ANNEX I
SUPPLEMENTAL TERMS TO
MASTER REPURCHASE AGREEMENT,
DATED AS OF APRIL 10, 1997, AMONG
MERRILL LYNCH MORTGAGE CAPITAL INC.
AND
MERRILL LYNCH CREDIT CORPORATION
AND
FIRSTPLUS FINANCIAL, INC.
1. APPLICABILITY. These Supplemental Terms (the "Supplemental Terms") to
Master Repurchase Agreement (the "Repurchase Agreement") modify the terms
and conditions of the Repurchase Agreement and the terms under which the
parties hereto may, from time to time, enter into Transactions (the
Repurchase Agreement, together with these Supplemental Terms, the
"Agreement"). The Agreement shall be read, taken and construed as one and
the same instrument. Capitalized terms used in these Supplemental Terms
and not otherwise defined herein shall have the meanings set forth in the
Repurchase Agreement.
2. ADDITIONAL DEFINITIONS.
(a) Notwithstanding the definition set forth in Paragraph 2(h) of the
Repurchase Agreement, with respect to Loans, the "Market Value" of
Loans shall be the price of Loans determined, as of any date of
determination, to be the fair market value thereof as determined
solely by Buyer in good faith; provided, however, that (i) a Market
Value of zero shall be assigned to each Loan that does not at any
time comply with the representation and warranty of Seller set forth
in Paragraph 7(b)(xii) of these Supplemental Terms, (ii) the Market
Value of Loans shall not in any event exceed the outstanding
principal amount thereof, (iii) any Loan that has been subject to
the Agreement for more than 180 days in aggregate shall have a
Market Value of zero and (iv) any Loan with respect to which there
is a breach of a representation, warranty or covenant that is not
cured within any applicable cure period shall have a Market Value of
zero.
(b) "Advance Rate" shall mean a fraction (expressed as a percentage),
the numerator of which is one and the denominator of which is
Buyer's Margin Percentage.
(c) "Book Net Worth" shall refer to the equity of Seller
determined in accordance with GAAP.
(d) "Borrower" shall refer to the obligor or any Loan.
(e) "Buyer" shall mean MLCC, in the case of Loans secured by second or
third liens, and MLMCI in all other cases.
(f) "Buyer's Margin Percentage" shall refer to the percentage used to
calculate Buyer's Margin Amount, which shall be 97%.
(g) "Code" shall refer to the Internal Revenue Code of 1986, as amended.
(h) "Computer Tape" shall have the meaning set forth in the Custodial
Agreement.
(i) "Custodial Agreement" shall refer to the Custodial Agreement, by and
among Seller, MLCC, MLMCI and the Custodian, providing for the
custody of records relating to Loans, as the same may be amended,
supplemented or otherwise modified from time to time.
(j) "Custodial Confirmation Statement" shall refer to the confirmation
statement issued by the party named as custodian in the Custodial
Agreement that evidences ownership of the Loans indicated thereon.
(k) "Custodian" shall refer to and its permitted successors as custodian
under the Custodial Agreement.
(l) "FHA" means the Federal Housing Administration.
(m) "FHA-Approved Mortgagee" means a lender or other mortgagee approved
by the FHA as a mortgagee for Title I Loans.
(n) "GAAP" shall mean generally accepted accounting principles
consistently applied.
(o) "Loans" shall refer to both Title I Loans and Uninsured Loans.
(p) "LIBOR" shall mean the London Interbank Offered Rate for one-month
United States Dollar deposits as set forth on page 4833 of Telerate
as of 8:00 a.m., New York City time, on the date of determination.
(q) "List of Loans" shall be as defined in Paragraph 3 of these
Supplemental Terms.
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(r) "MLCC" shall refer to Merrill Lynch Credit Corporation.
(s) "MLMCI" shall refer to Merrill Lynch Mortgage Capital Inc.
(t) "Monthly Report" shall mean the monthly report, substantially in the
form attached hereto as Exhibit C, submitted by Seller to Buyer
including, with respect to the insurance coverage reserve account of
Seller, (i) the amount of insurance coverage remaining in the
account and (ii) the number and aggregate principal amount of loans
having potential claims to the account.
(u) "Mortgage" shall mean, to the extent applicable to a particular
Loan, the mortgage or other instrument creating a lien on the
property securing a Note.
(v) "Note" shall mean the note or other evidence of indebtedness of a
Borrower secured by a Mortgage.
(w) "Purchase Price" shall mean with respect to each Loan, (i) on the
Purchase Date, in consideration for the transfer of the Loan by
Seller to Buyer, the price equal to the lesser of (A) the product of
the Advance Rate times the Market Value or (B) the outstanding
principal balance of such Loan on the Purchase Date, and (ii)
thereafter, except where Buyer and Seller agree otherwise, such
price increased by the amount of any cash transferred by Buyer to
Seller pursuant to paragraph 4(b) hereof and decreased by the amount
of any cash transferred by Seller to Buyer pursuant to Paragraph
4(a) hereof or applied to reduce Seller's obligations under clause
(ii) of Paragraph 5 hereof;
(x) "RAC" shall mean RAC Financial Group, Inc., the direct or indirect
sole shareholder of Seller.
(y) "Securities" shall be deemed to mean Loans (including the rights to
any FHA Insurance under the Title I Program relating thereto) and,
notwithstanding the use of the term "Securities" in the Master
Repurchase Agreement, in no event shall such Loans be deemed to be
securities for the purposes of any securities or blue sky laws.
(z) "Seller" shall refer to FIRSTPLUS FINANCIAL, INC.
(aa) "Seller's Contract of Insurance" shall refer to Seller's insurance
contract with the FHA under the Title I Program.
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(bb) "Seller's Origination Guide" shall refer to the origination guide of
Seller for Loans in the form most recently accepted in writing by
Buyer.
(cc) "Title I Loans" means first and junior lien or, to the extent
permitted hereby, unsecured home improvement loans or retail
installment sales contracts, and related promissory notes, insured
under the FHA's Title I Program, and including without limitation,
all rights to receive payments which are due pursuant thereto and
all other proceeds thereof (including any recourse rights against
third persons) from and after the related Purchase Date, but
excluding any rights to receive payments which are due prior to the
related Purchase Date.
(dd) "Title I Program" shall mean the Title I insurance program of the
FHA.
(ee) "Transaction" shall, in addition to the definition set forth in the
Repurchase Agreement, refer to substitutions pursuant to Paragraph 9
of the Repurchase Agreement.
(ff) "Uninsured Loans" means first, second and third lien home
improvement loans or retail installment sales contracts, and related
promissory notes (none of which are insured under the FHA's Title I
Program) and including without limitation, all rights to receive
payments which are due pursuant thereto and all other proceeds
thereof (including any recourse rights against third persons) from
and after the related Purchase Date, but excluding any rights to
receive payments which are due prior to the related Purchase Date.
