MORTGAGE SERVICING PURCHASE
AND SALE AGREEMENT # 1
between
California United Bank
and
Temple Inland Mortgage Corporation
Dated as of: August 31, 1994
MORTGAGE SERVICING PURCHASE AND SALE AGREEMENT
This Mortgage Servicing Purchase and Sale Agreement (the
"Sale Agreement") is dated as of the 31st day of
August , 19 94 , by and between Temple Inland Mortgage
Corporation, a Nevada Corporation with offices located at 901 South
MoPac Expressway, Suite 300, Austin, TX, 78746 (the "Purchaser") and
California United Bank , a National bank,
with offices located at 16030 Ventura Blvd., Encino, California
91436-4487 (the "Seller").
W I T N E S S E T H:
WHEREAS, Seller owns the right to service approximately 853
single family mortgage loans described in Exhibit A attached hereto
(collectively the "Mortgages" or individually the "Mortgage") having
an aggregate outstanding principal balance of 118,407,520
as of May 31 , 1994 which are owned by the Federal National
Mortgage association ("FNMA") or the Federal Home Loan Mortgage
Corporation ("FHLMC") (FNMA and FHLMC are hereinafter collectively
referred to as the "Agencies" and individually as an "Agency").
WHEREAS, the rights and responsibilities of Seller with
respect to servicing the Mortgages under the Servicing Agreements
and the maintenance and servicing of the related escrow accounts
are sometimes hereinafter referred to as the "Servicing":
WHEREAS, it is contemplated that FNMA and FHLMC will
consent to the assumption of the Servicing by Purchaser and to
Seller's transfer or assignment of the Servicing to Purchaser
as provided herein; and
WHEREAS, Purchaser desires to purchase and Seller desires
to sell all right, title and interest in and to the Servicing in
accordance with the terms and conditions of this Sale Agreement;
NOW, THEREFORE, in consideration of the mutual
covenants made herein and for other good and valuable
consideration the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1.1 "Agency" or "Agencies": FNMA and/or FHLMC as applicable.
1.2 "Business Day": any day other than (a) a Saturday or
Sunday, or (b) a day on which banking institutions in the State of
Texas are authorized or obligated by law or by executive order to be
closed.
1.3 "Delinquent Mortgage": A Mortgage which is two (2)
payments or more past due, the subject matter of filed or pending
litigation, in bankruptcy, foreclosed or in foreclosure as of the
Sale Date, not including loans on Exhibit H.
1.4 "Economic Benefits": All economic rights and benefits in
connection with the Servicing, including without limitation all
rights to servicing fees, late charges, fees related to the sale or
administration of insurance policies associated with the Mortgages,
management of escrow accounts and other financial benefits.
1.5 "FHLMC": As defined in the recitals hereof.
1.6 "FNMA": As defined in the recitals hereof.
1.7 "Legal Title": All indicia of legal ownership to the
Servicing, including without limitation Agency seller/servicer
status, mortgagee-of-record status, and all other legal rights,
obligations and duties with respect to the Servicing of the
Mortgages.
1.8 "Mortgage": As defined in the recitals hereof.
1.9 "PMI": A policy of mortgage guaranty insurance issued by a
qualified insurer with respect to certain mortgage loans.
1.10 "Prior Servicer": All servicers who serviced any of the
Mortgages prior to Seller.
1.11"Purchase Price": As defined in Paragraph 3.1 hereof.
1.12 "Purchase Price Percentage": As defined in Paragraph 3.1
hereof.
1.13 "Purchaser": As defined in the recitals hereof or its
assigns.
1.14 "Recourse Mortgage": A Mortgage as to which the Agency has
recourse against the servicer, whether by way of repurchase or
reimbursement, as to expenses and/or losses, other than ordinary
Agency limitations on expense reimbursement arising out of a
mortgagor's default with respect to the Mortgage.
1.15 "Related Escrow Accounts": Mortgage escrow/impound and
suspense accounts maintained by Seller relating to the Servicing.
1.16 "Sale Agreement": As defined in the first paragraph of
this agreement.
1.17 "Sale Date": August 31, 1994
1.18 "Seller": As defined in the first paragraph of this
Agreement.
1.19 "Servicing": As defined in the recitals hereof.
1.20 "Servicing Agreements": The mortgage loan servicing
agreements applicable to the Servicing including the Agency
regulations, contracts guidelines and directives of the Agencies
pursuant to which Seller is currently servicing the Mortgages.
1.21 "Subservicing Period": As defined in paragraph 2.6(b).
1.22 "Transfer Date": October 1, 1994 with regard to FNMA loans
and October 16, 1994 with regard to FHLMC loans.
ARTICLE II
SALE AND TRANSFER OF SERVICING
2.1 Items to be Sold. Subject to, and upon the terms and
conditions of this Sale Agreement, Seller shall, as hereinafter
provided, sell, transfer, assign and deliver to Purchaser all
right, title and interest in and to (a) the Servicing and (b)
Related Escrow Accounts.
2.2 Sale Date. On the Sale Date title to the Servicing shall
pass to Purchaser and Seller shall assign to Purchaser the right to
receive the Economic Benefit on such Mortgages subject to the
compensation provided for subservicing the Mortgages as provided in
Section 2.6(b). Seller shall retain Agency servicer status and
mortgagee of record status until the Transfer Date.
2.3 Transfer Date. On the Transfer Date, Purchaser shall
assume all servicing responsibilities related to, and Seller shall
cease all servicing responsibilities related to, the Mortgages sold
pursuant to Section 2.2. Legal Title including mortgagee of
record status where applicable, shall be transferred to Purchaser.
2.4 Actions Required Prior to the Transfer Date. The
following actions shall be taken with respect to Mortgages and the
related pools for which the servicing is being sold to Purchaser:
(a) Prior to the Transfer Date, Seller shall, subject to
Agency requirements purchase all Mortgages having defects
which will prevent, recertification, and/or that are the
subject matter of filed or pending litigation materially
impairing the related Servicing or Mortgages for which a
repurchase notice or requirement by the Agency exists.
