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EXHIBIT 10.1
LOAN SALE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This LOAN SALE AGREEMENT dated as of September 27, 1996 (the
"Agreement"), is made and entered into by and between FIRSTPLUS INVESTMENT
CORPORATION, as purchaser (together with its successors and assigns, being
referred to herein as "Purchaser"), and FIRSTPLUS FINANCIAL, INC., formerly
known as Remodelers National Funding Corp., as seller (together with its
successors and assigns, being referred to herein as "FFI").
W I T N E S S E T H:
WHEREAS, FFI is engaged in the business of underwriting, originating or
acquiring property improvement and debt consolidation loans secured by
mortgages on residential property;
WHEREAS, FFI desires to sell to Purchaser and Purchaser desires to
purchase from FFI on a whole loan basis the Initial Home Loans and all monies
due and to become due thereunder after August 31, 1996;
WHEREAS, FFI desires to sell to Purchaser and Purchaser desires to
purchase from FFI on a whole loan basis the Subsequent Home Loans and all
monies due and to become due thereunder after the related Cut-Off Date;
WHEREAS, Purchaser intends to transfer the Home Loans to FIRSTPLUS Home
Loan Owner Trust 1996-3 (the "Trust") in order to facilitate the issuance by
the Trust of a series of asset backed notes and certificates (the "Asset
Backed Securities");
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements herein set forth, Purchaser and FFI each agree as follows:
Section 1. Representations and Warranties.
FFI hereby represents and warrants to the Purchaser and the Issuer, with
respect to each Subsequent Home Loan, as of the applicable Subsequent Transfer
Date; and with respect to each Initial Home Loan, as of the date hereof (each,
a "Closing Date") and with respect to itself, as follows:
(a) Home Loan Information. The information with respect to each Home
Loan set forth in the Home Loan Schedule is true and correct in all material
respects as of the applicable Cut-Off Date.
(b) Delivery of Home Loan Documents. All of the original or
certified documentation required to be delivered to the Indenture Trustee or to
the Custodian on or prior to the Closing Date
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or the Subsequent Transfer Date, as applicable, or as otherwise provided in
this Agreement has or will be so delivered.
(c) Payments Current. As of the applicable Cut-off Date, no more
than 0.15% (by aggregate Cut-off Date Principal Balance) of the Initial Home
Loans are more than 30 days but not more than 60 days delinquent, based on the
terms under which the related Mortgages, if applicable, and Debt Instruments
have been made and none of the Home Loans are more than 60 days delinquent.
The Transferor has not advanced funds, or induced, solicited or knowingly
received any advance of funds from a party other than the related Obligor,
directly or indirectly, for the payment of any amount required by any Home
Loan.
(d) No Waiver or Modification. The terms of each Debt Instrument and
Mortgage, if applicable, have not been impaired, waived, altered or modified in
any respect, except by written instruments reflected in the Indenture Trustee's
Home Loan File and no provision of any Mortgage, if applicable, or Debt
Instrument has been "whited out" or erased unless such modification has been
initialed by each of the parties to the related Home Loan. No instrument of
waiver, alteration, modification or assumption has been executed except for the
instruments that are part of the Indenture Trustee's Home Loan File and the
terms of which are reflected in the Indenture Trustee's Home Loan File.
(e) No Defenses. No Debt Instrument 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 any Debt Instrument or
Mortgage, if applicable, or the exercise of any right thereunder, render such
Debt Instrument 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 related Home Loan
was originated.
(f) Compliance with Laws. Any and all requirements of any federal,
state or local law applicable to each Home 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
each Home Loan; each Home Loan was originated in compliance with all applicable
laws and no fraud or misrepresentation was committed by any Person in
connection therewith.
(g) 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 Home Loan with
respect to which a related Superior Lien was released in connection with the
refinancing of the mortgage loan relating to such Superior Lien.
