the performance and compliance with the terms
hereof by it do not require the consent or approval of any governmental
authority, or if such consent or approval is required, it has been obtained.
(d) Assuming due authorization, execution and delivery by each other
party hereto, this Agreement and all of the obligations of Buyer hereunder are
the legal, valid and binding obligations of Buyer, enforceable in accordance
with the terms of this Agreement, except as such enforcement may be limited by
applicable bankruptcy, conservatorship or similar debtor relief laws affecting
the enforcement of creditors' rights generally.
(e) There is no action, suit, proceeding or investigation pending or,
to the best of Buyer's knowledge, threatened against Buyer which, either in
any one
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instance or in the aggregate, may (i) result in any material adverse change in
business, operations, financial condition, properties or assets of Buyer or in
any material impairment of the right or ability of Buyer to carry on it
business substantially as now conducted or to perform under the terms of this
Agreement or (ii) which would draw in question the validity of this Agreement
or the Mortgage Loans.
(f) Buyer is not in default with respect to any order or decree of any
court or order, regulation or demand of any federal, state, municipal or
governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or other) or
operations of Buyer or its properties or might have consequences that would
materially and adversely affect its performance hereunder.
8. Term and Termination. This Agreement will expire on the earlier of (i)
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the one year anniversary of the date of this Agreement, or (ii) the day on which
an aggregate of more than $300 million in Mortgage Loans has been sold under
this Agreement. Either party may terminate this Agreement prior to its
expiration upon 90 days' written notice to the other party. This Agreement may
be terminated immediately by the non-defaulting party in the event of the
occurrence of any of the following:
(a) the other party materially defaults in the performance of any of
its duties or obligations hereunder, which default shall not be substantially
cured within 30 days after written notice is given by the non-defaulting party
specifying the default;
(b) an insolvency, bankruptcy or similar proceeding shall have been
commenced, or a decree or order of any appropriate court, agency or
supervisory authority for the appointment of a conservator, receiver or
liquidator shall have been entered against the other party, or the other party
admits in writing that it is unable to pay debts generally as they come due or
makes an assignment for the benefit of creditors.
9. Notices. All demands, notices and communication hereunder shall be in
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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 following addresses:
(a) if to Buyer:
U.S. Bank National Association
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Vice President
(b) if to Seller:
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New Century Mortgage Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇, Executive Vice President and COO
or such other addresses as may hereafter be furnished to the other party by like
notice.
10. Amendments, Changes and Modifications. This Agreement may be amended,
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changed modified or altered only with the written consent of Seller and Buyer by
a written agreement that specifically refers to this Agreement and that is
executed by all parties.
11. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Minnesota, without regard to the
application of conflict of laws rules.
12. Severability. Each part of this Agreement is intended to be
------------
severable. If any term, covenant, condition or provision hereof is unlawful,
invalid or unenforceable for any reason whatsoever, and such illegality,
invalidity or unenforceability does not affect the remaining parts of this
Agreement, then all such remaining parts hereto shall be valid and enforceable
and have full force and effect as if the invalid or unenforceable part had not
been included.
13. Rights Cumulative; Waivers. The rights of each of the parties under
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this Agreement are cumulative and may be exercised as often as any party
considers appropriate. The rights of each of the parties hereunder shall not be
capable of being waived or varied otherwise than by an express waiver or
variation in writing. Any failure to exercise or any delay in exercising any of
such rights shall not operate as a waiver or variation of that or any other such
right. Any defective or partial exercise of any such rights shall not preclude
any other or further exercise of that or any other such right. No act or course
of conduct or negotiation on the part of any party shall in any way preclude
such party from exercising any such right or constitute a suspension or any
variation of any such right.
14. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall constitute one and the same instrument, and
wither party hereto may execute this Agreement by signing any such counterpart.
15. Remedies Not Exclusive. Except as provided otherwise herein, the
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rights and remedies of the parties provided in the Agreement are cumulative and
not exclusive and are in addition to any other rights and remedies now and
hereafter provided by law.
16. Integrated Agreement. This Agreement and the documents, instruments
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and agreements executed and delivered pursuant to this Agreement, constitute the
entire
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agreement between the parties with respect to the subject of the transactions
contemplated hereby and supersede all prior letters or agreements with respect
thereto.
17. Assignment of Rights to Third Parties. All of the terms and
-------------------------------------
conditions of this Agreement shall be binding upon and inure to the benefit of
Buyer and Seller and their respective successor and assigns; provided, however,
that neither party shall assign or delegate any of its rights, privileges or
duties arising under this Agreement without prior written consent of the other.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year stated
above.
U.S. Bank National Association, ND New Century Mortgage Corporation
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇ By:
------------------------------- -----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇ Name:
--------------------------- ---------------------------
Title: Vice President Title:
--------------------------- --------------------------
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year stated
above.
U.S. Bank National Association, ND New Century Mortgage Corporation
By: By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------- ----------------------------
Name: Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------- ---------------------------
Title: Title: Executive Vice President
---------------------------- --------------------------
S-1
Exhibit A
Pool Criteria
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1. All Mortgage Loans must conform to the mortgage loan origination standards
established and applied by Seller regarding the eligibility of mortgage
loans for origination and purchase by Seller, including exceptions to the
ordinarily applicable standards if such exceptions were properly approved by
persons with authority to do so under such standards, as they may be amended
or supplemented from time to time.
2. No Mortgage Loan may be:
. To a Borrower who is rated "C minus" under Seller's underwriting
guidelines
. Originated under Seller's "C minus Home Saver" program
3. The proportion of loan types offered by Seller for bid in each month must be
representative of Seller's aggregate production in that month, except that,
if Buyer so requests, they must also conform to the following criteria:
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Characteristic A B C
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Lien Position 1st only 1st only 1st only
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Rental, or investor owned Yes Yes Yes
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Single family, condo, PUDs only Yes Yes Yes
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Exceptions to Seller's bankruptcy underwriting criteria No No No
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Average LTV not more than 79% 75% 70%
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Maximum Rental/Investor Owned 13% 13% 13%
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Maximum "Jumbo" loans (defined as greater than $300,000 15% 15% 15%
for A, $250,000 for B, and $200,000 for C) based on
number of loans in pool
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Maximum "Stated Income" 35% 35% 35%
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Credit Grade Maximum Target Minimum
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A+ 80% 75% 70%
A+ MO
A-
A- MO
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B 25% 20% 15%
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C 15% 10% 0%
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C- or Home Saver None None None
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A-1
Exhibit B
Form of Confirmation
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CONFIRMATION
This Confirmation is entered into pursuant to that certain Flow Purchase
Agreement dated as of November __, 1998 by and between New Century Mortgage
Corporation, as Seller, and US Bank National Association, ND, as Buyer.
Capitalized terms used herein and not defined herein have the meanings given
them in said Mortgage Loan Purchase Agreement.
Seller and Buyer hereby confirm an agreement to sell and purchase the Mortgage
Loans identified on the attached Mortgage Loan Schedule, upon the following
terms:
Date of this Confirmation: __________________________
Closing Date: __________________________
Purchase Price Percentage: __________%
[or list separately for sub-pools of
different loan types]
Cut-Off Date ________ 1, 199__
Aggregate Principal Balance as of Cut-Off $_________________________
Date:
The Mortgage Loan Schedule is attached hereto.