(b) On or prior to the Transfer Date (except that Seller
shall have fifteen days after the Transfer Date to prepare and
send assignments where required to the appropriate recorder's
office for recording with a certified copy to Purchaser) Seller
shall at its sole cost and expense:
(i) Assign to Purchaser by appropriate endorsements and individual
assignments, all of Seller's right, title and interest in and to the
Servicing Agreements and the pools, notes and mortgages (or deeds
of trust) related to the Servicing as required by appropriate
Investor requirements. Seller shall prepare and record the
assignments including intervening assignments if not previously
prepared and recorded. Seller shall also prepare assignments of
mortgages from Purchaser to Agencies in accord with Agency
requirements, and form reasonably acceptable to Purchaser and
Purchaser's custodian and provide such assignments and copies of
executed assignments required by the first two sentences of this
subparagraph (with a certification that each assignment has been
submitted for recording) to Purchaser. Additionally, Seller
shall deliver such other appropriately executed and authenticated
instruments of sale, assignment, transfer and conveyance to
Purchaser including limited powers of attorney as Purchaser, or its
counsel, may reasonably request in order to accomplish the transfer
to Purchaser of all of Seller's rights related to the Servicing (for
example, Seller's rights with respect to foreclosures, bankruptcies
and insurance/ guarantee claims). Such instruments provided by
Purchaser must be approved in form by the Seller and its counsel,
such approval not to be unreasonably withheld.
(ii) Cause its document custodian to deliver to Purchaser's
document custodian a complete custodial file for each Mortgage for
which documents are required by the Agency to be held by a
custodian. Each such custodial file shall contain all documents
required by applicable regulations and contractual provisions. In
the event all required documents are not contained in a custodial
file and are not provided by Seller or Seller's custodian or
otherwise satisfied in accord with Agency requirements within sixty
(60) days following written request by Purchaser, Seller, upon
Agency approval if required, shall repurchase such Mortgage as
provided in Paragraph 10.4 hereof.
(iii) With respect to each Mortgage Loan for which the servicer
maintains the original documents, create a separate document
file identified by mortgagor name and loan number containing only
the original documents, i.e. note (if held by servicer),
mortgage/deed of trust, mortgage insurance certificate, loan
guarantee certificate, complete chain of assignments and loan title
policy.
2.5 Examination of Mortgage Documents. Purchaser shall,
during the period prior to the Transfer Date, have reasonable access
during business hours to Seller's books, servicing system, records
and accounts with respect to the Mortgages. In the event
Purchaser's examination reveals that any information contained in
any of the Exhibits or the offering documents is not true and
correct in all material respects or any of the representations
contained herein concerning a Mortgage is not true and accurate,
Seller shall have ten (10) Business Days following receipt of notice
from Purchaser to cure all defects in the Mortgage or repurchase
such Mortgage as provided in Paragraph 10.4 hereof. Seller shall
provide Purchaser, within five (5) Business Days after request
with all information reasonably requested of Seller with
respect to the Mortgages and the Servicing. Any such review
or examination shall not affect Seller's obligations or
responsibilities with respect to the Servicing or information
provided as set forth in this Sale Agreement.
2.6 Obligations of Seller.
(a) Seller covenants and agrees, from the date hereof until
the Transfer Date that Seller shall pay, perform and
discharge all liabilities and obligations relating to
ownership of the Servicing and all the rights obligations and
duties with respect to the Related Escrow Accounts until the
transfer of such items on the Transfer Date.
(b) For the period between the Sale Date and the Transfer Date
("Subservicing Period"), Seller agrees to service the Mortgages
on behalf of Purchaser for a fee of $5.00 per Mortgage per
month, prorated for any partial months, with Seller retaining
ancillary income exclusive of late charges collected with
respect to the Servicing during the Subservicing Period.
During such period Seller agrees to service the Mortgages in
accordance with all applicable Agency requirements and shall at
all times service the Mortgages in accordance with all
applicable statutes, federal and state regulations, contractual
provisions of the Servicing Agreements and PMI insurers, and in
accordance with prudent mortgage banking practices. It is
understood and agreed that Servicer shall exercise the same
standard of care that it exercises in the servicing of
mortgages for its own account. Seller shall pay at
Seller's expense any compensating or paid-in-full interest
required to be paid in addition to the interest received from
the mortgagor with respect to any Mortgage for which payoff
funds are received within thirty (30) days of the Sale
Date. During the Subservicing Period Seller shall remit
servicing fees and late charges collected due the Purchaser,
together with supporting documentation, not later than the
tenth Business Day of each month covering the prior month's
servicing and shall provide Purchaser with reports and
supervised on-line system access at the Seller's offices, and
access to the servicing operation and related documentation, as
it relates to the portfolio the Purchaser is acquiring, as
Purchaser reasonably requests, to monitor the portfolio and
confirm Seller's adherence to this section during the
Subservicing Period.
2.7 Undertaking by Purchaser. Purchaser covenants and
agrees, upon acceptance of the assignment of the Servicing and
Related Escrow Accounts, to service the same in accordance with the
terms and conditions of the Servicing Agreements. Purchaser shall
not be responsible for the acts and omissions of Seller or Prior
Servicers nor for any other obligations or liabilities of Seller or
Prior Servicers or the loan originator whatsoever, except those
obligations or liabilities in the Servicing Agreements which are
assumed by Purchaser.
2.8 Approval of the Agencies. Processing of the request for
approval by the Agencies shall take place as follows:
(a) Seller shall be responsible for obtaining approvals
from the applicable Agencies. Seller shall prepare the
requests for approval in a manner to secure from the applicable
Agency, a prompt written determination of the acceptability of
the transfer of Servicing.
(b) Seller shall prepare all forms, documents and other
information requested by the Agencies.
2.9 Cooperation. The parties hereto shall, to the extent such
is reasonable and practical, cooperate with and assist each other,
as requested, in carrying out the other's covenants, agreements,
duties and responsibilities under this Sale Agreement and related
matters.
ARTICLE III
CONSIDERATION
3.1 Purchase Price. In full consideration for the sale of the
Servicing as specified in Article II hereof, and upon the terms and
conditions of this Sale Agreement Purchaser shall pay to Seller the
purchase price (the "Purchase Price") as follows:
(a) 103 basis points (1.03%) (the "Purchase Price
Percentage") of the aggregate unpaid principal balance of the
Mortgages, excluding any Delinquent Mortgages, as of the Sale
Date.