(h) Valid Lien. With respect to each Debt Instrument that is secured
by a Mortgage, if applicable, such Mortgage is or creates a valid, subsisting
and enforceable lien on the related
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Mortgaged Property, including, in the case of a Mortgage securing a Home
Improvement Loan, the land and all buildings on the related Mortgaged Property.
(i) Validity of Home Loan Documents. Each Debt Instrument and each
Mortgage, if applicable, is genuine and each is the legal, valid and binding
obligation of the Obligor 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 each Debt Instrument and each
Mortgage, if applicable, had legal capacity at the time to enter into the
related Home Loan and to execute and deliver such Debt Instrument and Mortgage,
and such Debt Instrument and Mortgage have been duly and properly executed by
such parties.
(j) Full Disbursement of Proceeds. As of the applicable Cut-Off
Date, the proceeds of each Home 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 Home Loan and the recording of the Mortgage,
if applicable, were disbursed, the Obligor is not entitled to any refund of any
amounts paid or due under the Debt Instrument or any related Mortgage and any
and all requirements set forth in the related Home Loan documents have been
complied with.
(k) Ownership. Immediately prior to the conveyance thereof to the
Seller, the Transferor had good and marketable title to each Home Loan, Debt
Instrument and Mortgage, if applicable, was the sole owner thereof and had full
right to sell each Home Loan, Debt Instrument and Mortgage to the Seller and
upon the conveyance thereof by the Transferor to the Seller, the Seller became
the sole owner of each Home Loan, Debt Instrument and Mortgage, if applicable,
free and clear of any encumbrance, equity, lien, pledge, charge, claim or
security interest.
(l) Ownership of Mortgaged Property. With respect to each Home Loan
that is secured by a Mortgaged Property, the related Servicer's Home Loan File
contains a title document reflecting that title to such Mortgaged Property is
held at least 50% by the Obligor under such Home Loan.
(m) No Defaults. Except with respect to any delinquent scheduled
payment set forth in subsection (c) above, there is no default, breach,
violation or event of acceleration existing under any Mortgage, if applicable,
or any Debt Instrument and, to the best of the Transferor'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 the Transferor 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 Indenture Trustee's Home Loan File.
(n) No Condemnation or Damage. To the best of the Transferor's
knowledge, the physical condition of each Mortgaged Property has not
deteriorated since the date of origination of the related Home Loan (normal
wear and tear excepted) and there is no proceeding pending for the total or
partial condemnation of any Mortgaged Property.
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(o) 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.
(p) Underwriting of Home Loans. Each Home Loan has been underwritten
by the originator thereof in accordance with such originator's then current
underwriting guidelines.
(q) Terms of Home Loans. Each Home Loan is a fixed rate loan; each
Debt Instrument has an original term to maturity of not less than 24 months nor
more than 20 years and 32 days from the date of origination; each Debt
Instrument 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 related Home Loan Interest Rate; and no Debt Instrument
provides for any extension of the original term.
(r) Security. No Debt Instrument is, or has been, secured by any
collateral except the lien of the related Mortgage, if applicable.
(s) Deed of Trust. If a Mortgage for a Secured Home 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 the Transferor to the trustee under the deed of trust, except in connection
with default proceedings and a trustee's sale after default by the related
Obligor.
(t) Types of Home Loans. Each Home Loan is either (i) a Home
Improvement Loan, (ii) a Debt Consolidation Loan, (iii) a Combination Loan, or
(iv) a first or junior lien purchase money loan. No Home Loan was originated
for the express purpose of purchasing a manufactured home.
(u) Completion of Improvements. With respect to all Home Improvement
Loans that have been originated through a home improvement contractor, all
improvements to be made to each Mortgaged Property with the proceeds of the
related Home Loan have been completed.
(v) Origination Practices. The origination practices used by each
originator of the Home Loans and the servicing and collection practices used by
the Transferor with respect to each Home Loan have been in all material
respects legal, proper, prudent and customary with respect to the loan
origination and servicing business as applicable to the respective loan type.