NEW CENTURY MORTGAGE CORPORATION
By: ___________________________
Its: ____________________
US BANK NATIONAL ASSOCIATION, ND
By: ___________________________
Its: ____________________
B-1
Exhibit C
Form of Mortgage Loan Purchase and Sale Agreement
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C-1
================================================================================
MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
By and Between
NEW CENTURY MORTGAGE CORPORATION
Seller,
and
US BANK NATIONAL ASSOCIATION, ND
Buyer
Dated as of ____________, 199_
================================================================================
MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
TABLE OF CONTENTS
PAGE
----
1. Definitions............................................................. 1
2. Seller's Representations and Warranties................................. 6
(a) Representations and Warranties Regarding Seller..................... 6
(i) Due Incorporation and Good Standing.................... 6
(ii) Corporate Authority and Power.......................... 6
(iii) Authorization, Execution, Delivery; Valid, Binding..... 7
(iv) Governmental Consent................................... 7
(v) Bulk Transfers......................................... 7
(vi) Performance............................................ 7
(vii) Pending Litigation..................................... 7
(viii) Compliance with Laws and Regulations................... 7
(ix) Material Facts......................................... 7
(b) Representations and Warranties Regarding Mortgage Loans............. 7
(i) Information Valid...................................... 8
(ii) Payments Current....................................... 8
(iii) No Outstanding Charges................................. 8
(iv) Original Terms Unmodified.............................. 8
(v) No Defenses............................................ 8
(vi) Hazard Insurance....................................... 9
(vii) Compliance with Applicable Laws........................ 9
(viii) No Satisfaction of Mortgage............................ 9
(ix) Valid Lien............................................. 10
(x) Validity of Mortgage Documents......................... 10
(xi) Full Disbursement of Proceeds.......................... 10
(xii) Ownership.............................................. 10
(xiii) Doing Business......................................... 11
(xiv) Title Insurance........................................ 11
(xv) No Defaults............................................ 11
(xvi) No Mechanics' Liens.................................... 11
(xvii) Location of Improvements; No Encroachments............. 11
(xviii) Payment Terms.......................................... 11
(xix) Customary Provisions................................... 12
(xx) Occupancy of the Mortgaged Property.................... 12
(xxi) No Additional Collateral............................... 12
(xxii) Deeds of Trust......................................... 12
(xxiii) Mortgaged Property Undamaged........................... 12
(xxiv) Leaseholds............................................. 12
(xxv) No Buydowns; No Contingent Features.................... 12
i
(xxvi) Compliance with Appraisal Regulations.................. 13
(xxvii) Origination Practices and Servicing.................... 13
(xxviii) No Construction or Trade-In Loans...................... 13
(xxix) Absence of Fraud....................................... 13
(xxx) Condominium or PUD..................................... 13
(xxxi) Pool Criteria.......................................... 13
(c) Exclusivity of Seller's Representations and Warranties.............. 13
3. Buyer's Representations and Warranties.................................. 13
(a) Due Incorporation and Good Standing................................. 13
(b) Corporate Authority and Power....................................... 14
(c) Authorization, Execution, Delivery; Valid, Binding.................. 14
(d) Governmental Consent................................................ 14
(e) Performance......................................................... 14
(f) Pending Litigation.................................................. 14
(g) Compliance with Laws and Regulations................................ 14
(h) Material Facts...................................................... 15
4. Purchase and Sale....................................................... 15
(a) Agreement to Purchase............................................... 15
(b) Confirmations....................................................... 15
5. Examination of Mortgage Files........................................... 15
6 Purchase Price.......................................................... 16
7. Purchase and Settlement................................................. 16
8. Indemnification and Repurchase Obligation............................... 17
(a) Repurchase for Breach of Representation and Warranty
or Document Deficiency............................................. 17
(b) Repurchase for First Payment Default................................ 17
(c) Repurchase Procedure................................................ 17
(d) Indemnification..................................................... 18
(e) Sole and Exclusive Remedies......................................... 18
(f) Reimbursement for Certain Refinancings.............................. 18
(g) Survival of Representations and Warranties.......................... 19
9. Delivery of Loan Documentation.......................................... 19
10. True Sale; Financial Accounting Treatment............................... 19
11. Arbitration............................................................. 20
12. Miscellaneous........................................................... 20
ii
(a) Construction; Article and Section Headings..................... 20
(b) Counterparts; Execution and Delivery by Facsimile.............. 20
(c) Severability................................................... 20
(d) Notices........................................................ 21
(e) Governing Law.................................................. 21
(f) Offsets........................................................ 21
(g) Prior Agreements............................................... 21
(h) Amendments..................................................... 21
(i) Assignment of Rights under this Agreement...................... 22
Schedule of Exhibits:
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Exhibit A Form of Confirmation
Exhibit B Pool Criteria
Exhibit C Mortgage Notes and Loan Files
Exhibit D Form of Assignment of Mortgage Loans
Exhibit E Seller's Wire Instructions
iii
MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
THIS MORTGAGE LOAN PURCHASE AND SALE AGREEMENT (the "Agreement") is entered
into as of _____________, 199_, by and between New Century Mortgage Corporation
("Seller") and US Bank National Association, ND ("Buyer").
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain
whole mortgage loans ("Mortgage Loans") on a servicing-retained basis, subject
to the terms and conditions set forth in the Agreement.
NOW, THEREFORE, the parties hereby agree that for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Seller hereby agrees to sell to Buyer and Buyer hereby agrees to purchase from
Seller, on the Closing Dates those Mortgage Loans identified in the Mortgage
Loan Schedules, all in accordance with the terms, covenants and conditions as
herein set forth.
1. Definitions.
Unless the context shall otherwise plainly require, the capitalized terms
used herein shall have meanings given them below and such meanings are equally
applicable to the singular and the plural forms of such terms.
"Adjustable Rate Mortgage Loan" means a Mortgage Loan which, by its terms,
allows for periodic adjustments to the Note Rate according to a specified
procedure.
"Agreement" or "Purchase Agreement" means this Mortgage Loan Purchase and
Sale Agreement and all exhibits, amendments and supplements thereto.
"Appraised Value" means, with respect to any Mortgaged Property, the lesser
of (i) the value thereof as determined by an appraisal made by an Appraiser for
the originator of the Mortgage Loan at the time of origination of the Mortgage
Loan, and (ii) the purchase price paid for the related Mortgaged Property by the
Borrower with the proceeds of the Mortgage Loan; provided, however, in the case
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of a Refinanced Mortgage Loan, such value of the Mortgaged Property is
determined solely pursuant to the valuation method set forth in clause (i)
above.
"Assignment of Mortgage" means an assignment of a Mortgage, notice of
transfer, or equivalent instrument sufficient under the laws of the jurisdiction
in which the related Mortgaged Property is located to reflect the sale of the
Mortgage to Buyer.
"Borrower" means any obligor on a Mortgage Note or any Person that has
acquired Mortgaged Property and assumed the obligations of the obligor under the
Mortgage Note and the Mortgage, or a Person that has acquired title to any
Mortgaged Property subject to the lien of the Mortgage.
1
"Business Day" means any day other than (a) a Saturday or Sunday, or (b) a
day on which banking institutions in the state in which either Buyer or Seller
has its headquarters are authorized or obligated by law or executive order to be
closed.
"Closing" means the consummation of the purchase and sale of the Mortgage
Loans as contemplated in this Agreement, which shall take place on a Closing
Date.
"Closing Date" means, with respect to a Mortgage Loan or group of Mortgage
Loans, the date specified as such in the related Confirmation, which shall be
the date on which the sale of such Mortgage Loans pursuant to this Agreement
shall be consummated and payment of the Purchase Price therefor shall be made.
"Confirmation" means an agreement substantially in the form set forth as
Exhibit A, executed by Seller and Buyer, establishing the Closing Date and the
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Purchase Price Percentage with respect to the Mortgage Loan or group of Mortgage
Loans listed on the Mortgage Loan Schedule attached thereto.
"Cut-off Date" means, with respect to a Mortgage Loan, the first day of the
calendar month in which the Closing Date with respect to that Mortgage Loan
occurs.
"Delinquent" means, with respect to a Mortgage Loan, one for which any
Monthly Payment installment is unpaid by the subsequent Due Date.
"Due Date" means, with respect to each Mortgage Loan, the day of each month
on which a Monthly Payment installment is due as stated in the underlying
Mortgage Note.
"Fixed Rate Mortgage Loan" means a Mortgage Loan which, by its terms, calls
for the Note Rate to be constant for the term of the loan.
"Flood Insurance Policy" means a policy of insurance issued in accordance
with the Flood Disaster Protection Act of 1973, as amended from time to time,
or, if repealed or amended, any superseding legislation governing similar
insurance coverage, or any other policy providing similar coverage against loss
sustained by floods that conforms to the flood insurance requirements prescribed
by the Lending Standards.
"Flow Purchase Agreement" means that certain Flow Purchase Agreement dated
as of November __, 1998 between Buyer and Seller.
"Hazard Insurance Policy" means a fire and casualty extended coverage
insurance policy issued by a Qualified Insurer and protecting against loss or
damage from fire and other hazards covered by a standard extended coverage
endorsement and containing such other terms and conditions as are consistent
with the Lending Standards, or any other fire and casualty insurance policy
providing similar coverage and issued by a Qualified Insurer, including all
riders and endorsements thereto.