3. CONFIRMATIONS. Each Confirmation shall be binding upon the parties hereto
unless written notice of objection is given by the objecting party to the
other party within one (1) business day after the objecting party's
receipt of such Confirmation. The Loans relating to each Transaction shall
be identified on a detailed listing to be provided by Seller to Buyer (a
"List of Loans") and may be identified in the related Confirmation by
reference to such list. Each List of Loans will indicate for each Loan
whether it is insured under the FHA's Title I Program.
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4. MARGIN MAINTENANCE.
(a) Paragraph 4(b) of the Repurchase Agreement is hereby modified to
provide that if the notice to be given by Buyer to Seller under such
paragraph is given at or prior to 10:00 a.m., New York City time,
Seller shall transfer the Additional Purchased Securities to Buyer
prior to the close of business in New York City on the date of such
notice, and if such notice is given after 10:00 a.m., New York City
time, Seller shall transfer the Additional Purchased Securities
prior to the close of business in New York City on the business day
immediately following the date of such notice. The Custodial
Agreement shall set forth further terms and provisions relating to
Buyer's and Seller's rights and obligations under Paragraph 4 of the
Repurchase Agreement.
(b) Paragraph 4 of the Repurchase Agreement is hereby modified by adding
the following at the end thereof:
"(f) In the event that Seller fails to comply with the
provisions of this Paragraph 4, Buyer shall not enter into any
additional Transactions hereunder after the date of such
failure."
5. INCOME PAYMENTS. Paragraph 5 of the Repurchase Agreement is hereby
modified to provide that, so long as no Event of Default shall have
occurred and be continuing, Seller shall be entitled to all payments of
principal and interest and principal prepayments payable to the holder of
the Loans. Upon the occurrence of an Event of Default, payment of
principal and interest and principal prepayments shall be paid directly to
Buyer.
6. INTENT OF THE PARTIES; SECURITY INTEREST.
(a) It is the intention of the parties hereto that any Transaction
involving the sale of Loans hereunder shall include all rights to
any related FHA insurance applicable thereto under the Title I
Program, subject to applicable FHA insurance regulations.
(b) In the event, for any reason, any Transaction is construed by any
court as a secured loan rather than a purchase and sale, the parties
intend that Seller shall have granted to Buyer a perfected first
priority security interest in all of the Loans and any related
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FHA insurance applicable thereto under the Title I Program.
(c) Seller shall pay all fees and expenses associated with perfecting
such security interest including, without limitation, the cost of
filing financing statements under the Uniform Commercial Code and
recording assignments of mortgage as and when required by Buyer in
its sole discretion.
(d) In the event that Buyer elects to engage in repurchase transactions
with the Loans (including the rights to any related FHA insurance)
or otherwise elects to pledge or hypothecate such Loans, Seller
shall, at the request of Buyer and at the expense of Seller, provide
Buyer's counterparty in such repurchase transaction with an opinion
of counsel to the effect that such counterparty has a perfected
first priority security interest in such Loans.
(e) Notwithstanding Paragraph 9(b) of the Repurchase Agreement, it is
the intention of the parties that the Custodian, rather than Seller,
shall maintain custody of the Purchased Securities pursuant to the
Custodial Agreement.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Each party represents and warrants, and shall on and as of the
Purchase Date of any Transaction be deemed to represent and warrant,
as follows:
(i) The execution, delivery and performance of the Agreement and
the performance of each Transaction do not and will not result
in or require the creation of any lien, security interest or
other charge or encumbrance (other than pursuant to the
Agreement) upon or with respect to any of its properties; and
(ii) The Agreement is, and each Transaction when entered into under
the Agreement will be, a legal, valid and binding obligation
of it enforceable against it in accordance with the terms of
the Agreement.
(b) Seller represents and warrants to Buyer, and shall on and as of the
Purchase Date of any Transaction be deemed to represent and warrant,
as follows:
(i) The documents disclosed by Seller to Buyer
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pursuant to the Agreement are either original documents or
genuine and true copies thereof;
(ii) Seller is a separate and independent corporate entity from the
Custodian named in the Custodial Agreement, Seller does not
own a controlling interest in such Custodian either directly
or through affiliates, such Custodian does not own a
controlling interest in Seller either directly or through
affiliates and no director or officer of Seller is also a
director or officer of such Custodian;
(iii) None of the Purchase Price for any Loans will be used either
directly or indirectly to acquire any security, as that term
is defined in Regulation T of the Regulations of the Board of
Governors of the Federal Reserve System, and Seller has not
taken any action that might cause any Transaction to violate
any regulation of the Federal Reserve Board;
(iv) Each Loan conforms to the current market standards of
institutional securitization applicable to contracts and loans
similar in nature to the Loans; all Loans will comply with the
applicable representations and warranties attached as Exhibit
B hereto;
(v) Each Loan was originated by Seller or purchased by Seller from
Seller's list of approved originators or acquired in a bulk
sale transaction in the ordinary course of business (which
bulk sale transaction does not constitute a "bulk sale" as
defined in the Uniform Commercial Code);
(vi) Each Loan was underwritten in accordance with the written
underwriting standards of Seller furnished by Seller to Buyer,
and no change to such underwriting standards has occurred
since the date of the last written revision to such standards
was furnished to Buyer by Seller or on behalf of Seller;
(vii) Since the date of the most recent financial statement of
Seller, delivered by it pursuant to Paragraph 11 of these
Supplemental Terms, there has been no material adverse change
in the financial condition or results of operations of Seller;
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(viii) Seller shall be at the time it delivers any Loans for any
Transaction, and shall continue to be, through the Purchase
Date relating to each such Transaction, the legal and
beneficial owner of such Loans, free of any lien, security
interest, option or encumbrance except for the security
interest created by or pursuant to the Agreement;
(ix) Seller and each servicer is an FHA-Approved Mortgagee;
(x) Each Title I Loan is insured under the FHA's Title I Program;
(xi) Seller has taken all action with respect to the Agreement, the
Custodial Agreement and the transactions contemplated hereby
and thereby in order to comply with the provisions of all
applicable law;
(xii) At least 97% of the aggregate outstanding Repurchase Price for
all Transactions relates to Loans that are not more than
fifty-nine (59) days delinquent; not more than 3% of the
aggregate outstanding Repurchase Price for all Transactions
relates to Loans that are more than fifty-nine (59) days
delinquent but not more than (90) days delinquent; and
(xiii) Seller is the direct or indirect wholly owned subsidiary of
RAC.
