EXHIBIT 10.2
FIRST AMENDMENT TO
WAREHOUSING CREDIT AND SECURITY AGREEMENT
FIRST AMENDMENT TO WAREHOUSING CREDIT AND SECURITY AGREEMENT (this "Amendment")
dated as of December 2, 2002, between OAK STREET MORTGAGE LLC, a Delaware
limited liability company, f/k/a Cresleigh Financial Services LLC, a Delaware
limited liability company ("Oak Street LLC"), OAK STREET MORTGAGE OF TENNESSEE
LLC, a Tennessee limited liability company, f/k/a CRESLEIGH BANCORP OF TENNESSEE
LLC, a Tennessee limited liability company ("Oak Street of TN"), OAK STREET
MORTGAGE, INC., a Delaware corporation, f/k/a CRESELEIGH FINANCIAL SERVICES,
INC., a Delaware corporation ("Oak Street Inc.") (Oak Street LLC, Oak Street of
TN" and Oak Street Inc. are collectively referred to as the "Borrowers"), and
RESIDENTIAL FUNDING CORPORATION, a Delaware corporation ("Lender").
A. Borrowers and Lender have entered into a revolving mortgage warehousing
facility with a present Warehousing Commitment Amount of $125,000,000,
which is evidenced by a First Amended and Restated Promissory Note
dated August 31, 2002 (the "Note"), and by a Warehousing Credit and
Security Agreement dated as of June 15, 2002 (as the same may have been
and may be amended or supplemented, the "Agreement").
B. Borrowers have informed Lender that effective on November 1, 2002, each
of Borrowers names have been changed as follows: CRESLEIGH FINANCIAL
SERVICES LLC to OAK STREET MORTGAGE LLC; CRESLEIGH BANCORP OF TENNESSEE
LLC to OAK STREET MORTGAGE OF TENNESSEE LLC; and CRESLEIGH FINANCIAL
SERVICES, INC. to OAK STREET MORTGAGE, INC.
C. Borrowers have requested that Lender increase the Warehousing
Commitment Amount, extend the Warehousing Commitment and amend certain
other terms of the Agreement, and Lender has agreed to such increase,
extension and those other amendments, subject to the terms and
conditions of this Amendment.
NOW, THEREFORE, the parties to this Amendment agree as follows:
1. Subject to Borrowers' satisfaction of the conditions set forth in
Section 9, the effective date of this Amendment is December 2, 2002
("Effective Date").
2. Unless otherwise defined in this Amendment, all capitalized terms have
the meanings given to those terms in the Agreement. Defined terms may
be used in the singular or the plural, as the context requires. The
words "include," "includes" and "including" are deemed to be followed
by the phrase "without limitation." Unless the context in which it is
used otherwise clearly requires, the word "or" has the inclusive
meaning represented by the phrase "and/or." References to Sections and
Exhibits are to Sections and Exhibits of this Amendment unless
otherwise expressly provided.
3. Article 1 of the Agreement is amended and restated in its entirety as
set forth in Article 1 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 1 (including each and
every Section in Article 1) are deemed to refer to the new Article 1.
4. Article 3 of the Agreement is amended and restated in its entirety as
set forth in Article 3 attached to this Amendment. All references in
the Agreement and other Loan
* Represents confidential information that has been omitted and filed separately
with the Commission.
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Documents to Article 3 (including each and every Section in Article
1.2) are deemed to refer to the new Article 3.
5. Article 8 of the Agreement is amended and restated in its entirety as
set forth in Article 8 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 8 (including each and
every Section in Article 8) are deemed to refer to the new Article 8.
6. Article 12 of the Agreement is amended and restated in its entirety as
set forth in Article 9 attached to this Amendment. All references in
the Agreement and other Loan Documents to Article 12 (including each
and every Section in Article 12) are deemed to refer to the new Article
12.
7. Exhibit E to the Agreement is amended and restated in its entirety as
set forth in Exhibit E to this Amendment. All references in the
Agreement and the other Loan Documents to Exhibit E are deemed to refer
to the new Exhibit E.
8. Exhibit H to the Agreement is amended and restated in its entirety as
set forth in Exhibit H to this Amendment. All references in the
Agreement and the other Loan Documents to Exhibit H are deemed to refer
to the new Exhibit H.
9. Borrower must deliver to Lender (a) two executed copies of this
Amendment, and (b) a $350 document production fee.
10. Borrower represents, warrants and agrees that (a) there exists no
Default or Event of Default under the Loan Documents, (b) the Loan
Documents continue to be the legal, valid and binding agreements and
obligations of Borrower, enforceable in accordance with their terms, as
modified this Amendment, (c) Lender is not in default under any of the
Loan Documents and Borrower has no offset or defense to its performance
or obligations under any of the Loan Documents, (d) except for changes
permitted by the terms of the Agreement, Borrower's representations and
warranties contained in the Loan Documents are true, accurate and
complete in all respects as of the Effective Date and (e) there has
been no material adverse change in Borrower's financial condition from
the date of the Agreement to the Effective Date.
11. Except as expressly modified, the Agreement is unchanged and remains in
full force and effect, and Borrower ratifies and reaffirms all of its
obligations under the Agreement and the other Loan Documents.
12. This Amendment may be executed in any number of counterparts, each of
which will be deemed an original, but all of which shall together
constitute but one and the same instrument.
END OF PAGE INTENTIONALLY OMITTED
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IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to be duly
executed on their behalf by their duly authorized officers as of the day and
year above written.
OAK STREET MORTGAGE LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇. Royal
---------------------------------
Its: Chief Financial Officer
OAK STREET MORTGAGE, INC,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. Royal
---------------------------------
Its: Chief Financial Officer
OAK STREET MORTGAGE OF TENNESSEE LLC,
a Tennessee limited liability company
By: /s/ ▇▇▇▇▇ ▇. Royal
---------------------------------
Its: Chief Financial Officer
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Its: Director
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FIRST AMENDED AND RESTATED WAREHOUSING CREDIT
AND SECURITY AGREEMENT
FIRST AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated as
of August 31, 2002, among Cresleigh Financial Services LLC, a Delaware limited
liability company ("Cresleigh LLC"), CRESLEIGH BANCORP OF TENNESSEE LLC, a
Tennessee limited liability company ("Cresleigh Bancorp"), CRESLEIGH FINANCIAL
SERVICES, INC., a Delaware corporation ("Cresleigh Inc.") (Cresleigh LLC,
Cresleigh Bancorp and Cresleigh Inc. are collectively referred to as the
"Borrower"), and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation
("Lender").
A. Borrower has requested certain financing from Lender.
B. Borrower has asked Lender to amend and restate the Existing Agreement
(as defined below) and to set forth the terms and conditions upon which
Lender will provide certain financing to Borrower.
C. Lender has agreed to amend and restate the Existing Agreement to
provide that financing to Borrower subject to the terms and conditions
of this Agreement.
D. Subject to Borrower's satisfaction of the conditions set forth in
Article 5, the "Closing Date" for the transactions contemplated by this
Agreement is August 31, 2002.
NOW, THEREFORE, the parties to this Agreement agree as follows:
THE CREDIT
1.1. THE WAREHOUSING COMMITMENT
On the terms and subject to the conditions and limitations of this Agreement,
including Exhibit H, Lender agrees to make Warehousing Advances to Borrower from
the Closing Date to the Business Day immediately preceding the Warehousing
Maturity Date, during which period Borrower may borrow, repay and reborrow in
accordance with the provisions of this Agreement. The total aggregate principal
amount of all Warehousing Advances outstanding at any one time may not exceed
the Warehousing Commitment Amount. While a Default or Event of Default exists,
Lender may refuse to make any additional Warehousing Advances to Borrower.
Effective as of the Closing Date, all outstanding loans made under the Existing
Agreement are deemed to be Warehousing Advances made under this Agreement. All
Warehousing Advances under this Agreement constitute a single indebtedness, and
all of the Collateral is security for the Warehousing Note and the Sublimit Note
and for the performance of all of the Obligations. Warehousing Advances will be
made to Cresleigh LLC, Cresleigh Bancorp or to Cresleigh Inc., as requested by
Cresleigh LLC, Cresleigh Bancorp or Cresleigh Inc., respectively, will be deemed
made to or for the benefit of Cresleigh LLC and Cresleigh Bancorp and Cresleigh
Inc., jointly and severally, and each of Cresleigh LLC, Cresleigh Bancorp and
Cresleigh, Inc. are obligated to repay any Warehousing Advances made to
Cresleigh LLC, Cresleigh Bancorp or to Cresleigh Inc. under the Warehousing
Commitment. With respect to its obligation to repay Warehousing Advances made to
any other Borrower, each Borrower agrees to the terms set forth in Exhibit I.
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1.2. EXPIRATION OF WAREHOUSING COMMITMENT
The Warehousing Commitment expires on the earlier of ("Warehousing Maturity
Date"): (a) March 27, 2005, as such date may be extended in writing by Lender,
in its sole discretion, on which date the Warehousing Commitment will expire of
its own term and the Warehousing Advances will become due and payable without
the necessity of Notice or action by Lender; and (b) the date the Warehousing
Commitment is terminated and the Warehousing Advances become due and payable
under Section 10.2.
1.3. WAREHOUSING NOTE/SUBLIMIT NOTE
Warehousing Advances, other than Warehousing Advances made against REO
Properties, are evidenced by Borrower's promissory note, payable to Lender on
the form prescribed by Lender ("Warehousing Note"). Warehousing Advances made
against REO Properties are evidenced by Borrower's promissory note, payable to
Lender on the form prescribed by Lender ("Sublimit Note"). The term "Warehousing
Note" and "Sublimit Note" as used in this Agreement includes all amendments,
restatements, renewals or replacements of the original Warehousing Note, the
Sublimit Note and all substitutions for it. All terms and provisions of the
Warehousing Note and the Sublimit Note are incorporated into this Agreement.
END OF ARTICLE 1
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INTEREST, PRINCIPAL AND FEES
3.1. INTEREST
3.1 (a) Except as provided in Sections 3.1(d) and 3.1(e), Borrower must pay
interest on the unpaid amount of each Warehousing Advance from the date
the Warehousing Advance is made until it is paid in full at the
Interest Rate specified in Exhibit H.