(w) Servicing Practices. Each Home Loan has been serviced in
accordance with all applicable laws and, to the best of the Transferor's
knowledge, no fraud or misrepresentation was committed by any Person in
connection therewith.
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(x) No Bulk Transfer. The sale, transfer, assignment, conveyance and
grant of the Debt Instruments and the Mortgages, if applicable, by the
Transferor to the Seller were not subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction.
(y) Delinquencies. As of the August 31, 1996 Cut-Off Date, no more
than 0.15% of the Initial Home Loans (by outstanding principal balance) were 31
days or more delinquent.
(z) Relief Act Matters. No Obligor has notified the Transferor, and
no relief has been requested or allowed to an Obligor under the Soldiers' and
Sailors' Civil Relief Act of 1940.
(aa) Selection Criteria. The Home Loans were not selected by the
Transferor for sale to the Seller or the Issuer on any basis intended to
adversely affect the Seller or the Issuer.
(bb) Superior Lien Delinquencies. No Superior Lien was more than 30
days past due at the time of origination of the related Home Loan.
(cc) Treasury Regulation Section 301.7701. On the Closing Date and on
each Subsequent Transfer Date, 55% (by aggregate principal balance) of the Home
Loans do not constitute "real estate mortgages" for the purpose of Treasury
Regulation Section 301.7701 under the Code. For this purpose a Home Loan does
not constitute a "real estate mortgage" if:
(i) The Home Loan is not secured by an interest in real
property, or
(ii) The Home Loan is not an "obligation principally secured by
an interest in real property." For this purpose an "obligation is
principally secured by an interest in real property" if it satisfies
either the test set out in paragraph (1) or the test set out in
paragraph (2) below.
(1) The 80-percent test. An obligation is principally secured
by an interest in real property if the fair market value
of the interest in real property securing the obligation
(A) was at least equal to 80 percent of the adjusted
issue price of the obligation at the time the
obligation was originated (or, if later, the time
the obligation was significantly modified); or
(B) is at least equal to 80 percent of the adjusted
issue price of the obligation on the Closing Date
or Subsequent Transfer Date, as applicable.
For purposes of this paragraph (1), the fair market value
of the real property interest must be first reduced by the
amount of any lien on the real property interest that is
senior to the obligation being tested, and must be further
reduced by a proportionate amount of any lien that is in
parity with the obligation being tested, in each case
before the percentages set forth in (1)(A)
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and (1)(B) are determined. The adjusted issue price of an
obligation is its issue price plus the amount of accrued
original issue discount, if any, as of the date of
determination.
(2) Alternative test. An obligation is principally secured by
an interest in real property if substantially all of the
proceeds of the obligation were used to acquire or to
improve or protect an interest in real property that, at
the origination date, is the only security for the
obligation. For purposes of this test, loan guarantees
made by the United States or any state (or any political
subdivision, agency, or instrumentality of the United
States or of any state), or other third party credit
enhancement are not viewed as additional security for a
loan. An obligation is not considered to be secured by
property other than real property solely because the
obligor is personally liable on the obligation. For this
purpose only substantially all of the proceeds of the
obligations means more than 66- 2/3% of the gross
proceeds.
(dd) Good Repair. To the best of the Transferor's knowledge, the
related Mortgaged Property described in each Debt Instrument 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 Home
Loan.
(ee) Home Loan Interest Method. Interest for each Home Loan is
calculated at a rate of interest computed by the simple interest method or the
actuarial method.
(ff) With respect to those Home Loans that are retail installment
contracts for goods or services, such Home Loans are home improvement loans for
goods or services, and are either "consumer credit contracts" or "purchase
money loans" as such terms are defined in 16 C.F.R. Part 433.1.
(gg) To the best of the Transferor'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
Mortgages, if applicable, have been made, obtained or issued as applicable.