2
"Index" means, with respect to an Adjustable Rate Mortgage Loan, the
interest rate series used as the basis for periodic adjustments to the Note Rate
as specified in the Mortgage Note.
"Insurance Policy" means a Primary Mortgage Insurance Policy, Hazard
Insurance Policy, Flood Insurance Policy, Title Insurance Policy or Title
Certificate, including all riders and endorsements thereto.
"Insurance Proceeds" means any amounts paid upon settlement of claims filed
under an Insurance Policy, and the proceeds of any other insurance policy or
bond providing coverage for a Mortgage Loan or a Mortgaged Property.
"Lender" means the originator of any Mortgage Loan, as lender thereunder,
together with its successors and assigns, as mortgagee thereunder.
"Lending Standards" means the mortgage loan origination standards
established and applied by Seller regarding the eligibility of mortgage loans
for origination and purchase by Seller, including exceptions to the ordinarily
applicable standards if such exceptions were properly approved by persons with
authority to do so under such standards, as they may be amended or supplemented
from time to time.
"Liquidation Proceeds" means all funds received in full repayment of a
Mortgage Loan, whether upon prepayment in full by the Borrower, sale by deed-in-
lieu of foreclosure, the receipt of foreclosure proceeds from a judgment, writ
of attachment or order levied against the Borrower or his assets, the receipt of
Insurance Proceeds, the receipt of proceeds from the purchase of the Mortgage
Loan by Seller or Buyer, or otherwise.
"Loan-to-Value Ratio" or "LTV" means, with respect to a Mortgage Loan, the
ratio, expressed as a percentage, that the principal balance of the Mortgage
Loan as of the date of origination of the loan bears to the lesser of (a) the
Appraised Value of the Mortgaged Property, or (b) if the Mortgage Loan was made
to finance the acquisition of the Mortgaged Property, the purchase price of the
Mortgaged Property.
"Monthly Payment" means the amount of a scheduled installment of principal
and interest due to the holder of a Mortgage Loan in accordance with the terms
of the Mortgage Loan.
"Mortgage" means a mortgage, deed of trust or other instrument given as
security for a Mortgage Note, together with any riders, addenda or amendments
thereto.
"Mortgage Loan" means an individual loan evidenced by a Mortgage Note and
secured by a first priority Mortgage on residential one- to four-family real
property sold to Buyer by Seller pursuant to this Agreement and identified on a
Mortgage Loan Schedule.
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"Mortgage Loan File" means, with respect to a Mortgage Loan, the documents
required to be delivered by Seller to Buyer or Buyer's designee pursuant to this
Agreement.
"Mortgage Loan Schedule" means a schedule of Mortgage Loans attached to a
Confirmation containing the following information with respect to each Mortgage
Loan, in each case as of the Cut-off Date except as otherwise expressly stated:
(1) the Seller's Mortgage Loan identifying number, (2) the Borrower's name, (3)
the street address of the Mortgaged Property, including the state and zip code
(4) a code indicating whether the Mortgaged Property is owner-occupied (which
shall mean that the Borrower represented at the time of origination that the
Mortgaged Property would be so occupied); (5) a code indicating whether the
Mortgaged Property is a single family residence, a two- to four-family
residence, a condominium unit or a unit in a PUD, (6) the LTV at origination,
(7) the Note Rate in effect immediately following the Cut-Off Date, (8) the
stated maturity date, (9) the amount of the Monthly Payment at origination, (10)
the amount of the Monthly Payment as of the Cut-Off Date, (11) the last payment
date on which a Monthly Payment was actually applied to the unpaid stated
principal balance, (12) the original principal amount, (13) the principal
balance as of the close of business on the Cut-off Date, after deduction of
payments of principal due on or before the Cut-off Date, whether or not
collected, (14) a code indicating the loan purpose, (15) the Note Rate at
origination, (16) a code indicating the document style (i.e., full, limited or
stated); (17) the risk grade, (18) a code indicating whether the Mortgage Loan
is secured by a first priority lien, (19) the Appraised Value of the Mortgaged
Property, (20) the sale price of the Mortgaged Property if the loan was
originated in connection with the purchase of the Mortgaged Property, (21) the
paid to date, (22) a code indicating the type of prepayment charge, and, in the
case of Adjustable Rate Mortgage Loans, (23) the Gross Margin, and (24) the
Index, including the source of such Index. The Mortgage Loan Schedule shall
also contain, with respect to the Mortgage Loans listed therein in the
aggregate, as of the Cut-off Date: (1) the number of Mortgage Loans, (2) the
aggregate outstanding principal balance, (3) the weighted average Note Rate, and
(4) the weighted average maturity.
"Mortgage Note" means the original note, bond or other evidence of
indebtedness executed by a Borrower in evidence of the indebtedness of such
Borrower under a Mortgage Loan, and all riders, addenda and amendments thereto.
"Mortgaged Property" means the real property securing repayment of a
Mortgage Loan.
"Note Rate" means, with respect to a Mortgage Loan, the rate of interest
payable at any time by the Borrower as specified in the Mortgage Note.
"Person" means an individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof.
4
"Pool Criteria" means the loan characteristics and limitations set forth in
the Flow Purchase Agreement and Exhibit B to this Agreement, as such loan
---------
characteristics and limitations may be amended by the parties from time to time.
"PUD" means a planned unit development, which is a parcel of real property
that contains buildings or other improvements owned and maintained by a
homeowner's association, corporation or trust for the benefit of the Persons
that own individual residential units on such parcel where such association,
corporation or trust requires automatic, nonseverable membership by each unit
owner and imposes mandatory assessments on all such owners for maintenance and
other services.
"Purchase Price" has the meaning given it in Section 6.
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"Purchase Price Percentage" means, with respect to a Mortgage Loan or group
of Mortgage Loans, the percentage stated in the related Confirmation.
"Purchase Proceeds" means the net proceeds payable to Seller on the Closing
Date to effect the purchase of the Mortgage Loans by Buyer, as specified in this
Agreement.
"Qualified Insurer" means an insurance company or surety or bonding company
that qualifies as an acceptable insurer or obligor under the Lending Standards.
"Remittance Date" has the meaning given it in the Servicing Agreement.
"Servicing Agreement" means the Mortgage Loan Servicing Agreement between
Seller, as "Servicer," and Buyer, as "Owner," dated __________________, 1998,
providing for the servicing of mortgage loans by the Seller in exchange for the
Servicing Compensation, as the same may be amended from time to time.
"Servicing Compensation" means the compensation to which Seller shall be
entitled pursuant to the Servicing Agreement, including the Servicing Fee,
benefits derived from collection and escrow accounts, satisfaction and release
fees, assumption fees, late payment charges and other like fees, as more
specifically provided in the Servicing Agreement.
"Servicing Fee" has the meaning given it in the Servicing Agreement.
"Servicing Rights" means the rights to service the Mortgage Loans and
collect the income thereon according to standard industry practice.
"Tax and Insurance Reserve" means, with respect to a Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, flood insurance premiums, and other payments escrowed by the Borrower
with the Lender pursuant to the terms of the related Mortgage Loan documents.
5
"Term" means the period beginning on ___________ and ending on __________,
or such earlier date on which Seller shall have offered to Buyer pursuant to the
Flow Purchase Agreement an aggregate of $300,000,000 in outstanding principal
amount of Mortgage Loans, as such time period may be extended and such aggregate
amount may be increased by written agreement of the parties.
"Title Certificate" means an attorney's opinion or certificate of title,
indicating to the holder of the Mortgage Loan that the Mortgage constitutes a
valid first lien on the Mortgaged Property, subject only to such matters as are
permitted under subparagraphs (a) through (f) under the definition of Title
Insurance Policy.
"Title Insurance Policy" means an ALTA or CLTA (extended coverage) lender's
title insurance policy issued by a Qualified Insurer, including all riders or
endorsements thereto, together with such additional endorsements as are required
by the Lending Standards in an amount not less than the original principal
amount of the Mortgage Loan, insuring the holder of the Mortgage Loan and its
successors and assigns that the Mortgage constitutes a valid first lien on the
Mortgaged Property, subject only to (a) liens for real estate taxes and
governmental improvement assessments not delinquent; (b) easements and
restrictions that do not adversely affect the marketability of title to the
Mortgaged Property or prohibit or interfere with the use of the Mortgaged
Property for its intended purpose; (c) a declaration of condominium or other
similar document that evidences the creation of a condominium project (where
applicable); (d) reservations as to oil, gas or mineral rights provided that
such rights do not include the right to remove buildings or other improvements
on or near the surface thereof or otherwise enter the surface for purposes of
removing oil, gas or minerals; (e) agreements for the installation, maintenance
or repair of public utilities provided such agreements do not create or evidence
liens on the Mortgaged Property, authorize or permit any Person to file or
acquire claims or liens against the Mortgaged Property or interfere with the
intended use of the Mortgaged Property; and (f) such other exceptions as are
acceptable under the Lending Standards.
