What an MLPA Lets a Purchaser Do Besides Demand Repurchase

Set off against your money. That is the short answer, and it is the one provision sellers most often discover after it has already happened. A correspondent purchase agreement in current use gives the purchaser discretion to recover losses “offset against Correspondent’s/Brokers funds on deposit at BancMac/UCB or any affiliate of BancMac/UCB and/or from and against future net funding of BancMac/UCB’s loans”. Read that twice. The recovery runs against deposits held anywhere in the purchaser’s corporate family, and against the funding of loans you have not sold yet.

Repurchase gets all the negotiating attention because it is the provision with a number attached. The provisions that let a purchaser collect without ever making a demand get almost none.

Why does this gap exist?

Because the loudest published commentary stops at the same place every time.

Bilzin Sumberg published a seller-side note on residential mortgage loan purchase agreements in April 2026 flagging four problem areas: fraud representations without knowledge qualifiers, early payment default repurchase triggers, deemed materiality provisions, and unlimited survival periods with statute of limitations waivers. The piece is accurate and it is worth reading. It also says plainly that these are “just the tip of the iceberg,” and names the provisions it does not analyse: indemnification, set-off rights, powers of attorney, amendment provisions, cure periods, and termination rights.

That list is the article nobody has written. So here it is.

Where does set-off actually bite?

Not at the demand stage. At the funding stage, which is the point.

A repurchase demand is a claim. You can appeal it, cure it, negotiate it, or refuse it and make the purchaser sue. A set-off right converts the same economics into self-help: the purchaser simply nets its asserted loss out of the next wire. You are now the plaintiff, arguing about money you have already lost the use of, and your leverage has inverted.

Two features decide how bad this is. The first is scope, meaning whether recovery runs only against amounts owed under this agreement or against deposits at affiliates too, as the BancMac form allows. The second is trigger, meaning whether set-off requires a determined loss or merely an asserted one. A seller should be pushing for a set-off that attaches only to liquidated amounts, after notice, with a short cure window before the netting starts.

What about a power of attorney?

Check whether you granted one, because the answer varies by form and neither answer is obvious from the title of the document.

The BancMac correspondent agreement contains no explicit power of attorney granting broad authority to the purchaser, though it does authorise the purchaser “to act on its behalf in processing residential mortgage loans qualifying for sale to the secondary market” as a conditional delegation. A securitization-side mortgage loan purchase agreement between People’s Choice Funding and People’s Choice Home Loan Securities, dated 1 June 2005, contains no power of attorney at all.

So you cannot answer this one from experience with a different form. A power of attorney in a purchase agreement is usually justified as an administrative convenience for endorsements and assignments, and drafted broadly enough to reach a good deal further. If your form has one, the questions are what acts it authorises, whether it is coupled with an interest and therefore irrevocable, and whether it survives termination.

Can the purchaser change the deal without asking?

In the purchase agreement itself, usually not. In the seller guide the purchase agreement incorporates, almost always.

Neither form reviewed here permits unilateral amendment of the agreement. The People’s Choice agreement requires written agreement signed by both parties. The BancMac agreement contains no unilateral amendment provision at all.

That is a narrower comfort than it appears. The operative terms of a correspondent relationship live in the seller guide rather than in the four corners of the purchase agreement, and the guide is the document that moves. We have written separately on what an aggregator can change in a seller guide without your consent. A seller who negotiates the amendment clause in the agreement and ignores the incorporation clause pointing at the guide has protected the wrong document.

How long do you have to fix a breach?

Where a cure period exists it is generous, and it runs from knowledge rather than from the breach.

The People’s Choice agreement gives the seller 90 days “from the date that the Seller was notified or otherwise obtained knowledge of such breach” either to cure in all material respects or to purchase the loan at the Purchase Price. The BancMac correspondent agreement specifies no cure period before repurchase or termination remedies.

The difference is worth pricing. A 90 day knowledge-triggered cure window is a real asset on a curable documentary defect. No cure period at all means the first notice you receive is already a demand.

What happens when the relationship ends?

Termination is easy. Getting free of the obligations is not.

The BancMac agreement lets either party terminate on 90 days’ written notice, with an express carve-out: notice “will not terminate outstanding obligations to process or deliver Loans in progress, or to service Loans closed hereunder, or to pay outstanding fees or expenses due”. Separate grounds allow the purchaser to terminate immediately without notice. The People’s Choice agreement ties termination to the termination of the trust under the trust agreement.

The asymmetry is the standard shape: a symmetrical notice period on the face of it, an immediate termination right for the purchaser underneath it, and survival language that keeps every obligation you owe alive after the relationship you wanted is over. What a seller should be negotiating is not the notice period but the survival tail, and specifically whether the repurchase and indemnity obligations survive indefinitely or for a defined period after termination.

What does the indemnity actually reach?

Everything, in the ordinary form, and it is broader than the repurchase obligation it sits beside.

The BancMac indemnity runs to “any and all claims, demands, actions, suits, damages, costs, and expenses” arising as a result of the correspondent’s failure to perform, breach of warranties, or misrepresentation of certifications. There is a reciprocal indemnity running the other way for the purchaser’s own failure to perform, which is more than many forms offer and worth keeping. The agreement also carries a prevailing-party fee provision entitling the winner of any action to costs and reasonable attorney’s fees.

An indemnity phrased that way is not capped, is not limited to direct damages, and is not conditioned on the loss arising from a significant defect. It sits alongside the repurchase remedy rather than inside it, and it is the mechanism by which a purchaser recovers on a loan it never had the right to put back.

The provisions worth your negotiating capital

Rank them by what they cost you when they fire rather than by how often they are discussed. Set-off first, because it moves money without a proceeding. The indemnity second, because it is uncapped and it survives. The survival tail third. The cure period fourth, and the amendment clause only after you have read what the seller guide incorporation clause actually pulls in.

The economics of the early payoff and early payment default provisions, which is where the repurchase conversation usually starts, sit in EPO premium recapture in correspondent lending.