(b) It is understood and agreed that if the principal balance
of any of the Mortgages used in computing the amount of the
Purchase Price shall be found to be incorrectly computed or
that the principal balance of a Delinquent Mortgage was
included in the computation of the Purchase Price, the Purchase
Price shall be promptly and appropriately adjusted on the
basis of the Purchase Price Percentage and payment shall be
promptly made by the appropriate party.
(c) It is understood and agreed that if the service fee rate
or any other material characteristic of the aggregate mortgage
loans specified in the offering documents or the exhibits shall
be found to be incorrectly stated as to any Mortgages on the
Sale Date or the Transfer Date, the Purchase Price shall be
promptly and appropriately reduced.
(d) The Purchase Price with respect to any Mortgage for which
payoff funds are received within thirty (30) days of the Sale
Date and the Purchase Price with respect to any mortgage that a
payoff statement was sent by the seller prior to the Sale Date
for which payoff funds are received within ninety (90) days of
the Sale Date ("Payoff Refund") shall be refunded to Purchaser
as provided below.
(e) The Servicing as to any Mortgage for which Agency approval
of the transfer is not received by the Transfer Date shall not
transfer and the Purchase Price shall be reduced accordingly.
3.2 Payment. The Purchase Price shall be paid by wire
transfer of immediately available funds as follows:
(a) On the Sale Date Purchaser will pay funds to Seller which
total twenty percent (20%) of the estimated Purchase Price.
(b) Seller shall remit funds held in the various
servicing accounts and Related Escrow Accounts no later than
three (3) Business Days of the applicable Transfer Date which
may be remitted net of the collectable receivables referred to
in Section 5.19. Within three (3) Business Days after the
Seller's timely delivery in all material respects of the funds
information and data covering the Servicing and the Related
Escrow Accounts, the Purchaser shall remit an amount which when
added to the amount previously paid will equal ninety percent
(90%) of the Purchase Price applicable to that Transfer Date.
(c) The remaining ten percent (10%) of the Purchase Price less
the Payoff Refund will be remitted to the seller the latter of,
fifteen (15) business days of the receipt of all loan documents
including a copy of the assignments sent to be recorded and
unrecorded assignments as applicable, or January Seventh (7),
1995.
(d) The requirements of this paragraph concerning payment
shall not apply if the transfer of Servicing is not completed
on the Transfer Date. In the event Seller in all material
respects, has not complied with all provisions hereof, and
provided all requested information to Purchaser on or before
the Transfer Date, or in a timely manner thereafter for items
to be subsequently delivered, Purchaser's obligation to pay the
Purchase Price for any such affected Mortgage shall be
postponed until all required performance and all requested
information is provided by Seller.
3.3 Other Costs.
(a) Seller shall bear the entire cost of securing Agency
approval of the transfer of Servicing from Seller to
Purchaser including all transfer fees due to the Agencies.
(b) Seller shall comply, at its sole cost and expense, with
Purchaser's reasonable requirements pertaining to the
processing and shipping of loan files, insurance files, tax
records and collection records which are reasonably necessary
to service the Mortgages or are required to be maintained by
the Agency(s), including but not limited to the relabeling of
each loan file and creating separate document files.
ARTICLE IV
GENERAL REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Sale
Agreement Seller represents and warrants as follows (it being
acknowledged that each such representation and warranty relates to
material matters upon which Purchaser relied, and it being
understood that each such representation and warranty is made to the
Purchaser as of the Sale Date and the Transfer Date):
4.1 Organization. Seller is duly organized and validly
existing under the laws of the United States , and is qualified
or licensed to do business in all states in which its activities
with respect to the Mortgages or the Servicing require it to
be qualified or licensed.
4.2 Authority and Capacity. Seller has all requisite power,
authority and capacity to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby.
4.3 Defaults. Subject to the receipt of all prior Agency(s)
approvals and consents necessary to effect the Sale, the execution,
delivery and performance of this Agreement by Seller does not
and the consummation of the transactions contemplated hereby
will not (a) violate any material provision of law applicable to
Seller, (b) conflict with any of the terms of (i) Seller's Charter,
Articles of Incorporation or Bylaws, or (ii) any other governing
instrument relating to the conduct of Seller's business or the
ownership of its properties, or (c) result in a material breach of
any other agreement to which Seller is a party or by which it is
bound with respect to the Servicing. No event has occurred and not
been cured which would constitute an event of default under any
Servicing Agreement related to the Servicing, or result in the
cancellation of PMI insurance with respect to any Mortgage. The
Seller has not been the subject of an audit by the Agencies in which
allegations were made concerning Seller's failure to comply with
applicable loan origination, servicing or claims procedures, which
resulted in a refusal to purchase any mortgages, honor a claim,
refusal of conveyance or reconveyance, or a request for
indemnification in connection with any mortgage.
4.4 Binding Agreement. The Agreement has been duly
authorized and, subject to the Agency's approval of the assignment
of the servicing rights from Seller to Purchaser, is a valid and
binding obligation of Seller, enforceable against Seller in
accordance with its terms (except as enforcement thereof may be
limited by applicable bankruptcy, insolvency or similar laws
affecting the rights of creditors generally or the application
of general principles of equity).
ARTICLE V
REPRESENTATIONS AND WARRANTIES AS TO SERVICING AND THE MORTGAGES
As further inducement to Purchaser to enter into this Sale
Agreement, Seller represents and warrants to Purchaser as of the
Sale Date and the Transfer Date, except as to Section 5.3 which is
made as of the Sale Date only,with respect to the Servicing and each
Mortgage as follows:
5.1 Title. Seller is the lawful owner of the Servicing.
Subject to the receipt of all Agency approvals and consents
necessary to effect the Sale, the Sale and transfer of the
Servicing by Seller to Purchaser in accordance with the terms and
subject to the conditions of this Agreement will give Purchaser good
and marketable title to the Servicing, free and clear of any and all
valid claims, charges, defenses, offsets and encumbrances of any
kind or nature except as is set forth in the related Servicing
Agreements.
5.2 Mortgage Documents. The Mortgage documents are genuine,
legally valid, binding and enforceable obligations of the borrower
and have been duly executed by a borrower of legal capacity, and all
insertions in any Mortgage document were correct when made. The
Mortgage documents were in compliance with applicable law, PMI
requirements, and Agency(s) requirements, guidelines and directives
upon origination and are complete in all material respects with
regard to origination and servicing activity.