2. Seller's Representations and Warranties.
(a) Representations and Warranties Regarding Seller. Seller represents and
warrants to Buyer and, at all times during the term of this Agreement, shall be
deemed to represent and warrant as follows:
(i) Due Incorporation and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
California. Seller holds all licenses, certificates, franchises, and permits
from all governmental authorities necessary for the conduct of its business and
has received no notice of proceedings relating to the revocation of any such
license, certificate or permit, which singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would materially affect the
conduct of the business, results of operations, net worth or financial condition
of Seller.
(ii) Corporate Authority and Power. Seller has all requisite corporate
power and authority to own its properties and to conduct any and all business
required or
6
contemplated by this Agreement to be conducted by Seller and to perform the
covenants and obligations to be performed thereunder; the execution and delivery
by Seller of this Agreement is within the corporate power of Seller and has been
duly authorized by all necessary corporate action on the part of Seller; and
neither the execution and delivery of this Agreement by Seller, nor the
consummation by Seller of the transactions therein contemplated, nor compliance
with the provisions thereof by Seller, shall (i) conflict with or result in a
breach of, or shall constitute a default under, any of the provisions of the
articles of incorporation or bylaws of Seller or any law, governmental rule or
regulation, or any judgment, decree or order binding on Seller or its
properties, or any of the provisions of any indenture, mortgage, deed of trust,
contract or other instrument to which Seller is a party or by which it is bound
or (ii) result in the creation or imposition of any lien, charge or encumbrance
upon any of its properties pursuant to the terms of any such indenture,
mortgage, deed of trust, contract or other instrument.
(iii) Authorization, Execution, Delivery; Valid, Binding. This
Agreement and all other documents and instruments required or contemplated
thereby to be executed or delivered by Seller under this Agreement, have been
duly authorized, executed and delivered by Seller and constitute legal, valid
and binding agreements enforceable against Seller in accordance with their
terms, subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency or other similar laws affecting rights of creditors
of banking institutions from time to time in effect and to general principles of
equity.
(iv) Governmental Consent. No consent, approval, order or
authorization of, or registration, qualification or declaration with, any
governmental authority is required to be obtained by Seller in connection with
the authorization, execution or delivery of this Agreement and exhibits and
documents related thereto, or the performance by Seller of the covenants and
obligations to be performed by it thereunder.
(v) Bulk Transfers. The transfer, assignment and conveyance of
the Mortgage Loans by Seller are not subject to the bulk transfer provisions of
the Uniform Commercial Code or any similar statutory provisions in effect in any
applicable jurisdiction.
(vi) Performance. 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) Pending Litigation. There is no litigation pending or, to
Seller's knowledge, threatened, which, if determined adversely to Seller, would
adversely affect the sale of the Mortgage Loans, the execution, delivery or
enforceability of this Agreement, or which would have a material adverse effect
on the financial condition of Seller.
(viii) Compliance with Laws and Regulations. Seller has performed
and shall continue to perform its obligations and duties hereunder in accordance
with all applicable laws and regulations, including any Internal Revenue Service
reporting requirements.
(ix) Material Facts. To the best of Seller's knowledge, neither
this Agreement nor any statement, report or other document furnished or to be
furnished by Seller pursuant to
7
this Agreement or in connection with the transactions contemplated hereby, which
relate to Seller's financial condition and business operation, contains any
untrue statement of fact or omits to state a fact necessary to make the
statement therein not misleading.
(b) Representations and Warranties Regarding Mortgage Loans. Seller
further represents and warrants that at and as of each Closing Date, except as
otherwise stated, to the best of Seller's knowledge, the following
representations and warranties shall be accurate and complete in all material
respects as to each Mortgage Loan purchased on that Closing Date.
(i) Information Valid. All information set forth in the Mortgage
Loan Schedule is complete, true and correct.
(ii) Payments Current. All payments required to be made on or
prior to the Cut-off Date under the terms of the related Mortgage Note have been
made. No payment under any Mortgage Loan has been Delinquent for more than 30
days more than once in the 12 months immediately preceding the Closing Date.
(iii) No Outstanding Charges. There is no default in complying with
the terms of the Mortgage which creates a first lien in the Mortgaged Property,
and all taxes, governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which previously became
due and owing have been paid or for any Mortgage Loan for which an escrow of
funds is required by applicable law or is required under the terms of the
Mortgage Loan, such an escrow of funds has been established and the appropriate
amount of monies has been collected. Seller has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other than the
Borrower, directly or indirectly, for the payment of any amount required by the
Mortgage Loan, except for interest accruing from the date of the Mortgage Note
or date of disbursement of the Mortgage Loan proceeds, whichever is later, to
the day which precedes by one month the Due Date of the first installment of
principal and interest.
(iv) Original Terms Unmodified. The terms of the Mortgage Note and
the Mortgage have not been impaired, waived, altered or modified in any respect,
except by a written instrument which has been recorded, if necessary, to protect
the interests of Buyer. The substance of any such waiver, alteration or
modification has been approved by the issuer of any related mortgage insurance
policy and the title insurer, to the extent required by the applicable policy,
and its terms are reflected on the Mortgage Loan Schedule. No Borrower has been
released, in whole or in part, except in connection with an assumption agreement
approved by the issuer of any related mortgage insurance policy and the title
insurer, to the extent required by the applicable policy, and which assumption
agreement is part of the Mortgage Loan File and the terms of which are reflected
in the Mortgage Loan Schedule. Any principal advances made to the Borrower prior
to the Cut-Off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the Mortgage Loan File reflects the consolidation
of such advances with and into a single loan balance having a single interest
rate and a single set of repayment terms.
8
(v) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor shall the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto.
(vi) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
Qualified Insurer against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the Mortgaged Property is
located, in an amount which is at least equal to the lesser of (A) the maximum
insurable value of the improvements securing such Mortgage Loan and (B) the
greater of (x) the outstanding principal balance of the Mortgage Loan and (y) an
amount such that the proceeds thereof shall be sufficient to prevent the
Borrower or the loss payee from becoming a co-insurer. If upon origination of
the Mortgage Loan, the related Mortgaged Property was in an area identified in
the Federal Register 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 with a Qualified Insurer in an
amount representing coverage equal to the lesser of (A) the minimum amount
required, under the terms of the coverage, to compensate for any damage or loss
on a replacement cost basis (or the unpaid balance of the Mortgage if
replacement cost coverage is not available for the type of building insured) and
(B) the maximum amount of insurance which is available under the National Flood
Insurance Act of 1968, as amended. All individual Insurance policies contain a
standard mortgagee clause naming Seller or a permitted sub-servicer and its
successors and assigns as mortgagee, and all premiums due and payable thereon
have been paid. Each Mortgage obligates the Borrower thereunder to maintain the
Hazard Insurance Policy at the Borrower's cost and expense, and on the
Borrower's failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at such Borrower's cost and expense, and to seek
reimbursement therefore from the Borrower. Each Hazard Insurance Policy is the
valid and binding obligation of the insurer, is in full force and effect, and
shall be in full force and effect and inure to the benefit of Buyer upon the
consummation of the transactions contemplated by the Agreement. None of Seller,
Borrower or any sub-servicer has engaged in, any act or omission which would
impair the coverage of any such policy, the benefits of the endorsement provided
for herein, or the validity and binding effect of either.
(vii) Compliance with Applicable Laws. Any and all requirements of
any federal, state or local law including, without limitation, usury, truth-in-
lending, real estate settlement procedures, consumer credit protection, equal
credit opportunity or disclosure laws applicable to the Mortgage Loan and its
origination as in effect on the date the Mortgage Loan was originated have been
complied with.