(c) Seller covenants with Buyer, from and after the date of the
Agreement, as follows:
(i) Seller will take all actions necessary to maintain the FHA
insurance on the Title I Loans;
(ii) Seller will take all actions necessary to maintain its status
as an FHA-Approved Mortgagee;
(iii) Seller will take all actions necessary with respect to the
Agreement, the Custodial Agreement and the transactions
contemplated hereby and thereby in order to maintain
compliance with the provisions of all applicable law;
(iv) Seller shall immediately notify Buyer if an Event of Default
or an event contemplated by Paragraph 9 of these Supplemental
Terms shall have occurred;
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(v) Seller shall deliver a Computer Tape relating to the Custodial
Agreement to Buyer with such frequency as Buyer may require
but in no event less frequently than monthly;
(vi) No Loan shall be subject to the Agreement for more than 180
days in aggregate;
(vii) Seller shall deliver to Buyer a Monthly Report on the tenth
business day of each month during the term of the Agreement;
(viii) In the event that Buyer elects to exercise its remedies with
respect to the Loans pursuant to the terms of the Agreement
after an Event of Default by Seller, Seller shall do all
things necessary in order to insure that the rights and
benefits of any FHA insurance applicable to the Title I Loans
are transferred to Buyer or its designee and Seller further
covenants to cooperate with Buyer in realizing the benefits of
such insurance for the benefit of Buyer or its designee,
subject to the compliance by Buyer or its designee with the
applicable HUD rules and regulations;
(ix) Seller shall notify Buyer upon the anticipated sale or
transfer by RAC of any ownership interest in Seller prior to
any such sale or transfer;
(x) The ratio of Seller's outstanding indebtedness (determined in
accordance with GAAP but including for this purpose any
warehouse or repurchase facilities accounted for as off
balance sheet transactions) to all lenders (including, without
limitation, all indebtedness incurred under any loan
agreement, warehouse finance agreement and repurchase
agreement) to its Book Net Worth shall not at any time be more
than 8 to 1;
(xi) Seller shall not experience losses or changes in its financial
condition that cause its Book Net Worth for any two
consecutive calendar quarters to be less than or equal to 80%
of its Book Net Worth as of the commencement of such period;
(xii) Seller's Book Net Worth shall not at any time, from the date
of the Agreement to April 30, 1997, be less than $140,000,000
and shall not at any time thereafter be less than
$200,000,000; and
(xiii) Seller shall not pay or declare any dividend or
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other distribution except (a) dividends payable solely in the form of capital
stock, (b) dividends to RAC to the extent of Seller's portion of the
consolidated federal income tax liability of RAC and its subsidiaries, (c)
dividends to RAC to the extent of interest on the subordinated debt of Seller
owed by RAC, (d) other dividends to RAC that do not in any fiscal year of Seller
when added to the dividends during that year under clauses (b) and (c) preceding
exceed 25% of Seller's net income for that fiscal year, or (e) dividends
otherwise approved in writing by Buyer; notwithstanding the above, Seller may
not pay or declare any dividends at any time while an Event of Default exists
and is continuing or would be created by such dividends.
8. EVENTS OF DEFAULT.
(a) The term "Event of Default" shall, in addition to the definition set
forth in the Repurchase Agreement, include the following events:
(i) Any governmental or self-regulatory authority shall take
possession of Buyer or Seller or their property or appoint any
receiver, conservator or other official, or such party shall
take any action to authorize any of the actions set forth in
this clause (i).
(ii) Buyer shall have reasonably determined that Seller is or will
be unable to meet its commitments under the Agreement, shall
have notified Seller of such determination and Seller shall
not have responded with appropriate information to the
contrary to the satisfaction of Buyer within 24 hours.
(iii) The Agreement shall for any reason cease to create a valid,
first priority security interest in any of the Loans purported
to be covered thereby.
(iv) A final judgment by any competent court in the United States
of America for the payment of money in an amount of at least
$100,000 is rendered against Seller, and the same remains
undischarged for a period of sixty (60) days during which
execution of such judgment is not effectively stayed.
(v) Any representation or warranty made by Seller in the Agreement
or any Custodial Agreement shall
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have been incorrect or untrue in any material respect when
made or repeated or when deemed to have been made or repeated;
provided, however, that in the case of representations and
warranties made with respect to the Purchase Securities that
are Loans, such circumstances shall not constitute an Event of
Default if, after determining the Market Value of the Loans
without taking into account the Loans with respect to which
such circumstances have occurred, no other Event of Default
shall have occurred and be continuing.
(vi) Any covenant made by Seller in the Agreement or any Custodial
Agreement shall have been breached in any material respect;
provided, however, that in the case of covenants made with
respect to the Purchased Securities that are Loans such
circumstances shall not constitute an Event of Default if,
after determining the Market Value of the Loans without taking
into account the Loans with respect to which such
circumstances have occurred, no other Event of Default shall
have occurred and be continuing.
(vii) Any event of default or any event which with notice, the
passage of time or both shall constitute an event of default
shall occur and be continuing under any repurchase or other
financing agreement for borrowed funds or indenture for
borrowed funds by which Seller is bound or affected shall
occur and be continuing including, without limitation, any
such agreement of Seller to which Buyer is a party.
(b) Upon the occurrence and during the continuance of an Event of
Default by Seller:
(i) All rights of Seller to receive payments which it would
otherwise be authorized to receive pursuant to Paragraph 5 of
these Supplemental Terms shall cease, and all such rights
shall thereupon become vested in Buyer, which shall thereupon
have the sole right to receive such payments and apply them to
the aggregate unpaid Repurchase Prices owed by Seller.
(ii) All payments which are received by Seller contrary to the
provisions of the preceding clause (i) shall be received in
trust for the benefit of Buyer and shall be segregated from
other funds of Seller.
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(iii) Buyer may exercise any self-help remedies permitted by
applicable law.
(iv) Buyer shall be entitled to the right of set off with respect
to any amounts owed by Buyer or any affiliate of Buyer to
Seller or any affiliate of Seller under any contract, margin
account or other arrangement.
(c) The parties hereby agree that sales of Loans under Paragraph
11(d)(i) of the Repurchase Agreement shall be deemed to include and
permit sales of Loans pursuant to a securities offering.
