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Sample Business Contracts

Loan Purchase and Administrative Services Agreement - CWM Mortgage Holdings Inc. and Countrywide Funding Corp.

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                            1995 AMENDED AND EXTENDED

               LOAN PURCHASE AND ADMINISTRATIVE SERVICES AGREEMENT



                  THIS  AGREEMENT is made as of May 15, 1995, by and between CWM
Mortgage  Holdings,  Inc. (formerly known as Countrywide  Mortgage  Investments,
Inc.),  a  Delaware   corporation  (the  "Company"),   and  Countrywide  Funding
Corporation, a New York corporation ("CFC").

                                                    WITNESSETH:

     WHEREAS,  the Company has elected to qualify for the tax benefits  accorded
by Sections 856 to 860 of the Internal Revenue Code of 1986, as amended; and

                  WHEREAS, the Company, directly or through Subsidiaries, in the
conduct of its business primarily  operates a mortgage loan conduit,  engages in
warehouse  lending and construction  lending,  and invests in mortgage loans and
mortgage-related  securities  meeting the investment  criteria  established from
time to time by the Board of Directors; and

                  WHEREAS,  the Company may desire to  purchase  mortgage  loans
originated  or purchased by CFC and may want CFC to cause the issuance of Agency
Securities supported by pools of such mortgage loans on its behalf; and

                  WHEREAS,  the  Company  may desire to  appoint  CFC to service
mortgage  loans  originated by others and  purchased by the Company  through its
mortgage loan conduit operations; and

                  WHEREAS,  the  Company  and CFC desire to amend and extend the
Loan Purchase and Administrative  Services Agreement  originally entered into as
of September 3, 1985, for a one-year period through May 14, 1996, upon the terms
and subject to the conditions set forth in this Agreement.

                  NOW  THEREFORE,  in  consideration  of the  mutual  agreements
herein set forth, the parties hereto agree as follows:

     Section 1.  Definitions.  Whenever  used in this  Agreement,  the following
terms, unless the
context otherwise requires, shall have the following meanings:


     (a)  "Affiliate"  shall  have the  meaning  attributed  to such term in the
Management Agreement.

     (b) "Agency  Securities" shall mean GNMA  Certificates,  FHLMC Certificates
and/or FNMA
Certificates.

     (c) "Agreement" shall mean this 1995 Amended and Extended Loan Purchase and
Administrative
Services Agreement.

     (d) "Board of Directors" shall mean the Board of Directors of the Company.

                  (e)  "Conforming  Loan" shall mean an FHA Loan, a VA Loan or a
conventional mortgage loan eligible for sale to FNMA or FHLMC.

                  (f) "FHA Loan"  shall mean any  mortgage  loan  insured by the
Federal Housing Administration under the National Housing Act.

                  (g)  "FHLMC"   shall  mean  the  Federal  Home  Loan  Mortgage
Corporation,  a corporation  organized and existing under the laws of the United
States, or any successor thereto.

                  (h) "FHLMC  Certificate"  shall mean a mortgage  participation
certificate,  guaranteed  as to payment of interest  and  principal by FHLMC and
backed by a pool of conventional mortgage loans.

                  (i)  "FNMA"   shall  mean  the   Federal   National   Mortgage
Association,  a corporation  organized and existing under the laws of the United
States, or any successor thereto.

                  (j)  "FNMA  Certificate"  shall  mean  a  guaranteed  mortgage
pass-through  certificate,  guaranteed  as to timely  payment  of  interest  and
principal  by  FNMA  and  backed  by a  pool  of FHA  Loans,  VA  Loans,  and/or
conventional mortgage loans.

                  (k)  "GNMA"  shall  mean  the  Government   National  Mortgage
Association,  a wholly  owned  corporate  instrumentality  of the United  States
within  the  Department  of  Housing  and Urban  Development,  or any  successor
thereto.

                  (l)   "GNMA   Certificate"   shall   mean  a  fully   modified
pass-through  mortgage-backed  certificate  guaranteed  as to timely  payment of
interest and principal by GNMA and backed by a pool of FHA Loans or VA Loans.

