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EXHIBIT 10.7
MASTER LOAN PURCHASE AGREEMENT
This Master Loan Purchase Agreement (this "AGREEMENT") by and between
AAMES CAPITAL CORPORATION, a California corporation ("PURCHASER"), and PACIFIC
THRIFT AND LOAN COMPANY, a California corporation ("SELLER"), is made and
executed as of June 21, 1995 with reference to the following facts:
R E C I T A L S
A. Purchaser is engaged in the business of, inter alia, purchasing
residential mortgage loans from originating lenders, which mortgage loans
conform in all respects with Purchaser's underwriting and quality control
standards and procedures as currently in effect (a copy of which is attached
hereto as EXHIBIT "A") and as they may be changed by Purchaser from time to time
(the "GUIDELINES").
B. Seller is engaged in the business of originating and closing
residential mortgage loans in its own name as lender as well as purchasing
closed residential mortgage loans from unaffiliated lenders.
C. Seller desires to sell to Purchaser, and Purchaser is willing to
purchase from Seller, residential mortgage loans ("LOANS" and, individually, a
"LOAN") originated by Seller and closed in the name of Seller as lender or
originated by unaffiliated lenders and purchased by Seller, on the terms and
subject to the conditions set forth herein.
D. Following the sale of a Loan to Purchaser, Purchaser may, at its
option, sell and assign such Loan on a servicing released or servicing retained
basis to a third party investor and/or pledge the Loan to a creditor as
collateral for a warehouse line of credit, repurchase facility or similar
financing vehicle, and/or transfer the Loan to a trustee for deposit in a trust,
the assets of which consist of a pool of mortgage loans, in connection with the
sale of mortgage pass-through securities to various investors and/or transfer or
assign the Loan to a corporation, partnership, trust or other entity which
invests in mortgages or mortgage-related products (each such creditor, trustee,
investor in a Loan or mortgage pass-through security and corporation,
partnership, trust or other entity referred to herein, an "INVESTOR").
NOW, THEREFORE, in reference to the aforementioned facts, and in
consideration of the covenants and agreements herein set forth, Purchaser and
Seller hereby agree as follows:
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A G R E E M E N T
Section 1. AGREEMENT TO PURCHASE. On the terms and subject to the
conditions set forth in this Agreement, Purchaser hereby agrees to purchase from
Seller those Loans offered by Seller for sale to Purchaser pursuant to the terms
of the Agreement. The agreement of Purchaser and Seller set forth for the
purchase of the Loans by Purchaser from Seller shall cover and include only such
Loans as (a) are in strict compliance with the terms and conditions set forth in
the Guidelines and this Agreement, (b) are approved by Purchaser pursuant to the
terms of Section 3 of this Agreement and (c) unless otherwise approved in
writing by Purchaser, shall be limited to no more than $6,500,000 principal
amount of Loans in any one week.
Section 2. UNDERWRITING; DELIVERY OF LOANS.
(a) Underwriting. With respect to each Loan, Seller shall
obtain all necessary verifications, credit reports, and appraisals, on forms
designated and approved in advance by Purchaser, and such other documents and
information required pursuant to the Guidelines or otherwise required by
Purchaser in accordance herewith and as evidenced by those conditions listed by
Purchaser on any loan concurrence form ("LOAN CONCURRENCE") delivered by
Purchaser to Seller in connection with the related Loan.
(b) Delivery. Seller shall deliver the Loans by submitting to
Purchaser (i) a schedule listing each Loan proposed to be purchased (the "LOAN
SCHEDULE") and (ii) the related Loan file (the "LOAN File"), each of which shall
be in strict compliance with the Guidelines.
Section 3. CONDITIONS PRECEDENT TO PURCHASE.
Purchaser's obligation to purchase and pay for a Loan is subject to the
following conditions:
(a) Loan Schedule. The information set forth on the Loan
Schedule with respect to each Loan shall be complete and accurate. Purchaser
reserves the right to delete from such Loan Schedule any Loan which does not
meet the terms of this Agreement, in which case the aggregate Purchase Price for
all Loans scheduled for purchase on the purchase date (the "PURCHASE DATE")
shall be adjusted accordingly.
(b) Delivery of Loan File. Purchaser shall have received a
true, complete and correct copy of the related Loan File for review and
approval. Seller acknowledges and agrees that the original Loan File shall be
delivered to Purchaser on or prior to the Purchase Date.
(c) Loan File Documentation. Each Loan File shall contain the
documents listed on EXHIBIT "B" hereto (the "LOAN DOCUMENTS"), each of which
shall be in form and substance satisfactory to Purchaser. In all instances where
Seller cannot deliver the originals of the recorded mortgage, deed of trust or
other security instrument (each, a "MORTGAGE") or the original mortgagee policy
of title insurance as a part of the Loan File because of a delay associated with
recording (provided such delay is not caused by Seller), Seller may deliver
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certified true copies of the Mortgage or a mortgagee title insurance binder as
the case may be. In such instances, Seller shall deliver the originals of these
documents promptly upon receipt of same to Purchaser, but not later than ninety
(90) days from the Purchase Date of the related Loan. If Seller fails to deliver
to Purchaser said original Mortgage or mortgagee policy of title insurance
within such 90-day period, Seller shall repurchase the related Loan within ten
(10) calendar days after Purchaser's written request therefor at the Repurchase
Price (as defined in Section 8 hereof). Purchaser shall have a period of one
hundred eighty (180) days after the Purchase Date of any Loan to notify Seller
of any other document missing from the related Loan File and Seller shall be
required to deliver such missing document (or a true and correct copy thereof)
within ten (10) calendar days of such notice or to repurchase the Loan at the
Repurchase Price. After the expiration of such 180-day period, Seller shall have
no further obligation under the immediately preceding sentence.
(d) Loan Approval. With respect to each Loan, Purchaser will
review the Loan File to determine if it complies with the requirements of this
Agreement and the Guidelines, and Purchaser will notify Seller of its decision
to purchase or not to purchase a Loan. Purchaser shall have the right to effect
or cause to be effected a "drive-by" inspection of the property securing any
Loan. Purchaser shall have the right to reject any Loan if Purchaser determines
in its reasonable discretion that (i) any Loan Documentation with respect to
such Loan is materially defective or insufficient; (ii) any representation or
warranty set forth herein with respect to such Loan is not true and correct as
of the related Purchase Date; or (iii) any condition required in the Loan
Concurrence to be met has not been met.
It is understood and agreed by the parties hereto that an
employee, representative or agent of Purchaser shall generally review and
underwrite the Loan File with respect to a given Loan at Seller's premises prior
to Seller's funding, or purchase, of such Loan. If such Loan generally meets
Purchaser's criteria for purchase, Purchaser shall deliver to Seller its Loan
Concurrence with respect to such Loan. The Loan Concurrence will typically list
a number of conditions precedent to the purchase of such Loan by Purchaser.
(e) Representations and Warranties. All of the representations
and warranties of Seller under this Agreement shall be true as of the Purchase
Date of such Loan and shall not be affected or limited in any way as a result of
Purchaser's review or verification of any Loan Documents or any Loan at any
time.
(f) Additional Documents. Prior to the purchase of any Loans
under this Agreement, Purchaser shall have received an Officer's Certification
and an Opinion of Counsel, each substantially in the form of EXHIBITS "C" and
"D", respectively, attached hereto. Each purchase of Loans hereunder shall be
effected by the execution and delivery of a Loan Conveyance Agreement,
substantially in the form of EXHIBIT "E" attached hereto, with respect to the
Loan so purchased. The Loan Conveyance Agreement shall set forth, inter alia,
the Cut-off Date, the Purchase Date and the Loan Schedule with respect to the
Loans purchased pursuant thereto.
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(g) Other Conditions. All other terms and conditions of this
Agreement shall have been complied with.
Section 4. PURCHASE OF LOANS.
(a) Delivery of Note and Security Instruments. On the Purchase
Date and immediately following receipt of executed originals of all Loan
Documents in form and substance satisfactory to Purchaser (including without
limitation, the promissory note (the "NOTE"), evidencing the mortgagor's
obligation to repay the Loan, endorsed by an authorized representative of Seller
as follows: "Pay to the order of Aames Capital Corporation, without recourse")
and upon confirmation that Seller has executed and delivered its instrument of
assignment of the security instruments securing the Loan (the "SECURITY
INSTRUMENTS"), subject to Seller's satisfaction of the conditions set forth in
Section 3 hereof, Purchaser shall pay the Purchase Price for each Loan delivered
by Seller, to an account designated by Seller. The Purchase Price shall be
calculated in accordance with the purchase price amendment (the "PURCHASE PRICE
AMENDMENT").