5.3 Physical Damage. There exists no physical damage to the
collateral securing the Mortgage from fire, flood, windstorm,
earthquake, tornado, hurricane or any other similar casualty which
physical damage would cause any Mortgage to become delinquent or
adversely affect the value or marketability of any Mortgage, the
related Servicing or the collateral, except those mortgage loans
listed on Exhibit H.
5.4 Application of Funds. All monies received with respect to
each Mortgage have been accounted for and applied in accordance with
generally accepted accounting practices.
5.5 Certification. The Mortgage documents for each Mortgage
will contain, upon transfer of the Servicing to Purchaser,
all items required by applicable Agency regulations, and such
documents and Servicing records will be complete and in compliance
with all applicable Agency and PMI requirements and guidelines. All
Mortgages shall be, when transferred to Purchaser eligible for
applicable recertification by Purchaser's custodian, and Seller
will be responsible for the costs of curing any deficiencies that
must be cured in order for Purchaser to obtain such
recertification. The principal balance outstanding and owing on the
Mortgages equals or exceeds the amount owing to the corresponding
agency.
5.6 Litigation and Compliance with Law. There is no
litigation or governmental investigation pending or threatened,
nor is there any order, injunction or decree outstanding against or
relating to Seller, which could have a material adverse effect upon
the Servicing, Mortgages, or the Seller's ability to comply with the
Seller's obligations to Purchaser, established by this Agreement,
nor any material basis for any such litigation. Neither Seller nor
any prior servicer or originator has violated any applicable law,
regulation, ordinance, order, injunction or decree, or any other
requirement of any governmental body, court or Agency or insurer in
connection with the origination or servicing of the Mortgages, the
violation of which would have a material adverse effect on any of
the Servicing, the Mortgages, or the Seller's ability to comply with
the Seller's obligations to the Purchaser established by this
Agreement.
5.7 Statements Made. No representation, warranty or
statement made by Seller in this Agreement, in any Exhibit, the
offering documents the Servicing records and documents provided
pursuant to Exhibits C and D or any written statement or
certificate furnished by Seller to Purchaser in connection with the
transactions contemplated hereby, including specifically the
servicing fee rate applicable to the Mortgages, contains or will
contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
5.8 Mortgage Disbursement. Seller warrants that any and all
Mortgages were fully disbursed and made or consummated in accordance
with applicable law and regulations, a violation of which would have
a material adverse effect on the Servicing.
5.9 Unpaid Balances. The amount of the unpaid balance for each
Mortgage is correct as set forth in the trial balance provided and
there are no defenses, setoffs or counterclaims against such
Mortgages.
5.10 Security Interests. The security interest granted by the
borrower in the collateral is a valid first priority lien on the
collateral. Neither the collateral nor any party to any related
security agreement has been released, with the exception of partial
releases, releases required by divorce decree and releases required
by assumptions.
5.11 Payment of Taxes Insurance Premiums. etc. The
responsibilities of Seller and Prior Servicers with respect to
all applicable taxes, special assessments, ground rents,
flood insurance premiums, hazard insurance premiums and PMI
premiums that are related to the Mortgages have been met.
5.12 Effective Insurance. All required insurance policies,
including PMI, remain in full force and effect. Seller, the
originator, and any prior servicer, has complied with all insurance
contract obligations which, if not complied with, might have a
material adverse effect on the Servicing.
5.13 Tax Identifications. All tax identifications and property
descriptions contained in any Mortgage document are complete and
legally sufficient.
5.14 Compliance with Contractual Obligations. Seller, and all
Prior Servicers and originators have complied with all of their
contractual obligations including all applicable Agency and PMI
requirements, which relate to the origination, underwriting or
the prior servicing of each Mortgage, the breach of which might
adversely affect the Servicing.
5.15 Filing of Reports. Seller has filed or will have filed by
the Transfer Date all reports required by any Agency any PMI, and
any federal, state or municipal law, regulation or ordinance,
except where any failure to do so would not have a material adverse
effect on the Servicing, Mortgages or the Related Escrow Accounts.
5.16 Escrow Accounts. Seller is the lawful fiduciary of all
Related Escrow Accounts, and such Accounts are being maintained in
accordance with applicable law the terms of the Servicing
Agreements related to the Servicing and the Mortgage documents, and,
where applicable, in accordance with the regulations of the
Agency(s), insurers and other governmental agencies having
jurisdiction. Except for payments which are past due under the
terms of the Mortgage documents, all escrow balances required by the
Mortgage documents and paid to Seller for the account of the
mortgagors and Seller are on deposit in the appropriate escrow
accounts.
5.17 No Accrued Liabilities. Except for such transfer and
termination fees as may be imposed in connection with the Sale and
which are to be paid by Seller, there are no accrued liabilities of
Seller with respect to the Mortgages or the Servicing and there are
no circumstances or events existing that could result in any such
accrued liabilities arising against Purchaser as successor to the
Servicing.
5.18 No Recourse; Residential Loans. No Mortgage is either (i)
a Recourse Mortgage or (ii) secured by a property that does not
qualify as a single family (1-4 unit) property, and all mortgages
are first liens.
5.19 Collectable Receivables. All advances and other
receivables associated with the Servicing for which Purchaser pays
funds to Seller pursuant to paragraph 3.2(b) have been properly made
and are documented and reasonable and are reimbursable in full under
the applicable Servicing Agreement.
5.20 Interest on Escrows. Seller has credited to the account of
mortgagors all interest required to be paid on any
escrow/impound account through the Transfer Date. Evidence of such
credit shall be provided to Purchaser upon written request.
5.21 Agency Agreements. No Mortgage is subject to any special
underwriting provision or specially negotiated contract terms which
materially increases servicer's risk, servicing responsibilities, or
recourse responsibility with respect to the Mortgage from that
assumed under a standard Agency nonrecourse contract.
5.22 Adjustable Rate Mortgages. All adjustable rate loans were
originated and set-up on the sellers servicing system according to
agency guidelines in strict adherence to the mortgage documents.