3.1 (b) As long as no Default or Event of Default exists, Borrower is
entitled to receive a benefit in the form of an "Earnings Credit" on
the portion of the Eligible Balances maintained in time deposit
accounts with a Designated Bank, and Borrower is entitled to receive a
benefit in the form of an "Earnings Allowance" on the portion of the
Eligible Balances maintained in demand deposit accounts with a
Designated Bank. Any Earnings Allowance will be used first and any
Earnings Credit will be used second as a credit against Miscellaneous
Fees and Charges (including Designated Bank Charges), and against other
fees payable to Lender under this Agreement, including Warehousing
Fees, Wire Fees, Warehousing Commitment Fees,Non-Usage Fees, and Loan
Package Fees, and may be used, at Lender's option, to reduce accrued
interest. Any Earnings Allowance not used during the month in which the
benefit was received will be accumulated and must be used within 6
months of the month in which the benefit was received. As long as no
Default or Event of Default exists, any Earnings Credit not used during
the month in which the benefit was received will be used to provide a
cash benefit to Borrower. Any Earnings Credit retained by Lender as a
result of a Default or Event of Default will be applied to the payment
of Borrower's Obligations in the order Lender determines in its sole
discretion. The Earnings Credit and the Earnings Allowance for any
month will be determined by Lender in its sole discretion and Lender's
determination of those amounts is conclusive and binding absent
manifest error. In no event will the benefit received by Borrower
exceed the Depository Benefit.
Either party to this Agreement may terminate the benefits provided for
in this Section effective immediately upon Notice to the other party,
if the terminating party determines (which determination is conclusive
and binding on the other party, absent manifest error) at any time that
any applicable law, rule, regulation, order or decree or any
interpretation or administration of such law, rule, regulation, order
or decree by any governmental authority charged with its interpretation
or administration, or compliance by such party with any request or
directive (whether or not having the force of law) of any such
authority, makes it unlawful or impossible for the party sending the
Notice to continue to offer or receive the benefits provided for in
this Section. No Notice is required for a termination of benefits as a
result of a Default or Event of Default.
3.1 (c) Lender computes interest on the basis of the actual number of days
elapsed in a year of 360 days. Borrower must pay interest monthly in
arrears, not later than 9 days after the date of Lender's invoice or,
if applicable, 2 days after the date of Lender's account analysis
statement, commencing with the first month following the Closing Date
and on the Warehousing Maturity Date.
3.1 (d) If, for any reason Borrower repays a Warehousing Advance on the same
day that it was made by Lender, Borrower agrees to pay to Lender an
administrative fee equal to 1 day of interest on that Advance at the
Interest Rate that would otherwise be applicable under Exhibit H.
Borrower must pay all administrative fees within 9 days after the date
of Lender's invoice or, if applicable, within 2 days of the date of
Lender's account analysis statement.
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3.1 (e) After an Event of Default occurs and upon Notice to Borrower by Lender,
the unpaid amount of each Warehousing Advance will bear interest at the
Default Rate until paid in full.
3.1 (f) Lender will adjust the rates of interest provided for in this Agreement
as of the effective date of each change in the applicable index.
Lender's determination of such rates of interest as of any date of
determination are conclusive and binding, absent manifest error.
3.2. INTEREST LIMITATION
Lender does not intend, by reason of this Agreement, the Warehousing Note, the
Sublimit Note or any other Loan Document, to receive interest in excess of the
amount permitted by applicable law. If Lender receives any interest in excess of
the amount permitted by applicable law, whether by reason of acceleration of the
maturity of this Agreement, the Warehousing Note, the Sublimit Note or
otherwise, Lender will apply the excess to the unpaid principal balance of the
Warehousing Advances and not to the payment of interest. If all Warehousing
Advances have been paid in full and the Warehousing Commitment has expired or
has been terminated, Lender will remit any excess to Borrower. This Section
controls every other provision of all agreements between Borrower and Lender and
is binding upon and available to any subsequent holder of the Warehousing Note
or the Sublimit Note.
3.3. PRINCIPAL PAYMENTS
3.3 (a) Borrower must pay Lender the outstanding principal amount of all
Warehousing Advances on the Warehousing Maturity Date.
3.3 (b) Except as provided in Section 3.1(d), Borrower may prepay any portion
of the Warehousing Advances without premium or penalty at any time.
3.3 (c) Borrower must pay to Lender, without the necessity of prior demand
or Notice from Lender, and Borrower authorizes Lender to cause the
Funding Bank to charge Borrower's Operating Account for, the amount of
any outstanding Warehousing Advance against a specific Pledged Asset
upon the earliest occurrence of any of the following events:
(1) One (1) Business Day elapses from the date a Warehousing
Advance was made if the Pledged Loan to be funded by that Warehousing
Advance is not closed and funded.
(2) Ten (10) Business Days elapse without the return of a
Collateral Document delivered by Lender to Borrower under a Trust
Receipt for correction or completion.
(3) On the date on which a Pledged Loan is determined to have been
originated based on untrue, incomplete or inaccurate information or
otherwise to be subject to fraud, whether or not Borrower had knowledge
of the misrepresentation, incomplete or incorrect information or fraud,
on the date on which Borrower knows, has reason to know, or receives
Notice from Lender, that (A) one or more of the representations and
warranties set forth in Article 9 were inaccurate or incomplete in any
material respect on any date when made or deemed made, or (B) Borrower
has failed to perform or comply with any covenant, term or condition
set forth in Article 9.
(4) On the date the Pledged Loan or a Lien prior to the Mortgage
securing repayment of the Pledged Loan is defaulted and remains in
default for a period of 60 days or more.
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(5) Upon the sale, other disposition or prepayment of any Pledged
Asset or, with respect to a Pledged Loan included in an Eligible
Mortgage Pool, upon the sale or other disposition of the related Agency
Security.
(6) One (1) Business Day immediately preceding the date scheduled
for the foreclosure or trustee sale of the premises securing a Pledged
Loan.
3.3 (d) Upon telephonic or written Notice to Borrower by Lender, Borrower must
pay to Lender, and Borrower authorizes Lender to cause the Funding Bank
to charge Borrower's Operating Account for, the amount of any
outstanding Warehousing Advance against a specific Pledged Asset upon
the earliest occurrence of any of the following events:
(1) For any Pledged Loan, the Warehouse Period elapses.
(2) Forty-five (45) days elapse from the date a Pledged Loan was
delivered to an Investor or Approved Custodian for examination and
purchase or for inclusion in a Mortgage Pool, without the purchase
being made or an Eligible Mortgage Pool being initially certified, or
upon rejection of a Pledged Loan as unsatisfactory by an Investor or
Approved Custodian.
(3) Seven (7) Business Days elapse from the date a Wet Settlement
Advance was made against a Pledged Loan, other than a Repurchased
Mortgage Loan or a Nonperforming Mortgage Loan, without receipt by
Lender of all Collateral Documents relating to the Pledged Loan.
(4) With respect to any Pledged Loan, any of the Collateral
Documents, upon examination by Lender, are found not to be in
compliance with the requirements of this Agreement or the related
Purchase Commitment.
(5) Three (3) Business Days after the mandatory delivery date of
the related Purchase Commitment if the specific Pledged Loan or the
Pledged Security backed by that Pledged Loan has not been delivered
under the Purchase Commitment prior to such mandatory delivery date, or
on the date the related Purchase Commitment expires or is terminated,
unless, in each case, the Pledged Loan or Pledged Security is eligible
for delivery to another Investor under a comparable Purchase
Commitment.
3.3 (e) In addition to the payments required pursuant to Sections 3.3(a),
3.3(c) and 3.3(d), if the principal amount of any Pledged Loan is
prepaid in whole or in part while a Warehousing Advance is outstanding
against the Pledged Loan, Borrower must pay to Lender, without the
necessity of prior demand or Notice from Lender, and Borrower
authorizes Lender to cause the Funding Bank to charge Borrower's
Operating Account for, the amount of the prepayment, to be applied
against the Warehousing Advance.
3.3 (f) The proceeds of the sale or other disposition of Pledged Assets must be
paid directly by the Investor to the Cash Collateral Account. Borrower
must give Notice to Lender in writing or by telephone or by RFConnects
Delivery to Lender (and if by telephone, followed promptly by written
Notice) of the Pledged Assets for which proceeds have been received.
Upon receipt of Borrower's Notice, Lender will apply any proceeds
deposited into the Cash Collateral Account to the payment of the
Warehousing Advances related to the Pledged Assets identified by
Borrower in its Notice, and those Pledged Assets will be considered to
have been redeemed from pledge. Lender is entitled to rely upon
Borrower's affirmation that deposits in the Cash Collateral Account
represent payments from Investors for the purchase of the Pledged
Assets specified by Borrower in its Notice. If the payment from an
Investor for the purchase of Pledged
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Assets is less than the outstanding Warehousing Advances against the
Pledged Assets identified by Borrower in its Notice, Borrower must pay
to Lender, and Borrower authorizes Lender to cause the Funding Bank to
charge Borrower's Operating Account in an amount equal to that
deficiency. As long as no Default or Event of Default exists, Lender
will return to Borrower any excess payment from an Investor for Pledged
Assets.
3.3 (g) Lender reserves the right to revalue any Pledged Loan. Borrower must
pay to Lender, without the necessity of prior demand or Notice from
Lender, and Borrower authorizes Lender to cause the Funding Bank to
charge Borrower's Operating Account for, any amount required after any
such revaluation to reduce the principal amount of the Warehousing
Advance outstanding against the revalued Pledged Loan to an amount
equal to the Advance Rate for the applicable type of Eligible Loan or
REO Property multiplied by the Fair Market Value of the Mortgage Loan.
