Accredited Home Lenders Holding (LEND)

LEND » Topics » Accredited Home Lenders Canada, Inc. Master Mortgage Purchase Agreement and Pool 2007-A Warehouse Loan Agreement

This excerpt taken from the LEND 8-K filed Jul 5, 2007.

Accredited Home Lenders Canada, Inc. Master Mortgage Purchase Agreement and Pool 2007-A Warehouse Loan Agreement

On June 28, 2007, Accredited Home Lenders Canada, Inc. (“AHL Canada”), entered into a Master Mortgage Purchase Agreement (the “Purchase Agreement”) with Computershare Trust Company of Canada (“Computershare”), in its capacity as trustee of Accredited Home Lenders Canada Trust III (the “Trust”). Accredited Home Lenders Holding Co. (the “Company”) guaranteed AHL Canada’s obligations under the Purchase Agreement. AHL Canada, Computershare and the Trust entered into a Pool 2007-A Warehouse Loan Agreement (the “Deutsche Bank Warehouse Loan Agreement” and, together with the Purchase Agreement, the “Agreements”) with Deutsche Bank AG, Canada Branch (“Deutsche Bank”). The Agreements set forth the terms for a warehouse finance facility under which Deutsche Bank will finance certain mortgage loans where the underlying security is located in Canada. The maximum amount under the Agreements is $150 million Canadian, of which the entire amount is committed.

Terms for the purchase of the mortgage loans under the Purchase Agreement consist of an advance rate at a specified percentage of the market value of the mortgage loans, and an interest rate of one month CDOR plus an applicable spread. The Purchase Agreement terminates on June 28, 2008.

The Agreements contain certain customary covenants and provisions including, without limitation, covenants relating to the prohibition of fundamental changes to AHL Canada, limitations on incurring additional material indebtedness and limitations on AHL Canada’s ability to encumber property, as well as financial covenants. AHL Canada is required to maintain minimum levels of net worth and to comply with an indebtedness to net worth ratio, and the Company is also obligated to maintain certain minimum levels of net worth and liquidity and to comply with an indebtedness to net worth ratio.

The Agreements provide for specified events of default, some of which provide for grace periods, including but not limited to the failure of AHL Canada or the Trust to make payments due under the Agreements, certain cross defaults involving other related contracts, an act of insolvency occurring with respect to AHL Canada or the Company, certain of the material representations or warranties made by AHL Canada and the Company in the Agreements proving to be incorrect, failure to comply with certain covenants or conditions, including financial covenants, material adverse changes to the business, financial condition or operations of AHL Canada or the Trust or a change in control of AHL Canada.

If an event of default exists under the Agreements, Deutsche Bank has the right to accelerate payments due under the Warehouse Agreement, as well as exercise the other rights and remedies set forth in the Agreements.



The Agreements have been entered into to replace the existing warehouse financing arrangement to fund Canadian mortgage loans with Merrill Lynch Capital Canada, Inc., which is currently set to expire on July 13, 2007.

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