10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

Commission file number    000-25621

E-LOAN, INC.
(Exact name of Registrant as Specified in its Charter)

 

Delaware	77-0460084
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

6230 Stoneridge Mall Road
Pleasanton, California   94588
(Address of Principal Executive Offices including Zip Code)

(925) 847-6200
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $0.001 PAR VALUE
(Title of Class)

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   x    No   ¨

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K.    ¨

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes   x    No   ¨

      Aggregate market value of Common Stock held by non-affiliates based on the closing price of the registrant's Common Stock on the Nasdaq National Stock Market on June 30, 2003: $274,640,398. For purposes of this disclosure, shares of Common Stock held by persons who hold more than 5% of the outstanding shares of Common Stock and shares held by executive officers and directors of the registrant have been excluded in that such persons may be deemed to be affiliates. This determination of affiliates is not necessarily conclusive for this or any other purpose.

DOCUMENTS INCORPORATED BY REFERENCE

      Certain portions of the registrant's Proxy Statement for its Annual Meeting of Stockholders to be held on June 11, 2004 are incorporated by reference hereof.

E-LOAN, INC.

2003 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Part I.		Page
Item 1.	Description of Business	**
Item 2.	Properties	**
Item 3.	Legal Proceedings	**
Item 4.	Submission of Matters to a Vote of Security Holders	**
Part II.
Item 5.	Market for Registrant's Common Stock and Related Stockholder Matters	**
Item 6.	Selected Financial Data	**
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	**
Item 7a.	Quantitative and Qualitative Disclosures About Market Risks	**
Item 8.	Financial Statements and Supplementary Data	**
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	**
Item 9A.	Controls and Procedures	**
Part III.
Item 10.	Directors and Executive Officers	**
Item 11.	Executive Compensation	**
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	**
Item 13.	Certain Relationships and Related Transactions	**
Item 14.	Principal Accounting Fees and Services	**
Part IV.
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	**
Signatures		**

PART I

ITEM 1. DESCRIPTION OF BUSINESS

General Background

E-LOAN, Inc. was incorporated on August 26, 1996 and began marketing its services in June 1997. We are an online provider of loans directly to consumers, offering borrowers a variety of purchase and refinance mortgage loans ("mortgage loans"), home equity loans and home equity lines of credit ("home equity loans") and auto loans to suit their financial needs. Our purpose is to make the entire loan process not only more affordable but actually enjoyable.

We originate loans through our website and by telephone, fund the loans using warehouse and other lines of credit, and then sell the closed loans. A warehouse credit facility is an asset-backed financing vehicle for the interim financing of mortgage and home equity loans. The facility is fully collateralized by the underlying mortgage and home equity loans. A revolving line of credit facility secured by the underlying auto assets is used to fund our auto loans. At the time of funding of a borrower's loan, the credit facility advances 92%-100% of the loan amount (depending on the type of loan), and we self fund the remainder of the loan amount. The amount borrowed under the credit facility remains outstanding until the borrower's loan is sold. Upon the sale of the loan, the funds from the sale are used to repay the advance on the credit facility, any excess funds represent the repayment of our self funded portion of the loan, plus gain on the sale of the loan.

Our principal sources of income are gains from the origination and sale of mortgage, home equity, and auto loans and interest income earned on loans during the period that they are held pending sale. All loans are underwritten pursuant to standards we establish to satisfy the underwriting criteria of the ultimate purchasers of the loans.

Product diversification. We offer a variety of loan products - mortgage, home equity, and auto - in order to satisfy the various lending needs of our customers. Offering multiple products provides us the opportunity to shift resources such as marketing and operations expenses among our products to take advantage of seasonal and cyclical lending opportunities as the mix of business changes in response to interest rate and economic conditions. This product diversification strategy also helps reduce our earnings volatility and provide more stability through a range of economic cycles. When interest rates are low, consumers refinance higher interest rate home and auto loans in order to lower their overall borrowing costs. When interest rates are higher, consumers still have the need to borrow and are concerned about finding the best loan - perhaps a home equity line of credit - to meet their needs for such uses as home improvement or paying for college education.

Low Cost Producer Strategy. Our business model starts with a focus on reducing the expenses required to originate and sell a loan. This low cost position enables us to offer consumers great rates. Highly satisfied customers will help drive overall consumer adoption and thus expand our overall share of the lending market. Increased market share will drive economies of scale that should further help lower our costs to originate and sell loans.

Loan Distribution. Our focus is on transforming the traditional distribution process of loans from the highly efficient capital markets, where loan products are created, all the way to consumers. The traditional distribution process is often inefficient, confusing, costly, and mistrusted by consumers. Our goal is to take advantage of the opportunities provided by the online channel to eliminate existing conflicts of interest, increase the overall efficiency and ease of the loan process, and greatly improve transparency and control in the process for the consumer. We believe this focus will promote trust in our services by consumers and differentiate us from traditional lenders over time.

INDUSTRY BACKGROUND

Shortcomings of the Traditional Consumer Debt Market

Consumers seeking financing for homes, cars or other purchases often encounter obstacles in obtaining rate quotes, unbiased advice, thorough comparisons of loan products and timely credit decisions. Loan sales people often participate in earnings through compensation plans based on their ability to sell consumers a loan product with higher fees and interest rates. As a result, consumers of similar credit quality often receive very different rates based on their ability to negotiate. There are many intermediaries in the distribution process, which creates confusion and time delays for consumers.

Traditional Mortgage and Home Equity Lending. While increased competition in the mortgage industry over the past decade has resulted in tremendous innovation in the mortgage loan choices available to consumers, the level of complexity associated with these loans has also increased. Furthermore, the underwriting and lending processes remain paper-based and time-intensive, and the consumer is provided with scant visibility into these processes. As a result, we believe that the traditional mortgage lending process causes many consumers to feel:

• Uncertain that their single source lenders and brokers are providing unbiased advice and are recommending the most suitable loan products
• Skeptical that rates initially quoted will ultimately be available
• Intimidated by the number and variety of loan products available
• Pressured to commit to a particular product before they have researched and compared products to their satisfaction
• Frustrated with the amount and types of fees they are required to pay
• Overwhelmed by the substantial time and effort that it takes to get a mortgage loan

Many borrowers receive little ongoing assistance in managing their debt after the loan is closed. Many direct lenders who also engage in mortgage servicing are not committed to proactive monitoring of their customers' loans because they risk losing servicing fees if customers refinance with other lenders. Multi-lender brokers have an incentive to pursue refinancing opportunities, but typically lack the technological capability to proactively monitor the market changes of thousands of loan products in real time.

Traditional Auto Financing. With auto financing, consumers (prior to the increase in the popularity of the Internet) had relied largely upon local auto dealerships to provide financing. This is due in part to the difficulty in obtaining loan information from a variety of national lenders for comparison. Traditionally, dealers have bundled financing with the sale of the car, and as a result, dealers can manipulate the terms of the financing package to compensate for any price concessions the buyer may negotiate for the vehicle. The elements of the loan, such as payment, term, and interest rate may not be easily understood and transparent to the buyer. As a result, the loan terms can vary by individual and by which automobile is being purchased, instead of being based solely on the credit quality of the individual.

Market opportunity

The consumer debt market is substantial and highly fragmented among many lenders. The evolution of Internet usage and the lending industry's adoption of electronic solutions to traditionally paper based processes provide a significant growth opportunity within this market.

Consumer Debt Market. According to industry sources, the 2003 U.S. consumer debt market for our focus products totaled approximately $4.6 trillion in originations, which is comprised of approximately $3.8 trillion in mortgage loans (approximately $2.5 trillion of which were refinance transactions), approximately $327.0 billion in home equity loans and approximately $475.0 billion in auto loans. The average mortgage market totaled a significant $2.3 trillion in annual loan originations over the past four years (2000-2003), and 2003 was a record year for mortgage refinance loan activity.

A study conducted by Jupiter Research [October 2002] projects steady growth for online mortgage lending. Online purchase mortgage originations are expected to grow from 0.9 percent in 2001 to 6.7 percent in 2007 of the total U.S. purchase mortgage originations. Jupiter also forecasts that online refinance mortgage originations will grow from 2.5 percent in 2001 to 11.9 percent in 2007 of the total U.S. refinance mortgage originations. In a separate study Jupiter forecasted that internet generated auto loans would exceed 11% of all auto loan originations in 2007.

Loan products are ideally suited for fulfillment over the Internet. These products are often complex, requiring extensive consumer research to find the right product and provider, and they do not require the consumer, provider and product to be in physical proximity. Loans - as opposed to other products marketed online, such as computers - have the potential to evolve into a completely electronic product. The Internet gives consumers informational links and graphical interfaces for comparing competing loan products, as well as transaction capabilities to complete their loan.

PRODUCTS AND SERVICES

The E-LOAN Solution

We make the loan process more affordable by using the technology of the Internet to find the right loan for the consumer, to streamline every aspect of the loan application and approval process, and to pass cost savings on to consumers. We eliminate commissioned intermediaries such as mortgage brokers and auto dealer finance salespeople. We eliminate most traditional lender fees such as administration, commitment, processing, underwriting, and document preparation on a mortgage loan. Our website is designed to offer prospective borrowers easy access to rate quotes, information about loan fulfillment and a variety of interactive tools and services to help them understand their options and make the best choices for their personal situations. At our website, borrowers can:

• Apply for loans online
• Quickly search a database of loan products and compare loans along many characteristics
• Determine their credit score
• Use a calculator to determine the size of the loan for which they may qualify
• Access tools such as debt consolidation calculators and a loan advisor query that helps them pick the loan that best fits their entire portfolio needs
• Receive a credit decision in a very short time
• Obtain a mortgage loan pre-approval letter
• Set up rate watch and monitoring accounts so that they can receive automatic notification of favorable rate changes
• Track their loan applications online through our unique E-Track service that monitors every stage of their loan application in real time

Given the range of consumer loan products and the difficulties consumers face in accessing and evaluating a variety of loan options, we believe we have a substantial opportunity to market loan products online in a convenient, cost-effective way and to build a leading national brand name in consumer lending.

E-LOAN Innovations

We continuously look for ways to break down barriers and eliminate redundant steps to make the loan process significantly faster, easier and far less expensive for both consumers and ourselves. Where technology and automation make sense, we use it. Where a person can make a distinct difference, such as consulting with a customer, our team members provide advice.

Some of the important innovations that we have introduced to date are:

Analytical Loan Recommendations. We provide borrowers with recommendations regarding available loan products through our Loan Advisor tool. We formulate our recommendations by using powerful comparative and analytical tools designed to assist the borrower in determining which of our products is the most suitable for their needs. These recommendations are based on borrower-provided information and criteria.

Ongoing Mortgage Monitoring. We enable customers, at their request, to obtain information in order to make refinance decisions by continuously comparing their existing loan to new or existing products available through E-LOAN. Those with whom we have a previous relationship and/or have opted to receive current mortgage information are notified about opportunities to save money or restructure their payment schedules over the life of their loan. Our monitoring algorithm takes into account the borrower's investment objectives, prospective hold period, risk profile and marginal tax rates. This capability promotes long-term relationships with our customers.

Proprietary Underwriting System. A mortgage and home equity loan application is immediately passed through an automated series of credit filters. If the loan application is credit qualified, it is immediately passed through our proprietary underwriting engine. Within approximately two minutes of customer submission -- and without any human effort or underwriting charges except for the cost of a credit report -- the loan is automatically underwritten and an email response is sent to the customer. At the same time, the output of our underwriting engine is passed on in an easy to read electronic format to a loan consultant for rapid follow up with the customer.

Rapid Contact. A key to providing excellent service in the online lending environment is to quickly respond to customers. This assures consumers that there are knowledgeable people available to assist them through the process. We have created a Rapid Contact technology that integrates across our various systems to enable that crucial timely contact to take place.

E-Track. We have developed a proprietary online tracking system, E-Track, in order to make the loan application process more open and convenient for consumers. We establish an E-Track account for each customer at the time an application is completed online. Each E-Track account is personalized and password-protected. The E-Track system contains important information pertaining to the loan, such as documentation requirements and deadlines. All of this information is updated in real time as the loan application is processed. In addition to the E-Track system, our customer service representatives provide as much personal contact and information as the consumer desires.

Online Documents and Disclosures. The disclosures that are required by various federal and state laws and regulations are accepted in electronic form by a majority of our mortgage, home equity and auto loan customers, eliminating shipping and handling costs and enabling fast and easily navigable access using the customer's E-Track account.

Third Party Electronic Data Exchanges. Much of the information flow in mortgage loan processing involves the interplay of the lender and third party service providers. In both the mortgage and home equity operations, we have automated almost every third party communication for loans including appraisal, title, and flood certification, both for the delivery of orders and the receipt of information. Automating these communications increases our efficiency, reduces our cycle time and eliminates data errors as redundant data entry is eliminated. We have also created a process we call Flash Funding, which we use for a majority of our mortgage loan sales. Using this process, all of the information we have on the loan is sent across a secure electronic bridge to the loan purchaser, where it is automatically loaded into their servicing system, eliminating almost all of the manual effort required by the loan purchaser. A handful of the key customer signed documents are mailed to the loan purchaser, and the remainder of the loan file is immediately sent to storage. We receive the loan purchaser's electronic acknowledgment and payment for the loan in days, not weeks, enabling us to better manage interest rate spreads, hedge costs, and working capital.

Business Development

The following are key areas of focus to further develop our business:

Expanding Capital Markets Development and Consumer Debt Offerings. We believe that one of our greatest competitive advantages is our ability to satisfy customers' specific borrowing requirements by offering a comprehensive selection of consumer debt products available online nationwide. We will continue to seek ways to increase the breadth of our capital market sources in order to expand the number and variety of product choices available to consumers while also improving our pricing flexibility.

Automating the Lending Process Comprehensively. We intend to further streamline and automate our processes in order to eliminate the inefficiencies and unnecessary steps that separate the origination and underwriting processes from the capital markets. By continually incorporating and upgrading automated underwriting techniques and technologies, we believe we will efficiently match borrowers with the loan best tailored to their needs, resulting in faster approval, lower pricing and reduced documentation. We are also positioned to take advantage of the trend to adopt automated property valuation modeling versus traditional appraisals as well as electronic signatures versus the traditional paper based process.

Helping Consumers Monitor and Manage Their Debt. We recognize that consumers can lower their overall cost of capital by managing their loans as a portfolio, much as they manage their assets. We intend to provide tools and services to help our consumers create and manage these debt portfolios through personalized accounts within our online environment. We believe that our role in providing these tools and services will help us form and maintain strong, ongoing relationships with borrowers that will prompt them to use us to fulfill their future borrowing needs.

Our debt management services currently include The Loan Advisor that provides analytical recommendations for the best loan product to suit the borrower's needs and circumstances, and Mortgage Monitor that provides customers with assistance in mortgage loan origination and refinancing decisions through active loan monitoring and rate alerts. We intend to further develop tools that help our customers identify optimal financing opportunities available through E-LOAN for all of their debt types in order to lower their overall cost of capital.

Mortgage and Home Equity Loan Operations

Overview. As a direct-to-consumer lender we originate, underwrite and fund a variety of mortgage and home equity loan products to suit the needs of our borrowers. Originations are funded through our warehouse lines of credit. Our loan originations are predominantly prime credit quality loans secured by single-family residences. All loans are underwritten pursuant to either general or investor specific standards that we establish to satisfy the criteria of the ultimate purchasers of the loans. We engage in hedging activities to minimize interest rate risk during the time between rate-lock with our customer and sale of the loan.

Obtaining a Loan. The loan origination process begins when the customer completes a loan application, typically online through our website or by telephone. Once the application is submitted, our proprietary underwriting system immediately analyzes the borrower's information and renders a credit decision. Next, our Rapid Contact technology allows us to quickly place a call to customers welcoming them to E-LOAN, providing a credit decision, answering questions, verifying information in the application and informing them of what to expect from the process. Customers then receive their required disclosures electronically or in the mail, based on the customer's preference.

An E-Track account is created at the time a loan application is received and keeps the customer abreast of all pertinent information throughout the loan process. Customers are invited to visit their E-Track account frequently to review key steps in the loan process and receive updated information regarding their loan product, closing costs, and interest rate lock. They can also view loan disclosures and the progress of their loan application.

Although the E-Track account is available 24 hours a day, seven days a week, a dedicated loan consultant also maintains telephone and email contact with borrowers throughout the loan process in order to communicate major events and answer questions. One-on-one personal service begins as soon as the online application has been received, and continues until the loan has funded.

At the appropriate time, approved customers are invited to request an interest rate lock for their selected loan. An interest rate lock is an agreement between the borrower and the lender, specifying a number of days for which a loan's interest rate and points will be guaranteed by the lender. Lock requests can be made by phone or online through a customer's E-Track account. Customers are notified via email when their lock request has been confirmed.

As loan documentation is received, data provided by the customer at the time of initial origination is validated. Where needed, appraisals and title documents are ordered and reviewed by the loan consultant, who is supported by a loan processor.

Final loan approval is secured once all critical data elements have been validated and have been confirmed to satisfy the guidelines of the lending program sought by the borrower. If a borrower's loan does not satisfy loan program guidelines, the designated loan consultant will research additional loan programs for the customer. If a product cannot be secured for the customer, the customer will receive a letter stating the reasons that a loan could not be obtained.

After loans have been approved and all relevant conditions have been met, we prepare loan documents to be signed by the borrower. The assigned loan consultant will work with the borrower to schedule the closing of the loan and obtain the necessary signatures for funding. Often a mobile notary service is used to provide an added level of convenience for the borrower. Once the borrower has signed all documentation, the loan file is reviewed to identify any missing requirements. If complete, the loan is then funded and recorded as closed.

