HomeMy WebLinkAbout1984-07-17; City Council; 7820 Exhibit 12; OFFICIAL REQUEST TO STATE OF CALIFORNIA FOR MORTGAGE REVENUE BOND ALLOCATION Exhibit 12t I
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WELLS FARGO MORTGAGE COMPANY
as Lending Institution
and
INVESTORS MORTGAGE FINANCIAL SERVICES, INC.
as Administrator
and
SECURITY PACIFIC NATIONAL BANK
as Trustee
and
CITY OF CARLSBAD, CALIFORNIA as Issuer
_____-----__________--__-_---_----------_-_-------------------- ____________________----_---------------_----------__----------
MORTGAGE SALE AND SERVICE AGREEMENT
Dated as of June 15, 1983
CITY OF CARLSBAD, CALIFORNIA SINGLE FAMILY RESIDENTIAL MORTGAGE REVENUE BONDS ISSUE OF 1983
_---------_________-------------------------------------------- ____________________-------------------------------------------
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference
only and is not a part of this Agreement).
ARTICLE I P ac
Definitions ............................................. 2
ARTICLE I1
REPRESENTATIONS
Section 2.01. Representations, Warranties and Covenants
Section 2.02. Representations, Warranties and Covenants
Section 2.03 Representations, Warranties and Covenants
Section 2.04 Representations, Warranties and Covenants
of the Issuer ......................... c
of Lending Institution ................. 1c
of Trustee ............................ 12
of the Administrator .................. If
ARTICLE I11
ISSUANCE OF BONDS, APPLICATION OF BOND PROCEEDS
Section 3.01. Agreement to Issue Bonds; Application of
Bond Proceeds .......................... 1:
Section 3.02. Payment of Cost of Issuance of Bonds ..... 1:
Section 3.03. Special Arbitrage Certifications ........ le
Section 3.04. Limited Liability ....................... 16
ARTICLE IV
COMMITMENTS TO PURCHASE LOANS
Section 4.01. Commitment to Buy and Sell ............... 1(
Section 4.02. Loan Amount ............................. 1t
Section 4.03. Loan Submission ......................... 15
Section 4.04. Closings ................................ 15
Section 4.05. Closing Documents ........................ 2(
i
Section 4.06. Loan File ............................... 20
Section 4.07. Defective Documents 20
Section 4.08. Representations, Warranties and
.....................
Covenants of Lending Institution
Concerning Loans 21
Section 4.09. Permitted Buydowns of Interest Rate ..... 28
......................
ARTICLE V
ADMINISTRATION AND SERVICING OF LOANS
Section 5.01. Lending Institution to Act as Servicer ... 29 Section 5.02. Collection of Certain Loan Payments;
Section 5.03. Collection of Taxes, Assessments and
Section 5.04. Transfers and Permitted Withdrawals
...................... Receipts Account 30
Similar Items; Loan Service Account .... 31
from Issuer's Receipts Account;
Requisitions for Reimbursements 31
Section 5.05. Claims Against Insurer of Loans ......... 33
Insurance and Flood Insurance ......... 33
Insurance ............................. 35
.......
Section 5.06. Maintenance of Standard Hazard
Section 5.07. Maintenance of Earthquake Damage
Section 5.08. Maintenance of Special Hazard Insurance
Section 5.09. Maintenance of Errors and Omissions
Section 5.10. Maintenance of Private Mortgage Insurance
Policy ................................ 35
Insurance Policy and Fidelity Bond .... 35
Policy ................................ 36
Section 5.11. Transfers and Assumptions 36 Section 5.12. Realization Upon Defaulted Loans ........ 37
Files ................................. 38
Administrator and Receipts Account
Statements ............................ 39
Section 5.15. Prohibition of Discrimination; Report
to Issuer ............................. 4c
Section 5.16. Certain Verifications ................... 4c
...............
Section 5.13. Issuer to Cooperate; Release of Loan
Section 5.14. Reports to Trustee, Issuer and
ii
ARTICLE VI
LENDING INSTITUTION
Section 6.01. Merger or Consolidation of the Lending
Institution 4c
Section 6.02. Lending Institution Not to Resign 41
........................... .......
ARTICLE VI1
CAUSES PERMITTING TERMINATION OF LENDING INSTITUTION
........... Section 7.01. Causes of Termination Defined 41
Section 7.02. Remedies 42 Section 7.03. Administrator to Act; Appointment
of Successors 44
Section 7.04. Notification of Bondholders 4E
Section 7.05. No Remedy Exclusive 4E Section 7.06. Agreement to Pay Attorneys' Fees,
Costs and Other Expenses 45
................................
......................... ............. .....................
..............
ARTICLE VI11
THE ADMINISTRATOR
Section 8.01. Liability of Administrator .............. 4E
Section 8.02. Role of the Administrator 4t
Section 8.03. Merger or Consolidation of Administrator. 4E
Section 8.04. Administrator Not to Resign 4E
Section 8.05. Termination for Cause 4;
Section 8.06. Maintenance of Errors and Omissions
Insurance Policy and Fidelity Bond 4E Section 8.07. Appointment of Successor Administrator
by the Trustee; Temporary Administrator 45
Section 8.08. Agreement to Pay Attorneys' Fees,
Costs and Other Expenses 45
...............
............. ...................
....
..............
iii
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9-01. Amendments, Changes and Modifications .... 45
Section 9.02. Changes in Applicable Laws ............... 5c
Section 9.03. Recordation of Agreement ................. 5c
Section 9.04. Limitation on Rights of Bondholders ...... 5c
Section 9.05. Litigation Regarding Acceleration Clauses. 5c
Section 9.06. Purchase of Bonds ........................ 5c
Section 9-07. Governing Law ............................ 5c
Section 9.08. Counterparts ............................. 51
Section 9.09. Notices .................................. 51
Section 9.10. Severability ............................. 53
Section 9.11. Further Assurances and Corporate Instruments ........................... 51
Section 9.12. Term of Agreement ........................ 53
Testimonium ............................................ 51
Signatures and Seals ................................... 5:
EXHIBIT "A" Mortgage File
EXHIBIT "Brr Loan Submission Voucher
EXHIBIT "C" Lender's Certificate
EXHIBIT "D" Opinion of Lender's Counsel
EXHIBIT "E" Riders to Note and Deed of Trust
EXHIBIT "F" Buyer's Affidavit
EXHIBIT "G" Seller's Affidavit
iv
MORTGAGE SALE AND SERVICE AGREEMENT
THIS MORTGAGE SALE AND SERVICE AGREEMENT (the "Agreement"),
dated as of June 15, 1983, is among Wells Fargo Mortgage
Company (the "Lending Institution"), Security Pacific National
Bank (the "Trustee"), Investors Mortgage Financial Services,
Inc. (the "Administrator"), and the City of Carlsbad,
California (the "Issuer").
WITNESSETH
WHEREAS, the Issuer has adopted a home mortgage finance program (the "Program") pursuant to Part 5 of Division 31 of the Health and Safety Code of the State of California (the "Act I' ) ;
WHEREAS, the Issuer has promulgated rules and regulations with respect to purchasing mortgage loans originated and made by qualified mortgage lenders to mortgagors to purchase
residences within its boundaries;
WHEREAS, the Issuer proposes to issue, sell and deliver its Single Family Residential Mortgage Revenue Bonds, Issue of 1983 (the "Bonds") , pursuant to a purchase contract (the "Purchase
Contract") between the Issuer and a group of underwriters for
whom Blyth Eastman Paine Webber Incorporated is the senior
manager (the "Underwriters"), for the purpose of providing
funds to purchase mortgage loans pursuant to the Program;
WHEREAS, the Issuer intends to enter into an indenture
between itself and the Trustee for the issuance of the Bonds
(the "Indenture"), pursuant to which the Trustee will be empowered to purchase on behalf of the Issuer mortgage loans which have been originated by the Lending Institution and
reviewed by the Administrator, subject, among other things, to certain of the terms and conditions hereinafter set forth;
WHEREAS, the Issuer, the Trustee, the Administrator, and the Lending Institution are desirous of setting forth the terms
and conditions upon which the Lending Institution will
originate and service mortgage loans under the Program; and
WHEREAS, the Issuer has found and declared that the
purchase of Loans under the terms of this Agreement and the
Program will both further the purposes of the Act and serve the
public purpose of providing financing for decent, safe and
sanitary housing affordable to persons and families in the
lower end of the purchasing spectrum;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, and for and in consideration of the mutual
promises, representations and agreements herein contained,
hereby agree as follows:
ARTICLE I
DEFINITIONS
Unless the context clearly otherwise requires, each capitalized word or phrase appearing herein which is defined in the Indenture shall have the same meaning in this Agreement as is given it in the Indenture. In addition thereto, unless the
context clearly requires otherwise, the following terms shall
have the following respective meanings:
"Acquisition Cost" means the cost of acquiring a Residence
from the seller as a completed residential unit, including: (i)
all amounts paid, either in cash or in kind, by the purchaser
(or a related party or for the benefit of the purchaser) to the seller (or a related person or for the benefit of the seller) as consideration for the Residence; (ii) if the Residence is incomplete, the reasonable cost of completing it (so that occupancy thereof is legally permitted); and, (iii) if the Residence is purchased subject to a ground rent, the capitalized value of the ground rent calculated using a discount rate equal to the Yield on the Bonds; but exclusive
of: (i) usual and reasonable settlement or financing costs,
(but only to the extent that such amounts do not exceed the
usual and reasonable costs which would be paid by the purchaser
where financing is not provided through bonds the interest on
which is excludable from the gross income of the recipient for
federal income tax purposes), (ii) the value of services
performed by the mortgagor or members of his or her family in completing the Residence, and (iii) the cost of land which has been owned by the mortgagor for at least two years before the date on which construction of the Residence begins.
"Average Area Purchase Price" means the average purchase price of single family residences (exclusive of duplexes,
triplexes and fourplexes) in the San Diego Standard
Metropolitan Statistical Area stated separately with respect to
residences which have not been previously occupied ("Average
Area Purchase Price - New") and residences which have been
previously occupied ("Average Area Purchase Price - Existing")
for the most recent period for which sufficient information is
5072P/2062/06 -2 -
available, as such price may from time to time be determined by
the Issuer in accordance with the Code and as specified by the
Issuer, provided that if the Issuer shall fail to determine
such price for a period of one year then upon the expiration of such one year period, "Average Area Purchase Price" shall mean the most current applicable average purchase price safe harbor limitations from time to time published by the United States Department of the Treasury for the San Diego Standard
Metropolitan Statistical Area.
"Closing" means a closing held pursuant to Section 4.04 of
this Agreement at which a Loan is sold, without recourse, by
the Lending Institution to the Trustee on behalf of the Issuer.
"Closing Date" means the date on which a Closing is held pursuant to this Agreement.
"Code" means the Internal Revenue Code of 1954, as amended,
and all regulations and rulings promulgated thereunder.
"Deed of Trust" means the instrument securing a Loan.
"Developer" means any one of the persons signing a
Developer Agreement, the Loans with respect to whose Developer
Reserved Single Family Residences have been designated by the
Administrator for origination and servicing by the Lending Institution.
Developer Agreement" means any of the agreements between i If
Developer and the Issuer under which the Developer agrees to
provide Developer Reserved Single Family Residences, and all amendments or supplements thereto.
Developer Fees" means the fees paid to the Issuer by the I1
Developers pursuant to the Developer Agreements.
"Developer Reserved Single Family Residences" means
Residences which are anticipated to be sold by a Developer
pursuant to a Developer Agreement.
policies, or endorsement thereto, issued by a Qualified
Insurer, which provides extended coverage against earthquake
loss in an amount not less than the maximum insurable value of
the Residence securing a Loan (based upon the replacement cost
thereof) or the principal balance owing on such Loan, whichevei
is less. Such insurance may provide a deductible, which may not exceed 5 percent per occurrence.
"Earthquake Damage Insurance" means an insurance policy or
5072P/2062/06 -3-
"Errors and Omissions Insurance Policy" means a standard
form insurance policy, in form and substance required of
mortgage sellers/servicers by the FHLMC or the FNMA insuring
against losses from errors or omissions in the conduct of a
business.
"Existing Residence" means a Residence which has been previously occupied.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"Fidelity Bond'' means a standard form fidelity bond, in
form and substance required of mortgage sellers/servicers by
the FNMA or the FHLMC.
First Time Homebuyer" means an individual who has not had
a present ownership interest (within the meaning of the Code)
in his or her principal residence at any time during the three
year period ending on the date he or she executes a Note.
"Flood Insurance Policy'' means insurance in the form of a
standard federal homeowner's flood insurance policy in an
amount not less than the lesser of either the maximum insurable
value of the Residence which is covered thereby or the
principal balance of the Loan secured by such Residence.
If
"FNMA" means the Federal National Mortgage Association.
"Force Majeure" means any cause or event not within the control of a party hereto which prevents that party from performing any of its obligations hereunder, including, withouf
limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders
or restraints of any kind of the government of the United
States of America or of the State or any of their departments,
agencies or officials, or any civil or military authority;
insurrections; riots; landslides; adverse weather conditions;
earthquakes; fires; storms; droughts; floods; explosions; and
breakage or accident to transmission wires, machinery, transmission pipes or canals.
"Household Income" means the current adjusted gross income
of a potential mortgagor, determined in substantially the same manner in which such determination is made in connection with
other loans originated pursuant to FHLMC guidelines, together
with the current adjusted gross income of all persons who
reside or intend to reside with such mortgagor in the same
dwelling unit, but exclusive of the income of any co-signer of
a Note who does not reside or intend to reside therein, as
evidenced by documentation satisfactory to the Lending
Institution.
5072P/2 062/06 -4-
"Insurance Expenses" means expenses incurred by the Lending
Institution which are recoverable under any of the insurance
policies required to be maintained hereunder, exclusive of
amounts representing recoveries of principal of and interest on
.any Loan.
"Insurance Proceeds" means payments received by the Lending
Institution under any insurance policy with respect to a Loan.
"Liquidation Expenses" means expenses incurred by the
Lending Institution in connection with the liquidation of any
defaulted Loan and not recovered under the applicable Private
Mortgage Insurance Policy, exclusive of amounts representing
recoveries of principal of and interest on any Loan.
"Liquidation Proceeds" means amounts (other than Insurance
Proceeds) received by the Lending Institution in connection
with the liquidation of any defaulted Loan, whether through
trustee's sale, foreclosure sale or otherwise.
"Loan" means a loan evidenced by a Note secured by a first
lien deed of trust which meets the requirements of Section 4.08 hereof and which the Trustee, on behalf of the Issuer, has purchased or intends to purchase from the Lending Institution pursuant to this Agreement.
"Loan File" means the documents listed in Exhibit A to this Agreement as required to be delivered by the Lending Institution for each Closing pertaining to each Loan it originates.
Loan Principal Prepayments" means all amounts representing It
recovery of the principal amount of any Loan (exclusive of
regularly scheduled principal payments) as a result of (1) any
prepayment of all of the principal amount of any Loan,
including any prepayment penalty, fee, premium or other such
additional charge; (2) the sale, assignment or other
disposition of any Loan; (3) the acceleration of any Loan (on
account of default or any other cause) or the foreclosure or sale under deed of trust or other proceedings taken in the event of default of any Loan; and (4) compensation for losses incurred with respect to any Loan from the proceeds of
condemnation, title insurance, hazard insurance, mortgage
insurance or guarantees (whether received in the form of moneys
or as debentures or certificates issued pursuant to a contract
of insurance), exclusive of amounts recovered in respect of
such losses to the extent required to be otherwise applied
pursuant to the applicable contract of insurance.
5072P/2062/06 -5-
"Loan Submission Voucher'' means the voucher in the form of Exhibit B to this Agreement which is submitted to the Administrator pursuant to Section 4.03 of this Agreement.