9. EVENTS OF TERMINATION.
(a) At the option of Buyer, exercised by written notice to Seller, the
Repurchase Date for each Transaction under the Agreement shall be
deemed to immediately occur in the event that:
(i) In the judgment of Buyer a material adverse change shall have
occurred in the business, operations, properties, prospects or
condition (financial or otherwise) of Seller;
(ii) Buyer shall request written assurances as to the financial
well-being of Seller and such assurances shall not have been
provided within 24 hours of such request;
(iii) Seller shall be in default with respect to any normal and
customary covenants under any debt contract or agreement, any
servicing agreement or any lease to which it is a party, which
default could materially adversely affect the financial
condition of Seller (which covenants include, but are not
limited to, an Act of Insolvency of Seller or the failure of
Seller to make required payments under such contract or
agreement as they become due);
(iv) The senior debt obligations or short-term debt obligations of
Merrill Lynch & Co., Inc. shall be rated below the four
highest generic grades (without regard to any pluses or
minuses reflecting gradations within such generic grades) by
any nationally recognized statistical rating organization;
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(v) Any representation or warranty made by Seller in the Agreement
or any Custodial Agreement shall have been incorrect or untrue
in any material respect when made or repeated or when deemed
to have been made or repeated;
(vi) Seller shall fail to promptly notify Buyer of (i) the
acceleration of any debt obligation or the termination of any
credit facility of Seller by any party other than Seller; (ii)
the amount and maturity of any debt in excess of $20,000,000
assumed after the date hereof; (iii) any adverse developments
with respect to pending or future material litigation
involving Seller; and (iv) any other developments which might
materially and adversely affect the financial condition of
Seller;
(vii) Seller shall have failed to comply in any material respect
with its obligations under the Custodial Agreement;
(viii) The approval of the FHA with respect to Seller or any
servicer as an FHA-Approved Mortgagee shall have been
withdrawn or adversely modified; or
(ix) Either Daniel T. Phillips or Eric Green shall cease to be
employed by Seller in his current capacity (or in an
equivalent capacity) on a full-time basis or as a consultant
devoting sufficient time (in the sole judgment of Buyer) to
the performance of such duties.
(b) The events specified in Paragraph 9(a) of these Supplemental Terms
which may, at the option of Buyer, cause an acceleration of the
Repurchase Date for a Transaction shall be in addition to any other
rights of Buyer to cause such an acceleration under the Agreement.
10. FINANCIAL STATEMENTS. As of the date hereof, Seller shall have provided
Buyer with the audited year-end financial statements of Seller and RAC and
the most recent publicly available interim financial statement of RAC.
Seller shall provide Buyer (i) within one hundred and twenty (120) days
after the end of the fiscal year of Seller and RAC with an audited
year-end consolidated financial statement for such fiscal year, together
with the report of independent certified accountants, (ii) within sixty
(60) days after the end of each of the first three fiscal quarters in each
fiscal year unaudited consolidated statements of financial
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condition and consolidated statement of income of Seller and RAC and (iii)
within thirty (30) days after the last day of each calendar month
consolidated statements of income for such month and balance sheets as of
the end of such month accompanied in each case by a certificate of the
chief financial officer or treasurer of Seller stating (x) that such
financial statements are fairly presented in accordance with generally
accepted accounting principles and (y) that no Event of Default exists
under the Agreement. Each delivery of Loans by Seller to Buyer hereunder
will constitute a representation by Seller that there has been no material
adverse change in Seller's financial condition not disclosed to Buyer
since the date of the most recent financial statement delivered to Buyer
as aforesaid. Seller shall provide Buyer, from time to time at Seller's
expense, with such information of a financial or operational nature
respecting Seller as Buyer may reasonably request promptly upon receipt of
such request.
11. MINIMUM AND MAXIMUM TRANSACTION AMOUNTS; MARGIN. With respect to all
Transactions hereunder:
(a) The minimum amount of any Transaction under the Agreement shall have
an aggregate Repurchase Price of $1,000,000;
(b) The aggregate outstanding Repurchase Price for the Loans subject to
the Agreement at any one time shall not exceed $300,000,000; and
(c) The aggregate outstanding principal amount of all Loans insured
under the Title I Program subject to the Agreement that are not
secured by realty or personalty shall not exceed $5,000,000.
12. REPURCHASE PRICE; PRICE DIFFERENTIAL. The Repurchase Price as of any date
shall include that portion of the Price Differential that has accrued but
has not been paid. The Price Differential shall accrue, be calculated and
be compounded on a daily basis for each Purchased Security (such
calculation to be made on the basis of a 360-day year and the actual
number of days elapsed). The Price Differential shall be payable monthly
in arrears to Buyer with respect to each Transaction. The Price
Differential for any Transaction shall, unless otherwise agreed by the
parties, be equal to the product of (i) the Repurchase Price (which shall
be the Purchase Price increased by the accrued and unpaid Price
Differential) and (ii) a per annum percentage one hundred (100) basis
points (or such other number of basis points as Buyer and Seller shall
mutually agree) in excess of LIBOR. Payment of the Price
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Differential to Buyer shall be made by wire transfer in immediately
available funds.
13. ADDITIONAL INFORMATION.
(a) At any reasonable time, Seller shall permit Buyer, its agents or
attorneys, to inspect and copy any and all documents and data in
their possession pertaining to each Security that is the subject of
such Transaction. Such inspection shall occur upon the request of
Buyer at a mutually agreeable location during regular business hours
and on a date not more than two (2) business days after the date of
such request.
(b) Seller agrees to provide Buyer from time to time with such
information concerning Seller of a financial or operational nature
as Buyer may reasonably request.
(c) Seller shall provide Buyer with copies of all filings made by or on
behalf of Seller or any entity that controls Seller, with the
Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended, promptly upon making such filings.
14. TRANSACTION PROCEDURES; TRANSACTIONS OPTIONAL.
(a) Buyer may, in its sole reasonable discretion, reject any Security
from inclusion in a Transaction hereunder for any reason.
(b) Any provision of the Agreement to the contrary notwithstanding, each
purchase by Buyer hereunder is discretionary on the part of Buyer.
15. OPINIONS OF COUNSEL. Seller shall, on the date of the first Transaction
hereunder and, upon the reasonable request of Buyer, on the date of any
subsequent Transaction, cause to be delivered to Buyer, with reliance
thereon permitted as to any person or entity that purchases the Loans from
Buyer in a repurchase transaction, a favorable opinion of Seller's counsel
with respect to the matters set forth in Exhibit A hereto, in form and
substance reasonably acceptable to Buyer.
16. ADDITIONAL CONDITIONS. Prior to entering into the initial Transaction
under the Agreement, Seller shall cause each of the following conditions
to occur:
(a) A Custodial Agreement in a form satisfactory to Buyer shall have
been executed and delivered by the parties thereto;
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(b) Seller shall have disclosed information reasonably satisfactory to
Buyer with respect to the scheduled maturities and termination
provisions of all outstanding credit facilities and debt of Seller;
(c) Seller shall have delivered to Buyer an undated letter to Seller's
archivist authorizing and directing such archivist to make available
to Buyer and its agents all printouts and all computer software
pertaining to the Loans; and
(d) The Custodian shall have delivered to Buyer a Custodial Confirmation
Statement relating to the Loans subject to the Transaction.
