FIRST MORTGAGE CORPORATION WHOLE LOAN PURCHASE AGREEMENT FHA/VA LOANS

Transcription

1 FIRST MORTGAGE CORPORATION WHOLE LOAN PURCHASE AGREEMENT FHA/VA LOANS This Whole Loan Purchase Agreement is made as of, 20 (the Agreement") by and between, a corporation duly organized and validly existing under the laws of, with its principal place of business at ("Seller") and FIRST MORTGAGE CORPORATION, a California corporation, duly organized and validly existing under the laws of California, with its principal place of business at 1131 West Sixth Street, Ontario, California ("Buyer"). From time to time, Buyer may desire to buy from Seller and Seller may desire to sell to Buyer certain loans and the servicing rights thereto, on the terms and conditions set forth herein and as may be amended as provided herein. Now, therefore, the parties hereto, in consideration of the terms, conditions, promises and agreements hereafter set forth, and other good and valuable consideration, the receipt and sufficiency of which is hereby expressly acknowledged, mutually warrant, covenant and agree as follows: I. Loan Eligibility Each loan will conform to the following requirements: 1. Loans must be originated only by the Seller, a wholly-owned subsidiary of Seller, another FHA/VA loan correspondent sponsored by the Seller, an FHA/VA-approved third party with which Seller has an FHA/VA agency relationship, or any qualified third party approved in advance in writing by Buyer. 2. Each loan must (a) be fully secured by a first lien mortgage on a 1-4 family dwelling ("Property"); be insured by the Federal Housing Administration ("FHA") or guaranteed by VA so as to be eligible for inclusion in pools of mortgage-backed securities fully guaranteed by the Government National Mortgage Association ("Ginnie Mae"); and (c) meet all requirements of FHA/VA and Ginnie Mae for mortgage insurance and pool eligibility, respectively. Additionally, loans must be eligible for purchase by the Federal National Mortgage Association (Fannie Mae). 3. On each sale date, each loan must be paid current through and including the month of the sale date and will be purchased on a current month due basis through the fifteenth of each month. If a loan is purchased after the 15th day of any month, the next payment due will be deducted from the purchase price and the principal balance amortized to reflect that the next payment has been applied. II. Commitment to Purchase, Price and Terms 1. When Seller offers a loan for sale to Buyer, Buyer may issue to Seller a written commitment to purchase that loan for a purchase price established by Buyer. Loans submitted to Buyer must comply (a) with this Agreement; and (b) with the terms and conditions of the related purchase commitment. 2. Upon entering into a commitment for the sale of a loan, the parties will agree to a purchase price, which will be expressed as a percentage of the principal amount of the loan to be sold. 3. Buyer agrees to guarantee the purchase price, as set forth above, for a time period agreed to at the time of commitment. Seller agrees to close each such loan and to deliver same to Buyer within said period. Buyer agrees to purchase each individual loan within seven (7) Page 1 of 7

2 working days of delivery provided that all of the terms and conditions of this Agreement, of any pertinent Announcements and of the related purchase commitment have been met. 4. Any loans which by agreement of Seller and Buyer are subject to mandatory delivery will be subject to this Agreement and such additional terms and conditions reasonably required by Buyer. 5. Seller agrees to sell to Buyer a minimum principal amount of two million dollars ($2,000,000) in aggregate per month. If Seller fails to sell the minimum principal amount, Buyer reserves the right to terminate the Agreement. III. Delivery of Documents 1. Loans shall be deemed delivered to Buyer upon receipt by Buyer, within the commitment period set forth on the related Exhibit A, of a loan package complying with the requirements set forth in Section I of this Agreement. 2. All loan documentation delivered by Seller to Buyer under this Agreement shall comply with (a) prudent mortgage banking standards; (b) all applicable requirements of FHA/VA and Ginnie Mae; and (c) all other conditions reasonably required by Buyer. 