3.4. BUYDOWNS
Borrower may prepay a portion of the Warehousing Advances outstanding against
Subprime Mortgage Loans (a "Buydown") upon Notice to Lender not later than (a)
1:00 p.m. on the Business Day immediately preceding the Business Day on which
Borrower desires to make a Buydown in the amount of $10,000,000 or more or (b)
1:00 p.m. on the Business Day on which Borrower desires to make a Buydown in an
amount less than $10,000,000. Each Buydown must be in an amount not less than
$5,000, and Buydowns may not exceed, in the aggregate, the amount outstanding
against Subprime Mortgage Loans. A Buydown is a reduction in the aggregate
amount of the Warehousing Advances outstanding against Subprime Mortgage Loans,
but does not represent the prepayment of any particular Warehousing Advance, and
does not entitle Borrower to the release of any Collateral. Lender may apply
Buydowns to reduce interest payable by Borrower on outstanding Warehousing
Advances in any order that Lender determines in its sole discretion. Unless a
Default or Event of Default exists, Borrower may reborrow all or any portion of
a Buydown upon Notice to Lender not later than (m) 1:00 p.m. on the Business Day
immediately preceding the Business Day on which Borrower desires to reborrow
$10,000,000 or more or (n) 1:00 p.m. on the Business Day that Borrower desires
to reborrow an amount less than $10,000,000. If Lender receives Buydowns or a
combination of Buydowns and payments of Warehousing Advances that exceed the
aggregate principal balance of the Warehousing Advances outstanding against
Subprime Mortgage Loans (an "Excess Buydown"), as long as no Default or Event of
Default exists, Borrower may reborrow all or any portion of an Excess Buydown
upon Notice to Lender not later than (y) 1:00 p.m. on the Business Day
immediately preceding the Business Day on which Borrower desires to reborrow
$10,000,000 or more or (z) 1:00 p.m. on the Business Day that Borrower desires
to reborrow an amount less than $10,000,000. Alternatively, Lender may, in its
sole discretion, re-advance to Borrower all or any portion of an Excess Buydown
by causing the Funding Bank to credit the Operating Account in that amount.
Lender has no obligation to pay or otherwise provide to Borrower any interest,
dividends or other benefits on an Excess Buydown.
3.5. WAREHOUSING COMMITMENT FEES
Borrower must pay Lender a fee ("Warehousing Commitment Fee") in the amount of
0.125% per annum on $125,000,000 of the Warehousing Commitment Amount. The
Warehousing Commitment Fee is payable quarterly in advance. Lender computes the
Warehousing Commitment Fee on the basis of the actual number of days in each
Calendar Quarter and a year of 360 days. On the Closing Date, Borrower must pay
the prorated portion of the Warehousing Commitment Fee due from the Closing Date
to the last day of the current Calendar Quarter. After the Closing Date,
Borrower must pay the Warehousing Commitment Fee within 9 days after the date of
Lender's invoice or, if applicable, within 2 days after the date of Lender's
account analysis statement. If the date set forth in clause (a) of the
definition of Warehousing Maturity Date occurs
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on a day other than the last day of a Calendar Quarter, Borrower must pay the
prorated portion of the Warehousing Commitment Fee due from the beginning of the
then current Calendar Quarter to and including that date. Borrower is not
entitled to a reduction in the amount of the Warehousing Commitment Fee if (a)
the Warehousing Commitment Amount is reduced or (b) the Warehousing Commitment
is terminated at the request of Borrower or as a result of an Event of Default.
If the Warehousing Commitment terminates at the request of Borrower or as a
result of an Event of Default, Borrower must pay, on the date of termination, a
Warehousing Commitment Fee on the Warehousing Commitment Amount in effect
immediately prior to termination, for the period from the date of termination to
and including the date set forth in clause (a) of the definition of Warehousing
Maturity Date on the date of such termination. Lender's determination of the
Warehousing Commitment Fee for any period is conclusive and binding, absent
manifest error.
3.6. NON-USAGE FEES
At the end of each month during the term of this Agreement, Lender will
determine the average usage of the Warehousing Commitment by calculating the
arithmetic daily average of the Warehousing Advances outstanding during such
month ("Used Portion"). Lender will then subtract the Used Portion from the
arithmetic daily average of the Warehousing Commitment Amount outstanding during
such month, and the result, if positive, will be known as the "Unused Portion."
Borrower agrees to pay to Lender a fee ("Non-Usage Fee") in the amount of 0.125%
per annum of the Unused Portion during such month, except that no Non-Usage Fee
will be charged for any month in which the Used Portion is equal to or greater
than 50% of the Warehousing Commitment Amount. The Non-Usage Fee is payable
monthly, in arrears. Lender computes the Non-Usage Fee on the basis of the
actual number of days in the month and a year of 360 days. Borrower must pay the
Non-Usage Fee within 9 days after of the date of Lender's invoice or account
analysis statement. If the date set forth in clause (a) of the definition of
Warehousing Maturity Date occurs on a day other than the last day of a month,
Borrower must pay the prorated portion of the Non-Usage Fee due from the
beginning of the month to and including that date. Borrower is not entitled to a
reduction in the amount of the Non-Usage Fee if (a) the Warehousing Commitment
Amount is reduced or (b) the Warehousing Commitment is terminated at the request
of Borrower or as a result of an Event of Default. If the Warehousing Commitment
terminates at the request of Borrower or as a result of an Event of Default,
Borrower must pay, on the date of termination, a Non-Usage Fee in the amount of
0.125% per annum of the Warehousing Commitment Amount in effect immediately
prior to the date of termination, for the period from the date of termination to
and including the date set forth in clause (a) of the definition of Warehousing
Maturity Date. Lender's determination of the Non-Usage Fee for any period is
conclusive and binding, absent manifest error.
3.7. LOAN PACKAGE FEES, WIRE FEES, WAREHOUSING FEES
At the time of each Warehousing Advance against an Eligible Loan or REO
Property, Borrower will incur a loan package fee ("Loan Package Fee") and a wire
fee ("Wire Fee"). Loan Package Fees and Wire Fees may, at Lender's discretion,
be billed separately or combined into a single warehousing fee ("Warehousing
Fee"). Borrower must pay all Loan Package Fees, Wire Fees or Warehousing Fees in
the amount set forth in Exhibit H within 9 days after the date of Lender's
invoice or, if applicable, within 2 days after the date of Lender's account
analysis statement.
3.8. MISCELLANEOUS FEES AND CHARGES
Borrower must reimburse Lender for all Miscellaneous Fees and Charges. Borrower
must pay all Miscellaneous Fees and Charges within 9 days after the date of
Lender's invoice or, if applicable, within 2 days after the date of Lender's
account analysis statement.
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3.9. OVERDRAFT ADVANCES
If, under the authorization given by Borrower in the Funding Bank Agreement or
pursuant to this Agreement, Lender debits Borrower's Operating Account or
directs the Funding Bank to honor an item presented against the Operating
Account or against the Check Disbursement Account, and that debit or direction
results in an overdraft, Lender may make an additional Warehousing Advance to
fund that overdraft ("Overdraft Advance"). Borrower must pay (a) the outstanding
amount of any Overdraft Advance, plus interest on that Overdraft Advance, within
1 Business Day after the date of the Overdraft Advance, and (b) interest on the
amount of the Overdraft Advance, at a rate per annum equal to the Bank One Prime
Rate plus 2%, within 9 days after the date of Lender's invoice or, if
applicable, within 2 days after the date of Lender's account analysis statement.
3.10. METHOD OF MAKING PAYMENTS
3.10 (a) Unless otherwise specified in this Agreement, Borrower must make all
payments under this Agreement to Lender by the close of business on the
date when due unless the date is not a Business Day. If the due date is
not a Business Day, payment is due on, and interest will accrue to, the
next Business Day. Borrower must make all payments in United States
dollars in immediately available funds transferred by wire to accounts
designated by Lender.
3.10 (b) While a Default or Event of Default exists, Borrower authorizes Lender
to cause the Funding Bank to charge Borrower's Operating Account for
any Obligations due and payable to Lender, without the necessity of
prior demand or Notice from Lender.
3.11. EXCESS USAGE FEES
At the end of each month during the term of this Agreement, Lender will
determine the number of days ("Excess Usage Days") during the month on which the
Warehousing Advances outstanding during such month ("Daily Outstanding
Balances") exceeded $125,000,000 ("Usage Target"). For each Excess Usage Day in
the month, Borrower must pay to Lender a fee ("Excess Usage Fee") in the amount
of 0.125% per annum on the amount by which the Daily Outstanding Balance
exceeded the Usage Target. The Excess Usage Fee is payable monthly, in arrears.
Lender computes the Excess Usage Fee on the basis of the actual number of days
in each month and a year of 360 days. Borrower must pay the Excess Usage Fee
within 9 days after the date of Lender's invoice or, if applicable, within 2
days after the date of Lender's account analysis statement Lender's
determination of the Excess Usage Fee for any period is conclusive and binding,
absent manifest error.
END OF ARTICLE 3
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NEGATIVE COVENANTS
As long as the Warehousing Commitment is outstanding or there remain any
Obligations to be paid or performed, Borrower must not, either directly or
indirectly, without the prior written consent of Lender:
8.1. CONTINGENT LIABILITIES
Assume, guarantee, endorse or otherwise become contingently liable for the
obligation of any Person except by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business, and except for
obligations arising in connection with the sale of Mortgage Loans with recourse
in the ordinary course of Borrower's business.
8.2. PLEDGE OF SERVICING CONTRACTS
Pledge or grant a security interest in any existing or future Servicing
Contracts of Borrower other than to Lender or omit to take any action required
to keep all of Borrower's Servicing Contracts in full force and effect.
8.3. RESTRICTIONS ON FUNDAMENTAL CHANGES
8.3 (a) Consolidate, merge or enter into any analogous reorganization or
transaction with any Person.
8.3 (b) Amend or otherwise modify Borrower's articles of organization or
operating agreement in any way which will have an adverse impact on
Lender.
8.3 (c) Liquidate, wind up or dissolve (or suffer any liquidation or
dissolution).
8.3 (d) Cease actively to engage in the business of originating or acquiring
Mortgage Loans or make any other material change in the nature or scope
of the business in which Borrower engages as of the date of this
Agreement.
8.3 (e) Sell, assign, lease, convey, transfer or otherwise dispose of (whether
in one transaction or a series of transactions) all or any substantial
part of Borrower's business or assets, whether now owned or acquired
after the Closing Date, other than, in the ordinary course of business
and to the extent not otherwise prohibited by this Agreement, sales of
(1) Mortgage Loans, (2) Mortgage-backed Securities and (3) Servicing
Contracts.
8.3 (f) Acquire by purchase or in any other transaction all or substantially
all of the business or property of, or stock or other ownership
interests of, any Person; provided, however, Borrower may purchase all
or substantially all of the business or property of a Person whose
primary business is directly related to mortgage banking if (1) the
purchase price is no greater than $500,000, (2) the business or
property is consolidated into the Borrower, and (3) Borrower gives at
least five 5 Business Days advance written Notice of such purchase.