17. REPURCHASE TRANSACTIONS.
(a) Ownership of all Loans shall pass to Buyer and nothing in this
Agreement shall preclude Buyer from engaging in repurchase
transactions with the Loans or otherwise pledging or hypothecating
the Loans, but no such transaction shall relieve Buyer of its
obligations to resell and transfer Loans to Seller pursuant to the
terms hereof and no such transaction shall have a maturity date
later than the Repurchase Date unless such transaction permits the
substitution of collateral.
(b) Buyer hereby grants to Seller the right to perform in Buyer's stead
under any repurchase, reverse repurchase, loan or similar
transaction in which Buyer has sold, pledged or otherwise
transferred the Loans, in the event that Buyer has defaulted on its
obligations to repurchase or accept redelivery of such Loans in
conformity with the terms of any such transaction and so long as an
Event of Default under this Agreement by Seller shall not have
occurred and be continuing. Buyer further acknowledges that each
Loan identified on a loan schedule and included in a Transaction
hereunder is unique and identifiable on the date of the related
Transaction and that an award of money damages would be insufficient
to compensate Seller for the losses and damages incurred by Seller
in the event of Buyer's failure to transfer and deliver the Loans as
provided in Paragraph 3(e) or 11 hereof.
18. NEW YORK JURISDICTION; WAIVER OF JURY TRIAL. Seller agrees to submit to
personal jurisdiction in the State of New York in any action or proceeding
arising out of the Agreement. Buyer and Seller each hereby waives the
right of trial by
16
jury in any litigation arising hereunder.
19. SERVICING ARRANGEMENTS.
(a) The parties hereto agree and acknowledge that, notwithstanding the
purchase and sale of the Loans contemplated hereby, Seller shall
cause the Loans to continue to be serviced for the benefit of Buyer
and, if Buyer shall exercise its rights to sell the Loans pursuant
to the Agreement prior to the related Repurchase Date, Buyer's
assigns; provided, however, that the obligation of Seller to cause
Loans to be serviced for the benefit of Buyer as aforesaid shall
cease upon the payment to Buyer of the Repurchase Price therefor.
(b) Seller shall cause the Loans to be serviced in accordance with the
servicing standards for similar assets employed by prudent services
in the home improvement loan industry and the home equity loan
industry, as applicable.
(c) Seller shall cause the servicer to enforce the rights of the owner
of the Loans in accordance with the standards of a prudent lender in
the home improvement loan industry and the home equity loan
industry, as applicable.
(d) If an Event of Default shall have occurred and be continuing, Buyer
may, in its sole discretion without payment of any termination fee
or any other amount to Seller or any servicer, (i) sell its right to
the Loans on a servicing released basis or (ii) terminate the
servicer of the Loans with or without cause.
(e) Except with respect to Seller, each servicer of Loans must be
approved by Buyer.
20. FURTHER ASSURANCES. Seller shall promptly provide such further assurances
or agreements as Buyer may reasonably request in order to effect the
purposes of the Agreement.
21. BUYER AS ATTORNEY-IN-FACT. Buyer is hereby appointed to act after the
occurrence and during the continuation of an Event of Default as the
attorney-in-fact of Seller for the purpose of carrying out the provisions
of the Agreement and taking any action and executing any instruments that
Buyer may deem necessary or advisable to accomplish the purposes hereof,
which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, Buyer shall
have the right and power after
17
the occurrence and during the continuation of any Event of Default to
receive, endorse and collect all checks made payable to the order of
Seller representing any payment on account of the principal of or interest
on any of the Purchased Securities and to give full discharge for the
same.
22. TERMINATION. Notwithstanding any provisions of Paragraph 15 of the Master
Repurchase Agreement to the contrary, the Agreement and all Transactions
outstanding hereunder shall terminate automatically without any
requirement for notice on the date occurring eleven calendar months and
twenty-nine days after the date as of which the Agreement is entered into;
provided, however, that the Agreement and any Transaction outstanding
hereunder may be extended by mutual agreement of Buyer and Seller; and
provided further, however, that no such party shall be obligated to agree
to such an extension.
23. APPOINTMENT OF AGENT. MLCC hereby appoints MLMCI as its agent for purposes
of reviewing and executing Confirmations, determining Market Value,
exercising any termination option provided for in Paragraph 9 of these
Supplemental Terms, exercising MLCC's rights under any margin maintenance
provision of the Agreement, exercising MLCC's rights under the default
provisions of the Agreement and such other purposes as MLCC may direct.
The appointment of such agent shall not relieve MLCC of its obligations as
Buyer hereunder.
24. BINDING TERMS. All of the covenants, stipulations, promises and agreements
in the Agreement shall bind the successors and assigns of the parties
hereto, whether expressed or not.
25. NOTICES AND OTHER COMMUNICATIONS. Any provision of Paragraph 13 of the
Repurchase Agreement to the contrary notwithstanding, any notice required
or permitted by the Agreement shall be in writing (including telegraphic,
facsimile or telex communication) and shall be effective and deemed
delivered only when received by the party to which it is sent; provided,
however, that a facsimile transmission shall be deemed to be received when
transmitted so long as the transmitting machine has provided an electronic
confirmation of such transmission. Any such notice shall be sent to a
party at the address or facsimile transmission number set forth in Annex
II attached hereto.
26. INCORPORATION OF TERMS. The Repurchase Agreement as supplemented hereby
shall be read, taken and construed as one and the same instrument.
18
27. EXPENSES. Seller shall pay its own expenses and all reasonable
out-of-pocket costs and expenses (including fees and disbursements of
counsel): (1) of Buyer incident to the preparation and negotiation of the
Agreement, the Custodial Agreement and any documents relating thereto,
provided that Seller's liability for such costs and expenses of Buyer
pursuant to this clause 1 shall not exceed a total of $17,500; (2) of
Buyer incident to the preparation and negotiation of any amendments or
waivers thereto, and the protection of the rights of Buyer thereunder; and
(3) of Buyer incident to the enforcement of payment of amounts due under
the Agreement or the Custodial Agreement, whether by judicial proceedings
or otherwise, including, without limitation, in connection with
bankruptcy, insolvency, liquidation, reorganization, moratorium or other
similar proceedings involving Seller. Notwithstanding any provision hereof
to the contrary, the obligations of Seller under this Paragraph 27 shall
be effective and enforceable whether or not any Transaction remains
outstanding and shall survive payment of all other obligations owed by
Seller to Buyer.
28. COUNTERPARTS. The Agreement may be executed in any number of counterparts,
each of which counterparts shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.
19
EXHIBIT A
OPINION OF COUNSEL TO SELLER
1. Seller is duly organized and validly existing as a corporation in good
standing under the laws of the State of Texas and has power and authority to
enter into and perform its obligations under this Agreement and the Custody
Agreement. Seller is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the business transacted by it
requires such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets or condition
(financial or other) of Seller and its subsidiaries, considered as a whole.