All rate adjustments made prior to Transfer Date have been made in
accordance with agency guidelines, the mortgage documents and all
Federal requirements.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Sale Agreement,
Purchaser represents and warrants as follows (it being acknowledged
that each such representation and warranty relates to material
matters upon which Seller relied, and it being understood that each
such representation and warranty is made to the Seller as of the
Sale Date and the Transfer Date):
6.1 Due Incorporation and Good Standing. Purchaser is a
corporation duly organized and validly existing under the laws of
the State of Nevada. Purchaser is qualified or licensed to transact
business in each jurisdiction in which its activities with respect
to the Mortgages or the Servicing require it to be qualified
or licensed.
6.2 Authority and Capacity. Purchaser has all requisite
power, authority and capacity to enter into this Sale Agreement and
to perform the obligations required of it hereunder and thereunder.
The execution and delivery of this Sale Agreement and the
consummation of the transactions contemplated hereby, have each been
duly and validly authorized by all necessary corporate action. This
Sale Agreement constitutes valid and legally binding
agreements of Purchaser enforceable in accordance with their terms,
and no offset, counterclaim or defense exists to the full
performance of this Sale Agreement.
6.3 Effective Agreement. The execution, delivery and
performance of this Sale Agreement by Purchaser, its compliance
with the terms hereof and the consummation of the transactions
contemplated hereby will not violate, conflict with, result in a
breach of, constitute a default under, be prohibited by, or require
any additional approval under the certificate of incorporation,
bylaws or any instrument or agreement to which it is a party or by
which it is bound or which affects the Servicing, or any state or
federal law, rule or regulation or any judicial or administrative
decree, order, ruling or regulation applicable to it or to the
Servicing.
6.4 Good Standing. Purchaser is a mortgage lender and
servicer in good standing with all appropriate regulatory
authorities and agencies.
ARTICLE VII
COVENANTS
7.1 Notice to Mortgagors. Seller shall, at Seller's expense,
mail to the mortgagor of each Mortgage no later than fifteen (15)
days prior to the Transfer Date a letter advising the mortgagor of
the transfer of Servicing to Purchaser; provided, however, the
content and format of the letter shall have the prior written
approval of Purchaser.
7.2 Notice to Mortgage and Hazard Insurers. Seller shall, at
Seller's expense, notify all relevant mortgage insurance companies
and PMI companies not later than the Transfer Date, by certified
mail, return receipt requested, that all insurance premium billings
for the Mortgages must thereafter be sent to Purchaser. Seller
shall provide Purchaser with copies of the certified
receipts. Additionally, Seller shall, prior to the Transfer Date,
obtain the written consent of any PMI insurance companies which have
the contractual right to approve transfer of the Servicing. No later
than the Transfer Date Seller shall, at Seller's expense, transmit
to the applicable hazard and flood companies and/or agents
notification of the assignment of the Servicing to Purchaser,
directions to name Purchaser as mortgagee and notice to deliver all
notices and premium billings to Purchaser from and after the
Transfer Date. Seller shall maintain a record of such
notification.
7.3 Delivery of Servicing Records. Seller shall forward to
Purchaser on the Transfer Date all servicing records in Seller's
possession relating to each Mortgage, including the information
enumerated in Exhibit C and any other record which is to be
maintained pursuant to the Servicing Agreements.
7.4 Delivery of Loan Documents. Seller shall provide
Purchaser on the Transfer Date the loan documentation described in
Exhibit D.
7.5 Escrow/Impound Balances: Unearned Fees. Seller shall
provide Purchaser within three (3) Business Days of the Transfer
Date, with immediately available funds in the amount of:
(a) The escrow, suspense balances and other servicing account
balances associated with the Mortgages net of the collectible
receivables. Seller shall provide Purchaser with an
accounting statement of escrow and suspense balances and loss
draft balances sufficient to enable Purchaser to reconcile the
amount of such payment with the accounts of the Mortgages; and
(b) All collected but unearned assumption or service fees as
of the Transfer Date.
7.6 Mortgage Payments Received Prior to Transfer Date. Prior
to the Transfer Date, all payments received by Seller on each
Mortgage shall be properly applied by Seller to the account of the
particular mortgagor.
7.7 Mortgage Payments Received After Transfer Date. The
amount of any Mortgage payments received by Seller after the
Transfer Date shall be forwarded to Purchaser by overnight mail
within three (3) Business Days of the date of receipt for a period
of sixty (60) days after the Transfer Date; provided, however
Seller will forward with payments sufficient information to
permit processing of the payment by Purchaser. After sixty (60)
days Seller shall return the payments to the mortgagor with
instructions to make the payments to Purchaser.
7.8 Misapplied Payments. Misapplied payments shall be
processed as follows:
(a) Both parties shall cooperate in correcting misapplication
errors.
(b) The party receiving notice of a misapplied payment
occurring prior to the Transfer Date and discovered after the
Transfer Date shall immediately notify the other party.
(c) If a misapplied payment which occurred prior to the
Transfer Date cannot be identified by either party and said
misapplied payment has resulted in a shortage in a Mortgage
account, Seller shall be liable for the amount of such
shortage. Seller shall reimburse Purchaser for the amount of
such shortage within thirty (30) days after receipt of written
demand therefor from Purchaser.
(d) If a misapplied payment has created an improper Purchase
Price as the result of an inaccurate outstanding principal
balance, a check shall be issued to the party shorted by the
improper payment application within ten (10) Business Days
after notice thereof by the other party.
(e) Any check issued under the provisions of this Paragraph
7.8 shall be accompanied by a statement indicating the purpose
of the check, the mortgagor and property address involved, and
the corresponding Seller and/or Purchaser account number.
7.9 Approvals. Seller shall, at its expense as provided in
Paragraphs 8.4 hereof receive the Agencies approval of the transfer
of Servicing from Seller to Purchaser pursuant hereto on or before
the Transfer Date.
7.10 Review of Mortgage Files. Seller shall provide Purchaser
between the contract date and Transfer Date during regular business
hours reasonable access to the books, records, servicing system and
accounts of Seller with respect to the Mortgages.
7.11 Taxes. No later than the Transfer Date Seller shall at
Seller's expense, provide for transfer of the life of loan tax
service contract for each Mortgage to Purchaser's account and
provide purchaser with a loan level audit tape including all
mortgages. With regard to all escrowed mortgage loans, Seller shall
pay all taxes which have a "tax due date", which is defined as the
date by which taxes must be paid to avoid loss of any discount or
accrual of any penalty or interest, within sixty (60) days of the
Transfer Date. If bills for such taxes are not available prior to
the Transfer Date, Seller shall provide Purchaser with such tax
bills not less than fifteen (15) days prior to such tax due date.