A quality control review of funded loans is performed prior to forwarding the loan documentation to the final mortgage loan purchaser or its designated custodian. An accounting audit is also performed to reconcile settlement information provided by escrow/attorney settlement agents with our internal information. Loan documentation relating to closed loans is then shipped to the mortgage loan purchaser or its designated custodian, and documentation is maintained to satisfy regulatory and company record retention requirements.

We also solicit customer feedback regarding the loan process to measure overall customer loyalty and to be utilized in developing future product and service enhancements.

Loan Products. Our broad and competitive product offerings include conforming and jumbo fixed rate mortgages, adjustable rate mortgages, alternate "A" and non-prime mortgage loans, concurrent second mortgages, and home equity loans and lines of credit.

The following table summarizes the mix of our mortgage and home equity closed loan volume by product type along with their median credit score and loan to value ("LTV") ratios for the year ended December 31, 2003:

                                              Median
                                              Credit
                                   % Total     Score     LTV*
                                  ---------  --------- ---------
Mortgage
    Conforming Fixed.............     52.5 %    737       68
    Jumbo Fixed..................      6.0 %    762       67
    Adjustable Rate..............     25.8 %    744       71
    Alternate "A" and Non-Prime..      5.9 %    670       79
    Concurrent Second Mortgages..      9.8 %    741       89
                                   ---------
                                     100.0 %

Home Equity
    Loans........................     25.0 %    710       92
    Lines of Credit..............     75.0 %    729       76
                                   ---------
                                     100.0 %

* The LTV ratio on home equity and second mortgage products includes the value of the existing first mortgage (if applicable) and therefore represents the cumulative loan to value ratio (CLTV).

Conforming Fixed Rate Loans. These mortgage loans conform to the underwriting standards established by Federal National Mortgage Association ("Fannie Mae") or the Federal Home Loan Mortgage Corporation ("Freddie Mac"). This product is limited to high-quality borrowers with good credit records and involves adequate down payments or mortgage insurance.

Jumbo Fixed Rate Loans. Jumbo loans are considered non-conforming mortgage loans because they have a principal loan amount in excess of the loan limits set by Fannie Mae and Freddie Mac (currently $333,700 for single-family, one-to-four-unit mortgage loans in the continental United States).

Adjustable Rate Mortgages (ARM). The ARM's defining feature is a variable interest rate that fluctuates over the life of the loan, usually 30 years. Interest rate fluctuations are based on an index that is related to Treasury bill rates, regional or national average cost of funds, or another widely published rate, such as the London InterBank Offered Rate ("LIBOR"). The period between the rate changes is called an adjustment period and may change every six months or once a year. The majority of the ARMs we originate include an initial fixed rate period of three to ten years, otherwise known as hybrid ARMs. The ARMs we originate include rate and payment caps, which limit the interest rate increase and payment amount for each adjustment period.

Alternate "A" and Non-Prime Mortgage Loans. From a credit risk standpoint, alternate "A" loan borrowers present a risk profile comparable to that of conforming loan borrowers, but entail special underwriting considerations, such as a higher loan to value ratio or limited income verification. The non-prime mortgage loan focuses on customers whose borrowing needs are not served by traditional financial institutions. Borrowers of non- prime mortgage loans may have impaired or limited credit profiles, high levels of debt service to income, or other factors that disqualify them from conforming loans. The risk of originating mortgage loans to borrowers with higher credit risk is generally offset with higher interest rates than would be charged for a conventional loan. Offering this category of mortgage loans on a limited basis allows us to provide loan products to borrowers with a variety of credit profiles.

Concurrent Second Mortgage Loans. These loans take place concurrent to a first mortgage loan origination and are secured by a second lien on the related property.

Home Equity Loans and Lines of Credit. These loans are usually secured by second liens on the related property. Our home equity line of credit products bear an adjustable interest rate and generally provide for a 5, 10 or 15-year draw period where the borrower withdraws needed cash and pays interest only, followed by a balloon payment of the outstanding balance of principal and interest. Our closed-end home equity loans are fixed rate loans that typically amortize over 15 to 30 years with a balloon payment due after 10 or 15 years.

Loan Underwriting. Our guidelines for underwriting conventional conforming loans comply with the underwriting criteria employed by Fannie Mae and/or Freddie Mac. Our underwriting guidelines and property standards for all other non-conforming loans are based on either general or investor specific guidelines that we establish to satisfy the criteria of the ultimate purchasers of the loans. We consider the following general underwriting criteria in determining whether to approve a loan application:

• Employment and income
• Credit history
• Property value and characteristics
• Available assets

Underwriting of Non-Conforming Loans. In some cases we develop a set of general underwriting guidelines (non-investor specific) for non-conforming loans that we believe are acceptable to a broad range of capital market investors. These guidelines go through a process in which multiple investors review and approve them prior to their adoption. While this process provides comfort that the guidelines will produce salable loans, it does not constitute a firm commitment on behalf of the investors to purchase loans that meet the criteria. Investors provide firm purchase commitments when we agree to sell them a specific group of loans at a specified price. The use of general guidelines provides for better internal operating efficiencies as compared to underwriting to a complex matrix of investor specific guidelines. The two main determinants for adopting general underwriting guidelines are the availability of multiple purchasers in the capital markets for the loan type (liquidity) and underlying risk profile of the loan type (credit quality and complexity of loans). We currently underwrite most of the following loan types using general guidelines: prime jumbo fixed rate mortgages, prime hybrid ARMs, and prime home equity loans and lines of credit. We use investor specific underwriting guidelines for the following loan types: some ARM mortgages, alternate "A" mortgages, non-prime mortgages, high loan to value loans, and any other loan type that involves complex terms and/or lower credit quality.

Typically, we sell our loans on a servicing released basis without recourse. By doing so, we reduce our risk of loss or default by the borrower, except that we may be required to repurchase the loan in the event of an early payment default. Although loans are sold without recourse, we may be required to repurchase the loan if we breach the representations or warranties that we make in connection with the sale of the loan, or if the loan does not comply with the underwriting standards or other requirements of the ultimate loan purchaser. Our loan sale agreements contain standard representations and warranties for such transactions, including, representations and warranties regarding compliance with applicable laws, ownership of the loans, enforceability of the loans, collateral condition, priority of liens, insurance, title insurance, timeliness of payments, and compliance with buyer's underwriting guidelines.

Automated Underwriting. Automated underwriting (AU) contributes significantly to our goal of increasing the efficiency of multi-source lending by providing customers with faster, more cost-efficient credit reviews and decisions. In addition, we believe customers also value the less onerous and time-consuming nature of AU relative to more traditional underwriting processes.

We have created our own proprietary underwriting engine that enables us to instantly underwrite loans at time of application at minimal cost. We are also approved as an originator under Fannie Mae's Desktop Originator and Desktop Underwriter system (DU), and Freddie Mac's Loan Prospector system (LP). These systems help automate the lending process for all conforming loans.

We will continue to seek to enhance our AU capabilities and incorporate as many techniques and technologies as are warranted by our business needs and the needs of our major business partners.

Automated Appraisal. The use of automated property valuation models (AVMs) to replace the traditional physical appraisal process is starting to gain acceptance by our capital market sources. This trend is particularly evident with our home equity products where approximately 62% of loans originated were funded using AVMs versus physical appraisals. Our customers benefit through reduced costs (the cost of a typical conforming first mortgage loan appraisal normally exceeds $300) and time savings. Freddie Mac and Fannie Mae are both considering purchasing no-appraisal loan products that use AVMs. Certain jumbo loan purchasers already accept no appraisal products that use AVMs. Broad capital markets acceptance of AVMs is necessary for a truly electronic loan offering.

Interest Rate Hedging. We attempt to minimize the interest rate risk associated with the time lag between when fixed rate mortgage loans are rate-locked with the customer and when they are committed for sale or exchanged in the secondary market, through our hedging activities. Individual mortgage loan risks are aggregated by loan type and stage in the pipeline, and are then matched, based on duration, with the appropriate hedging instrument, thus mitigating basis risk until closing and delivery. We believe that we have implemented a cost-effective hedging program to provide a level of protection against changes in the market value of rate-lock commitments. However, an effective strategy is complex and no hedging strategy can completely insulate against such changes.

Warehouse Credit Facilities. We use warehouse credit facilities to fund our loans prior to their sale to capital market loan purchasers, which typically occurs within 30 days. We currently draw on warehouse credit facilities established with Greenwich Capital Financial Products, Inc., GMAC Mortgage Corporation, and Merrill Lynch Mortgage Capital, Inc. We have committed and uncommitted funds available through these facilities aggregating approximately $675 million as of March 12, 2004. The interest rate charged on these borrowings range from LIBOR plus 0.75% to 2.0%. The net of this expense and the corresponding interest income that we earn during the time loans are held for sale currently produces a positive interest spread.

Our agreements with our warehouse lenders require us to comply with various operating and financial covenants. Principally these covenants restrict our ability to:

• Sell any of our material assets or merge or consolidate with another company
• Issue additional shares of common stock
• Pay dividends on our outstanding shares of common stock
• Amend our Certificate of Incorporation or Bylaws

These covenants also require us to:

• Maintain minimum cash and cash equivalents, and tangible net worth
• Limit the amount of debt we incur relative to our net worth
• Ensure that our current assets are equal to or greater than our current liabilities
• Maintain two warehouse facilities at all times with minimum credit limits

Auto Operations

Overview. We are an online provider of auto loans for the purchase of new and used vehicles. We also offer auto refinance loans to customers with vehicles subject to an existing automobile installment loan. The mix of our auto loan originations in 2003 were 84% used versus new car, 50% purchase financing versus refinance related, and 87% prime versus sub-prime credit quality loans. We fund auto loans using a line of credit and then sell them to earn a gain on sale. Prime auto loans are sold to a qualified special purpose entity (QSPE) as more fully described below. In the third quarter of 2003, we stopped processing and funding sub-prime auto loans, and instead shifted this portion of our business to a referral based system in order to focus our resources on prime loans, which we believe are better suited to online fulfillment. Loan applications that do not meet our prime auto lending criteria are forwarded to sub-prime lenders in exchange for a fee.

Obtaining a Loan. The process of obtaining a car loan involves fewer steps than a mortgage or home equity loan. The process begins when a customer searches for a rate, then completes a short, online application on our website. In most cases, the application goes through an automated underwriting process that takes only minutes to complete. In other cases, applications requiring greater review are underwritten by E-LOAN underwriters.

If approved, a customer receives an email notification generally within minutes after submitting the application. Once approved, the customer is sent a PowerCheck^SM via regular mail or overnight delivery. A PowerCheck^SM works just like a personal check, and indicates the maximum amount the customer is approved for. The customer then takes the PowerCheck^SM to any licensed auto dealer and negotiates the purchase price for a vehicle of their choice, with a similar bargaining position that a cash purchaser brings to a dealer.

When the customer selects a vehicle, and the purchase price is finalized, the customer signs the PowerCheck^SM and presents it to the dealer as payment. The dealer is required to verify the customer's identity and obtain and forward any other supporting documents required to support the loan approval. In addition, the dealer ensures that the title is filed properly, with E-LOAN listed as the lien holder. The dealer then deposits the signed PowerCheck^SM as payment for the vehicle. After the dealer is funded, we deliver a copy of the final loan contract to the customer.

For auto refinance loans, the customer completes the necessary paperwork and we pay off the existing lender.

Loan Underwriting. Our underwriting guidelines for auto loans generally consider the borrower's credit history, employment and income status. Our specific guidelines for prime auto loans were established with and approved by Merrill Lynch Bank USA ("Merrill Lynch") and are limited to high credit quality borrowers. Our expected credit risk (risk of loss) on prime auto loans is factored into our calculation of gain on sale.

Interest Rate Risk. Approved auto loan applicants are provided a guaranteed rate for up to a 45-day period. To mitigate the potential interest rate risk, we enter into amortizing swap auto loan contracts in an amount equal to the total approvals outstanding which are estimated to fund.

Line of Credit Facilities. We use a line of credit facility established with Merrill Lynch Mortgage Capital, Inc. to fund our loans prior to their sale to auto loan purchasers, which typically occurs within 10 days. We have $10 million in committed funds available through this facility that expires on July 13, 2004. The interest rate charged on this line is based on LIBOR plus various percentage points. This agreement also requires us to comply with various operating and financial covenants.

Loan Sales to QSPE. In June 2002, we created a qualified special purpose entity, E-Loan Auto Fund One, LLC ("E-Loan Auto"), which purchases prime auto loans from us and then holds the loans. Revenues from these sales consist of the discounted cash flows net of interest, servicing fees and credit losses. Revenues on prime auto loan sales are recognized when the loan is sold to the QSPE. The QSPE borrows money under a $800 million credit facility it has established with Merrill Lynch Bank USA for this purpose.

TECHNOLOGY

Our technology systems use a combination of our own proprietary and open source technologies, and commercially available licensed technologies from industry leading providers, including Sun Microsystems, Cisco Systems and Oracle. Our systems were designed around industry standard architecture to reduce downtime in the event of outages or catastrophic occurrences. These systems provide availability 24 hours a day, seven days a week, and have capacity for peak activity levels without requiring additional hardware or support.

User Interface. Our website is designed for fast downloads and compatibility with most basic browsers. Pages are built with minimal graphics and do not require client-side plug-ins or Java to view.

Loan Application and Tracking. When a customer applies for a loan online, the application data is stored in a database server. As additional information, including credit reports, appraisal details and financial documentation, is obtained throughout the loan process and added to the borrower's file, e-mails are automatically sent to the borrower (and realtor, if authorized and applicable) to inform them of the current status of the loan application. At the same time, the borrower's E-Track account is updated.

Security. In order to safeguard borrowers' sensitive financial data, our systems provide secure online transaction capability. Customer information sent via the website is encrypted using a Secure Socket Layer ("SSL"). The network is protected with reliable firewall software. E-Track is password-protected so that only the borrower and authorized E-Loan employees may access the account. The servers containing borrower data are accessible only to authorized users within E-LOAN.

Server Hosting and Back-Up. Our website system hardware is hosted offsite at a web hosting company's facility that provides redundant communication lines and multiple emergency power back-up resources. Scheduled maintenance can take place without taking the website offline. A backup web hosting data center is being constructed in the Company's Pleasanton facility and will be completed in 2004. When complete, this facility will have all equipment, software and data communications in place to continue E-LOAN business operations indefinitely in the event of a catastrophic business interruption of the primary facility.

CUSTOMERS

We are a direct-to-consumer lender. Our underwriting guidelines generally look at three areas to assess loan risk:

• Credit reputation: credit score and history
• Collateral: loan amount relative to the home or auto value
• Capacity to pay: income, debt, cash reserves

A credit score summarizes credit reputation. Credit scores generally range from the mid 300s to the mid 800s, with scores above 700 representing good to excellent credit. The median credit score for our mortgage, home equity, and auto loans in 2003 were 739, 723 and 721, respectively. Capital market loan purchasers look favorably upon loans with loan to value ratios ("LTV"s) below 80% and often pay a premium for those loans. The LTV of our mortgage and home equity loans in 2003 were 71% and 80% (ratio includes loan value of first mortgage), respectively.

Approximately 63% and 46% of all mortgage loans sold during the years ended December 31, 2002 and 2003, respectively, were sold to one mortgage loan purchaser, Wells Fargo Home Mortgage, Inc. Approximately 40% of all auto loans sold during the year ended December 31, 2002 were sold to one auto loan purchaser, Americredit Financial Services, Inc. Approximately 86% of all auto loans sold during the year ended December 31, 2003 were sold to one auto loan purchaser, E-Loan Auto Fund One, LLC. Approximately 75% and 45% of all home equity loans in 2002 and 2003 were sold to one purchaser, Wells Fargo Bank, N.A.

GEOGRAPHIC INFORMATION

All of our revenue is generated from transactions originating in the United States. All of our fixed assets are located in the United States, principally at our headquarters in Pleasanton, California.

SEASONALITY

The mortgage banking industry is generally subject to seasonal trends. These seasonal trends reflect patterns in the national housing market. Home sales typically rise during the spring and summer seasons and decline during the fall and winter seasons. The effect of this seasonality is muted to the extent of mortgage refinancing activity, which is primarily driven by prevailing mortgage rates. In addition, mortgage delinquency rates typically rise temporarily in the winter months driven by mortgagor payment patterns.

MARKETING

Our brand and direct response marketing strategy is to attract home and auto loan applicants to our website by promoting the E-LOAN brand as a byword for trust, choice, open and honest competitive pricing and service for consumer loans. We rely on a variety of methods to promote our brand. By providing superior customer service, we promote referrals from satisfied borrowers and repeat business. Offline marketing focuses primarily on national television advertising and direct mail campaigns that target the demographic and geographic segments with the highest propensity to utilize an online loan provider. Online marketing efforts are centered on marketing agreements with leading online companies and select use of banner advertising. We also intend to take advantage of both short and long term cross-selling opportunities across our product lines.

Mortgage and Home Equity Loan Marketing. The majority of our mortgage and home equity applications are derived from our national television ads and direct mail campaigns. Our online marketing agreements with online websites such as Bankrate.com and Homestore drive applications through a hyperlink or banner advertisement on their website which leads the loan applicant to our website. We also have a marketing agreement with zipRealty, a technology based real estate company, pursuant to which zipRealty's website advertises exclusively our mortgage services and rates to visitors of the website. In addition, we engage in marketing activities at realtor and relocation trade shows and other events in the real estate industry in order to encourage realtors and relocation consultants to promote our website to homebuyers. A minority of our mortgage and home equity applications are derived from our online marketing agreements.