2. This Agreement and the Custody Agreement have each been duly
authorized, executed and delivered by Seller, and each constitutes a valid and
legally binding obligation of Seller enforceable against Seller in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights generally and to general equity principles.
3. No consent, approval, authorization or order of any state or federal
court or government agency or body is required to be obtained by Seller for the
consummation of the transactions contemplated by this Agreement or the Custody
Agreement.
4. The consummation of any of the transactions contemplated by this
Agreement and the Custody Agreement will not conflict with, result in a breach
of, or constitute a default under the articles of incorporation or bylaws of
Seller or the terms of any indenture or other agreement or instrument known to
us to which Seller is party or bound, or any order known to such counsel to be
applicable to Seller or any regulations applicable to Seller, of any state or
federal court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over Seller.
5. There is no pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any arbitrator involving
Seller or relating to the transaction contemplated by this Agreement or the
Custody Agreement which, if adversely determined, would have a material adverse
effect on Buyer.
6. Seller is duly registered as a finance company in each state in which
Loans were originated, to the extent such registration is required by applicable
law.
A-1
7. Each Loan will have been endorsed in a manner which satisfies any
requirement of endorsement in order to transfer all right, title and interest in
and to that Loan from Seller to Buyer. Each assignment of Mortgage related to
each such Loan is in recordable form and is sufficient under applicable law to
validly and effectively transfer all right, title and interest of Seller to
Buyer. This Agreement together with (a) the delivery of such related Loans to
Custodian, (b) the endorsement of such Loans to Buyer and (c) the delivery of
the assignments of Mortgages related to the Loans to the Custodian in recordable
form assigning such Mortgages to Buyer, creates a valid, perfected security
interest in such Loans in favor of Buyer. Such security interest will have the
same priority and will be subject to the same security interests and liens as
apply to such Loans in the hands of Seller.
A-2
EXHIBIT B
REPRESENTATIONS AND WARRANTIES
(a) Delivery of Loan Documents. All of the original or certified
documentation required to be delivered to Buyer or the Custodian on or prior to
the Purchase Date, or as otherwise provided in this Agreement has or will be so
delivered.
(b) Payments Current. As of the Purchase Date, no Loan is more than 60
days delinquent, based on the terms of the related Note and Mortgage, if
applicable. Seller has not advanced funds, or induced, solicited or knowingly
received any advance of funds from a party other than the related Borrower,
directly or indirectly, for the payment of any amount required by the Loan.
(c) No Waiver or Modification. The terms of each Note and Mortgage, if
applicable, have not been impaired, waived, altered or modified in any respect,
except by written instruments reflected in the Loan File and no provision of any
Mortgage, if applicable, or Note has been "whited out" or erased unless such
modification has been initialed by each of the parties to the related Loan. No
instrument of waiver, alteration, modification or assumption has been executed
except for the instruments that are part of the Loan File and the terms of which
are reflected in the Loan File.
(d) No Defenses. No Note or Mortgage, if applicable, is subject to any
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Note or Mortgage, if applicable, or the
exercise of any right thereunder, render such Note or Mortgage unenforceable, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted in any proceeding or was
asserted in any state or federal bankruptcy or insolvency proceeding at the time
the Loan was originated.
(e) Compliance with Laws. Any and all requirements of any federal, state
or local law applicable to a Loan have been complied with including, without
limitation, all consumer, usury, truth-in-lending, consumer credit protection,
equal credit opportunity or disclosure laws applicable to such Loan, and with
respect to the Title I Loans, the FHA regulations for the Title I Program; and
such Loan was originated in compliance with all applicable laws and no fraud or
misrepresentation was committed by any Person in connection therewith.
B-1
(f) No Satisfaction or Release of Lien. No Mortgage, if applicable, has
been satisfied, canceled, subordinated or rescinded, in whole or in part. No
Mortgaged Property has been released from the lien of the related Mortgage, if
applicable, in whole or in part, nor has any instrument been executed that would
effect any such release, cancellation, subordination or rescission, other than
the subordination of the lien of such Mortgage securing a Loan (in the case of a
Title I Loan, as permitted by the FHA regulations for the Title I Program) with
respect to a superior lien on such Mortgaged Property in connection with the
refinancing of the mortgage loan relating to such superior lien.
(g) Valid Lien. With respect to a Note that is secured by a Mortgage, if
applicable, such Mortgage is or creates a valid, subsisting and enforceable lien
on the related Mortgaged Property, including, in the case of a Mortgage securing
a Home Improvement Loan, the land and all buildings on the related Mortgaged
Property.
(h) Validity of Loan Documents. Each Note and each Mortgage, if
applicable, is genuine and each is the legal, valid and binding obligation of
the Borrower thereof, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting creditors' rights in general and by general
principles of equity. All parties to a Note and the related Mortgage, if
applicable, had legal capacity at the time to enter into the Loan and to execute
and deliver such Note and Mortgage, and such Note and Mortgage have been duly
and properly executed by such parties.
(i) Full Disbursement of Proceeds. As of the applicable Cut-Off Date, the
proceeds of each Loan have been fully disbursed and there is no requirement for
future advances thereunder, all costs, fees and expenses incurred in making or
closing each Loan and the recording of the related Mortgage, if applicable, were
disbursed, the Borrower is not entitled to any refund of any amounts paid or due
under the Note or the related Mortgage, if applicable, and any and all
requirements set forth in the related Loan documents have been complied with.
(j) Ownership. Immediately prior to the transfer thereof to Buyer, Seller
had good and marketable title to each Loan, Note and Mortgage, if applicable,
Seller was the sole owner thereof and Seller had full right to transfer each
such Loan, Note and Mortgage, if applicable, to Buyer; and upon the transfer
thereof by Seller to Buyer, Buyer became the sole transferee of each Loan, Note
and Mortgage, if applicable, free and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest (other than the interest of Seller
and Buyer therein
B-2
under the Agreement).
(k) Ownership of Mortgaged Property. With respect to a Loan that is
secured by a Mortgaged Property, the related servicing loan file contains a
title document reflecting that title to such Mortgaged Property is held at least
50% by the Borrower under such Loan.
(l) No Defaults. Except with respect to any delinquent scheduled monthly
payment set forth in subsection (ii) above, there is no default, breach,
violation or event of acceleration existing under a Mortgage, if applicable, or
the related Note and, to the best of Seller's knowledge, there is no event
which, with the passage of time or with notice and/or the expiration of any
grace or cure period, would constitute such a default, breach, violation or
event of acceleration and neither Seller nor its predecessors have waived any
such default, breach, violation or event of acceleration, except as set forth in
an instrument of waiver, alteration, modification or assumption that is included
in the related Loan File.
