The following is a sample partial purchase agreement when purchasing two or more loans. This agreement has verbiage that all the loans are cross collateralized, meaning
If any account sold goes into default, seller would either
Repurchase the defaulted loan
Assign a new loan (with like factors)
Make monthly payment due on the defaulted loan and facilitate reselling the collateral
No loan would be reassigned, to the seller, if any of the other ‘cross collateralized account’ is in default and seller has not replaced or repurchased that defaulted loan. This would entitle you to continue to collect the payments due on accounts beyond the stream of payments originally purchased (to recoup the $ due you on any defaulted account).
Partial Purchase Agreement w/Cross Collateral
AGREEMENT FOR MORTGAGE PARTICIPATION
This Agreement ("Agreement) is entered into on November 1, 2007, by and between John and Mary Noteseller, ("Seller") and Buyer and/or assigns for the sale of a portion of the payments due Seller under the promissory notes and contracts for deed reflected on Exhibit “A” attached hereto and incorporated herein (hereinafter collectively called the "Notes" and individually called a "Note”). Each of the promissory notes described in Exhibit “A” is secured by a Mortgage or Deed of Trust (hereinafter collectively called the "Mortgages" and individually called a "Mortgage") recorded in the real property records of the respective counties. The Mortgages are also described in Exhibit “A”. The parties mutually agree as follows:
I .Sale and ConsiderationSeller hereby sells and assigns to Buyer the consecutive regular payments due under the Notes and Mortgages as set forth on Exhibit “A” beginning with the payments due on each of the Notes as set forth on Exhibit “A” for the total purchase price of $______. Seller acknowledges receipt of this sum and authorizes disbursement as follows: $______ to Seller. Seller acknowledges that this transaction is a sale of all or a portion of Seller's interest in the Notes and Mortgages, not a loan or extension of credit. Buyer can encumber, pledge, hypothecate or assign the Mortgages and Notes during the period of Assignment without consent of Seller.
2.Representations and Warranties of SellerSeller represents, covenants and warrants to Buyer to the best of Seller's knowledge, the following with respect to the Notes and Mortgages sold:
(a)Each Mortgage is a good and valid instrument having been prepared and recorded either by a duly licensed attorney or an accredited title insurance company and constitutes a valid and enforceable lien against the real estate describe therein in the priority set forth on Exhibit “A”.
(b)Seller is vested with full and absolute title to the Mortgages and Notes free and clear of all encumbrances and has the power and authority to assign and transfer the Mortgages and Notes to Buyer under this Agreement.
(c)The original principal face amount of each of the Notes has been advanced to the Payor of each Note and there are no defaults existing at the present time under any of the Mortgages and Notes except the following: NONE.
(d)Each of the Mortgages and Notes were originated, closed and serviced in strict and absolute compliance with applicable federal, state, and local laws, regulations, ordinances and rules.
(e)There are no undisclosed agreements between Seller and Payor of each Note, directly or indirectly having any effect on the obligations of any Payor to make timely payments on any of the Notes.
(f)Each of the Mortgages and Notes are enforceable according to their terms and none of the Payors have claims , offsets, or defenses to the enforceability of any of the Mortgages or Notes. No settlement, payments, special promise, consideration or compromise has been made by any party to any of the Mortgages and Notes.
(g)Each Mortgage and Note were executed by the persons purported to be the Payors and contain no forged or unauthorized signatures and the parties thereto were of full age and legal capacity to contract at the time of execution.
(h)The present unpaid principal balance of each Mortgage and Note is as reflected on Exhibit “A” and the next regular payment on each Note is in the amount as reflected on Exhibit “A” and is due and payable as reflected on Exhibit “A”
(i)Each Note, Mortgage and all other documents, instruments or records evidencing or relating thereto are true, correct, complete and undisputed, and no credit has previously been given to any Payor which was gratuitous or was given for a payment made by an employee or agent of Seller or has arisen from a renewal granted for the purpose of concealing past or present delinquency.
(j)Seller has no knowledge of any event or circumstance which may adversely effect the collectibility or payment on the Note or the validity of the lien created by the Mortgage.
3.Remedies for Breach
(a)In the event of a breach of any of the foregoing representations or warranties by Seller, Seller will immediately repurchase the Mortgage and Note affected by the breach held by Buyer for an amount equal to Buyer's Unamortized Principal Balance on the affected Note, plus accrued and unpaid interest. Buyer's Unamortized Principal Balance of each of the Notes shall be calculated according to the initial terms of the amortization schedule for each Note attached hereto as Exhibit “B”, hereafter referred to as Buyer's "Unamortized Principal Balance."
(b)Seller further agrees to indemnify and forever save Buyer harmless from any and all costs, damages, suits, actions, losses and expenses including but not limited to reasonable attorneys fees arising directly or indirectly from Seller's breach of any of the foregoing warranties and representations or any other provision of this Agreement.
(c)At Buyer's sole and exclusive option, it may waive its right to demand repurchase under paragraph (a) above and continue to retain the Note. Any such waiver shall not be construed as a waiver of any rights of Buyer under this Agreement for any subsequent breach of Seller nor diminish or eliminate Seller's obligations under paragraph (b) above, which shall remain in full force and effect.
(d)The provisions of this section shall survive this Agreement and constitute a continuing obligation of the parties.
(e)In the event Seller fails to pay any sum due to Buyer hereunder or fails to perform any obligation hereunder, Buyer may, in addition to any other remedy Buyer has, offset any sums or damages due to Buyer by Seller against any sum or obligation due to Seller by Buyer, including the right of Buyer to continue collecting payments on one or more of the Notes after the payment of the Buyer Unamortized Principal Balance on said Notes until Buyer has collected the full amount due to Buyer on account of Seller's default, plus attorneys fees and costs.