     (m) "Jumbo  Loan" shall mean any  mortgage  loan which is not a  Conforming
Loan.

                  (n) "Management  Agreement" shall mean that certain  agreement
dated as of May 15, 1995  between the  Company  and the  Manager  governing  the
management of the Company's investments and day-to-day operations.

                  (o)  "Manager"  shall  mean   Countrywide   Asset   Management
Corporation,  or any successor  thereto,  under a Management  Agreement with the
Company.

     (p) "Mortgage Backed  Securities" shall have the meaning attributed to such
term in the
Management Agreement.

     (q)  "Subsidiary"  shall have the  meaning  attributed  to such term in the
Management
Agreement.

     (r)  "Unaffiliated  Directors"  shall  mean  those  members of the Board of
Directors who are
not Affiliates of the Manager.

                  (s) "VA Loan" shall mean any mortgage  loan  guaranteed by the
Veterans  Administration  under the  Servicemen's  Readjustment  Act of 1944, as
amended, or Chapter 37 of Title 38, United States Code.

                  Section 2.  Purchase of Mortgage  Loans and Agency  Securities
from CFC by the Company.  (a) CFC may sell to the Company mortgage loans, Agency
Securities and other  mortgage-related  assets meeting the Company's  investment
criteria.  CFC agrees that all such sales shall be made in  accordance  with the
normal and  customary  industry  practices  with respect to the sale of mortgage
loans, Agency Securities and other mortgage-related  assets. CFC agrees that all
mortgage  loans or other  investments  sold by it to the  Company  will meet the
investment criteria of the Company in effect at the time of sales.

                  (b) CFC  agrees  that,  any  sale of  mortgage  loans,  Agency
Securities  and other  mortgage-related  assets from CFC to the Company  will be
made at prices no less  favorable to the Company than are  available to CFC from
other purchasers.

                  (c) The  Company  agrees  that prior to the  delivery  of each
mortgage loan  purchased,  it shall have no interest in such mortgage  loan. CFC
shall bear all expenses and costs  associated  with the mortgage  loans prior to
delivery,  including the costs associated with mortgage loans that are not sold.
Upon  the  delivery  of such  mortgage  loan,  the  Company  shall  be the  sole
beneficial  owner of such mortgage loan although legal title to the mortgage and
the  mortgage  note will be held by CFC if so  directed by the Company to permit
the issuance of Agency Securities under Section 3.

                  (d)   Notwithstanding   the  fact  that  the  Company  is  the
beneficial  owner of the mortgage loans it purchases,  the Company and CFC agree
that from and after the date first written above,  the Conforming  Loans sold to
the Company  under this  Agreement  shall be sold  "servicing  retained" and the
servicing  rights  therefor  shall remain with CFC or the other holder  thereof.
Notwithstanding  the  foregoing,  neither  CFC nor such  holder  may  assign its
servicing  rights to such  Conforming  Loans  without the consent of the Company
prior to the issuance of Agency  Securities backed by such Conforming Loans. The
Company  agrees that it will not  unreasonably  withhold  its consent to such an
assignment of servicing  rights.  CFC's rights to assign the servicing rights to
Conforming Loans that have been pooled and exchanged for Agency Securities shall
be subject to Subsection 3(c).

                  (e) CFC hereby  represents  and  warrants  that at the time of
sale of  mortgage  loans  to the  Company  such  mortgage  loans  will  meet the
representations  and warranties required to be made by sellers of mortgage loans
to  the  Company  or  any  Subsidiary  pursuant  to  the  Seller/Servicer  Guide
incorporated by reference into the Seller/Servicer Contract executed by CFC.

                  (f) CFC shall act as an  independent  contractor and not as an
agent of the Company for purposes of originating  and purchasing  mortgage loans
and  selling  to the  Company  mortgage  loans and Agency  Securities  and other
investments.