(hh) In the event that any Home Loan was originated by an entity (such
entity, the "Originator") other than the Transferor and to the extent that the
Transferor has failed to fulfill or is not capable of fulfulling its
obligations to cure, substitute or repurchase such Home Loan as required
hereunder, then the Securities Insurer or the Indenture Trustee on behalf of
the Securityholders may enforce any remedies for breach of representations and
warranties made by the Originator with respect to such Home Loan.
(ii) With respect to each Home Loan that is not a first mortgage loan,
either (i) no consent for the Home Loan is required by the holder of the
related prior lien or (ii) such consent has been obtained and has been
delivered to the Indenture Trustee.
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(jj) If required by federal or state law, each property securing a
Home Loan is covered by flood and insurance with a standard mortgagee clause
and extended coverage in an amount which is not less than the value of such
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 property is located. All
acts required to be performed to preserve the rights and remedies of the
Indenture Trustee in any such insurance policies have been performed including,
without limitation, any necessary notifications of insurers and assignments of
policies or interests therein.
(kk) To the best of the Transferor's knowledge, all improvements which
were considered in determining the appraised value of the property securing
each Mortgage, if applicable, lay wholly within the boundaries and building
restrictions lines of the related property and no improvements on adjoining
properties encroach upon such property and no improvement located on or being a
part of such property is in violation of any applicable zoning laws or
regulation.
(ll) The Home Loans are not being transferred with any intent to
hinder, delay or defraud any creditors.
(mm) To the best of the Transferor's knowledge, there do not exist any
circumstances, conditions or information with respect to the Home Loan, the
related Mortgaged Property securing same, the Obligor the Obligor's credit
standing that reasonably can be expected to cause private institutional
investors investing in same type of home loan to regard such Home Loan as an
unacceptable investment, to increase the likelihood that such Home Loan will
become delinquent, or adversely affect the value or marketability of the Home
Loan.
(nn) To the best of the Transferor's knowledge, the Mortgaged Property
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.
(oo) Each Initial Home Loan conforms, and all Initial Home Loans in
the aggregate conform, in all material respects to the description thereof set
forth in the Prospectus Supplement.
(pp) No Home 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 the Transferor, the Obligor or anyone else on
behalf of the Obligor, or paid by any source other than the Obligor. No Home
Loan contains any other similar provision which may constitute a "buydown"
provision. No Home Loan is a graduated payment mortgage loan. No Home Loan
has a shared appreciation or other contingent interest feature.
(qq) Each Debt Instrument is comprised of one original promissory note
and each such promissory note constitutes an "instrument" for purposes of
Section 9-105(1)(i) of the UCC. No Debt Instrument constitutes or is comprised
of "chattel paper" as such term is defined in Section 9-105(1)(b) of the UCC.
Each Debt Instrument has been delivered to the Indenture Trustee.
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In light of the Transferor's underwriting guidelines, the Transferor has
reviewed all of the documents constituting each Servicer's Home Loan File and
each Indenture Trustee's Home Loan File and has made such inquiries as it deems
reasonable under the circumstances to make and confirm the accuracy of the
representations set forth herein.
Section 2. Purchase and Delivery.
In consideration for the sale and transfer of the Home Loans to
Purchaser by FFI, and upon transfer of such Home Loans to Purchaser or
Purchaser's designee from FFI on the date hereof with respect to the Initial
Home Loans, and on the applicable Subsequent Transfer Date with respect to the
Subsequent Home Loans, the Purchaser shall pay or cause to be paid to FFI good
and valuable consideration, (the "Purchase Price") including (without
limitation) (a) the net proceeds of the sale of the Asset Backed Securities and
(b) certain residual classes of securities subordinate to the Asset Backed
Secutities . The transfer of funds from Purchaser to FFI for the Purchase
Price for all Home Loans purchased shall be made by wire transfer of
immediately available funds to the bank account designated by FFI.