(viii) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not
9
been released from the lien of the Mortgage other than a partial release which
has been approved by the applicable mortgage insurer and which has been effected
so that (A) the priority of the Mortgage is not prejudiced by any claim or
potential claim of a junior lienholder or other person and (B) there has been no
violation of any zoning, subdivision or other law affecting or relating to the
Mortgaged Property. If a partial release has occurred, the value of the
Mortgaged Property has not been materially and adversely affected. No instrument
has been executed that would effect any such release, cancellation,
subordination or rescission except a partial release as referenced herein.
(ix) Valid Lien. The Mortgage is a valid subsisting and
enforceable first lien on the Mortgaged Property, including all buildings on the
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to (1) the lien of
current real property taxes and assessments not yet due and payable; (2)
covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording acceptable to mortgage
lending institutions generally and specifically referred to in the Title
Insurance Policy delivered to the originator of the Mortgage Loan and referred
to or otherwise considered in the valuation made for the originator of the
Mortgage Loan or which do not adversely affect the Appraised Value of the
Mortgaged Property; and (3) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, subsisting and enforceable first
lien and first priority security interest on the property described therein and
Seller has full right to sell and assign the same to Buyer.
(x) Validity of Mortgage Documents. The Mortgage Note and the
related Mortgage are genuine, and each is the legal, valid and binding
obligation of the maker thereof enforceable in accordance with its terms. All
parties to the Mortgage Note and the Mortgage had legal capacity to enter into
the Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage,
and the Mortgage Note and the Mortgage have been duly and properly executed by
such parties. The Borrower is a natural person who is a party to the Mortgage
Note and the Mortgage either in an individual capacity or as trustee of a family
trust, and if as trustee of a family trust, the trust's obligation is guaranteed
by a natural person in that person's individual capacity.
(xi) Full Disbursement of Proceeds. The proceeds of the Mortgage
Loan have been fully disbursed and there is no requirement for future advances
thereunder and the improvements on the Mortgaged Property have been fully
completed, except that any minor improvements or repairs that do not affect
livability may be incomplete in the case where an escrow account has been
established in accordance with the Lending Standards in an amount sufficient to
guarantee completion of the repairs or improvements. All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the recording of
the Mortgage were paid,
10
and the Borrower is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage.
(xii) Ownership. Immediately prior to the sale of the Mortgage Loan
pursuant to this Agreement, Seller is the sole owner of the Mortgage Loan with
full right to transfer and sell the Mortgage Loan to Buyer free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to the Agreement.
(xiii) Doing Business. All parties which have had any interest in
the Mortgage Loan, whether as Lender, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) organized under the
laws of such state, or (3) qualified to do business in such state, or (4)
federal savings and loan associations or national banks, or (5) not doing
business in such state.
(xiv) Title Insurance. The Mortgage Loan is covered by an ALTA
Title Insurance Policy with, in the case of an Adjustable Rate Mortgage Loan, an
adjustable rate mortgage endorsement, issued by a Qualified Insurer insuring
Seller, its successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan, subject only to
the exceptions contained in clauses (1), (2) and (3) of paragraph (ix) of this
Section 2(b). Seller is the sole insured of such Title Insurance Policy, and
------------
such Title Insurance Policy is in full force and effect and shall be in full
force and effect upon the consummation of the transactions contemplated by the
Agreement. No claims have been made under such Title Insurance Policy, and no
prior holder of the related Mortgage, including Seller, has done, by act or
omission, anything which would impair the coverage of such Title Insurance
Policy.
(xv) No Defaults. There is no default, breach, violation or event
of acceleration existing under the Mortgage or the related Mortgage Note 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 neither Seller nor its predecessors have waived any default,
breach, violation or event of acceleration (other than a payment that is
Delinquent by less than 30 days).
(xvi) No Mechanics' Liens. There are no mechanics' or similar liens
or claims which have been filed for work, labor or materials (and no rights are
outstanding that under the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage.
(xvii) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the related
Mortgaged Property lay wholly within the boundaries and building restriction
lines of the Mortgaged Property and no improvements on adjoining properties
encroach upon the Mortgaged Property except for encroachments which are minor in
nature and shall not adversely affect the value of the
11
Mortgage Loan or Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable zoning law or
regulation.
(xviii) Payment Terms. The Mortgage Note is payable on the first day
of each month in monthly installments of principal and interest, with interest
calculated and payable in arrears. In the case of an Adjustable Rate Mortgage
Loan, the Monthly Payments are adjusted on each adjustment date to an amount
sufficient to amortize the Mortgage Loan fully by the stated maturity date. The
Mortgage Loan does not have a balloon payment feature.
(xix) Customary Provisions. The related Mortgage contains customary
and enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged 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
judicial foreclosure. There is no homestead or other exemption available to a
Borrower which would interfere with the right to sell the Mortgaged Property at
a trustee's sale or the right to foreclose the Mortgage.
(xx) Occupancy of the Mortgaged Property. The Mortgaged 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 Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities.
(xxi) No Additional Collateral. The related Mortgage Note is not
and has not been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement or
chattel mortgage referred to in paragraph (ix) of this Section 2(b).
------------
(xxii) Deeds of Trust. If 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 shall become payable by Buyer to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Borrower.
(xxiii) Mortgage Property Undamaged. The Mortgaged Property is not
damaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado
or other casualty so as to affect adversely the value of the Mortgaged Property
as security for the Mortgage Loan or the use for which the premises were
intended, or if damaged, it has been restored and repaired and the value of the
Mortgage Loan has not been adversely affected.
(xxiv) Leaseholds. The Mortgaged Property either (1) is not a
leasehold estate or (2) is a leasehold estate in which the remaining term is at
least ten years beyond the stated maturity of the Mortgage Note.
12
(xxv) No Buydowns; No Contingent Features. The Mortgage Loan does
not contain provisions pursuant to which Monthly Payments are paid with funds in
a separate account or by another source other than the Borrower, nor does it
contain other similar provisions constituting "buydown" provisions. The Mortgage
Loan is not a graduated payment loan and does not have a shared appreciation or
other contingent interest feature.
(xxvi) Compliance with Appraisal Regulations. With respect to the
Mortgage Loan, all appraisal reports shall have been ordered, performed and
rendered in accordance with the requirements of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989.
(xxvii) Origination Practices and Servicing. The origination,
servicing and collection practices used with respect to the Mortgage Note and
Mortgage have been in all respects legal, proper, prudent and customary in the
mortgage origination and servicing industry, and in accordance with the terms of
the Mortgage Loan. In the case of an Adjustable Rate Mortgage Loan, the Borrower
has executed a statement acknowledging receipt of all disclosure materials
required by applicable law with respect to the making of adjustable rate
mortgage loans; and in the case of a loan for the purpose of refinancing a prior
loan, the Borrower has received all disclosure materials required by applicable
law with respect to the making of refinancing mortgage loans, and evidence of
such receipt is in the Mortgage Loan File.
(xxviii) No Construction or Trade-In Loans. The Mortgage Loan was not
made in connection with (1) the construction or rehabilitation of the Mortgaged
Property or (2) facilitating the trade-in or exchange of the Mortgaged Property.
(xxix) Absence of Fraud. There was no error, omission,
misrepresentation, fraud or similar occurrence with respect to the Mortgage Loan
on the part of any person, including, without limitation, the Borrower, any
appraiser, builder or developer, or any party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to the Mortgage
Loan.
(xxx) Condominium or PUD. If the Mortgaged Property is a
condominium unit or a unit in a PUD, the condominium or PUD project meets the
eligibility standards of ▇▇▇▇▇▇ ▇▇▇ for such projects.
(xxxi) Pool Criteria. The Mortgage Loan (either itself or, as
applicable, together with all other Mortgage Loans sold on the same Closing
Date) satisfies the Pool Criteria.
(c) Exclusivity of Seller's Representations and Warranties. It is
expressly agreed and understood that the representations and warranties set
forth above are the sole representations and warranties made by Seller, its
representatives, agents, officers, directors or other employees with respect to
the sale of Mortgage Loans to Buyer hereunder.
3. Buyer's Representations and Warranties
13
Buyer represents and warrants to Seller and, at all times during the term
of this Agreement, shall be deemed to represent and warrant as follows:
(a) Due Incorporation and Good Standing. Buyer is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States. Buyer holds all licenses, certificates, franchises, and
permits from all governmental authorities necessary for the conduct of its
business and has received no notice of proceedings relating to the revocation of
any such license, certificate or permit, which singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would materially
affect the conduct of the business, results of operations, net worth or
financial condition of Buyer.
