The obligations of Ditech Financial and RMS under certain of the DIP Facilities and related hedges are
netted and cross-collateralized, pursuant to the terms of a master netting agreement (the Netting Agreement). Pursuant to the Netting Agreement, the DIP Lenders may setoff and net certain margin held by or pledged to them under the DIP
Facilities and related hedges against the obligations owed by Ditech Financial or RMS under certain of the DIP Facilities.
The proceeds of the initial
draw on the Forward Repo Agreement were used to, among other things, pay off Ditech Financials previously existing master repurchase agreement and purchase the mortgage loans previously financed by Ditech Financial thereunder. The advance rate
provided under the Forward Repo Agreement is equal to up to 96% for certain qualifying agency mortgage loans, and the interest rate thereunder is equal to three-month LIBOR plus a per annum margin of 2.25%.
The proceeds of the initial draw on the Reverse Repo Agreement were used to, among other things, pay off RMSs previously existing master repurchase
agreements and purchase the HECMs and related real estate owned previously financed by RMS thereunder. The advance rates provided under the Reverse Repo Agreement generally range from 85%-90%, depending on the
classification of the underlying purchased assets, and the interest rate thereunder is equal to three-month LIBOR plus a per annum margin of 3.25%. The DIP Lenders have also agreed to work towards documenting, within thirty (30) days following
the closing date of the DIP Facilities, a separate master repurchase agreement with RMS in order to fund RMSs Ginnie Mae HMBS tail securities. Such additional repurchase agreement is contemplated to provide for an advance rate of 92% and a
maximum committed sublimit of $80 million. Any amounts drawn under such repurchase agreement would reduce the amount otherwise available to be drawn by RMS under the Reverse Repo Agreement.
The Agency VFN and Private Label VFN have maximum capacity sublimits of $160 million and $90 million, respectively, and were issued under
the existing revolving pool master trust facilities of Ditech Agency Advance Trust and Ditech PLS Advance Trust II, as applicable. The proceeds of the initial draw of the Agency VFN were used to redeem in whole the Series 2018-VF1 variable funding notes previously issued by Ditech Agency Advance Trust, and the proceeds of the initial draw of the Private Label VFN were used to redeem in whole the Series
2018-VF1 variable funding notes previously issued by Ditech PLS Advance Trust II. The interest payable with respect to amounts outstanding under each of the Agency VFN and the Private Label VFN is equal to
three-month LIBOR plus a per annum margin of 2.25%.
The proceeds of the initial draw on the DIP Facilities, in addition to paying off and refinancing the
Debtors previously existing warehouse facilities as described above, were available to pay general working capital and operational expenses of the Debtors, as well as customary fees and expenses in connection with the closing of the DIP
Facilities. The undrawn fee payable with respect to the unused capacity under the DIP Facilities is equal to a per annum rate of 0.75%.
Facilities contain numerous events of default customary for debtor-in-possession financing of its kind as set forth in a Master Refinancing Agreement, dated as of
February 14, 2019 (the Master Refinancing Agreement), by and among the DIP Lenders, the Company, Ditech Financial, RMS and certain other subsidiaries of the Company, including, among other events, (i) the breach of certain
representations, warranties and covenants (including certain financial covenants), (ii) the dismissal of the Chapter 11 Cases, (iii) the conversion of any Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code,
(iv) any stay, reversal or revocation of the Debtors debtor-in-possession financing and cash collateral orders, (v) the termination or other adverse
modification being made to the RSA without the consent of the DIP Lenders, (vi) the occurrence of a change in control