"Loan-to-Value Ratio" means the ratio of the original principal amount of a Loan to the lesser of the initial
appraised value or the purchase price of a Residence. -
Maximum Acquisition Cost" means an amount which does not 11
exceed 110 percent of the Average Area Purchase Price - New in
the case of New Residence or of the Average Area Purchase Price - Existing in the case of an Existing Residence. The Maximum
Acquisition Cost shall be determined as of the earlier of the
date the Lending Institution makes a commitment to provide
financing (or, in the case of an assumption of an existing Loan, the date the Lending Institution approves the assumption) or the date the Residence is purchased.
"Median Household Income" means the highest of (i) statewide median household income for the State as determined
by the Issuer, (ii) countywide median household income as
determined by the Issuer, or (iii) median family income within
the boundaries of the Issuer for the San Diego Standard
Metropolitan Statistical Area for a family of four, as
published by the United States Department of Housing and Urban
Development, as may be adjusted from time to time by the
Issuer, or as may be otherwise reasonably determined by the
Issuer in accordance with the Act.
"Mortgage Loan Interest Rate" means the annual rate of
interest, as specified in the Note (exclusive of any fee or charge for mortgage insurance), of a Loan when held by the Trustee on behalf of the Issuer, which rate shall be specified by the Issuer in a Notice of Fee, Rate and Allocation.
"New Residence" means a Residence which has not been
previously occupied.
"Note" means the promissory note executed by a mortgagor to
evidence such mortgagor's obligation to repay a Loan.
"Notice Address" means:
(a) As to the Issuer:
City of Carlsbad
1200 Elm Road
Carlsbad, California 92008
Attention: Director of Building
and Planning
5072P/2062/06 -6-
(b) As to the Trustee:
Security Pacific National Bank
Corporate Trust Administration Division
P.O. Box 30376, Terminal Annex
Los Angeles, California 90030
Attention: H 42-9
(c) As to the Administrator:
Investors Mortgage Financial Services, Inc.
500 Newport Center Drive, Suite 754
P. 0. Box 2910
Newport Beach, California 92660 Attention: Mr. Richard Latto
(d) As to the Lending Institution:
Wells Fargo Mortgage Company
1701 Fourth Street,
P. 0. Box 937
Santa Rosa, California 95404
Attention: Mr. Larry Koagedal
"Notice of Fee, Rate and Allocation" means a notice from
the Issuer to the Trustee, the Administrator, the Lending
Institution, and the Developers specifying the Developer Fee,
the Mortgage Loan Interest Rate, the Developers' Reservation,
and the Yield on the Bonds, which notice shall be provided
within thirty days after the issuance of the Bonds.
"Private Mortgage Insurance Policy" means an insurance
policy or policies issued by a Private Mortgage Insurer under
which the coverage is substantially the same as the coverage provided by Investors Mortgage Insurance Company's 100 percent Coverage Policy with Advance Claim Payment, Advance Claim
Payment for Delinquent Loans, Attorneys' Fees Limit Waiver, and Default Amendatory Endorsements, all in the form submitted to the Trustee by Investors Mortgage Insurance Company as of the
date of issuance of the Bonds.
"Private Mortgage Insurer" means Investors Mortgage
Insurance Company, for so long as Investors Mortgage Insurance
Company (i) is legally qualified to write Private Mortgage
Insurance Policies in the State, (ii) underwrites Private
Mortgage Insurance Policies for the Program in a manner consistent with its representations to the Issuer, and (iii)
maintains a credit rating which does not cause a reduction in the rating of the Bonds assigned by Standard and Poor's Corporation as of the issuance of the Bonds; and thereafter, at
5072P/2062/06 -7-
the option of the Issuer, "Private Mortgage Insurer" shall mean
any or any other person qualified to issue mortgage insurance,
and approved by the Issuer to issue mortgage insurance under the Program, other than the Federal Housing Administration, the
Veterans Administration or an instrumentality of the State.
"Program Fund" means the fund by that name created pursuant to the Indenture and into which certain Bond proceeds and Developer Fees will be deposited and used to purchase Loans.
"Qualified Insurer" means any properly licensed insurance company qualified to do business in and write the applicable
form of insurance in the State and which is rated B-6 or better
by Best's Insurance Reports (Property-Casualty).
and maintained for the Issuer by the Lending Institution at Security Pacific National Bank pursuant to Section 5.02 of this
Agreement and into which shall be deposited all payments and collections received with respect to Loans serviced by the Lending Institution, except the Service Fee, unless it is the Lending Institution's practice to calculate its Service Fee at
the time it remits the balance of the Receipts Account to the Trustee.
"Receipts Account" means the account by that name created
"Residence" means real property and improvements thereon consisting of a single family detached or attached (condominium, rowhouse, townhouse) residential unit (but not
including a mobile home, that is, a residence transportable in
one or more sections built on a permanent chassis) which can
reasonably be expected to become the principal residence of the
mortgagor within a reasonable period of time (which shall not
exceed 60 days) after the Loan is made to the mortgagor and
which is located within the boundaries of the Issuer.
"Reserve Fund" means the fund by that name created pursuant
"Revenue Fund" means the account by that name created
11 Service Fee" means a fee payable to the Lending
to the Indenture.
pursuant to the Indenture.
Institution for servicing of Loans in an amount equal to a monthly fee of 1/12 of 0.- percent of the unpaid balance of
each Loan as of the day preceding the last day on which a scheduled payment on the Loan was due.
"Servicing Officer" means any officer of the Lending
Institution involved in, or responsible for, the administration
and servicing of the Loans, whose name appears on a list of servicing officers furnished to the Issuer, the Trustee and the
Administrator by the Lending Institution, as such list may from
time to time be amended.
5 0 72 P/2 062/0 6 -8-
Special Hazard Insurance Policy" means a special hazard 11
insurance policy or any replacement policy obtained by the
Trustee pursuant to Section 5.08 of this Agreement.
"Standard Hazard Insurance" means insurance, issued by a
Qualified Insurer, as described in Section 5.06 herein.
"State" means the State of California.
"Uninsured Cause" means any cause of damage to property subject to a Loan, the complete restoration of which is not fully reimbursable by the insurance policies required to be maintained pursuant to Section 5.06 or 5.07 of this Agreement.
"Yield on the Bonds" means the yield on the Bonds as determined by the Issuer in accordance with the Code and as
specified by the Issuer in a Notice of Fee, Rate, and
Allocation.
ARTICLE I1
REPRESENTATIONS
Section 2.01. Representations, Warranties and Covenants of
the Issuer. The Issuer represents and warrants to, and
covenants with, the Lending Institution, the Administrator and
the Trustee that:
(a) The Issuer is a municipal corporation of the
State, duly organized and existing under the Constitution
and laws of the State. Pursuant to the Act, the Issuer has
authorized the execution and delivery of this Agreement,
the Indenture, and the Developer Agreements.
(b) The Issuer has complied or intends to comply with all of the provisions of the Constitution and laws of the
State including the Act, and has or will have full power
and authority to consummate all transactions contemplated
by this Agreement, the Developer Agreements, the Indenture,
and any and all other agreements relating thereto.
(c) To accomplish the foregoing, the Issuer proposes
to issue the Bonds following the execution of this Agreement on the terms and bases set forth in the Indenture and to use the proceeds thereof as specified in this Agreement, the Developer Agreements and the Indenture.
(d) No officer or official of the Issuer has any prohibited interest, as defined by the applicable laws of the State, in the Lending Institution or in the transactions contemplated by this Agreement.
5072P/2062/06 -9-
(e) The Issuer will make any and all findings and
determinations required to be made by it pursuant to this
Agreement in good faith and with due diligence.
Section 2.02. Representations, Warranties and Covenants
of Lending Institution.
and warrants to, and covenants with, the Issuer, the Trustee,
the Administrator and, in order to induce the Underwriters to
enter into the Purchase Contract, the Underwriters that:
The Lending Institution represents
(a) It is (i) a duly organized and existing mortgage banking corporation or other financial institution which customarily provides servicing and origination of home mortgages, and is authorized to do business in the State, or (ii) a duly organized and existing federal or state savings and loan association authorized to do business in the State, or (iii) a duly organized and existing federal
or state bank authorized to do business in the State; and
it is either a FNMA or FHLMC approved seller/servicer.
(b) It will, during the term of this Agreement, remain a financial institution subject to supervision and
examination by state or federal authorities (if currently
subject to such supervision and examination) as applicable,
will not make a change in the character of its business
which would materially adversely affect its performance
hereunder, will remain in good standing and qualified to do
business under the laws of the United States of America or
the state of its then state of organization and of the
State, will not dissolve or otherwise dispose of all or
substantially all of its assets and will not voluntarily
consolidate with or merge into any other entity or permit
one or more other entities to consolidate with or merge
into it; provided, that it may, without violating the
agreement contained in this subsection, consolidate with or merge into another financial institution, or permit one or
more financial institutions to consolidate with or merge
into it, or sell or otherwise transfer to another such
financial institution all or substantially all of its
assets as an entirety and thereafter dissolve, provided
that the surviving, resulting, or transferee financial
institution, as the case may be, (i) shall be subject to
the supervision and examination of state or federal
authorities, to the extent applicable, (ii) shall be a FNMA
or FHLMC approved seller/servicer, (iii) after giving
effect to such transaction, shall have a net worth
substantially equal to or greater than that of such Lending
Institution immediately prior to such transaction, and (iv)
shall assume in writing all of the obligations of such
Lending Institution under this Agreement (in the case of a
sale of all or substantially all of such Lending
5072P/2062/06 -10-
Institution's assets, the Trustee, on behalf of the Issuer,
shall release such Lending Institution in writing from all
liability hereunder, concurrently with and contingent upon suck assumption).
(c) It has the power to execute, deliver and perform,
and to enter into the transactions contemplated by, this Agreement, and has duly authorized the execution, delivery
and performance of this Agreement.
(d) The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the fulfillment of or compliance with the terms and
conditions of this Agreement, do not and will not conflict
with or result in a breach of its charter or bylaws or any
of the terms, conditions or provisions of any legal restriction or any agreement or instrument to which it is
now a party or by which it is bound, or constitute a
default (or constitute, with notice or lapse of time, or
both, a default) under any of the foregoing.
(e) any action which is within its control to be taken which
would to its knowledge impair the exemption from federal
income taxation of interest on the Bonds.
It will not knowingly take any action or permit
(f) The information, if any, concerning the Lending
Institution under the caption "Lending Institution" in the
preliminary Official Statement of the Issuer relating to
the Bonds does not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the statements therein not misleading.
(9) It will furnish to the Issuer and the Under- writers a letter and an opinion of counsel respectively,
dated the date of the issuance of the Bonds, in sub-
stantially the forms of Exhibits C and D hereto.
(h) Neither it nor any "related person" within the
meaning of Section 103(b)(6)(C) of the Code will purchase Bonds pursuant to an arrangement, formal or informal, in an amount related to the amount of Loans purchased from the
Lending Institution.
Section 2.03. Representations, Warranties and Covenants of
Trustee. The Trustee represents and warrants to, and
covenants with, the Lending Institution, the Administrator, the
Issuer and, in order to induce the Underwriters to enter into
the Purchase Contract, the Underwriters that:
5072P/2062/06 -11-
(a) The Trustee has been duly organized under the
laws of the United States and is validly existing as a national banking association, with full corporate power to
own its properties and conduct its business;
(b) This Agreement has been duly authorized, executed and delivered by the Trustee, and, when executed and
delivered by the Issuer, the Administrator and the Lending
Institution, will constitute a legal, valid and binding
obligation of the Trustee enforceable in accordance with
its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, or other laws
affecting creditors' rights generally or by equitable
principles if equitable remedies are sought;
(c) All corporate proceedings legally required to be
taken by the Trustee in connection with the authorization
and execution of this Agreement and the consummation of the
transactions Contemplated hereby and related hereto, and to
the best of its knowledge, all approvals, authorizations,
consents or other orders of state or federal regulatory
agencies, public boards or bodies, if any, as may be
legally required to be obtained by the Trustee prior to the
date of this Agreement with respect to any or all of such
matters, have been taken or obtained;
(d) The Trustee has full legal authority to engage in
the activities covered by this Agreement; and, furthermore,
the execution and delivery of this Agreement and compliance with the terms, conditions and provisions hereof will not conflict with or result in a breach of any of the terms, conditions or provisions of the charter or bylaws of the Trustee or any agreement or instrument to which it is a
party or by which it is bound, or to the best of its
knowledge, any law or regulation or administrative decree
or order to which it is subject, or constitute a default
(or constitute, with notice or lapse of time, or both, a
default) thereunder;
(e) The Trustee is not in default with respect to any order or decree of any court, or any order, regulation or demand of any federal, state, municipal or governmental agency, which default might have consequences that would
materially and adversely affect the operation of the
Trustee or its properties with respect to its duties and
obligations contemplated by this Agreement;
(f) The Trustee is not a party to or bound by any
agreement or instrument or subject to any charter or any
other corporate restriction or any judgment, order, writ,
injunction, or decree which now or in the future may
5072P/2062/06 -12-
materially and adversely affect the ability of the Trustee
to perform its obligations under this Agreement or which
require the consent of any third person to the execution of this Agreement or the consummation of the transactions contemplated hereby;
(9) The Trustee is, or has a wholly-owned mortgage banking subsidiary which is, a seller/servicer approved by
the FNMA or the FHLMC for conventional loans, and it shall
maintain its standing as such;
(h) The Trustee will report, as more fully set forth
in this Agreement, information relating to the Loans to the
Issuer and the Lending Institution and will do and perform
every act and thing which may be necessary or required to
perform its duties under this Agreement;
(i) No litigation is pending or, to the best of the
Trustee's knowledge, threatened against the Trustee which
would prohibit its entering into this Agreement or
consummating the transactions contemplated hereby.
Section 2.04. Representations, Warranties and Covenants of - the Administrator. The Administrator represents and warrants to, and covenants with, the Lending Institution, the Trustee, the Issuer and, in order to induce the Underwriters to enter into the Purchase Contract, the Underwriters that:
(a) The Administrator is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation, is duly qualified
and in good standing to transact business in the State, and
possesses all requisite authority, power, licenses, permits
and franchises to conduct any and all business contemplated
by, and to execute, deliver, and comply with its obliga-
tions under the terms of, this Agreement, the execution,
delivery and performance of which have been duly authorized
by all necessary corporate action.
(b) The execution and delivery of this Agreement by the Administrator in the manner contemplated herein and the
performance and compliance with the terms hereof by it will
not violate its certificate or articles of incorporation or
bylaws, or any laws which could have any material adverse
effect whatsoever upon the validity, performance or
enforceability of any of the terms of this Agreement
applicable to the Administrator and will not constitute a
material default (or constitute, with notice or lapse of
time, or both, a default) under, or result in the breach of, any material contract, agreement or other instrument tc
which the Administrator is a party or which may be
cpplicable to it or any of its assets.
5 0 7 2P/2 062/0 6 -13-
(c) The execution and delivery of this Agreement by
the Administrator in the manner contemplated herein and the
performance and compliance with the terms hereof by it do
not require the consent or approval of any governmental
authority, or if such consent or approval is required, it
has been obtained.
(d) This Agreement, and all documents and instruments
contemplated hereby, which are or pursuant hereto will be
executed and delivered by the Administrator, will
constitute valid, legal and binding obligations of the
Administrator (assuming execution and delivery thereof by
the other party or parties thereto), enforceable in
accordance with their respective terms, except as the
enforcement thereof may be limited by applicable laws
affecting creditors' rights generally or by equitable
principles if equitable remedies are sought.