Auto Loan Online Marketing. Through marketing agreements with leading automotive websites and portals, such as Microsoft CarPoint, Autobytel.com, and Bankrate.com, E-LOAN derives auto applications through many integrated auto loan centers, text links, and banner ads resulting in auto loans. The majority of our auto applications are derived from online marketing agreements.

COMPETITION

Primary Competition

We compete in three principal markets: mortgage loans, home equity loans and auto loans. Our primary sources of competition in each of these markets are traditional offline lenders and to a lesser extent online providers of consumer loans. The largest competitors by market are: mortgage brokers for mortgage loans, the consumer's bank for home equity loans, and auto dealers for auto loans.

Mortgage Loan Competition. Our largest competition for mortgage loans is mortgage brokers. The mortgage brokerage industry is very fragmented with a large number of brokers, none of which have a significant portion of the market for mortgage loans. Mortgage brokers continue to originate the majority of all mortgage loans. They originate these loans mostly for large, national mortgage wholesale lenders. The popularity of using brokers is indicative of consumers' desire to obtain a competitive price from among multiple lenders. Brokers are middlemen in the transaction and as a result they cannot completely control the fulfillment process, and overall customer experience, in contrast to a direct-to-consumer lender. The brokers' key competitive advantage is their existing relationships with real estate agents who refer purchase mortgage customers to them.

We fund most of our loans through the use of our warehouse lines of credit. Unlike a mortgage broker, as a direct-to-consumer lender we control all parts of the loan transaction process from application to funding of the loan. This offers the consumer the confidence that they are dealing with the ultimate decision maker on their loan, which allows for rapid credit decisions and streamlined processes. We believe real estate agents will gain confidence in our solution over time and want their customers to realize the benefits provided by our products and service. We also compete with the retail or direct-to-consumer divisions of the large, national mortgage lenders such as Wells Fargo Mortgage, Chase Manhattan Mortgage, Washington Mutual and Countrywide Financial Corporation. These institutions are involved at several levels of the mortgage lending industry. They loan directly to consumers in the retail market, utilize mortgage brokers to originate loans in the wholesale market and purchase funded loans from direct lenders including us, in the correspondent or conduit market. We believe we have a competitive advantage over these institutions in the retail market because we are able to offer our customers competitive rates and products from a selection of capital market sources while these institutions generally offer only their own rates and products. These institutions have the competitive advantage of having greater financial and marketing resources than we do. We do not believe the ability of these institutional lenders to make wholesale purchases of loans from their consumer divisions provides them any particular advantage, since the wholesale market for the purchase of loans consists of multiple competitive purchasers.

Home Equity Loan Competition. There is an under-developed competitive market for home equity loans as compared to mortgage loans. Because of this, consumers tend to apply for home equity loans with their primary bank because of its familiarity. The principal competitors in this market are Wachovia Corporation, Bank of America, Bank One Corporation and Wells Fargo Bank. Our advantage is that we are often able to offer a more streamlined loan process. However, our competitors have the advantage of having an existing relationship with the customer and substantially greater financial and marketing resources than we do.

Auto Loan Competition. Our largest competition for auto loans is the auto dealership's finance salesperson through their lending sources. These lending sources include large financial institutions such as Chase Manhattan and Bank of America as well as the automobile manufacturer's finance companies including Ford Motor Credit and GMAC. These institutions have strong, existing relationships with the automobile dealers as well as greater financial and marketing resources. Our advantage is that by separating the auto financing from the purchasing transactions, we allow borrowers to establish the credit terms in a competitive environment before they negotiate the purchase of the vehicle. In this manner, our borrowers avoid the risk of bundling the purchase price of the automobile and the price of financing.

Online Competition

Online Direct Lender Competition. Traditional single source lenders such as Washington Mutual, Countrywide Home Loans, Citibank and Bank of America have created websites which offer mortgage and home equity loans directly online as an alternative to the traditional process. The advantage of these lenders is that they have national reputations, substantial resources and extensive marketing greater than ours. These lenders, however, normally do not offer the consumer a selection of loan products from multiple capital market sources, and as a result may not provide the most competitive offers to the consumer.

The online lenders with the most comparative business models and product offerings are Quicken Loans, E*Trade Mortgage Corporation, and Ditech.com for mortgage and home equity loans, and Capital One Auto Finance for auto loans. We compete with all of these online lenders on the basis of products, price and customer service. Quicken Loans was created through the purchase of Rock Financial by Intuit in December 1999. Intuit sold the company back to the founders of Rock Financial in 2002. Quicken Loans is a provider of direct-to-consumer home loans, offering mortgages in all 50 states on the internet through Quickenloans.com and in Michigan through Rock Financial. We believe that Quicken Loans still enjoys a competitive marketing advantage over us in its access to the vast Intuit customer base. E*Trade Mortgage Corporation is also a direct-to-consumer lender of various mortgage products. E*Trade Mortgage Corporation was formed in February 2001 when LoansDirect merged with E*TRADE Group, Inc. E*Trade Mortgage Corporation also has a marketing competitive advantage over us based on its ability to cross sell to its brokerage and banking customers. Ditech.com is a division of GMAC Mortgage Corporation and as such it enjoys a competitive advantage over us in its substantially greater financial and marketing resources. Capital One Auto Finance is an online direct auto loan provider and enjoys a competitive marketing advantage over us in its access to Capital One's approximately 47 million customers. According to the Q2 2003 Internet Scorecard for Mortgages produced by Gomez Research, a research group that provides objective, customer- focused research scorecards on various online financial services categories, including, ease of use, customer confidence, on-site resources, and relationship services, we ranked third overall out of the fifteen lenders evaluated. Our closest online competitors ranked as follows: E*Trade Mortgage Corporation (fourth) and Quicken Loans (sixth). We know of no similar research available for online home equity or auto loans.

Loan Marketplace Websites. We compete with a number of consumer loan websites that act similarly to traditional loan brokers, offering multi-lender distribution channels for banks and other financing sources. The most significant competitors in this area are LendingTree and GetSmart, a unit of Lending Tree. These websites are marketplaces that operate on an advertising model but do not actually make loans; they simply provide a conduit between borrower and lender. They do not offer complete transaction fulfillment for customers, and therefore, add additional steps and fees to the lending process. We believe we have a competitive advantage in being a direct lender because our control over the fulfillment process allows us to remove the redundant or unnecessary steps and related costs involved in getting a loan, and to pass savings onto the consumer. In addition, our capital markets access to multiple loan purchasers further enables us to provide consumers with highly competitive rates.

LICENSING AND REGULATION OF MORTGAGE AND AUTO LOAN BUSINESS

We are licensed as a mortgage banker and/or mortgage broker, or are otherwise authorized to originate mortgage loans in all states and the District of Columbia. We have obtained necessary licenses in every state that requires such licensing for our online operations and originate auto loans in most, but not all, states. In a few states where licensing is not available for our particular online lending operations, we limit our product offerings to comply with state law.

The mortgage and auto loan businesses are highly regulated. In order to offer our mortgage and auto loan services, we must comply with federal and state laws and regulations relating to licensing, advertising, loan disclosures and servicing, rate and fee limits, use of credit reports, notification of action taken on loan applications, privacy, discrimination, unfair and deceptive business practices, payment or receipt of kickbacks, referral fees or unearned fees in connection with the provision of real estate settlement services, and other requirements.

Current laws, and those enacted or interpreted to deal with Internet transactions and other aspects of our business, may be revised or interpreted in ways that adversely affect our business. We believe we are in substantial compliance with the laws applicable to our business, and have taken prudent steps to mitigate risks associated with offering loan services through the Internet.

CUSTOMER PRIVACY

We believe that the privacy of customer information is important to uphold both online and offline. We disclose our information handling practices in a detailed privacy policy, which is prominently accessed from every page of our website. Our policy is based on fair information practices and privacy law.

The Gramm-Leach-Bliley Act ("GLBA"), among other things:

• Restricts financial institutions from disclosing nonpublic personal information about a consumer, subject to certain exceptions;
• Requires financial institutions to disclose its privacy policies and practices with respect to information sharing;
• Does not preempt any state law that provides greater protection than provided for in the GLBA; and
• Requires that financial institutions provide a means for consumers to opt out of information sharing with third parties, subject to certain exceptions.

We believe consumers should have more control over the sharing of their personal financial information. Therefore, we provide more privacy protections than federal law currently requires and have worked with consumer groups to create stronger California privacy legislation.

EMPLOYEES

As of December 31, 2003, we employed 832 full-time employees (including temporary and contract employees), of whom 351 were in mortgage loan operations, 247 were in home equity loan operations, 90 were in auto loan operations, 60 were in administration, 28 were in marketing and business development, and 56 were in engineering. None of our employees are represented by a labor union or are the subject of a collective bargaining agreement.

E-LOAN ON THE INTERNET

Topics featured in this 10-K can be found via our home page on the Internet (www.eloan.com). Financial results, news on E-LOAN products, services and other activities can also be found via that address. We file reports with the Securities and Exchange Commission ("SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any other filings required by the SEC.

E-LOAN's website (www.eloan.com) contains a significant amount of information about E-LOAN, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. These materials are available free of charge on or through our website via the Investor & Media Relations page at www.eloan.com. References to the Company's website address in this report are intended to be inactive textual references only, and none of the information contained on our website is part of this report or incorporated in this report by reference.

The public may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

ITEM 2. PROPERTIES

E-LOAN is headquartered in Pleasanton, California, where it leases approximately 118,000 square feet of space primarily in a single building where its mortgage, home equity loan and auto operations take place. The lease for E-LOAN's office space in Pleasanton expires in June 2010.

ITEM 3. LEGAL PROCEEDINGS

The Company has been named as a defendant in five related lawsuits filed in the Federal District Court for the Southern District of New York between August 10, 2001 and September 25, 2001. The lawsuits purport to be class actions filed on behalf of the plaintiffs and others similarly situated. They name as defendants E-LOAN, Christian Larsen, Janina Pawlowski, Frank Siskowski, The Goldman Sachs Group, Inc., FleetBoston Robertson Stephens, Inc., Merrill Lynch Pierce Fenner & Smith, Inc., Credit Suisse First Boston Corp. and J.P. Morgan Chase & Co., some of which were involved in the Company's initial public offering. The complaints have since been consolidated into a single action. The Consolidated Amended Complaint alleges, among other things, that the underwriters of the Company's initial public offering violated Section 12(a) of the Securities Act of 1933 by receiving excessive and undisclosed commissions and fees, and by entering into unlawful private agreements with brokers' customers, and that all defendants violated Section 11 of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 under the Securities Exchange Act of 1934 by making material false and misleading statements in the Company's initial public offering prospectus concerning brokers' commissions and private agreements with brokers' customers. The plaintiffs seek to recover damages on behalf of all those who purchased or otherwise acquired E-LOAN securities during the respective class period. Similar complaints have been filed against over 300 other issuers that have had initial public offerings since 1998 and all such actions have been included in a single coordinated proceeding.  On October 9, 2002, the Company's individual defendants were dismissed, without prejudice, from the lawsuit, pursuant to a stipulated agreement with the plaintiffs.

On June 25, 2003, a committee of the Company's Board of Directors conditionally approved a proposed partial settlement with the plaintiffs in this matter. The settlement would provide, among other things, a release of the Company and of the individual defendants for the conduct alleged in the action to be wrongful in the Amended Complaint. The Company would agree to undertake other responsibilities under the partial settlement, including agreeing to assign away, not assert, or release certain potential claims the Company may have against its underwriters. Any direct financial impact of the proposed settlement is expected to be borne by the Company's insurers. The committee agreed to approve the settlement subject to a number of conditions, including the participation of a substantial number of other Issuer Defendants in the proposed settlement, the consent of the Company's insurers to the settlement, and the completion of acceptable final settlement documentation. Furthermore, the settlement is subject to a hearing on fairness and approval by the Court overseeing the IPO Litigation.  Due to the inherent uncertainties of litigation, and because the settlement has not yet been approved by the Court, the ultimate outcome of the matter cannot be predicted.

The Company is subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material adverse effect on the Company's results of operations, financial position or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of 2003.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

E-LOAN's (the "Company") common stock has been quoted on the Nasdaq National Market under the symbol "EELN" since its initial public offering on June 28, 1999. Prior to this time, there was no public market for the Company's common stock. The following table shows the high and low sale prices per share of the Company's common stock as reported on the Nasdaq National Market for the periods indicated:

	High	Low
Fiscal 2002:      First Quarter      Second Quarter      Third Quarter      Fourth Quarter Fiscal 2003:      First Quarter      Second Quarter      Third Quarter      Fourth Quarter	$ 2.25 2.00 1.81 2.13       2.75 6.81 6.95 4.42	$ 1.11 1.03 0.95 1.17       1.88 2.55 3.18 2.55

On March 5, 2004, the last reported sale price of the Company's common stock on the Nasdaq National Market was $3.08 per share. The Company had approximately 257 holders of record of our common stock on that date.

The Company has never declared or paid any cash dividends on its capital stock. The Company currently expects to retain future earnings, if any, for use in the operation and expansion of its business and does not anticipate paying any cash dividends in the foreseeable future. The covenants under the Company's warehouse lines of credit prohibit the Company from paying cash dividends without the consent of Greenwich Capital Financial Products, Inc. or if in so doing, it caused the Company to breach its tangible net worth covenant with GMAC Mortgage Corporation. The covenants under the Merrill Lynch Capital Inc. warehouse line prevent the payment of dividends in excess of 50% of the net income for the calendar year.

The Company's equity plan information required by this item is incorporated by reference from the information under the heading "Equity Compensation Plan Information" in the Company's Proxy Statement for its Annual Meeting of Stockholders to be held on June 11, 2004.

ITEM 6. SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA

(Dollars in thousands, except per share data)

The selected financial data below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and is qualified by reference to the Financial Statements and Notes thereto appearing elsewhere in this document. The balance sheet data as of December 31, 2002 and 2003 and the income statement data for each of the three years in the period ended December 31, 2003 are derived from, and are qualified by reference to, the audited financial statements of the Company included elsewhere in this document.

                                                             Years Ended December 31,
                                              -----------------------------------------------------
                                                1999       2000       2001       2002       2003
                                              ---------  ---------  ---------  ---------  ---------
INCOME STATEMENT DATA:
Revenues.................................... $  22,097  $  35,879  $  67,950  $ 103,288  $ 153,008

Operating expenses:
   Operations...............................    22,779     31,747     42,946     53,854     72,882
   Sales and marketing......................    30,286     28,506     16,785     25,365     41,368
   Technology...............................     3,595      6,207      6,325      5,625      7,651
   General and administrative...............     6,859      6,840      5,784      6,936      8,509
   Non-cash marketing costs.................        --      6,490      5,970         --         --
   Amortization of unearned
   compensation.............................    23,116      9,392      5,164         --         --
   Amortization of goodwill and
   intangible assets .......................    11,589     39,733     28,144         --         --
                                              ---------  ---------  ---------  ---------  ---------
     Total operating expenses...............    98,224    128,915    111,118     91,780    130,410
                                              ---------  ---------  ---------  ---------  ---------
       Income (loss) from operations........   (76,127)   (93,036)   (43,168)    11,508     22,598
Other income, net...........................     3,152      1,276      3,638        107      1,184
                                              ---------  ---------  ---------  ---------  ---------
Income (loss) before taxes..................   (72,975)   (91,760)   (39,530)    11,615     23,782
Income taxes................................        --         --         --       (964)    (1,148)
                                              ---------  ---------  ---------  ---------  ---------
Net income (loss)........................... $ (72,975) $ (91,760) $ (39,530) $  10,651  $  22,634
                                              =========  =========  =========  =========  =========
     Net income (loss) per share:
       Basic................................ $   (2.75) $   (1.91) $   (0.73) $    0.18  $    0.37
                                              =========  =========  =========  =========  =========
       Diluted.............................. $   (2.75) $   (1.91) $   (0.73) $    0.18  $    0.34
                                              =========  =========  =========  =========  =========

BALANCE SHEET DATA (AT
   END OF PERIOD):
Cash and cash equivalents................... $  37,748  $  28,459  $  32,538  $  36,321  $  33,973
Loans held-for-sale.........................    35,140     22,745    162,246    393,386     50,874
Retained interests in auto loans - trading..        --         --         --      3,969     11,658
Goodwill and intangible assets..............    67,878     28,144         --         --         --
Total assets................................   152,967     99,743    210,626    452,036    136,276
Warehouse and other lines payable...........    33,115     17,678    158,148    383,647     44,283
Long term obligations.......................     2,525      1,088      5,000         --         --
Total stockholders' equity..................   103,007     67,486     39,768     56,040     81,627

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this document. This discussion contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below, as well as those discussed below under Factors Affecting Future Operating Results. The Company disclaims any obligation to update information contained in any forward-looking statement.

OVERVIEW

The Company is an online consumer direct lender, specializing in mortgage, home equity and auto loans. As a retail lender, the Company is heavily impacted by economic conditions (such as interest rates) and seasonal/cyclical factors. To help mitigate this, the Company has focused on its diversified revenue products, which consist of purchase and non-prime mortgage loans, home equity loans and lines of credit, and auto loans. Additionally, the Company strives to be a low-cost provider with a vision of driving overall prices lower, which creates marketing efficiency. The result is a virtuous cycle connecting efficiencies in capital markets, operations and customer acquisition.