3. Complete final documentation including, without limitation, the Mortgage Insurance Certificate or Guaranty, the recorded Mortgage/Deed of Trust; recorded assignment and final title policy must be delivered to Buyer within 60 days of the date the loan is purchased by Buyer. Seller may request a written extension of 60 days to provide the missing documentation with an explanation reasonably acceptable to Buyer for each file. IV. Seller Representations, Warranties and Covenants Seller represents and warrants each time a loan is sold hereunder that, to the best of its knowledge, the following shall all be true and correct on the date of Buyer s purchase of each such loan: 1. Each and every note, mortgage and all other loan documentation has been validly executed and contains no error, omission, misrepresentation or incorrect statement or information. 2. No brokerage commissions are due or payable with respect to any loan. 3. Each of the documents, notes and mortgages delivered is true, correct and complete and no term or provision thereof has been waived, altered or modified in any respect, and all the terms thereof are in full force and effect; the lien has not been subordinated in any manner to any other mortgage or encumbrance; no portion of the mortgaged premises has been released from the lien thereof; nor has any satisfaction, discharge, release or other similar instrument been executed or recorded with respect to such loan. 4. Each mortgage is insured to be a good and valid first lien by a fully paid, freely transferable ALTA Mortgagee's Policy of Title Insurance. 5. Each loan has been made in compliance with all applicable federal, state and local laws, rules and regulations including, but not limited to the following laws and the related regulations: The Truth in Lending Act; the Fair Credit Reporting Act; the Flood Disaster Protection Act; the Real Estate Settlement Procedures Act; the Equal Credit Opportunity Act; the Fair Housing Act; Home Ownership and Equity Protection Act of 1994 (HOEPA); the Home Mortgage Disclosure Act; and all other state and federal acts, laws and regulations in effect and applicable to the loan on the date of purchase by Buyer, all as are or may be amended. Page 2 of 7

3 6. The Seller is and shall continue to be duly organized, validly existing and in good standing under the laws of its state of organization during the time of its activities with respect to the origination of mortgage loans. The Seller has and shall continue to maintain in full force and effect all required FHA/VA approvals, all licenses, registrations, and certifications in all appropriate jurisdictions to conduct all activities performed with respect to origination and sale of mortgages. 7. The Seller has all requisite power, authority and capacity to enter into this Agreement and any related commitments to sell loans and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and any related agreements, instruments or commitments has been duly and validly authorized by all necessary action. 8. The Seller has full right and title to sell the notes and mortgages referred to above to Buyer free and clear of all liens and encumbrances. 9. Each FHA/VA Mortgage Loan is in compliance with this Agreement, all other requirements or overlays set by Buyer, GNMA Requirements and all applicable laws, rules, requirements and guidelines that are applicable to FHA/VA Mortgage Loans including, without limitation, HUD Mortgagee Letters, HUD Handbooks, HUD Guidelines, HUD Notices, HUD Issuances, the VA Lender s Handbook, VA Loan Guarantee Releases and VA Loan Guarantee Circulars. 10. If the Mortgage Loan is an FHA/VA Mortgage Loan, Seller hereby makes to Buyer the representations and warranties contained in the GNMA Requirements with respect to each such FHA/VA Mortgage Loan. 11. In the case of an FHA Mortgage Loan, there is an FHA Approval in effect for such FHA Mortgage Loan, all conditions of the FHA Approval have been met, and the one-time mortgage insurance premium required by FHA, if applicable, has been paid, as evidenced by a mortgage insurance certificate issued by HUD. In the case of a VA Mortgage Loan, there is a VA Approval in effect for such VA Mortgage Loan, all conditions of the VA Approval have been met, and the funding fee required by VA, if applicable, has been paid in full, as evidenced by a loan guaranty certificate issued by VA. 12. The Mortgage Loan is not subject to any state or local law, rule, regulation or ordinance that governs, addresses, regulates or prohibits predatory lending, high cost home loans, high rate home loans, high fee home loans, or similar matters. 13. Seller further represents and warrants to Buyer as of the date of this Agreement, and as of each Purchase Date, as follows: Binding Agreement. This Agreement has been duly executed and delivered by Seller and constitutes a legal, valid and binding agreement of Seller, enforceable in accordance with its terms, subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, or other similar laws affecting creditor s rights generally from time to time in effect, and to general principles of equity. No Government Consent. No governmental consent or approval is required with respect to Seller s execution, delivery or performance of this Agreement. Litigation. There is no action, suit, proceeding or government investigation pending or, to the knowledge of Seller, threatened against Seller which, if adversely determined, would adversely affect Seller s business or its performance under this Agreement. Financial Condition. All financial statements provided by Seller to Buyer have been prepared in accordance with generally accepted accounting principles and reflect Seller s financial Page 3 of 7