8.3 (g) Permit any Subsidiary of Borrower to do or take any of the foregoing
actions.
Page 1
8.4. SUBSIDIARIES
Form or acquire, or permit any Subsidiary of Borrower to form or acquire, any
Person that would thereby become a Subsidiary.
8.5. Deferral of Subordinated Debt
Pay any Subordinated Debt of Borrower in advance of its stated maturity or,
after a Default or Event of Default under this Agreement has occurred, make any
payment of any kind on any Subordinated Debt of Borrower until all of the
Obligations have been paid and performed in full and any applicable preference
period has expired.
8.6. LOSS OF ELIGIBILITY
Take any action that would cause Borrower to lose all or any part of its status
as an eligible lender, seller/servicer or issuer as described under Section 9.1.
8.7. ACCOUNTING CHANGES
Make, or permit any Subsidiary of Borrower to make, any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change its fiscal year or the fiscal year of any Subsidiary of Borrower.
8.8. Leverage Ratio
Permit Cresleigh LLC's Leverage Ratio at any time to exceed 20 to 1.
8.9. MINIMUM TANGIBLE NET WORTH
Permit Cresleigh LLC's Tangible Net Worth at any time to be less than (i)
$7,500,000 through June 30, 2003, and (ii) after June 30, 2003 (adjusted
semi-annually thereafter), (a) $7,500,000 plus (b) 50% of Cresleigh LLC's net
income after taxes and distributions to members for tax purposes, if positive,
for each six-month period ending on June 30 or December 31 of any year,
beginning June 30, 2003. Adjustments will occur on the first Business Day after
the end of each six-month period.
8.10. CURRENT RATIO
Permit Cresleigh LLC's Current Ratio at any time to be less than 1 to 1.
8.11. MINIMUM CASH AND CASH EQUIVALENTS
Permit Cresleigh LLC's Cash and Cash Equivalent at any time to be less than
$1,500,000.
8.12. TRANSACTIONS WITH AFFILIATES
Directly or indirectly (a) make any loan, advance, extension of credit or
capital contribution to any of Borrowers' Affiliates, (b) sell, transfer, pledge
or assign any of its assets to or on behalf of those Affiliates, (c) merge or
consolidate with or purchase or acquire assets from those Affiliates, or (d) pay
management fees to or on behalf of those Affiliates.
Page 2
8.13. RECOURSE SERVICING CONTRACTS
Acquire or enter into Servicing Contracts under which Borrower must repurchase
or indemnify the holder of the Mortgage Loans as a result of defaults on the
Mortgage Loans at any time during the term of those Mortgage Loans.
8.14. GESTATION AGREEMENTS
Directly or indirectly sell or finance a Mortgage Loan under any Gestation
Agreement if the Mortgage Loan is or was previously pledged to Lender as
Collateral under this Agreement if the aggregate amount of Warehousing Advances
outstanding is less than 60% of the Warehousing Commitment Amount.
END OF ARTICLE 8
Page 3
DEFINITIONS
12.1. DEFINED TERMS
Capitalized terms defined below or elsewhere in this Agreement have the
following meanings or, as applicable, the meanings given to those terms in
Exhibits to this Agreement:
"Advance Rate" means, with respect to any Eligible Loan and REO Property, the
Advance Rate set forth in Exhibit H for that type of Eligible Loan or REO
Property.
"Affiliate" means, when used with reference to any Person, (a) each Person that,
directly or indirectly, controls, is controlled by or is under common control
with, the Person referred to, (b) each Person that beneficially owns or holds,
directly or indirectly, 5% or more of any class of voting Equity Interests of
the Person referred to, (c) each Person, 5% or more of the voting Equity
Interests of which is beneficially owned or held, directly or indirectly, by the
Person referred to, and (d) each of such Person's officers, directors, joint
venturers and partners. For these purposes, the term "control" (including the
terms "controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of the Person in question.
"Aged Mortgage Loans" means Mortgage Loans against which a Warehousing Advance
has been outstanding for longer than the Standard Warehouse Period, provided
that Aged Mortgage Loans are permitted for such type of Mortgage Loan.
"Aged Warehouse Period" means the maximum number of days a Warehouse Advance
against Aged Mortgage Loans of a particular type may remaining outstanding.
"Agency Security" means a Mortgage-backed Security issued or guaranteed by
▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae.
"Agreement" means this First Amended and Restated Warehousing Credit and
Security Agreement, either as originally executed or as it may be amended,
restated, renewed or replaced.
"Appraised Property Value" means with respect to an interest in real property,
the then current fair market value of the real property and any improvements on
it as of recent date determined in accordance with Title XI of FIRREA by a
qualified appraiser who is a member of the American Institute of Real Estate
Appraisers or other group of professional appraisers.
"Approved Custodian" means a pool custodian or other Person that Lender deems
acceptable, in its sole discretion, to hold Mortgage Loans for inclusion in a
Mortgage Pool or to hold Mortgage Loans as agent for an Investor that has issued
a Purchase Commitment for those Mortgage Loans.
"Audited Statement Date" means the date of Borrower's most recent audited
financial statements (and, if applicable, Borrower's Subsidiaries, on a
consolidated basis) delivered to Lender under the Existing Agreement or this
Agreement.
"Bank One" means Bank One, National Association, or any successor bank.
4
"Bank One Prime Rate" means, as of any date of determination, the highest prime
rate quoted by Bank One and most recently published by Bloomberg L.P. If the
prime rate for Bank One is not quoted or published for any period, then during
that period the term "Bank One Prime Rate" means the highest prime rate
published in the most recent edition of The Wall Street Journal in its regular
column entitled "Money Rates."
"Borrower" has the meaning set forth in the first paragraph of this Agreement.
"BPO Value" means, with respect to the improved real property securing any
Mortgage Loan, the lowest fair market value for such real property or ownership
interest and occupancy rights as set forth in an opinion of a real estate broker
acceptable to Lender, in its sole discretion, as to the value of such improved
real property if sold within a 60-day marketing period. Each such broker price
opinion must be obtained from a real estate broker with substantial experience
in the purchase and sale of similar properties in the geographic area in which
the real property or ownership interest and occupancy rights to be valued is
located and should be as of a date not more than 30 days prior to the date of
the related Advance.
"Business Day" means any day other than Saturday, Sunday or any other day on
which national banking associations are closed for business.
"Buydown" has the meaning set forth in Section 3.4.
"Calendar Quarter" means the 3 month period beginning on each January 1, April
1, July 1 or October 1.
"Cash and Cash Equivalent" means the following assets owned by a Person as of
any date of determination: (a) unrestricted and unencumbered cash, (b) funds on
deposit in any bank located in the United States, (c) investment grade
commercial paper, (d) money market funds, (e) the amount of any Buydowns then
available to be reborrowed by Borrower or (f) high grade marketable securities
with a maturity of 270 days or less, in all cases that qualify as "cash or cash
equivalent" on a balance sheet of such Person in accordance with GAAP.
"Cash Collateral Account" means a demand deposit account maintained at the
Funding Bank in Lender's name and designated for receipt of the proceeds of the
sale or other disposition of Collateral.
"Check Disbursement Account" means a demand deposit account maintained at the
Funding Bank in Borrower's name and under the control of Lender for clearing
checks written by Borrower to fund Mortgage Loans funded by Warehousing
Advances.
"Closing Date" has the meaning set forth in the Recitals to this Agreement.
"Collateral" has the meaning set forth in Section 4.1.
"Collateral Documents" means, with respect to each Mortgage Loan, (a) the
Mortgage Note, the Mortgage and all other documents including, if applicable,
any Security Agreement, executed in connection with or relating to the Mortgage
Loan; (b) as applicable, the original lender's ALTA Policy of Title Insurance or
its equivalent, documents evidencing the FHA Commitment to Insure, the VA
Guaranty or private mortgage insurance, the appraisal, the Regulation Z
statement, the environmental assessment, the engineering report, certificates of
casualty or hazard insurance, credit information on the maker of the Mortgage
Note, the HUD-1 or corresponding purchase advice; (c) any other document listed
in Exhibit B; and (d) any
5
other document that is customarily desired for inspection or transfer incidental
to the purchase of any Mortgage Note by an Investor or that is customarily
executed by the seller of a Mortgage Note to an Investor.
"Committed Purchase Price" means for an Eligible Loan (a) the dollar price as
set forth in the Purchase Commitment or, if the price is not expressed in
dollars, the product of the Mortgage Note Amount multiplied by the price
(expressed as a percentage) as set forth in the Purchase Commitment for the
Eligible Loan, or (b) if the Eligible Loan is to be used to back an Agency
Security, the dollar price as set forth in a Purchase Commitment or, if the
price is not expressed in dollars the product of the Mortgage Note Amount
multiplied by the price (expressed as a percentage) as set forth in the Purchase
Commitment for the Agency Security.
"Compliance Certificate" means a certificate executed on behalf of Borrower by
its manager having principal financial accounting responsibilities,
substantially in the form of Exhibit E.
"Credit Score" means a mortgagor's overall consumer credit rating, represented
by a single numeric credit score using the Fair, ▇▇▇▇▇ consumer credit scoring
system, provided by a credit repository acceptable to Lender and the Investor
that issued the Purchase Commitment covering the related Mortgage Loan (if a
Purchase Commitment is required by Exhibit H).
"Current Assets" means a Person's (and, if applicable, the Person's
Subsidiaries, on a consolidated basis) assets that in the regular course of
business will be readily and quickly realized, or converted into cash, all in
accordance with GAAP, within 1 year, together with those additional assets that
may readily be converted into cash without impairing the business of Borrower.
Current Assets include (a) cash, (b) temporary investments, (c) Mortgage Loans
and Mortgage-backed Securities held for sale (net of any loan loss reserves),
(d) accounts and accrued interest receivable (net of allowance for doubtful
accounts) and (e) servicing advances made on behalf of mortgagors, but exclude
(x) loans and advances to or receivables due from managers, members, employees
or Affiliates, (y) all deferred assets, other than prepaid items for insurance,
taxes and rents and (z) any properties or assets located outside the continental
United States and Canada.