QUARTERLY RESULTS

The following table sets forth the unaudited results of operations for the Company on a quarterly basis and expressed as a percentage of total revenues (dollars in thousands):

                                                                     Three Months Ended
                                    --------------------------------------------------------------------------------------
                                    March 31,  June 30,   Sept. 30,   Dec 31,   March 31,  June 30,   Sept. 30,   Dec 31,
                                      2002       2002       2002       2002       2003       2003       2003       2003
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Revenues.......................... $  20,766  $  20,986  $  28,437  $  33,100  $  35,989  $  45,883  $  43,776  $  27,359

Operating expenses:
      Operations..................    10,852     11,327     15,283     16,398     17,001     20,521     19,066     16,291
      Sales and marketing.........     5,137      6,138      6,484      7,598      8,492     11,433     11,890      9,553
      Technology..................     1,429      1,240      1,436      1,520      1,687      2,294      2,002      1,668
      General and administrative..     1,633      1,347      1,687      2,270      1,923      2,807      2,064      1,716
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
      Total operating expenses....    19,051     20,052     24,890     27,786     29,103     37,055     35,022     29,228
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income (loss) from operations.....     1,715        934      3,547      5,314      6,886      8,828      8,754     (1,869)
Other income, net.................       (57)        39         51         72        261        286        296        339
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income (loss) before taxes........     1,658        973      3,598      5,386      7,147      9,114      9,050     (1,530)
Income taxes......................       (54)       (29)      (508)      (372)      (815)    (1,038)    (1,032)     1,737
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net income (loss)................. $   1,604  $     944  $   3,090  $   5,014  $   6,332  $   8,076  $   8,018  $     207
                                    =========  =========  =========  =========  =========  =========  =========  =========
   Net income per share
     Basic                         $    0.03  $    0.02  $    0.05  $    0.08  $    0.11  $    0.13  $    0.13  $      --
     Diluted                       $    0.03  $    0.02  $    0.05  $    0.08  $    0.10  $    0.12  $    0.12  $      --

AS A PERCENTAGE OF REVENUES:
Revenues..........................       100%       100%       100%       100%       100%       100%       100%       100%

Operating expenses:
      Operations..................        52%        54%        54%        50%        47%        45%        44%        60%
      Sales and marketing.........        25%        29%        23%        23%        24%        25%        27%        35%
      Technology..................         7%         6%         5%         5%         5%         5%         5%         6%
      General and administrative..         8%         6%         6%         7%         5%         6%         5%         6%
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
      Total operating expenses....        92%        96%        88%        84%        81%        81%        80%       107%
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income (loss) from operations.....         8%         5%        12%        16%        19%        19%        20%        -7%
Other income, net.................        -0%         0%         0%         0%         1%         1%         1%         1%
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income (loss) before taxes........         8%         5%        12%        16%        20%        20%        21%        -6%
Income taxes......................        -0%        -0%        -2%        -1%        -2%        -2%        -2%         6%
                                    ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net income (loss).................         8%         5%        10%        15%        18%        18%        18%         1%
                                    =========  =========  =========  =========  =========  =========  =========  =========

REVENUES

The Company is a consumer direct lender whose revenues are derived primarily from the gain on sale of mortgage, home equity and auto loans that it underwrites, funds and sells. The Company also earns interest income on mortgage and home equity loans during the brief time they are held pending sale.

The following table provides the components of revenue shown in thousands and as a percentage of total revenues:

                                                                        Three Months Ended
                                          --------------------------------------------------------------------------------------
                                          March 31,  June 30,   Sept. 30,   Dec 31,   March 31,  June 30,   Sept. 30,   Dec 31,
                                            2002       2002       2002       2002       2003       2003       2003       2003
                                          ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
   Mortgage............................. $  12,815  $  11,738  $  16,773  $  19,889  $  23,851  $  31,505  $  26,856  $  13,034
   Interest income on mortgage loans....     2,991      2,985      4,548      4,576      4,864      5,152      5,138      3,393
   Home equity..........................     2,284      3,267      3,129      4,496      3,939      5,334      7,412      6,671
   Interest income on home equity loans.       237        519        705        917        424        683      1,342      1,697
   Auto.................................     2,291      2,250      3,036      2,999      2,656      2,817      2,646      2,253
   Other................................       148        227        246        223        255        393        382        311
                                          ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
         Total revenues................. $  20,766  $  20,986  $  28,437  $  33,100  $  35,989  $  45,884  $  43,776  $  27,359
                                          =========  =========  =========  =========  =========  =========  =========  =========

   Mortgage.............................        62 %       56 %       59 %       60 %       66 %       69 %       61 %       48 %
   Interest income on mortgage loans....        14 %       14 %       16 %       14 %       14 %       11 %       12 %       13 %
   Home equity..........................        11 %       16 %       11 %       14 %       11 %       12 %       17 %       24 %
   Interest income on home equity loans.         1 %        2 %        2 %        3 %        1 %        1 %        3 %        6 %
   Auto.................................        11 %       11 %       11 %        9 %        7 %        6 %        6 %        8 %
   Other................................         1 %        1 %        1 %        1 %        1 %        1 %        1 %        1 %
                                          ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
         Total revenues.................       100 %      100 %      100 %      100 %      100 %      100 %      100 %      100 %
                                          =========  =========  =========  =========  =========  =========  =========  =========

The following table summarizes dollar volume of loans sold and the revenue in both dollars and average basis points ("BPS") (dollars in thousands except BPS):

                                                               Three Months Ended
                             ---------------------------------------------------------------------------------------------
                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,    June 30,   Sept. 30,   Dec. 31,
                                 2002        2002        2002        2002       2003        2003        2003       2003
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Mortgage
$ Volume                     $  916,802  $  766,494  $  944,538  $  863,027 $1,110,008  $1,214,742  $1,289,200  $ 723,891
Revenue                      $   12,815  $   11,738  $   16,773  $   19,889 $   23,851  $   31,505  $   26,856  $  13,034
BPS                                 140         153         178         230        215         259         208        180

Home Equity
$ Volume                     $   97,648  $  124,125  $  123,879  $  184,382 $  167,789  $  192,169  $  275,227  $ 273,456
Revenue                      $    2,284  $    3,267  $    3,129  $    4,496 $    3,939  $    5,334  $    7,412  $   6,671
BPS                                 234         263         253         244        235         278         269        244

Auto
$ Volume                     $  140,464  $  150,733  $  169,305  $  169,652 $  168,106  $  164,729  $  193,582  $ 159,474
Revenue                      $    2,291  $    2,250  $    3,036  $    2,999 $    2,656  $    2,817  $    2,646  $   2,253
BPS                                 163         149         179         177        158         171         137        141

Mortgage Revenues. The Company's mortgage revenues are derived from the origination and sale of loans. Mortgage loans are funded through the Company's warehouse lines of credit and sold to mortgage loan purchasers typically within thirty days. Mortgage loan revenues consist of proceeds in excess of the carrying value of the loan, origination fees less certain direct origination costs and other processing costs. These revenues are recognized at the time the loan is sold. Mortgage revenues consist of refinance mortgage revenues and diversified mortgage revenues - which are comprised of purchase and non-prime mortgage loans. Mortgage revenues benefited significantly from a sharp increase in refinance revenues starting in the third quarter of 2002 and reaching its peak in the second quarter of 2003. Refinance revenue experienced large declines in the third and fourth quarters of 2003 as interest rates increased and the overall mortgage market shifted away from refinance volume. Diversified mortgage revenues increased significantly starting in the first quarter of 2003 through the third quarter of 2003, coming down in the fourth quarter of 2003. The decline in the fourth quarter of 2003 was due to seasonal weakness, coupled with intense price competition in the market (as a result of the evaporating refinance market). The Company expects refinance activity to continue to decline in 2004 and that while growth in diversified mortgages is expected, we do not anticipate that it will completely offset the decline in refinance volume, resulting in a lower mortgage revenue amount in 2004 as compared to 2003.

The following table summarizes dollar volume of mortgage loans sold and the revenue in both dollars and average basis points ("BPS") (dollars in thousands except BPS):

                                                               Three Months Ended
                             ---------------------------------------------------------------------------------------------
                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,    June 30,   Sept. 30,   Dec. 31,
                                 2002        2002        2002        2002       2003        2003        2003       2003
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Refinance Mortgage
$ Volume                     $  755,812  $  549,235  $  718,419  $  636,742 $  755,489  $  778,835  $  649,512  $ 332,810
Revenue                      $   10,880  $    8,438  $   13,219  $   15,927 $   17,938  $   21,410  $   16,871  $   6,662
BPS                                 144         154         184         250        237         275         260        200

Diversified Mortgage
$ Volume                     $  160,990  $  217,259  $  226,119  $  226,285 $  354,519  $  435,907  $  639,688  $ 391,081
Revenue                      $    1,935  $    3,300  $    3,554  $    3,962 $    5,913  $   10,095  $    9,985  $   6,372
BPS                                 120         152         157         175        167         232         156        163

The following table illustrates the percentages of the Company's mortgage closed loan volume from purchase and refinance loans as compared to the total market (according to Mortgage Bankers Association of America) through 2003. The Mortgage Bankers Association of America data for the fourth quarter of 2003 and the year ended 2003 below represents its estimate as of February 17, 2004:

                     2001      2002      Q1 03     Q2 03     Q3 03     Q4 03     2003
                   --------- --------- --------- --------- --------- --------- ---------
E-LOAN Mortgage*
   Purchase              16%       21%       25%       32%       45%       45%       36%
   Refinance             84%       79%       75%       68%       55%       55%       64%

Total Market
   Purchase              43%       41%       29%       32%       32%       51%       34%
   Refinance             57%       59%       71%       68%       68%       49%       66%

* Excludes home equity and auto loan volume

Interest Income on Mortgage and Home Equity Loans. The Company generates revenues from interest income on mortgage and home equity loans. The revenues realized are based on the loan amount multiplied by the contractual interest rate from the time of funding by the Company through time of sale. These revenues are recognized as earned during the period from funding to sale. Interest income is highly correlated to the volume of loans funded. As such, the Company anticipates that with relatively lower mortgage revenue in 2004, interest income on mortgages will be slightly lower. Home equity fundings are expected to increase in 2004, as will interest income on home equity loans and lines of credit.

Home Equity Revenues. Home equity revenues are derived from the origination and sale of loans. Home equity loans are funded through the Company's warehouse lines of credit and sold to home equity loan purchasers in approximately thirty days. Home equity loan revenues consist of proceeds in excess of the carrying value of the loan, origination fees less certain direct origination costs and other processing costs. These revenues are recognized at the time the loan is sold. Home equity revenues increased from $2.3 million to $4.5 million from the first quarter to the fourth quarter of 2002 and from $3.9 million to $6.7 million from the first quarter to the fourth quarter of 2003. As revenue per loan on home equity loans sold has remained relatively constant, the fluctuation in revenue is mostly attributable to the volume of sold loans in any given quarter. The Company expects that home equity revenues will grow throughout 2004 as volumes continue to increase.

Auto Revenues. The Company funds prime auto loans using a line of credit and then sells them to a qualified special purpose entity (QSPE), which was created in July 2002. Revenues from these sales consist of the estimated future discounted cash flows net of interest, servicing fees and credit losses. Revenues on prime auto loan sales are recognized when the loan is sold to the QSPE.

Prior to the third quarter of 2003, sub-prime auto loans were sold to sub-prime auto loan purchasers. The revenue on these loans consisted of the mark-up to the lending partner's loan price or a set origination fee. These revenues were recognized at the time the loan was sold. In the third quarter of 2003, the Company stopped processing and funding sub-prime auto loans and shifted this portion of the business to a referral based system. Loan applications that do not meet the prime auto lending criteria are referred out to other sub-prime lenders in exchange for a fee. This fee is recognized as revenue at the time of transfer to the sub-prime lender and paid to the Company monthly for the previous month's referrals.

Auto revenues increased from the first quarter to the fourth quarter of 2002 from $2.3 million to $3.0 million and decreased from the first quarter to the fourth quarter of 2003 from $2.7 million to $2.3 million. The increase in auto revenues during 2002 is largely a result of the new QSPE structure introduced in June 2002 that improved our ability to offer competitive rates to consumers while increasing our gain on sale execution compared to our prior correspondent loan sales. The decline in 2003 is largely attributed to the Company's decision to transition its sub-prime loan platform from self-funding to a referral basis in the third quarter of 2003. As expected, this transition resulted in a reduction in overall auto loan volume. The Company assumes continued pressure from incentive financing rates coupled with the elimination of sub-prime volume, will result in relatively flat 2004 auto revenues as compared to 2003.

OPERATING EXPENSES

Total Operating Expenses. Total operating expenses include operational costs associated with the origination of mortgage, home equity and auto loans, including interest expense on warehouse lines, as well as costs associated with marketing, technology and administrative.

The following table provides detail of the Company's total operating expenses classified by major types of expense, expressed as a percentage of total operating expenses:

                                                               Three Months Ended
                              --------------------------------------------------------------------------------------------
                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,    June 30,   Sept. 30,   Dec. 31,
                                 2002        2002        2002        2002       2003        2003        2003       2003
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Compensation & Benefits              44%         43%         41%         44%        43%         44%         42%        40%
Processing Costs                     10%         11%         13%         10%        10%          8%          8%        10%
Advertising & Marketing              22%         25%         21%         23%        25%         27%         30%        30%
Occupancy & Administrative           14%         12%         13%         12%        12%         12%         11%        12%
Interest Expense on Warehouse        10%          9%         12%         11%        10%          9%          9%         8%

As almost half of the total operating expenses of the Company are compensation and benefit related, the following table shows full-time headcount (including temporary and contract employees) by function at the end of each respective quarter:

                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,    June 30,   Sept. 30,   Dec. 31,
                                 2002        2002        2002        2002       2003        2003        2003       2003
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Mortgage                            258         241         280         308        400         433         471        351
Home Equity                          89         115         139         163        163         169         230        247
Auto                                 84          86         110         100        146         114         111         90
Sales & Marketing                    31          26          26          25         28          31          31         28
Technology                           42          42          45          49         57          64          61         56
General & administrative             42          45          46          43         47          56          67         60
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Total                               546         555         646         688        841         867         971        832

Operations. Operations expense is comprised of both fixed and variable expenses, including employee compensation and expenses associated with the production and sale of loans and interest expense paid by the Company under the warehouse and line of credit facilities it uses to fund mortgage, home equity and auto loans held for sale.

The following table provides detail of the Company's operations expenses classified by the following revenue-related categories (dollars in thousands):

                                                                        Three Months Ended
                                          --------------------------------------------------------------------------------------
                                          March 31,  June 30,   Sept. 30,   Dec 31,   March 31,  June 30,   Sept. 30,   Dec 31,
                                            2002       2002       2002       2002       2003       2003       2003       2003
                                          ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Mortgage ............................... $   5,849  $   5,967  $   7,822  $   8,675  $   8,502  $  10,613  $   9,708  $   7,599
Interest expense on mortgage loans......     1,512      1,301      2,289      2,140      2,397      2,506      2,435      1,516
Home equity.............................     1,331      1,844      2,333      2,631      3,030      3,170      3,733      4,357
Interest expense on home equity loans...       110        241        392        493        288        531        647        876
Auto....................................     2,013      1,940      2,430      2,459      2,783      3,702      2,543      1,943
Other...................................        37         34         17         --          1         --         --         --
                                          ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Total operations........................ $  10,852  $  11,327  $  15,283  $  16,398  $  17,001  $  20,522  $  19,066  $  16,291
                                          =========  =========  =========  =========  =========  =========  =========  =========

Operations expense increased from the first quarter to the fourth quarter of 2002 from $10.9 million to $16.4 million and decreased from the first quarter to the fourth quarter of 2003 from $17.0 million to $16.3 million largely driven by the increases and decreases in mortgage operations expense. Operations expense increased as a percentage of revenues from 52% for the first quarter of 2002 to 60% for the fourth quarter of 2003. The increase in operations expense as a percentage of revenue is due to decreased volumes of mortgage fundings and lower mortgage revenue per loan, resulting in overall lower revenues.

The following table provides detail of the Company's total mortgage operations expenses (excluding interest expense) classified by major types of expense, expressed as a percentage of total mortgage operations expenses (excluding interest expense):

                                                                  Three Months Ended
                              --------------------------------------------------------------------------------------------
                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,    June 30,   Sept. 30,   Dec. 31,
                                 2002        2002        2002        2002       2003        2003        2003       2003
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Mortgage Operations
   Headcount & Related               48%         46%         38%         42%        47%         46%         48%        49%
   Commissions                       23%         22%         27%         25%        23%         25%         23%        18%
   Processing Costs                  19%         22%         25%         22%        20%         19%         17%        18%
   Facilities & Other                10%         10%         10%         11%        10%         10%         12%        15%

The following table provides detail of the Company's total home equity operations expenses (excluding interest expense) classified by major types of expense, expressed as a percentage of total home equity operations expenses (excluding interest expense):

                                                                  Three Months Ended
                              --------------------------------------------------------------------------------------------
                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,    June 30,   Sept. 30,   Dec. 31,
                                 2002        2002        2002        2002       2003        2003        2003       2003
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Home Equity Operations
   Headcount & Related               56%         57%         55%         58%        64%         58%         59%        57%
   Commissions                        8%         11%         10%         12%         8%         13%         14%        10%
   Processing Costs                  24%         19%         22%         18%        18%         18%         16%        21%
   Facilities & Other                12%         13%         13%         12%        10%         11%         11%        12%

The following table provides detail of the Company's total auto operations expenses (excluding interest expense) classified by major types of expense, expressed as a percentage of total auto operations expenses (excluding interest expense):

                                                                  Three Months Ended
                              --------------------------------------------------------------------------------------------
                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,    June 30,   Sept. 30,   Dec. 31,
                                 2002        2002        2002        2002       2003        2003        2003       2003
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Auto Operations
   Headcount & Related               55%         52%         49%         57%        57%         65%         70%        65%
   Commissions                        1%         --           1%          1%        --           1%          2%         2%
   Processing Costs                  19%         23%         24%         16%        15%          9%         15%        17%
   Facilities & Other                25%         25%         26%         26%        28%         25%         13%        16%

Direct Margin. Direct margin is defined as revenue minus operations expense, which includes variable and fixed expenses.