4 condition as of the date thereof. There have been no material adverse changes in Seller s financial condition since that date. Insurance Coverage. Seller has in place such errors and omissions, fidelity bond and general liability insurance policies, providing coverage in such amounts as may be required from time to time by Buyer at its sole discretion. 14. The foregoing statements and representations run directly from Seller to Buyer notwithstanding any intermediate assignments of the mortgage loans. 15. The foregoing representations and warranties shall survive Buyer's purchase of mortgage loans and termination of this Agreement. 16. Without Buyer's consent Seller will not directly or indirectly solicit any refinance of any loan sold to Buyer hereunder during the twelve (12) month period following sale of the loan to Buyer or violate Ginnie Mae's prohibition of "planned refinances. V. Indemnification and Repurchase, Right to Delivery and Specific Performance 1. a) Seller shall indemnify and hold Buyer harmless from any and all loss, injury, damage and/or liability arising from or related to, any breach of Seller's covenants, representations or warranties under this Agreement or any willful or negligent act or omission of Seller, its employees or agents in connection with any loan sold by Seller hereunder. This indemnity covers, without limitation, damages and liability arising from claims, suits, demands or judgments of any borrower, investor, subsequent purchaser of a loan or other third party, reasonable attorney fees, appraiser's costs, investigator's fees, expert's fees or any other cost or disbursement made by Buyer in connection with any indemnified matter. b) Seller shall indemnify and hold Buyer harmless from all liability, loss, damage or expense which results from any obligation Buyer may incur to repurchase any loan from an investor in or subsequent purchaser of a loan, sold to Buyer by Seller, as a result of (i) any defect, error or omission in connection with Seller's origination of a loan; (ii) the allegation of such defect, error or omission by an investor or purchaser, regardless of the allegation s correctness or accuracy; or (iii) any allegation of a breach of any of the representations or warranties made herein by Seller. 2. Seller agrees to repurchase any loan within 30 days of Buyer's demand if any of the following occurs: a) The FHA's Mortgage Insurance Certificate ("MIC") or VA guaranty related to a loan is not received by Buyer within 60 days after the date that the loan is purchased. b) The loan fails to qualify for inclusion in a Ginnie Mae pool or fails to receive any custodian's final certification. c) The loan file is incomplete or reflects or results in a breach of this Agreement, an Announcement or any purchase commitment. d) Any information submitted by Seller or any statement, report or document furnished by Seller to Buyer hereunder was incomplete, inaccurate, false or misleading in any material respect when made or delivered, regardless of whether Seller had or should have had knowledge of the same at the time. This includes, without limitation, any information in any loan application submitted by any Borrower; any appraisal or evaluation report; any credit report; any title search or title insurance policy; and any condominium or PUD warranties made by Seller to Buyer. Page 4 of 7