(b) Corporate Authority and Power. Buyer has all requisite corporate power
and authority to own its properties and to conduct any and all business required
or contemplated by this Agreement to be conducted by Buyer and to perform the
covenants and obligations to be performed thereunder; the execution and delivery
by Buyer of this Agreement is within the corporate power of Buyer and has been
duly authorized by all necessary corporate action on the part of Buyer; and
neither the execution and delivery of this Agreement by Buyer, nor the
consummation by Buyer of the transactions therein contemplated, nor compliance
with the provisions thereof by Buyer, shall (i) conflict with or result in a
breach of, or shall constitute a default under, any of the provisions of the
articles of association or bylaws of Buyer or any law, governmental rule or
regulation, or any judgment, decree or order binding on Buyer or its properties,
or any of the provisions of any indenture, mortgage, deed of trust, contract or
other instrument to which Buyer is a party or by which it is bound or (ii)
result in the creation or imposition of any lien, charge or encumbrance upon any
of its properties pursuant to the terms of any such indenture, mortgage, deed of
trust, contract or other instrument.
(c) Authorization, Execution, Delivery; Valid, Binding. This Agreement and
all other documents and instruments required or contemplated thereby to be
executed or delivered by Buyer under this Agreement, have been duly authorized,
executed and delivered by Buyer and constitute legal, valid and binding
agreements enforceable against Buyer in accordance with their terms, subject, as
to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency
or other similar laws affecting rights of creditors of banking institutions from
time to time in effect and to general principles of equity.
(d) Governmental Consent. No consent, approval, order or authorization of,
or registration, qualification or declaration with, any governmental authority
is required to be obtained by Buyer in connection with the authorization,
execution or delivery of this Agreement and exhibits and documents related
thereto, or the performance by Buyer of the covenants and obligations to be
performed by it thereunder.
(e) Performance. Buyer 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.
(f) Pending Litigation. There is no litigation pending or, to Buyer's
knowledge, threatened, which, if determined adversely to Buyer, would adversely
affect the sale of the
14
Mortgage Loans, the execution, delivery or enforceability of this Agreement, or
which would have a material adverse effect on the financial condition of Buyer.
(g) Compliance with Laws and Regulations. Buyer has performed and shall
continue to perform its obligations and duties hereunder in accordance with all
applicable laws and regulations, including any Internal Revenue Service
reporting requirements.
(h) Material Facts. To the best of Buyer's knowledge, neither this
Agreement nor any statement, report or other document furnished or to be
furnished by Buyer pursuant to this Agreement or in connection with the
transactions contemplated hereby, which relate to Buyer's financial condition
and business operation, contains any untrue statement of fact or omits to state
a fact necessary to make the statement therein not misleading.
4. Purchase and Sale.
(a) Agreement to Purchase. Seller hereby agrees to sell and Buyer hereby
agrees to purchase, on or before the Closing Date identified in the related
Confirmation, Mortgage Loans having an aggregate principal balance on the
related Cut-off Date in an amount as set forth in the related Confirmation, or
in such other amount as agreed by Buyer and Seller as evidenced by the actual
aggregate principal balance of the Mortgage Loans accepted by Buyer on the
related Closing Date.
(b) Confirmation. With each pool of Mortgage Loans presented by Seller to
Buyer pursuant to the Flow Purchase Agreement, Seller shall provide Buyer with a
listing of the Mortgage Loans to be offered for purchase under this Agreement
("Preliminary Mortgage Schedule"). If Seller accepts Buyer's bid for a
particular pool of Mortgage Loans, Buyer shall purchase such Mortgage Loans
subject to the adjustments specified in the following paragraph. After making
such adjustments, Seller and Buyer shall attach the final Mortgage Loan Schedule
to the related Confirmation.
The Mortgage Loan Schedule shall include the Mortgage Loans identified on
the Preliminary Mortgage Schedule, with the following adjustments: (a)
Mortgage Loans identified by Buyer prior to the Closing Date as not conforming
to the requirements of this Agreement shall be deleted; (b) Seller shall
delete such Mortgage Loans which have been prepaid in full prior to the Closing
Date, or as to which the representations and warranties of Seller cannot be made
as of the Closing Date; and (c) Mortgage Loans acceptable to Buyer may be
substituted for Mortgage Loans deleted pursuant to clauses (a) and (b) of this
paragraph.
5. Examination of Mortgage Files.
Prior to the Closing Date, Seller shall make the Mortgage Files available
to Buyer for examination at Seller's office or such other location or locations
as Seller shall designate, for the purpose of ascertaining the compliance of the
Mortgage Loans with the terms of this Agreement. Such examination may be made by
Buyer, or any agent or designee of Buyer, at any time, whether before or after
the Closing Date. If Buyer makes such examination prior to the Closing
15
Date and identifies any Mortgage Loans which do not conform to the terms of this
Agreement, such Mortgage Loans shall be deleted from the Mortgage Loan Schedule,
and may be replaced by substitute Mortgage Loans acceptable to Buyer. The
failure by Buyer to conduct any such examination prior to the Closing Date shall
not affect Buyer's rights to demand repurchase or other relief as provided under
this Agreement.
6. Purchase Price.
The Purchase Price for the Mortgage Loans sold and purchased on a Closing
Date shall be the Purchase Price Percentage reflected on the related
Confirmation multiplied by the aggregate outstanding principal balance as of the
Cut-off Date of the Mortgage Loans listed on the Mortgage Loan Schedule, after
application of scheduled payments of principal due on or before the Cut-off
Date, whether or not collected. In addition, Buyer shall pay to Seller on the
Closing Date accrued interest on the principal amount of the Mortgage Loans at
the weighted average interest rate of the Mortgage Loans net of the Servicing
Fee, from the Cut-off Date to the day prior to the Closing Date, inclusive.
Buyer shall be entitled to all scheduled principal due after the Cut-off
Date, and all payments of interest on the Mortgage Loans net of the Servicing
Fee (minus the portion of any such payment which is allocable to the period
prior to the Cut-off Date). The principal balance of each Mortgage Loan as of
the Cut-off Date is determined after application of the payments of principal
due on or before the Cut-off Date whether or not collected. Therefore,
payments of scheduled principal and interest prepaid and for a due date beyond
the Cut-off Date shall not be applied to the principal balance as of the Cut-off
Date. Such prepaid amounts shall be the property of Buyer, and Seller shall
deposit such amounts in the remittance account established for the benefit of
Buyer for subsequent remittance to Buyer; subject to the following: all
scheduled payments of principal due on or before the Cut-off Date shall belong
to Seller.
7. Purchase and Settlement.
The Closing and settlement for the purchase and sale of the Mortgage Loans
shall take place on the Closing Date. Closing shall, at Seller's option, 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 shall be subject to each of the following conditions:
(a) All of the representations and warranties of Buyer and Seller under
this Agreement shall be true and correct as of the Closing Date, or such other
date as is otherwise stated herein, and no event shall have occurred which, with
notice or the passage of time, would constitute a default under this Agreement;
(b) The parties shall have executed and delivered the Servicing Agreement;
16
(c) All other documents required to be executed under the terms of this
Agreement shall have been duly executed and delivered by the respective parties;
and
(d) The parties shall have complied with all other terms and conditions of
this Agreement.
Upon satisfaction of the foregoing conditions, on the Closing Date, Buyer
shall pay to Seller the Purchase Price plus accrued interest by wire transfer of
immediately available funds to the account identified in Exhibit E, as
---------
designated by Seller.