(e) The Administrator is a qualified servicer of
mortgages, its management is experienced in the business of
servicing mortgages in the manner contemplated herein, it
meets and will continue to meet the requirements of all
applicable laws and regulations so as to be able to service
conventional mortgages hereunder and the assumption by it
of servicing responsibilities hereunder will not, in any
way, contravene its Articles of Incorporation, its bylaws,
any agreement to which it is a party nor will it require
the consent or approval of any governmental authority.
(f) From time to time the Administrator will report,
as more fully set forth in this Agreement, information relating to the Loans to the Lending Institution, the Issuer, and the Trustee, and will do every act and thing
which may be necessary or required to perform its duties
under this Agreement.
(9) The Administrator agrees that so long as it shall
continue to serve in the capacity contemplated under the
terms of this Agreement it will remain in good standing
under the laws of the State and qualified under the laws of
the State to do business in the State, will not dissolve or
otherwise dispose of all or substantially all of its assets
and will not voluntarily consolidate with or merge into any other entity or permit one or more other entities to
consolidate with or merge into it; except that the Administrator may, without violating the covenant contained in this subsection, consolidate with or merge into another entity, or permit one or more entities to consolidate or merge into it, or sell or otherwise transfer to another such entity all or substantially all of its assets as an entirety and thereafter dissolve, if the surviving,
5072P/2062/06 -14-
resulting or transferee entity, as the case may be, (i)
shall have a net worth equal to or greater than the net
worth of the Administrator immediately preceding any such
transaction, (ii) shall be qualified under the laws of the
State to do business in the State, shall be qualified under the laws and have all necessary approvals required of the
Administrator under this Section to perform the
Administrator's duties under this Agreement, and (iii)
shall assume in writing all of the obligations of the
Administrator under this Agreement (in the case of a sale
of all or substantially all of the Administrator's assets, the Trustee, on behalf of the Lending Institution and the
Issuer, shall release the Administrator in writing from all
obligations so assumed, concurrently with and contingent
upon such assumption).
ARTICLE I11
ISSUANCE OF BONDS; APPLICATION OF BOND PROCEEDS
Section 3.01. Agreement to Issue Bonds; Application of
Bond Proceeds. The Issuer agrees to use its best efforts to
issue, sell and deliver the Bonds to the Underwriters pursuant
to the Purchase Contract on the terms and bases set forth in
the Indenture, provided the terms and conditions of such sale
are acceptable to the Issuer. The proceeds of the Bonds will
be deposited with the Trustee as provided in the Indenture, and
will be disbursed as provided in the Indenture, the Developer
Agreements and this Agreement.
Section 3.02. Payment of Cost of Issuance of Bonds. The
Lending Institution acknowledges that the Issuer shall direct the payment of all costs not otherwise paid in connection with the issuance of the Bonds, including, without limitation, costs of printing, legal and accounting fees and all other costs as specified in the Indenture, solely from moneys in the Program
Fund and that the Issuer shall have no obligation of any kind
to pay, or to reimburse the Lending Institution for, any costs
incurred by the Lending Institution in connection with the
issuance of the Bonds.
Section 3.03. Special Arbitrage Certifications. The
Issuer, the Trustee, the Administrator and the Lending
Institution severally, and not jointly, certify to the
purchasers and holders of the Bonds from time to time
outstanding that, based solely on present expectations as set
forth in an arbitrage certificate delivered at the closing for
the sale of the Bonds, moneys on deposit in any fund or account
in connection with the Bonds, whether or not such moneys were
derived from the proceeds of the sale of the Bonds or from any other sources, are not intended to be used in a manner which
5072P/2062/06 -15-
will cause the interest on the Bonds to become subject to
federal income taxation. The Issuer, the Trustee, the
Administrator and the Lending Institution reserve the right,
however, to make any investment of such moneys permitted by the
laws of the State if, when and to the extent that the Code
shall be repealed or interpreted to permit such investment or shall be held void by final judgment of a court of competent
jurisdiction so as to permit such investment, but only if such investment made by virtue of such repeal, interpretation or decision would not, in the opinion of counsel of recognized
competence in such matters, result in making the interest on
the Bonds subject to federal income taxation.
Section 3.04. Limited Liability. All obligations of the
Issuer incurred hereunder shall be limited obligations of the
Issuer, payable solely out of Bond proceeds, Developer Fees,
revenues, and other amounts derived by the Issuer from the
Loans (including earnings thereon and certain insurance
proceeds with respect thereto), and certain reserve funds
established in connection therewith and nothing contained
hereunder shall create any indebtedness or be construed to
create any moral obligation on the part of the Issuer, or
permit any person to compel the exercise of the taxing power of
the Issuer. All obligations of the Issuer incurred hereunder
shall be subordinated to the obligations of the Issuer to the
holders of the Bonds, and shall be payable only after all
obligations of the Issuer to the holders of the Bonds shall have been satisfied.
ARTICLE IV
COMMITMENTS TO PURCHASE LOANS
Section 4.01. Commitment to Buy and Sell. At or after
the times (but in no event later than the date set forth in
Section 10 of Exhibit B of the applicable Developer Agreements) and in the amounts set forth in the draw-down schedule included in Section 5 of said Exhibit B of the Developer Agreements, the Trustee acting on behalf of the Issuer and using moneys in the
Program Fund, will purchase from the Lending Institution Loans
secured by the Residences referred to in said Developer
Agreements. The Lending Institution will use its best efforts
to originate and sell such Loans to the Trustee, without
recourse, at or after such times and in said amounts, provided
that, if prior to the issuance of the Bonds the Issuer has
entered into a mortgage sale and service agreement
substantially similar to this Agreement with another lending
institution, the Administrator shall determine the Developer
Reserved Single Family Residences with respect to which the
Lending Institution shall originate and sell loans to the
Trustee.
5072P/2062/06 -16-
In the event arnounts reserved to make Loans for the
Developer Reserved Single Family Residences of a Developer are
determined by such Developer to be unusable, or in the event
the Issuer reduces or terminates a Developer's Reservation and
the Issuer is unable to find a residential project which it
deems to be a suitable replacement for the Developer's
development, then upon receipt of written permission from the
Issuer and the Trustee and subject to the provisions of the
applicable Developer Agreement, the Lending Institution may
originate and sell to the Trustee a like amount of Loans on
other residences provided such Loans shall comply in all other
respects with the requirements applicable to Loans for
Developer Reserved Single Family Residences.
Each Loan shall-: (i) be secured by a first lien Deed of
Trust (subject to certain permitted encumbrances) on a
Residence, the Acquisition Cost of which does not exceed, to
the best knowledge of the Lending Institution, the Maximum
Acquisition Cost; (,ii) be made to a person or persons each of
whom is, to the best knowledge of the Lending Institution, a
First Time Homebuyer except that Loans in an aggregate
principal amount not exceeding 10 percent of the total
principal amount of all Loans may be made to persons who are
not First Time Homebuyers) whose Household Income does not
exceed: (a) 150 percent of the Median Household Income in the
case of a purchase of a New Residence (provided that if the
principal amount of the Bonds exceeds $20,000,000, a lesser
maximum income may be specified in the Notice of Fee, Rate and
Allocation with respect to that percentage of each Developer's Reservation which equals the quotient obtained by dividing the
principal amount of the Bonds by the portion thereof in excess
of $20,000,000), or (b) 120 percent of the Median Household
Income in the case of an Existing Residence (provided, however,
that Loans representing at least 20 percent of the principal
amount of all Loans for Existing Residences shall be made to
persons whose Household Income does not exceed 110 percent of
the Median Household Income); (iii) bear interest at the
Mortgage Loan Interest Rate; (iv) not be used to acquire or
replace an existing mortgage (other than a construction loan or
similar temporary financing); (v) comply with the requirements of Section 4.08 hereof; and (vi) be fully insured by a Private Mortgage Insurance Policy. No Loan shall have a Loan-to-Value
Ratio in excess of 95 percent.
Not more than 40 percent of the aggregate principal amount of the Loans in the first paragraph of this Section 4.01 may be
made for the purchase of Existing Residences.
Section 4.02. Loan Amount. The purchase price of each
Loan purchased hereunder by the Trustee on behalf of the Issuer
shall be equal to the principal amount thereof plus accrued
5072P/2062/06 -17-
interest thereon. The Trustee shall pay to the Lending
Institution from the Program Fund on each Closing Date a sum
equal to the aggregate applicable purchase price of Loans it originated which are purchased on such Closing Date (provided that any accrued interest to be paid in connection therewith
shall be paid from the Revenue Fund).
The Lending Institution may charge a non-refundable
application fee of not more than one hundred dollars ($100) in
connection with each loan application it processes. Such fee
shall be credited against the fees and charges hereinafter described.
At the closing for any Loan, the Lending Institution may
charge the mortgagor a fee equal to 0.5 percent of the original
principal amount of the Loan, which amount may be retained by
the Lending Institution for its sole account. The Lending
Institution may also collect from the mortgagor charges for any
costs of the following items paid or incurred by the Lending
Institution in connection with the making of a Loan, but only
to the extent that such charges do not exceed either those
charged in the area in connection with the origination of loans
not financed through qualified mortgage bonds within the
meaning of the Code or the actual costs of the Lending
Institution: (i) at the closing for a Loan, title insurance,
recording charges, escrow and tax contract fees, standard
hazard, earthquake, flood, mortgage or life insurance premiums
in such amounts as may be actually incurred; and (ii) prior to the closing for a Loan, credit report, survey, appraisal,
abstract and attorneys' fees, and similar charges for loan
processing fees, in an amount not to exceed $300 in total, plus
an additional $100 in the case of a Loan for which there is to
be a cosigner. No other fees, charges or remuneration may be
received by the Lending Institution, directly or indirectly, in
connection with the origination or closing of a Loan for the
Program.
Section 4.03. :Loan Submission. A Loan Submission
Voucher accompanied by copies of supporting documents contained
in Part I1 of the Loan File for each Loan sold by the Lending Institution to the Trustee shall be delivered to the Administrator at a reasonable time, but not less than five business days, prior to the proposed date on which Trustee will make a disbursement from the Program Fund for the purchase of
such Loan. The Administrator shall review the Loan Submission
Voucher and accompanying documents for each such Loan to
determine whether documentary evidence exists that the
procedures necessary to originate the Loan in accordance with
the Agreement and any standards promulgated hereunder have been
carried out. Upon a determination that such evidence exists,
the Administrator shall deliver a written approval of the Loan
to the Lending Institution and shall deliver the Loan
Submission Voucher to the Trustee.
5072P/2062/06 -18-
Each Loan to be purchased shall be submitted on standard
conventional FHLMC loan documents with the riders set forth in
Exhibit E, and shall provide for payments of principal and
interest on the first day of each month, all such payments to
be substantially equal. Such payments shall commence not latex
than the first day of the second month following the Closing
Date and in all cases not later than 62 days from the date of
settlement with mortgagor.
on the submission date, all matured payments due on the Note
have been paid. The sale of each Note and related Deed of
Trust shall be evidenced by the originating Lending
Institution's (i) placing the following endorsement on the bacI of such Note: "Pay to the Order of Security Pacific National Bank, as Trustee for the City of Carlsbad, without recourse"
and (ii) as soon as practicable thereafter, executing and delivering to Trustee, on behalf of Issuer, and recording or
filing in the offices necessary to evidence Issuer's ownership thereof, an assignment to Issuer of the Deed of Trust securing such Note.
No Loan shall be purchased unless,
Section 4.04. Closings. The Closing for the purchase of each Loan shall take place at the office of the Trustee or at such other place as may be mutually agreeable to the Trustee, the Administrator, and the Lending Institution. Closings for the Lending Institution shall be in such numbers or for such principal amounts of Loans as shall be agreeable to the Lendinc
Institution, the Trustee, and the Administrator. Unless
otherwise agreed among the Lending Institution, the Trustee anc
the Administrator, Closings shall be once a week.
All mortgagor payments on account of principal (except for
prepayments), interest, taxes or insurance collected by the
Lending Institution with respect to a Loan prior to the Closinc Date, but not due until after the Closing Date for such Loan ("prepaid installments") shall be held by the Lending Institution until the Closing. On such Closing, such amounts shall be immediately deposited by the Lending Institution in the appropriate fund or account, created hereunder or under the
Indenture, as if such amount had been received subsequent to the Closing.
Section 4.05. Closing Documents. The Lending
Institution shall deliver to the Trustee in connection with the
Closing for each Loan the documents comprising Part I of the
Loan File, including, without limitation, the Note, related
Deed of Trust and assignment required by Section 4.03 hereof,
all of which shall be held in the possession of the Trustee in
accordance with the Indenture.
Section 4.06. Loan File. The Lending Institution shall, at its own expense, maintain, with respect to each Loan it
5 0 7 2 P/2 0 62 /O 6 -19-
originates, any original documents not previously submitted to
the Trustee and all other documents commonly maintained,
required to be retained by law or regulation,
files. Such documents may be stored on microfilm.
Administrator's review of the Loan Submission Voucher and
accompanying documents pursuant to Section 4.03 hereof,
any time any document or documents constituting a part of a
Loan File are in th.e opinion of the Administrator (which
opinion shall be binding upon the Lending Institution)
defective or inaccurate in any material respect, the Lending
Institution shall cure the defect or inaccuracy within 60 days (or such shorter period of time as may be required by law) from
the time the Administrator notifies it of the existence of the
defect.
that, if any such material defect cannot be cured within such
60-day period (or such shorter period of time as may be
required by law), it will, not later than 90 days after the
Administrator's notice to it respecting such defect or inaccuracy, repurchase the related Loan from the Issuer at a
price equal to (i) 100 percent of the principal remaining
unpaid on such Loan plus (ii) unpaid accrued interest thereon to the date of the repurchase. The Trustee shall then assign
and deliver such Note and Deed of Trust to the Lending
Institution. The Trustee, as agent for the Issuer (and the
Trustee is hereby irrevocably appointed as the Issuer's agent and attorney-in-fact for such purpose) shall execute and
deliver such instruments of transfer or assignment, in each
case without recourse, as shall be necessary to vest in the Lending Institution the Note and Deed of Trust released
pursuant thereto.
statute of limitation or other law which might otherwise be
raised in defense to any obligation to repurchase any Loan
hereunder.
or
in its loan
Section 4.07. Defective Documents. Notwithstanding the
if at
The Lending Institution hereby covenants and agrees
The Lending Institution hereby waives any
Notwithstanding the foregoing, in any case in which the
Lending Institution is required to repurchase a Loan by reason of a defect, inaccuracy or misrepresentation in a Buyer's
Affidavit (Exhibit F) pertaining to a requirement of the Code
or the Act, the Lending Institution need not repurchase the
Loan so long (i) such defect, inaccuracy or misrepresentation
constitutes a default under the Loan with respect to which the Private Mortgage Insurance Policy provides coverage, and (ii) as the Lending Institution shall diligently proceed, on behalf
of the Issuer, to declare all sums the payment of which is
secured thereby to be immediately due and payable and to take
all steps necessary to collect all benefits pursuant to the applicable Private Mortgage Insurance Policy. Moreover, in any
case in which the Lending Institution is required to repurchase
a Loan because a Developer incorrectly indicated in an
5072P/2062/06 -20-
affidavit submitted to the Lending Institution that the Acquisition Cost of: a Residence did not exceed the Maximum Acquisition Cost, the Lending Institution may exercise the
right of the Issuer, pursuant to Section 5.01 of the Developer
Agreement, to require the Developer to purchase such Loan from
the Issuer.
Section 4.08. Representations, Warranties and Covenants of
Lending Institution Concerning Loans.