5 e) The Mortgage Loan payment due on the first payment due date after the Purchase Date is Delinquent. f) Any party to whom Buyer sells a Mortgage Loan requests Buyer to repurchase the Mortgage Loan and Seller is unable to provide a defense which persuades such party to withdraw the repurchase request. g) The Mortgage Loan is unmarketable by Buyer for any reason including, without limitation, material errors regarding data validation. 3. Seller s repurchase obligation under this Section shall survive (a) any transfer or grant of any interest in or sale of the Mortgage Loan by Buyer or its affiliates or any of their successors or assigns; (b) any termination of this Agreement; and (c) any issuance of a Termination of Purchase Agreement Component Advice for Delegated Underwriting. Seller s obligation to repurchase Mortgage Loans under this Section shall be in addition to and not in replacement of Seller s obligation to repurchase Mortgage Loans under any other applicable law. 4. The repurchase price shall be equal to the sum of (a) the greater of par or the price Buyer paid Seller for such loan, (b) all accrued, unpaid interest and late charges, (c) all escrow advances made by Buyer, and (d) all other miscellaneous expenses actually incurred by Buyer with respect to the related loan. 5. Seller's failure to comply with the repurchase request within 30 days from the date of demand entitles Buyer to withhold from or set off against any amounts due from Buyer to Seller or any amounts Seller has deposited with the Buyer. 6. Upon Seller's insolvency, repudiation or failure to perform its obligations, Buyer may proceed immediately to take possession of all documents relating to loans belonging to Seller which could qualify for sale to Buyer pursuant to Seller's commitments, by its own acts, order or seizure, or such other remedy as may be available at law or equity. 7. Seller grants Buyer a right to specific performance of any of Seller's obligations hereunder including, without limitation, Seller's repurchase obligations. This right is in addition to any and all rights and remedies available to Buyer under law or in equity. 8. Subject to Buyer's consent, which it may withhold in its sole discretion, Seller may agree to indemnify Buyer in lieu of repurchase by depositing with Buyer a cash foreclosure expense deposit (the "Deposit") and a foreclosure processing fee, both in amounts required by Buyer. Buyer will then complete the foreclosure process and file the claim with FHA/VA. Upon receipt of the final settlement amount, Buyer will promptly furnish Seller a full accounting of the claim and either (a) refund any unused portion of the Deposit or (b) invoice the Seller for prompt payment of any excess expenses over the Deposit. For a loan to be eligible for indemnification, Buyer must be in receipt of a valid and enforceable MIC or Guaranty, as appropriate, and a final title insurance policy showing the property to be free and clear of any liens or encumbrances superior to the security interest then held by Buyer. 9. If a loan sold hereunder is paid in full prior to the end of the sixth full calendar month after it is purchased by Buyer, Seller shall promptly refund to Buyer all amounts paid to Seller by Buyer in excess of par, plus the full amount of any premium paid to Seller related to such loan. VI. Power of Attorney With respect to each Mortgage Loan sold by Seller to Buyer under this Agreement, Seller hereby constitutes and appoints Buyer its true and lawful Attorney-In-Fact, and in its name, place and stead and for its use and benefit hereby authorizes such Attorney-In-Fact, through any of its duly appointed officers, from time to time to execute and/or acknowledge in writing, or by facsimile, or Page 5 of 7

6 otherwise, all documentation reasonably necessary and appropriate for any one or more of the following: (a) the substitution of any trustee in any Mortgage; (b) the assignment of any Mortgage in the name of Seller to Buyer, and the recordation of any such Mortgage or assignment; (c) the endorsement of any checks, drafts or other payment instruments made payable to Seller with respect to any such Mortgage Loan; (d) the modification, amendment or correction of any Note, Mortgage, Closing Package document or Post-Closing Document relating to any such Mortgage Loan; and (e) the preparation, execution and/or delivery of such other documentation in the name of Seller as Buyer shall determine to be reasonably necessary and appropriate to carry out the transactions contemplated by this Agreement and/or the subsequent sale of any such Mortgage Loan to Buyer. Seller gives and grants to such Attorney-In-Fact full power and authority to do and perform each and all of the foregoing acts, as fully as Seller might or could do so on its own behalf. The power of attorney contained in this Section is coupled with an interest, is irrevocable, and shall survive any termination of this Agreement. Upon the request of Buyer, Seller shall execute and acknowledge such additional powers of attorney as may be reasonably necessary to enable Buyer, as such Attorney-In-Fact, to perform any of the actions described in this Section. VI. Repurchase of Loan In the event that Buyer shall demand that seller repurchase a loan sold to Buyer by Seller pursuant to this Agreement or claim a right of indemnity