(b) Principal and Interest. Solely for purposes of determining
the Purchase Price for each Loan to be purchased pursuant to this Agreement,
Purchaser shall be entitled to (i) all scheduled principal due on and after the
Purchase Date, (ii) all other recoveries of principal collected on and after the
Purchase Date (minus that portion of principal due before the Purchase Date) and
(iii) all payments of interest on the Loans (minus that portion of any such
payment which is allocable to the period prior to the Purchase Date). The
principal balance of each Loan as of the Purchase Date shall be determined after
application of payments of principal due before the Purchase Date, whether or
not collected. Any payments with respect to a Loan received by Purchaser on or
after the related Purchase Date allocable to principal or interest due prior to
the Purchase Date shall be paid to Seller within 30 days of receipt.
(c) Servicing. It is the intention of Purchaser and Seller
that the sale of each Loan hereunder shall be effected on a servicing-released
basis. Simultaneously with the purchase of each Loan hereunder and in
consideration of Purchaser's payment of the Purchase Price, Seller shall
transfer all servicing rights and benefits and deliver to Purchaser all monies
in its possession and all escrow funds and accounts and any and all interest
which has accrued on such funds and accounts, pertaining to or in any way
connected with such Loan, together with documentation sufficient to enable
Purchaser or its designated representative to service such Loan in compliance
with all rules, orders and regulations of federal, state and local governments
and other duly appointed authorities affecting such Loan. Seller shall deliver
such notices to the mortgagors concerning the transfer of the servicing of the
related Loans as may then be required by applicable state and federal law.
Seller shall take all action necessary to transfer to Purchaser all interest of
Seller in, and to make Purchaser the loss payee of, each title insurance policy,
mortgage guaranty insurance policy, hazard insurance policy and each other
insurance policy constituting a portion of the Loan File.
(d) Limited Indemnity. Purchaser agrees to and does hereby
indemnify, defend and hold harmless Seller, its directors, officers, employees
and agents, and its successors
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and assigns, against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against any of such indemnified parties, in any way
related to the servicing of any Loan purchased under this Agreement following
the related Purchase Date. This limited indemnity shall not apply to the
servicing of any Loan which Seller repurchases from Purchaser with respect to
the period commencing on the Repurchase Date.
Section 5. SELLER'S GENERAL REPRESENTATIONS, WARRANTIES AND
OBLIGATIONS. Seller represents and warrants to Purchaser that, as of the date
first set forth above and agrees to represent and warrant as of each Purchase
Date:
(a) Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and is
licensed and qualified to transact business and is in good standing in each
state where it is required to be so licensed and qualified.
(b) Power and Authority. Seller has the full power and authority to
enter into this Agreement and to originate, hold and sell each Loan; and none of
the execution and delivery of this Agreement, the origination of the Loans, the
sale of the Loans, the consummation of the transactions contemplated herein, or
the fulfillment of or compliance with the terms and conditions of this Agreement
conflicts with or will conflict with, or results in or will result in, a breach
of any term, condition or provision of Seller's articles of incorporation or
by-laws or any agreement to which Seller is a party or by which Seller is bound,
or constitutes or will constitute a material default or result in an
acceleration under any of the foregoing.
(c) Authority. Seller has the full corporate power and authority to
execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of Seller; and all requisite corporate action has been taken by
Seller to make this Agreement valid and binding upon Seller in accordance with
its terms.
(d) No Consent. No consent, approval, authorization or order of any
court, governmental body or any other person or entity is required for the
execution and delivery by Seller of this Agreement and the performance of its
obligations hereunder including, but not limited to, the sale of the Loans to
Purchaser.
(e) No Litigation. Neither Seller nor any of its properties is subject
to or bound by any pending or threatened suit, action, arbitration or legal or
administrative or other proceeding which might affect its ability to perform its
obligations under this Agreement or which might have a material adverse effect
on Seller's financial condition.
(f) Compliance With Laws. Seller is in compliance in all material
respects with all applicable laws and regulations and is fully licensed by, and
in good standing with, all applicable
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mortgage banking and real estate licensing authorities having jurisdiction over
the operations of Seller. Seller has all federal, state and local licenses,
permits and other authorizations of governmental authorities used or required in
the conduct of its business (collectively, "LICENSES"), including but not
limited to state mortgage banking and real estate licenses, and Seller has not
received any notice that revocation, termination or suspension is being
considered with respect to any of its Licenses, nor do any grounds for such
revocation, termination or suspension exist. No employee, director or 25%
shareholder of Seller (either individually or in their capacity as an employee,
director or shareholder of Seller or another entity) and no entity in which any
such person has acted as an employee, director or shareholder has been the
subject of any action (whether or not successful) for the revocation,
termination or suspension of any such License. Seller further covenants to
notify Purchaser immediately upon the suspension, revocation, expiration or
other termination of any License or of the taking of any action against Seller
or which could adversely affect the Licenses.
(g) No Untrue Information. No untrue statement of material fact is
contained in this Agreement or in any statement, report or other document
furnished or to be furnished pursuant to this Agreement or in connection with
the transactions contemplated hereby and none of the foregoing omits to state a
fact necessary to make the statements contained herein or therein not
misleading.
(h) No Bulk Transfer, Etc. The transfer, assignment and conveyance of
the Loans by Seller pursuant to this Agreement are in the ordinary course of
Seller's business and are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction. Seller is not
transferring the Loans with the intent to hinder, delay or defraud any of its
creditors. Seller is solvent and will not be rendered insolvent by the sale of
any of the Loans. The purchase price paid by Purchaser constitutes fair
consideration and reasonably equivalent value for the Loans.
(i) Ability to Perform. Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant and
obligation contained in this Agreement; Seller does not do business under a
fictitious name or, if it does so, a fictitious business name or assumed name
statement has been filed, recorded and/or published in each jurisdiction in
which the Loans were originated in accordance with all applicable laws, rules
and regulations.
(j) No Accrued Liabilities. There are no accrued liabilities of Seller
with respect to the Loans or circumstances under which such accrued liabilities
will arise against Seller, or Purchaser as assignee of the Loans, with respect
to actions or events occurring on or prior to the Purchase Date, or due to
actions or omissions of Seller.
Section 6. SELLER'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
LOANS. Seller and Purchaser agree that EXHIBIT "F" hereto is incorporated herein
by this reference and made a part of this Agreement.
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Section 7. SELLER'S REPURCHASE OBLIGATIONS. Seller shall repurchase any
Loan sold to Purchaser pursuant to this Agreement within ten (10) business days
after receipt of written notice from Purchaser of any of the following
circumstances:
(a) Purchaser's audit procedures reveal any evidence of fraud or
falsity in the origination of the Loan or in the sale of the Loan to Purchaser,
whether or not Seller had knowledge of such fraud or falsity; provided, however,
that such fraud or falsity would have a material adverse effect on the value of
the Loan; and provided further that with respect to representations made by a
borrower as to his income or assets, to the extent that the Guidelines
applicable to such Loan do not require that such representations be verified
and/or documented (other than being reasonable for the line of business or
employment stated), Seller shall be entitled to rely conclusively upon such
representations of the borrower and the repurchase obligation that might
otherwise arise under this Section 7(a) shall not apply, unless such
representations were known by Seller to be false.
(b) Seller fails to observe or perform or is or becomes in breach of
any of the representations, warranties or agreements contained in this Agreement
including the representations and warranties made in Section 6 and EXHIBIT "F"
with respect to each Loan purchased hereunder and such Loan is materially and
adversely affected by such breach; provided, however, that if Seller is or
becomes in material breach of any representation or warranty contained in
Section 5 hereof, Purchaser may require Seller to repurchase all Loans sold by
Seller to Purchaser under this Agreement that are materially and adversely
affected by such breach at the "Repurchase Price" (as defined in Section 8 of
this Agreement). It is understood that Seller's obligation to repurchase any
Loan is binding and enforceable against it without regard to any limitation set
forth in such representation or warranty concerning the knowledge of Seller as
to the facts stated therein.
Section 8. REPURCHASE PRICE The repurchase price (the "REPURCHASE
PRICE") of any Loan to be paid by Seller for any repurchase of such Loan
required pursuant to Section 7 hereof shall be calculated as follows:
(a) The principal amount of such Loan outstanding on the date of
repurchase,
(b) plus all interest accrued but unpaid on the outstanding principal
balance of the Loan from the repurchase date through and including the
first day of the month following the month in which the repurchase is
made,
(c) plus all expenses, including, but not limited to reasonable fees
and expenses of counsel (including fees of Purchaser's in-house
counsel) incurred by Purchaser in enforcing Seller's obligation to
repurchase such Loan,
(d) plus a percentage of the Purchase Price premium paid by Purchaser
for the Loan, said premium being an amount equal to the excess of the
Purchase Price paid for such Loan over the principal amount thereof
outstanding on the original Purchase Date thereof (the "PREMIUM"), as
follows:
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(i) 100% of the Premium, if demand for Seller to
repurchase the Loan is made by Purchaser before the
first anniversary of the related Purchase Date;
(ii) 67% of the Premium. if demand for Seller to
repurchase the Loan is made by Purchaser before the
second anniversary of the related Purchase Date;
(iii) 33% of the Premium, if demand for Seller to
repurchase the Loan is made by Purchaser before the
third anniversary of the related Purchase Date; or
(iv) 0% of the Premium, if demand for Seller to repurchase
the Loan is made by Purchaser thereafter.