Institution hereby represents and warrants to, and covenants
with, the Issuer, the Trustee, and the Administrator that with
respect to the Loans it shall originate for sale to the Trustee
on behalf of the Issuer:
The Lending
(i) The Information set Eorth in each Loan Submissior Voucher will be true and correct at the Closing Date
thereof to the best knowledge of the Lending Institution,
and each Loan shall have been closed after the delivery of
this Agreement;
(ii) Based upon representations made by the mortgagor
by an affidavit. or declaration under penalty of perjury and
to the best knowledge of the Lending Institution (using the
underwriting procedures and criteria which it applies in
the case of loans being originated for its own portfolio),
each Loan will be secured by a Residence to be occupied by
the mortgagor as such mortgagor's principal place of
residence (and not as an investment or recreational home)
within 60 days and for a minimum of two years after
receiving the Lloan; will be made substantially in accordance with the Lending Institution's then current standard underwriting policies, which shall conform to FHLMC guidelines except as otherwise herein prescribed;
will be made for the purpose of purchasing the property
subject to the related Loan and not for the purpose of
refinancing or replacing any existing loan on any such
property (other than a construction loan or similar
temporary financing); will be a permanent mortgage and not
a construction loan; will have a term of not more than 360
and not less th.an 348 consecutive substantially equal
monthly installments; and complies with all of the
requirements of Section 4.01;
(iii) As of the Closing Date, the Loan will have been finally endorsed for insurance under a Private Mortgage Insurance Policy (or a firm commitment therefor received);
and the Lending Institution agrees, until such time as no
Bonds are outstanding or as otherwise directed by the
Trustee, to cause such insurance to be maintained in force
and effect during all times that the Issuer owns an
interest in the Loan;
5072P/2062/06 -21-
(iv) As of the Closing Date, the Loan will be secure(
by a valid first lien Deed of Trust on the property
financed by the Loan, subject only to (a) the lien of
current real property taxes and assessments, and covenants
conditions and restrictions, rights of way, easements, and
other matters of public record as of the date of recording
of the related Deed of Trust, such exceptions appearing of
record being either acceptable to lending institutions
generally or taken into account and reflected in the
appraisal made in connection with the origination of the
Loan or (b) any lien the full payment for the release of
which provision has been made from the proceeds of such
Loan, provided each payment will be made as soon as
practicable;
(v) As of the Closing Date, the Lending Institution
shall have in its possession with respect to the property
financed by the Loan and secured thereby an ALTA approved
or an equivalent mortgage title insurance policy (or a
commitment therefor) in an amount equal to the original
principal amount of the Loan, naming the Lending
Institution and its successors and assigns, if any, as an
insured, and insuring that the Deed of Trust securing the
Loan constitutes a first lien on such property, subject to
the exceptions of the preceding subsection;
(vi) As of the Closing Date, the improvements upon
the real property subject to such Loan will be covered by i valid and subsisting Standard Hazard Insurance Policy,
Flood Insurance Policy (if required) and Earthquake Damage Insurance Policy (or firm commitment therefor), with an
endorsement in favor of the Lending Institution, the Issue]
and the Trustee as their interests may appear, issued by a
Qua 1 i fed I nsure r ;
(vii) The terms, covenants and conditions of the Loar
shall not have been and shall not prior to the Closing be
waived, altered, impaired or modified in any respect which
would materially affect the value, validity, enforceablity,
or prompt payment of the Loan, or the security of the lien
securing the Loan, except for such waivers, alterations anc the like accomplished by the Lending Institution prior to the Closing Date and disclosed in writing to the Admi ni st rator ;
(viii) As of the submission date, all matured payments
due on the Note will have been current;
(ix) As of the Closing Date, there shall be no
delinquent tax or delinquent lien against the property
financed by the Loan, except as specified in paragraph (iv:
hereof or unless the title insurance specified in paragrap1 (v) hereof insures against such risks;
5072P/2062/06 -22-
(x) As of the Closing Date, the Lending Institution
shall not have 'done any act to create an offset, defense or
counterclaim to the Loan, including the obligation of the mortgagor to pay the unpaid principal of and interest on
the Loan;
(xi) As of the Closing Date, there shall be no
mechanics' liens or claims for work, labor or material
affecting the premises financed by the Loan which are or
may be a lien prior to, or equal with, the lien of the Deed
of Trust securi:ng the Loan, subject to the exceptions
specified in paragraph (iv) hereof, or unless the title
insurance specified in paragraph (v) hereof insures against
such risks;
(xii) The Lending Institution will cause an
inspection to be performed in connection with making the
Loan and, based upon the inspection and to the best knowledge of the Lending Institution, the physical property
financed by the Loan will be complete, free of apparent
material damage, and in general good repair on the Closing Date of such Loan;
(xiii) In making such Loan, the Lending Institution has complied with the Truth-in-Lending Act, the Real Estate
Settlement Procedures Act of 1974, the Equal Credit
Opportunity Act and any other applicable federal or state
statutes or regulations;
(xiv) Each Deed of Trust required to be filed in a
public office to perfect the lien of the Deed of Trust
securing each Loan against third parties will have been
duly recorded at the instructions of the Lending
Institution in the proper public office in order to give
constructive notice thereof to all subsequent purchasers or encumbrancers of the property financed by such Loan;
(xv) Each Loan at the time it shall have been made
shall have complied with the state and federal usury laws
applicable to the Lending Institution;
(xvi) To the best knowledge of the Lending
Institution, the mortgagor of a Loan shall not have
conveyed such mortgagor's right, title or interest to or in
the property to any party other than a trustee for the
benefit of such mortgagor;
(xvii) The fees to be charged and retained by the Lending Institution and the stated interest rate for each Loan shall be in compliance with this Agreement;
5072P/2062/06 -23-
(xviii) Each mortgagor shall have executed and
delivered a Buyer's Affidavit in substantially the form
attached hereto as Exhibit F;
(xix) Except in the case of Loans in an aggregate
principal amount not exceeding 10 percent of the total
amount of all L,oans, to the best knowledge of the Lending
Institution, based upon its review of signed copies
(certified by the mortgagor to be true and accurate) of the
mortgagor's federal income tax returns for the three years
preceding the date of application for the Loan (from which
it has determined that the mortgagor has not claimed a
deduction pursuant to section 164(a)(l) of the Code for
taxes on real property which was the mortgagor's principal
residence or a deduction pursuant to section 163 of the
Code for interest paid on a mortgage secured by real
property which was the mortgagor's principal residence) anc such other information as may have been furnished to the Lending Institution in connection with the Loan application, the affidavit furnished by the mortgagor under the preceding paragraph will h.ave been accurate as it relates to the mortgagor's sta.tus as a First Time Homebuyer
(if all such tax returns are not submitted by the
mortgagor, the Lending Institution shall obtain an
affidavit to the effect that the mortgagor was not requirec
to file the same);
(xx) If the mortgagor is an employee of the Issuer,
the Lending Institution will have determined, or received i
written declaration from the Issuer to the effect, that the
mortgagor does not have decision-making authority for the
Issuer;
(xxi) The Note and Deed of Trust shall have attached
thereto the riders provided for in Exhibit E or such other riders as the Issuer may from time to time require by such
notice;
(xxii) The information provided to mortgagors
regarding the resale provisions applicable to the subject
property will be in such form and substance as the Issuer
may from time to time require, and will be provided at the
expense of the Developer or the Lending Institution;
(xxiii) The Developer or seller, as the case may be,
shall have executed and delivered a Seller's Affidavit in
substantially the form attached hereto as Exhibit G;
(xxiv) For each Loan on a leasehold estate the Lendinc Institution warrants that the lease is a lease of the fee or a sublease which is executed by the fee owner and the
sublessor; and that:
5072P/2062/06 -24-
(a) the use of leasehold or ground rent estates
for residential properties is a customary practice in
the area in which the Residence is located,
(b) residential properties in the area
consisting of such leasehold or ground rent estates
are readily marketable, and
(c) mortgages covering such residential
properties are commonly acceptable to private
institutional mortgage investors.
The Lending Institution further warrants that:
(d) the lease, sublease or conveyance reserving ground rents and their provisions is in a form
commonly acceptable to private institutional mortgage
investors in the area in which the Residence is located.
(e) the lease (or a memorandum thereof) and the sublease if any (including all amendments thereto)
is/are recorded.
(f) the leasehold is in full force and effect
and is not subject to any prior lien or encumbrance by
which the leasehold can be terminated or subjected to
any charge or penalty.
(9) the remaining term or exercised renewal of
the lease and sublease together with any renewals
enforceable by the mortgagee does not terminate earlier th.an five (5) years after the maturity date of the mortga.ge.
(h) the sublease payments are, at least, equal to the lease payments and are due no less frequently
than the lease payments.
(i) the lease and sublease if any does/do not
contain any provisions which:
(1) permit increase(s) in the rent (lease
payment) other than a sum certain increase at a specified date(s) or time interval(s) (Increases based on cost of living or other indices or reappraisal are not acceptable unless they have
the effect of limiting increased payment amounts
to the lesser of the sum certain specified or the
amount resulting from application of the index or
reappraisal. ) ;
5072P/2062/06 -25-
l(2) provide for termination for lessee's
defau:lt without the leasehold mortgagee being
entitled to receive written notice of, and a
reasonable opportunity to cure, such default (If the mortgagee is entitled to such notice only if it has served on the ground lessor a written request that it be given such notice, then the *
Lending Institution represents that it has served such a written request on the ground lessor.);
(3) provide for termination in the event of
damage or destruction as long as the leasehold
mortgage is in existence;
(4) prohibit the leasehold mortgagee to be
an insured under hazi3rd insurance policies;
(5) prohibit payment of hazard insurance
proceeds to the leasehold mortgagee or insurance
trustee;
(6) prohibit payment to leasehold mortgagee of any condemnation award to which lessee is entitled;
(7) prohibit the leasehold mortgagee from exercising renewal options.
(j) The lease or sublease contains provisions
which:
(1) permit mortgaging of the leasehold
estate,
(2) permit assignment without lessor's
consent or, if lessor's consent is required,
state that lessor's consent must be granted if (i) the tenant is not in default, (ii) the transferee assumes t'he tenant's obligations in writing, and (iii) lessor is furnished with the requisite assignment documentation and paid a
transfer fee of not more than $50,
(3) permit the leasehold mortgagee the
right to acquire in its own name (or nominee) the
rights of the lessee upon foreclosure or
assignment in lieu of foreclosure;
(xxv) To the best knowledge of the Lending
Institution, based upon its examination of the closing
statement pertaining to the sale of the Residence and such
5072P/2 062/06 -2 6-
other information as the Lending Institution deems
relevant, the Acquisition Cost of the Residence does not
exceed the Maximum Acquisition Cost;
(xxvi) To the Lending Institution's best knowledge there is no circumstance or condition with respect to the Loan or the mortgagor which (a) could reasonably be
expected to cause the Lending Institution to regard the
Loan as an unacceptable investment for its own portfolio,
cause the Loan to become delinquent, or adversely affect
the value or marketability of the Loan, except that the
interest rate on the Loan may be below the market interest
rate and the Loan-to-Value Ratio may be greater than that
which is otherwise acceptable to private lenders; or (b)
would lead it to believe that the affidavits required to be
made by the mortgagor and the Developer or seller are not
true and correct; and
(xxvii) Neither the Lending Institution nor any other
person (insofar as the Lending Institution is aware) has
charged the seller of the Residence or any other person any
fee, charge or remuneration for the services to be provided
by the Lending Institution pursuant to this Agreement
except those fees, charges and remunerations specifically provided for herein.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section shall survive the sale of' the Loans by the Lending Institution to the Trustee and that the representations, warranties and covenants shall inure to the benefit of the transferees and the assigns
of the Issuer or the Trustee which., under the Indenture,
include the Trustee and the Bondholders. Upon discovery at ani
time by the Issuer, the Lending Institution, the Administrator
or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which may materially
and adversely affect the value of any Loan or the interest of
the Issuer in any Loan or the tax exemption for interest on the Bonds, the party discovering such breach shall give prompt written notice to the others. Within 60 days (or such shorter period as may be required by law) of its discovery or its receipt of notice of breach, the Lending Institution shall cure such breach in all material respec:ts or shall purchase the Loar
from Issuer in the manner, at the time, and at the purchase
price set forth in Section 4.07 hereof.
Section 4.09. Permitted Buydowns of Interest Rate.
(A) The interest rate on arty Loan may be bought down,
but only under the following condi.tions:
(i) the money used to effect the buydown must be
deposited in an escrow account; with scheduled monthly
releases which serve to reduce the mortgagor's payments;
5072P/2062/06 -27-
(ii) the term of the buydown period may not be less
than one year nor more than three years;
(iii) the initial interest rate buydown must be
effective for one year and may not be greater than three
percentage points;
(iv) reductions in the buydown must occur not more
frequently than annually, no such reduction may exceed one
percentage point, and no resulting increase in the
scheduled monthly payment may exceed 7.5 percent per year;
(v) the escrow account must be insured by FDIC or
FSLIC;
(vi) the Note and Deed of Trust may make no reference
to the buydown and the interest rate and monthly payments
provided in the Note may not take into account the buydown;
(vii) the escrow agreement must require the escrow
agent to make monthly payments to the Lending Institution
for the account of the mortgagor;
(viii) the escrow agreement must provide for reversion
of escrowed moneys to the person who made the original
deposit thereof if the Residence is sold by the mortgagor
or the Loan is prepaid in full, whether voluntarily or involuntarily;
(1x1 if the Loan is to be underwritten on the basis of the reduced mortgagor payment for the first year, the
moneys for the buydown must be placed in the escrow account
prior to purchase of the Loan by the Trustee and must be
sufficient (with interest earnings thereon, but without
regard to the income of any co-signer) to make all monthly
payments provided under the buydown; and
moneys is to have them applied to payments due under the
Note as provided in this Section and such moneys may not be
used to pay past due payments of the mortgagor.
(x) the mortgagor's only interest in the escrowed
(B) As an alternative to the conditions specified in
subsection (A) of this Section, the interest rate on any Loan
may be bought down, but under the following conditions:
(1) the seller must deposit money in an escrow
account with monthly releases scheduled which serve to
reduce the mortgagor's payments during the entire term of
the Loan;
5072P/2062/06 -28-
(ii) the interest rate buydown must be one percentage
point over such entire term;
(iii) the escrow account must be with a financial
institution which is not the Lender or the Trustee and musl
be insured by FDIC or FSLIC;
(iv) the Note and Deed of: Trust may make no reference to the buydown and the interest rate and monthly payments
provided in the Note may not take into account the buydown,
(v) the escrow agreement; must require the escrow
agent to make monthly payments to the Lending Institution
for the account of the mortgagor;
(vi) the escrow agreement; must provide for any
interest on the escrow account. to be paid to the seller or
kept in the escrow and for reversion of escrowed moneys to the seller if the Residence is sold by the mortgagor or thc
Loan is prepaid in full, whether voluntarily or involuntarily;
(vii) if the Loan is to be underwritten on the basis oj the reduced mortgagor payment, the moneys for the buydown
must be placed in the escrow account prior to purchase of
the Loan by the Trustee and must be sufficient (either without interest or, if interest is to remain in the escroi
account and is at a stated rate for the entire term of the
escrow, with interest) to make all monthly payments
provided under the buydown; arid
(viii) the mortgagor's only interest in the escrowed
moneys is to have them applied to payments due under the
Note as provided in this Section and such moneys may not be
used to pay past due payments of the mortgagor.
ARTICLE V
ADMINISTRATION AND SERVICING OF LOANS
Section 5.01. Lending Institution to Act as Servicer.
The Lending Institution shall service and administer the Loans
it originated and shall have full power and authority, acting
alone, to do any and all things in connection with such
servicing and administration which it may deem necessary or
desirable, subject to the provision of this Agreement and
subject also to the direction of the Administrator. Without
limiting the generality of the foregoing, the Lending
Institution shall, and is hereby irrevocably authorized and
5072P/2062/06 -29-
empowered by the Issuer to, execute and deliver, in its own
name, on behalf of itself and the Issuer, upon approval by the
Administrator any a:nd all instruments of satisfaction or
cancellation or of partial or full release or discharge and all
other comparable instruments, with respect to the Loans and
with respect to the Residences subject to the Deeds of Trust
securing such Loans.