The following table provides detail of the Company's direct margin classified by the following revenue-related categories (dollars in thousands):

                                                                  Three Months Ended
                              --------------------------------------------------------------------------------------------
                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,    June 30,   Sept. 30,   Dec. 31,
                                 2002        2002        2002        2002       2003        2003        2003       2003
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Mortgage.................... $    6,966  $    5,771  $    8,951  $   11,214 $   15,349  $   20,892  $   17,148  $   5,435
Mortgage interest margin....      1,479       1,684       2,253       2,436      2,467       2,646       2,703      1,877
Home equity.................        953       1,423         796       1,865        909       2,164       3,679      2,314
Home equity interest margin.        127         278         313         424        136         152         695        821
Auto........................        278         310         612         540       (127)       (885)        103        310
Other.......................        111         193         229         223        254         393         382        311
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Total direct margin......... $    9,914  $    9,659  $   13,154  $   16,702 $   18,988  $   25,362  $   24,710  $  11,068
                              ==========  ==========  ==========  ========== ==========  ==========  ==========  =========

Direct margin increased from the first quarter to the fourth quarter of 2002 from $9.9 million to $16.7 million and decreased from the first quarter to the fourth quarter of 2003 from $19.0 million to $11.1 million. The growth in direct margin in 2002 is due largely to the contribution from increased mortgage and home equity volume, as well as increased revenue per loan, coupled with technology and process improvements. Additionally, the increase in direct margin in 2002 is due to the positive spread of interest income over interest expense. The decline in direct margin in 2003 is primarily due to decreased mortgage revenue per loan and decreased mortgage volumes. This decrease was offset by increased home equity volumes and revenues as well as a positive spread of home equity interest income over interest expense. The Company anticipates that mortgage revenue per loan and the spread of interest income over interest expense will decline in 2004 as compared to 2003, as the overall level of refinance activity declines and competitive pricing pressure increases. Auto direct margin turned negative in the first and second quarters of 2003 due to the transition of auto operations from Florida to California which started in the first quarter and completed in the second quarter of 2003. Auto direct margins returned to positive levels in the third and fourth quarters of 2003 increasing from $0.1 million in the third quarter to $0.3 million by the fourth quarter of 2003. The Company expects auto direct margin to grow modestly throughout 2004.

Sales and Marketing. Sales and marketing expense is primarily comprised of expenses (excluding non-cash marketing costs) related to advertising, promotion and marketing agreements and employee compensation and other expenses related to marketing personnel. The Company experienced increases in sales and marketing expenses as a direct result of increasing spending in direct response television advertising as well as direct response mail advertising. Sales and marketing expenses are expected to increase as a percentage of total revenues and absolute dollars in 2004.

The following table provides detail of the Company's total sales and marketing expenses classified by major types of expense, expressed as a percentage of total sales and marketing expenses:

                                                                  Three Months Ended
                              --------------------------------------------------------------------------------------------
                              March 31,    June 30,   Sept. 30,    Dec. 31,  March 31,    June 30,   Sept. 30,   Dec. 31,
                                 2002        2002        2002        2002       2003        2003        2003       2003
                              ----------  ----------  ----------  ---------- ----------  ----------  ----------  ---------
Direct Response TV                   --           1%         26%         41%        46%         53%         57%        56%
Direct Response Mail                 31%         37%         17%         16%        11%         12%         16%        18%
Online Advertising                   31%         35%         29%         21%        25%         17%         13%        14%
Other Advertising                    19%          7%          7%          6%         3%          7%          3%         2%
Headcount & Administrative           19%         20%         21%         16%        15%         11%         11%        10%

Technology. Technology expense includes employee compensation, the introduction of new technologies and the support of our existing technological infrastructure. Technology expense remained relatively constant in 2002 going from $1.4 million in the first quarter of 2002 to $1.5 million in the fourth quarter of 2002 and remained constant in 2003 at $1.7 million in both the first and fourth quarters of 2003. Technology expense as a percentage of revenues decreased from 7% in the first quarter of 2002 to 5% in the fourth quarter of 2002 and increased in 2003 from 5% in the first quarter of 2003 to 6% in the fourth quarter of 2003. The increase in technology expense in 2003 as a percentage of revenues was due to the decreased volumes in revenue in the fourth quarter of 2003. The Company expects technology expense to continue at approximately 6% of total revenues in the upcoming quarters.

General and Administrative. General and administrative expense is primarily comprised of employee compensation and professional services. General and administrative expense increased from the first quarter to the fourth quarter of 2002 from $1.6 million to $2.3 million and decreased from the first quarter to the fourth quarter of 2003 from $1.9 million to $1.7 million. General and administrative expense decreased as a percentage of revenues in 2002 from 8% in the first quarter of 2002 to 7% in the fourth quarter of 2002, and increased from 5% in the first quarter of 2003 to 6% in the fourth quarter of 2003. General and administrative expenses are expected to be approximately 6% of total revenues in the upcoming quarters.

Other Income, Net. Other income, net, remained relatively constant from $(0.1) million to $0.1 million from the first quarter to the fourth quarter of 2002 and remained constant at $0.3 million from the first quarter to the fourth quarter of 2003. Other income, net includes interest income from investments, interest expense on non-warehouse borrowings and interest income from the retained interest asset. The Company generally has little to no non-warehouse borrowings outstanding, and therefore generates very little interest expense. Interest on short-term investments has declined slightly as overall interest rates remained very low. Interest income from the retained interest asset has increased as the overall asset size has increased. This will continue to increase moderately throughout 2004 as the retained interest asset is expected to grow moderately.

COMPARISON OF YEARS ENDED DECEMBER 31, 2002 AND 2003

The following table sets forth the results of operations for the Company and these results expressed as a percentage of total revenues (dollars in thousands):

                                                         Years Ended December 31,
                                                         ------------------------
                                                            2002         2003
                                                         -----------  -----------
Revenues .............................................. $   103,288  $   153,008

Operating expenses:
    Operations.........................................      53,854       72,882
    Sales and marketing................................      25,365       41,368
    Technology.........................................       5,625        7,651
    General and administrative.........................       6,936        8,509
                                                         -----------  -----------
           Total operating expenses....................      91,780      130,410
                                                         -----------  -----------
Income from  operations................................      11,508       22,598
Other income, net......................................         107        1,184
                                                         -----------  -----------
Income before taxes....................................      11,615       23,782
Income taxes...........................................        (964)      (1,148)
                                                         -----------  -----------
Net income..............................................$    10,651  $    22,634
                                                         ===========  ===========

   Net income per share:
      Basic                                             $      0.18  $      0.37
                                                         ===========  ===========
      Diluted                                           $      0.18  $      0.34
                                                         ===========  ===========

AS A PERCENTAGE OF REVENUES:

Revenues ..............................................         100%         100%

Operating expenses:
    Operations.........................................          52%          48%
    Sales and marketing................................          25%          27%
    Technology.........................................           5%           5%
    General and administrative.........................           7%           6%
                                                         -----------  -----------
           Total operating expenses....................          89%          85%
                                                         -----------  -----------
Income from  operations................................          11%          15%
Other income, net......................................           0%           1%
                                                         -----------  -----------
Income before taxes....................................          11%          16%
Income taxes...........................................          -1%          -1%
                                                         -----------  -----------
Net income.............................................          10%          15%
                                                         ===========  ===========

REVENUES

Revenues for the year ended December 31, 2003 increased $49.7 million from $103.3 million for the twelve months ended December 31, 2002 to $153.0 million for the twelve months ended December 31, 2003. This increase resulted primarily from the growth in the number of mortgage and home equity loans closed and sold, as well as the increased revenue per loan earned on these loans. Interest income on self-funded mortgage and home equity loans also increased due to the increased funding volumes.

The following table provides the components of revenue shown in thousands:

                                         Years Ended December 31,
                                          ----------------------
                                             2002        2003
                                          ----------  ----------
Mortgage ............................... $   61,212  $   95,248
Interest income on mortgage loans.......     15,093      18,547
Home equity.............................     13,176      23,355
Interest income on home equity loans....      2,379       4,146
Auto....................................     10,582      10,371
Other...................................        846       1,341
                                          ----------  ----------
Total Revenues.......................... $  103,288  $  153,008
                                          ==========  ==========

The following table summarizes dollar volume of loans closed and sold and the revenue in both dollars and average basis points ("BPS") (dollars in thousands except BPS):

                                          Years Ended December 31
                                          ----------------------
                                             2002        2003
                                          ----------  ----------
Mortgage
$ Volume                                 $3,490,861  $4,337,841
Revenue                                  $   61,212  $   95,248
BPS                                             175         220

Home Equity
$ Volume                                 $  530,034  $  908,641
Revenue                                  $   13,176  $   23,355
BPS                                             249         257

Auto
$ Volume                                 $  630,154  $  685,891
Revenue                                  $   10,582  $   10,371
BPS                                             168         151

OPERATING EXPENSES

Total Operating Expenses. Total operating expenses increased $38.6 million from $91.8 million for the twelve months ended December 31, 2002 to $130.4 million for the twelve months ended December 31, 2003. The increase is primarily due to an increase in operations expense, primarily from mortgage and home equity, as well as a significant increase in sales and marketing expenses. Compensation and benefits costs increased as headcount increased by 144 from 688 at December 31, 2002 to 832 at December 31, 2003 to align the Company's infrastructure with increased business demands.

The following table shows full-time headcount (including temporary and contract employees) by function at the end of each year ended December 31, 2002 and 2003:

                                             2002        2003
                                          ----------  ----------
Mortgage                                        308         351
Home Equity                                     163         247
Auto                                            100          90
Sales & Marketing                                25          28
Technology                                       49          56
General & administrative                         43          60
                                          ----------  ----------
Total                                           688         832

Operations. Operations expense increased $19.0 million from $53.9 million for the twelve months ended December 31, 2002 to $72.9 million for the twelve months ended December 31, 2003. Operations expense as a percentage of revenues decreased from 52% in 2002 to 48% in 2003. Operations headcount increased due to the expansion of the Company's mortgage and home equity operations to accommodate increasing volumes.

The following table provides detail of the Company's operations expenses classified by the following revenue-related categories (dollars in thousands):

                                         Years Ended December 31,
                                          ----------------------
                                             2002        2003
                                          ----------  ----------
Mortgage ............................... $   28,315  $   36,422
Interest expense on mortgage loans......      7,242       8,856
Home equity.............................      8,139      14,290
Interest expense on home equity loans...      1,235       2,342
Auto....................................      8,842      10,971
Other...................................         81           1
                                          ----------  ----------
Total operations........................ $   53,854  $   72,882
                                          ==========  ==========

Sales and Marketing. Sales and marketing expenses increased $16.0 million from $25.4 million for the twelve months ended December 31, 2002 to $41.4 million for the twelve months ended December 31, 2003. Sales and marketing expenses as a percentage of revenues increased slightly from 25% in 2002 to 27% in 2003. The increase in absolute dollars is primarily the result of increased spending in the Company's national television advertising campaign. The following table provides detail of the Company's total sales and marketing expenses classified by major types of expense, expressed as a percentage of total sales and marketing expenses:

                                          Years Ended December 31
                                          ----------------------
                                             2002        2003
                                          ----------  ----------
Direct Response TV                               19%         53%
Direct Response Mail                             25%         14%
Online Advertising                               28%         17%
Other Advertising                                 9%          4%
Headcount & Administrative                       19%         12%

Technology. Technology expenses increased $2.0 million from $5.6 million for the twelve months ended December 31, 2002 to $7.6 million for the twelve months ended December 31, 2003. Technology expenses as a percentage of revenues remained constant at 5% in both 2002 and 2003. Technology expenses increased as a function of the increase in actual headcount as well as an increase in professional services.

General and Administrative. General and administrative expenses increased $1.6 million from $6.9 million for the twelve months ended December 31, 2002 to $8.5 million for the twelve months ended December 31, 2003. General and administrative expenses as a percentage of revenues decreased from 7% in 2002 to 6% in 2003. General and administrative expenses increased as a function of the increase in actual headcount as well as an increase in professional services.

Other Income, net. Other income, net, increased $1.1 million from $0.1 million for the twelve months ended December 31, 2002 to $1.2 million for the twelve months ended December 31, 2003. The increase is primarily due to the increase in interest income earned related to the Company's retained interest asset in 2003 compared to 2002.

COMPARISON OF YEARS ENDED DECEMBER 31, 2001 AND 2002

The following table sets forth the results of operations for the Company and these results expressed as a percentage of total revenues (dollars in thousands):

                                                         Years Ended December 31,
                                                         ------------------------
                                                            2001         2002
                                                         -----------  -----------
Revenues .............................................. $    67,950  $   103,288

Operating expenses:
    Operations.........................................      42,946       53,854
    Sales and marketing................................      16,785       25,365
    Technology.........................................       6,325        5,625
    General and administrative.........................       5,784        6,936
    Amortization of non-cash marketing costs...........       5,970           --
    Amortization of unearned compensation..............       5,164           --
    Amortization of goodwill and intangible assets.....      28,144           --
                                                         -----------  -----------
           Total operating expenses....................     111,118       91,780
                                                         -----------  -----------
Loss from  operations..................................     (43,168)      11,508
Other income, net......................................       3,638          107
Income (loss) before taxes.............................     (39,530)      11,615
Income taxes...........................................          --         (964)
                                                         -----------  -----------
Net income (loss)...................................... $   (39,530) $    10,651
                                                         ===========  ===========
   Net income (loss) per share:
      Basic                                             $     (0.73) $      0.18
                                                         ===========  ===========
      Diluted                                           $     (0.73) $      0.18
                                                         ===========  ===========

AS A PERCENTAGE OF REVENUES:

Revenues ..............................................         100%         100%

Operating expenses:
    Operations.........................................          63%          52%
    Sales and marketing................................          25%          25%
    Technology.........................................           9%           5%
    General and administrative.........................           9%           7%
    Amortization of non-cash marketing costs...........           9%          --
    Amortization of unearned compensation..............           8%          --
    Amortization of goodwill and intangible assets.....          41%          --
                                                         -----------  -----------
           Total operating expenses....................         164%          89%
                                                         -----------  -----------
Loss from  operations..................................         -64%          11%
Other income, net......................................           5%           0%
Income (loss) before taxes.............................         -58%          11%
Income taxes...........................................          --           -1%
                                                         -----------  -----------
Net income (loss)......................................         -58%          10%
                                                         ===========  ===========

REVENUES

Revenues for the year ended December 31, 2002 increased $35.3 million from $68.0 million for the twelve months ended December 31, 2001 to $103.3 million for the twelve months ended December 31, 2002. This increase resulted primarily from the growth in the number of mortgage and home equity loans closed, as well as the increased revenue per loan earned on these loans. Interest income on mortgage and home equity loans also increased due to the increased funding volumes.

OPERATING EXPENSES

Total Operating Expenses. Total operating expenses decreased $19.3 million from $111.1 million for the twelve months ended December 31, 2001 to $91.8 million for the twelve months ended December 31, 2002. The decrease is primarily due to the completion of the amortization of non-cash marketing costs, unearned compensation and goodwill in 2001. These amounts are partially offset by increases of $10.9 million in operations expense and $8.6 million in sales and marketing expenses.

Operations. Operations expense increased $10.9 million from $42.9 million for the twelve months ended December 31, 2001 to $53.8 million for the twelve months ended December 31, 2002. Operations expense as a percentage of revenues decreased from 63% in 2001 to 52% in 2002. Operations headcount increased by 201 to 571 as of December 31, 2002 from 370 as of December 31, 2001. This increase is primarily due to the expansion of the Company's mortgage and home equity operations to accommodate increasing volumes.

Sales and Marketing. Sales and marketing expenses increased $8.6 million from $16.8 million for the twelve months ended December 31, 2001 to $25.4 million for the twelve months ended December 31, 2002. Sales and marketing expenses as a percentage of revenues remained constant at 25% in both 2001 and 2002. The increase in absolute dollars is the result of increased spending in the Company's national television advertising campaign and direct mail campaigns. Sales and marketing headcount increased by 2 to 25 as of December 31, 2002 from 23 as of December 31, 2001.

Technology. Technology expenses decreased $0.7 million from $6.3 million for the twelve months ended December 31, 2001 to $5.6 million for the twelve months ended December 31, 2002. Technology expenses as a percentage of revenues decreased from 9% in 2001 to 5% in 2002. Technology headcount increased by 11 to 49 as of December 31, 2002 from 38 as of December 31, 2001.

General and Administrative. General and administrative expenses increased $1.1 million from $5.8 million for the twelve months ended December 31, 2001 to $6.9 million for the twelve months ended December 31, 2002. General and administrative expenses as a percentage of revenues decreased from 9% in 2001 to 7% in 2002. General and administrative headcount increased by 2 to 43 as of December 31, 2002 from 41 as of December 31, 2001.

Amortization of Non-Cash Marketing Costs. The marketing services receivable was amortized on a straight-line basis over a one-year term and concluded amortization on June 30, 2001. Amortization of non-cash marketing costs was $6.0 million for the twelve months ended December 31, 2001 and $0 for the twelve months ended 2002.

Amortization of Unearned Compensation. Management accelerated the vesting of compensatory options in the fourth quarter of 2001 resulting in the full amortization of unearned compensation as of December 31, 2001. Amortization of unearned compensation was $5.2 million for the twelve months ended December 31, 2001 and $0 for the twelve months ended 2002.