Promptly following its receipt of the full amount of the Repurchase
Price for such Loan, Purchaser shall endorse the related Note (without recourse)
and shall execute an assignment of the related Security Instruments (without
recourse), in recordable form, and deliver same, together with the related Loan
File, to Seller, all at Seller's sole cost and expense. As additional
consideration, Purchaser shall release all servicing rights with respect to such
Loan to Seller and shall cooperate with Seller in effecting, at Seller's
expense, the transfer of servicing of such Loan.
Section 9. REMEDIES FOR BREACH OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
(a) Survival of Representations and Warranties; Notice. It is
understood and agreed that the representations and warranties set forth in this
Agreement are being relied upon by Purchaser for its own decision to purchase a
Loan and in the Purchaser's decision to sell, transfer and/or assign the Loan to
an Investor, and such representations and warranties shall survive the sale and
delivery of the Loans to Purchaser and subsequent sale, transfer and/or
assignment to an Investor and will continue in full force and effect for the
remaining life of each Loan purchased hereunder. Upon discovery by either Seller
or Purchaser of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the other
party.
(b) Indemnification. In addition to any such repurchase obligations of
Seller, and all other remedies available to Purchaser under this Agreement, at
law or in equity, and regardless of any investigation conducted by Purchaser
with respect to any Loan at any time, Seller shall indemnify Purchaser and its
agents, affiliates, assigns, officers, directors and employees (each a
"PURCHASER INDEMNITEE") from and hold them harmless against all losses,
liabilities, damages, penalties, fines, forfeitures, costs (including court
costs and attorney's fees), judgments, and any other costs, fees and expenses,
including costs of settlement (collectively, "DAMAGES") resulting or arising
from:
(i) any breach of any representation, warranty or obligation of
Seller set forth in, or made pursuant to, this Agreement;
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(ii) any act or failure to act or any breach of any warranty,
obligation made by any Purchaser Indemnitee in reliance upon any
warranty, obligation or representation made by Seller contained in or
made pursuant to this Agreement;
(iii) reasonable claims made by borrowers or third parties against
any Purchaser Indemnitee arising from negligence, fraud or a material
omission on the part of Seller in receiving, processing or funding any
Loan sold to Purchaser, which claims are either (i) determined to be
valid by a final adjudication in a court of competent jurisdiction or
(ii) reasonably determined by Purchaser to be valid in connection with
a decision by Purchaser to reach a final settlement of such claims with
the borrowers or third parties; provided, however, that Purchaser
shall, at least ten (10) business days before committing to a final
settlement, offer to Seller the right to repurchase the related Loan
(in accordance with the terms described in Section 8 hereof) and assume
the defense of the claims in lieu of completing the settlement. Seller
shall thereafter have a period of ten (10) business days to notify
Purchaser of its consent to the proposed settlement or its decision to
repurchase the related Loan and assume the defense of the claims;
(iv) all Damages arising out of or in connection with any one or
more of the items set forth in Sections 7(a) and 7(b) of this
Agreement;
(v) any Damages arising due to any act or omission of Seller prior
to the date of this Agreement or, with respect to any particular Loan,
any Damages due to acts or omissions of Seller or any other party
involved in the loan transaction on or prior to the Purchase Date
and/or any Damages relating to any defect or deficiency in any Loan
existing as of the Purchase Date (including, without limitation, a
defect in the documentation of any Loan or defects which would cause
the Loan to fail to be in strict compliance with the representations
and warranties set forth in EXHIBIT "F" at all times since the date the
related mortgagor applied for such Loan); and
(vi) any undertaking of an investigation of the facts relating to
any claim or demand to which this indemnity relates, and reasonable
costs or expenses incurred to consultants and investigators in
connection with such investigation or in the defense of any claims
related to a Loan which may give rise to Damages.
Section 10. NO PARTNERSHIP, AGENCY OR OTHER RELATIONSHIP; POWER OF
ATTORNEY. Nothing contained in this Agreement shall be deemed or construed by
any person to create a partnership or joint venture between Purchaser and
Seller, or to constitute either of Purchaser or Seller the agent, nominee or
representative of the other. Seller shall not represent itself to any person as
the Purchaser's agent, loan agent, nominee or otherwise. Seller shall not name
Purchaser in its advertisements, stationery, business cards, loan applications
or related documents or forms. Without limitation on or expansion of the
foregoing, Seller hereby appoints Purchaser, its agents, employees, successors
and assigns, the true and lawful attorney-in-fact of Seller without right of
revocation and with the full power of substitution for and in the place and
stead of Seller and on behalf and for the benefit of Purchaser, to demand, and
control and collect, all sums due on the Loans purchased under this Agreement,
and to enforce any and all rights with
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respect thereto, and to endorse the name of Seller where Seller's name is
designated as the payee upon any notes, collateral, security, acceptances,
checks, drafts, money order or other evidences of payment coming into the hands
of Purchaser in full or partial payment of any Loan, and to satisfy or release,
or cause to be satisfied or released, all liens and security interests related
thereto, when and if Purchaser may determine to do so.
Section 11. ACKNOWLEDGMENT OF SELLER. Seller acknowledges that, in
connection with Purchaser's purchase of Loans from Seller, Purchaser may
reasonably conclude that it is required to comply with various federal and state
laws. In this connection, Seller expressly understands and acknowledges that
Purchaser may from time to time require Seller to deliver such notices to
borrowers as Purchaser reasonably concludes are required by law to be delivered
by Seller, all at Seller's sole cost and expense. In addition, to the extent any
borrower exercises his statutory right of rescission, Seller shall promptly
reimburse to Purchaser all amounts paid to all such borrowers by Purchaser.
Section 12. EXPENSES. Each party shall be responsible for its own
expenses incurred in connection with this Agreement; provided, however, that
Seller shall bear any expenses arising as a result of (a) any changes or
modifications required to be made to any documents underlying the Loan for
whatever reason; (b) the preparation and delivery of all notices relating to the
transfer of servicing required by applicable state and federal law, including,
without limitation, notices required by the Guidelines or Section 6(a) of RESPA;
and (c) the preparation and delivery of all notices and information necessary to
be delivered to the applicable hazard insurance company in order to designate
Purchaser as payee under the lender loss payable clause.
Section 13. THIRD PARTY BENEFICIARY; RELIANCE. Each representation,
warranty and covenant made by Seller hereunder is for the express benefit of
Purchaser and each Investor which ultimately purchases a Loan (or any interest
therein), if any, and, in the purchase of each Loan hereunder, Purchaser is
relying on each representation, warranty and covenant made by Seller hereunder
in its decision to sell, assign and/or transfer a Loan to an Investor.
Section 14. MAINTENANCE OF FIDELITY BOND. Seller shall maintain, with a
company acceptable to Purchaser, a blanket fidelity bond, with broad coverage on
all officers, employees or other persons acting in any capacity with regard to
the Loans, who handle funds, money, documents and papers relating to the Loans
("Employees"). Any such fidelity bond shall protect and insure the Seller
against losses resulting from dishonest or fraudulent acts of such Employees. No
provisions of this Section 14 requiring a fidelity bond shall diminish or
relieve the Seller from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such fidelity bond shall be at least
equal to $1,000,000. Upon the request of Purchaser, Seller shall cause to be
delivered to Purchaser a certified true copy of such fidelity bond.
Section 15. MISCELLANEOUS.
(a) No Solicitation; Prepayment. No borrower or co-borrower under any
Loan sold to Purchaser shall be solicited by Seller for refinance during the
period of twelve (12) months
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immediately following the Purchase Date for such Loan. Borrowers requesting a
refinance from Seller within such 12-month period must be referred to Purchaser.
In the event Seller breaches this covenant, Seller shall pay to Purchaser,
within two (2) business days after Seller's receipt of notice from Purchaser
demanding payment, an amount equal to:
(i) 100% of the Premium, if such breach occurs before the first
anniversary of the related Purchase Date;
(ii) 67% of the Premium. if such breach occurs before the second
anniversary of the related Purchase Date;
(iii) 33% of the Premium, if such breach occurs before the third
anniversary of the related Purchase Date; or
(iv) 0% of the Premium, if such breach occurs thereafter.
(b) Exhibits. All exhibits attached hereto or referred to in this
Agreement are incorporated by reference into this Agreement.
(c) Entire Agreement. The entire agreement between the parties is
contained in this Agreement and cannot be modified in any respect except by an
amendment in writing signed by both parties.
(d) Assignment. Neither Purchaser nor Seller may assign its rights or
obligations under this Agreement without the prior written consent of the other.
This Agreement shall be binding and inure to the benefit of the permitted
successors and assigns of the parties hereto.