"Current Liabilities" means a Person's (and, if applicable, the Person's
Subsidiaries, on a consolidated basis) liabilities, or any portion of a Person's
liabilities, the maturity of which will not extend beyond 1 year from the date
of determination.
"Current Ratio" means the ratio of a Person's Current Assets to Current
Liabilities.
"Daily Outstanding Balances" has the meaning set forth in Section 3.11.
"Debt" means (a) all indebtedness or other obligations of a Person that, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liabilities side of a balance sheet of the Person on the date of
determination, plus (b) all indebtedness or other obligations of the Person for
borrowed money or for the deferred purchase price of property or services. For
purposes of calculating a Person's Debt, Subordinated Debt not due within 1 year
of that date and deferred taxes arising from capitalized excess servicing fees
and capitalized servicing rights may be excluded from a Person's indebtedness.
"Default" means the occurrence of any event or existence of any condition that,
but for the giving of Notice or the lapse of time, would constitute an Event of
Default.
6
"Default Rate" means, for any Warehousing Advance, the Interest Rate applicable
to that Warehousing Advance plus 4% per annum. If no Interest Rate is applicable
to a Warehousing Advance, "Default Rate" means, for that Warehousing Advance,
the highest Interest Rate then applicable to any outstanding Warehousing Advance
plus 4% per annum.
"Depository Benefit" means the compensation received by Lender, directly or
indirectly, as a result of Borrower's maintenance of Eligible Balances with a
Designated Bank.
"Designated Bank" means any bank designated by Lender as a Designated Bank, but
only for as long as Lender has an agreement under which Lender receives
Depository Benefits from that bank.
"Designated Bank Charges" means any fees, interest or other charges that would
otherwise be payable to a Designated Bank in connection with Eligible Balances
maintained at the Designated Bank, including deposit insurance premiums, service
charges and any other charges that may be imposed by governmental authorities
from time to time.
"Discontinued Loan" has the meaning set forth in the GMAC-RFC Client Guide.
"Earnings Allowance " has the meaning set forth in Section 3.1(b).
"Earnings Credit " has the meaning set forth in Section 3.1(b).
"Electronic Advance Request" means an electronic transmission through RFConnects
Delivery containing the same information as Exhibit A to this Agreement.
"Electronic Tracking Agreement" means an Electronic Tracking Agreement, on the
form prescribed by Lender, among Borrower, Lender, MERS and MERCORP, Inc.,
pursuant to which Lender will have the authority to, among other things,
withdraw a Mortgage from the MERS system, if either the Mortgage Loan has been
registered on the MERS system naming Borrower as servicer or subservicer, or the
Mortgage Loan has not yet been registered on the MERS system.
"Eligible Balances" means all funds of or maintained by Borrower (and, if
applicable, Borrower's Subsidiaries) in demand deposit or time deposit accounts
at a Designated Bank, minus balances to support float, reserve requirements and
any other reductions that may be imposed by governmental authorities from time
to time.
"Eligible Loan" means a Single Family Mortgage Loan that satisfies the
conditions and requirements set forth in Exhibit H.
"Eligible Mortgage Pool" means a Mortgage Pool for which (a) an Approved
Custodian has issued its initial certification, (b) there exists a Purchase
Commitment covering the Agency Security to be issued on the basis of that
certification and (c) the Agency Security will be delivered to Lender.
"Equity Interests" means all shares, interests, participations or other
equivalents, however, designated, of or in a Person (other than a natural
person), whether or not voting, including common stock, membership interests,
warrants, preferred stock, convertible debentures and all agreements,
instruments and documents convertible, in whole or in part, into any one or more
of the foregoing.
7
"ERISA" means the Employee Retirement Income Security Act of 1974 and all rules
and regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.
"ERISA Affiliate" means any trade or business (whether or not incorporated) that
is a member of a group of which Borrower is a member and that is treated as a
single employer under Section 414 of the Internal Revenue Code.
"Event of Default" means any of the conditions or events set forth in Section
10.1.
"Excess Usage Day" has the meaning set forth in Section 3.11.
"Excess Usage Fee" has the meaning set forth in Section 3.11.
"Exchange Act" means the Securities Exchange Act of 1934 and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.
"Exhibit B" means Exhibit B-SF or Exhibit B-REP/NP/REO, as applicable to the
type of Eligible Loan or REO Property against which a Warehousing Advance is to
be made.
"Existing Agreement" means the Warehousing Credit and Security Agreement dated
as of June 30, 2000, as amended, between Cresleigh Financial Services LLC and
Lender.
"Fair Market Value" means, at any time for an Eligible Loan or a related Agency
Security (if the Eligible Loan is to be used to back an Agency Security) as of
any date of determination, (a) the Committed Purchase Price if the Eligible Loan
is covered by a Purchase Commitment from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac or the
Eligible Loan is to be exchanged for an Agency Security and that Agency Security
is covered by a Purchase Commitment from an Investor, or (b) otherwise, the
market price for such Eligible Loan or Agency Security, determined by Lender
based on market data for similar Mortgage Loans or Agency Securities and such
other criteria as Lender deems appropriate in its sole discretion.
"▇▇▇▇▇▇ Mae" means ▇▇▇▇▇▇ ▇▇▇, a corporation created under the laws of the
United States, and any successor corporation or other entity.
"FHA" means the Federal Housing Administration and any successor agency or other
entity.
"FICA" means the Federal Insurance Contributions Act and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules and regulations.
"FIRREA" means the Financial Institutions Reform, Recovery and Enforcement Act
of 1989 and all rules and regulations promulgated under that statute, as
amended, and any successor statute, rules, and regulations.
"First Mortgage" means a Mortgage that constitutes a first Lien on the real
property covered by the Mortgage.
"First Mortgage Loan" means a Mortgage Loan secured by a First Mortgage.
"▇▇▇▇▇▇▇ Mac" means ▇▇▇▇▇▇▇ Mac, a corporation created under the laws of the
United States, and any successor corporation or other entity.
8
"Funding Bank" means Bank One or any other bank designated by Lender as a
Funding Bank.
"Funding Bank Agreement" means a letter agreement on the form prescribed by
Lender between the Funding Bank and Borrower authorizing Lender's access to the
Operating Account and the Check Disbursement Account.
"GAAP" means generally accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and in statements and pronouncements of the
Financial Accounting Standards Board, or in opinions, statements or
pronouncements of any other entity approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Gestation Agreement" means an agreement under which Borrower agrees to sell or
finance (a) a Mortgage Loan prior to the date of purchase by an Investor or (b)
a Mortgage Pool prior to the date a Mortgage-backed Security backed by the
Mortgage Pool is issued.
"▇▇▇▇▇▇ Mae" means the Government National Mortgage Association, an agency of
the United States government, and any successor agency or other entity.
"GMAC-RFC Client Guide" means the applicable loan purchase guide issued by
Lender, as the same may be amended or replaced.
"Government Mortgage Loan" means a closed-end First Mortgage Loan that is either
HUD/FHA insured (other than a HUD 203(K) Mortgage Loan or a Title I Mortgage
Loan) or VA guaranteed.
"Hedging Arrangements" means, with respect to any Person, any agreements or
other arrangements (including interest rate swap agreements, interest rate cap
agreements and forward sale agreements) entered into to protect that Person
against changes in interest rates or the market value of assets.
"High LTV Mortgage Loan" has the meaning set forth in Exhibit H.
"HUD" means the Department of Housing and Urban Development, and any successor
agency or other entity.
"Indemnified Liabilities" has the meaning set forth in Section 11.2.
"Indemnitees" has the meaning set forth in Section 11.2.
"Interest Rate" means, for any Warehousing Advance, the floating rate of
interest specified for that Warehousing Advance in Exhibit H.
"Interim Statement Date" means the date of the most recent unaudited financial
statements of Borrower (and, if applicable, Borrower's Subsidiaries, on a
consolidated basis) delivered to Lender under the Existing Agreement or this
Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, Title 26 of the
United States Code, and all rules, regulations and interpretations issued under
those statutory provisions, as amended, and any subsequent or successor federal
income tax law or laws, rules, regulations and interpretations.
9
"Investment Company Act" means the Investment Company Act of 1940 and all rules
and regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.
"Investor" means ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or a financially responsible private
institution that Lender deems acceptable, in its sole discretion, to issue
Purchase Commitments with respect to a particular category of Eligible Loans.
"Lender" has the meaning set forth in the first paragraph of this Agreement.
"Leverage Ratio" means the ratio of a Person's (and, if applicable, the Person's
Subsidiaries, on a consolidated basis) Debt to Tangible Net Worth. For purposes
of calculating a Person's Leverage Ratio, Debt arising under Hedging
Arrangements, to the extent of assets arising under those Hedging Arrangements,
may be excluded from a Person's Debt.
"LIBOR" means, for each week, the rate of interest per annum that is equal to
the arithmetic mean of the U.S. Dollar London Interbank Offered Rates for 1
month periods of certain U.S. banks as of 11:00 a.m. (London time) on the first
Business Day of each week on which the London Interbank market is open, as
published by Bloomberg L.P. If those interest rates are not offered or published
for any period, then during that period LIBOR means the London Interbank Offered
Rate for 1 month periods as published in The Wall Street Journal in its regular
column entitled "Money Rates" on the first Business Day of each week on which
the London Interbank market is open.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature of such an agreement and any
agreement to give any security interest).
"Loan Documents" means this Agreement, the Warehousing Note, the Sublimit Note,
any agreement of Borrower relating to Subordinated Debt, any Security Agreement,
if applicable, and each other document, instrument or agreement executed by
Borrower in connection with any of those documents, instruments and agreements,
as originally executed or as any of the same may be amended, restated, renewed
or replaced.
"Loan Package Fee " has the meaning set forth in Section 3.5.
"Loan-to-Value Ratio" means, for any Mortgage Loan, the ratio of (a) the maximum
amount that may be borrowed under the Mortgage Loan (whether or not borrowed) at
the time of origination, plus the Mortgage Note Amounts of all other Mortgage
Loans secured by the related Property, to (b) the Appraised Property Value of
the related Property.
"Manufactured Home" means a structure that is built on a permanent chassis
(steel frame) with the wheel assembly necessary for transportation in one or
more sections to a permanent site or semi-permanent site.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System, as amended.