                  Section  3.  Pooling of  Mortgage  Loans;  Issuance  of Agency
Securities;  Payments  of Certain  Amounts to  Company.  (a) If  directed by the
Company,  CFC on  behalf  of the  Company  will  pool any FHA Loans and VA Loans
purchased by the Company in accordance  with the  requirements  of FNMA and will
use its best efforts to have GNMA  Certificates  issued backed by such FHA Loans
and VA  Loans.  In  connection  therewith,  CFC  will  (i)  apply  to GNMA for a
commitment to guarantee mortgage-backed  securities by the issuance of such GNMA
Certificates;  (ii) once such a commitment has been issued by GNMA,  deliver the
pool of mortgage  loans to a custodian  (selected by CFC and  acceptable  to the
Company,  subject to GNMA requirements) to be held for the benefit of the holder
of the Certificates;  and (iii) once the custodian  verifies to GNMA that it has
custody  of the pool,  enter into or cause to be  created  an  appropriate  GNMA
guaranty  pursuant  to which  CFC  will  issue a GNMA  Certificate  owned by and
registered  in the name of or deposited  into a depository  institution  for the
account of the Company.  After the issuance of such GNMA Certificates,  CFC will
retain all  responsibilities  and duties to GNMA,  including  the payment of all
GNMA  guaranty  fees,  with  respect  to such  FHA  Loans,  VA  Loans  and  GNMA
Certificates  and will service such FHA Loans and VA Loans after the issuance of
the GNMA Certificates in accordance with GNMA requirements.

                  (b) If directed by the  Company,  CFC on behalf of the Company
will  pool  any  conventional  mortgage  loans  and/or  FHA  Loans  and VA Loans
purchased by the Company in accordance with the  requirements of FNMA and/or the
requirements  of FHLMC and will use its best  efforts to have FNMA  Certificates
and/or FHLMC Certificates issued backed by such conventional mortgage loans, FHA
Loans and VA Loans, but only if CFC in its sole discretion  determines that such
conventional  mortgage  loans,  FHA  Loans  and VA Loans  meet all FNMA or FHLMC
underwriting and other requirements for such issuance.  In connection therewith,
CFC will (i) apply to FNMA or FHLMC for a commitment to issue FNMA  Certificates
or FHLMC Certificates and (ii) once such commitment has been approved,  CFC will
contract with FNMA or FHLMC to pool such conventional  mortgage loans, FHA Loans
and VA Loans and  cause to be issued  FNMA  Certificates  or FHLMC  Certificates
backed by such loans,  which FNMA  Certificates  or FHLMC  Certificates  will be
owned by and will be  registered  in the name of or deposited  into a depository
institution  for the  account of the  Company.  After the  issuance of such FNMA
Certificates and FHLMC Certificates,  CFC will retain all  responsibilities  and
duties to FNMA and FHLMC,  including  the payment of all FNMA or FHLMC  guaranty
fees, with respect to such  conventional  mortgage  loans,  FHA Loans, VA Loans,
FNMA  Certificates  and FHLMC  Certificates  and will service such  conventional
mortgage  loans,  FHA Loans and VA Loans after the issuance of the FNMA or FHLMC
Certificates which they back, in accordance with FNMA and FHLMC requirements.

                  (c) If Agency Securities are issued to the Company pursuant to
this  Section,  CFC agrees that for such time as it is  servicing  the  mortgage
loans  underlying each Agency Security on behalf of the Company,  in addition to
all  duties and  obligations  imposed on CFC by the  servicing  agreement  which
incorporates the appropriate GNMA, FNMA or FHLMC  requirements,  CFC shall remit
to the Company at the same time it remits each periodic installment of principal
and  interest on the Agency  Security,  the  amount,  if any,  representing  the
difference  between (i) the scheduled  installment  of principal and interest on
the mortgage loans  underlying the Agency  Security,  less the applicable  GNMA,
FNMA or FHLMC  guaranty  fee and CFC's  servicing  fee as agreed to between  the
Company and CFC, and (ii) the scheduled installment of principal and interest on
the Agency Security.  The obligation of CFC to remit such amounts to the Company
shall arise upon receipt by CFC from the mortgagor of the scheduled  installment
of principal and interest on the  underlying  mortgage  loan. CFC agrees that in
the event it assigns its right to service the mortgage loans  underlying  Agency
Securities,  either the successor  servicer of such mortgage loans will continue
to remit the  amounts  referred to above to the Company or CFC will remit to the
Company an amount  representing  the present  value of the  anticipated  amounts
which would  otherwise  be received by the Company over the life of the mortgage
loans under this Subsection.

