Exhibit 10.12
LOAN CLOSING FILE REVIEW AGREEMENT
This Loan Closing File Review Agreement (the "Agreement"), effective as of
August 2, 2005, between the FEDERAL AGRICULTURAL MORTGAGE CORPORATION, an
instrumentality of the United States (together with its permitted successors and
assigns, "Farmer Mac") and ZIONS FIRST NATIONAL BANK, a national banking
association, (together with its permitted successors and assigns, "Zions").
RECITALS
WHEREAS, Farmer Mac intends to underwrite certain agricultural mortgage
loans from time to time from approved sellers (each, a "Seller") of such loans;
and
WHEREAS, Farmer Mac desires to engage Zions to review and close certain
submitted loan files (the "Loan Files") on a non-exclusive basis and Zions
desires to undertake to review and close such loan files in accordance with the
terms of this Agreement. The parties understand that the term "close loan files"
refers to the closing of the purchase of a loan identified in the Loan Files by
Farmer Mac, not the closing of the loan.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties agree as follows:
1. Farmer Mac and Zions agree that this Agreement terminates and replaces
that Loan File Review and Underwriting Agreement between Farmer Mac and Zions
effective December 17, 1996. Farmer Mac and Zions hereby agree to waive any
notice of termination requirements set forth in such Loan File Review and
Underwriting Agreement.
2. Farmer Mac agrees to underwrite such Loan Files, which underwriting
shall include Farmer Mac's communication of an affirmative credit decision
(Preliminary Loan Purchase Approval) to the Seller, obtaining and reviewing the
final appraisal, environmental form, and the preliminary title report (with
respect to the preliminary title report, Farmer Mac's review shall only relate
to the legal description of the real estate and any necessary obligors on the
loan).
3. After Farmer Mac's performance of the items set forth in paragraph 2
herein, Farmer Mac will issue an Instruction Letter to Zions which describes the
duties and obligations of Zions with respect to Zions' review and closing of the
Loan File. The Instruction Letter shall state that Zions will receive and review
the Seller's proposed and final documentation for such Farmer Mac loans (the
"Loans" or a "Loan").
4. Prior to the closing of a Loan, Zions shall receive from the Seller the
closing documents required in the Selling Guide and the Instruction Letter.
Zions shall review such closing documents in accordance with the following
guidelines and shall determine whether the Loan satisfies the requirements of
the Selling Guide and the Farmer Mac Instruction Letter.
5. Zions and Farmer Mac agree that with each review and closing, it will
perform the following duties with respect to the loan documents listed in the
Instruction Letter, prior to closing or the purchase of loan by Farmer Mac.
A. Promissory note with signer(s)
1. Farmer Mac will supply the legal names of individuals and
entities to sign the Promissory Note and any Rate Lock agreement.
2. Zions shall review the form of the Promissory Note and determine
whether the Note includes the individuals and entities as
identified by Farmer Mac in the Instruction Letter, whether the
Seller has included entity documents indicating who should sign
the documents and whether such individuals or entities have
executed the documents and whether the terms of the Note
correctly conform to the Rate Lock agreement, loan product terms
and provisions of the Seller Guide.
B. Mortgage or Deed of Trust with signer(s)
1. Farmer Mac will supply the legal names of individuals and
entities to sign Mortgage or Deed of Trust.
2. Zions shall review the Mortgage or Deed of Trust and determine
whether the Mortgage or Deed of Trust contains the individuals
and entities as identified by Farmer Mac in the Instruction
Letter, whether the Seller has included entity documents
indicating who should sign the documents and whether such
individuals or entities have executed the documents and whether
the Mortgage or Deed of Trust conforms to the provisions of the
Seller Guide.
C. Legal description to be included in Mortgage or Deed of Trust
1. Farmer Mac will attach a legal description to the Instruction
Letter.
2. Zions shall review the Mortgage or Deed of Trust and determine
whether the legal description provided by Farmer Mac is included
in the proposed Mortgage or Deed of Trust.
D. Description of any fixtures or non real property to serve as
collateral to be included in Mortgage or Deed of Trust or any other
Farmer Mac identified security documents.
Fixtures and non real property collateral shall include, but shall not
be limited to the following, if applicable, water rights,
certificates, or assignments in form, number and acreage conforming to
the underwriter's requirements to be assigned, grazing rights, state
grazing leases, BLM permits, certificates, or assignments in form,
number and acreages.