(e) Attorneys' Fees and Expenses; Choice of Law and Forum. If any party
hereto shall bring suit or other proceeding against the other as a result of any
alleged breach of failure by the other party to fulfill or perform any covenants
or obligations under this Agreement, then the prevailing party obtaining final
judgment in such action shall be entitled to receive from the non-prevailing
party reasonable attorneys' fees incurred by reason of such action and all costs
of suit and preparation thereof at both trial and appellate levels. In addition,
any such suit or proceeding shall be brought in the federal or state courts
located in Los Angeles County, California, which courts shall have sole and
exclusive in personam, subject matter and other jurisdiction in connection with
such suit or proceedings and venue shall be appropriate for all purposes in such
courts. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California.
(f) No Remedy Exclusive; Waiver. No remedy under this Agreement is
exclusive of any other available remedy, but each remedy shall be cumulative and
shall be in addition to other remedies given under this Agreement or existing at
law or in equity. Any forbearance by a party to this Agreement in exercising any
right or remedy under this Agreement or otherwise afforded by applicable law
shall not be a waiver or preclude the exercise of that or any other right or
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remedy. Seller hereby waives any statute of limitations that might otherwise be
raised in any action to enforce Seller's indemnification and repurchase
obligations hereunder.
(g) Termination. Each party hereto may terminate Sections 1 through
4(c) of this Agreement at any time upon thirty (30) days' prior written notice
to the other party; provided, however, that Purchaser shall (i) continue to
review Loans submitted to it by Seller and continue to provide Loan Concurrences
with respect to Loans that meet the requirements of the Guidelines and this
Agreement during such 30-day notice period and (ii) purchase all Loans as to
which Loan Concurrences have been provided and which, within sixty (60) days of
such notice, meet the conditions for purchase stated in Section 3 hereof.
(h) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
(i) Provision of Information. During the term of this Agreement, each
party shall furnish to the other party such periodic, special or other reports
or information, whether or not provided for herein, as shall be necessary,
reasonable or appropriate to Purchaser or Seller, or otherwise with respect to
the purposes of this Agreement. All notices, communications, documents,
correspondence and other materials received by Seller from any person whatsoever
after the Purchase Date of the related Loan shall be forwarded to Purchaser by
overnight courier, at Seller's expense, within two (2) business days following
receipt thereof by Seller.
(j) Financial Statements. Upon request by either party, the other party
shall furnish to the requesting party its unaudited quarterly and audited annual
financial statements. Such unaudited and audited financial statements shall be
received by Purchaser no later than ninety (90) calendar days after the end of
each quarter and/or fiscal year or as soon thereafter as available. Each party
agrees to make available to the other party a knowledgeable financial or
accounting officer for the purpose of answering questions regarding the
financial statements and any developments affecting its financial condition. All
such financial statements furnished hereunder shall have been prepared in
accordance with generally accepted accounting principles, consistently applied.
Seller also agrees that Purchaser shall be entitled at Purchaser's sole expense,
at reasonable times and upon reasonable notice to Seller, to audit Seller's
origination procedures and practices and to examine such records and policies of
Seller as may be necessary to satisfy Purchaser that Seller has the ability to
repurchase any Loans as may be required by and in accordance with the terms of
this Agreement.
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(l) Notice. All notices under this Agreement shall be in writing,
deemed effective upon receipt and shall be delivered to the addresses set below:
If to Purchaser: If to Seller:
AAMES CAPITAL CORPORATION PACIFIC THRIFT AND LOAN COMPANY
P.O. Box 76930 21031 Ventura Boulevard, 1st Floor
Los Angeles, California 90010 Woodland Hills, California 91364-2210
Attn: Mark Costello Attn: Richard D. Young
Vice President- Mortgage President
Banking
IN WITNESS WHEREOF, the parties hereto have duly executed this Loan
Agreement this 21 day of June, 1995.
PACIFIC THRIFT AND LOAN COMPANY AAMES CAPITAL CORPORATION
By: /s/ RICHARD D. YOUNG By: /s/ MARK E. COSTELLO
---------------------------- --------------------------------------
Name: Richard D. Young Mark E. Costello
Title: President Vice President - Mortgage Banking
("Seller") ("Purchaser")
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EXHIBIT "B"
CONTENTS OF LOAN FILE
Each Loan File shall contain the following documentation in form and
substance satisfactory to Purchaser:
(i) A signed appraisal report (including a recertification thereof)
of the property securing the Loan (the "MORTGAGED PROPERTY") setting forth an
appraisal value therefor, which appraisal report shall (A) be dated no earlier
than ninety (90) days prior to the date of closing of the related Loan, (B)
include the appraiser's certification stating whether the Mortgaged Property is
located in any Special Flood Hazard Area (as determined by the Federal Emergency
Management Agency pursuant to the National Flood Insurance Act of 1973), and (C)
have been performed by an independent fee appraiser who shall have certified
that he has no interest in the Mortgaged Property, the Loan, or the approval,
rejection or amount of the Loan.
(ii) A credit report on the mortgagor (the "MORTGAGOR") named in the
promissory note (the "NOTE") executed in connection with the Loan, which credit
report is dated not more than ninety (90) days prior to the date of closing of
the related Loan.
(iii) A lender's or mortgagee policy of title insurance meeting the
requirements of the Guidelines.
(iv) The original of the Note evidencing the Loan, endorsed by an
authorized representative of Seller to the order of Purchaser.
(v) The original of the Security Instrument securing the Loan, with
evidence of recording thereon, or a copy thereof certified by the recorder's
office of the county wherein the related Mortgaged Property is located.
(vi) The original of the assignment of the Security Instrument
securing the Loan, duly executed by Seller in favor of Purchaser, as assignee.
(vii) A statement of the census tract number for the Mortgaged
Property if the Mortgaged Property is located within a standard metropolitan
statistical area.
(viii) The Mortgagor's original application for the Loan, an original
or certified copy of the HUD-1 Settlement Statement or statements issued in
connection with the closing of the Loan, and all of the original documents
executed by the Mortgagor in connection with the origination of the Loan.
(ix) If applicable, a certificate of issuance of a privately issued
policy of mortgage insurance, together with an assignment thereof in favor of
Purchaser or a letter from
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the issuer of the policy stating that Purchaser will succeed to the coverage of
the policy without the necessity of such an assignment.
(x) The original of any and all agreements affecting the terms of
the Note, or affecting the Security Instrument securing the Loan, or affecting
any of the liabilities or obligations of the Mortgagor with respect to the Loan
or any successor-in-interest to the Mortgaged Property.
(xi) A survey of the Mortgaged Property, together with any other
surveys and any plot plans relating to the Mortgaged Property that Seller may
have in its possession or control.
(xii) Verifications of employment of the Mortgagor and
verifications of deposits of the Mortgagor or such alternative evidence of
employment, income and assets which complies with the Guidelines.
(xiii) If the Loan is a purchase money loan, a copy of the purchase
agreement of the Mortgagor for his acquisition of the Mortgaged Property.
(xiv) Copies of all required disclosures under the Truth in Lending
Act, servicing transfer disclosures, good faith estimates, adjustable rate
program disclosures and any other disclosure statements required to be delivered
to the Mortgagor in connection with the Loan under applicable state or federal
law.
(xv) A policy of fire and extended coverage hazard insurance (and a
copy of Seller's letter sent to the related insurance agent or carrier
requesting the issuance of lender's loss payable endorsement in favor of
Purchaser), in an amount and with a carrier that is licensed in the jurisdiction
wherein the related Mortgaged Property is located and (a) has a current Best's
rating of B+ or (b) is a State-established pool insurer such as California Fair
Plan.
(xvi) If the Mortgaged Property is located in a Special Flood Hazard
Area, a certificate of flood insurance meeting the requirements of the
Guidelines.
(xvii) Unless a blanket security release certification has previously
been delivered to Purchaser, a duly executed Security Release Certification in
the form attached as EXHIBIT "D" to the Agreement, executed by any person as
requested by Purchaser if any of the Loans have at any time been subject to any
security interest, pledge or hypothecation for the benefit of such person, and
certification by Seller that, as of the Purchase Date, no adverse security
interest in and to the Loan is outstanding and that Seller will not convey grant
or convey any such interest.
(xviii) Any and all such other documents as may reasonably be required
of Seller by Purchaser or as may be required by the Guidelines in such form as
may be required by Purchaser.
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EXHIBIT "C"
OFFICER'S CERTIFICATION
I, ____________, hereby certify that I am the duly elected ____________
of ______________ ("SELLER") and, in connection with the sale of certain loans
by Seller to __________ pursuant to that certain Loan Purchase Agreement between
Seller and Purchaser dated __________, 1995 (the "AGREEMENT"), I hereby certify
to the best of my knowledge and belief as follows:
(A) Each of the representations and warranties of the Seller in the
Agreement is true and complete in all respects on the Purchase Date, with the
same effect as if made on the Purchase Date;
(B) Seller has complied with all of the agreements and satisfied all of
the conditions to be performed or satisfied in connection with the sale of the
Loans previously sold to Purchaser under the Agreement;
(C) Upon the sale of each Loan to Purchaser, Purchaser will acquire
all, right, title and interest in and to such Loan, free and clear of any
pledges, liens, security interests, claims, participations, interests or other
equities or encumbrances of any type, kind or nature.