(m) No Condemnation or Damage. To the best of Seller's knowledge, the
physical condition of the related Mortgaged Property, if applicable, has not
deteriorated since the date of origination of the Loan (normal wear and tear
excepted) and there is no proceeding pending for the total or partial
condemnation of such Mortgaged Property.
(n) Mortgage Remedies Adequate. Each Mortgage, if applicable, contains
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the related Mortgaged
Property of the benefits of the security provided thereby, including, (i) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise, by judicial foreclosure.
(o) Underwriting of Loans. Each Loan has been underwritten by the
originator thereof in accordance with such originator's then current
underwriting guidelines.
(p) Terms of Loans. Each Loan is a fixed rate loan; each Note has an
original term to maturity of not less than 24 months nor more than 25 years and
three months from the date of origination; each Note is payable in monthly
installments of principal and interest, with interest payable in arrears, and
requires a monthly payment which is sufficient to amortize the original
principal balance over the original term and to pay interest at the interest
rate set forth in related Note; and no Note provides for any extension of the
original term.
(q) Security. No Note is, or has been, secured by any
B-3
collateral except the lien of the related Mortgage, if applicable.
(r) Deed of Trust. If a Mortgage for a Loan constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves as such and is named in such Mortgage, or a
valid substitution of trustee has been recorded or may be recorded and no
extraordinary fees or expenses are, or will become, payable by Seller to the
trustee under the deed of trust, except in connection with default proceedings
and a trustee's sale after default by the related Borrower.
(s) Types of Loans. Each Loan is either (i) a Home Improvement Loan, (ii)
a Debt Consolidation Loan, (iii) a Combination Loan, (iv) a Purchase or
Refinance Loan, or (v) subject to the prior approval of Buyer to the inclusion
within the definition of Loan, another type of mortgage or consumer loan. No
Loan was originated for the express purpose of purchasing a manufactured home.
(t) Completion of Improvements and Obligations. With respect to a Home
Improvement Loan or a Combination Loan that has been originated through a home
improvement contractor, all improvements to be made to the related Mortgaged
Property, if applicable, with the proceeds of the Loan have been completed. All
obligations of a seller or contractor under a Debt Consolidation Loan, a
Purchase or Refinance Loan or a Combination Loan have been completed in
accordance with the terms thereof as of the Purchase Date, and no additional
goods or services will be, or are required to be provided by such seller or
contractor after the Purchase Date.
(u) Origination and Servicing Practices. The origination practices used by
each originator of each Loan and the servicing and collection practices used by
Seller with respect to each Loan have been in all material respects legal,
proper, prudent and customary based upon the loan origination and servicing
industry practices applicable to the respective loan type.
(v) Servicing Practices. Each Loan has been serviced in accordance with
all applicable laws and, to the best of Seller's knowledge, no fraud or
misrepresentation was committed by any Person in connection therewith.
(w) No Bulk Transfer. The transfer and assignment of each Note and each
related Mortgage, if applicable, by Seller to Buyer was not subject to the bulk
transfer laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(x) Relief Act Matters. No Borrower has notified Seller
B-4
and no relief has been requested or allowed to a Borrower under the Soldiers'
and Sailors' Civil Relief Act of 1940.
(y) Superior Lien Delinquencies. No superior lien on the related Mortgaged
Property, if applicable, was more than 30 days past due at the time of
origination of the Loan.
(z) Good Repair. To the best of Seller's knowledge, the related Mortgaged
Property described in each Mortgage, if applicable, is free of damage and in
good repair or will be free of damage and in good repair following the
completion of any improvements or repairs to be financed by the related Loan.
(aa) Interest Computation Method. Interest for each Loan is calculated at
a rate of interest computed by the simple interest method or the actuarial
method.
(bb) Retail Installment Contracts. Some of the Loans may be retail
installment contracts for goods or services, and some of the Loans may be Home
Improvement Loans for goods or services, which will be either "consumer credit
contracts" or "purchase money loans" as such terms are defined in 16 C.F.R. Part
433.1.
(cc) Inspections of Improvements; and No Encroachment. To the best of
Seller's knowledge, all required inspections, licenses and certificates with
respect to the improvements and the use and occupancy of all occupied portions
of all property securing the related Mortgage, if applicable, have been made,
obtained or issued as applicable. To the best of Seller's knowledge, all
improvements which were considered in determining the appraised value of the
Mortgaged Property securing the related Mortgage, if applicable, lay wholly
within the boundaries and building restrictions lines of such Mortgaged Property
and no improvements on adjoining properties encroach upon such Mortgaged
Property and no improvement located on or being a part of such Mortgaged
Property is in violation of any applicable zoning laws or regulation.
(dd) Remedies Against Originators. In the event that any Loan was
originated by an entity (such entity, the "Originator") other than Seller or an
affiliate of Seller, and to the extent that Seller has failed to fulfill or is
not capable of fulfilling its obligations to cure, substitute or repurchase such
Loan as required hereunder, then Buyer may enforce any remedies for breach of
representations and warranties made by the Originator with respect to such Loan.
(ee) Consent of Senior Lien. With respect to each Loan that is secured by
a Mortgage and such Mortgage is not a first lien on the related Mortgaged
Property, either (i) no consent for the Loan is required by the holder of the
related prior lien or (ii)
B-5
such consent has been obtained and is included in the servicer's loan file for
such Loan.
(ff) Flood Insurance. If required by federal or state law, the related
Mortgaged Property securing a Loan is covered by flood insurance with a standard
mortgagee clause and extended coverage in an amount which is not less than the
value of such Mortgaged Property. All such insurance policies meet the
requirements of the current guidelines of the Federal Insurance Administration,
conform to the requirements of the FNMA Sellers' Guide and the FNMA Servicers'
Guide, and are of standard type and quality for the locale where the related
Mortgaged Property is located. All acts required to be performed to preserve the
rights and remedies of Seller in any such insurance policies have been performed
including, without limitation, any necessary notifications of insurers and
assignments of policies or interests therein.
(gg) No Fraudulent Conveyance. The Loans are not being transferred by
Seller with any intent to hinder, delay or defraud any creditors.
(hh) Value and Marketability. To the best of Seller's knowledge, there do
not exist any circumstances, conditions or information with respect to the Loan,
the related Mortgaged Property securing same, if applicable, the Borrower or the
Borrower's credit standing that reasonably can be expected to cause private
institutional investors investing in the same type of loan to regard such Loan
as an unacceptable investment, to increase the likelihood that such Loan will
become delinquent, or adversely affect the value or marketability of the Loan.