If such taxes are not paid or bills are not delivered Seller shall
reimburse Purchaser for any penalty and costs incurred plus a fifty
dollar ($50) administration fee for each Mortgage Loan
involved.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Sale Agreement are
subject, at Purchaser's option, to the satisfaction at or prior to
the Transfer Date of each of the following conditions:
8.1 Delivery of Servicing Data and Records. Seller shall
provide Purchaser with servicing information consisting of a master
loan tape, a history tape, and a Solomon style format tape. A set
of tapes shall be sent as reasonably requested by the purchaser
including upon execution of this Sale Agreement. A final set of
tapes shall be sent on the Transfer Date. Seller shall cooperate
with Purchaser's efforts to establish an efficient and accurate
conversion of tape data to Purchaser's system. The tapes shall be
accompanied with a hard copy trial balance and related reports and
shall include the information set forth in Exhibit C. On the
Transfer Date Seller shall deliver to Purchaser the servicing
files containing the documentation set forth in Exhibit D,
including copies of original loan documents maintained in custodian
files, and, in separately identified boxes or transmittal, the
original document custodial file for each mortgage created pursuant
to Section 2.4(b)(iii). Seller acknowledges that failure to provide
the information or documents on Exhibits C and D may give rise to a
claim under Section 10.2 to the extent such failure results in a
loss, expense, cost or other damage to Purchaser.
8.2 Correctness of Representations and Warranties. The
representations and warranties made by Seller in this Sale
Agreement are true and correct in all material respects and shall
continue to be true and correct on the Sale Date and the Transfer
Date.
8.3 Compliance with Conditions. All of the terms, covenants
and conditions of this Sale Agreement required to be complied with
and performed by Seller at or prior to the Transfer Date shall have
been duly complied with and performed in all material respects.
8.4 Regulatory Approval. Seller shall, at its expense,
obtain approval from the Agencies for the transfer of the Servicing
from Seller to Purchaser pursuant hereto.
8.5 Books and Records. Purchaser shall have determined to its
reasonable satisfaction that:
(a) The books, records and accounts of Seller with respect to the
Mortgages are in order pursuant to Agency and PMI requirements;
(b) The information provided in Exhibit A is substantially correct;
(c) The Mortgages have been originated, pooled and serviced in
accordance with Agency requirements and sound and prudent mortgage
banking practice.
In this connection Purchaser shall perform its due diligence review
pursuant to Section 2.5 and, if any material noncompliance is
determined to exist such as materially impair the value of the
Servicing, Seller shall correct such noncompliance.
8.6 Contingency Purchase. The execution of a second
Purchase and Sale Agreement by the Seller and the Purchaser with
regard to a second portfolio of mortgage servicing rights whose
characteristics and size have no significant variance from those
mortgage servicing rights contained in this Purchase and Sale
Agreement, and whose Sale Date will occur within thirty-two days of
this Agreement and whose Transfer Date(s) will coincide with this
Agreement.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Sale Agreement are
subject, at Seller's option, to the satisfaction at or prior to the
Transfer Date of each of the following conditions:
9.1 Correctness of Representations and Warranties. The
representations and warranties made by Purchaser in this Sale
Agreement are true and correct and shall continue to be true and
correct on the Transfer Date.
9.2 Compliance with Conditions. All of the terms, conditions
and covenants of this Sale Agreement required to be complied with
and performed by Purchaser at or prior to the Transfer Date shall
have been duly complied with and performed.
ARTICLE X
MISCELLANEOUS
10.1 Costs and Expenses. Costs and expenses incurred in
connection with the transactions contemplated hereby shall be paid
as follows:
(a) Seller shall pay all the reasonable costs associated with
the transfer of the Servicing to Purchaser involving the costs
of shipping files to Purchaser and to Purchaser's custodian,
any recording or filing fees, Agency transfer fees, Seller
custodian charges, and all other costs associated with the
preparation, filing and due recording of Mortgage assignments
including intervening assignments, and any other expenses
incurred by Seller or its affiliates; and
(b) Except as provided in (a) above, Purchaser shall pay the
expenses incurred by it or its affiliates in connection with the
transactions contemplated hereby.
10.2 Indemnification by Seller. Seller shall indemnify and hold
Purchaser harmless from and shall reimburse Purchaser for any
losses, damages, deficiencies, claims, causes of action or expenses
of any nature (including reasonable attorneys' fees, investigative
expenses and operational costs) incurred by Purchaser before or
after the Sale Date which:
(a) Result from any breach or violation of any representation
or warranty made by Seller in Articles IV and V including
Section 5.3 and the mortgages listed on Exhibit H of this Sale
Agreement; as to any representation or warranty Seller shall be
obligated to indemnify Purchaser as to any such matter
regardless of whether Seller did or did not have knowledge of
such matter;
(b) Result from the non-fulfillment of any covenant or
condition of Seller contained in this Sale Agreement or in any
schedule, written statement or certificate furnished by Seller
pursuant to this Sale Agreement;
(c) Result from litigation existing or pending on the Sale
Date involving the Servicing or any of the Mortgages or
litigation arising out of matters occurring prior to the
Transfer Date; or
(d) Result from missing servicing records or documents not
included in the servicing file or Seller's failure to timely
provide such records.
10.3 Indemnification by Purchaser. Purchaser shall indemnify
and hold Seller harmless from and shall reimburse Seller for any
losses, damages, deficiencies, claims, causes of action or expenses
of any nature (including reasonable attorneys' fees, investigative
expenses and operational costs) incurred by Seller and arising after
the Transfer Date, or in regard to Subsection (b) are incurred by
Seller and arise after the Sale Date, which:
(a) Result from any misrepresentation made by Purchaser in
this Sale Agreement, or in any schedule, written statement or
certificate furnished by Purchaser pursuant to this Sale
Agreement;
(b) Result from any breach of warranty by Purchaser, or the
non-fulfillment of any covenant of Purchaser contained in this
Sale Agreement, or in any schedule, written statement or
certificate furnished by Purchaser pursuant to this Sale
Agreement;
(c) Result from errors of Purchaser in servicing any of the
Mortgages after the Transfer Date; or
(d) Result from litigation arising out of matters occurring
subsequent to the Transfer Date involving the Servicing or any
of the Mortgages.