(D) Each Note has been properly endorsed in a manner that satisfies any
requirement of endorsement in order to transfer to the Purchaser all right,
title and interest of the Seller to that Note. Each Assignment of Security
Instrument is in recordable form and is sufficient to effect the assignment and
transfer to the Purchaser of the benefits of the Seller, as original mortgagee
or assignee thereof, under each Security Instrument to which such assignment
relates.
(E) The amount of consideration received by the Seller for the sale of
each Loan to the Purchaser constitutes reasonably equivalent value and fair
consideration for such Loan.
(F) The Seller was solvent at all times prior to, and will not be
rendered insolvent by, the sale of the Loans to Purchaser as provided in the
Agreement.
(G) The Seller did not sell the Loans with the intent to hinder, delay
or defraud any of the Seller's creditors.
(H) No fraud or illegality on the part of the Seller affecting any Loan
or otherwise in connection with any transaction contemplated by the Agreement
has occurred.
IN WITNESS WHEREOF, I have executed this certificate as of the date set
forth below.
Date:_____________________ By:_____________________________________
Name:___________________________________
Title:__________________________________
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EXHIBIT "D"
FORM OF OPINION OF COUNSEL
(1) The Seller: (a) is duly organized, validly existing and in good
standing as a _________________ under the laws of the State of _________ and is
qualified to do business in each jurisdiction where the conduct or nature of
its business makes such qualification necessary and (b) has the power and
authority to own and operate its property and to conduct its business in the
manner in which it does and proposes so to do.
(2) The Seller has the power and authority to execute, deliver and
perform the Agreement and has taken all necessary corporate action to authorize
the execution, delivery and performance of the Agreement. The Agreement has been
duly executed and delivered on behalf of the Seller and constitutes legal, valid
and binding obligations of the Seller, enforceable against the Seller in
accordance with its terms, except to the extent that enforceability may be
subject to or limited by bankruptcy, insolvency, reorganization, or moratorium,
arrangement or assignment or other similar laws.
(3) The execution, delivery and performance of the Agreement by Seller
will not violate any provision of (i) the articles of incorporation or the
bylaws of the Seller, (ii) federal or state laws or regulations applicable to
the Seller or (iii) any contract material to the business or operations of
Seller.
(4) There is no litigation, investigation or proceeding of or before
any arbitrator or governmental authority either pending or threatened by or
against the Seller or against any of the Seller's properties or revenues which
might have a material adverse affect on the ability of Seller to fully perform
its obligations under the Agreement or the financial condition or prospects of
Seller.
(5) No consent, approval, authorization of, or registration,
declaration or filing with, any governmental authority or any other person is
required on the part of the Seller in connection with the execution and delivery
of the Agreement or the performance of or compliance with the terms, provisions
and conditions thereof.
(6) Upon sale of the Loans to Purchaser and payment of the purchase
price therefor to Seller, Purchaser shall acquire all of Seller's right, title
and interest in and to each Loan, free and clear of any lien, claim or
encumbrance.
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EXHIBIT "E"
LOAN CONVEYANCE AGREEMENT
________________________, as Seller, and AAMES CAPITAL CORPORATION, as
Purchaser, pursuant to the Master Loan Purchase Agreement dated as of
_____________, 1995, as amended, between Seller and Purchaser (the "PURCHASE
AGREEMENT), hereby confirm their understanding with respect to the sale by
Seller and the purchase by Purchaser of each of the Loans listed on the attached
Loan Schedule (the "PURCHASED LOANS"). All capitalized terms not otherwise
defined herein shall have the meaning ascribed to them in the Purchase
Agreement.
Conveyance of Purchased Loans. Seller, concurrently with the execution
and delivery of this Loan Conveyance Agreement, does hereby irrevocably
transfer, assign, set over and convey to Purchaser, without recourse (except as
otherwise explicitly provided for herein), all of its right, title and interest
in and to the Purchased Loans, including specifically, without limitation, the
related deeds of trust or mortgages (each, a "MORTGAGE"), the Loan Files and all
other documents, materials and properties appurtenant thereto and the Notes,
including any amounts received by Seller from the related Loan obligors
("OBLIGORS") in connection with the origination of the Purchased Loans that
constitute or are in lieu of future Monthly Payments or otherwise represent
payments in respect of interest accrued for any period after the Purchase Date
for such Purchased Loans, together with all of Seller's right, title and
interest in and to the proceeds received on or after the Cut-off Date of any
related insurance policies.
If Seller cannot deliver the original Mortgage with evidence of
recording thereon with respect to any Purchased Loan concurrently with the
execution and delivery of this Loan Conveyance Agreement solely because of a
delay caused by the public recording office where such original Mortgage has
been delivered for recordation, Seller shall deliver an officer's certificate,
with a photocopy of such Mortgage attached thereto, stating that such original
Mortgage has been delivered to the appropriate public recording office for
recordation. Seller shall promptly deliver to Purchaser such original Mortgage
with evidence of recording indicated thereon upon receipt thereof from the
public recording office. If, within four months after the Purchase Date, Seller
shall not have received such original Mortgage from the public recording office,
it shall obtain, and deliver to Purchaser within six months after the Purchase
Date, a copy of such original Mortgage certified by such public recording office
to be a true and complete copy of such original Mortgage as recorded by such
public recording office.
The costs relating to the delivery of the documents specified in this
Loan Conveyance Agreement shall be borne by Seller.
Incorporation of the Purchase Agreement. Seller and Purchaser hereby
agree that the terms and provisions of the Purchase Agreement with respect to
the Purchased Loans are hereby incorporated herein by reference and made a part
hereof.
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Affirmation of Representations and Warranties. Seller hereby certifies
that the representations and warranties set forth in Section 5 of the Purchase
Agreement are true and correct with respect to the Seller as of the Purchase
Date and that the representations and warranties with respect to the Purchased
Loans set forth in Section 6 of the Purchase Agreement are true and correct with
respect to each Purchased Loan as of the Purchase Date or such other date as may
be specifically referred to therein. Seller also represents and warrants to
Purchaser that each Purchased Loan that is an Adjustable Rate Loan was
underwritten as though such Purchased Loan would initially have borne interest
at a rate equal to the Index plus the related Gross Margin (determined at the
time such underwriting was conducted). Seller hereby acknowledges and agrees
that upon the breach of any such representations and warranties with respect to
any Purchased Loan, Purchaser may exercise and enforce any remedy with respect
thereto in accordance with Section 7 of the Purchase Agreement.
Servicing of Purchased Loans. Seller represents to Purchaser that the
Purchased Loans are serviced by Seller and are not subject to any third party
servicing agreements as of the Purchase Date. Seller is selling the Purchased
Loans on a "servicing released" basis and hereby assigns and transfers to
Purchaser all of Seller's rights to service the Purchased Loans. Purchaser
agrees to pay Seller a quarterly fee (the "SERVICING RELEASED FEE") on the
fifteenth (15th) Business Day (each, a "SERVICING FEE PAYMENT DATE") following
each March 31, June 30, September 30, and December 31 of each year, (each, a
"SERVICING FEE CALCULATION DATE"). The Servicing Released Fee shall be equal to
one-fourth (1/4th) of the product of forty-five (45) basis points and the
aggregate of the Principal Balances of the Purchased Loans as of the close of
business on the related Servicing Fee Calculation Date; provided, however, that
the Servicing Released Fee due in respect of the Servicing Fee Calculation Date
of________ , 199__ shall be pro-rated since the Purchase Date hereunder does
not fall at or near a quarter-end.
Mandatory Delivery; Grant of Security Interest. The sale and delivery
on the Purchase Date of the Purchased Loans described on the attached Loan
Schedule are mandatory, it being specifically understood and agreed that each
Purchased Loan is unique and identifiable on the date hereof and that an award
of money damages would be insufficient to compensate Purchaser for the losses
and damages incurred by Purchaser in the event of Seller's failure to deliver
the Purchased Loans on or before the Purchase Date. Seller hereby grants to
Purchaser a lien on and a continuing security interest in each Purchased Loan
and each document and instrument evidencing each Purchased Loan to secure the
performance by Seller of its obligations hereunder, and Seller agrees that it
holds such Purchased Loans in custody for Purchaser subject to Purchaser's (i)
right, prior to the Purchase Date, to reject any Purchased Loan that does not
conform to the conditions set forth in Purchaser's Loan Concurrence with respect
to such Loan as well as each of the requirements set forth in the Purchase
Agreement with respect thereto and (ii) obligation to pay the Purchase Price for
the Purchased Loans. All rights and remedies of Purchaser under this Loan
Conveyance Agreement are distinct from, and cumulative with, any other rights or
remedies under this Loan Conveyance Agreement or the Purchase Agreement or
afforded at law or in equity, and all such rights and remedies may be exercised
concurrently, independently or successively.
