WHO IS THE BORROWER?

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EDITOR’S ANALYSIS: The passage below contains very valuable information. I want to focus on one simple fact — the “borrower” is not defined as some homeowner applying for a loan. The “borrower” is some sham entity that has been created by the investment bank, to create the appearance of a warehouse line of credit for funding mortgages. It’s another layer to support plausible deniability. The borrower in the transaction with investor-lender is not identified in the documents as the homeowner. The creditor in the transaction described in the documents given to the homeowner to sign is not the investor-lender, nor even the pool, nor for that matter the “warehouse lender.” This was done intentionally to throw the sheer certainty of loss onto the investors and to grab the revenue, profits and fees for the banks, while at the same time declaring that it was all the fault of homeowners who defaulted on their loans. By avoiding basic rules of evidence, these banks are taking assets that should be used for restitution to the investors and the homeowners and keeping it for themselves.

What I find interesting is how many ‘Borrowers” we have in the illusion of securitization, and how they plays out as evidence in court regarding the so-called default. Starting with the investor who advances the money, the “borrower” or “payor” is an entity (that may or may not have ever come into existence). This is the SPV, trust or pool, depending upon how you look at it. So this borrower is promising to pay a debt to the investor based upon terms and conditions that are highly convoluted. The promise, for example, is based upon the right of the borrower to use the money of the creditor to make the payments to the creditor. So if there is no money in the pool, the SPV can still pay the creditor and there is no default.

Another aspect of this promise is that it is based upon revenue obtained from assets which are roughly defined but not identified. The list attached to the prospectus appears to identify the assets (loans in the pool) but the caveat is that the prospectus eventually gets around to saying that these are not the real loans and that the ones shown on the list are to replaced by real loans.

NOTE THAT THE HOMEOWNER NEITHER KNOWS ABOUT NOR IS REQUESTED TO ACKNOWLEDGE THESE TERMS AND OBVIOUSLY HAS NOT SIGNED ANY AGREEMENT, NOTE OR OTHER INSTRUMENT PROMISING TO PAY THE ACTUAL CREDITOR. The Homeowner has signed documents that give the appearance of a loan from an entirely DIFFERENT entity (the originator).

The point here is that as far as the actual creditor is concerned, the homeowner is NOT identified as the debtor or borrower. The documents are very clear on that point because it was always the intent to raid the revenue flow from the investments in mortgage bonds and the payments by various parties and NOT give the creditor the money, whenever it suited the investment bank to stop paying the investor. Thus the control over a default lies in sham corporations established by the investment banker regardless of whether the homeowner has made payments, and regardless of whether the creditor is receiving payments from sources other than the homeowner.

Then we go down one level and discover that there is yet another “borrower” who is not the homeowner. It is in the warehouse lender-borrower agreement in which the “borrower” is a sham entity created by the investment bank to create the appearance of a bona fide third party transaction for value in which the aggregator of loans can direct the funding of loans to borrowers through yet another layer of entities. Once again the borrower is clearly identified as NOT being the homeowner, although the reference is made to repurchase or replacement of the loan if the loan was defective. This clause is almost never invoked. But in any event, from the document itself, you can see that it is the obligation of this new “borrower” to assure payment from the pool of loans that are non-existent because they were never securitized or transferred, and the creditor is now, not the investor nor the pool, but rather the warehouse lender.

Skipping down a few layers, we get to the transaction with the homeowner where the homeowner is identified as a borrower, the creditor is identified as some party who was neither  a party to the the mortgage bond prospectus nor the warehouse lending agreement. In fact this party is not a creditor in any sense of the word but is nonetheless identified as the “lender” despite the appearance of MERS or some nominee. This party is actually an unregulated, unregistered mortgage broker, even if it has the word “bank” in it, because it is not performing a banking function. ON its balance sheet the loan never shows up. On its income statement, the transaction shows as a fee-based service in which it served as the straw-man for the securitization participants.

Thus the money from the investor is laundered down to giving a part to fund the “loan” to the homeowner who in reality is just a pawn in the scheme to skim or steal money from the investors. The funding of the loan is a cover for the theft of the investor’s money, deftly accomplished by siphoning off a substantial amount of the money advanced by investors into accounts as profits and fees and never reaching any closing table where a loan was funded. The investors were funding outlandish fees without knowing it. At the point where the homeowner is presented with documents, the real transaction has been completely obscured.