                  Section 4.  Obligation to Assume  Servicing.  In the event the
Company  or  any  Subsidiary  acquires  rights  to  service  mortgage  loans  or
terminates  the servicing  rights of any entity which has sold mortgage loans to
the Company or any Subsidiary on a servicing retained basis, the Company and CFC
agree to negotiate a servicing  agreement  pursuant to which CFC will assume the
servicing function.

                  Section 5. Additional  Activities of CFC. Nothing herein shall
prevent  CFC or its  Affiliates  from  engaging  in  other  businesses  or  from
rendering  services  of any kind to any other  person or entity,  including  the
performance  of  monitoring,  administering  or servicing  activities for others
investing in any type of real estate investment.

     Section 6. Bank Accounts. Fidelity Bond. (a) CFC may establish and maintain
in connection with the services performed hereunder one or more bank accounts in
the name of the Company,  at the  direction of the Company,  and may collect and
deposit into any such account or accounts, and disburse from any such account or
accounts,  moneys on behalf of the Company,  under such terms and  conditions as
the Company  may  approve;  and CFC shall from time to time  render  appropriate
accountings of such collections and payments to the Company and, when requested,
to the auditors of the Company.

                  (b) CFC shall  maintain  a  fidelity  bond with a  responsible
surety  company in an amount  approved by the Board of  Directors  covering  all
officers and employees of CFC handling funds of the Company and any documents or
papers,  which bond shall  protect  the  Company  against all losses of any such
property from acts of such officers and employees  through theft,  embezzlement,
fraud,  negligent acts, errors and omissions or otherwise,  the premium for said
bond to be paid by CFC.

                  Section  7.  Records;  Confidentiality.   CFC  shall  maintain
appropriate  books  of  account  and  records  relating  to  services  performed
hereunder, which books of account and records shall be accessible for inspection
and copying by the Company at any time during normal business hours.  CFC agrees
to keep  confidential  any and all  information  it obtains from time to time in
connection  with the  services it renders  hereunder  and shall not disclose any
portion  thereof to  nonaffiliated  third parties  except with the prior written
consent of the Company.

                  Section  8.  Term;  Termination.   (a)  This  Agreement  shall
continue in force through May 14, 1996,  and  thereafter it may be extended only
with  the  consent  of CFC  and by the  affirmative  vote of a  majority  of the
Unaffiliated  Directors.  Each  extension  shall be  executed in writing by both
parties  hereto  before the  expiration  of this  Agreement or of any  extension
thereof.

     (b) CFC may terminate this Agreement upon 30 days' written notice if at any
time any of the Affiliates of Countrywide Credit Industries,  Inc. are no longer
serving as Manager.

                  (c)   Notwithstanding   any  other  provision  herein  to  the
contrary,  this  Agreement,  or any extension  hereof,  may be terminated by the
Company with cause,  upon 30 days'  written  notice,  or by either party without
cause,  upon 60 days'  written  notice,  by  majority  vote of the  Unaffiliated
Directors or by vote of the holders of a majority of the  outstanding  shares of
common stock of the Company,  in the case of termination  by the Company,  or in
the case of termination by CFC, by majority vote of the Directors of CFC.