1. Farmer Mac will identify in the Instruction Letter, the specific
appraisal and the location in such appraisal of a complete
description of all fixtures and non real property to serve as
collateral to the Instruction Letter.
2. Zions shall review the Mortgage or Deed of Trust or other
security documents as identified by Farmer Mac to determine that
the documents contain a complete description of all fixtures and
non real property as identified by the Instruction Letter and the
Seller.
3. The parties understand and agree that the Seller is responsible
for determining the documents necessary to perfect such liens.
E. Preliminary Title Policy submitted by Seller
1. Farmer Mac will review the preliminary title policy to determine
if information is needed on additional obligors and compare the
legal description with that in the appraisal.
2. Zions shall review the preliminary title report along with any
Seller proposed modifications to such report, and determine
whether (i) any liens or encumbrances must be removed from title
prior to Farmer Mac's purchase of the loan, and (ii) any other
requirements must be met in order for Farmer Mac to have a first
lien (or other lien position, as specified in the Instruction
Letter) on the real property being pledged as collateral,
standard exceptions to such title policy excluded.
Notwithstanding the foregoing, Farmer Mac agrees that Zions does
not in any way guarantee the lien position of Farmer Mac and that
the issuer of the Title Insurance Policy will be solely
responsible for any claims regarding the priority of Farmer Mac's
lien against the real property.
F. UCC-1 Financing Statements
1. Zions shall review any UCC-1 financing statements provided by the
Seller to determine whether the general property description set
forth in the UCC-1 includes the collateral set forth in the
Instruction Letter.
2. Farmer Mac agrees that Zions is responsible only for a review of
the documents provided by the Seller to determine whether the
documents contain a general description of the non real property
and that the Seller is responsible for determining the documents
necessary to perfect such liens and the jurisdiction where such
documents should be filed or such liens otherwise perfected.
G. Required dairy assignments
1. Zions shall review any dairy assignment identified in the
Instruction Letter and determine whether the dairy assignment is
identified in the applicable documents provided by Seller.
2. It is understood and agreed that it is the Sellers'
responsibility to perfect the dairy assignment and ensure all
appropriate documents are obtained.
J. Hazard Insurance Requirements.
1. Zions shall determine whether the Hazard Insurance requirements
are in accordance with the Instruction Letter that will state the
amount of the required coverage (not applicable for land-only
transactions).
K. HUD 1
1. Zions shall determine whether the proposed disbursements as per
the HUD 1 are in accordance with the items and amounts as listed
in the Instructions Letter.
L. Closing Instructions
1. Zions shall review the Seller's closing instructions to the
person closing the loan and determine whether such closing
instructions are in accordance with the Instruction Letter.
M. Closing Protection Letter
1. Zions shall review and determine if a Closing Protection Letter
has been issued by the company providing title insurance for the
Loan.
6. Upon the review of the documents listed in paragraph 4 herein, and
Zions' determination that each of the above is in accordance with the
Instruction Letter and contains provisions required by the appropriate mortgage
purchase program listed in the Instruction Letter, Zions shall notify the Seller
of Farmer Mac's agreement to purchase the Loan. In the event Zions determines
that any of the documents or items listed in paragraph 4 herein are not in
accordance with the Instruction Letter or do not contain provisions required by
the appropriate mortgage purchase program listed in the Instruction Letter,
Zions shall notify the Seller of all such deficiencies. Zions shall not notify
the Seller of Farmer Mac's agreement to purchase the Loan until all such
deficiencies are remedied.
7. Upon notification to Zions by the Seller of Seller's intent to sell the
Loan to Farmer Mac, Zions shall notify Farmer Mac of the loan purchase through
the Farmer Mac form entitled Notice to Purchase.
8. Subsequent to Farmer Mac's funding of the Loan purchase, the Seller
shall remit a file to Zions containing all documents relating to a consummated
mortgage (the "Final Loan File"). Upon receipt of the Final Loan File, Zions
shall review such Final Loan File to determine whether each required document,
as provided for in the Instruction Letter and the closing instructions, is
included in such Final Loan File and is complete and executed in accordance with
all applicable requirements.
9. In the event that Zions discovers a deficiency in the Final Loan File,
Zions shall promptly notify the Seller of the deficiency. At that time Zions
shall inform the Seller that the Final Loan File will not be considered complete
until the missing or corrected documentation is provided to Zions.