"MERS" means Mortgage Electronic Registrations Systems, Inc. and any successor
entity.
10
"Miscellaneous Fees and Charges" means the miscellaneous fees set forth on
Lender's collateral operations fees schedule (either as originally delivered to
Borrower or as it may be amended, restated, renewed or replaced after the date
of this Agreement) and all miscellaneous disbursements, charges and expenses
incurred by or on behalf of Lender for the handling and administration of
Warehousing Advances and Collateral, including costs for Uniform Commercial
Code, tax lien and judgment searches conducted by Lender, filing fees, charges
for wire transfers and check processing charges, charges for security delivery
fees, charges for overnight delivery of Collateral to Investors, recording fees
for REO Mortgages, Funding Bank service fees and overdraft charges and
Designated Bank Charges.
"Mortgage" means a mortgage or deed of trust on real property that is improved
and substantially completed (including real property to which a Manufactured
Home has been affixed in a manner such that the Lien of a mortgage or deed of
trust would attach to the Manufactured Home under applicable real property law).
"Mortgage-backed Securities" means securities that are secured or otherwise
backed by Mortgage Loans.
"Mortgage Loan" means any loan evidenced by a Mortgage Note and secured by a
Mortgage and, if applicable, a Security Agreement.
"Mortgage Note" means a promissory note secured by one or more Mortgages and, if
applicable, one or more Security Agreements.
"Mortgage Note Amount" means, as of any date of determination, the then
outstanding and unpaid principal amount of a Mortgage Note (whether or not an
additional amount is available to be drawn under that Mortgage Note).
"Mortgage Pool" means a pool of one or more Pledged Loans on the basis of which
a Mortgage-backed Security is to be issued.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, to which either Borrower or any ERISA Affiliate of Borrower
has any obligation with respect to its employees.
"Non-Usage Fee" has the meaning set forth in Section 3.6.
"Notices" has the meaning set forth in Section 11.1.
"Obligations" means all indebtedness, obligations and liabilities of Borrower to
Lender and Lender's Subsidiaries (whether now existing or arising after the date
of this Agreement, voluntary or involuntary, joint or several, direct or
indirect, absolute or contingent, liquidated or unliquidated, or decreased or
extinguished and later increased and however created or incurred), including
Borrower's obligations and liabilities to Lender under the Loan Documents and
disbursements made by Lender for Borrower's account.
"Operating Account" means a demand deposit account maintained at the Funding
Bank in Borrower's name and designated for funding that portion of each Eligible
Loan or REO Property not funded by a Warehousing Advance made against that
Eligible Loan or REO Property and for returning any excess payment from an
Investor for a Pledged Loan or Pledged Security.
"Overdraft Advance" has the meaning set forth in Section 3.9.
11
"Participant" has the meaning set forth in Section 11.8.
"Person" means and includes natural persons, corporations, limited liability
companies, limited liability partnerships, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions of those governments.
"Plan" means each employee benefit plan (whether in existence on the date of
this Agreement or established after that date), as that term is defined in
Section 3 of ERISA, maintained for the benefit of directors, officers or
employees of Borrower or any ERISA Affiliate.
"Pledged Assets" means, collectively, Pledged Loans, Pledged Securities, and REO
Properties.
"Pledged Hedging Accounts" has the meaning set forth in Section 4.1 (i).
"Pledged Hedging Arrangements" has the meaning set forth in Section 4.1 (i).
"Pledged Loans" has the meaning set forth in Section 4.1 (b).
"Pledged Securities" has the meaning set forth in Section 4.1 (c).
"Prime Mortgage Loan" has the meaning set forth in Exhibit H.
"Prohibited Transaction" has the meanings set forth for such term in Section
4975 of the Internal Revenue Code and Section 406 of ERISA.
"Purchase Commitment" means a written commitment, in form and substance
satisfactory to Lender, issued in favor of Borrower by an Investor under which
that Investor commits to purchase Mortgage Loans or Mortgage-backed Securities.
"Receivables" has the meaning set forth in Section 4.1(e).
"Release Amount" has the meaning set forth in Section 4.3(f).
"REO Mortgage" means a First Mortgage in form and substance approved by Lender
covering an REO Property which has been executed and delivered by Borrower for
the benefit of Lender.
"REO Property" has the meaning set forth in Exhibit H.
"Repurchased Mortgage Loan" has the meaning set forth in Exhibit H.
"RFC Mortgage Loan" means a Mortgage Loan covered by a Purchase Commitment
issued by Lender.
"RFConnects Delivery" means Lender's proprietary service to support the
electronic exchange of information between Lender and Borrower, including
Advance Requests, shipping requests, payoff requests, activity reports and
exception reports.
12
"RFConnects Pledge Agreement" means an agreement (on the then current form
prescribed by Lender) granting Lender a security interest in Mortgage Loans for
which Borrower has requested Warehousing Advances using RFConnects Delivery.
"Second Mortgage" means a Mortgage that constitutes a second Lien on the
property covered by the Mortgage.
"Second Mortgage Loan" means a Mortgage Loan secured by a Second Mortgage.
"Security Agreement" means a security agreement or other agreement that creates
a Lien on personal property, including furniture, fixtures and equipment, to
secure repayment of a Mortgage Loan.
"Servicing Contract" means, with respect to any Person, the arrangement, whether
or not in writing, under which that Person has the right to service Mortgage
Loans.
"Servicing Portfolio" means, as to any Person, the unpaid principal balance of
Mortgage Loans serviced by that Person under Servicing Contracts, minus the
principal balance of all Mortgage Loans that are serviced by that Person for
others under subservicing arrangements.
"Single Family Mortgage Loan" means a Mortgage Loan secured by a Mortgage on
improved real property on which is located a 1-to-4 family residence.
"Standard Warehouse Period" means, for any Mortgage Loan or REO Property, the
maximum number of days a Warehousing Advance against that type of Mortgage Loan
or REO Property, other than against an Aged Mortgage Loan, may remain
outstanding, as set forth in Exhibit H.
"Statement Date" means the Audited Statement Date or the Interim Statement Date,
as applicable.
"Sublimit" means the aggregate amount of Warehousing Advances (expressed as a
dollar amount or as a percentage of the Warehousing Commitment Amount) that is
permitted to be outstanding at any one time against a specific type of Eligible
Loan or REO Property.
"Sublimit Note" has the meaning set forth in Section 1.3.
"Subordinated Debt" means (a) all indebtedness of Borrower for borrowed money
that is effectively subordinated in right of payment to all present and future
Obligations either (1) under a Subordination of Debt Agreement on the form
prescribed by Lender or (2) otherwise on terms acceptable to Lender, and (b)
solely for purposes of Section 8.5, all indebtedness of Borrower that is
required to be subordinated by Sections 5.1 (b) and 7.11.
"Subprime Mortgage Loan" has the meaning set forth in Exhibit H.
"Subsidiary" means any corporation, partnership, association or other business
entity in which more than 50% of the shares of stock or other ownership
interests having voting power for the election of directors, managers, trustees
or other Persons performing similar functions is at the time owned or controlled
by any Person either directly or indirectly through one or more Subsidiaries of
that Person.
"Tangible Net Worth" means the excess of a Person's (and, if applicable, the
Person's Subsidiaries, on a consolidated basis) total assets over total
liabilities as of the date of determination, each determined in
13
accordance with GAAP, except for implementation of FASB 91, applied in a manner
consistent with the most recent audited financial statements delivered to Lender
under the Existing Agreement, plus that portion of Subordinated Debt not due
within 1 year of that date. For purposes of calculating a Person's Tangible Net
Worth, advances or loans to managers, members, employees or Affiliates
investments in Affiliates, assets pledged to secure any liabilities not included
in the Debt of the Person, intangible assets, those other assets that would be
deemed by HUD to be non-acceptable in calculating adjusted net worth in
accordance with its requirements in effect as of that date, as those
requirements appear "Consolidated Audit Guide for Audits of HUD Programs," and
other assets Lender deems unacceptable, in its sole discretion, must be excluded
from a Person's total assets.
"Third Party Originated Loan" means a Mortgage Loan originated and funded by a
third party (other than with funds provided by Borrower at closing to purchase
the Mortgage Loan) and subsequently purchased by Borrower.
"Trust Receipt" means a trust receipt in a form approved by and under which
Lender may deliver any document relating to the Collateral to Borrower for
correction or completion.
"Usage Target" has the meaning set forth in Section 3.11.
"Unused Portion" has the meaning set forth in Section 3.6.
"Used Portion" has the meaning set forth in Section 3.6.
"Warehousing Advance" means a disbursement by Lender to fund the origination or
acquisition of a Mortgage Loan.
"Warehousing Advance Request" has the meaning set forth in Section 2.1.
"Warehousing Collateral Value" means, as of any date of determination, (a) with
respect to any Eligible Loan or REO Property, the lesser of (1) the amount of
any Warehousing Advance made, or that could be made, against such Eligible Loan
or REO Property under Exhibit H or (2) an amount equal to the Advance Rate for
the applicable type of Eligible Loan or REO Property multiplied by the Fair
Market Value of such Eligible Loan or REO Property; (b) if Eligible Loans or REO
Properties have been exchanged for Agency Securities, the lesser of (1) the
amount of any Warehousing Advances outstanding against the Eligible Loans or REO
Properties backing the Agency Securities or (2) an amount equal to the Advance
Rates for the applicable types of Eligible Loans backing the Agency Securities
multiplied by the Fair Market Value of the Agency Securities; and (c) with
respect to cash, the amount of the cash.
"Warehousing Commitment" means the obligation of Lender to make Warehousing
Advances to Borrower under Section 1.1.
"Warehousing Commitment Amount" means $150,000,000.
"Warehousing Commitment Fee" has the meaning set forth in Section 3.5.
"Warehousing Fee" has the meaning set forth in Section 3.7.
"Warehousing Maturity Date" has the meaning set forth in Section 1.2.
14
"Warehousing Note" has the meaning set forth in Section 1.3.
"Wet Settlement Advance" means with respect to any Warehousing Advance, the time
from the date the Warehousing Advance is made until the date of Lender's receipt
of the Collateral Documents required by Article 2 and the Exhibits and documents
referenced in that Article.
"Wire Disbursement Account" means a demand deposit account maintained at the
Funding Bank in Lender's name for clearing wire transfers requested by Borrower
to fund Warehousing Advances.