8. Indemnification and Repurchase Obligation.
(a) Repurchase for Breach of Representation and Warranty or Document
Deficiency. Seller shall be obligated to repurchase, upon demand from Buyer,
any Mortgage Loan:
(1) as to which any representation or warranty made by Seller to
Buyer pursuant to this Agreement, or any document required to be
submitted by Seller in connection with the purchase of any
Mortgage Loan by Buyer is determined to have been inaccurate or
incomplete to any extent when made (without regard to Seller's
actual or implied knowledge of the untruth of such representation
or warranty), unless Seller presents evidence to the contrary
satisfactory to Buyer; or
(2) for which any document constituting the Mortgage Loan File or
otherwise relating to a Mortgage Loan is deficient, defective,
falsified or fraudulent (which shall include any
misrepresentations made by the Borrower whether or not
verification of the Borrower's statements was a required part of
the loan documentation) or is missing or is lost or destroyed by
Seller or is not timely delivered when so requested by Buyer;
provided, in either case, only if and to the extent that as a result thereof the
--------
value of the Mortgage Loan is materially affected; and provided, further, that
-------- -------
Buyer shall have made such demand promptly upon becoming aware of the inaccuracy
or incompleteness of the representation and warranty or document, or of the
documentary deficiency, and in any event not later than one year following the
relevant Closing Date. Should Buyer determine, in its good faith judgment, that
any such deficiency can be cured without adversely affecting Buyer's interest in
the Mortgage Loan, Buyer shall allow Seller to cure such deficiency at Seller's
expense provided the deficiency is cured to Buyer's satisfaction within 90 days
following Buyer's notification to Seller.
(b) Repurchase for First Payment Default. Seller shall be obligated to
repurchase, upon demand from Buyer, any Mortgage Loan as to which the Borrower
shall have failed to make the first Monthly Payment by the day that is 90 days
after such first Monthly Payment became due. Seller shall repurchase any such
loan within 90 days following the date on which the Mortgage Loan first became
90 days overdue.
17
(c) Repurchase Procedure. The repurchase price for a Mortgage Loan
repurchased pursuant to Section 8(a) or (b) shall be payable by Seller to Buyer
-------------------
in immediately available funds in an amount equal to: (1) the then outstanding
principal balance of such Mortgage Loan; (2) plus accrued and uncollected
interest on the subject Mortgage Loan calculated, based on the Note Rate, up to,
but not including the date of repurchase; (3) less amounts received with respect
to such repurchased Mortgage Loan being held for remittance to Buyer on the
Remittance Date next following the repurchase (which amount shall be remitted to
Buyer on such date). At the time of repurchase, Buyer shall arrange for the
reassignment of such Mortgage Loan to Seller, the delivery to Seller of any
related documents in the possession of Buyer or any third party, and the
assignment to Seller of all Buyer's rights as to such Mortgage Loan under any
applicable Insurance Policy. Seller shall have the option, in lieu of such
repurchase, to substitute another mortgage loan, which mortgage loan (i)
conforms in all respects with the requirements of this Agreement with respect to
the Mortgage Loans sold hereby, (ii) as of the date of substitution has an
outstanding principal amount no greater than the outstanding principal amount of
the Mortgage Loan for which it is being substituted, and (iii) has an interest
rate that is no lower than the interest rate of the Mortgage Loan for which it
is being substituted. If Seller substitutes a Mortgage Loan, it shall pay to
Buyer in the manner described above an amount calculated in the manner set forth
above with respect to the difference, if any, between the outstanding principal
balance of the substituted loan and the outstanding principal balance of the
loan for which it is substituted, both determined as of the date of
substitution.
(d) Indemnification. Seller shall indemnify and hold Buyer harmless
against any and all liabilities, claims, losses, penalties, fines, costs and
expenses including attorneys' fees directly resulting from Seller's gross
negligence or willful misconduct in carrying out its obligations under this
Agreement. The parties understand that some of the representations and
warranties given by Seller herein have been made for the purpose of allocating
the risk of their inaccuracy, and that the remedy for such inaccuracy, if not
cured, shall be the repurchase of the affected Mortgage Loans. Accordingly,
inaccuracy of the representations and warranties shall not be deemed gross
negligence or willful misconduct on the part of Seller for purpose of this
Section 7(d).
------------
(e) Sole and Exclusive Remedies. Seller's obligations to indemnify Buyer
and to cure, repurchase or substitute for the affected Mortgage Loan shall be
the sole and exclusive remedies of Buyer against Seller with respect to the
failure of the Mortgage Loan to conform to the representations and warranties
contained in Section 2(b).
------------
(f) Reimbursement for Certain Refinancing. If any Borrower prepays a
Mortgage Loan within the first 48 months following the origination of that
Mortgage Loan, and if Seller should be the lender with respect to a new loan to
that Borrower secured by the same Mortgaged Property, then Seller shall
reimburse Buyer for a portion of the premium, if any, paid by Buyer for that
Mortgage Loan, to the extent that such portion exceeds the prepayment charges
collected in connection with the prepayment of the Mortgage Loan. For this
purpose, the "premium" means the amount by which the Purchase Price Percentage
applied in calculating the Purchase
18
Price for that Mortgage Loan exceeds 100%, multiplied by the outstanding
principal amount of that Mortgage Loan as of the Cut-Off Date. The portion of
this premium that shall be reimbursed by Seller shall be the unamortized
portion, based upon a seven-year amortization using the "sum of the years
digits" method, starting on the Closing Date.
(g) Survival of Representations and Warranties. The representations and
warranties set forth in Section 2(b) shall survive the sale of the Mortgage
------------
Loans for a period of twelve months, and shall inure to the benefit of Buyer,
its successors and assigns, notwithstanding any restrictive or qualified
endorsement on any Mortgage Note or Assignment of Mortgage or the examination or
failure to examine any Mortgage Loan File, or other documents relating to any
Mortgage Loan, on the part of Buyer.
9. Delivery of Loan Documentation.
(a) Not later than three Business Days following the Closing Date for each
Mortgage Loan, Seller shall deliver to Buyer or Buyer's designee, with respect
to each Mortgage Loan listed on the related Mortgage Loan Schedule, the
documents identified on Exhibit C. Buyer or its designee shall, from and after
----------
the Closing Date, hold all such documents, including the Mortgage Note and the
Mortgage Loan File, as custodian in accordance with the Servicing Agreement.
(b) All documents and instruments relating to each Mortgage Loan will
comply in all respects to the requirements set forth in this Agreement.
(c) At Closing, Seller shall deliver to Buyer in recordable form for each
Mortgage Loan, an individual Assignment of Mortgage substantially in the form
attached hereto as Exhibit D. The individual assignments need not be recorded
---------
unless otherwise required or directed by Buyer. In the event that Buyer elects
to require recordation of the individual assignments, Seller shall reimburse
Buyer and its designee for all reasonable costs and expenses related to such
required recordations.
(d) In the event delivery by Seller to Buyer of any Mortgage Loan File or
other documentation relating to a Mortgage Loan purchased by Buyer does not
conform with the requirements set forth in the Agreement, a breach of Seller's
representation and warranties as specified in Section 2(b) will be deemed to
------------
have occurred and Buyer will pursue rights and remedies provided herein or
otherwise available under applicable law.
10. True Sale; Financial Accounting Treatment.
Buyer and Seller agree with one another that the transactions contemplated
by this Agreement are intended to represent a bona fide true sale of the
Mortgage Loans conveying to Buyer all right, title and interest in and to the
Mortgage Loans, excluding Servicing Rights. Buyer and Seller agree to execute
such documents and take all such action as may be required from time to time to
assure that this transaction is deemed for all purposes, including for
19
financial accounting treatment, a true and absolute sale by Seller and purchase
by Buyer of the Mortgage Loans.
11. Arbitration.
Any controversy or claim between or among the parties or their agents,
including but not limited to those arising out of or relating to this Agreement
or any agreements or instruments relating hereto or delivered in connection
herewith and any claim based on or arising from an alleged tort which allegedly
occurred during the course of performance or non-performance under this
Agreement, shall at the request of any party be determined by arbitration. The
arbitration shall be conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code (S)(S)1 et seq.), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The arbitrator shall give effect to statutes
of limitation in determining any claim. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrators. Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
No provision of this section shall limit the right of any party to this
Agreement to exercise self-help remedies such as setoff, or obtaining
provisional or ancillary remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration or other proceeding. The
exercise of a remedy does not waive the right of either party to resort to
arbitration or reference.
12. Miscellaneous.
(a) Construction; Article and Section Headings. This Agreement shall be
fairly and evenly construed and interpreted as the joint negotiated work product
between two knowledgeable participants in the secondary mortgage market, each
represented by legal counsel. No inference or presumption in favor of one party
or against the other shall arise on account of drafting. The Article and
Section headings are for convenience only and shall not affect the construction
of this Agreement.
(b) Counterparts; Execution and Delivery by Facsimile. For the purposes of
facilitating the execution of this Agreement, as herein provided and for other
purposes, this Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
all such counterparts shall constitute but one and the same instrument. Any
original counterpart when executed and transmitted by electronic facsimile shall
be deemed duly delivered to the other party upon confirmed receipt thereof by
such other party.