10. Zions hereby agrees to act as custodian of any documents delivered to
it hereunder from the date of delivery thereof by the Seller to the date of
disposition thereof in accordance with the terms of this Agreement and the
Selling Guide. With respect to any documents held by Zions which have been
delivered by the Seller but as to which Farmer Mac has not made payment, Zions
shall hold such documents as custodian for the Seller. With respect to any
documents held by Zions as to which either (i) the Seller has acknowledged
receipt of the purchase price or (ii) in the absence of such confirmation, Zions
has received confirmation from Farmer Mac's bank that it has wired the funds in
the amount of the purchase price to the account specified by the Seller, Zions
shall hold such documents as custodian for Farmer Mac in accordance with the
terms hereof and of the Selling Guide. Upon receipt of confirmation that a Loan
has been purchased by Farmer Mac, Zions shall ship the Final Loan File (to the
extent Zions has the documents) to U. S. Bank National Association, in its
capacity as Custodian under the Custodial Agreement, or its successor in
interest or any successor Custodian.
Zions agrees to accept and hold all such documents as agent for and on
behalf of the Seller or Farmer Mac, as applicable, pursuant to the terms of this
Agreement and the Selling Guide, and shall at all times make such documents
available to Farmer Mac for the purpose of inspecting such documents. Zions
shall neither have nor acquire any liens, rights of ownership or other claims in
or to such documents or the related loans except as provided herein.
11. Zions shall, at all times during the term of this Agreement, hold any
documents delivered to it in safekeeping and shall be responsible for their
safety. Zions shall segregate such documents and shall not commingle such
documents with property of Zions or of other customers of Zions.
12. Zions shall return any or all of such documents to the Seller as they
relate to a loan which has been rejected by Zions or by Farmer Mac, or, with
respect to any loan not yet purchased by Farmer Mac, upon the Seller's request.
13. In the event any property held by Zions hereunder shall be attached,
garnished or levied upon under any court order, or if the delivery of such
property shall be stayed or enjoined by any court order, or if any court, writ,
judgment or decree shall be made or entered affecting such property or affecting
any act by Zions, Zions shall obey and comply with all orders, writs, judgments
or decrees so entered or issued unless such order, writ, judgment or decrees are
being contested in an appropriate judicial proceeding), notwithstanding any
provisions of this Agreement to the contrary. If Zions obeys and complies with
any such orders, writs, judgments or decrees, it shall not be liable to any of
the parties hereto or to any other person or entity by reason of such
compliance, notwithstanding that such orders, writs, judgments or decrees may be
subsequently reversed, modified, annulled, set aside or vacated.
14. The parties agree that Farmer Mac will pay Zions, for each completed
Loan Closing File Review [material omitted pursuant to a request for
confidential treatment and filed separately with the SEC]. Zions shall remit an
invoice to Farmer Mac monthly for all Loan Closing File Reviews and Farmer Mac
shall promptly pay all amounts set forth on such invoice. Farmer Mac will not
pay to Zions any fees or costs relating to the origination, underwriting,
closing and approval of any "Zions Proprietary Qualified Loan", as such term is
defined in certain letter agreements between Zions and Farmer Mac, or of any
loan sold into the Farmer Mac I program by Zions. In addition, in the event that
Farmer Mac pays more than [material omitted pursuant to a request for
confidential treatment and filed separately with the SEC] on any full-time farm
loan to any other person who performs similar duties and obligations for Farmer
Mac to those set forth for Zions herein, Farmer Mac shall increase the amount of
compensation hereunder to be equal to than the amounts paid to such other person
if Zions agrees to accept and perform such additional duties and obligations
under this contract as such other person performs under its agreement with
Farmer Mac.
15. Zions shall be liable to Farmer Mac under this Agreement only to the
extent of the obligations specifically imposed and undertaken herein. In
addition, in the event the Loan File documents contain any errors or omissions
that cause any damages or claims to occur, Farmer Mac agrees to pursue the
Seller of such Loan File for such damages or claims and shall not pursue or
otherwise bring such claims against Zions, unless such claims are the result of
Zions' gross negligence, willful malfeasance or bad faith.
16. Zions will keep in full effect its existence, rights and franchises
under the laws of its jurisdiction of organization, and will obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and to perform its duties under this Agreement.
17. Zions may assign its rights and delegate its duties and obligations
under this Agreement, provided that the person accepting such assignment or
delegation shall be satisfactory to Farmer Mac, is willing to service the Loans
and executes and delivers to Farmer Mac an agreement, in form and substance
satisfactory to Farmer Mac, which contains an assumption by such Person of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by Zions under this Agreement. In the case of any such
assignment and delegation, Zions shall be released from its obligations under
this Agreement, except that Zions shall remain liable for all liabilities and
obligations incurred by it hereunder prior to the satisfaction of the conditions
to such assignment and delegation set forth herein.