Without limiting the genera1it.y of the foregoing paragraph, the Lending Institution shall service the Loans in accordance with the servicing standards as set forth in the FHLMC Servicers' Guide, as they may be i:n effect during the term of the Program, and except as such standards may be specifically modifed herein or as may reasonab1.y be requested from time to time by the Issuer, the Trustee or the Administrator. The Lending Institution shall perform all of its duties in servicing Loans for the Issuer with due care, diligence, and reasonable promptness and shall use the same degree of care in servicing Loans under the Program as it would employ in
servicing mortgage loans on behalf of FHLMC. In addition, the Lending Institution shall provide to the Private Mortgage
Insurer any and all notices and follow all procedures required as a condition to the payment of all benefits pursuant to the
Private Mortgage Insurance Policy.
As compensation for its activities hereunder, and in
consideration for servicing the Loans it originated, the
Lending Institution shall retain from each mortgagor's monthly
payment allocable to interest in an amount equal to the Service
Fee. In addition, the Lending Institution shall be entitled to
servicing compensation out of Insurance Proceeds or Liquidation
Proceeds to the extent permitted by Section 5.04 hereof.
Additional servicing compensation in the form of assumption
fees, reconveyance fees, late payment charges or otherwise, if any, may be retained by the Lending Institution to the extent not required to be deposited in the Receipts Account it
maintains pursuant to Section 5.02 hereof. The Lending
Institution shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder
(including maintenance of the insurance required by Section
5.09 hereof) and shall not be entitled to reimbursement
therefor, except as specifically provided in Sections 5.03,
5.04 and 5.12 hereof and the Indenture.
Section 5.02. Collection of Certain Loan Payments; Receipts Account. The Lending Institution shall collect and
deposit, less the Service Fee (if it is the Lending Institution's general practice to collect such fees upon the receipt of a mortgagor's payment), in the Receipts Account all payments called for under the terms and provisions of the Loans, and shall follow such collection procedures as it
5072P/2062/06 -30-
follows at the time of the execution of this Agreement with respect to mortgage loans owned and held in its own portfolio
which are comparable to the Loans. If it is the Lending Institution's accounting practice to determine the Service Fee
at the end of each month, and if the amounts deposited into the
Receipts Account include the Service Fee, then the Lending
Institution may withhold its Service Fee at the time it
transfers the balance of the Receipts Account pursuant to
Section 5.04 hereof. Consistent with the foregoing, and
subject to any requirements imposed by the Private Mortgage Insurer of such Loans, the Lending Institution may in its
discretion arrange a schedule for the liquidation of delinquent
items, which schedule shall not be any more favorable to the
mortgagor than customarily obtained by the Lending Institution
in the administration of its own portfolio.
the Issuer as a separate account a Receipts Account. All funds
held in the Receipts Account shall constitute funds of the
Issuer from the time of the deposit therein and shall be fully
insured by FDIC or FSLIC; and the title of the account shall be
in the name of the Issuer. Except as provided in Section 5.01
hereof, the Lending Institution shall deposit in the Receipts
Account it mainta1n.s for the Issuer on a daily basis all
payments and collections received by it with respect to Loans,
including Insurance Proceeds and Liquidation Proceeds. All funds deposited in the Receipts Account shall be held by the
Lending Institution. until disbursed in accordance with Section
5.04 hereof, but sh.all be suject to withdrawal on demand of the
Trustee on behalf of the Issuer at any time if, in the
reasonable discretion of the Trustee, such funds are then
needed to insure timely payments of principals of and interest on the Bonds.
The Lending Institution shall establish and maintain for
Section 5.03. Collection of Taxes, Assessments and
Similar Items; Loan. Service Account. The Lending Institution
shall establish and maintain a loan service account and shall
deposit therein all collections of real estate taxes,
assessments, premiums on insurance required by Sections 5.06,
5.07 and 5.10 hereof or comparable items for the account of the
mortgagors of the L,oans to the extent it deems the same
reasonably necessary. Withdrawals from the loan service
account may be made only to effect timely payments of taxes,
assessments, insurance premiums or comparable items with respect to such Loans, or to reimburse the Lending Institution out of related collections for any payments made pursuant to Sections 5.06, 5.07 and 5.10 hereof and any real estate taxes, assessments or premiums on insurance required by Sections 5.06,
5.07 and 5.10 or comparable items, advanced by it. Unless the Lending Institution. shall be required by law to pay interest tc the respective mortgagors of Loans on funds in its loan service
5 072 P/2 O62/06 -31-
account, the Lending Institution slhall retain such interest to
defray its expenses in servicing its loan service account, or
to refund to each mortgagor the unused portion of the moneys
attributable to such mortgagor's Lloan, when such Loan is repaid
in its entirety. The loan service account shall be fully
insured by FDIC or FSLIC.
Section 5.04. Transfers and Permitted Withdrawals from Issuer's Receipts Account; Requisitions for Reimbursements. (A) On the close of business on the twenty-fifth day of
each month, the Lending Institution shall remit to the Trustee
for deposit the sum of: (i) the scheduled payments of principal
of and interest on the Loans received by it on or before the
twentieth day of the month and not previously remitted to the
Trustee, (ii) Loan Principal Prepayments received by it on or
before the twentieth day of the month, and (iii) the amount of
all payments of principal of and interest on the Loans which
(a) are then delinquent, (b) have not been previously remitted
to the Trustee, and (c) are not yet payable by the Private
Mortgage Insurer, less (iv) the Service Fee, escrow payments and any other amounts permitted to be retained by the Lending
Institution pursuant to this Agreement. The payment of the
sums referred to in the preceding sentence shall be guaranteed,
in a form satisfactory to the Issuer, by Wells Fargo Mortgage
Company.
If any such date of transfer is a Saturday, Sunday or legal
holiday, or is not a business day for the Lending Institution,
such transfer may be made at the opening of business on the
next succeeding business day.
(B) In the event that the Lending Institution and its guarantor will be unable to make the payments set forth in subsection (A) above by the twenty-fifth day of a month, the Lender will so notify the Trustee by the eighteenth day of such
month. On the next business day, the Trustee will notify the
Private Mortgage Insurer of the inability of the Lending
Institution and its guarantor to make such payments in order to
provide the Private! Mortgage Insurer sufficient time to make
the payments required under its mortgage guaranty insurance
policy on the twenty-fifth day of such month.
(C) Nothwithstanding the provisions of subsection (A)
above, if at any time the amount on deposit on the Receipts Account shall exceed the amount insured by FDIC or FSLIC, any
such excess shall be immediately remittd to the Trustee.
(D) The Issuer hereby authorizes the Lending Institution, with approval of the Administrator, on any date prior to the transfer to the Trust.ee of moneys in the Receipts Account to withdraw moneys from such Receipts Account to:
5072P/2062/06 -32-
(a) Reimburse itself frolm Insurance Proceeds paid by
the Private Mortgage Insurer for amounts advanced by the Lending Institution pursuant to this Section with respect
to delinquent installments of principal of and interest on Loans;
(b) Reimburse itself from Insurance Proceeds and Liquidation Proceeds for amounts expended in good faith by it with respect to the related Loan pursuant to Section 5.11 hereof in connection with the restoration of property damaged by an Uninsured Cause;
(c) Reimburse itself from Insurance Proceeds for Insurance Expenses and pay itself from Insurance Proceeds any unpaid Service Fee on the related Loan, the latter payment being limited to the amount, if any, by which the
sum of the aggregate of the Liquidation Proceeds, if any, plus the aggregate Insurance Proceeds received in
connection with the liquidation of the defaulted Loan is, after the deduction of Insurance Expenses and any amounts deducted pursuant to subsection (a) above, in excess of the
principal balance of such Loan together with accrued and
unpaid interest thereon;
(d) Reimburse itself from Liquidation Proceeds for Liquidation Expenses ;
(e) Reimburse itself for all real estate taxes,
special assessments, utitility liens, premiums for Private
Mortgage Insurance, Standard Hazard Insurance, Flood
Insurance or Earthquake Damage Insurance advanced by it;
(f) Reimburse itself for any unpaid accrued interest on a Closing Date for the related Loans; and
(9) Reimburse itself for any Service Fee to which it is entitled and not theretofore retained before deposits into the Receipts Account.
The Issuer agrees that it will execute and deliver, or
cause to be executed and delivered, such further instruments
and documents as may be required for permitting the above
stated withdrawals from the Receipts Account. In connection
with withdrawals pursuant to subsections (a) through (9) above,
inclusive, the Lending Institution's entitlement thereto is
limited to collections or other recoveries on the related Loan, and for this reason the Lending Institution shall keep and
maintain separate accounting, on a Loan-by-Loan basis, for the
purpose of justifying any such reimbursement.
5072P/2062/06 -33-
Section 5.05. Claims Against Insurer of Loans. In
connection with its activities as servicer of the Loans, the
Lending Institution agrees to comply with any requirements
imposed by the Private Mortgage Insurer with respect to the
Loans it services, and with all applicable laws and to present,
on behalf of the parties in interest, claims against all
insurers of such Loans or mortgaged premises, and, in this
regard, to take all reasonable actions as shall be necessary tc
permit recovery under all insurance policies respecting such
Loans or mortgaged premises. Pursuant to Section 5.02 hereof,
any amounts collected by the Lending Institution from the
Private Mortgage Insurer and the Qualified Insurers with
respect to the Loans shall be deposited in its Receipts
Account, subject to withdrawal for reimbursement pursuant to
Section 5.04 hereof'. The Issuer and the Trustee, shall be
named as insureds as their interests may appear under all
insurance policies to be obtained with respect to the Loans.
Section 5.06. Maintenance of Standard Hazard Insurance anc
Flood Insurance. The Lending Institution shall cause to be
maintained for each Loan it services fire insurance with
extended coverage on the mortgaged, property in an amount which
is at least equal to the lesser of' (i) the principal balance
owing on the Loan, or (ii) 90 percent of the insurable value
of the property securing the Loan based upon replacement cost.
Subject to all applicable laws, pursuant to Section 5.02
hereof, any amounts collected by the Lending Institution under
any such policies (other than amounts to be applied to the restoration or repair of the property subject to the related
Loan) shall be deposited into its Receipts Account, subject to
withdrawal for reimbursement pursuant to Section 5.04 hereof.
It is understood arid agreed that such insurance shall be with
Qualified Insurers approved by the! Lending Institution and that
no other additional- hazard insurance is to be required of any
mortgagor, except Flood Insurance where required and Earthquake
Damage Insurance (if commercially available), other than
pursuant to such applicable laws and regulations as shall at any time be in forc:e and as shall require such additional
insurance.
In the case of condominium units, the applicable declaration of covenants, conditions and restrictions must
require the homeowners' association established for each
project to secure a Standard Hazard Insurance Policy and an
Earthquake Damage Insurance Policy (if commercially available)
to cover the entire project. Such premiums are to be paid by
the homeowner's association. In the absence of such a
requirement in the declaration of covenants, conditions and
restrictions, the insurance requirements described in the firs1
paragraph of this Section shall be applicable to each unit
which secures a Loan. The association must have fidelity
5072P/2062/06 -34-
coverage as well as comprehensive public liability insurance
with a severability of interest en.dorsement and other commonly
required coverages.
In lieu of reta,ining in its possession the Standard Hazard Insurance Policy, the Lending Institution may maintain at its
expense and keep a mortgagee single interest hazard insurance
policy, for the benefit of the Issuer and the Trustee, in such amount as may be acceptable to the Administrator, throughout
the term of this Agreement.
In addition, th.e Lending Institution covenants and agrees that if a mortgaged property is located in an area designated as a flood area by federal or state authorities, it shall cause
to be maintained for such Loan secured by such mortgaged
property a flood insurance policy in the form of a federal
homeowner's flood insurance policy in an amount which is not
less than the maximum insurable value of the property securing
such Loan or the principal balance owing on such Loan,
whichever is less. Pursuant to Section 5.02 hereof, any
amounts collected by the Lending Institution under any such
policy relating to the Loans shall be deposited in its Receipts
Account, subject t0 withdrawal for reimbursement pursuant to Section 5.04 hereof.
Section 5.07. Maintenance of Earthquake Damage Insurance. The Lending Institution shall cause to be maintained for each Loan it services Earthquake Damage Insurance (if commercially
available) with extended coverage on the mortgaged property in
an amount which is not less than the maximum insurable value of
the property securing such Loan, based upon the replacement
cost thereof, or th,e principal balance owing on such Loan,
whichever is less. Such insurance may contain a deductible
clause of not to exceed 5 percent per occurrence. Subject to
the laws of the State, pursuant to Section 5.02 hereof, any
amounts collected by the Lending Institution under any such policies (other than amounts to be applied to the restoration
or repair of the property subject to the related Loan) shall be deposited into its Receipts Account, subject to withdrawal for
reimbursement pursuant to Section 5.04 hereof. It is
understood and agreed that such insurance shall be with
Qualified Insurers approved by the Administrator.
Section 5.08. Maintenance of Special Hazard Insurance
Policy. The Administrator shall exercise its best reasonable
efforts to maintain and keep with a Qualified Insurer, a
Special Hazard Insurance Policy to provide protection with
respect to mudslide, building collapse and losses resulting
from the application of a coinsurance clause, in an amount
equal to the greater of (i) 1 percent of the aggregate
principal amount of all Loans which are purchased hereunder
5072P/2 062/06 -35-
(less any claims made and paid) or (ii) twice the original
principal amount of the largest Loan so purchased (less any
claims made and paid), in full force and effect until (i) each
Loan has been paid in full or is no longer security for the
Bonds or (ii) the principal of and interest on all Bonds has
been fully paid or provision for such payment has been provided
for pursuant to the Indenture. The premium for the Special
Hazard Insurance Policy shall be paid from the Program Expense
Fund pursuant to the Indenture. In the event that such
insurance becomes unavailable from the original Qualified
Insurer, the Administrator shall exercise its best efforts to
obtain a comparable replacement policy from another Qualified
Insurer with a total coverage equal to the then existing
coverage of the Special Hazard Insurance Policy. Pursuant to
Section 5.02 hereof', any amount collected under any such policq
shall be paid to the Lending Institution which serviced the
Loan with respect to which the amount was collected and the
Lending Institution shall deposit such amount in its Receipts
Account, subject to withdrawal for reimbursement pursuant to
Section 5.04 hereof.
Section 5.09. Maintenance of Errors and Omissions
Insurance Policy and Fidelity Bond.. The Lending Institution
will use its best efforts to maintain, or require the mortgagor
to maintain, the Standard Hazard Insurance Policy (or mortgagee
single interest hazard insurance policy), the Private Mortgage
Insurance Policy, Earthquake Damage Insurance (if commercially
available) and, if required, Flood Insurance in effect at all
times throughout the terms of this Agreement. Additionally,
the Lending Institution will be obligated to perform its
servicing duties in a manner which will preserve all claims against insurers. If the Lending Institution fails to perform these obligations due to an error or omission of any of its officers or employees, coverage will be provided by the Errors and Omissions Insurance Policy reqpired to be maintained by the
Lending Institution. If any officer or employee of the Lendin5
Institution misappropriates funds from the Lending Institution,
coverage therefor will be provided by the Fidelity Bond
maintained by the Lending Institution. The Lending Institutior
must obtain and maintain in effect. at all times throughout the
term of this Agreement an Errors and Omissions Insurance Polic]
and a Fidelity Bond, both of which must be in amounts, and be
obtained from an insurance company, acceptable to the
Administrator and the Trustee. The Lending Institution, as servicer, will pay the premiums far its Errors and Omissions Insurance Policy and Fidelity Bond.