(c) Severability. Any part, provision, representation or warranty of this
Agreement which is prohibited or is held to be void or unenforceable by a court,
governmental body or
20
administrative agency or authority shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warrant of this Agreement which
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. To the extent permitted by applicable law, the parties hereto
waive any prohibitions of law which prohibits or renders void or unenforceable
any provisions hereof.
(d) Notices. All notices, requests, demands and other communications which
are required or permitted to be given under the Agreement shall be in writing
and shall be deemed to have been duly given upon the actual delivery thereof or
upon the expiration of three (3) business days following mailing thereof by
registered or certified mail, return receipt requested, postage prepaid:
If to Seller, to:
New Century Mortgage Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
If to Buyer, to:
US Bank National Association, ND
____________________
____________________
____________________
Attention: ____________________
or to such other address as Seller or Buyer shall have specified in writing
to the other.
(e) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without giving effect to
conflict-of-law rules.
(f) Offsets. Amounts payable by Buyer to Seller pursuant to this Agreement
may, at Seller's option and in its sole discretion, be offset by Seller against
any payments then or thereafter owed by Seller to Buyer.
(g) Prior Agreements. This Agreement and the exhibits hereto, which are
incorporated herein by this reference, supersede all prior agreements and
understandings relating to the subject matter thereof except as otherwise
provided in the introductory paragraph thereof.
21
(h) Amendments. Except as expressly otherwise provided herein, this
Agreement may not be changed, waived, discharged or terminated orally, but only
in writing executed by both Seller and Buyer.
(i) Assignment of Rights under this Agreement. This Agreement and the
parties' respective rights and obligations hereunder may not be sold, assigned
or transferred without the prior written consent of the other party, except that
Seller may assign its obligation to sell all or a portion Mortgage Loans
hereunder to an affiliate of Seller.
IN WITNESS WHEREOF, each of the undersigned parties to the Agreement has
caused the Agreement to be duly executed in its corporate name by one of its
duly authorized officers, all as of the date first above written.
SELLER:
NEW CENTURY MORTGAGE CORPORATION
By:
--------------------------
Its:
-------------------
BUYER:
US BANK NATIONAL ASSOCIATION, ND
By:
--------------------------
Its:
-------------------
22
Exhibit A
Form of Confirmation
--------------------
CONFIRMATION
This Confirmation is entered into pursuant to that certain Mortgage
Loan Purchase Agreement dated as of _________, 1998 by and between New Century
Mortgage Corporation, as Seller, and US Bank National Association, ND, as Buyer.
Capitalized terms used herein and not defined herein have the meanings given
them in said Mortgage Loan Purchase Agreement.
Seller and Buyer hereby confirm an agreement to sell and purchase the
Mortgage Loans identified on the attached Mortgage Loan Schedule, upon the
following terms:
Date of this Confirmation: __________________________
Closing Date: __________________________
Purchase Price Percentage: __________%
[or list separately for sub-pools of
different loan types]
Cut-Off Date ________ 1, 199__
Aggregate Principal Balance as of Cut-Off $_________________________
Date:
The Mortgage Loan Schedule is attached hereto.
NEW CENTURY MORTGAGE CORPORATION
By:
------------------------------------
Its:
-----------------------------
US BANK NATIONAL ASSOCIATION, ND
By:
------------------------------------
Its:
-----------------------------
A-1
Exhibit B
Pool Criteria
-------------
1. All Mortgage Loans must conform to the Lending Standards.
2. No Mortgage Loan may be:
. To a Borrower who is rated "C minus" under Seller's underwriting
guidelines
. Originated under Seller's "C minus Home Saver" program
3. The proportion of loan types in each pool must be representative of Seller's
aggregate production in the relevant month, except that, if Buyer so
requests, the pool must also conform to the following criteria:
Characteristic A B C
-------------------------------------------------------------------------------------------------------------------------
Lien Position 1st only 1st only 1st only
-------------------------------------------------------------------------------------------------------------------------
Rental, or investor owned Yes Yes Yes
-------------------------------------------------------------------------------------------------------------------------
Single family, condo, PUDs only Yes Yes Yes
-------------------------------------------------------------------------------------------------------------------------
Exceptions to Seller's bankruptcy underwriting criteria No No No
-------------------------------------------------------------------------------------------------------------------------
Average LTV not more than 79% 75% 70%
-------------------------------------------------------------------------------------------------------------------------
Maximum Rental/Investor Owned 13% 13% 13%
-------------------------------------------------------------------------------------------------------------------------
Maximum "Jumbo" loans (defined as greater than $300,000 15% 15% 15%
for A, $250,000 for B, and $200,000 for C) based on
number of loans in pool
-------------------------------------------------------------------------------------------------------------------------
Maximum "Stated Income" 35% 35% 35%
-------------------------------------------------------------------------------------------------------------------------
Credit Grade Maximum Target Minimum
-------------------------------------------------------------------------------------------------------------------------
A+ 80% 75% 70%
A+ MO
A-
A- MO
-------------------------------------------------------------------------------------------------------------------------
B 25% 20% 15%
-------------------------------------------------------------------------------------------------------------------------
C 15% 10% 0%
-------------------------------------------------------------------------------------------------------------------------
C- or Home Saver None None None
-------------------------------------------------------------------------------------------------------------------------
B-1
Exhibit C
Mortgage Notes and Loan Files
-----------------------------
1. The original Mortgage Note, together with any required riders or addenda,
assumption or modification agreement, and any surety or guaranty agreements
shall be delivered to Buyer or, as may be directed by Buyer, Servicer as
custodian for Buyer who shall act and hold each Mortgage Note and related
item described above on behalf of Buyer:
Each Mortgage Note shall bear all intervening endorsements and, except as
provided in the Mortgage Loan Purchase Agreement, be endorsed in
substantially the following form:
WITHOUT RECOURSE
PAY TO THE ORDER OF
US BANK NATIONAL ASSOCIATION, ND
NEW CENTURY MORTGAGE CORPORATION
[or insert name of affiliate to which Agreement has
been assigned]
By: ________________________________
________________________________
(typed/printed name and title)
By: ________________________________
________________________________
(typed/printed name and title)
Such endorsement shall be made by an authorized officer.
2. Mortgage Loan File. Each Mortgage Loan File shall contain each item
------------------
required to be included therein as required by the Lending Standards.
Unless otherwise directed by Buyer, each of the items constituting the
Mortgage Loan File shall be retained by Servicer for the purposes of
servicing the Mortgage Loans.
C-1
Exhibit D
Form of Assignment of Mortgage Loans
------------------------------------
D-1
:
When Recorded, mail to: :
Attn: :
[company] :
[street] :
[City, State Zip] :
:
Loan #______ Commitment #_________ :
ASSIGNMENT OF DEED OF TRUST
FOR VALUE RECEIVED, NEW CENTURY MORTGAGE CORPORATION [or insert name of
affiliate to which Agreement has been assigned , a California corporation,
("Assignor") does hereby grant, assign and transfer to ______________________,
a ____________________, ("Assignee") all beneficial interest under that certain
Deed of Trust ("Deed of Trust") dated ________________, 19____, executed by
________________________, Trustor, to ______________________, Trustee, and
recorded _____________, 19____, as Instrument No. ________, or Book ________,
Page ________, of Official Records in the Office of the County Recorder of
___________ County, ________, State of __________, affecting the real property
therein described,
TOGETHER with the note(s) therein described or referred to, the money due
and to become due thereon with interest, and all rights accrued and to accrue
under the Deed of Trust; without recourse on, or any warranty or representation
whatsoever by Assignor.
Any notices required or permitted to be given to the Assignee under or in
connection with this Assignment or under or in connection with the Deed of Trust
may be given at the following address:
_________________________________
_________________________________
_________________________________
or such other address or addresses as may be stated in any document or
instrument recorded hereafter referring to this Assignment and identifying the
Deed of Trust so affected.
Dated: _______________ NEW CENTURY MORTGAGE CORPORATION
[or insert name of affiliate to which Agreement has
been assigned]
By: ____________________________
____________________________
By: ____________________________
____________________________
Attach appropriate form of notary acknowledgment.
D-2
Exhibit E
Seller's Wire Instructions
--------------------------
[To be attached.]
E-1