                  Section 9. Assignment.  This Agreement shall not be assignable
in  whole  or in  part by  CFC,  unless  such  assignment  is to a  corporation,
association,  trust or other  organization  which shall acquire the property and
carry on the  business of CFC, if at the time of such  assignment  a majority of
the voting  stock of such  assignee  organization  shall be owned,  directly  or
indirectly, by Countrywide Credit Industries,  Inc. or unless such assignment is
consented  to in writing by the  Company  with the  consent of a majority of the
Unaffiliated Directors.  Such an assignment shall bind the assignee hereunder in
the  same  manner  as CFC is bound  hereunder,  and,  to  further  evidence  its
obligations  hereunder,  the assignee shall execute and deliver to the Company a
counterpart of this  Agreement.  This  Agreement  shall not be assignable by the
Company  without the consent of CFC,  except in the case of an assignment by the
Company to a corporation or other  organization which is a successor (by merger,
consolidation  or  purchase  of  assets)  to the  Company,  in which  case  such
successor  organization shall be bound hereunder by the terms of said assignment
in the same manner as the Company is bound hereunder.

                  Section 10.  Termination  by Company for Cause.  At the option
solely of the Company,  this Agreement may be and become terminated upon receipt
of thirty days' written notice of termination from the Board of Directors to CFC
is any of the following events shall occur:

                  (a) If CFC shall violate any provisions of this Agreement and,
after notice of such violation, shall not cure such default within 30 days; or

                  (b) There is entered an order for relief or similar  decree or
order with respect to CFC by a court having  jurisdiction  in the premises in an
involuntary  case  under  the  federal  bankruptcy  laws  as  now  or  hereafter
constituted or under any applicable  federal or state bankruptcy,  insolvency or
other  similar laws; or CFC (i) ceases or admits in writing its inability to pay
its debts as they become due and payable,  or makes a general assignment for the
benefit of, or enters into any composition or arrangement with, creditors;  (ii)
applies for, or consents (by admission of material  allegations of a petition or
otherwise)  to the  appointment  of a receiver,  trustee,  assignee,  custodian,
liquidator  or  sequestrator  (or  other  similar  official)  of  CFC  or of any
substantial part of its properties or assets,  or authorizes such an application
or consent,  or proceedings  seeking such appointment are commenced without such
authorization,  consent or application against CFC and continue  undismissed for
30 days;  (iii)  authorizes  or files a  voluntary  petition in  bankruptcy,  or
applies for or consents (by admission of material  allegations  of a petition or
otherwise) to the  application of any bankruptcy,  reorganization,  arrangement,
readjustment of debt, insolvency, dissolution,  liquidation or other similar law
of any jurisdiction,  or authorizes such application or consent,  or proceedings
to such end are instituted against CFC without such  authorization,  application
or  consent  and remain  undismissed  for 30 days or result in  adjudication  of
bankruptcy or insolvency; or (iv) permits or suffers all or any substantial part
of its properties or assets to be sequestered or attached by court order and the
order remains undismissed for 30 days.

                  (c)  CFC  agrees  that  if  any  of the  events  specified  in
paragraph (b) of this Section 10 shall occur, it will give prompt written notice
thereof to the Board of Directors after the happening of such event.

                  Section  11.  Action  Upon  Termination.  From and  after  the
effective date of termination of this Agreement, pursuant to Sections 8, 9 or 10
hereof,  CFC  shall  not  be  entitled  to  compensation  for  further  services
hereunder,  but  shall  be  paid  all  compensation  accruing  to  the  date  of
termination. CFC shall forthwith upon such termination:

                  (a) Pay over to the Company any money  collected  and held for
the  account of the Company  pursuant  to this  Agreement  or  otherwise,  after
deducting any accrued compensation to which it is then entitled;

                  (b)  Deliver  to the  Board of  Directors  a full  accounting,
including a statement  showing any  payments  collected by it and a statement of
any  money  held by it,  covering  the  period  following  the  date of the last
accounting furnished to the Board of Directors; and

                  (c)  Deliver  to the  Board  of  Directors  all  property  and
documents of the Company  then in the custody of CFC,  except to the extent that
to do so would  conflict  with the  terms of its  servicing  agreement  with the
Company.

                  Section 12.  Release of Money or other  Property  Upon Written
Request.  CFC agrees that any money or other property of the Company held by CFC
under this Agreement shall be held for the Company in a custodial capacity,  and
CFC's records shall be appropriately  marked to clearly reflect the ownership of
such money or other  property of the Company.  CFC shall  release its custody of
any money or other property only in accordance  with written  instructions  from
the Company.