The documents refer to a money transaction between parties (the homeowner and the originator) in which no money exchanged hands. Thus factually, these documents refer to a transaction that never existed and was never meant to exist — a problem for both enforcing the documents themselves and for reforming them to conform to the evidence. Any default declared on such documents is meaningless. Any foreclosure initiated based upon such documents is a nullity. Any title issued as a result of such a foreclosure is a wild deed. Any “credit” bid submitted at an auction is void because it comes from a non-creditor regardless of how the transaction is analyzed.

Meanwhile the actual money transaction in which the actual party with money conveys money for the benefit of the actual party who receives the benefit of that money is completely undocumented. The investor-lender and the homeowner-borrower are intentionally left disconnected. And the pretender lenders wish the courts to use the absence of such documentation as proof that no such transaction existed. That is why a general denial of virtually everything the pretender proffers in any form is necessary and why the rules of evidence, if applied, would establish that there is a lack of evidence of any default, and a lack of evidence that the loan is actually still outstanding or delinquent.

SUBMITTED BY KEN DOST:

FIFTH AMENDMENT TO FIRST AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITYAGREEMENTFIFTH AMENDMENT TO FIRST AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITYAGREEMENT (this “Amendment”) dated as of January 25, 2006, between MORTGAGEIT,INC., a New York corporation (“Borrower”), and RESIDENTIAL FUNDING CORPORATION,a Delaware corporation (“Lender”).A. Borrower and Lender have entered into a revolving mortgage warehousingfacility with a present Warehousing Commitment Amount of $650,000,000, which isevidenced by a Replacement Promissory Note dated September 20, 2005 (the”Note”), and by a First Amended and Restated Warehousing Credit and SecurityAgreement dated as of April 12, 2005 (as the same may have been and may beamended or supplemented, the “Agreement”).B. Borrower has requested that Lender increase the Warehousing Commitment Amountand amend certain other terms of the Agreement, and Lender has agreed to suchincrease and those certain other amendments, subject to the terms and conditionsof this Amendment.NOW, THEREFORE, the parties to this Amendment agree as follows:1. Subject to Borrower’s satisfaction of the conditions set forth in Section 24,the effective date of this Amendment is December 21, 2005 (“Effective Date”).2. Unless otherwise defined in this Amendment, all capitalized terms have themeanings given to those terms in the Agreement. Defined terms may be used in thesingular or the plural, as the context requires. The words “include,” “includes”and “including” are deemed to be followed by the phrase “without limitation.”Unless the context in which it is used otherwise clearly requires, the word “or”has the inclusive meaning represented by the phrase “and/or.” References toSections and Exhibits are to Sections and Exhibits of this Amendment unlessotherwise expressly provided.3. The Table of Contents and Exhibits Page to the Agreement are amended andrestated in their entirety as set forth in the Table of Contents and ExhibitsPage attached to this Amendment.4. Article 1 of the Agreement is amended and restated in its entirety as setforth in Article 1 attached to this Amendment. All references in the Agreementand other Loan Documents to Article 1 (including each and every Section inArticle 1) are deemed to refer to the new Article 1.5. Article 3 of the Agreement is amended and restated in its entirety as setforth in Article 3 attached to this Amendment. All references in the Agreementand other Loan Documents to Article 3 (including each and every Section inArticle 3) are deemed to refer to the new Article 3.6. Article 4 of the Agreement is amended and restated in its entirety as setforth in Article 4 attached to this Amendment. All references in the Agreementand other Loan Documents to Article 4 (including each and every Section inArticle 4) are deemed to refer to the new Article 4.7. Article 5 of the Agreement is amended and restated in its entirety as setforth in Article 5 attached to this Amendment. All references in the Agreement and other LoanDocuments to Article 5 (including each and every Section in Article 5) aredeemed to refer to the new Article 5.8. Article 6 of the Agreement is amended and restated in its entirety as setforth in Article 6 attached to this Amendment. All references in the Agreementand other Loan Documents to Article 6 (including each and