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Seller Information. Seller Information refers to the information
provided on Annex 1 to this Loan Conveyance Agreement. Seller hereby represents
and warrants to Purchaser that such Seller Information on Annex 1 is true,
correct and complete in all material respects and will be true, correct and
complete in all material respects as of the Purchase Date. Seller hereby
convenants that if any event occurs which would cause the Seller Information to
include any untrue statement of material fact or omit to state any material fact
necessary to make the statements in the Seller Information not misleading,
Seller will immediately notify Purchaser of such fact. Seller hereby consents to
the use of the Seller Information in Annex 1 attached hereto, or as may
hereafter be attached, to be used from time to time in any Prospectus Supplement
for an Aames Trust that includes any of the Purchased Loans.
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ANNEX 1
Pacific Thrift and Loan Company ("PACIFIC") is a California corporation
organized on July 22, 1988 and is a wholly-owned subsidiary of Presidential
Mortgage Company, a California limited partnership. Pacific is a
California-licensed industrial loan company engaged in the business of
originating, purchasing and selling loans and loan participations secured by
trust deeds on residential and, to a lesser extent, commercial or undeveloped
real property. Every loan is secured by a mortgage or deed of trust on real
property.
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TERMS OF LOAN CONVEYANCE
Pool Principal Balance - $__________________
Pool Purchase Price - $__________________
Plus: Accrued Interest - $__________________
Net Purchase Price - $__________________
Cut-off Date - ___________, 199___
Purchase Date - __________, 199___
Weighted Average Combined Loan-to-Value Ratio - ____%
Maximum Combined Loan-to-Value Ratio per Loan - 80%
Index - Six-month LIBOR
Type - Fixed rate marked "F" on attached Schedule and
- Six month LIBOR adjustable rate marked "A" on attached Schedule
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All terms and conditions of the Purchase Agreement are hereby
incorporated herein; provided, however, that in the event of any conflict the
provisions of this Loan Conveyance Agreement shall control over the conflicting
provisions of the Purchase Agreement.
Executed and agreed to as of_________________, 199__.
____________________________
as Seller
By:_________________________
Name:_______________________
Title:______________________
AAMES CAPITAL CORPORATION
as Purchaser
By:_________________________
Name:_______________________
Title:______________________
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LOAN SCHEDULE
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EXHIBIT "F"
As of the Purchase Date, Seller represents and warrants to
Purchaser each of the following, it being understood and agreed by Seller that
unless the context otherwise requires, each reference in this EXHIBIT "F" to
Seller shall be deemed to include Seller and each other person or entity which
has or had an interest in the Loan or participated in the origination of the
Loan:
1. Loans as Described. The information set forth in the Loan
Schedule is complete, true and correct;
2. Payments Current. All payments made up to the Purchase Date
for the Loan under the terms of the Note have been credited. No payment required
under the Loan is delinquent more than 10 days after the date on which it first
became due;
3. No Outstanding Charges. To the best of Seller's knowledge
there are no defaults in complying with the terms of the Note and Security
Instruments, and all taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or an escrow of funds has been established
in an amount sufficient to pay for every such item which remains unpaid and
which has been assessed but is not yet due and payable. Seller has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Obligor, directly or indirectly, for the payment of any
amount required under the Loan, except for interest accruing from the date of
the Note or date of disbursement of the Loan proceeds, whichever is later, to
the day which precedes by one month the due date of the first installment of
principal and interest;
4. Original Terms Unmodified. The terms of the Note and the
Security Instruments have not been impaired, waived, altered or modified in any
respect, except by a written instrument a copy of which has been delivered to
Purchaser and which has been recorded, if necessary, to protect the interests of
Purchaser. The substance of any such waiver, alteration or modification has been
approved by the issuer of any mortgage insurance policy and the title insurer,
to the extent required by the policy, and its material terms are reflected on
the Loan Schedule. No Obligor, any guarantor of, or any other security granted
in connection with, any Loan has been released, in whole or in part;
5. No Defense. The Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, the
defense of usury, nor will the operation of any of the terms of the Note or the
Security Instruments, or the exercise of any right thereunder, render either the
Note or the Security Instruments unenforceable, in whole or in part, or subject
to any right of rescission, set-off, counterclaim or defense, and no such right
of rescission, set-off, counterclaim or defense has been asserted with respect
thereto;
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6. Hazard and Flood Insurance. Pursuant to the terms of the
Security Instruments, all buildings or other improvements upon the real property
subject to the Security Instruments (the "MORTGAGED PROPERTY") are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located in an amount which is at the least equal to the lesser of (i) the
maximum insurable value of such improvements and (ii) the combined principal
balance of the Loan and the principal balance of each mortgage loan senior in
priority to the Loan; provided, however, that such hazard insurance shall be in
an amount not less than such amount as is necessary to avoid the application of
any co-insurance clause contained in the related hazard insurance policy. If the
Mortgaged Property is in an area identified by the Federal Emergency Management
Agency as having special flood hazards, a flood insurance policy in a form
meeting the requirements of the current guidelines of the Federal Insurance
Administration is in effect with respect to such Mortgaged Property with a
generally acceptable carrier in an amount representing coverage not less than
the least of (A) the combined principal balance of the Loan and the principal
balance of each mortgage senior in priority to the lien of the Loan, (B) the
minimum amount required to compensate for damage or loss on a replacement cost
basis or (C) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973. All individual insurance policies contain a
standard mortgagee clause naming Seller and its successors and assigns as
mortgagee, and the current premiums thereon have been paid. The Security
Instruments obligate the Obligor thereunder to maintain the hazard and, if
applicable, flood insurance policy at the Obligor's cost and expense, and on the
Obligor's failure to do so, authorizes the holder of the Security Instrument to
obtain and maintain such insurance at such Obligor's cost and expense, and to
seek reimbursement therefor from the Obligor. Each of the hazard and, if
applicable, the flood insurance policy has been issued by a carrier licensed to
do business in the jurisdiction where the Mortgaged Property is located and
having a Best's rating of B+, is the valid and binding obligation of the
insurer, is in full force and effect, and will be in full force and effect and
inure to the benefit of Purchaser upon the consummation of the transactions
contemplated by the Agreement. Seller has not engaged in, and has no knowledge
of the Obligor's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
therein, or the validity and binding effect thereof. In addition, each policy
provides for ten (10) days' advance notice in writing to the mortgagee, its
successors and/or assigns, in the event the policy is to be canceled. Seller has
furnished proof of such coverage and delivered the same to Purchaser;
7. Compliance with Applicable Laws. The Loan and all
activities performed in connection with the Loan by Seller and each other person
involved in the origination of the Loan comply and complied in all respects with
any and all requirements of all applicable federal, state and local laws
including, without limitation the federal Equal Credit Opportunity Act and
Regulation B thereunder, the federal Truth in Lending Act and Regulation Z
thereunder, the federal Real Estate Settlement Procedures Act of 1974 and
Regulation X thereunder and the federal Fair Credit Reporting Act, in each case
as amended. Seller shall deliver to Purchaser evidence of compliance with all
such requirements. Any applicable period within which the Mortgagor may rescind
the Loan has expired. The Mortgagor was not required by the Seller to pay any
fees, charges or other amounts which have been excluded from the calculation of
the finance charge by the Seller except to the extent such fees may properly be
excluded under, and
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were bona fide and reasonable in amount for purposes of, the federal Truth in
Lending Act. All fees imposed by any affiliate of the Seller upon the Mortgagor
in connection with the Loan have been properly disclosed to the Mortgagor under
the requirements of the federal Truth in Lending Act and any other state or
federal law, rule or regulation;
8. No Satisfaction of Mortgage. The Security Instruments have
not been satisfied, canceled, subordinated or rescinded, in whole or in part,
and the Mortgaged Property has not been released from the lien of the Security