4.Servicing of Mortgage
(a)Buyer agrees to service the Mortgages and Notes during the period of assignment, including any extended periods under section 3e above, and to exert reasonable collection efforts to insure that each Payor makes timely payments due under each of the Notes.
(b)Buyer shall have the right, upon giving notice to Seller and Payors, to terminate any existing escrow arrangement under any Note and Mortgage by returning all escrow funds (if any) to the Payor and advising the Payor that future payments of property taxes and insurance must be made by Payor. Seller waives any and all claims Seller may have against Buyer resulting directly or indirectly from Buyer's termination of any escrow arrangement and return of escrow funds to Payors.
(c)Buyer shall have the right to renew, extend or rearrange Payor's time for repayment of the installments due under any Note and Mortgage. Buyer shall continue to hold each applicable Note and Mortgage until all amounts due Buyer under this Agreement are paid by Payor under said Note and Mortgage.
AGREEMENT FOR MORTGAGE PARTICIPATION
5.Payor's PrepaymentShould any of the Notes be paid in full at any time prior to Buyer’s collecting its regular scheduled payments, Buyer shall be entitled to receive and may retain out of the funds actually received, in addition to the payments previously made to Buyer, an amount equal to the sum of 1.15 times Buyer's Unamortized Principal Balance of the applicable Note at the time of prepayment as shown on Exhibit “B” plus any unpaid accrued interest due. All funds received by Buyer over and above its entitlement as determined above shall be the property of Seller and shall be paid over to the Seller. Seller hereby designates Buyer as its agent for collection of any amounts due Seller in connection with any payment of each Mortgage and Note including payments in full. Seller agrees not to accept any payments from Payors until Buyer has been paid in full and the Note and Mortgage assigned back to Seller by Buyer
6.Payment as Scheduled/Application of Prepaid FundsShould Buyer receive all payments as shown on Exhibit “B” (Buyer Unamortized Principal Balance) on a Note by Note basis, then Buyer shall execute without recourse, an absolute assignment of the applicable Mortgage and Note back to Seller and advise Payor(s) to make all future payment to Seller subject to Buyer still having possession of the original Note and Mortgage.
7.Payor's DefaultAt Buyer's discretion, should any Mortgage and Note be in default for a period of at least 60 days, the Seller, upon written notice of such default, shall either (a) repurchase Buyer's interest in the applicable Mortgage and Note within 30 days of said notice by payment to Buyer of an amount equal to the sum of Buyer's Unamortized Principal Balance at the time of repurchase plus any unpaid interest due thereon and attorneys fees incurred by Buyer, or (b) make payment within 30 days of said notice to Buyer of any amounts then in default and undertake in writing to make future scheduled payments to Buyer to the extent that the Payor might fail to do so and within said 30 days, cure any default in the terms and conditions of the Mortgage, (c) authorize Buyer to collect additional funds from the remaining Mortgages and Notes prior to reassignment to pay off the amount owed to Buyer as computed under 7(a) above, or (d) within 30 days replace the note and mortgage with a new note and mortgage acceptable to Buyer, in their sole discretion.
Should the Seller fail within the said 30 days to comply with either 7(a), (b), (c) or (d) above, Buyer may then foreclose on the Mortgage and Note and/or collect additional funds from the remaining mortgage and notes prior to reassignment to pay off the amount owed to the buyer.
Upon completion of any foreclosure action or acceptance of a deed in lieu of foreclosure, if the property is purchased by anyone other than Buyer, Buyer may retain from the proceeds received, in addition to all payments previously made to Buyer, an amount equal to the sum of the following:
(a)Buyer Unamortized Principal Balance at the time of sale plus any unpaid interest due thereon;
(b)All costs incurred by Buyer, including but not limited to, attorneys fees, filing fees, appraisals, and title searches;
(c)$______.
Any excess proceeds over (a), (b) and (c) above will be paid to the Seller as its interest in the property.
If the Property is purchased by Buyer at the foreclosure sale, or subsequent to said foreclosure sale, Seller releases and discharges Buyer and shall have no further obligations or liability to Seller with regard to the Note, Mortgage, or Property foreclosed upon and Buyer may retain said Property or take any further action with respect to it as it may wish without any claim of Seller or obligation to Seller. Buyer shall have no obligation to bid or purchase the property at the foreclosure sale.
AGREEMENT FOR MORTGAGE PARTICIPATION
8.Agency DesignationThe Seller does hereby designate and appoint Buyer or it's assigns, as its agent for the commencement of any collection or foreclosure action on any Note and Mortgage and consents to any such action being brought in the name of Buyer or of the Seller and agrees to execute any such other documents as may be necessary or appropriate to accomplish this.
9.Time and Binding EffectTime shall always be of the essence and this Agreement shall inure to and be binding upon the respective heirs, representative, successors and assigns of the parties hereto.
10.NoticeSeller and Buyer agree to provide each other with written notice of any change of address. Any failure to provide notice of change of address will release the other party for liability resulting from any lost or misdirected mail.
11.No Oral AgreementsThis Agreement, along with any other Agreements executed by Buyer and Seller contain the entire agreement between the parties and supersedes, merges, combines and completely integrates any prior understanding or oral agreements between the parties respecting the subject matter hereof. No other representations, promises or oral agreements have been made.
12.AssignabilityThe Seller does hereby expressly acknowledge the assignability of this Agreement herein and the representations, warranties and covenants made hereunder.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals the day and date written, each with the Intent to be legally bound.
WITNESS:SELLER:
______
John Noteseller
______
Mary Noteseller
WITNESS:BUYER:
NoteBuying Company
______By:______
Auhtorized Representative
AGREEMENT FOR MORTGAGE PARTICIPATION