Section 5.10. Maintenance of Private Mortgage Insurance Policy. The Lending Institution covenants and agrees that it
shall cause to be maintained for such Loan, throughout the tern
of this Agreement, a Private Mortgage Insurance Policy, but
50 72 P/2 0 62/06 -36-
only until no Bonds are outstanding or as otherwise determined
by the Trustee. All premiums advanced by the Lending
Institution in maintaining any such insurance shall be added to
the amount owing under the Loan where the terms of the Loan so
permit. Such premiums shall be recoverable by the Lending
Institution pursuant to Section 5.03 or 5.04 hereof. Pursuant
to Section 5.02 hereof, any amounts collected by the Lending
Institution under any such policy shall be deposited into the
Receipts Account.
Section 5.11. Transfers and Assumptions. In any case in
which property subject to a Loan has been or is about to be
conveyed by the mortgagor or by his successor in interest, the
Lending Institution is authorized to consent to the conveyance
and to release the transferor and to take or enter into an
assumption agreement from or with the person to whom such
property has been or is about to be conveyed, but only if the following conditions are met: (1) the Lending Institution has
determined that all of the requirements of Article IV and
Article V hereof are met with respect to such assumption, based
upon the facts as they exist at the time of the assumption as
if the Loan were being made for the first time; (2) the Lending
Institution has received from the transferor an executed
Seller's Affidavit in the form attached hereto as Exhibit G and
from the person to whom such property has been or is about to
be conveyed an executed Buyer's Affidavit in the form attached
hereto as Exhibit F; (3) the Administrator has determined, on
behalf of the Issuer, that the transferee is a First Time
Homebuyer who intends to occupy the Residence as his or her
principal place of residence within 60 days after the assumption and that the Acquisition Cost of the Residence does
not exceed the Maximum Acquisition Cost; (4) the Private
Mortgage Insurer has approved such release and assumption
agreement, if such approval is required by the Private Mortgage Insurance Policy; and (5) the Lending Institution has received
payment of its then customary assumption charge plus the
charges specified in clauses (i) and (ii) of Section 4.02
hereof. The assumption agreement shall be inserted in the
related Loan File whereupon it shall be deemed a part of such
Loan File for all purposes hereof. In connection with any such
assumption agreement, the interest rate of the related Note
shall not be changed.
Under no circumstances shall the Lending Institution consent to any conveyance of the Residence unless the above conditions (1) through (5) have been met or unless the Issuer shall have received an opinion of counsel of its choice, recognized to be expert in such matters, that permitting a
conveyance without having met conditions (1) through (4) thereof would not affect the validity of the Bonds nor the
tax-exemption for the interest thereon and the Issuer shall
5072P/2062/06 -37-
have so notified the Lending Institution. If the Lending
Institution determines that a Residence has been conveyed by
the mortgagor or his successor in interest and that the above conditions (1) through (5) have not been met, the Lending Institution shall give notice thereof to the Administrator. IJ the Lending Institution believes that some action other than foreclosure (such as reconveyance under circumstances meeting
the above conditions) can be taken so as to enable it to
consent to the transfer of the Residence, it shall so advise
the Administrator and cause such action to be taken or not, as
the case may be, at the direction of the Administrator. If no
such action can be taken or if the Lending Institution fails tc
cause such action to be taken, the Lending Institution shall sc
advise the Administrator, shall take any and all steps
necessary to secure all benefits payable under the applicable
Private Mortgage Insurance Policy and shall commence
foreclosure proceedings unless otherwise directed by the Issue]
within fifteen days after such notice.
Section 5.12. Realization Upon Defaulted Loans. The
Lending Institution shall foreclose upon or otherwise
comparably convert the ownership of properties securing such oi
the Loans it services as come into and continue in default and
as to which no satisfactory arrangements can be made for the
curing of such default. In connecrtion with such foreclosures or other conversion, the Lending Institution shall, consistent with section 5.05 hereof, follow EjUCh practices and procedures as it shall deem necessary or advisable and as shall be normal and usual in its general mortgage servicing activities. Following such foreclosure or other conversion of ownership anc
upon deposit of such amounts as are realized as a result of
such foreclosure (Liquidation Proceeds, Insurance Proceeds, anc
any other related procees or funds) in the Receipts Account of
the Lending Institution pursuant to the Agreement, the Lending
Institution shall notify the Administrator and the Trustee in
writing within five (5) business days of such deposit of (i)
the amount of unpaid principal of and unpaid accrued interest
on such defaulted Loan, and (ii) the sum realized from such
Loan and deposited in the Receipts Account. The foregoing is
subject to the provision that, in the case of damage to
mortgaged property from an Uninsured Cause, the Lending Institution may expend its own funds toward the restoration of
the property if it reasonably believes (i) that after
reimbursement to itself for such expenses such restoration will
increase the proceeds of liquidation of the Loan to the Issuer,
after reimbursement to itself for such expenses, and (ii) that
such expenses will be recoverable to it either through
Liquidation Proceeds (respecting which it shall have priority
for purposes of withdrawal from the Receipts Account pursuant
to Section 5.04 hereof) or through Insurance Proceeds
(respecting which it shall have similar priority). The Lendinc
5072P/2062/06 -38-
Institution shall be responsible for all other costs and
expenses incurred by it in any such proceedings or in
connection with preservation of all insurance policies
respecting the Loans it services; provided, however, that it
shall be entitled to withdrawal thereof (as well as its normal
Service Fee) to the extent, but only to the extent, that
withdrawals from its Receipts Account with respect thereto are
permitted under Section 5.04 hereof.
Section 5.13. Issuer to Cooperate; Release of Loan Files.
Upon the payment in full of any LoIan it services, the Lending
Institution will notify the Issuer within five business days bq
delivering to the Trustee, and a copy to the Administrator, a
certification (which certification. shall include a statement tc
the effect that all amounts received in connection with such
payment which are required to be d.eposited in its Receipts
Account pursuant to Section 5.02 h.ereof have been so deposited)
of a Servicing Officer of the Lend.ing Institution along with
the amount collected upon 1iquidat.ion and, in the case of a
defaulted loan, data sufficient to account for the liquidation
and shall request delivery to it of the Note and related Deed
of Trust. Upon receipt of such certification and request, the
Trustee, pursuant to the Indenture, shall deliver the Note and
related Deed of Trust to the Lending Institution.
From time to time and as appro'priate for the servicing or
foreclosure of any Loan, including for this purpose collection
of Insurance Proceeds, the Issuer hereby appoints the Lending
Institution as its agent and attorney-in-fact to execute such
documents as shall be necessary to' the prosecution of any such proceeding relating to a Loan it services. The Trustee shall, on behalf of the Issuer, execute s'uch documents as shall be necessary to the prosecution of an.y such proceedings.
Section 5.14. Reports to Trustee, Issuer and Administra-
tor and Receipts Account Statement,s. No later than the twenty-fifth day of each month, thz Lending Institution shall
forward to the Administrator a sta.tement substantially similar
to FHLMC'S single-debit accounting for conventional loans,
certified by a Servicing Officer, setting forth the status of
the Receipts Account of the Issuer it maintains, as of the close of business on the twentieth. day of such month and showing, for the period covered by such statement, the aggregate of deposits into and withdrawals from its Receipts Account. Such statement shall be in such form as the Administrator prescribes and shall also include (i) informatior
as to the principal balances of Lotans outstanding at the close
of business on the twentieth day o'f such month, (ii)
information as to the number of, principal balances of, and
percentages of aggregate dollar amount of all Loans it
services, of Loans upon which a combined total of two required
5072P/2062/06 -39-
monthly payments of principal and interest shall be delinquent,
as of the close of business on the last day of the preceding
calendar month, and (iii) the unpaid outstanding principal
amount of Loans with respect to arid the estimated fair market
value of any real estate acquired through foreclosure or grant
of a deed in lieu of foreclosure.
In addition, no later than the twenty-fifth day of each
month, the Lending Institution shall forward to the
Administrator a statement setting forth the status of the Loan
Service Account of the borrowers it maintains, as of the close
of business on the twentieth day of such month. Such statemenl
shall be in such form as the Administrator prescribes.
If such twenty-fifth day of the month is a Saturday, Sunda!
or legal holiday or is not a business day for the Lending
Institution such report may be forwarded at the opening of
business on the next succeeding business day.
Within 120 days after the close of the Lending
Institution's fiscal year, the Lending Institution shall
furnish to the Administrator an auditor's report relating to
the Lending Institution's financial statement and mortgage loa]
operations. The Lending Institution shall also deliver to the Trustee and the Administrator a Servicing Officer's certificatc
stating that (i) a review of the activities under this
Agreement of the Lending Institution during the preceding year
and of its performance under this Agreement has been made unde:
such Servicing Officer's supervision, and (ii) to the best of
such Servicing Officer's knowledge, based upon such review,
there is, as of such date, no default by the Lending
Institution in the fulfillment of any of its obligations under
this Agreement, or if there is any such default known to such
Servicing Officer, specifying each such default and the nature
and status thereof.
Section 5.15. Prohibition of Discrimination; Report to Issuer. Except as specifically provided in this Agreement, the Lending Institution will not arbitrarily reject an application for a Loan or vary the terms of a Loan for
residential properties within a specified geographic area of
the Issuer because of the location and/or age of the property,
or, in the case of a proposed mortgagor, arbitrarily reject an
application or vary the terms of such Loans or the application
procedures therefor because of race, color, religion, national
origin, age, sex or marital status.
Any other information desired by the Issuer shall be
compiled by the Issuer from information contained in the Loan
Files which will be available for inspection upon reasonable notice and at reasonable times.
5 0 72 P/2 0 62/06 -40-
Section 5.16. Certain Verifications. The Issuer or
Lending Institution from time to time may cause a firm of
independent public accountants to supply the Issuer, the
Trustee, the Administrator and the Lending Institution with
such information as the Issuer or the Lending Institution may
request in order to determine in a manner reasonably
satisfactory to the Issuer, the Trustee, the Administrator and
the Lending Institution all matters relating to the sufficiency of projected cash flow receipts and disbursements on the Loans and reserve funds to pay the principal of and interest on the Bonds. Payment for costs and expenses incurred in connection
with supplying the foregoing information shall be paid from
moneys in the Revenue Fund pursuant to the Indenture.
ARTICLE VI
LENDING INSTITUTION
Section 6.01. Merger or Consolidation of the Lending Institution. Any entity into which the Lending Institution may be merged or consolidated, or any entity resulting from any
merger, conversion or consolidation to which the Lending Institution shall be a party, or any entity succeeding to the
business of the Lending Institution, shall be the successor of
the Lending Institution hereunder without the execution or
filing of any document or instrument, except as provided in
Section 2.02(b) of this Agreement, or any further act on the
part of any of the parties hereto.
Section 6.02. Lending Institution Not to Resign. The
Lending Institution. shall not resign from its obligations and
duties hereby imposed on it except upon determination that its
duties hereunder are no longer permissible under applicable
law. Any such determination permitting the resignation of the
Lending Institution shall be evidenced by an opinion of counsel to such effect delivered to the Issuer, the Administrator and the Trustee. No such resignation shall become effective until the Administrator or a successor servicer shall have assumed
the Lending Institution's responsibilities and obligations in
accordance with Section 7.03 hereof.
ARTICLE VI1
CAUSES PERMITTING TERMINATION OF LENDING INSTITUTION
Section 7.01. Causes of Termination Defined. Upon the
happening of any one or more of the following events, the
Administrator, for and on behalf of the Issuer and the Trustee,
5072P/2062/06 -41-
may terminate this Agreement with respect to the Lending
Institution as provided in Section 7.02 hereof and shall have
the other remedies specified therein:
(a) Failure by the Lending Institution to (i) deposit funds in the Receipts Account as required by Section 5.02 hereof or (ii) to make the payments required under Section'
5.04 hereof at the time specified therein.
(b) Failure by the Lending Institution duly to
observe or perform in any material respect any other
covenant, condition or agreement in this Agreement to be
observed or performed by it, other than as referred to in
Section 7.01(a) hereof, for a period of thirty days after
written notice, specifying suclh failure and requesting that
it be remedied, given to the Lending Institution by the
Issuer, the Trustee or the Administrator, unless the
Issuer, the Trustee or the Administrator, (whichever has
given notice) s:hall agree in writing to an extension of
such time prior to its expiration; provided, however, if
the failure stated in the notice cannot be corrected within
the applicable period, the Issuer, the Trustee and the Administrator will not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Lending Institution within the applicable period and diligently pursued until the default is corrected; and provided further, that no cause, reason, or event shall require the Trustee to purchase Loans on behalf of the Issuer after the date specified in Section 4.01.
(c) A decree or order of a court or agency or supervisory authority having jurisdiction in the premises
for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its
affairs, shall have been entered against the Lending Institution and such decree or order shall have remained in force undischarged or unstayed for a period of sixty days.
(d) The Lending Institution shall have consented to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or
relating to it or of or relating to all or substantially
all of its property.
(e) The L,ending Institution shall admit in writing
its inability to pay its debts generally as they become
due, file a petition to take advantage of any applicable
insolvency or reorganizaiton statute, make an assignment
for the benefit of its creditors, or voluntarily suspend
payments of its obligations.
5072P/2062/06 -42-
(f) The Lending Institution shall experience a
delinquency ratio for Loans ninety days or more delinquent
which is 2-1/2 times greater than the delinquency ratio for
conventional mortgage loan ninety days delinquent in the
State of California as published by the Federal Home Loan
Bank Board of San Francisco. The Lending Institution will
have a thirty day cure period, as provided in (b) above, tc
rectify such delinquent ratio.
(9) The Guaranty dated as of , 1983
by and among , Security Pacific
National Bank in its capacity as Trustee, and the Issuer shall not be maintained in full force and effect.
The foregoing provisions of subsection (b) of this Section are
subject to the following limitation: if by reason of Force Majeure, the Lending Institution is unable in whole or in
part to carry out a.ny agreement on its part herein contained,
no such event shall be deemed a cause for termination during
the continuance of such inability. The Lending Institution
agrees, however, to remedy with all reasonable dispatch the
cause or causes preventing it from carrying out its agreement;
provided that the settlement of strikes, lockouts, and other
disturbances shall be entirely wit.hin the discretion of the
Lending Institution, as the case may be, and it shall not be
required to make settlement of strikes, lockouts and other
disturbances by acceding to the demands of the opposing party
or parties when such course is in the judgment of the Lending
Institution unfavorable to it. In addition, if the delinquencq
ratio of the Lending Institution described in subsection (f) of
this Section results by reason of Force Majeure, the
Administrator will not terminate the Agreement; provided,
however, that neither Force Majeure nor any other cause,
reason, or event shall require the Trustee to purchase Loans or behalf of the Issuer after the date specified in subparagraph (b) hereof.
Section 7.02. Remedies. Whenever any event referred to
in Section 7.01 hereof shall have happened and be continuing,
the Administrator, for and on behalf of the Issuer and the
Trustee, may take any one or more of the following remedial
steps:
(a) By notice in writing to the Lending Institution
with respect to which such an event has occurred, the Administrator may, subject to applicable state and federal law, terminate all of the Lending Institution's rights and obligations concerning the servicing of Loans. On or aftei the receipt by the Lending Institution of such written notice, all authority and power of the Lending Institution under this Agreement with respect to servicing Loans shall pass to and be vested in Administrator pursuant to and
5072P/2062/06 -43-
under this Section; and, without limitation, the
Administrator is hereby authorized and empowered to execute
and deliver, on behalf of the :Lending Institution, as
attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes
of such termination. The Lending Institution agrees to
cooperate with the Administrator in effecting the termination of its servicing responsibilities hereunder,
including, without limitation, the transfer to the Administrator for administration by it of Loan Files, and
to a FDIC or FSLIC insured account designated by the
Adminstrator all cash amounts %which it shall at the time
hold in its Receipts Account and loan service account or
thereafter receive with respect to Loans.