Instruments, in whole or in part, nor has any instrument been executed or
recorded that would effect any such release, cancellation, subordination or
rescission;
9. Location and Type of Mortgaged Property. The Mortgaged
Property is located in California, unless otherwise specified in the Loan
Schedule forming part of any Loan Conveyance Agreement hereunder, and consists
of a single parcel of real property with a single family residence erected
thereon, or a two-to-four family dwelling, or an individual unit in a planned
unit development or condominium project, none of which is a mobile home, a boat,
a cooperative apartment, or a manufactured dwelling. No portion of the Mortgaged
Property is used for commercial purposes;
10. Valid Lien. The Security Instruments evidence a valid,
subsisting and enforceable first or junior lien on the Mortgaged Property,
including all buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems located
in or affixed to such buildings, and all additions, alterations and replacements
made at any time with respect to the foregoing. The lien of the Security
Instruments are subject, in the case of a Loan secured by a junior lien, only to
the lien of any senior mortgage referred to in the title policy contained in the
Loan file and subject, in all cases only to: the lien of current real property
taxes and assessments not yet due and payable; covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording acceptable to mortgage lending institutions generally
and specifically referred to in the mortgagee title insurance policy delivered
to the originator of the Loan and (A) referred to or otherwise considered in the
appraisal made for the originator of the Loan or (B)which do not adversely
affect the appraised value of the Mortgaged Property set forth in such
appraisal; and other matters to which like properties are commonly subject and
which do not materially interfere with the benefits of the security intended to
be provided by the Security Instruments or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with the
Loan establishes and creates a valid, subsisting and enforceable first or junior
lien in the property described therein and Seller has full right to sell and
assign the same to Purchaser. No other liens, claims or encumbrances exist or
have been recorded on the Mortgaged Property, whether or not prior to the lien
of the Mortgage, since the date the Security Instruments were recorded, except
as described in this subsection 10. The Mortgage was duly and properly recorded
in the office of the county recorder where the Mortgaged Property is located;
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11. Validity of Mortgage Documents. The Note and the Security
Instruments are genuine, and each is the legal, valid and binding obligation of
the maker thereof enforceable in accordance with its terms. The Note and
Security Instruments delivered to Purchaser are the only executed copies
thereof. All parties to the Note and the Security Instruments had legal capacity
to enter into the Loan and to execute and deliver the Note and the Security
Instruments, and the Note and the Security Instruments have been duly and
properly executed by such parties. Any provision of the documents included in
the Loan File purporting to require the payment of a prepayment fee or penalty
complies with all applicable state and federal laws and is enforceable in
accordance with its terms against the related Mortgagor;
12. Full Disbursement of Proceeds. The proceeds of the Loan
have been fully disbursed and there is no requirement for future advances
thereunder, and any and all requirements as to completion of any on-site or
off-site improvements and as to disbursements of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making or closing
the Loan and the recording of the Security Instruments were paid, and the
Mortgagor is not entitled to any refund of any amounts paid or due under the
Note or the Security Instruments;
13. Ownership. Seller is the sole owner of record and holder
of the Loan. The Loan has not been assigned or pledged, and Seller has good and
marketable title thereto, and has full right to transfer, sell and assign each
Loan and the related serving rights (if applicable) to Purchaser free and clear
of any encumbrance, equity, participation interest, lien, pledge, charge, claim,
interest or participation of, or agreement with, any other party, pursuant to
the Agreement;
14. Doing Business. All parties which have had any interest in
the Loan, whether as mortgagee, assignee, pledgee or otherwise are (or during
the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) organized under the
laws of such state, or (iii) qualified to do business in such state, or (iv)
federal savings and loan associations or national banks having principal offices
in such state, or (v) not doing business in such state;
15. LTV. At origination, the loan-to-value ratio ("LTV") of
the Loan, based on the original principal balance of the Loan and the value of
the related Mortgaged Property set forth in the appraisal contained in the
related Loan File, did not exceed the maximum LTV amount set forth in the Loan
Conveyance Agreement for such Loan; and if the Loan is a junior priority lien,
the principal balances of all related senior liens outstanding at the
origination of the Loan must be added to the original principal balance of the
Loan to determine the LTV of such Loan.
16. Title Insurance. The Loan is covered by either an ALTA
mortgage title insurance policy, or the equivalent thereof if an ALTA policy is
not available in a specific geographic location, issued by a title insurer
acceptable to Purchaser. The title insurance policy has been issued by a title
insurer qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring Seller, its successors and assigns, as to the
first or junior priority lien
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of the Mortgage in the original principal amount of the Loan, subject only to
the exceptions contained in and permitted by subsection 10 hereof. Seller is the
sole insured of such mortgage title insurance policy, and such mortgage title
insurance policy is in full force and effect and will be in force and effect
upon the consummation of the transactions contemplated by this Agreement. No
claims have been made under such mortgage title insurance policy, the accuracy
of any attorney's opinion of title has never been disputed, and no prior holder
of the Mortgage, including Seller, has done, by act or omission, anything which
could impair the coverage or enforceability of such mortgage title insurance
policy or the accuracy of such attorney's opinion to title. Each such mortgage
title insurance policy includes all endorsements which are customary for loans
similar to the Loans, or which may be required by Purchaser in the exercise of
its reasonable discretion provided that Purchaser has provided prior written
notice of such requirements in the Loan Concurrence for such Loan;
17. No Defaults. There is no material default, breach,
violation or event of acceleration existing under the Security Instruments or
the Note and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration, and neither Seller nor its predecessors has
waived any material default, breach, violation or event of acceleration;
18. No Mechanic's Liens. There are no mechanic's,
materialman's or similar liens or claims which have been filed for work, labor
or material (and no rights are outstanding that under the law could give rise to
such liens) affecting the related Mortgaged Property which are or may be liens
prior to, or equal or coordinate with, the lien of the related Mortgage;
19. Location of Improvements; No Encroachments. To the best
knowledge of Seller, all improvements which were considered in determining the
appraised value of the Mortgaged Property at origination lay wholly within the
boundaries and building restriction lines of the Mortgaged Property and no
improvements on adjoining properties encroach upon the Mortgaged Property
(except such encroachments as have been affirmatively insured over by the title
insurer). To the best knowledge of Seller, no improvement located on or being
part of the Mortgaged Property is in violation of any applicable zoning law,
rule or regulation;
20. Maturity Date: The maturity date of the Loan is at least
twelve months prior to the maturity date of any related senior mortgage loan if
such senior mortgage loan provides for a balloon payment;
21. Customary Provisions. The Security Instruments contain
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including, (i) in the
case of Security Instruments designated as a deed or trust, by trustee's sale,
and (ii) otherwise by judicial foreclosure. There is no homestead or other
exemption available to a Mortgagor which would interfere with the right to sell
the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
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22. Occupancy Certifications. To the best knowledge of Seller,
the Mortgaged Property is lawfully occupied under applicable law. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities;
23. No Additional Collateral. The Note is not and has not been
secured by any collateral except the lien of the corresponding Security
Instruments;
24. Deeds of Trust. In the event the Mortgage constitutes a
deed of trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by Purchaser to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
25. Delivery of Mortgage Documents. The Note, the Mortgage,
the assignment of Mortgage or Deed of Trust and any other documents required to
be delivered under the Agreement for the Loan have been delivered to Purchaser.
Seller has delivered to Purchaser a complete, true and accurate Loan File in
compliance with the Agreement;
26. Condominium Units. As to each condominium unit located in
a condominium project, such unit meets the criteria therefor established in the
Guidelines.