Amortization of Goodwill. Amortization of goodwill concluded in September 2001. Amortization of goodwill was $28.1 million for the twelve months ended December 31, 2001 and $0 for the twelve months ended 2002.

Other Income, net. Other income, net, decreased $3.5 million from $3.6 million for the twelve months ended December 31, 2001 to $0.1 million for the twelve months ended December 31, 2002. The decrease is primarily due to the one-time sale of shares in E-LOAN Japan in the fourth quarter of 2001, which resulted in a gain of $3.2 million.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which require the Company to make estimates and assumptions (see Note 1 to the consolidated financial statements). The Company believes that of its significant accounting policies (see Note 2 to the consolidated financial statements), the following may involve a higher degree of judgment and complexity.

Revenue Recognition. The Company's mortgage and home equity revenues are derived from the origination and sale of loans. Mortgage and home equity loans are funded through the Company's warehouse lines of credit and sold to loan purchasers typically within thirty days. Mortgage and home equity loan revenues consist of proceeds in excess of the carrying value of the loan, origination fees less certain direct origination costs and other processing costs. These revenues are recognized at the time the loan is sold. Also included in mortgage and home equity loan revenues are amounts recorded in connection with loans sold under a Sale Agreement with Greenwich Capital (see "Off-Balance Sheet Arrangements"). The Company sells all loans to loan purchasers on a servicing released basis without recourse, subject to certain representations and warranties. Additionally, the Company is responsible for a minimum number of payments to be made on these loans. As such, the Company records reserves as a contra-revenue at the time a loan is sold, based on certain assumptions in anticipation of future losses.

The Company funds prime auto loans using a line of credit and then sells them to a qualified special purpose entity (QSPE), which was created in July 2002 (see "Off-Balance Sheet Arrangements"). Revenues from these sales consist of the estimated future discounted cash flows net of interest, servicing fees and credit losses. Revenues on prime auto loan sales are recognized when the loan is sold to the QSPE.

Prior to the third quarter of 2003, sub-prime auto loans were sold to sub-prime auto loan purchasers. The revenue on these loans consisted of the mark-up to the lending partner's loan price or a set origination fee. These revenues were recognized at the time the loan was sold. In the third quarter of 2003, the Company stopped processing and funding sub-prime auto loans and shifted this portion of the business to a referral based system. Loan applications that do not meet the prime auto lending criteria are referred out to other sub-prime lenders in exchange for a fee. This fee is recognized as revenue at the time of transfer to the sub-prime lender.

Valuation of derivative instruments. On January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative and Hedging Activities" ("SFAS 133"), as subsequently amended by Statement of Financial Accounting No. 138. In accounting for its derivative financial instruments, SFAS 133 requires an entity to recognize all derivative assets or liabilities in the statement of financial condition and measure those instruments at fair value. The accounting for changes in fair value of the derivative depends on the intended use of the derivative and the resulting designation. An entity that elects to apply hedge accounting is required to establish at the inception of the hedge the method it will use in assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffectiveness of the hedge. These methods must be consistent with the entity's approach to managing risk. The Company is a party to mortgage rate lock commitments to fund mortgage loans at interest rates previously agreed (locked) by both the Company and the borrower for specified periods of time. When the borrower locks their interest rate, the Company effectively extends a put option to the borrower, whereby the borrower is not obligated to enter into the loan agreement, but the Company must honor the interest rate for the specified time period. Under SFAS 133 mortgage interest rate locks are derivatives. The Company is exposed to interest rate risk during the accumulation of interest rate lock commitments and loans prior to sale. The Company utilizes either a best efforts sell forward commitment or a mandatory sell forward commitment to economically hedge the changes in fair value of the loan due to changes in market interest rates. Both best efforts and mandatory sell forward sale commitments are derivatives under SFAS 133. Throughout the lock period the changes in the market value of interest rate lock commitments, best efforts and mandatory forward sale commitments are recorded as unrealized gains and losses and are included in the statement of operations in mortgage revenue.

The Company's management has made complex judgments in their application of SFAS 133. The judgments include the identification of hedging instruments, hedged items, nature of the risk being hedged, and how the hedging instrument's effectiveness will be assessed. The Company designates forward delivery commitments, where the company intends to deliver the underlying loan into the commitment, as a fair value SFAS 133 hedge at the commitment date. In addition, the Company designates all best efforts sell forward commitments as fair value SFAS 133 hedges for underlying loans at funding date. The Company does not designate mandatory sell forward agreements as SFAS 133 hedges but does utilize them to economically hedge the changes in fair value of rate lock commitments with borrowers for which a best efforts sell forward commitment has not been obtained. The Company did not have a material gain or loss representing the amount of hedge ineffectiveness related to designated SFAS 133 hedges during the twelve months ended December 31, 2002 and 2003.

In September 2003, the Company began hedging its interest rate risk on auto loan approvals. When the Company issues an auto loan approval, the Company extends a put option to the borrower, whereby the borrower is not obligated to enter into the loan agreement, but the Company must honor the interest rate for up to a 45-day period. Under SFAS 133, auto loan approvals are not considered derivatives. However, the company is still exposed to interest rate risk from issuance of approval to loan sale. The Company enters into amortizing swap contracts to economically hedge the interest rate changes in auto loan approvals. These swap contracts are considered derivatives under SFAS 133. The Company marks-to-market any changes in the value of outstanding swap contracts, which are recorded as unrealized gains and losses and included in the statement of operations in auto revenue.

Capitalized software. In 1999, the Company adopted SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, which requires that the Company expense computer software costs as they are incurred in the preliminary project stage. Once the capitalization criteria of the SOP have been met, external direct costs of materials and services consumed in developing or obtaining internal-use computer software and payroll and payroll related costs for employees who are directly associated with and who devote time to the internal-use computer software are capitalized. Capitalized costs are generally amortized over one to three years on a straight-line basis.

eserves for loan originations. The Company sells loans to loan purchasers on a servicing released basis without recourse. As such, the risk of loss or default by the borrower has generally been assumed by these purchasers. However, the Company is usually required by these purchasers to make certain representations relating to credit information, loan documentation and collateral. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase loans or indemnify these purchasers for any losses from borrower defaults. In connection with a majority of its loan sales agreements, the Company is also responsible for a minimum number of payments to be made on each loan, or else the Company may be required to refund the premium paid to it by the loan purchaser. As such, the Company records reserves based on certain assumptions in anticipation of future losses as a result of current activity.

Loan loss reserves due to potential violations of representations and warranties are recorded based on a percentage of current month originations. The Company currently calculates this loss rate exposure based on its historical loss rates as well as similar lending portfolios. Once the Company has endured a complete economic cycle, the rate will be adjusted based on actual losses as a percentage of origination volume on a historical basis. Premium repayment reserves, generated through early loan prepayments related to loans sold to investors, are recorded based on a rate determined by calculating actual prepayments as a percentage of originations on a historical basis applied to current month originations.

Stock Compensation. The Company accounts for stock- based employee compensation arrangements in accordance with the provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations, and complies with the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting For Stock-Based Compensation -- Transition And Disclosure -- An Amendment Of SFAS No. 123. Under APB No. 25, compensation expense is based on the excess of the estimated fair value of the Company's stock over the exercise price, if any, on the date of grant. The Company accounts for stock issued to non-employees in accordance with the provisions of SFAS No. 123 and the Emerging Issues Task Force Consensus in Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

Deferred Tax Asset. The Company accounts for income taxes using the liability method in accordance with SFAS No. 109, Accounting for Income Taxes. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Management evaluates the recoverability of the deferred tax assets and the level of the valuation allowance. At such time as it is determined that it is more likely than not that the deferred tax asset will be realizable, the valuation allowance will be reduced. The Company's deferred tax asset arises principally from net operating loss carryforward (NOLs). There are significant judgments and estimates involved in projecting the recoverability of the deferred tax asset, particularly with respect to the existence of future taxable income sufficient to realize NOLs. The Company reported its first profitable year in 2002 and was again profitable in 2003. However, the sustained low interest rate environment created favorable operating conditions for the Company. During the fourth quarter of 2003, mortgage refinancing volume declined sharply and the Company reported a loss from operations and is projecting a loss for the first quarter of 2004. Management will continue to monitor projections of future taxable income and when it believes realization of the tax benefits associated with the NOLs is more likely than not, management will reduce the valuation allowance by recording a benefit through the income tax provision recorded in the statement of operations. Based upon the Company's performance throughout the coming year it is possible that management would reduce the valuation allowance during 2004; however, management can provide no assurances as to the amount of such reduction, the period in which it might occur or if it will occur at all.

OFF-BALANCE SHEET ARRANGEMENTS

Retained interest in auto loans. On June 17, 2002, the Company entered into an arrangement to sell auto loan receivables to a qualified special purpose entity (QSPE), E-Loan Auto Fund One, LLC ("E-Loan Auto"), for the purpose of being able to recognize the gain on sale from these loans. These transactions involve the Company surrendering control over these assets to assure that the sold assets have been isolated from the Company and its creditors. As E-Loan Auto has met the appropriate tests to be considered a QSPE the assets and liabilities of E-Loan Auto are appropriately not consolidated in financial statements of the Company. In the event that the entity no longer qualifies as a QSPE and is required to be consolidated, the Company would no longer be in compliance with certain debt covenants related to its warehouse and other lines of credit, as currently structured. In particular, the Company's debt to tangible net worth covenants would be exceeded, however management believes that it would be able to renegotiate its existing warehouse related covenants to adequately accommodate the consolidation of this entity, if needed. E-Loan Auto has obtained a secured borrowing facility from Merrill Lynch Bank USA to finance all purchases of loans from the Company. The Company recognizes a gain on the sale of auto loan receivables to E-Loan Auto in the period in which the sale occurs, which represents the difference between the sale proceeds to the Company and the Company's net carrying value of the receivables. The Company retains an interest in the future cash flows from the loans. Such cash flows are distributed to the Company by the QSPE monthly. The fair value of the retained interest asset is based upon the net present value of the estimated future cash flows to be received by the Company over the life of the loans. These retained interest assets are recorded on the balance sheet at fair value as trading assets, and are adjusted to estimated fair value at each subsequent reporting period. Changes in the estimated fair value of the residual interests are recorded through the statement of operations. Estimates of future cash flows to be received by the Company reflect assumptions regarding the cumulative credit losses to be incurred on the pool of auto loan receivables sold, prepayment rates of the auto loans and the rate at which the estimated future excess cash flows are discounted. The assumptions used represent the Company's best estimates, and the use of different assumptions could produce different financial results. The Company will continue to monitor and update its assumptions over time.

Sale Agreement with Greenwich Capital. The Company has an uncommitted mortgage loan purchase and sale agreement with Greenwich Capital, for the purpose of controlling the timing associated with loan sales. Under the terms of this agreement, mortgage loans which are subject to a mandatory sell forward commitment between the Company and an investor, but have not yet been purchased, may be sold to Greenwich Capital with the accompanying trade assignment. Revenues from loans sold under this arrangement are included as a receivable on the balance sheet. All loans sold under this arrangement are already committed to another investor, and as such, hold little risk of being unsaleable. Therefore, in the event that the Company was unable to utilize this arrangement, the Company would experience a one-time impact to revenues in the period this arrangement was discontinued

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of cash include cash from the sale of mortgage, home equity and auto loans, borrowings under warehouse lines of credit and other credit facilities, brokerage fees, interest income, credit card referrals and the sale of debt and equity securities in both private and public transactions. The Company's uses of cash include the funding of mortgage, home equity and auto loans, repayment of amounts borrowed under warehouse lines of credit, operating expenses, payment of interest, and capital expenditures primarily comprised of furniture, fixtures, computer equipment, software and leasehold improvements. Because the Company's loan origination operating activities are funded principally through its warehouse and other lines payable, the Company analyzes trends in operating cash flows by combining cash flows from operating activities with cash flows from certain financing activities (specifically cash flows from warehouse and other lines payable).

Cash used in operating activities, net of cash provided by financing activities related to its warehouse and other lines payable was $4.8 million for the twelve months ended December 31, 2003. The Company obtained cash from the net income of $22.6 million for the twelve months ended December 31, 2003. Additionally, the Company benefited from positive cash flow as a result of loans held-for-sale net of warehouse payable decreasing and providing $3.1 million in net cash. However, these sources of cash were offset by two major uses of cash: (1) the receivable related to the Greenwich Sale Agreement increased $13.7 million as more loans were sold under this agreement and at a higher revenue/loan than the comparable period the year before, and (2) the retained interest asset continued to increase, going up another $7.7 million as additional loans were sold to the QSPE in 2003.

Cash used in operating activities, net of cash provided by financing activities related to its warehouse and other lines payable was $7.4 million for the twelve months ended December 31, 2002. The net change in loans held-for-sale less the related warehouse payable resulted in a cash usage of $5.6 million in the twelve months ended December 31, 2002. This is due to the overall increase in the loans held-for-sale balances less the amount advanced by the warehouse lenders. Additionally, $4.0 million of cash was used in the increase of the retained interest asset for the QSPE started in June of 2002. Both of these amounts were offset by cash provided by the increase in the income tax payable related to taxes estimated to be paid in 2003 for the year ended 2002. Note that fiscal year 2002 was the first profitable year for the Company, and as such, resulted in taxable income. While the Company has significant amounts of net operating loss carryforwards (NOLs), the state of California imposed a two-year moratorium on the usage of NOLs for the tax years 2002 and 2003.

Net cash used in investing activities was $4.1 million and $10.1 million for the twelve months ended December 31, 2002 and 2003, respectively. Net cash used in investing activities during 2002 and 2003 was entirely related to purchases of software, furniture, equipment and leasehold improvements. The increase in 2003 was primarily due to the addition of infrastructure related to increased headcount and investment in new technology systems. In 2003, the Company relocated its corporate headquarters to a new, larger facility in Pleasanton, California. Capital expenditures related to the new facility (net of tenant improvement allowances) were $2.7 million for the twelve months ended December 31, 2003. The Company will complete the buildout of its new facility in the first half of 2004, and as a result expects to spend an additional $2.1 million to complete the project.

Cash provided by financing activities, net of cash used by its warehouse and other lines payable was $0.5 million for the twelve months ended December 31, 2002 and $2.9 million for the twelve months ended December 31, 2003. The large increase from 2002 to 2003 was due to the issuance of common stock from the exercise of stock options and the Employee Stock Purchase Plan, as a result of the company's increased stock price during the second and third quarters of 2003.

The Company has committed and uncommitted warehouse lines of credit that it uses to fund mortgage and home equity loans. A committed line is a firm commitment from the warehouse lender that funds will be available if requested. The Company pays for these committed funds either in the form of pre-paid commitment fees charged as a percentage of the committed line available, or in the form of an unused line fee, which is assessed monthly based on a percentage of the unused amount during the previous month. Uncommitted funds are available to the Company at the warehouse lenders discretion, and could potentially not be accessible by the Company if the warehouse lender denied the funding request. The Company has not experienced such a denied funding request from any of its current or previous warehouse lenders.

The Company has a warehouse line of credit for borrowings of up to $75 million for the interim financing of mortgage loans with GMAC Mortgage Corporation. The interest rate charged on borrowings against these funds is variable based on LIBOR plus various percentage points. This warehouse line requires the Company to pay GMAC a non-use fee when the average outstanding principal amount of borrowings is less than 50% of the total commitment at a rate of 0.25% per annum on the daily average unutilized commitment. Borrowings are collateralized by the related mortgage loans held-for-sale. The committed line of credit expires on March 31, 2005. Upon expiration, management believes it will either renew its existing line or obtain sufficient additional lines. This line of credit agreement generally requires the Company to comply with various financial and non-financial covenants. In particular, the Company must maintain a minimum cash balance of $15.0 million in addition to the requirement that the Company maintain at least one other committed warehouse facility of no less than $100 million. Failure to comply with these, or any other covenants, could result in the obligation to repay all amounts then outstanding. The Company had to obtain a waiver as a result of failure to meet a current ratio covenant for the months ended April 30, 2003 and May 31, 2003, but was in compliance with all covenants for this agreement for all other periods and at December 31, 2003.

The Company has an uncommitted warehouse line of credit for borrowings of up to $200 million for the interim financing of mortgage loans with Merrill Lynch Mortgage Capital Inc. The interest rate charged on borrowings against these funds is variable based on LIBOR plus various percentage points. Borrowings are collateralized by the related mortgage loans held-for-sale. The uncommitted line of credit expires on February 4, 2005. Upon expiration, management believes it will either renew its existing line or obtain sufficient additional lines. This line of credit agreement generally requires the Company to comply with various financial and non-financial covenants. In particular, the Company must maintain a minimum cash balance of $12.5 million. Failure to comply with these, or any other covenants, could result in the obligation to repay all amounts then outstanding. This line of credit facility was added subsequent to the year ended December 31, 2003.

The Company has an agreement to finance up to $400 million of mortgage loan inventory pending sale of these loans to the ultimate mortgage loan investors with Greenwich Capital. Of this amount, $200 million is available in committed funds. This loan inventory financing is secured by the related mortgage loans. The interest rate charged on borrowings against these funds is based on LIBOR plus various percentage points. As part of this agreement the Company had to pay a commitment fee of $1.0 million for the period of March 31, 2003 through March 30, 2004. The commitment fee was reduced to $750,000 for the period March 15, 2004 through March 14, 2005. The line requires the restriction of $2.5 million in cash as additional collateral, however, in March 2004, the line was amended to remove this restriction. The line expires March 14, 2005. Upon expiration, management believes it will either renew its existing line or obtain sufficient additional lines. This agreement includes various financial and non-financial covenants. In particular, the Company must maintain a minimum cash and cash equivalents balance of $15 million. Additionally, the Company is required to maintain at least one other warehouse facility of no less than $75 million in committed funds. Failure to comply with these, or any other covenants, could result in the obligation to repay all amounts then outstanding. The Company was in compliance with all debt covenants for this agreement during the year ended and at December 31, 2003.