(b) The Administrator may take whatever other action
at law or in equity may appear necessary or desirable to
collect the amounts then due and thereafter to become due
under this Agreement or enforce performance and observance
of any obligation, agreement or covenant under this
Agreement, of the Lending Institution with respect to which
such an event has occurred.
Any amounts collected pursuant to action taken under this
Section shall be applied in accordance with the provisions of
the Indenture.
Section 7.03. Administrator to Act; Appointment of
Successors. At the time the Lending Institution receives a
notice of termination pursuant to Section 7.02(a), the
Administrator, on behalf of the Trustee, shall succeed to all rights and obligations of such terminated Lending Institution concerning servicing of the Loans and shall be entitled to receive compensation therefor as specified herein. As soon as
practicable thereafter, the Administrator shall enter a
servicing agreement: with another qualified servicing
institution (the obligations of wh.ich to make the payments
required pursuant to Section 5.04(A) hereof must be guaranteed
by a financial institution whose long term debt is rated not
lower than the long term debt is rated not lower than the long term debt of by Standard & Poor's Corporation), or
shall itself assume such servicing for such compensation. The
Administrator may, if it shall be unable to so act, appoint or
petition a court of competent jurisdiction to appoint any established bank or savings and laan association having a net worth of not less than $500,000, or another lending institution, as the successor to such terminated Lending Institution, in the assumption of all or any part of the responsibilities, duties or liabilities of the Lending Institution under this Agreement. In connection with such
5072P/2062/06 -44-
appointment and assumption, the Administrator may make such
arrangements for the compensation of such successor out of
payments on Loans as it and such successor shall agree;
provided, however, that no such compensation shall be in excesE
of the funds to which the Lending Institution would have been
entitled to retain or withdraw from the Receipts Account if it
had continued to act hereunder. After the Lending Institution
receives notice of termination under this Section 7.03, it
shall be entitled to no payments or compensation of any kind (including the Service Fee for any period of time after such notice of termination) other than the payments which are provided for herein. The Administrator and such successor
shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
Section 7.04. Notification of Bondholders. The Trustee
or the Administrator shall give published notice to the Bondholders of any termination or appointment of a successor tc
the Lending Institution.
Section 7.05. No Remedy Exclusive. Unless otherwise
expressly provided, no remedy herein conferred upon the Issuer, the Administrator or the Trustee or reserved to any of them is
intended to be exclusive of any other available remedy, but
each remedy shall be cumulative and shall be in addition to
other remedies given under this Agreement, the Indenture, or
existing at law or in equity. No delay or omission to exercise
any right or power accruing upon the happening of any event set
forth in Section 7.01 hereof shall impair any such right or
power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle the Issuer, the Trustee or the Administrator to exercise any remedl reserved to it in this Article, it shall not be necessary to
give any notice, other than such notice as may be required in
this Article.
Section 7.06. Agreement to Pay Attorneys' Fees, Costs and
Other Expenses. In the event the Lending Institution should
fail to perform its obligations under any of the provisions of
this Agreement and the Issuer, the Trustee or the Administrator
should employ attorneys or incur other expenses for the
enforcement of performance or observance of any obligation or agreement on the part of the Lending Institution herein
contained, the Lending Institution agrees that it will pay or
reimburse the Trustee or the Administrator on demand the reasonable fee of such attorneys and such other expenses and costs incurred in connection therewith. In addition, the Lending Institution agrees to pay or reimburse the Trustee or the Administrator on demand all expenses reasonably incurred in locating and engaging a successor Lending Institution pursuant to Section 7.03 hereof.
5072P/2062/06 -45-
ARTICLE ‘41 I I
THE ADMINISTRATOR
Section 8.01. Liability of Administrator. The Adminis-
trator shall be liable under this Agreement only to the extent
that obligations are explicitly imposed upon and undertaken by
it.
Section 8.02. Role of the Administrator. Pursuant to
this Agreement the Administrator will supervise, oversee and coordinate the origination and servicing of the Loans by the
Lending Institution and will undertake certain duties in
connection therewith, including approval of the Loans and
supervision of performance of the Lending Institution as
servicer. The Lending Institution hereby acknowledges the role
of the Administrator as set forth in this Agreement and the
Indenture, and consents to the exercise by the Administrator of
the responsibilities provided in the Indenture, this Agreement,
and the Developer Agreements. The Administrator may establish
and, from time to time revise, reasonable written standards
detailing uniform procedures to be used and complied with by
the Lending Institution. The Lending Institution agrees to
comply with such reasonable standards, and to submit such
reports, provide such documents and permit such access to
information as the Administrator may reasonably request.
Section 8.03. Merger or Consolidation of Administrator.
Any entity into which the Administrator may be merged or consolidated, or any entity resulting from any merger, conversion or consolidation to which the Administrator shall be a party, or any entity succeeding to the business of an Administrator, shall be the successor of the Administrator
hereunder without the execution or filing of any document or
instrument, except as provided in Section 2.04(g) of this
Agreement, or any further act on the part of any of the parties
hereto.
Section 8.04. Administrator Not to Resign. The
Administrator shall not resign from its obligations and duties
hereby imposed on it except upon determination that its duties
hereunder are no longer permissible under applicable law. Any
such determination permitting the resignation of the
Administrator shall be evidenced bly an opinion of counsel to
such effect delivered to the Issuer and the Trustee. No such
resignation shall become effective until Trustee or a successor shall have assumed the Administrator’s responsibilities and
obligations in accordance with Section 8.07 hereof.
5072P/2062/06 -46-
Section 8.05. Termination for Cause. (A) Upon the
happening of any of the following events, the Trustee may
terminate this Agreement with respect to the Administrator by giving notice of such termination to the Administrator:
(a) The Administrator shall assign or delegate its
duties or rights hereunder without first obtaining the
written approvals of the Trustee and the Issuer;
(b) Any representation or warranty of the
Administrator affecting the mortgages covered and governed
hereby shall be found to be untrue;
(c) The Administrator shall be the subject of a
decree of any court or order of any supervisory authority
for the appointment of a conservator or receiver or
liquidator, or shall consent to the appointment of a
conservator or receiver or liquidator, or shall consent to
the appointment of a receiver of all or substantially all
of its property, or shall make a general assignment for thc
benefit of its creditors, or :;hall admit in writing its
inability to pay its debts as they become due, or shall be
adjudged a bankrupt or insolvent by a court of competent
jurisdiction, or if an order he made by a court of
competent jurisdiction appointing a receiver, liquidator 03
trustee of the Administrator or of all or substantially a11 of its property or approving any petition filed against tht Administrator for its reorgan:Lzation, and such adjudicatio] or order shall remain in force or unstayed for a period of twenty days;
(d) The Administrator shall otherwise become
incapacitated by operation of law or fact for the faithful
performance of its duties pursuant to the terms of this
Agreement; or
(e) The Administrator shall fail to perform any of its duties hereunder or under any other agreement between the Issuer and the Administrator and shall fail, within thirty days after written notice from the Issuer, to correct or cure such failure. In any case where the Issue
shall have given the Administrator the aforesaid written
notice and if, for causes beyond the Administrator's
control, it would not reasonably be possible for the
Administrator to correct or cure such failure within the
aforesaid thirty-day period, then, provided that the
Administrator, immediately upon receipt of such notice,
shall as soon as reasonably possible thereafter duly
institute and diligently prosecute to completion all steps
necessary to correct or cure such failure and shall correc
5072P/2062/06 -47-
and cure same, this contract shall not terminate at the
expiration of the aforesaid thirty-day period as otherwise
hereinabove provided.
(B) The Trustee shall terminate this Agreement with
respect to the Administrator, by giving notice of such
termination to the Administrator, .in the event that the Issuer G
shall notify the Trustee that the Issuer has determined in good
faith that the performance of the Administrator hereunder has
not been equal to the conduct and level of performance of other
administrators whiclh are administering mortgage revenue bond
programs for the Issuer and other .issuers of tax-exempt bonds
in the State and that the Issuer wishes the Trustee to
terminate this Agreement with respect to the Administrator.
(C) If this Agreement shall be terminated under the
provisions of either paragraph A or paragraph B, (i) the
Administrator shall make a full accounting and transfer and
deliver to or on the order of the 'Trustee all documents and
moneys relating to the mortgages wlhich are then in its
possession or under its custody or control and thereupon all
rights and duties of the Administrator and its right to further
compensation hereunder shall cease and (ii) the Administrator
shall pay or reimburse to the Trustee on demand (in addition to
any payment or reimbursement required by Section 8.08 hereof)
all compensation of any and all successor administrators
appointed pursuant to paragraph D :hereof for the remaining term
of this Agreement.
(D) Prior to appointing a successor administrator, the Trustee shall solicit bona fide bids from at least three institutions which it reasonably believes to be qualified to
act as the administrator hereunder; and the Trustee shall
appoint as the administrator the institution which is the
lowest responsible bidder.
Section 8.06. Maintenance of Errors and Omissions
Insurance Policy and Fidelity Bond. If the Administrator
fails to perform its obligations hereunder due to an error or
omission of any of its officers or employees, coverage will be
provided by the Errors and Omissions Insurance Policy required to be maintained by it. If any officer or employee of the
Administrator misappropriates Program or related funds, coverage therefor will be provided by the Fidelity Bond required to be maintained by the Administrator. The
Administrator shall obtain and maintain in force at all times during the term of this Agreement an Errors and Omissions Insurance Policy and a Fidelity Bond must be in amounts, and be
obtained from an insurance company, acceptable to the Trustee.
The Administrator will pay the premiums for its Errors and
Omissions Insurance Policy and Fidelity Bond.
5072P/2062/06 -48-
Section 8.07. Appointment of Successor Administrator by the Trustee: Temporary Administrator. In case the
Administrator hereunder shall resign or be removed, or be
dissolved, or shall be in course of dissolution or liquidation,
or otherwise become incapable of acting hereunder, it shall be taken under the control of any public officer or
officers, or of a receiver appointed by a court, the Trustee shall assume the duties of the Administrator (including the
duty to service the Loans pursuant to Section 7.03 hereof)
hereunder until such time as a successor is appointed by the Trustee with consent of the Issuer. Nevertheless, in case of
such vacancy, the Trustee upon written notice to the Lending Institution may appoint a temporary administrator to fill such
vacancy until a successor administrator shall be appointed in
the manner above provided; and any such temporary administrator so appointed shall immediately and. without further act be
superseded by the successor administrator so appointed by the
Trustee. Every such administrator appointed pursuant to the
provisions of this Section shall be an institution having a
reported capital and surplus of not less than $10,000,000 if
there be such an institution willing, qualified hereunder as
administrator and able to accept the appointment upon
reasonable or customary terms.
or in case
Section 8.08. Agreement to Pay Attorneys' Fees, Costs and Other Expenses.
to perform its obligations under any of the provisions of this
Agreement and the Issuer or the Trustee should employ attorney: or incur other expenses for the enforcement of performance or observance of any obligation or agreement on the part of the
Administrator contained herein, the Administrator agrees that it will pay or reimburse the Trustee on demand the reasonable
fee of such attorneys and such other expenses and costs
incurred in connection therewith. In addition, the
Administrator agrees to pay or reimburse the Trustee on demand
all expenses reasonably incurred in locating and engaging a successor administrator if the Administrator is terminated
pursuant to either paragraph (A) or paragraph (B) of Section
8.05 hereof.
In the event the Administrator should fail
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendments, Changes and Modifications.
Subsequent to the issuance of the Bonds and prior to their
payment in full (or provision for the payment thereof having
been made in accordance with the provisions of the Indenture),
5072P/2062/06 -49-
this Agreement may not be effectivlely amended, changed,
modified, altered or terminated without the written approval of
the parties.
Section 9.02. Changes in Applicable Laws. In the event
the Act or the Code is amended so as, in the opinion of counsel recognized to be expert in such matters, to reduce or eliminate any restriction therein applicable to the use of the proceeds of the Bonds, the Issuer may, at its option, similarly reduce or eliminate the comparable restriction contained herein so as to conform to such amendment by giving notice thereof to the Developers and to the other parties hereto.
Section 9.03. Recordation of Agreement. This Agreement,
or a memorandum of any portion or portions hereof executed by
the Issuer and the Lending Institution, is subject to
recordation in all appropriate public offices for real property
records, such recordation to be effected by the Lending
Institution at its expense, on direction by the Administrator.
Section 9.04. Limitation on Rights of Bondholders. No
Bondholder shall give any right to institute a suit with respect to this Agreement except as provided in Article VI11 of
the Indenture and only if for the equal benefit of all Bondholders. This Section may be enforced by the Trustee or any Bondholder.
Section 9.05. Litigation Regarding Acceleration Clauses.
In the event that the exercise of any acceleration clause contained in any rider included in Exhibit E hereto gives rise
to litigation challenging the constitutionality or legality of
such clause generally (as opposed, for example, to the manner
in which it was exercised or the application thereof to a particular set of circumstances) t,he Lending Institution need not be responsible for pursuing or defending such litigation unless the Issuer agrees to pay such reasonable costs and attorneys' fees as may be incurredl by the Lending Institution in pursuing or defending such acceleration clause.
Section 9.06. Purchase of Bone. The Lending
Institution (including a "related person" thereof, within the
meaning of Section 103(b)(6)(c) of the Code) shall not purchase
Bonds for its or their own account,.
Section 9.07. Governing Law. This Agreement shall be
construed in accordance with the laws of the State and the obligations, rights and remedies of the parties hereunder shall
be determined in accordance with their own account.
5072P/2062/06 -50-
Section 9.08. Counterparts. This Agreement may be
simultaneously executed in serveral counterparts, each of which
shall be an origina:L and all of wh:Lch shall constitute but one
and the same instrument.
Section 9-09. Notices. All notices, certificates, or
other communications hereunder sha:L1 be sufficiently given and -
shall be deemed given when delivered or mailed by registered mail, postage prepaid, addressed to the appropriate Notice Address. A duplicate copy of each notice, certificate or other
communication given hereunder to the Issuer, the Lending Institution, the Administrator or the Trustee shall also be given to the others. The Issuer, the Lending Institution, the Administrator and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.
Section 9.10. Severability. In the event any provision
of this Agreement shall be held liable or unenforceable by any
court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Section 9.11. Further Assurances and Corporate Instru-
ments. To the extent permitted by law, the Issuer and the Lending Institution, severally and not jointly, agree that they will, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as may be
reasonably required for carrying out the intention of or
facilitating the performance of this Agreement.
Section 9.12. Term of Agreement. This Agreement shall
be in full force and effect from the date of the execution hereof and shall continue in effect so long as any Bonds are outstanding or the Issuer shall own any Loans purchased hereunder, whichever is later.
IN WITNESS WHEREOF, the Lending Institution, the Issuer, the Trustee and the Administrator have caused their names to be signed hereto by their respective duly authorized officers and
their respective seals, duly attested, to be hereunto fixed,
all as of the day and year first above written.
WELLS FARGO MORTGAGE COMPANY
BY-
Its
5072P/2062/06 -51-
SECURITY PACIFIC NATIONAL BANK
BY-
Its
INVESTORS MORTGAGE FINANCIAL
SERVICES, INC.
BY-
Its
CITY OF CARLSBAD, CALIFORNIA
BY Mayor
ATTEST :
Clerk of the City of Carlsbad
5072P/2062/06 -52-
EXHIBIT A
LOAN FILE
PART I. Documents to be Delivered to the Trustee
The following documents, for each Loan, must be for-
warded to the trustee at least five days before the proposed
purchase date:
1. Original and one copy of the executed Mortgage Sub-
mission Voucher
2. Original executed Note with endorsement and any
attendant riders
3. Original Deed of Trust or copy which has been noted:
''Certified true and correct copy of original which has
been transmitted for recordation." When a copy is
furnished, the original must be delivered to the
Trustee within sixty (60) days of the Purchase Date.