27. Transfer of Loans. The Assignment of Security Instruments
is in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located;
28. Due-on-Sale. The Security Instruments contain an
enforceable provision for the acceleration of the payment of the unpaid
principal balance of the Loan in the event that the Mortgaged Property is sold
or transferred without the prior written consent of the mortgagee thereunder;
29. No Buydown Provisions; No Graduated Payments or Contingent
Interest. The Loan does not contain provisions pursuant to which monthly
payments are paid or partially paid with funds deposited in any separate account
established by the mortgagee, the seller of the Mortgaged Property, the
Mortgagor or anyone on behalf of the Mortgagor, or paid by any source other than
the Mortgagor, nor does it contain any other similar provision which may
constitute a "buydown" provision; the Loan is not a graduated payment mortgage
loan; and the Loan does not have a shared appreciation or other contingent
interest feature;
30. Mortgaged Property Undamaged. To the best knowledge of
Seller, the Mortgaged Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to affect adversely
the value of the Mortgaged Property as
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security for the Loan or the use for which the premises were intended. The
related Mortgagor is not in and has not been in violation of, no prior owner of
the Mortgaged Property was in violation of, and the Mortgaged Property does not
violate any standards under, applicable statutes, ordinances, rules,
regulations, orders or decisions with regard to pollutants or hazardous or toxic
substances, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act, Federal Water Pollution Control Act,
Clean Air Act, Resource Conservation and Recovery Act, Surface Mining Control
and Reclamation Act and Toxic Substances Control Act, as such laws are amended
and supplemented from time to time and any analogous federal, state or local
statutes and regulations;
31. Originator. The Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company,
industrial loan company or similar institution which is supervised and examined
by a federal or state authority, a mortgage loan broker or consumer finance
lender supervised and licensed by the appropriate state agency of the
jurisdiction in which the related Mortgaged Property is located or a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to Sections
203 and 211 of the National Housing Act;
32. Conformance. The Loan conforms to all applicable
requirements of local, state and federal law and the Agreement;
33. Demand Statements. Seller has not received any requests
for a demand statement with respect to the Loan;
34. No Transfer. The Mortgagor named in each Loan was the
Mortgagor at the closing of such Loan, and no Mortgagor has assigned,
transferred, pledged or delegated any of its rights or obligations under the
Security Instruments and the Note;
35. Loan File. The Loan File contains each of the documents
and instruments specified to be included therein by the Agreement or the
Guidelines, each duly executed and in due and proper form, and each such
document or instrument complies with the Guidelines. Each Note and Security
Instrument are on forms which comply with the Guidelines;
36. Information True. To the best knowledge of Seller, the
information contained in and appearing upon the records and documents of each
Loan File is accurate and adequately reflects the true status of the Loan to
which said records and documents relate;
37. Credit File. Each credit file submitted by Seller to
Purchaser relating to each Loan shall contain true and complete copies of all
credit documents submitted, including without limitation, the application and
all information obtained by Seller as a result of its credit investigations;
38. Credit Information. The credit information contained in
each file submitted to Purchaser was compiled by the use of generally accepted
lawful credit investigation procedures, including inquiry to national credit
investigation agencies;
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39. Appraisal. The appraisal meets the requirements of all
applicable state and federal laws, rules and regulations in all respects and was
performed by a qualified appraiser who is duly licensed under all applicable
state and federal laws and who has no interest, direct or indirect, in the
Mortgaged Property or in any loan encumbering the Mortgaged Property, who does
not receive compensation which is affected by the approval or denial of the
Loan;
40. Adjustable Rate Loans. Each Loan that has an adjustable
rate of interest has an interest rate not less than the floor rate specified in
the related Note. No adjustable rate loan permits the conversion of the Loan to
a fixed interest rate;
41. Condition of Mortgagor. The Seller is not aware of any
circumstances existing at or prior to the Purchase Date that would lead it to
believe the Mortgagor is unable to repay the Loan, giving due consideration to
the value of the related Mortgaged Property. No event or circumstance known to
Seller has occurred or has arisen which, with or without notice, passage of time
or both, could result in the seizure of the Mortgaged Property by state or
federal agents acting under any state or federal law, rule or regulation
including, without limitation, the Controlled Substances Act or the Internal
Revenue Code or the regulations promulgated pursuant to either of the foregoing;
42. Servicing Practices; Escrow Deposits. The origination and
collection practices used with respect to each Loan have been in accordance with
standards generally required by institutional lenders and with applicable law,
and have been in all respects legal and proper. With respect to each Loan that
provides for an adjustable rate of interest and/or payment adjustments, all such
adjustments have been made strictly in accordance with the terms of the Note and
the related Security Instruments. There are no escrow deposits or accounts in
connection with the Loan.
43. No Consent of Senior Holder. With respect to each Loan
subject to the lien of a loan senior in priority to the lien of the Loan, either
(A) no consent for such Loan was required by the holder of the related senior
lien prior to the making of such Loan or (B) such consent has been obtained and
is contained in the related Loan File;
44. Repayment Ability. The Mortgagor has not signed a letter
in connection with the origination of any Loan in which such Mortgagor indicates
his inability to repay such Loan in accordance with the terms of the related
Note.
45. Soldiers' and Sailors' Relief Act. The Mortgagor is not
entitled to relief under the Soldiers' and Sailors' Civil Relief Act of 1940;
46. Mortgagor Acknowledgment. The Mortgagor has executed a
statement to the effect that the Mortgagor has received all disclosure materials
required by applicable law with respect to the Loan and, in particular, that the
Mortgagor has received all disclosure statements required by the federal Truth
in Lending Act. Such statement lists each disclosure document which has been
delivered to the Mortgagor.
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PURCHASE PRICE AMENDMENT
This Purchase Price Amendment is dated June ___, 1995, and is made
pursuant to that certain Master Loan Purchase Agreement (the "AGREEMENT") by and
among PACIFIC THRIFT AND LOAN COMPANY, a California corporation ("SELLER"), and
AAMES CAPITAL CORPORATION, a California corporation ("PURCHASER").
Defined Terms. Capitalized terms herein shall have the meanings given
in the Agreement.
Calculation of Purchase Price. Until such time as Purchaser shall have
completed the purchase from Seller of Loans with aggregate outstanding principal
balances (as of the Purchase Dates of the respective Loans) of $22,500,000 in a
given calendar quarter (i.e., January - March, April - June, July - September,
October - December), the Purchase Price for each Loan shall be 1.0325 times par.
At such time as purchaser shall have reached such $22,500,000 milestone and
until such time as Purchaser shall have completed the purchase from Seller of
Loans with aggregate outstanding principal balances (as of the Purchase Dates of
the respective Loans) of $25,000,000 in a given calendar quarter, the Purchase
Price for each Loan shall be 1.0375 times par. In addition, Purchaser shall pay
to Seller a volume premium on all Loans previously purchased from Seller by
Purchaser in such calendar quarter before such $22,500,000 milestone was reached
in an amount equal to 0.0050 times par. If, in any given calendar quarter,
Purchaser shall have completed the purchase from Seller of Loans with aggregate
principal balances (as of the respective Purchase Dates of the respective Loans)
in excess of $25,000,000, the Purchase Price for each Loan in such quarter in
excess of such $25,000,000 milestone shall be 1.0425 times par. No additional
volume premium shall be paid on Loans previous purchased. Calculation of
aggregate principal balances shall begin at zero at the beginning of each
calendar quarter with no amount carried over from a previous quarter.
In connection with the partial calendar quarter beginning on May 29,
1995 and ending on June 30, 1995, the milestones set forth in the immediately
preceding paragraph shall be pro-rated based on the remaining number of days in
such calendar quarter.
Minimum and Maximum Interest Rates. For each group of Loans sold by
Seller to Purchaser pursuant to a Loan Conveyance Agreement that includes Loans
with an adjustable rate of interest, the weighted average start rate of such
adjustable rate Loans in such group must equal at least 360 basis points over
the six-month LIBOR rate published in The Wall Street Journal that is most
recently available on the Friday immediately preceding the Purchase Date of such
Loans. In addition, the weighted average margin (that is added to the Index to
calculate the Note rate) of such Loans in such group must equal at least 500
basis points. Prices for adjustable rate loans not falling within these
parameters will be negotiated separately.
For each group of Loans sold by Seller to Purchaser pursuant to a Loan
Conveyance Agreement that includes Loans with a fixed rate of interest, the
weighted average interest rate of such Loans in such group must equal an amount
between 525 and 575 basis points over the four year treasury bond rate published
in The Wall Street Journal that is available most recently on
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the Friday immediately preceding the Purchase Date of such Loans. To the extent
a purchase of fixed rate Loans has a weighted average interest rate in an amount
up to 1% below this range, a 2-to-1 tradeoff or adjustment downward to the
Purchase Price would be applied. For example, if the fixed rate floor is
established at 10.5% and the Loans in the group equal a 10.0% rate, the Purchase
Price will be adjusted from 1.0325 times par to 1.0225 times par. In a similar
manner, to the extent a purchase of fixed rate Loans has a weighted average
interest rate in an amount up to 1% above this range, a 2-to-1 tradeoff or
adjustment upward to the Purchase Price would be applied. For example, if the
fixed rate ceiling is established at 11.0% and the fixed rate Loans in the group
equal a 11.5% rate, the Purchase Price paid will be adjusted from 1.0325 times
par to 1.0425 times par. Fixed rate loans falling outside these ranges will be
negotiated separately.
Servicing Released Fee. Seller is selling the Loans to Purchaser on a
"servicing released" basis. Purchaser shall pay to Seller a quarterly fee (the
"SERVICING RELEASED FEE") on the fifteenth (15th) day following each March 31,
June 30, September 30 and December 31 of each year (each, a "SERVICING FEE
CALCULATION DATE"). The Servicing Released Fee shall be an amount equal to
one-fourth (1/4th) of the product of (i) forty-five (45) basis points and (ii)
the aggregate of the principal balances of the Loans outstanding as of the close
of business on the related Servicing Fee Calculation Date; provided, however,
that the Servicing Released Fee due in respect of the first Servicing Fee
Calculation Date with respect to each Loan shall be pro-rated.
Prepayment Premiums. At least eighty percent (80%) of the Loans (by
principal amount) sold by Seller to Purchaser pursuant to any Loan Conveyance
Agreement shall contain a standard "California-type" prepayment premium
provision, enforceable in accordance with its terms in the jurisdiction where
the related Mortgaged Property is located, that will remain in effect during the
first five (5) years of the Loan.
Fees. Purchaser agrees to waive charging underwriting fees to Seller
with respect to the Loans.
IN WITNESS WHEREOF, the parties hereto have duly executed this Purchase
Price Amendment this 21 day of June, 1995.
PACIFIC THRIFT AND LOAN COMPANY AAMES CAPITAL CORPORATION
By: /s/ RICHARD D. YOUNG By: /s/ MARK E. COSTELLO
---------------------------- ------------------------------
Name: Richard D. Young Mark E. Costello
Title: President Vice President - Mortgage Banking
("Seller") ("Purchaser")
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