every Section inArticle 6) are deemed to refer to the new Article 6.9. Article 7 of the Agreement is amended and restated in its entirety as setforth in Article 7 attached to this Amendment. All references in the Agreementand other Loan Documents to Article 7 (including each and every Section inArticle 7) are deemed to refer to the new Article 7.10. Article 8 of the Agreement is amended and restated in its entirety as setforth in Article 8 attached to this Amendment. All references in the Agreementand other Loan Documents to Article 8 (including each and every Section inArticle are deemed to refer to the new Article 8.11. Article 10 of the Agreement is amended and restated in its entirety as setforth in Article 10 attached to this Amendment. All references in the Agreementand other Loan Documents to Article 10 (including each and every Section inArticle 10) are deemed to refer to the new Article 10.12. Article 11 of the Agreement is amended and restated in its entirety as setforth in Article 11 attached to this Amendment. All references in the Agreementand other Loan Documents to Article 11 (including each and every Section inArticle 11) are deemed to refer to the new Article 11.13. Article 12 of the Agreement is amended and restated in its entirety as setforth in Article 12 attached to this Amendment. All references in the Agreementand other Loan Documents to Article 12 (including each and every Section inArticle 12) are deemed to refer to the new Article 12.14. Exhibit A to the Agreement is amended and restated in its entirety as setforth in Exhibit A to this Amendment. All references in the Agreement and theother Loan Documents to Exhibit A are deemed to refer to the new Exhibit A.15. Exhibit E-1 to the Agreement is amended and restated in its entirety as setforth in Exhibit E-1 to this Amendment. All references in the Agreement and theother Loan Documents to Exhibit E-1 are deemed to refer to the new Exhibit E-1.16. Exhibit E-2 to the Agreement is amended and restated in its entirety as setforth in Exhibit E-2 to this Amendment. All references in the Agreement and theother Loan Documents to Exhibit E-2 are deemed to refer to the new Exhibit E-2.17. Exhibit H to the Agreement is amended and restated in its entirety as setforth in Exhibit H to this Amendment. All references in the Agreement and theother Loan Documents to Exhibit H are deemed to refer to the new Exhibit H.18. Exhibit I to the Agreement is amended and restated in its entirety as setforth in Exhibit I to this Amendment. All references in the Agreement and theother Loan Documents to Exhibit I are deemed to refer to the new Exhibit I.19. Exhibit B-SML is hereby added to the Agreement in the form attached to thisAmendment. 20. A Sublimit Promissory Note is hereby added to the Agreement inthe form attached to this Amendment.21. The Payment Option Loan Rider attached to this Amendment amends, restatesand replaces your existing Creditable Mortgage Loan Rider in its entirety andsuch amendment, restatement and replacement is effective as of the dateappearing in the preamble of such Payment Option Loan Rider (whether or not suchdate differs from the Effective Date or the date of this Amendment).22. Upon execution of this Amendment, Borrower must pay to Lender the pro rataWarehousing Commitment Fee on the increased portion of the WarehousingCommitment Amount for the time period from December 21, 2005, to December 31,2005.23. Section 7.2(a) of the Agreement requires the delivery of certain financialstatements of Borrower within specified time frames. Borrower failed to deliverthe required monthly interim financial statements for the months of June, July,September and October 2005. Failure to comply with this requirement constitutesan Event of Default pursuant to Section 10.1(b) of the Agreement.Borrower has requested that Lender waive its rights and remedies with respect tothe above-described Event of Default. Lender agrees to waive its rights andremedies with respect to the above-described Event of Default; provided,however, that this waiver is limited to the specific Event of Default describedabove and is not intended and will not be construed to be a waiver of any futureDefault or Event of Default of Section 7.2(a) of the Agreement or any existingor future Default or Event of Default under any other provision of theAgreement.BORROWER IS NOTIFIED THROUGH THIS AMENDMENT THAT LENDER REQUIRES STRICTCOMPLIANCE BY BORROWER OF ALL TERMS, CONDITIONS AND PROVISIONS OF THE AGREEMENTAND LOAN DOCUMENTS.The waiver of Lender under this Amendment may not be construed as establishing acourse of conduct on the part of Lender upon which Borrower may rely at any timein the future, and Borrower expre