On the date hereof with respect to the Initial Home Loans, and on the
Subsequent Transfer Date with respect to the Subsequent Home Loans, FFI shall
transfer, assign and convey to Purchaser all of FFI's right, title and interest
in and to each Home Loan and the related Home Loan File, free and clear of any
adverse claims, rights or interests therein. FFI shall, or shall cause its
agent to, deliver to Purchaser or Purchaser's designee the related Home Loan
File.
On the date hereof with respect to the Initial Home Loans, and on the
Subsequent Transfer Date with respect to the Subsequent Home Loans, FFI shall
promptly transfer to Purchaser or its designee good title to the related
Mortgage, if applicable, pursuant to an Assignment of Mortgage and legal title
to the related Debt Instrument pursuant to the endorsement thereof in the name
of the Purchaser or its designee; provided that such Assignment of Mortgage, if
applicable, and endorsement of such Debt Instrument shall be prepared and
executed in the manner as specified in writing by the Purchaser. FFI shall
provide to Purchaser, at FFI's cost, a duly executed Assignment of Mortgage, if
applicable, and a blank endorsement of the related Debt Instrument. Purchaser
shall bear the cost and expense of completing and recording such Assignment of
Mortgage, if applicable, and completing the endorsement of such Debt Instrument
to the Purchaser or its designee.
Section 3. Sale Treatment. It is the express intent of the parties
hereto that the conveyance of the Home Loans by FFI to the Purchaser, as
contemplated by this Agreement be and be treated as an absolute transfer and
conveyance of all of FFI's right, title, ownership and other interest in the
Home Loans. In the event that, notwithstanding the intent of the parties, the
Home Loans are held by a court to be the property of FFI, then (i) this
Agreement shall be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the applicable Uniform Commercial Code; (ii) the transfer
of the Home Loans provided for herein shall be deemed to be a grant by FFI to
the Purchaser of a security interest (and/or an assignment of any security
interest that FFI may hold) in all of the FFI's right, title, ownership and
other interest in and to the Home Loans and all amounts payable to the holders
of the Home Loans in accordance with the terms thereof and all
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proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, to the extent the Purchaser
would otherwise be entitled to own such Home Loans and proceeds thereof; (iii)
the possession by the Purchaser or the Indenture Trustee of the Debt
Instruments and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 (or comparable provision) of the applicable Uniform Commercial
Code; and (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Purchaser for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Purchaser pursuant to any provision
hereof or pursuant to the Sale and Servicing Agreement shall also be deemed to
be an assignment of any security interest created hereby. FFI and the
Purchaser shall, to the extent consistent with this Agreement, take such
actions as may be reasonably necessary to ensure that, if this Agreement were
deemed to create a security interest in the Home Loans, such security interest
would be deemed to be a perfected first priority security interest under
applicable law and will be maintained as such throughout the term of the Sale
and Servicing Agreement.
Section 4. Binding Effect. This Loan Sale Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Purchaser
and FFI.
Section 5. Governing Law. This Loan Sale Agreement shall be governed
by and construed under the laws of the State of New York.
Section 6. Capitalized Terms. Capitalized terms used and not
otherwise defined herein have the meanings assigned to them in the Sale and
Servicing Agreement, dated as of September 1, 1996, by and between FFI, as
Transferor and Servicer, the Purchaser, as Seller, FIRSTPLUS HOME LOAN TRUST
1996-3, as Issuer and First Bank National Association, as Indenture Trustee and
Co-Owner Trustee.
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IN WITNESS WHEREOF, the undersigned Purchaser and FFI have executed this
Loan Sale Agreement as of the 27th day of September, 1996.
FIRSTPLUS FINANCIAL, INC., as Seller
By:
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Christopher J. Gramlich
Senior Vice President
FIRSTPLUS INVESTMENT CORPORATION,
as Purchaser
By:
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Christopher J. Gramlich
Senior Vice President
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