4. Original Assignment or copy meeting the same condi- tions as the Deed of Trus8t
5. Original title insurance policy or copy of initial
binder with original policy to be delivered within
sixty (60) days
6. Private Mortgage 1nsuranc:e Policy or firm commitment
theref or
7. Original Seller's Affidavit
8. Original Buyer's Affidavi.t
PART 11. Documents to be Delivered to the Administrator
Legible copies of the fol-lowing for each Loan must be delivered to the Program Administrator at least five days
before the proposed purchase date. The Program Administrator
will only be returning the original of the Mortgage Submission
Voucher.
1. Original and two copies of Mortgage Submission Voucher
2. Copy of the executed Note with riders
3. Copy of the executed Deed of Trust with riders
4. Copy of the Private Mortgage Insurance Policy or firm
commitment therefor
5. Copy of the Seller's Affidavit
6.
7. A statement reaffirming the representations and war-
Copy of the Buyer's Affidavit
ranties made with respect to the Loan in the Mortgage
Sale and Service Agreement
8. Such other information as the Administrator may
reasonably request
A-2
EXHIBIT C
Letterhead of
LENDING INSTITUTION
(Closing :Date)
City of Carlsbad, California
Blyth Eastman Paine Webber Incorporated
and the other Purchasers named in the Purchase Contract dated , 1983
Blyth Eastman Paine Webber Incorporated
555 California Street
San Francisco, California 94104
City of Carlsbad, California
Single Family Residential Mortgage Revenue Bonds,
Issue of 1983
Dear Sirs:
We refer to the representations and warranties heretofore
made by us in the Mortgage Sale and Service Agreement dated
June 15, 1983 to induce you to execute and deliver the Purchase
Contract relating to the above mentioned Bonds. Moreover, we
hereby certify that the information concerning us which is set
forth in the City's Official Statement with respect to the
Bonds did not, as of the date of the Official Statement, and
does not, as of the date hereof: (i) contain any untrue statement of a material fact, or (ii) omit to state any
material fact which should be included therein for the purpose
for which the Official Statement is to be used or which is
necessary in order to make the statements contained therein, in
light of the circumstances in which they were made, not
misleading.
Very truly yours,
EXHIBIT D
(Letterhead of Counsel to Lending Institution)
(Closing :Date)
Blyth Eastman Paine Webber Incorporated
and the other Purchasers named in the Purchase Contract dated , 1983
Blyth Eastman Paine Webbe~r Incorporated 555 California Street
San Francisco, California 94104
City of Carlsbad, California
Single Family Residential Mortgage Revenue Bonds,
Issue of 1983
Dear Sirs:
We have acted as counsel for \NAME OF LENDING INSTITUTION]
(the "Lending Institution") in connection with the Lending Institution's entering into a Mortgage Sale and Service Agree-
ment (the "Agreement") among the Lending Institution, the City
of Carlsbad, California, :Security Pacific National Bank, as Trustee, and , as Administrator.
In that connection we have examined originals or copies
certified or otherwise identified to our satisfaction of (i)
the Agreement (ii) the Charter and. Bylaws of the Lending Insti-
tution, and (iii) such ot:her documents as we deem relevant to
the rendering of this opi:nion.
Based on the foregoing, and on diligent inquiry of the Lending Institution, we are of the opinion that:
(1) the Lending 1nstitut.ion is a [INSERT TYPE OF
ENTITY], duly created and lawfully existing under the laws of the State oE and licensed to do busi-
ness in the State of California.
(ii) the Agreement has been duly authorized, executed
and delivered by the Lending lnstitution and constitutes a
valid, legal and binding obligation of the Lending Institu-
tion enforceable in accordance with its terms;
(iii) the execution and delivery of the Agreement and
the performance by the Lending Institution of its obliga-
tions thereunder, do not violate the Charter or Bylaws of
the Lending Institution or any court order by which the
Lending Institution is bound, and such actions do not con- stitute a default under any agreement, indenture, mortgage, lease, note or other obligation or instrument to which the Lending Institution i:; a party or by which it is bound and
no approval or other action by any governmental authority
or agency is required in connection therewith; and
(iv) to the best of our knowledge, there is no action,
suit, proceeding, inquiry or investigation at law or in
equity or before or by any public board or body pending or,
to our knowledge, threatened against or affecting the Lend-
ing Institution or, to the best of our knowledge, any basis
therefor, wherein an unfavorable decision, ruling or find-
ing would adversely affect the transactions contemplated by the Agreement.
Very truly yours,
D-2
EXHIBIT E
1) - LOAN ASSUMABILITY RIDER
This Loan Assumability Rider is made this day of , 19-, and is incorporated into and shall be
deemed to amend and supplement the Note, dated of even date
herewith, given by the undersigned (herein the "Mortgagor").
The obligation evidenced by this Note may be assumed upon the Mortgagor's sale, transfer or other disposition of the Property securing this Note only if the City of Carlsbad
approves in writing such assumption and the new obligor or
obligors on the Note and any other new holders of an interest
in such Property meet the eligibility requirements of the City of Carlsbad Home Finance I?rogram.
2)- PREPAYMENT RIDER
This Prepayment Rider is made this day of , 19 , and is incorporated into and shall be deemed to amend and supplement the Note, dated of even date herewith, given by the undersigned (herein the "Mortgagor" ) .
If the Mortgagor makes a prepayment during any of the
first five years following the date hereof, there shall be
imposed on the Mortgagor, unless waived in writing by the
holder of the Note, a prejpayment charge in an amount equal to
the payment of six months' advance interest on any amount
prepaid in any twelve-month period which exceeds twenty percent
(20%) of the original principal amount of said Note.
3)- LOAN INTEREST RATE INCREASE RIDER
This Loan Interest Rate Increase Rider is made
this day of , 19--, and is incorporated into
and shall be deemed to amend and supplement the Note, dated of
even date herewith, given by the undersigned (herein the
"Mortgagor").
Upon the discovery of fraud or misrepresentation by
the Mortgagor with respect to any information provided by the
Mortgagor in the loan application or Buyer's Affidavit executed
by the Mortgagor in connection with the Note, at the sole
discretion of the holder of the Note, the rate of interest on
the unpaid principal balance of the Note shall be increased to
eighteen percent (18%) per annum and the monthly payments shall
be increased to provide for amortization of such balance over
the remaining portion of the original term of the Note with
level payments of principal and interest together.
4) * FORGIVENESS R I DE:R
This Forgiveness Rider is made this day of , 19 - , a:nd is incorporated into and shall be
deemed to amend and suppllement the Note, dated of even date
herewith, given by the undersigned. (herein the "Mortgagor" ) .
Upon the redemption of th!e last outstanding bond of
the issue of bonds designated as t.he City of Carlsbad Single
Family Residential Mortgage Revenue Bonds, Issue of 1983, (the
"Bonds") pursuant to the Indenture relating to the Bonds, dated
as of June 15, 1983, by and between the City of Carlsbad and
Security Pacific National Bank, and upon payment to the City of
Carlsbad of any amount to be paid to it pursuant to said
Indenture, the Mortgagor's obligation to make payments under
this Note shall cease and shall be forgiven by the County and the Trustee.
Mortgagor
Mortgagor
EXHIBIT E
ADDENDA TO MORTGAGE
1) * LOAN ASSUMABILITY RIDER
This Loan Assumability Rider is made this day
of , 19 - , and is incorporated into and shall
be deemed to amend and supplement a Deed of Trust, dated of
even date herewith, given by the undersigned (herein the
Mortgagor") to secure the Mortgagor? s Note to 11
(herein "Beneficiary") and
covering the property described in-the Deed of Trust and
located at
(the "Residence")
(property address)
Upon sale or othler transfer, whether voluntary,
involuntary or by operati'on of law, of all or any part of the
Residence, not approved by the City of Carlsbad or to a person
ineligible to receive a Loan under the City of Carlsbad Home
Finance Program, Beneficiary may, by written notice to
(Trustor), declare all obligations secured hereby immediately
due and payable, except to the extent that such acceleration and in such particular circumstances as exercise of such a
right by Beneficiary is prohibitedl by law. The provisions
hereof shall prevail notwithstanding any contrary provisions ir
any note or other instrument which evidences the obligations
hereby secured. (Trustor) shall notify Beneficiary promptly ir
writing of any transaction or event which may give rise to a
right of acceleration hereunder. (Trustor) shall pay to
Beneficiary all damages Beneficiary sustains by reason of the
breach of the covenant of notice set forth herein.
2)- LOAN FRAUC, RIDER
This Loan Fraud Rider is made this day of , 19-, and is incorporated into and shall be deemed to amend and supplement a Deed of Trust, dated of even date herewith, given by the undersigned (herein the "Mortgagor") to secure the Mortgagor's Note to
covering the property described irrthe Deed of Trust and
located at
(herein "Beneficiary") and
(the "Residence")
(property address)
Upon discovery of fraud or misrepresentation by the
Mortgagor with respect to any information provided by the
Mortgagor in the loan appl.ication or Buyer's Affidavit executed
by the Mortgagor in connection with the Mortgagor's Note, Beneficiary may, at Beneficiary's sole discretion, by written
notice to (Trustor), declare all obligations secured hereby
immediately due and payable. The provisions hereof shall
prevail notwithstanding any contrary provisions in any note or
other instrument which evi.dences the obligations hereby
secured. (Trustor) shall notify Beneficiary promptly in
writing of any transaction or event which may give rise to a
right of acceleration hereunder. (Trustor) shall pay to
Beneficiary all damages Beneficiar.y sustains by reason of the
breach of the covenant of notice set forth herein.
Mortgagor
Mortgagor
EXHIBIT F
BUYER'S AFFIDAVIT
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
) ss.
as applicant for a loan to be originated by -
to the City of Carlsbad's Home Mortgage Financing Program, or
as applicant to assume a .loan purchased for said Program, and
as purchaser of a residence which is the subject of such loan,
being first duly sworn, deposes and says:
pursuant
1. The residence to be financed with the proceeds of
the loan is located within the unincorporated portion of
the City of Carlsbad, or within the City of
at
[address]
2. The residence is reasonably suitable for
occupancy by not more than one family.
3. I int,end to occupy the home as my principal place of residence within 60 days OK less after the closing of the loan, and thereafter to maintain the property as my principal residence for a period of at least two years. I do not intend to, and have not. entered into an arrangement
to, rent, sell, assign or transfer the residence.
4. I will not use the residence in a trade or
business which qualifies me to deduct any portion of the
cost of the home as a home business expense on my federal
or California income tax return(s), and in any event will
not use more than 15% of the total area of the residence
primarily in a trade or business.
5. I will not use the residence as an investment
property and will not receive any income from the residencf or the land being purchased with the residence except
incidentally as follows:
6. I will not use the residence as a recreational
home.
7. All of the .Land being purchased with the
residence reasonably maintains the basic livability of the
residence, and I have no intention of subdividing such land
or otherwise selling :it apart from the residence.
8. I have not lhad a present ownership interest* in a
principal residence, including factory-made housing
permanently fixed to :real property, at any time during the
three-year period immediately prior to the closing of the
loan.
9. a. I have attached a copy of the purchase
contract, together with all other agreements which I
have entered into with th.e seller of the residence, tc
this Affidavit.
b. The acquisition. cost** of the residence as
shown in the purchase contract is $
c. Neither I nor a.nyone on my behalf has made
any payment other than thre amount shown in (a) to the
seller of the residence or to any other person on
behalf of the seller, nor have I cancelled any debt of
the seller or any related person to the seller.
d. The residence (is/is not) located on leased
land. If the residence is located on leased land, the
terms of the lease, including the payments required tc
be made thereunder, are set forth below:
*The term "present ownership interest" includes not
only outright ownership but also any of the following interests if held either directly by you or in trust for you: a joint
tenancy, a tenancy in common, a tenancy by the entirety, a
community property interest, the i.nterest of a tenant-
shareholder in a cooperative, a life estate, or a contract
pursuant to which you have possession and the benefits and
burdens of ownership although legal title is not transferred
until some time later. This provision does not apply to a
Targeted Area Residence as defined by the City of Carlsbad.
**The term "acquisition c:ost" means the cost of
acquiring the residence from the seller as a completed unit.
The term does not include usual and reasonable settlement or financing costs. It does include the amount of any lien or assessment to which the residence is subject.
F-2
10. I will not use any part of the loan proceeds to
acquire or replace an existing mortgage except for the construction period financing or other temporary initial financing set forth below:
Amount of Type, Purpose, and Term of
Loan Proceeds Existing Mortgage Being
- Acquired or Replaced
11. I will not lease the residence, nor allow the
mortgage on the residence to be assumed, nor sell the
residence subject to the mortgage, without the approval of
the City of Carlsbad.
12. All the inflDrmation and data which I have submitted to in connection with
my application for the loan is true and correct.
13. My adjusted gross income as calculated for federal income tax purposes is $ , and, for
all other persons who intend t.o reside permanently with me
in the residence, is $
I have read the Note and the Deed of Trust, and I understand that the loan may be ac:celerated and the interest
rate increased upon the occurrence of certain events specified
therein.
I understand that, if I have made any material
misstatements in the foregoing representations or omitted to
state any of the information requested, the following may OCCUI
1. I may be fined not more than $5,000 or imprisonec
not more than two years, or both, pursuant to Section 1014 of Title 18 of the United States Code.
2. The office of the district attorney may be contacted for investigation regarding misrepresentation an(
fraud.
3. The outstan.ding principal balance of the loan ma]
be declared immediately due and payable together with
accrued interest and foreclosure costs (if foreclosure is
necessary because payment in full is not made immediately)
F-3
4. The rate of interest on the loan may be increased
to percent (-X), and the monthly payment amount will beincreased to amortize the
loan over the same term.
Signature
Subscribed and sworn to before me this day of , 19 . - -
Notary Public in and for said
County and State
F-4
EXHIBIT G
SEL,LER' S AFFIDAVIT
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
) ss.
, ibs the authorized representa- tive of the seller of a residence to and , as purchaser(s), being first
duly sworn, deposes and says:
1. The residence is located at
[ address ]
2. The residence is reasonably suitable for
occupancy by not more than one family.
3. All of the land being sold with the residence
reasonably maintains the basic livability of the residence,
and to the best of (my/our) knlowledge the purchasers do not
intend to subdivide such land.
4. a. The acquisition cost* of the residence as shown in the purc:hase contract is $
b. Neither the purchasers nor anyone on their
behalf has made any payment other than the amount
shown in (a) to me or to any other person on my
behalf, nor have they cancelled any debt owned by me
or by any person related to me.
*The term "acquisition cost" means the cost of acquiring a residence from the seller as a completed unit. The term does not include usual and reasonable settlement or financing
costs. It does include the amount of any lien or assessment to
which the residence is subject.
c. The residence (is/is not) located on leased
land. If the residence is located on leased land, the
terms of the lease, including the payments required to
be made thereunder, are set forth below:
d. The residence hasbas not been previously
occupied.
5. The proceeds; of the :Loan being obtained by the
purchasers from the City of Carlsbad's Home Mortgage
Finance Program will riot be used to acquire or replace an
existing mortgage on the property (except for construction
period financing or other temporary initial financing).
6. If the undersigned is a developer who has
executed a Developer Agreement with the City of Carlsbad,
the undersigned hereby reaffirms the representations and
warranties with respect to the Residence which are
contained in Section 4.5 of said Developer Agreement.
Signature
Subscribed and sworn to before me
this , 19 . day of - -
Notary Public in and for said
County and State
G-2