ssly waives any right to assert any claim tosuch effect at any time.24. Borrower must deliver to Lender (a) two executed copies of this Amendment,(b) the executed Sublimit Promissory Note, (c) the executed Payment Option LoanRider, (d) the Additional Commitment Fee, and (e) a $1,500 document productionfee.25. Borrower represents, warrants and agrees that (a) except as stated inSection 20 above, there exists no Default or Event of Default under the LoanDocuments, (b) the Loan Documents continue to be the legal, valid and bindingagreements and obligations of Borrower, enforceable in accordance with theirterms, as modified by this Amendment, (c) Lender is not in default under any ofthe Loan Documents and Borrower has no offset or defense to its performance orobligations under any of the Loan Documents, (d) except for changes permitted bythe terms of the Agreement, Borrower’s representations and warranties containedin the Loan Documents are true, accurate and complete in all respects as of theEffective Date and (e) there has been no material adverse change in Borrower’sfinancial condition from the date of the Agreement to the Effective Date.26. Except as expressly modified, the Agreement is unchanged and remains in fullforce and effect, and Borrower ratifies and reaffirms all of its obligationsunder the Agreement and the other Loan Documents. 27. This Amendment may be executed in any number of counterparts, each of whichwill be deemed an original, but all of which shall together constitute but oneand the same instrument.IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to be dulyexecuted on their behalf by their duly authorized officers as of the day andyear above written.MORTGAGEIT, INC.,a New York corporationBy: /s/ Robert A. GulaIts: Chief Financial OfficerRESIDENTIAL FUNDING CORPORATION,a Delaware corporationBy: /s/ Robin SwansonIts: Director TABLE OF CONTENTS1. THE CREDIT……………………………………………………1-11.1. The Warehousing Commitment……………………………………..1-11.2. Expiration of Warehousing Commitment…………………………….1-11.3. Warehousing Note/Sublimit Note………………………………….1-12. PROCEDURES FOR OBTAINING ADVANCES……………………………….2-12.1. Warehousing Advances…………………………………………..2-13. INTEREST, PRINCIPAL AND FEES……………………………………3-13.1. Interest……………………………………………………..3-13.2. Interest Limitation……………………………………………3-23.3. Principal Payments…………………………………………….3-23.4. Buydowns……………………………………………………..3-43.5. Warehousing Commitment Fees…………………………………….3-53.6. Loan Package Fees, Wire Fees and Warehousing Fees…………………3-53.7. Miscellaneous Fees and Charges………………………………….3-53.8. Overdraft Advances…………………………………………….3-63.9. Method of Making Payments………………………………………3-64. COLLATERAL……………………………………………………4-14.1. Grant of Security Interest …………………………………….4-14.2. Maintenance of Collateral Records……………………………….4-24.3. Release of Security Interest in Pledged Loans and Pledged Securities……………………………………………………4-24.4. Collection and Servicing Rights…………………………………4-34.5. Return of Collateral at End of Warehousing Commitment……………..4-44.6. Delivery of Collateral Documents………………………………..4-45. CONDITIONS PRECEDENT…………………………………………..5-15.1. Initial Advance……………………………………………….5-15.2. Each Advance………………………………………………….5-25.3. Force Majeure…………………………………………………5-36. GENERAL REPRESENTATIONS AND WARRANTIES…………………………..6-16.1. Place of Business……………………………………………..6-16.2. Organization; Good Standing; Subsidiaries………………………..6-16.3. Authorization and Enforceability………………………………..6-16.4. Authorization and Enforceability of Guaranty……………………..6-16.5. Approvals…………………………………………………….6-26.6. Financial Condition……………………………………………6-26.7. Litigation……………………………………………………6-26.8. Compliance with Laws…………………………………………..6-26.9. Regulation U………………………………………………….6-36.10. Investment Company Act…………………………………………6-36.11. Payment of Taxes………………………………………………6-36.12. Agreements……………………………………………………6-36.13. Title to Properties……………………………………………6-36.14. ERISA………………………………………………………..6-46.15. No Retiree Benefits……………………………………………6-46.16. Assumed Names…………………………………………………6-46.17. Servicing…………………………………………………….6-47. AFFIRMATIVE COVENANTS………………………………………….7-17.1. Payment of Obligations…………………………………………7-17.2. Financial Statements…………………………………………..7-1 7.3. Other Borrower Reports…………………………………………7-27.4. Maintenance of Existence; Conduct of Business…………………….7-37.5. Compliance with Applicable Laws…………………………………7-37.6. Inspection of Properties and Books; Operational Reviews……………7-37.7. Notice……………………………………………………….7-37.8. Payment of Debt, Taxes and Other Obligations……………………..7-47.9. Insurance…………………………………………………….7-47.10. Closing Instructions…………………………………………..7-47.11. Subordination of Certain Indebtedness……………………………7-57.12. Other Loan Obligations…………………………………………7-57.13. ERISA………………………………………………………..7-57.14. Use of Proceeds of Warehousing Advances………………………….7-58. NEGATIVE COVENANTS…………………………………………….8-18.1. Contingent Liabilities…………………………………………8-18.2. Pledge of Servicing Contracts…………………………………..8-18.3. Restrictions on Fundamental Changes……………………………..8-18.4. Subsidiaries………………………………………………….8-18.5. Deferral of Subordinated Debt…………………………………..8-28.6. Loss of Eligibility, Licenses or Approvals……………………….8-28.7. Accounting Changes…………………………………………….8-28.8. Minimum Tangible Net Worth……………………………………..8-28.9 Distributions to Shareholders…………………………………..8-28.10 Transactions with Affiliates……………………………………8-28.11 Leverage Ratio for Guarantor……………………………………8-28.12 Minimum Tangible Net Worth for Guarantor…………………………8-28.13 Minimum Modified Liquid Assets for Guarantor……………………..8-38.14 Operating Losses for Guarantor………………………………….8-38.15 Recourse Servicing Contracts……………………………………8-39. SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL……………………………………………………9-19.1. Special Representations and Warranties Concerning Eligibility as Seller of Mortgage Loans…………………………………….9-19.2. Special Repre