18. Nothing herein shall relieve Zions of any liability it may have to
Farmer Mac as the Seller of any loan.
19. Neither Zions nor any of its directors, officers, employees or agents
shall be under any liability to Farmer Mac for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement or the Selling Guide, or for errors in judgment. However, this
provision shall not protect Zions or any such Person against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of disregard of obligations
and duties hereunder. Zions and any director, officer, employee or agent may
reasonably rely in good faith on any document of any kind prima facie properly,
executed and submitted by any Person respecting any matters arising hereunder.
20. This Agreement may be amended from time to time only by written
instrument executed by both parties hereto.
21. Either party hereto may terminate the provisions of this Agreement
relating to Loan File review duties upon 3 months' written notice to the other
party hereto.
22. This Agreement shall be governed by and construed in accordance with
federal law. To the extent federal law incorporates state law, that law shall be
the laws of the State of New York.
23. All demands and notices hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, to (a) in the case of Zions, One Main Street,
Suite 1610, Salt Lake City, Utah, 84111, or such other address as may be
hereafter furnished to Farmer Mac by Zions in writing, and (b) in the case of
Farmer Mac, 1133 21st Street, NW, Suite 600, Washington, DC, 20036, Attention:
Vice President - Agricultural Credit, with a copy to the Vice President -
General Counsel at the same address or such other address as may be hereafter
furnished to Zions by Farmer Mac in writing.
24. If any one or more of the covenants, agreements provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be seemed severable from the
remaining, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the Certificates or the rights of the holders thereof.
25. Zions shall not use the information received in connection with its
duties under this Agreement with respect to any loan Zions reviews (or the
related Borrower) for any purpose other than fulfilling its obligations under
this Agreement or as the servicer of such loan after purchase by Farmer Mac.
26. Arbitration.
Arbitration Disclosures.
1. ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY VERY
LIMITED REVIEW BY A COURT.
2. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT,
INCLUDING THEIR RIGHT TO A JURY TRIAL.
3. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT.
4. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING
IN THEIR AWARDS. THE RIGHT TO APPEAL OR SEEK MODIFICATION OF ARBITRATORS'
RULINGS IS VERY LIMITED.
5. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS AFFILIATED
WITH THE BANKING INDUSTRY.
6. ARBITRATION WILL APPLY TO ALL DISPUTES BETWEEN THE PARTIES, NOT JUST THOSE
CONCERNING THIS AGREEMENT.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE
AMERICAN ARBITRATION ASSOCIATION.
(a) Any claim or controversy ("Dispute") between or among the parties and
their employees, agents, affiliates, and assigns, including, but not limited to,
Disputes arising out of or relating to this agreement, this arbitration
provision ("arbitration clause"), or any related agreements or instruments
relating hereto or delivered in connection herewith ("Related Agreements"), and
including, but not limited to, a Dispute based on or arising from an alleged
tort, shall at the request of any party be resolved by binding arbitration in
accordance with the applicable arbitration rules of the American Arbitration
Association (the "Administrator"). The provisions of this arbitration clause
shall survive any termination, amendment, or expiration of this agreement or
Related Agreements. The provisions of this arbitration clause shall supersede
any prior arbitration agreement between or among the parties.
(b) The arbitration proceedings shall be conducted in a city mutually
agreed by the parties. Absent such an agreement, arbitration will be conducted
in Salt Lake City, Utah or such other place as may be determined by the
Administrator. The Administrator and the arbitrator(s) shall have the authority
to the extent practicable to take any action to require the arbitration
proceeding to be completed and the arbitrator(s)' award issued within 150 days
of the filing of the Dispute with the Administrator. The arbitrator(s) shall
have the authority to impose sanctions on any party that fails to comply with
time periods imposed by the Administrator or the arbitrator(s), including the
sanction of summarily dismissing any Dispute or defense with prejudice. The
arbitrator(s) shall have the authority to resolve any Dispute regarding the
terms of this agreement, this arbitration clause, or Related Agreements,
including any claim or controversy regarding the arbitrability of any Dispute.