(ii) Environmental Compliance. To the best of Seller's knowledge, the
Mortgaged Property, if applicable, is free from any and all toxic or hazardous
substances and there exists no violation of any local, state or federal
environmental law, rule or regulation.
(jj) No Buydown, GPM or Shared Appreciation Loans. No Loan contains any
provisions pursuant to which principal and interest payments are paid or
partially paid with funds deposited in any separate account established by
Seller, the Borrower or anyone else on behalf of the Borrower, or paid by any
source other than the Borrower. No Loan contains any other similar provision
which may constitute a "buydown" provision. No Loan is a graduated payment
mortgage loan. No Loan has a shared appreciation or other contingent interest
feature.
(kk) No Chattel Paper. Each Note is comprised of one original promissory
note and each such promissory note constitutes an "instrument" for purposes of
Section 9-105(1)(i)
B-6
of the Uniform Commercial Code. No Note constitutes or is comprised of "chattel
paper" as such term is defined in Section 9-105(1)(b) of the Uniform Commercial
Code. Each Note has been delivered to Buyer or the Custodian.
(ll) Entire Agreement. The Note and the Mortgage, if applicable, contain
the entire agreement between the related Borrower and the lender and all
obligations of the lender under the related Loan, and no other agreement
defines, modifies, or expands the obligations of the lender under the Loan,
except for any assumptions or modifications included in the related Loan File.
(mm) Title I insurance Coverage. Each Title I Loan is an FHA Title I
property improvement loan (as such term is defined in 24 C.F.R. Part 201.2)
underwritten by the originator thereof in accordance with such originator's then
current underwriting guidelines and all FHA requirements as set forth in the FHA
regulations and rules for the Title I Program, and has been or will be reported
to and acknowledged by the FHA for Title I insurance under Seller's Title I
contract of insurance. Further, Seller has no knowledge of any conditions or
circumstances that could reasonably be expected to adversely affect the Title I
insurability or invalidate or cancel the Title I insurance with respect to any
Title I Loan under the Title I Program.
B-7
EXHIBIT C
MONTHLY ACTIVITY REPORT
Reporting Period (_______________ - _______________)
- --------------------------------------------------------------------------------
ADVANCES INTEREST PRINCIPAL TOTAL
Beginning Pool Principal Balance
Scheduled Monthly Payments
Recovery of Delinquent Scheduled Payments
Principal Prepayments
FHA Claims Paid
Funds Received on Defaulted Loans (FHA)
-------- -------- -------
Total Funds Collected
Non Performing Sale
Non Performing Sale Proceeds (funds sent
previously)
CONVENTIONAL CHARGEOFFS
CONVENTIONAL DEFAULTED (funds received)
PAYMENTS RECEIVED ON FHA DEFAULTS
Repurchases (funds sent previously)
Net Principal Losses on FHA Title 1 Claims
Substitution Adjustment
CONVENTIONAL DEFAULTED LOANS
-------- -------- -------
Ending Pool Principal Balance
- --------------------------------------------------------------------------------
FUNDS DEPOSITED TOTAL
Total Funds Collected
Less: Servicing Fees
Less: Retained Yield
Less: FHA Insurance Premium Deposit
-------
Total Deposited Funds
- --------------------------------------------------------------------------------
DEFAULTED LOAN BALANCES
TITLE 1 CONVENTIONAL COMBINED COMBINED
CURRENT CURRENT PERIOD CUMULATIVE
AMOUNTS AMOUNTS AMOUNTS AMOUNT
-------- --------- --------- ---------
FHA Defaulted Loans
Conventional Defaulted Loans
Total Principal Advances
C-1
- --------------------------------------------------------------------------------
TITLE 1 CONVENTIONAL COMBINED TOTAL
CHARGEOFFS
Principal
Interest Accrued
Funds Received
Total Loss
- --------------------------------------------------------------------------------
FHA INSURANCE
Beginning FHA Insurance Amount
Less: FHA Claims Paid
Less: Annual Reductions
Plus: Additional HUD Insurance
Ending FHA Insurance Amount
No. Loans Loan Balance 10% Loss Expected Claim
------------ -------- --------------
Less: Claims Filed in Current Period
Less: Previous Unresolved Claims Filed
Available FHA Insurance Amount
Less: Claims Pending
Expected Remaining FHA Insurance Amount
Current Cumulative
------- ----------
Rejected Claims
- --------------------------------------------------------------------------------
PORTFOLIO INFORMATION (Ending Period)
TITLE 1 CONVENTIONAL COMBINED
------- ------------ --------
Weighted Average Remaining Maturity (WARM)
Weighted Average Coupon (WAC)
Remaining Number of Loans (#)
Remaining Number of Loans ($)
C-2
- --------------------------------------------------------------------------------
DELINQUENCY AND FORECLOSURE INFORMATION
TITLE 1 ONVENTIONAL TITLE 1 CONVENTIONAL COMBINED
# % # % $ % $ % $ %
----------------------------------------------------------
31-60 Days Delinquent
61-90 Days Delinquent
91 Days Plus Delinquent
Real Estate Owned
Loans in Foreclosure
Other
- --------------------------------------------------------------------------------
NET LOSS AND LIQUIDATION
TITLE 1 CONVENTIONAL COMBINED
------- ------------ --------
Liquidated Mortgage Loans
Accrued but Unpaid Interest
Net Liquidation Proceeds
Net Losses (Gains)
C-3
ANNEX II
Names and Addresses for Communications Between Parties
MERRILL LYNCH MORTGAGE CAPITAL, INC.
Merrill Lynch World Headquarters
World Financial Center
North Tower - 8th Floor
New York, New York 10281
Attention: James B. Cason
Telephone: (212) 449-1219
Telecopy: (212) 449-6673
MERRILL LYNCH CREDIT CORPORATION c/o Merrill Lynch
Mortgage Capital, Inc.
Merrill Lynch World Headquarters
World Headquarters
World Financial Center
North Tower - 8th Floor
New York, New York 10281
Attention: James B. Cason
Telephone: (212) 449-1219
Telecopy: (212) 449-6693
in each case with copies to:
Merrill Lynch Mortgage Capital, Inc.
Merrill Lynch World Headquarters
World Headquarters
World Financial Center
North Tower - 8th Floor
New York, New York 10281
Attention: Michael A. Blum
Telephone: (212) 449-8486
Telecopy: (212) 449-6693
and
Brown & Wood LLP
One World Trade Center
New York, New York 10048
Attention: Michael P. Peck
Telephone: (212) 839-5576
Telecopy: (212) 839-5599
--------------------------------
FIRSTPLUS FINANCIAL, INC.
1250 Mockingbird Lane
Dallas, Texas 75247-4902
Attention: Barry Tenenholtz
Telephone: (214) _______
Telecopy: (214) _______