for a loss suffered in connection with a loan sold to Buyer by Seller pursuant to this Agreement, the herein above set forth terms and provisions of sections IV and V shall govern, provided any such loan is then covered by the appropriate mortgage insurance. However, in the event any loan, which is the subject of any such demand or claim, shall fail to be covered by the appropriate mortgage insurance or if such mortgage insurance coverage shall be denied or rescinded, then, and in such event, Seller agrees to repurchase any such loan or pay any such indemnity claim without qualification or condition. VII. General Provisions 1. Buyer's failure to enforce any provision of this Agreement shall not be deemed a waiver of that or any other provision with respect to that or any other transaction with Buyer. 2. Seller's rights and obligations hereunder are not assignable or delegable without Buyer's prior written consent, which it may withhold in its sole discretion. 3. The terms and conditions of this Agreement shall be governed by, and construed and enforced in accordance with applicable federal law and the laws of the State of California. Buyer and Seller agree that the jurisdiction and venue for any litigation arising in relation to this Agreement shall be the County of San Bernardino, State of California. 4. Time is of the essence with respect to each and every provision of this Agreement and each and every purchase commitment issued pursuant hereto. 5. Buyer or Seller may with or without cause cancel this Agreement with thirty (30) days written notice to the other party, however, such cancellation will not affect any commitment to sell or purchase loans for which written confirmation has been given to Seller prior to such notice, provided that all of the terms and conditions contained in this Agreement have been met. Should Seller breach this Agreement, Buyer may immediately terminate this Agreement and decline to purchase any other loan from Seller, whether or not a written commitment was issued. 6. Seller shall, within 90 days following the end of each fiscal year, deliver to Buyer copies of its Audited Financial Statement, evidence of fidelity bond and errors and omissions coverage at conforming amounts, and a board resolution, with specimen signatures, authorizing the individual signing this Agreement to enter into contracts on behalf of the Seller and authorizing specific individuals to bind the Seller to price commitments on loans hereunder. Page 6 of 7

7 7. Seller grants Buyer the Right of set-off. Buyer may deduct any amounts due and owing to Buyer from Seller pursuant to this Agreement from any amounts due and owing from Buyer to Seller pursuant to this Agreement. 8. The relationship between Buyer and Seller is one of independent contract. Seller is not Buyer's employee or agent. The Seller is not authorized to use the corporate name "First Mortgage Corporation" or any derivation thereof, or any of the service marks of First Mortgage Corporation, in any of the Seller's promotional or other materials. 9. In any litigation, arbitration or other proceeding by which one party seeks to enforce its rights hereunder (whether in contract, tort or both and whether at law or in equity) or seeks a declaration of any rights or obligations hereunder, the prevailing party shall be awarded reasonable attorney fees, together with costs and expenses to resolve the dispute and enforce any judgment. 10. All notices referred to herein shall be effective if mailed by registered or certified mail return receipt requested to the parties' principal place of business to the attention of a person to be designated below by Buyer and Seller. Notices shall be deemed given on the day deposited in the mail. a) Send notices to Seller to the attention of: b) Send notices to Buyer to the attention of: Ron Vargas First Mortgage Corporation 1131 West Sixth Street Ontario, CA The herein Agreement, together with any attachments hereto and called for herein, constitute the entire written agreement between the parties and supersede all prior or contemporaneous discussions and agreements whether oral or written. This Agreement cannot be changed except in a writing signed by persons authorized to sign on behalf of Buyer and Seller. This Agreement has been freely negotiated and neither party shall be deemed its drafter. Any rule of construction to the effect that ambiguities are to be construed against the drafting party shall not apply in interpreting this Agreement. IN WITNESS WHEREOF, the parties have set their hands and seals the day and year first above written. Seller Buyer FIRST MORTGAGE CORPORATION BY: NAME: TITLE: DATE: BY: NAME: TITLE: DATE: Page 7 of 7