All limitations periods applicable to any Dispute or defense, whether by statute
or agreement, shall apply to any arbitration proceeding hereunder and the
arbitrator(s) shall have the authority to decide whether any Dispute or defense
is barred by a limitations period and, if so, to summarily enter an award
dismissing any Dispute or defense on that basis. The doctrines of compulsory
counterclaim, res judicata, and collateral estoppel shall apply to any
arbitration proceeding hereunder so that a party must state as a counterclaim in
the arbitration proceeding any claim or controversy which arises out of the
transaction or occurrence that is the subject matter of the Dispute. The
arbitrator(s) may in the arbitrator(s)' discretion and at the request of any
party: (1) consolidate in a single arbitration proceeding any other claim
arising out of the same transaction involving another party to that transaction
that is bound by an arbitration clause with Lender, such as borrowers,
guarantors, sureties, and owners of collateral; and (2) consolidate or
administer multiple arbitration claims or controversies as a class action in
accordance with the provisions of Rule 23 of the Federal Rules of Civil
Procedure.
(c) The arbitrator(s) shall be selected in accordance with the rules of the
Administrator from panels maintained by the Administrator. A single arbitrator
shall have expertise in the subject matter of the Dispute. Where three
arbitrators conduct an arbitration proceeding, the Dispute shall be decided by a
majority vote of the three arbitrators, at least one of whom must have expertise
in the subject matter of the Dispute and at least one of whom must be a
practicing attorney. The arbitrator(s) shall award to the prevailing party
recovery of all costs and fees (including attorneys' fees and costs, arbitration
administration fees and costs, and arbitrator(s)' fees). The arbitrator(s),
either during the pendency of the arbitration proceeding or as part of the
arbitration award, also may grant provisional or ancillary remedies including
but not limited to an award of injunctive relief, foreclosure, sequestration,
attachment, replevin, garnishment, or the appointment of a receiver.
(d) Judgement upon an arbitration award may be entered in any court having
jurisdiction, subject to the following limitation: the arbitration award is
binding upon the parties only if the amount does not exceed Four Million Dollars
($4,000,000.00); if the award exceeds that limit, either party may demand the
right to a court trial. Such a demand must be filed with the Administrator
within 30 days following the date of the arbitration award; if such a demand is
not made within that time period, the amount of the arbitration award shall be
binding. The computation of the total amount of an arbitration award shall
include amounts awarded for attorneys' fees and costs, arbitration
administration fees and costs, and arbitrator(s)' fees.
(e) No provision of this arbitration clause, nor the exercise of any rights
hereunder, shall limit the right of any party to: (1) judicially or
non-judicially foreclose against any real or personal property collateral or
other security; (2) exercise self-help remedies, including but not limited to
repossession and setoff rights; or (3) obtain from a court having jurisdiction
thereover any provisional or ancillary remedies including but not limited to
injunctive relief, foreclosure, sequestration, attachment, replevin,
garnishment, or the appointment of a receiver. Such rights can be exercised at
any time, before or after initiation of an arbitration proceeding, except to the
extent such action is contrary to the arbitration award. The exercise of such
rights shall not constitute a waiver of the right to submit any Dispute to
arbitration, and any claim or controversy related to the exercise of such rights
shall be a Dispute to be resolved under the provisions of this arbitration
clause. Any party may initiate arbitration with the Administrator. If any party
desires to arbitrate a Dispute asserted against such party in a complaint,
counterclaim, cross-claim, or third-party complaint thereto, or in an answer or
other reply to any such pleading, such party must make an appropriate motion to
the trial court seeking to compel arbitration, which motion must be filed with
the court within 45 days of service of the pleading, or amendment thereto,
setting forth such Dispute. If arbitration is compelled after commencement of
litigation of a Dispute, the party obtaining an order compelling arbitration
shall commence arbitration and pay the Administrator's filing fees and costs
within 45 days of entry of such order. Failure to do so shall constitute an
agreement to proceed with litigation and waiver of the right to arbitrate. In
any arbitration commenced by a consumer regarding a consumer Dispute, Lender
shall pay one half of the Administrator's filing fee, up to $250.
(f) Notwithstanding the applicability of any other law to this agreement,
the arbitration clause, or Related Agreements between or among the parties, the
Federal Arbitration Act, 9 U.S.C. Section 1 et seq., shall apply to the
construction and interpretation of this arbitration clause. If any provision of
this arbitration clause should be determined to be unenforceable, all other
provisions of this arbitration clause shall remain in full force and effect.
IN WITNESS WHEREOF, Farmer Mac and Zions have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year above written.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
By: /s/ Michael P. Morris
Its: Vice President - Agricultural Credit
ZIONS FIRST NATIONAL BANK
By: /s/ Patrick M. Floyd
Its: Senior Vice President