sentations and Warranties Concerning Warehousing Collateral……………………………………………………9-19.3. Special Affirmative Covenants Concerning Warehousing Collateral…….9-39.4. Special Negative Covenants Concerning Warehousing Collateral……….9-410. DEFAULTS; REMEDIES……………………………………………10-110.1. Events of Default…………………………………………….10-110.2. Remedies…………………………………………………….10-310.3. Application of Proceeds……………………………………….10-510.4. Lender Appointed Attorney-in-Fact………………………………10-510.5. Right of Set-Off……………………………………………..10-611. MISCELLANEOUS………………………………………………..11-111.1. Notices……………………………………………………..11-111.2. Reimbursement of Expenses; Indemnity……………………………11-111.3. Financial Information…………………………………………11-211.4. Terms Binding Upon Successors; Survival of Representations………..11-211.5. Assignment…………………………………………………..11-211.6. Amendments…………………………………………………..11-211.7. Governing Law………………………………………………..11-311.8. Participations……………………………………………….11-311.9. Relationship of the Parties……………………………………11-311.10. Severability…………………………………………………11-311.11. Consent to Credit References…………………………………..11-3 11.12. Counterparts…………………………………………………11-411.13. Headings/Captions…………………………………………….11-411.14. Entire Agreement……………………………………………..11-411.15. Consent to Jurisdiction……………………………………….11-411.16. Waiver of Jury Trial………………………………………….11-411.17. Waiver of Punitive, Consequential, Special or Indirect Damages…….11-511.18. Merger of Obligations…………………………………………11-511.19. Waiver of Events of Default Under Existing Agreement……………..11-511.20. Confidentiality………………………………………………11-512. DEFINITIONS………………………………………………….12-112.1. Defined Terms………………………………………………..12-112.2. Other Definitional Provisions; Terms of Construction…………….12-12EXHIBITSExhibit A Request for Advance Against Eligible LoansExhibit B Procedures and Documentation for Warehousing Mortgage LoansExhibit B-SML Procedures and Documentation for Warehousing Seasoned Mortgage LoansExhibit C Schedule of Servicing PortfolioExhibit D SubsidiariesExhibit E-1 Compliance Certificate (Borrower)Exhibit E-2 Compliance Certificate (Guarantor)Exhibit F Schedule of Lines of CreditExhibit G Assumed NamesExhibit H Eligible Loans and Other AssetsExhibit I Schedule of Miscellaneous FeesExhibit J Commitment Summary Report FIRST AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENTFIRST AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENT, dated asof April 12, 2005 between MORTGAGEIT, INC., a New York corporation (“Borrower”),and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation (“Lender”).A. Borrower and Lender desire to amend and restate the Existing Agreement(defined below) and to set forth herein the terms and conditions upon whichLender will continue to provide financing to Borrower.B. Subject to Borrower’s satisfaction of the conditions set forth in Article 5,the “Closing Date” for the transactions contemplated by this Agreement is thedate set forth as the Closing Date on the signature page to this Agreement.NOW, THEREFORE, the parties to this Agreement agree as follows:1. THE CREDIT1.1. THE WAREHOUSING COMMITMENTOn the terms and subject to the conditions and limitations of this Agreement,including Exhibit H, Lender agrees to make Warehousing Advances to Borrower fromthe Closing Date to the Business Day immediately preceding the WarehousingMaturity Date, during which period Borrower may borrow, repay and reborrow inaccordance with the provisions of this Agreement. Lender has no obligation tomake Warehousing Advances in an aggregate amount outstanding at any time inexcess of the lesser of (a) the Warehousing Commitment Amount, or (b) theAggregate Warehousing Collateral Value. While a Default or Event of Defaultexists, Lender may refuse to make any additional Warehousing Advances toBorrower. Effective as of the Closing Date, all outstanding loans made under theExisting Agreement are deemed to be the initial Warehousing Advances made underthis Agreement. All Warehousing Advances under this Agreement constitute asingle indebtedness, and all of the Collateral is security for the Notes and forthe performance of all of the Obligations.1.2. EXPIRATION OF WAREHOUSING COMMITMENTThe Warehousing Commitment expires on the earlier of (“Warehousing MaturityDate”): (a) June 30, 2006, as such date may be extended in writing by Lender, inits sole discretion, on which date the Warehousing Commitment will expire of itsown term and the Warehousing Advances will become due and payable without thenecessity of Notice or action by Lender; and (b) the date the WarehousingCommitment is terminated and the Warehousing Advances become due and payableunder Section 10.2.1.3. WAREHOUSING NOTE/SUBLIMIT NOTEWarehousing Advances, other than Warehousing Advances made against SeasonedMortgage Loans, are evidenced by Borrower’s promissory note, payable to Lenderon the form prescribed by Lender (“Warehousing Note”). Warehousing Advances madeagainst Seasoned Mortgage Loans are evidenced by Borrower’s sublimit promissorynote, payable to Lender on the form prescribed by Lender (“Sublimit Note”).Warehousing Note and Sublimit Note are collectively referred to as, “Notes.” Theterms “Warehousing Note” and “Sublimit Note” as used in this Agreement includesall amendments, restatements, renewals or replacements of the originalWarehousing Note and Sublimit Note and all substitutions for them. All terms andprovisions of the Warehousing Note and the Sublimit Note are incorporated intothis Agreement.END OF ARTICLE 1 3. INTEREST, PRINCIPAL AND FEES3.1. INTEREST3.1 (a) Except as otherwise provided in this Section, Borrower must pay intereston the unpaid amount of each Warehousing Advance from the date the WarehousingAdvance is made until it is paid in full at the Interest Rate specified inExhibit H.3.1 (b) As long as no Default or Event of Default exists, Borrower is entitledto receive a benefit in the form of an “Earnings Credit” on the portion of theEligible Balances maintained in time deposit accounts with a Designated Bank,and Borrower is entitled to receive a benefit in the form of an “EarningsAllowance” on the portion of the Eligible Balances maintained in demand depositaccounts with a Designated Bank. Any Earnings Allowance will be used first andany Earnings Credit will be used second as a credit against Miscellaneous Feesand Charges (including Designated Bank Charges), Warehousing Commitment Fees,Loan Package Fees, Wire Fees, Warehousing Fees and any other fees payable underthis Agreement, and may be used, at Lender’s option, to reduce accrued interest.Any Earnings Allowance not used during the month in which the benefit wasreceived will be accumulated and must be used within 6 months of the month inwhich the benefit was received. As long as no Default or Event of Defaultexists, any Earnings Credit not used during the month in which the benefit wasreceived will be used to provide a cash benefit to Borrower. Any Earnings Creditretained by Lender as a result of a Default or Event of Default will be appliedto the payment of Borrower’s Obligations in the order Lender determines in itssole discretion. The Earnings Credit and the Earnings Allowance for any monthwill be determined by Lender
in its sole discretion and Lender’s determinationof those amounts is conclusive and binding absent manifest error. In no eventwill the benefit received by Borrower under this Section exceed the DepositoryBenefit.Either party to this Agreement may terminate the benefits provided for in thisSection effective immediately upon Notice to the other party, if the terminatingparty determines (which determination is conclusive and binding on the otherparty, absent manifest error) at any time that any applicable law, rule,regulation, order or decree or any interpretation or administration of such law,rule, regulation, order or decree by any governmental authority charged with itsinterpretation or administration, or compliance by such party with any requestor directive (whether or not having the force of law) of any such authority,makes it unlawful or impossible for the party sending the Notice to continue tooffer or receive the benefits provided for in this Section. No Notice isrequired to terminate the benefit provided for in this Section as a result of aDefault or Event of Default.3.1 (c) Lender computes interest on the basis of the actual number of days ineach month and a year of 360 days. Borrower must pay interest