"Wire Fee" has the meaning set forth in Section 3.7.
12.2. OTHER DEFINITIONAL PROVISIONS; TERMS OF CONSTRUCTION
12.2 (a) Accounting terms not otherwise defined in this Agreement have the
meanings given to those terms under GAAP.
12.2 (b) Defined terms may be used in the singular or the plural, as the context
requires.
12.2 (c) All references to time of day mean the then applicable time in Chicago,
Illinois, unless otherwise expressly provided.
12.2 (d) References to Sections, Exhibits, Schedules and like references are to
Sections, Exhibits, Schedules and the like of this Agreement
unless otherwise expressly provided.
12.2 (e) The words "include," "includes" and "including" are deemed to be
followed by the phrase "without limitation."
12.2 (f) Unless the context in which it is used otherwise clearly requires,
the word "or" has the inclusive meaning represented by the phrase
"and/or."
12.2 (g) All incorporations by reference of provisions from other agreements are
incorporated as if such provisions were fully set forth into this
Agreement, and include all necessary definitions and related provisions
from those other agreements. All provisions from other agreements
incorporated into this Agreement by reference survive any termination
of those other agreements until the Obligations of Borrower under this
Agreement, the Warehousing Note and the Sublimit Note are irrevocably
paid in full and the Warehousing Commitment is terminated.
12.2 (h) All references to the Uniform Commercial Code shall be deemed to be
references to the Uniform Commercial Code in effect on the date of this
Agreement in the applicable jurisdiction.
12.2 (i) Unless the context in which it is used otherwise clearly requires, all
references to days, weeks and months mean calendar days, weeks and
months.
END OF ARTICLE 12
15
16
EXHIBIT E
COMPLIANCE CERTIFICATE
This Compliance Certificate is submitted to the Lender pursuant to Section
7.2(c) of the First Amended and Restated Warehousing Credit and Security
Agreement among OAK STREET MORTGAGE LLC ("Oak ▇▇▇▇▇▇ ▇▇▇"), ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇ LLC ("Oak Street of TN") and OAK STREET MORTGAGE, INC. ("Oak Street
Inc.;" Oak Street LLC, Oak Street of TN and Oak Street Inc. are collectively
referred to as the "Borrowers") and RESIDENTIAL FUNDING CORPORATION ("Lender"),
dated as of August 31, 2002 (as amended, restated, renewed or replaced,
"Agreement"). Capitalized terms and Section numbers used in this Compliance
Certificate without further definition refer to those terms and Sections set
forth in the Agreement.
The undersigned hereby certifies to Lender that as of the close of business on ,
_________20__ ("Statement Date") and with respect to Oak Street LLC (and Oak
Street LLC's Subsidiaries on a consolidated basis):
1. As demonstrated by the attached calculations supporting this Compliance
Certificate, Borrowers satisfied the covenants set forth in Sections
8.8, 8.9, 8.10, 8.11 and 8.12, or, if Borrowers did not satisfy any of
those covenants, a detailed explanation is attached setting forth the
nature and the period of existence of any Default or Event of Default
and the action Borrowers have taken, are taking or propose to take with
respect to that Default or Event of Default.
2. Borrowers have not transferred (by sale or otherwise), pledged or
granted a security interest in any Servicing Contracts, except as
permitted under the terms of the Agreement.
3. Borrowers have not made any payments in advance of the scheduled
maturity date on any Subordinated Debt, and Borrowers have not incurred
any additional Debt that must be subordinated under the terms of
Section 7.11.
4. Borrowers were in full compliance with all applicable Investor net
worth requirements, and in good standing with each Investor.
5. I have reviewed the terms of the Agreement and have made, or caused to
be made under my supervision, a review in reasonable detail of the
transactions and conditions of Borrowers (and Borrowers' Subsidiaries).
That review has not disclosed, and I have no other knowledge of the
existence of, any Default or Event of Default, or if any Default or
Event of Default existed or exists, a detailed explanation is attached
setting forth the nature and the period of existence of the Default or
Event of Default and the action Borrowers have taken, are taking or
propose to take with respect that Default or Event of Default.
6. Pursuant to Section 7.2 of the Agreement, enclosed are the financial
statements of Oak Street LLC as of the Statement Date. The financial
statements for the period ending on the Statement Date fairly present
the financial condition and results of operations of Oak Street LLC
(and Oak Street LLC's Subsidiaries on consolidated basis) as of the
Statement Date.
Dated:__________________________ OAK STREET MORTGAGE LLC,
a Delaware limited liability company
By:_________________________________
Its:________________________________
17
CALCULATIONS SUPPORTING COMPLIANCE CERTIFICATE
Borrower Name: OAK STREET MORTGAGE LLC (and its Subsidiaries)
Statement Date: _______________________________
All financial calculations set forth in this Compliance Certificate are as of
the Statement Date.
1. TANGIBLE NET WORTH:
A. Net Worth is:
Excess of total assets over total liabilities: $_______
Plus: Subordinated Debt not due within one
year of the Statement Date (or any
portion of that Subordinated Debt): $_______
Minus: Advances or loans to members, managers
or Affiliates or any shareholder,
director or officer of any manager,
member or Affiliate: $_______
Minus: Investments in Affiliates: $_______
Minus: Assets pledged to secure liabilities
not included in Debt: $_______
Minus: Intangible assets: $_______
Minus: Other assets that HUD deems non-acceptable: $_______
Minus: Other assets that Lender deems unacceptable: $_______
TANGIBLE NET WORTH $_______
B. Requirements of Section 8.9 of the Agreement:
OAK STREET LLC'S TANGIBLE NET WORTH MUST BE AT LEAST (A)
$7,500,000 THROUGH JUNE 30, 2003, AND (B) AFTER JUNE 30, 2003
(ADJUSTED SEMI-ANNUALLY THEREAFTER), (1) $7,500,000 PLUS (2)
50% OF OAK STREET LLC'S NET INCOME AFTER TAXES AND
DISTRIBUTIONS TO MEMBERS FOR TAX PURPOSES (IF POSITIVE) FOR
EACH SIX-MONTH PERIOD ENDED ON JUNE 30 OR DECEMBER 31 OF ANY
YEAR, BEGINNING JUNE 30, 2003. ADJUSTMENTS WILL OCCUR ON THE
FIRST BUSINESS DAY AFTER THE END OF EACH SIX-MONTH PERIOD.
C. COVENANT SATISFIED: _____ COVENANT NOT SATISFIED: ______
18
2. DEBT
A. Oak Street LLC's total liabilities calculated in
accordance with GAAP, plus all indebtedness or
other obligations for borrowed money or for the
deferred purchase price of property or services: $_______
Minus: Deferred taxes arising from capitalized
excess servicing fees and capitalized
servicing rights: $_______
Minus: Subordinated Debt not due within one year
of the Statement Date (or any portion of
that Subordinated Debt): $_______
B. DEBT (Total): $_______
Minus: Debt arising under Hedging Arrangements
(to the extent of assets arising under
those Hedging Arrangements): $_______
C. DEBT (adjusted for Hedging Arrangements): $_______
3. LEVERAGE RATIO
A. The ratio of Debt to Tangible Net Worth is
(2.C. to 1.A.): to 1 __________to 1
B. Requirements of Section 8.8 of the Agreement:
OAK STREET LLC'S LEVERAGE RATIO MUST NOT EXCEED 20 TO 1.
C. COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ____
4. MINIMUM CASH AND CASH EQUIVALENTS
A. Amount of Cash: $_______
B. Cash Equivalents:
Funds on deposit in a U.S. Bank: $_______
Investment grade commercial paper: $_______
Money market funds: $_______
Warehousing Buydown: $_______
High grade marketable securities with a
maturity of 270 days or less: $_______
C. TOTAL CASH AND CASH EQUIVALENTS:
D. Requirements of Section 8.11 of the Agreement:
OAK STREET LLC'S CASH AND CASH EQUIVALENT MUST NOT AT ANY TIME
BE LESS THAN $1,500,000.
E. COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ____
5. TRANSACTIONS WITH AFFILIATES
19
A. Loans, advances, and extensions of credit by
any Borrower to its Affiliates during the
current fiscal year: $_______
B. Capital contributions made by any Borrower to its
Affiliates during the current fiscal year: $_______
C. Transfers, sales, pledges, assignments or other
dispositions of assets made by any Borrower or
on behalf of its Affiliates: $_______
D. Management fees paid by any Borrower to Affiliates
during the current fiscal year: $_______
E. Requirements of Section 8.12 of the Agreement:
1. BORROWER MAY NOT MAKE ANY LOANS, ADVANCES, EXTENSIONS OF
CREDIT OR CAPITAL CONTRIBUTIONS TO ITS AFFILIATES.
COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ____
2. BORROWER MAY NOT TRANSFER, SELL, PLEDGE, ASSIGN OR MAKE ANY
OTHER DISPOSITION OF ASSETS TO OR ON BEHALF OF ITS
AFFILIATES.
COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ____
3. BORROWER MAY NOT MERGE OR CONSOLIDATE WITH, OR PURCHASE OR
ACQUIRE ANY ASSETS FROM, ITS AFFILIATES.
COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ____
4. BORROWER MAY NOT PAY MANAGEMENT FEES TO OR ON BEHALF OF ITS
AFFILIATES.
COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ____
6. RATIO OF CURRENT ASSETS TO CURRENT LIABILITIES
A. Current Assets:
Plus: Cash: $_______
Plus: Temporary Investments: $_______
Plus: Mortgage Loans and Mortgage-backed
Securities held for sale (net of
any loan loss reserves: $_______
Plus: Accounts and accrued interest
receivable (net of any allowance
for doubtful accounts): $_______
20
Plus: Servicing advances made on behalf
of mortgagors: $_______
Minus: Loans/advances to or receivables
from employees, officers or owners
and Affiliates: $_______
Minus: Deferred assets, other than prepaid
items for insurance, taxes and
rent: $_______
Minus: Properties or assets located
outside the continental United
States and Canada: $_______
Total Current Assets: $_______
B. Current Liabilities (liabilities or any portion maturing
within 1 year):
Plus: Warehouse notes payable: $_______
Plus: Other notes payable: $_______
Plus: Accounts payable and accrued
expenses: $_______
Total Current Liabilities: $_______
C. The ratio of Current Assets to Current Liabilities
is: $_______
D. Requirements of Section 8.10 of the Agreement:
OAK STREET LLC's RATIO OF CURRENT ASSETS TO CURRENT
LIABILITIES MUST NOT BE LESS THAN 1 TO 1.