On June 14, 2002, the Company secured a $10 million line of credit facility with Merrill Lynch Mortgage Capital, Inc. to support the interim funding of auto loans prior to the sale to the ultimate auto loan purchaser. The interest rate charged on this line is based on LIBOR plus various percentage points. This facility requires the Company to pay an unused line fee equal to 0.50% per year on the average daily unused line balance. This facility expires on July 13, 2004. Upon expiration, management believes it will either renew its existing line or obtain sufficient additional lines. This agreement includes various financial and non-financial covenants. In particular, the Company must maintain a minimum cash and cash equivalents balance of $15 million (including Restricted Cash). Additionally, the Company is prohibited from obtaining or incurring any debt or contingent liability in excess of $5 million without prior consent from the lender. Failure to comply with these, or any other covenants, could result in the obligation to repay all amounts then outstanding. The Company was in compliance with all debt covenants for this agreement during the year ended and at December 31, 2003.

The following table summarizes the key terms of our current warehouse and other lines payable:

                                    GMAC     Greenwich    Merrill     Merrill
                                  Mortgage    Capital      Lynch       Lynch
                                    $75M       $400M       $200M        $10M
                                 ----------  ----------  ----------  ----------
Cost of Funds
   Spread over LIBOR             1.25%-2.0%  0.75%-1.25% 0.75%-1.0%  1.0%-2.0%

Covenants
   Minimum Cash                  $15.0M      $15.0M      $12.5M      $15.0M (1)
   Minimum Tangible Net Worth    $40.0M      $60.0M      $40.0M      $25.0M
   Debt to Tangible Net Worth    10:1        10:1        12:1        --
                                                         Net Worth >
                                                         80% prior
   Profitability                 --          --          2 qtrs      --
   Current Ratio                 1.0:1.0     --          --          1.0:1.0
   Additional Facility           $100.0M     $75.0M      --          --

Advance Rates                    95%-100%    96%-99%     96%-99%     92%-97%

(1) Inclusive of all restricted cash, not to exceed $5 million

On July 12, 2001 the Company issued a $5.0 million convertible note to The Charles Schwab Corporation, which was convertible into shares of its common stock at a conversion price of $1.06 per share and which was scheduled to mature on January 19, 2003. The convertible note bore interest at a rate of 8% per annum and was payable quarterly. On March 14, 2002, the Company elected to redeem the note prior to its maturity date. Under the terms of the note, the Company notified Schwab of its intent to redeem the note on April 15, 2002 by payment of $5,250,000 (105% of the unpaid principal as of the date of redemption). On April 12, 2002, The Charles Schwab Corporation exercised its option to convert the amount due under the note into 4,716,981 shares of the Company's common stock, in lieu of repayment, and therefore the note was converted rather than redeemed.

On June 30, 2003, the Company obtained a $5 million line of credit from Wells Fargo Bank, National Association to support working capital needs. The interest rate charged on borrowings against these funds is based on LIBOR plus 2%, and is payable monthly. The line of credit expires on June 30, 2004. On December 11, 2003, the agreement was amended to reduce the line of credit to $2,350,000 and extend the expiration date to June 30, 2005. As part of the amendment, the Company was required to provide restricted cash as collateral for this line of credit. Currently, the line of credit is being utilized to support letters of credit related to the new Pleasanton, California facility as well as a letter of credit related to the Company's surety bonds. The Company was in compliance with all debt covenants for this agreement during the year ended and at December 31, 2003.

The adequacy of our liquidity depends on our ability to successfully generate positive cash flow from an appropriate combination of efficient operations and improvements therein, financing from third parties and access to capital markets. With $34.0 million of cash on hand at December 31, 2003 and borrowing capacity under our warehouse and other lines of credit of $687 million, we believe our liquidity (including operating and other cash flows that we expect to generate) will be sufficient to meet operating cash flow requirements as they occur for at least the next twelve months; however, our ability to maintain positive liquidity going forward depends on our ability to generate cash from operations and access to the financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory and other market factors that are beyond our control.

The following are return on equity and asset ratios for the years ended December 31, 2002 and 2003:

                                    December 31,
                                  2002       2003
                                ---------  ---------
Return on assets (1)..........       3.2        7.7
Return on equity (2)..........      22.2       32.9
Equity to assets (3)..........      14.5       23.4

(1) Net income divided by average total assets, multiplied by 100.

(2) Net income divided by average equity, multiplied by 100.

(3) Average equity divided by average total assets, multiplied by 100.

FACTORS AFFECTING FUTURE OPERATING RESULTS

The following important factors, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this report or presented elsewhere by management from time to time.

While we achieved our first profitable year during fiscal year 2002, we have a history of losses, and we may not be able to maintain profitability.

While we achieved our first profitable year during 2002, we have an accumulated deficit of $183.6 million, as of December 31, 2003. In the fourth quarter of 2003, we experienced a pre-tax loss of $1.5 million and may not regain or increase profitability on a quarterly or annual basis in the future. If revenues grow more slowly than we anticipate, or if operating expenses exceed our expectations or cannot be adjusted accordingly, our business, results of operations and financial condition will be adversely affected.

We have a limited operating history and consequently face significant risks and challenges in building our business.

We were incorporated in August 1996, initiated our online mortgage operations in June 1997 and acquired our online auto operations in September 1999. We cannot assure that the Company will be able to operate successfully if a downturn in the mortgage or auto business occurs. As a result of our limited operating history, our recent growth and our reporting responsibilities as a public company, we may need to expand operational, financial and administrative systems and control procedures to enable us to further train and manage our employees and coordinate the efforts of our underwriting, accounting, finance, marketing, and operations departments.

Our quarterly financial results are vulnerable to significant fluctuations and seasonality, which could adversely affect our stock price.

Our revenues and operating results may vary significantly from quarter to quarter due to a number of social and economic factors. Certain months or quarters historically experience greater volumes of mortgage and auto loan applications and funded loans. Moreover, the level and direction of interest rates regulate the relative volatility of seasonal loan origination cycles. As a result, we believe that quarter-to-quarter comparisons of our operating results may not be a good indication of our future performance. It is possible that in some future periods our operating results may not meet the expectations of market analysts and investors. In this event, the price of our common stock may fall.

Interest rate fluctuations could significantly reduce customers' incentive to refinance existing mortgage loans.

Rising interest rates generally reduce the demand for mortgage loans. Due to the low interest rate environment for the last several years, a significant percentage of our mortgage customers used our services to refinance existing mortgage loans. As mortgage interest rates have risen, consumers' incentive to refinance has been greatly reduced and the number of refinance loans that we originated and the revenues generated from those loans declined significantly. In an environment of rising or high interest rates relative to the interest rates on existing loans, refinance loan revenue could continue to decline. If we are unable to increase diversified product revenue to offset the decline in refinance loan activity, our business and results of operations may be adversely affected.

Our ability to engage in profitable secondary sales of loans may also be adversely affected by increases in interest rates.

The mortgage loan purchase commitments we obtain are contingent upon our delivery of the relevant loans to the purchasers within specified periods. To the extent that we are unable to deliver the loans within the specified periods and interest rates increase during those periods, we may experience no gain or even a loss on the sale of these loans. In addition, any increase in interest rates will increase the cost of maintaining our warehouse and repurchase lines of credit on which we depend to fund the loans we originate. The interest direct margin earned on loans held-for-sale significantly benefited from the spread between long-term and short-term interest rates starting in 2001 and continuing through the second quarter of 2003. Based on historical trends, we do not expect the same level of benefit from interest rate spreads in a normal market. We have implemented a hedging program to manage the risk of loss due to fluctuations in interest rates, but our hedging efforts may not be successful, and no hedging strategy can completely eliminate interest rate risk. A sharp decrease in interest rates over a short period may cause customers who have interest rates on mortgage loans committed through us to either delay closing their loans or refinance with another lender. If this occurs in significant numbers, it may have an adverse effect on our business or quarterly results of operations.

Our hedging strategy may not succeed in reducing our exposure to losses caused by fluctuations in interest rates.

We attempt to manage our interest rate risk exposure on mortgage loan interest rate locks through hedging transactions using a combination of forward sales of mortgage-backed securities and forward whole- loan sales to fix the sales price of loans we expect to fund. An effective hedging strategy is complex, and we have limited experience administering a hedging program. A successful hedging program depends in part on our ability to properly estimate the number of loans that will actually close and is subject to fluctuations in the prices of mortgage-backed securities, which do not necessarily move in tandem with the prices of loans we originate and close. To the extent that we implement a hedging strategy but are unable to effectively match our purchases and sales of mortgage-backed securities with the sale of the closed loans we have originated, our gains on sales of mortgage loans will be reduced, or we will experience a net loss on those sales. In addition, in September 2003, we began managing our interest rate exposure related to our auto loan approvals by entering into amortizing swap contracts. Approved auto loan applicants are provided a guaranteed rate for up to a 45 day period. To the extent that we implement a hedging strategy but are unable to effectively match our coverage with anticipated loan volume, it is possible that we could experience a net loss on those loan approvals. Finally, if we are unable to obtain the necessary liquidity to execute our hedging programs through multiple hedge counterparties, our hedging strategy may not succeed. We currently have one counter-party for auto hedging and 14 counterparties for mortgage hedging.

Uncertainty with respect to the time it takes to close mortgage loans can lead to unpredictable revenue and profitability.

The time between the date an application for a mortgage loan is received from a customer and the date the loan closes can be lengthy and unpredictable. The loan application and approval process is often delayed due to factors over which we have little or no control, including the timing of the customer's decision to commit to an available interest rate, the close of escrow date for purchase loans, the timeliness of appraisals and the adequacy of the customer's own disclosure documentation. Purchase mortgage loans generally take longer to close than refinance loans as they are tied to the close of the property sale escrow date. This uncertain timetable can have a direct impact on our revenue and profitability for any given period. We may expend substantial funds and resources supporting the loan fulfillment process and never generate revenue from closed loans. Therefore, our results of operations for a particular period may be adversely affected if the mortgage loans applied for during that period do not close in a timely manner or at all.

The increasing number of federal, state and local "anti-predatory lending" laws may restrict our ability to originate certain mortgage loans, or increase our risk of liability or cost of doing business.

The enactment of federal, state and local laws, rules and regulations intended to eliminate so-called "predatory" lending practices impose restrictions on loans on which certain points and fees or the annual percentage rate ("APR") exceed specified thresholds. Our mortgage loan purchasers and warehouse lenders are willing to buy or finance only a very limited selection of such loans, and these loans are subject to greater risks for actual or perceived non-compliance with such laws, rules and regulations, including demands for indemnification or loan repurchases from our loan purchasers, class action lawsuits, increased defenses to foreclosure of individual loans in default, individual claims for monetary damages, and administrative enforcement actions. The continued enactment of these laws, rules and regulations may prevent us from making certain loans and may cause us to reduce the APR or the points and fees on loans that we do make. In addition, the difficulty of managing the risks presented by these laws, rules and regulations may decrease the availability of warehouse financing and the overall demand for certain subprime loans, making it difficult to fund or sell such loans. The growing number of these laws, rules and regulations may increase our cost of doing business, as we are required to develop systems and procedures to ensure that we do not violate any aspect of these new requirements. Any of the foregoing could adversely affect our business and results of operations.

We have recently experienced significant growth in our business, and if we are unable to manage this growth, our business will be adversely affected.

Over the past two years we have experienced significant growth, which has placed a strain on our resources and will continue to do so in the future. Our failure to manage this growth effectively could adversely affect our business. We may not be successful in managing or expanding our operations or maintaining adequate management, financial and operating systems and controls. Our headcount has grown substantially. At December 31, 2002 and 2003, we had 688 and 832 full-time employees (including temporary and contract employees), respectively.

Our future success is dependent upon increased acceptance of the internet by consumers and lenders as a medium for lending.

Our success will depend in large part on widespread consumer acceptance of obtaining mortgage and auto loans online. Increased consumer use of the Internet to provide for their lending needs is subject to uncertainty. The development of an online market for mortgage and auto loans has only recently begun, is rapidly evolving and likely will be characterized by an increasing number of market entrants. If consumer acceptance of the Internet as a source for mortgage, home equity and auto loans does not increase, our business, results of operations and financial condition will be adversely affected. A number of factors may inhibit Internet usage by consumers, including privacy and security concerns regarding their personal information. The adoption of online lending requires the acceptance of a new way of conducting business, exchanging information and applying for credit by consumers that have historically relied upon traditional lending methods. As a result, we cannot be sure that we will be able to compete effectively with traditional borrowing and lending methods.

The termination of one or more of our mortgage funding sources would adversely affect our business.

We depend on GMAC Mortgage Corporation, formerly GMAC Bank ("GMAC Mortgage"), Greenwich Capital Financial Products, Inc. ("Greenwich Capital") and Merrill Lynch Mortgage Capital Inc. ("Merrill Lynch") to finance our mortgage loan activities through the warehouse credit facilities they provide. If any of these warehouse credit facilities becomes unavailable, our business would be adversely affected. Under our agreements with each of these lenders, we make extensive representations, warranties and various operating and financial covenants. A material breach of these representations, warranties or covenants on any of our lines could result in the termination of our agreements and an obligation to repay all amounts outstanding at the time of termination. In the past, we have had to obtain waivers from our warehouse lenders as a result of our failure to comply with covenants regarding the issuance of capital stock, excess asset purchases and our failure to meet financial ratios. More recently, we obtained a waiver from one of our warehouse lenders due to a failure to meet a current ratio covenant for the months ended April 30 and May 31, 2003. Our agreement with Greenwich Capital expires on March 14, 2005, our agreement with GMAC Mortgage expires on March 31, 2005 and our agreement with Merrill Lynch expires on February 4, 2005. Upon expiration of these agreements, management believes it will either renew its existing warehouse credit facilities or obtain sufficient additional credit facilities. However, we cannot assure that these agreements will be renewed or extended past their current expiration dates, and additional sources of funding for our mortgage loans may not be available on favorable terms or at all.

The termination of our auto line of credit would adversely affect our business.

We have obtained a line of credit from Merrill Lynch Mortgage Capital Inc. to finance the funding of our auto loans, and this is our sole facility for auto loan fundings. If this credit facility becomes unavailable, our business could be adversely affected. Under our line of credit agreement, we make extensive representations, warranties and various operating and financial covenants. A material breach of these representations, warranties or covenants could result in the termination of the facility and an obligation to repay all amounts outstanding at the time of termination. In the past we have had to obtain waivers from our previous auto line of credit provider (Bank One, N.A.) as a result of our failure to comply with a covenant regarding a debt to tangible net worth ratio. Our line of credit with Merrill Lynch Mortgage Capital Inc. expires July 13, 2004. Upon expiration, management believes it will either renew its existing line or obtain sufficient additional lines. However, we cannot assure you that this agreement will be renewed or extended past its current expiration date, and additional sources of funding for our auto loans may not be available on favorable terms or at all.

We are primarily dependent on two loan purchasers for all of our home equity business.

For the year ended December 31, 2003, the majority of our home equity loans were purchased by Wells Fargo Bank and The Provident Bank pursuant to Home Equity Loan/Line Purchase Agreements. If either loan purchaser is unable or unwilling to purchase our home equity loans, we may experience delays in our ability to accept or process home equity loan applications until we are able to secure new sources of loan purchasers. Sufficient additional sources of loan purchasers for our home equity loans may not be available on favorable terms or at all.

We are dependent on one loan purchaser for all of our auto loan business.

We currently sell all of our prime auto loans to E-Loan Auto Fund One, LLC, a qualified special purpose entity (QSPE). The QSPE is dependent on Merrill Lynch Bank USA to provide the necessary financing to continue purchasing loans from us. If Merrill Lynch Bank USA is unable or unwilling to provide continuing financing to the QSPE, additional forms of financing may not be available on favorable terms or at all.

We depend on the timely and competent services of various companies involved in the mortgage process; if these companies fail to timely and competently deliver these services, our business and reputation will be directly and adversely affected.

We rely on other companies to perform services related to the loan underwriting process, including appraisals, credit reporting and title searches. Any interruptions or delays in the provision of these services may cause delays in the processing and closing of loans for our customers. If we are unsuccessful in managing the timely delivery of these services we will likely experience increased customer dissatisfaction and our business and reputation could be adversely affected.

The loss of our relationship with any of our significant providers of automated underwriting would have an adverse effect on our business.

We depend on automated underwriting and other services offered by government sponsored and other mortgage investors, including Fannie Mae and Freddie Mac ("Agencies"), to help ensure that our mortgage services can be offered efficiently and on a timely basis. We currently have an agreement with the Agencies that authorizes our use of their automated underwriting services and enables us to sell qualified first mortgages to these Agencies. We cannot assure that we will remain in good standing with the Agencies or that the Agencies will not terminate our relationship. We expect to continue to process a significant portion of our conforming mortgage loans using the Agencies' systems. Our agreement with the Agencies can be terminated by either party. The termination of our agreements with the Agencies would adversely affect our business by reducing our ability to streamline the mortgage origination process.

Any outages, delays or other difficulties experienced internally or through internet service providers, online service providers or other website operators on which our users depend could adversely affect our business.