                  Section 13. Notices. Any notice, report or other communication
required or permitted  to be given  hereunder  shall be in writing,  unless some
other method of giving such notice , report or other  communication  is accepted
by the party to whom it is given,  and shall be given by being  delivered at the
following addresses of the parties hereto:



<PAGE>


                  The Company:              CWM Mortgage Holdings, Inc.
                                            35 North Lake Avenue
                                            Pasadena, California  91101-1857
                                            Attention:  General Counsel

                  CFC:                      Countrywide Funding Corporation
                                            155 North Lake Avenue
                                            Post Office 7137
                                            Pasadena, California  91109-7137
                                            Attention:  General Counsel

                  Either  party may at any time give  notice in  writing  to the
other party of a change of its address for the purpose of this Section 13.

                  Section  14. No Joint  Venture.  The  Company  and CFC are not
partners  or joint  venturers  with  each  other  and  nothing  herein  shall be
construed to make them such partners or joint  venturers or impose any liability
as such on either of them.

                  Section 15.  Amendments.  This Agreement shall not be amended,
changed,  modified,  terminated  or  discharged  in whole  or in  part,  and the
performance  of any  obligation  hereunder  may  not  be  waived,  except  by an
instrument  in  writing  signed  by both  parties  hereto,  or their  respective
successors or permitted assigns, or otherwise as provided herein.

     Section  16.  Successors  and  Assigns.   This  Agreement  shall  bind  any
successors or permitted
assigns of the parties hereto as herein provided.

     Section  17.  Severability.  The  invalidity  or  unenforceability  of  any
provision  of  this  Agreement  shall  not  affect  the  validity  of any  other
provision, and all other provisions shall remain in full force and effect.

     Section 18. Entire Agreement. This instrument contains the entire agreement
between the parties as to the rights granted and the obligations assumed in this
instrument.
                  Section  19.  Waiver.  Any  forbearance  by a  party  to  this
Agreement in  exercising  any right or remedy under this  Agreement or otherwise
afforded by applicable laws shall not be a waiver of or preclude the exercise of
that or any other right or remedy.

     Section 20.  Governing Law. This Agreement shall be governed by,  construed
under and interpreted in accordance with the laws of the State of California.

     Section  21.  Supplemental  Servicing.  From  and  after  the  date of this
Agreement the Supplemental  Servicing Agreement dated as of May 15, 1987, by and
among the Company, CFC and the Manager shall be of no further force and effect.

                  Section  22.  Headings  and   Cross-References.   The  section
headings  hereof have been inserted for  convenience of reference only and shall
not be  construed  to  affect  the  meaning,  construction  or  effect  of  this
Agreement.  Any reference in this Agreement to a "Section" or "Subsection" shall
be  construed,  respectively,  as referring to a section of this  Agreement or a
subsection of a section of this Agreement in which the reference appears.

                  Section 23. Execution in  Counterparts.  This Agreement may be
executed in one or more counterparts,  any of which shall constitute an original
as against  any party  whose  signature  appears  on it, and all of which  shall
together  constitute a single  instrument.  This Agreement  shall become binding
when  one or  more  counterparts,  individually  or  taken  together,  bear  the
signatures of both parties.

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be executed by their officers  thereunto duly  authorized as of the
day and year first above written.



                                               CWM MORTGAGE HOLDINGS, INC.



                                               By:     \s\ Michael W. Perry
                                                       Michael W. Perry
                                               Title:  Executive Vice President



                                               COUNTRYWIDE FUNDING CORPORATION



                                               By:     \s\ Kevin W. Bartlett
                                                       Kevin W. Bartlett
                                               Title:  Managing Director


                  The undersigned,  as Manager,  consents to the foregoing terms
and  provisions  of this  Agreement and agrees to be bound by them in performing
its duties as Manager of the Company.



                                               COUNTRYWIDE ASSET MANAGEMENT
                                               CORPORATION



                                               By:     \s\ Stanford L. Kurland
                                                       Stanford L. Kurland
                                               Title:  President