monthly inarrears, not later than 9 days after the date of Lender’s invoice or, ifapplicable, 2 days after the date of Lender’s account analysis statement,commencing with the first month following the Closing Date and on theWarehousing Maturity Date.3.1 (d) If, for any reason Borrower repays a Warehousing Advance on the same daythat it was made by Lender, Borrower must pay Lender an administrative fee equalto 1 day of interest on that Warehousing Advance at the Interest Rate that wouldotherwise have been applicable under Exhibit H. Borrower must pay alladministrative fees within 9 days after the date of Lender’s invoice or, ifapplicable, within 2 days after the date of Lender’s account analysis statement.3.1 (e) After an Event of Default occurs and upon Notice to Borrower by Lender,the unpaid amount of each Warehousing Advance will bear interest at the DefaultRate until paid in full.3.1 (f) Lender will adjust the rates of interest provided for in this Agreementas of the effective date of each change in the applicable index. Lender’sdetermination of such rates of interest as of any date of determination isconclusive and binding, absent manifest error.3.2. INTEREST LIMITATIONLender does not intend, by reason of this Agreement, the Notes or any other LoanDocument, to receive interest in excess of the amount permitted by applicable law. If Lenderreceives any interest in excess of the amount permitted by applicable law,whether by reason of acceleration of the maturity of this Agreement, the Notesor otherwise, Lender will apply the excess to the unpaid principal balance ofthe Warehousing Advances and not to the payment of interest. If all WarehousingAdvances have been paid in full and the Warehousing Commitment has expired orhas been terminated, Lender will remit any excess to Borrower. This Sectioncontrols every other provision of all agreements between Borrower and Lender andis binding upon and available to any subsequent holder of the Notes.3.3. PRINCIPAL PAYMENTS3.3 (a) Borrower must pay Lender the outstanding principal amount of allWarehousing Advances on the Warehousing Maturity Date.3.3 (b) Except as otherwise provided in Section 3.1, Borrower may prepay anyportion of the Warehousing Advances without premium or penalty at any timepursuant to Section 3.4 or Section 4.3(d). If at any time the WarehousingAdvances outstanding under this Agreement exceed the lesser of (i) theWarehousing Commitment Amount or (ii) the Aggregate Warehousing CollateralValue, Borrower must immediately pay to Lender without the necessity of priordemand or Notice from Lender, and Borrower authorizes Lender to cause theFunding Bank to charge Borrower’s Operating Account for, the amount of suchexcess.3.3 (c) Borrower must pay to Lender, without the necessity of prior demand orNotice from Lender, and Borrower authorizes Lender to cause the Funding Bank tocharge Borrower’s Operating Account for, the amount of any outstandingWarehousing Advance against a specific Pledged Asset upon the earliestoccurrence of any of the following events:(1) One (1) Business Day elapses from the date a Warehousing Advance was made ifthe Pledged Loan to be funded by that Warehousing Advance has not closed andfunded.(2) Ten (10) Business Days elapse without the return of a Collateral Documentdelivered by Lender to Borrower under a Trust Receipt for correction orcompletion.(3) On the date on which a Pledged Loan is determined to have been originatedbased on untrue, incomplete or inaccurate information or otherwise to be subjectto fraud, whether or not Borrower had knowledge of the misrepresentation,incomplete or inaccurate information or fraud, or on the date on which Borrowerknows, or has reason to know, or receives Notice from Lender, that (A) one ormore of the representations and warranties set forth in Article 9 wereinaccurate or incomplete in any material respect on any date when made or deemedmade or became inaccurate or incomplete after any such date with respect to suchPledged Loan or (B) Borrower has failed to perform or comply with any covenant,term or condition set forth in Article 9 with respect to such P …

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