10.4 Repurchase of Servicing. In the event Purchaser
discovers that any of the representations and warranties contained
in Articles IV and V excluding section 5.3 unless demand for
repurchase is made by an agency, hereof were not accurate in
material respects at the time they were made by Seller whether or
not Seller had knowledge of such inaccuracy, Purchaser shall give
prompt written notice of such fact to Seller, and subject to Seller
having an opportunity to cure any such defect or violation as is
reasonable under the circumstances then existing and is permitted by
the applicable Agency, Purchaser may demand that Seller repurchase
from Purchaser the right to service those Mortgages which are
affected by the inaccurate representation and warranty or, in the
event such Mortgages are required to be repurchased by the Agency,
Seller shall pay to Purchaser the cost to repurchase such Mortgages.
When Seller is required by this paragraph to repurchase servicing
rights related to a Mortgage from Purchaser or pay the cost to
repurchase a Mortgage, Seller shall pay Purchaser a repurchase price
for the related servicing equal to 108 Basis Points (1.08%) of the
then outstanding principal balance for such Mortgages. The
repurchase price of a Mortgage shall be the unpaid principal balance
plus accrued interest at the applicable note rate plus any
outstanding advances and uncollected receivables. When Seller is
required to either provide for repurchase of a Mortgage or
repurchase servicing of a Mortgage from Purchaser, such repurchase
shall be accomplished within the time period permitted or
required by the Agency and such repurchase shall be accomplished
within fifteen (15) Business Days following receipt from Purchaser
of written demand and support documentation from Purchaser pursuant
hereto. Upon completion of such purchase or repurchase by Seller,
Purchaser shall promptly forward to Seller at Purchaser's cost and
expense all servicing records and all documents relating to such
repurchased Mortgages or Servicing.
10.5 Supplementary Information. From time to time prior to and
after the Transfer Date, Seller shall furnish Purchaser such
incidental information, which is reasonably available to Seller,
supplementary to the information contained in the documents and
schedules delivered pursuant hereto and shall file such reports as
Purchaser may reasonably request to service in accordance with
applicable Agency requirements.
10.6 Access to Information. Seller shall give to Purchaser and
its counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the
Transfer Date, to all of Seller's files, books and records relating
to the Servicing and Related Escrow Accounts provided Purchaser has
provided Seller reasonable notice.
10.7 Confidentiality of Information: Prohibition on
Solicitation.
(a) Seller and Purchaser and their affiliates shall, and shall
cause their respective directors, officers, employees and
authorized representatives to hold in strict confidence and not use
or disclose to any other party without the prior written consent of
the other party all information concerning customers or proprietary
business procedures, servicing fees or prices, policies or plans of
the other party or any of its affiliates received by them from the
other party in connection with the transactions contemplated
hereby.
(b) Seller shall not use, and shall prohibit its affiliates,
successors or assigns from using, the mortgagor list of the
Mortgages or other data or information related to the Mortgages for
purposes of soliciting a refinancing of the Mortgages or conducting
marketing programs of any type, such list, data and information
after the Sale Date being the sole property of Purchaser. Seller
shall not take any action which would permit use of such list,
information or data by a third party.
10.8 No Broker's Fees. Each party hereto represents and
warrants to the other that it has made no agreement to pay any
agent, finder, or broker or any other representative, any fee or
commission in the nature of a finder's or originator's fee arising
out of or in connection with the subject matter of this Sale
Agreement other than Seller's agreement with Hamilton, Carter, Smith
& Co., Incorporated. Seller agrees to indemnify and hold Purchaser
harmless from any liability in connection with its agreement
with Hamilton, Carter, Smith & Co., Incorporated and both the
parties hereto covenant with each other and agree to indemnify and
hold each other harmless from and against any such obligation or
liability and any expense incurred in investigation or
defending (including reasonable attorneys' fees) any claim based
upon the other party's actions in connection with such obligation.
10.9 Survival of Representations and Warranties. Each party
hereto covenants and agrees that the representations and warranties
in this Sale Agreement, and in any document delivered or to be
delivered pursuant hereto, shall survive the Sale Date and Transfer
Date; provided that Seller's obligation to indemnify Purchaser under
Section 10.2(a) shall terminate as to any matter for which notice of
a breach or violation of a representation and warranty is not given
within fifteen (15) years of the Transfer Date.
10.10 Form of Payment to be Made. Purchaser shall pay to
Seller the amounts required by Article III by wire of Fed funds to
Seller's account at California United Bank , ABA 1222-3911-5 , for
the account of California United Bank , Acct. 03-910-3002, Attn:
Greg Tipton or other account as specified by Seller in writing.
10.11 Notices. All notices, requests, demands and other
communications which are required or permitted to be given under
this Sale Agreement shall be in writing and shall be deemed to have
been duly given upon the delivery, express mail delivery or mailing
thereof by registered or certified mail, return receipt requested,
postage prepaid:
(a) If to the Purchaser, to:
Mr. Richard K. Magel
Senior Vice President
Temple Inland Mortgage Corporation
301 Congress Avenue, Suite #304
Austin, TX 78701
CC: Mr. Joe Farr
Executive Vice President and CFO
Temple Inland Mortgage Corporation
901 South MoPac Expressway, Ste. 300
Austin, TX 78746
(b) If to the Seller, to:
Mr. Pat Hartman
CFO
16030 Ventura Blvd.
Encino, CA 91436-4487
CC: Ms. Anita Wohlman
General Counsel
16030 Ventura Blvd.
Encino, CA 91436-4487
or to such other address as Purchaser or Seller shall have
specified in writing to the other.
10.12 Waivers. Either Purchaser or Seller may, by written
notice to the other:
(a) Extend the time for the performance of any of the
obligations or other transactions of the other; and
(b) Waive compliance with any of the terms, conditions or
covenants required to be complied with by the other
hereunder.
The waiver by any party hereto of a breach of any provision of
this Sale Agreement shall not operate or be construed as a waiver of
any other subsequent breach.