E. COVENANT SATISFIED: ____ COVENANT NOT SATISFIED: ____
7. LOAN PRODUCTION VOLUME
Loan Type Number of Mortgage Loans Aggregate Mortgage Note Amount
------------------------------------------------------------------------------------------
Prime Mortgage Loans
------------------------------------------------------------------------------------------
Subprime Mortgage Loans
------------------------------------------------------------------------------------------
High LTV Mortgage Loans
------------------------------------------------------------------------------------------
Repurchased Mortgage Loans
------------------------------------------------------------------------------------------
Nonperforming Mortgage Loans
------------------------------------------------------------------------------------------
REO Properties
------------------------------------------------------------------------------------------
21
Exhibit H
ELIGIBLE LOANS AND OTHER ASSETS
LIMITATIONS ON WAREHOUSING ADVANCES AGAINST MORTGAGE LOANS
Lender's obligation to make Warehousing Advances under the Agreement is subject
to the following limitations:
1. No Warehousing Advance will be made against any Mortgage Loan
that has been previously sold or pledged to obtain financing (whether
or not such financing constitutes Debt) under another warehousing
financing arrangement or a Gestation Agreement.
2. No Warehousing Advance will be made against any Mortgage Loan
that Lender believes may be based on untrue, incomplete or inaccurate
or fraudulent information or may otherwise be subject to fraud.
3. No Warehousing Advance will be made against any Mortgage Loan
if any of the limitations set forth in this Exhibit H would be exceeded
after giving effect to the Warehousing Advance.
4. No Warehousing Advance will be made against any Mortgage Loan
with an original principal balance in excess of $2,000,000.
SUBLIMITS
These general limitations apply to all Warehousing Advances against Eligible
Loans:
1. Wet Settlement Advances: 40% of the Warehousing Commitment Amount
2. Third Party Originated Loans: Not Permitted
ELIGIBLE LOANS AND TERMS OF WAREHOUSING ADVANCES
Subject to compliance with the terms and limitations set forth below and the
terms, representations and warranties and the covenants in the Agreement, each
of the following Mortgage Loans is an Eligible Loan for purposes of the
Agreement:
1. PRIME MORTGAGE LOAN
(a) Definition: A First Mortgage Loan or a Second Mortgage Loan with the
following characteristics:
(i) For a First Mortgage Loan:
A. Underwritten substantially in accordance with ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac underwriting standards (except as to maximum
amount); and
B. Loan-to-Value Ratio not to exceed 80% or, if the Loan-to-Value
Ratio exceeds 80%, the amount by which the Prime Mortgage Loan
exceeds 80% is insured by or subject to a commitment for
mortgage insurance; or
C. A Government Mortgage Loan.
22
(ii) For a Second Mortgage Loan:
A. The credit of the obligor has been underwritten substantially in
accordance with ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac underwriting
standards; and
B. Loan-to-Value Ratio not more than 100%.
(b) Interest Rate:
(i) Other Mortgage Loans: 1.00% over LIBOR
(ii) Aged Mortgage Loans: 1.50% over LIBOR
(c) Prime Sublimit: 12% of the Warehousing Commitment
Amount
(i) First Mortgage Loan: 100% of the Prime Sublimit
(ii) Second Mortgage Loan: 50% of the Prime Sublimit
(iii) Aged Mortgage Loan: $600,000 of the Prime Sublimit
(d) Committed/Uncommitted:
(i) First Mortgage Loan: Purchase Commitment required
(ii) Second Mortgage Loan: Purchase Commitment not required
(e) Wet Settlement Advances: Permitted
(f) Aged Mortgage Loans: Permitted for First Mortgage Loans only
(g) Committed Advance Rate:
(i) First Mortgage Loan: * % of the lesser of (i) the Mortgage
Note Amount or (ii) the Committed
Purchase Price
(ii) RFC Mortgage Loan: * % of the lesser of (i) the Mortgage
Note Amount or (ii) the Committed
Purchase Price
(h) Uncommitted Advance Rate:
(i) Second Mortgage Loan: * % of the Mortgage Note Amount
(i) Standard Warehouse Period: 90 days
(j) Aged Warehouse Period: 120 days
(k) Required Prepayments: All Mortgage Loans in warehouse for 45
days will be reduced by 2% of the
Mortgage Note Amount.
On the day a Pledged Loan becomes an
Aged Mortgage Loan, the Advance against
such Pledged Loan must be (a) repaid
in full, to the extent the Aged
Mortgage Loan Sublimit would
23
be exceeded, or (b) otherwise, reduced
by 5% of the Mortgage Note Amount.
(l) Loan Package Fee: $20.00; however, should Borrower opt to
use MERS, the Loan Package Fee will
be $15.00.
(m) Wire Fee: $7.50
2. SUBPRIME MORTGAGE LOAN
(a) Definition: A First Mortgage Loan or a Second Mortgage Loan that has a risk
rating of "A"-, "B" or "C" (determined using underwriting standards that
comply with industry standards in the sole judgment of the Lender), and
that is acceptable for purchase by at least two Investors.
(b) Interest Rate:
(i) Other Mortgage Loans: 1.00% over LIBOR
(ii) Aged Mortgage Loans: 1.50% over LIBOR
(c) Subprime Sublimit: 100%
(i) First Mortgage Loan: 100% of the Subprime Sublimit
(ii)Second Mortgage Loan: 20% of the Subprime Sublimit
(ii)Aged Mortgage Loan: 5% of the Subprime Sublimit
(d) Committed/Uncommitted: Purchase Commitment not required
(e) Wet Settlement Advances: Permitted
(f) Aged Mortgage Loans: Permitted for First Mortgage Loans only
(g) Committed Advance Rate:
(i) RFC Mortgage Loan: * % of the lesser of (i) the Mortgage
Note Amount or (ii) the Committed
Purchase Price
(h) Uncommitted Advance Rate:
(i) First Mortgage Loan: * % of the Mortgage Note Amount
(ii)Second Mortgage Loan: * % of the Mortgage Note Amount
(i) Standard Warehouse Period: 90 days
(j) Aged Warehouse Period: 180 days
(k) Required Prepayments: All Mortgage Loans in warehouse for
60 days will be reduced by 2% of the
Mortgage Note Amount.
On the day a Pledged Loan becomes an
Aged Mortgage Loan, the Advance against
such
24
Pledged Loan must be (a) repaid in
full, to the extent the Aged Mortgage
Loan Sublimit would be exceeded, or (b)
otherwise, reduced by 5% of the
Mortgage Note Amount. Thereafter, the
Advance must be reduced by 5% of the
Mortgage Note Amount.
(m) Loan Package Fee: $20.00; provided, however, should
Borrower opt to use MERS, the Loan
Package Fee will be $15.00.
(n) Wire Fee: $7.50
3. HIGH LTV MORTGAGE LOAN
(a) Definition: A Second Mortgage Loan that meets the 125 Loan Program
eligibility criteria set forth in the GMAC-RFC Client Guide and for which
an AssetWise Certificate has been issued, and a First Mortgage Loan that
meets the Home Solution Program criteria and for which an AssetWise
Certificate has been issued.
(b) Interest Rate: 2.00% over LIBOR
(c) Committed/Uncommitted: Purchase Commitment from Lender
required
(d) Wet Settlement Advances: Permitted
(e) Aged Mortgage Loans: Not Permitted
(f) HighLTV Sublimit: $1,000,000
(g) Committed Advance Rate:
(i) First Mortgage Loan: * % of the lesser of (i) the Mortgage
Note Amount or (ii) the Committed
Purchase Price
(ii)Second Mortgage Loan: * % of the lesser of (i) the Mortgage
Note Amount or (ii) the Committed
Purchase Price
(h) Standard Warehouse Period: 45 days
(i) Loan Package Fee: $20.00; provided, however, should
Borrower opt to use MERS, the Loan
Package Fee will be $15.00.
(j) Wire Fee: $7.50
4. REPURCHASED MORTGAGE LOAN/NONPERFORMING MORTGAGE LOAN/REO PROPERTY
(a) Definitions:
Repurchased Mortgage Loan: A Mortgage Loan that has been repurchased from
an Investor or a Mortgage Pool pursuant to a Servicing Contract.
Nonperforming Mortgage Loan: A First Mortgage Loan or a Second Mortgage
Loan that is not a High LTV Mortgage Loan and (i) is in the process of
foreclosure, (ii) is 60 days or more delinquent or (iii) with respect to
which the Warehousing Period has expired.
25
REO Property: An improved real property containing a 1- to 4-family
residence, which property is owned by Borrower as the result of a
foreclosure proceeding or the acceptance of a deed in lieu of foreclosure,
or has been purchased from an Investor to satisfy a repurchase obligation
of Borrower to the Investor.
(b) Interest Rate: 3.25% over LIBOR
(c) Sublimit: $2,400,000
(d) Committed/Uncommitted: Purchase Commitment not required
(e) Wet Settlement Advances: Not Permitted
(f) Aged Mortgage Loans: Not permitted
(g) Advance Rate for Repurchased and
Nonperforming Mortgage Loans: * % of the lesser of (i) Lender's
initial Warehousing Advance, (ii) the
unpaid principal balance, (iii) the
repurchase price, or (iv) the Appraised
Property Value or BPO Value
(h) Advance Rate for REO Property: The lesser of (i) * % Lender's initial
Warehousing Advance or (ii) * % of the
Appraised Property Value or BPO Value
(i) Required Prepayments for
Repurchased and Nonperforming
Mortgage Loans: 5% of the Mortgage Note Amount paid
each month occurring more than 90
days after the date of the Warehousing
Advance
(j) Required Prepayments for
REO Property: 5% of the initial Warehousing Advance
against an REO Property paid each month
occurring more than 90 days after the
date of the Warehousing Advance
(k) Standard Warehouse Period: 365 days
(l) Loan Package Fee: $20.00; provided, however, should
Borrower opt to use MERS, the Loan
Package Fee will be $15.00.
(m) Wire Fee: $7.50
26