Opinion
Jointly Administered Under: No. 04-00757-W11, Docket No. 1843 [Motion for Order], 1844 [Notice of Motion], 2203 [Declaration of Lyons in Support of Motion], 2204 [Request for Submission of Order].
March 2, 2005
Barry W. Davidson, DAVIDSON MEDEIROS, Spokane, Washington and Charles R. Ekberg, Susan Brye Jahnke, Mary Jo Heston, LANE POWELL PC, Seattle, Washington, Attorneys for Metropolitan Mortgage Securities Co., Inc., Debtor and Debtor-in-Possession.
Doug B. Marks, Ford Elsaesser, Bruce A. Anderson, ELSAESSER JARZABEK ANDERSON MARKS, ELLIOTT McHUGH, Chtd., Sandpoint, Idaho and Jeffrey T. Wegner, John J. Jolley, Jr., KUTAK ROCK LLP, Omaha, Nebraska, Attorneys for Summit Securities, Inc., Debtor and Debtor-in-Possession.
ORDER AUTHORIZING SALE OF CERTAIN MORTGAGE LOANS BY SUMMIT SECURITIES, INC. TO SNGC, LLC, AND APPROVING MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
THIS MATTER having come on regularly for hearing upon the Motion (the ("Motion") of Summit Securities, Inc. ("Summit"), by and through its counsel, for an order authorizing the sale of certain full and partial interests in receivables which are secured by residential real estate, commercial property, or land, commonly referred to as residential mortgage loans, and/or contracts for deed (collectively, the "Mortgage Loans") to SNGC, LLC ("SNGC"), and for approval of the Mortgage Loan Sale Agreement (the "Agreement") between the parties dated as of November 19, 2004, and the Court having reviewed said Motion and the supporting Declaration of Maggie Lyons with the Revised Mortgage Loans Schedule attached thereto, with that Revised Mortgage Loans Schedule deleting ineligible Mortgage Loans, and the Court having determined that good cause exists for the relief requested in the Motion, and the Court being fully advised in the premises; NOW THEREFORE,
IT IS HEREBY ORDERED that Summit is authorized to sell the Mortgage Loans to SNGC as described in the Agreement, and as set forth on the Revised Mortgage Loans Schedule, free and clear of all liens, claims, and interests, with such liens to attach to the proceeds of sale pursuant to 11 USC 363. The sale price shall be equal to the Purchase Price Percentage of seventy-three and one one-hundredths percent (73.01%) multiplied by the unpaid principal balance (UPB) of each Mortgage Loan as of the Cut-Off Date, plus accrued but unpaid interest, plus the Servicing Advances Purchase Price Percentage multiplied by the Servicing Advances Balance.
The sale will generally include all right, title, and interest of Summit in and to (i) the Mortgage Loans set forth in the Revised Mortgage Loans Schedule, including the security interests created by the related Mortgages, (ii) all payments on and collections from such Mortgage Loans that are received after the applicable Cut-Off Date, (iii) all rights and benefits of the mortgagee with respect to any title, flood and fire, hazard and extended coverage insurance policies that insure the related Mortgaged Properties, (iv) the related Loan Documents, including the Custodial Loan Files and Servicing Loan Files, (v) all rights, benefits, and responsibilities related to the servicing of the Mortgage Loans, and (vi) all proceeds in any way derived from any of the foregoing; provided, that Summit will retain all principal (including prepayments) and interest payments, late fees on each such Mortgage Loan received prior to the applicable Cut-Off Date. SNGC's purchase of the Purchased Assets shall be on a "servicing-released basis," such that the servicing rights relating to the Mortgage Loans shall be included in the sale and transfer to SNGC on the Closing Date. All payments received by Summit or its designated servicer for the Mortgage Loans after the Cut-Off Date shall belong to SNGC and shall be sent by Summit's designated servicer to SNGC within five (5) days of the Service Transfer Date. Any payments or proceeds received by Summit after the Closing Date shall be sent to SNGC within five (5) business days of Summit's receipt, from its designated servicer, the monthly remittance and data reports necessary to determine the same.
The Cut-Off Date is the date specified in the related Purchase Commitment/Settlement when SNGC shall be entitled to the payments from the Mortgage Loans, or such other date, to which, Summit and SNGC may mutually agree in writing.
IT IS FURTHER ORDERED that Summit is authorized to enter into the Agreement and to consummate the transactions contemplated therein. SNGC is not assuming or acquiring any of Summit's liabilities related to the Mortgage Loans or liens against the Mortgaged Property that accrue prior to the Cut-Off Date.
IT IS FURTHER ORDERED that SNGC shall be entitled to all payments collected on the Mortgage Loans after the Cut-Off Date. Summit shall retain all right, title, and interest in the payments including, but not limited to, principal, accrued interest, late fees, prepayments, and expenses incurred, and or collected, on or before the Cut-Off Date. The total purchase price for the Mortgage Loans is $178,889.01.
The sale price will be adjusted in accordance with the outstanding principal balance of the Loans as of the day before the Closing Date, as defined in the Agreement.
IT IS FURTHER ORDERED that Summit's representations, warranties, and covenants with respect to each Mortgage Loan shall survive the sale of the Mortgage Loans for a period of ninety (90) days from the Closing Date (the "Warranty Period"). In addition to other remedies of SNGC, Summit will repurchase any Mortgage Loan as to which Summit cannot cure any defect within sixty (60) days. The repurchase price shall be an amount equal to the Purchase Price of such Mortgage Loan, plus the accrued and unpaid interest on such Mortgage Loan through the date immediately preceding the date of repurchase, less any principal or interest payments or Servicing Advances received by SNGC.
IT IS FURTHER ORDERED that twenty percent (20%) of the Purchase Price will be deposited to a segregated, interest bearing trust account escrow at a licensed escrow company during the Warranty Period, in accordance with the terms and conditions of the Escrow Agreement between Summit and SNGC. The escrow funds shall be held for a period of ninety (90) days following the Closing Date of the Agreement, and shall be used during the Warranty Period as a source of payment for re-priced or repurchased Mortgage Loans. At the expiration of the ninety (90) days following the Closing Date, all remaining escrow funds and accrued interest are to be disbursed to Summit without further demand or action of any party.
IT IS FURTHER ORDERED that SNGC is an unrelated third party purchaser, buying in good faith for value. In the event of a reversal or modification on appeal of this Order, SNGC would be entitled to the protection of 11 USC § 363(m) unless the sale were stayed pending appeal.
IT IS FURTHER ORDERED that the sale is not subject to avoidance under 11 USC § 363(n). The purchase price was negotiated through a private sale, following exposure to the marketplace, and was not controlled by any agreement among potential bidders.
IT IS FURTHER ORDERED that SNGC is not assuming or acquiring any of Summit's liabilities related to the Mortgage Loans or liens against the Mortgage Loans. The obligations of Summit hereunder shall not be affected by the confirmation of any plan of reorganization, any discharge received by Summit, any conversion of Summit's bankruptcy to a case under Chapter 7 of the Bankruptcy Code, or the dismissal of the bankruptcy case.
IT IS FURTHER ORDERED that SNGC is solely responsible for any and all broker fees, commissions, finder's fees, or any other compensation by reason of the execution or delivery or performance of the Agreement.
IT IS FURTHER ORDERED that closing shall occur within fifteen (15) days of this Order becoming an executed and docketed final, non-appealable Order.