10.13 Entire Agreement: Amendment. This Sale Agreement
constitutes the entire agreement between the parties with respect to
the sale of the Servicing and supersedes all prior agreements with
respect thereto. This Sale Agreement may be amended and any
provision hereof waived, but only in writing signed by the party
against whom such amendment or waiver is sought to be enforced.
10.14 Binding Effect. This Sale Agreement shall inure to
the benefit of and be binding upon the parties hereto and their
successors and assigns. Seller agrees that Purchaser may assign
this Agreement to a successor or affiliate so long as such
assignment cannot reasonably be deemed to have an adverse affect on
Seller and that such assignment does not occur prior to the Transfer
Date. Nothing in this Sale Agreement, express or implied, is
intended to confer on any person, other than the parties hereto, and
their successors and assigns, any rights, obligations, remedies or
liabilities.
10.15 Headings. Headings on the Articles and Paragraphs in
this Sale Agreement are for reference purposes only and shall not be
deemed to have any substantive effect.
10.16 Applicable Laws. This Sale Agreement shall be
construed in accordance with the laws of the State of Texas without
reference to its principles of conflict of laws.
10.17 Incorporation of Exhibits. Exhibits A through H
attached hereto shall be incorporated herein and shall be
understood to be a part hereof as though included in the body of
this Sale Agreement.
10.18 Counterparts. This Sale Agreement may be executed in
counterparts, each of which, when so executed and delivered, shall
be deemed to be an original and all of which, taken together, shall
constitute one and the same agreement.
IN WITNESS WHEREOF, each of the undersigned parties to this
Sale Agreement has caused this Sale Agreement to be duly executed in
its corporate name by one of its duly authorized officers, all as of
the date first above written.
"PURCHASER"
_Joe Farr___________________________
Joe Farr
Chief Financial Officer
Temple-Inland Mortgage Corporation
"SELLER"
_Pat Hartman__________________________
Pat Hartman
Chief Financial Officer
California United Bank
EXHIBIT A
Description of Mortgage Loans
Date of Information August 31, 1994
Principal Balance $231,566,758.80
Number of Loans 1675
Weighted Average Note Rate 7.468%
Weighted Average Net Servicing Fee .2995%
Weighted Average Original Term 228
Weighted Average Time to Maturity 209
Monthly T&I Escrow Constant $38,740.14
P&I Constant $1,831,226.34
Total Delinquency 1.73% = 29 Loans
(13 Loans=30 Days Delinq.
4 Loans=60 Days Delinq.
3 Loans=90 Days Delinq.
9 Loans=120 Days Delinq.)
List of Loan Numbers with Name and Address
SEE ATTACHMENT
EXHIBIT B
Schedule of Prior Servicers
(To be supplied by Seller)
None
EXHIBIT C
Schedule of Servicing Information
The following information with respect to each Mortgage in a
paper/report format and in a format sufficient to enable its
tape-to-tape transmission to Purchaser:
1. Mortgaged Property Address
2. Mortgagor's Name and any Co-Mortgagor's Name
3. Mailing Address
4. Mortgage Loan Number
5. Current Mortgage Interest Rate
6. Current Principal Balance
7. Original Principal Balance
8. First Payment Due Date
9. Total Interest Due
10. Next Due Date
11. Loan Type
12. Original Term of Loan
13. Maturity Date of Loan
14. Delinquency Pattern
15. Late Charges Due
16. Current Monthly Payment
17. Current Monthly Escrow Deposit
18. Current Escrow Balance
19. Social Security Number of Mortgagor and Co-Mortgagor(s)
20. Most recent twelve (12) month history
21. First or Next Interest Adjustment Date
22. Loan-to-Value Ratio at Origination or Appraised Value at
Origination
23. Payment Adjustment Date
24. Current Index
25. Lifetime Rate Cap
26. Gross Margin
27. Periodic Rate Cap
28. Payment Cap
29. Code Identifying any Conversion Option
30. Code Identifying whether Mortgaged Property is Owner-Occupied
31. Code Identifying Type of Residential Dwelling
32. Investor, Pool Data and Certificateholders
33. Investor Loan Number
34. Tax Servicer
35. Tax Data, including legal, parcel, due date, payee and last
disbursement date and amount
36. Hazard Insurance Data, including insurance company, policy
number, due date, premium amount, coverage amount, and last
disbursement date and amount
37. Private Mortgage Insurance Policy and Mortgage Insurance Data,
including case number, anniversary month, annual or monthly
premium, company, certificate number, monthly deposit, and
last disbursement date and amount.
38. Identifier to distinguish between one time and monthly FHA
premium.
EXHIBIT D
Additional Information/Documentation to be Delivered
A. The following information and documents with respect to each
Mortgage:
1. Two (2) year transaction history file (available in hard copy,
fiche or film) as available.
2. Collection records and Mortgaged Property address listing
3. All tax records including prior year receipts or deliver these
individually as Purchaser reasonably requests as needed after the
Transfer Date.
4. Optional Insurance Certificates
5. All title policies and title opinions
6. Microfilm, fiche or hard copy of loan files
7. Copy of form of letter sent to appropriate insurance companies/agents
requesting endorsements to reflect transfer to Purchaser and new
address with a listing of addresses
8. Other documents or information that Purchaser may reasonably
request which are reasonably available to Seller
9. Copy of Mortgage Note and recorded Mortgage or certified copy of
recorded Mortgage
10. Copy of letter to the appropriate taxing service notifying them of
the transfer of Servicing to Purchaser
11. Copy of original credit package
12. Available information concerning all pending items, including
but not limited to partial releases, mortgage life or mortgage
disability claims, litigation, assumptions, and loss drafts.
13. Detail foreclosure information on loans in foreclosure and loans
foreclosed.
14. Detail bankruptcy information on loans in bankruptcy.
On an aggregate basis, a schedule enumerating each Mortgage which
requires special handling with a statement of the reasons therefor
and all relevant documentation attached.
EXHIBIT E
Schedule of Pending Litigation
EXHIBIT F
Schedule of Delinquent Mortgages
Indicating Number of Payments Due
and including Loan No. and UPB
SEE ATTACHMENT
EXHIBIT G
SCHEDULE OF MORTGAGES FOR WHICH
A PAYOFF QUOTE WAS ISSUED PRIOR
TO SALE DATE
EXHIBIT H
MORTGAGES LOANS WITH PHYSICAL DAMAGE
DUE TO AN EARTHQUAKE