Due to the complexities of providing effective and responsive internet based products and services to customers, our information technology business model could experience delays and outages caused by a number of factors. Our IT platform is an integration of complex technologies ranging from proprietary and open source technologies to commercially available licensed technologies from industry leaders such as Cisco Systems, Sun Microsystems and Oracle. Although our IT business systems are designed to minimize downtime in the normal course of business, we cannot assure our service levels can be maintained in all possible disaster scenarios. Moreover, our users depend on Internet service providers, online service providers and other website operators for access to our website. Many Internet users have experienced significant outages in the past, and could experience outages, delays and other difficulties due to component or system failures unrelated to our systems. Any of these problems could adversely affect our business.

Our business will be adversely affected if we are unable to safeguard the security and privacy of our customers' financial data.

Internet usage could decline if any well-publicized compromise of security occurred. We may incur significant costs to protect against the threat of security breaches or to alleviate problems caused by any breaches that occur. We also retain on our premises personal financial documents we receive from prospective borrowers in connection with their loan applications. These documents are highly sensitive and if a third party were to misappropriate our customers' personal information, customers could possibly bring legal claims against us. We cannot assure that our privacy policy will be deemed sufficient by our prospective customers or compliant with any federal or state laws governing privacy, which may be adopted in the future.

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate movements significantly impact our volume of closed loans and represent the primary component of market risk to us. In a higher interest rate environment, consumer demand for mortgage loans, particularly refinancing of existing mortgages, declines. Interest rate movements affect the interest income earned on loans held for sale, interest expense on the warehouse lines payable, the value of mortgage loans held for sale and ultimately the gain on sale of mortgage and auto loans.

We attempt to minimize the interest rate risk associated with the time lag between when fixed rate mortgage loans are rate-locked and when they are committed for sale or exchanged in the secondary market, through our hedging activities. Individual mortgage loan risks are aggregated by loan type and stage in the pipeline, and are then matched, based on duration, with the appropriate hedging instrument, thus mitigating basis risk until closing and delivery. We currently hedge our mortgage pipeline through mandatory forward sales of Fannie Mae mortgage-backed securities in addition to both mandatory and best efforts forward loan sale agreements with the ultimate investor. We determine which alternative provides the best execution in the secondary market. In addition, we do not believe our net interest income would be materially affected as a result of concurrent changes in long-term and short-term interest rates due to the short duration of time loans are held on the balance sheet prior to being sold (approximately thirty days). We manage our interest rate exposure related to auto loan approvals by entering into amortizing swap contracts.

We believe that we have implemented a cost-effective hedging program to provide a high level of protection against changes in the market value of rate-lock commitments. However, an effective strategy is complex and no hedging strategy can completely insulate the Company against such changes.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Report of Independent Auditors, Financial Statements and Notes to Financial Statements begin on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

As of December 31, 2003, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e)). Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective at a reasonable level in timely alerting them to material information relating to the Company that is required to be included in the Company's periodic filings with the Securities and Exchange Commission. There has been no change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting.

The Company's management, including the Chief Executive Officer and Chief Financial Officer, do not expect that the Company's disclosure controls or internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met due to numerous factors, ranging from errors to conscious acts of an individual, or individuals acting together. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in a cost-effective control system, misstatements due to error and/or fraud may occur and not be detected.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The information regarding directors and executive officers appearing under the headings "Nominees," "Nominating Committee", "Section 16 (a) Beneficial Ownership Reporting Compliance" and "Family Relationships" of our proxy statement relating to our 2004 Annual Meeting of Stockholders to be held on June 11, 2004 (the "2004 Proxy Statement") is incorporated into this item by reference.

The Company has adopted a code of ethics that applies to all employees, including its principal executive officer, principal financial officer, principal accounting officer and its Board of Directors. A copy of the code of ethics is available on the Company's website at www.eloan.com. The registrant intends to satisfy the disclosure requirement under Item 10 of Form 8-K regarding an amendment to, or a waiver from, a provision of its code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions, by posting such information on its website at the website address set forth above.

The names of the executive officers of the Company and their ages, titles, and biographies as of the date hereof are set forth below:

Christian A. Larsen; age 43; Chief Executive Officer, President and Chairman of the Board.

Mr. Larsen co-founded the Company in August 1996, has served as its Chief Executive Officer since June 1998 and was named Chairman of the Board in March 2001. From August 1996 to June 1998, Mr. Larsen served as the Company's President. Mr. Larsen has been a director of the Company since its incorporation in August 1996. From October 1992 to August 1996, Mr. Larsen was the President of Palo Alto Funding Group, the mortgage brokerage he co-founded in 1992 and the Company's predecessor company. Mr. Larsen holds an M.B.A. degree from Stanford University and a B.S. degree from San Francisco State University.

Mark E. Lefanowicz; age 46; Chief Operating Officer and Director.

Mr. Lefanowicz has served as Chief Operating Officer of E-LOAN since January 2004 and as a Director of the company since October 2002. Mr. Lefanowicz served as Executive Vice President and Chief Financial Officer at Bay View Capital Corporation, a diversified financial services company headquartered in San Mateo, Calif. and parent company to Bay View Bank. Prior to Bay View Capital, Mr. Lefanowicz served as Chief Financial Officer of Provident Funding Associates, now one of the five largest wholesale residential lenders in the country. Mr. Lefanowicz also served in a variety of senior management positions at Coopers & Lybrand. As Partner-in-Charge of Coopers & Lybrand West Region Financial Services Practice, he was responsible for developing the firm's overall business goals, strategies and operations for banks, savings and loans, and mortgage banks located on the West Coast. Mr. Lefanowicz holds a B.S. degree in Accounting from the University of Wyoming. Having earned his CPA in 1980, he is also a member of AICPA and CACPA.

Matthew Roberts; age 35; Chief Financial Officer and Secretary.

Mr. Roberts has served as Chief Financial Officer of the Company since December 2000. From January 1999 to November 2000, Mr. Roberts served as the Company's Vice President of Finance. Prior to joining the Company, Mr. Roberts served as Corporate Controller of NetDynamics from April 1997 to January 1999 (acquired by Sun Microsystems). From March 1994 to April 1997, Mr. Roberts held senior financial and operational management positions at Berkeley Systems. Mr. Roberts is a certified public accountant and holds a B.S. degree in Accounting from Santa Clara University.

Harold "Pete" Bonnikson; age 49; Vice President of Operations.

Mr. Bonnikson has served as Vice President of Operations of the Company since January 1999. Prior to joining the Company, Mr. Bonnikson was with North American Mortgage and its predecessor companies since 1981. Mr. Bonnikson was the Executive Vice President of North American Mortgage from 1993 to 1999. Mr. Bonnikson holds a B.S. degree from California State University at Sacramento.

Geoffrey Halverson; age 60; Vice President of Auto Operations.

Mr. Halverson has served as the Company's Vice President of Auto Operations since May 2003. Prior to joining the Company, from 1999 until 2002, Mr. Halverson was an Executive VP at PeopleFirst.com, a Capital One Company, where he built the operating infrastructure and lending platform for this start up online auto finance lender. From 1996 to 1999, he was the IT Director, Strategic Financial Planning and Activity Based Costing for Ameritech Corporation. In 1994, he founded AutoTRENDS Consulting to provide consulting services to the financial services industry. Working with CEOs, he conducted in-depth market analysis by county; developed market and product differentiation strategies based on interviews and feedback from dealers; prepared information technology strategies along with operational workflows and process mapping; and developed detailed profitability projections for startup and continuing operations of existing portfolios. Mr. Halverson was an Operations Group Manager for Progressive Insurance from 1990 to 1994 and held the position of VP of Business Operations and Credit Risk at Security Pacific Auto Finance from 1988 to 1990. Mr. Halverson also served as the CFO of a Tier 2 supplier of injection molded and extruded plastic components for Ford, General Motors and Chrysler. His finance and operational process experience in financial services is substantial and initially was developed at Ford Credit and Ford Motor Company. Mr. Halverson has taught Applied Mathematics and Computer Science at the college level and holds an MBA with concentration in Finance from Northern Illinois University and a Bachelor of Arts in Mathematics from Lawrence University.

Etienne Handman; age 43; Chief Technology Officer.

Mr. Handman has served as the Company's Chief Technology Officer since November 2000. Prior to joining the Company, Mr. Handman served as Vice President of Technology of Oberthur Card Systems from September 1999 to November 2000 and Vice President of Operations for De La Rue from May 1983 to September 1999. Mr. Handman completed Stanford University's Executive Program and holds a B.A. degree in Mathematics and Computer Science from McGill University in Montreal, Quebec, Canada.

Eduardo Pretell; age 37; Vice President of Marketing.

Mr. Pretell has served as the Company's Vice President of Marketing since March 2004. Mr. Pretell served as the Company's Vice President of Product Management from May 2000 to February 2004. From October 1999 to April 2000 he was the Director of Product Management and prior to that held senior product marketing positions within the Company since joining January 1999. Between September 1997 and December 1999, Mr. Pretell was an independent marketing consultant serving web-based companies. From October 1995 to August 1997 Mr. Pretell worked in product marketing roles at Intuit. From September 1993 to September 1995 Mr. Pretell was a marketing management consultant at Booz Allen and Hamilton. From September 1988 to August 1991 Mr. Pretell worked in marketing and technology management roles at Prudential Insurance. Mr. Pretell holds an M.B.A. degree from Stanford University's Graduate School of Business and a B.A. from Haverford College.

Sedrick A. Tydus; age 51; Vice President of Home Equity Operations.

Mr. Tydus has served as Vice President of Home Equity Operations since July 2001. Prior to joining the Company, Mr. Tydus was the Executive Vice President of Premier Banking at Bank of America from November 1998 to November 2000. From March 1998 to November 1998, Mr. Tydus was the Executive Vice President of California Retail Marketing at the Bank of America. From November 1996 to February 1998, Mr. Tydus was the Executive Vice President of Equity Loan Origination at Transamerica Home Loans. From 1990 to 1996, Mr. Tydus was the Executive Vice President of Northern California Retail Bank at Wells Fargo Bank. Mr. Tydus holds an M.B.A. degree from Stanford Business School and a B.A. degree from Dartmouth College.

ITEM 11. EXECUTIVE COMPENSATION

The information appearing under the headings "Compensation of Directors," "Compensation Committee," "Compensation Committee Interlocks and Insider Participation," "Compensation Committee Report of the Board of Directors," "Executive Compensation" and "Performance Graph" of our 2004 Proxy Statement is incorporated into this item by reference (except to the extent allowed by Item 402(a)(8) of Regulation S-K).

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information appearing under the heading "Equity Compensation Plan Information" of our 2004 Proxy Statement is incorporated into this item by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information appearing under the heading "Certain Relationships and Related Transactions" of our 2004 Proxy Statement is incorporated into this item by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information appearing under the heading "Fees to Independent Auditors for Fiscal 2003 and 2002" of our 2004 Proxy Statement is incorporated into this item by reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. The following financial statements of E-LOAN, Inc. and its subsidiaries are found in this Annual Report on Form 10-K for the fiscal year ended December 31, 2003:

FINANCIAL STATEMENTS	Page
Report of Independent Auditors	F-2
Balance Sheets	F-3
Statements of Operations	F-4
Statements of Stockholders' Equity	F-5
Statements of Cash Flows	F-6
Notes to the Financial Statements	F-7

2. Financial Statement Schedules.

All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

(b) Reports on Form 8-K. E-LOAN filed or furnished the following Current Reports on Form 8-K during the fourth quarter of 2003:

Current Report on Form 8-K filed with the SEC October 24, 2003 for the purpose of reporting under Item 5 thereof that E-LOAN relocated its executive offices from 5875 Arnold Road, Suite 100, Dublin, California 94568 to 6230 Stoneridge Mall Road, Pleasanton, California 94588;

Current Report on Form 8-K furnished to the SEC on October 29, 2003 for the purpose of reporting under Item 9 and Item 12 thereof E-LOAN's third quarter financial results.

(c) Exhibits

3.1	Restated Certificate of Incorporation of E-LOAN dated July 2, 1999 (3)
3.2	Corrected Certificate of Amendment of Restated Certificate of Incorporation of E-LOAN, Inc. dated February 15, 2001 (5)
3.3	Amended and Restated Bylaws of E-LOAN, Inc. dated March 16, 2001 (5)
4.1	Stock Purchase Warrant issued to Greenwich Financial Products Inc. dated February 23, 2001 (5)
10.1	1997 Stock Plan dated August 30, 1999 (2)
10.2	1999 Employee Stock Purchase Plan dated October 25, 1999 (2)
10.3	Form of Indemnification Agreement between the Registrant and each of its directors and officers (1)
10.4	Loan Purchase Agreement with Norwest Funding Inc. dated May 18, 1998
10.5	Mortgage Loan Purchase and Sale Agreement with Greenwich Capital Financial Products, Inc. dated September 25, 1998 (1)
10.6	Loan Purchase Agreement with Aurora Loan Services Inc. dated August 23, 2000
10.7	Home Equity Loan/Line Purchase Agreement with Wells Fargo Bank West, N.A. and Wells Fargo Bank, N.A. dated November 1, 2000 (4)*
10.8	Warehouse Credit Agreement with GMAC Bank dated as of November 1, 2001 (6)
10.9	First Modification Agreement with GMAC Bank dated as of November 1, 2001 (6)
10.10	Warehouse Security Agreement with GMAC Bank dated as of November 1, 2001 (6)
10.11	Second Modification Agreement with GMAC Bank dated December 17, 2001(7)
10.12	Correspondent Agreement with The Provident Bank dated January 18, 2002 (11)*
10.13	Correspondent Agreement with GMAC Mortgage Corporation dated January 25, 2002
10.14	Promissory Note with Greenwich Capital Financial Products, Inc. dated March 21, 2002(7)
10.15	Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated March 21, 2002(7)
10.16	Fourth Modification Agreement with GMAC Bank dated March 28, 2002(7)
10.17	Third Modification Agreement with GMAC Bank dated February 26, 2002 (8)
10.18	Advertising, Marketing and Linking Agreement with zipRealty, Inc. dated April 15, 2002 (8)*
10.19	Fifth Modification Agreement with GMAC Bank dated April 18, 2002 (8)
10.20	Sixth Modification Agreement with GMAC Bank dated April 30, 2002 (8)
10.21	Seventh Modification Agreement with GMAC Bank dated May 29, 2002 (8)
10.22	Limited Liability Company Agreement of E-LOAN Auto Fund One, LLC, a wholly-owned subsidiary of E-LOAN, Inc. dated May 21, 2002 (8)
10.23	Certificate of Formation of E-LOAN Auto Fund One, LLC, a wholly-owned subsidiary of E-LOAN, Inc., dated May 21, 2002 (8)
10.24	Credit Agreement between E-LOAN Auto Fund One, LLC, E-LOAN, Inc. and Merrill Lynch Bank USA dated as of June 1, 2002 (8)
10.25	Administration Agreement between E-LOAN Auto Fund One, LLC and E-LOAN, Inc. dated as of June 1, 2002 (8)
10.26	Security Agreement between E-LOAN Auto Fund One, LLC and Merrill Lynch Bank USA dated as of June 1, 2002 (8)
10.27	Servicing and Custodian Agreement by and among Systems & Servicing Technologies, Inc., E-LOAN Auto Fund One, LLC and E-LOAN, Inc. dated as of June 1, 2002 (8)
10.28	Contribution and Sale Agreement between E-LOAN Auto Fund One, LLC and E-LOAN, Inc. dated as of June 1, 2002 (8)
10.29	Seventh Modification Agreement with GMAC Bank dated May 29, 2002 (9)
10.30	Amendment Number One to Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated July 1, 2002 (9)
10.31	Eighth Modification Agreement with GMAC Bank dated July 31, 2002 (9)
10.32	Ninth Modification Agreement with GMAC Bank dated August 21, 2002 (9)
10.33	Amendment Number Two to Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated August 26, 2002 (9)
10.34	Mortgage Loan Purchase Agreement with Countrywide Home Loans, Inc. dated September 11, 2002 (9)
10.35	Tenth Modification Agreement with GMAC Bank dated September 30, 2002 (9)
10.36	Amendment Number Three to Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated September 30, 2002 (10)
10.37	Indemnification Agreement with Etienne Handman dated October 1, 2002 (11)
10.38	Indemnification Agreement with Sedrick Tydus dated October 1, 2002 (11)
10.39	Indemnification Agreement with Claus Henrik Lund dated October 1, 2002 (11)
10.40	Indemnification Agreement with Mark E. Lefanowicz dated October 29, 2002 (11)
10.41	Director Agreement with Mark E. Lefanowicz dated October 29, 2002 (11)
10.42	Eleventh Modification Agreement with GMAC Bank dated October 29, 2002 (11)
10.43	Amendment Number Four to Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated March 12, 2003 (11)
10.44	Amendment Number Five to Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated March 31, 2003 (11)
10.45	Twelfth Modification Agreement and Agreement for E-Services with GMAC Bank dated February 21, 2003 (12)
10.46	Master Mortgage Loan Purchase and Interim Servicing Agreement with Greenwich Capital Financial Products, Inc. dated February 1, 2003 (12)
10.47	Seller's Purchase, Warranties and Interim Servicing Agreement with DLJ Mortgage Capital, Inc. dated April 1, 2003 (12)
10.48	Indemnification Agreement with Geoff Halverson dated April 14, 2003 (12)
10.49	Thirteenth Modification Agreement with GMAC Bank dated May 7, 2003 (12)
10.50	Second Amendment to Credit Agreement with E-Loan Auto Fund One LLC and Merrill Lynch Bank USA dated June 3, 2003 (13)
10.51	Fifteenth Modification Agreement with GMAC Bank dated June 18, 2003 (13)
10.52	Fourth Amended and Restated Note in favor of GMAC Bank dated June 18, 2003 (13)
10.53	Sublease with Charles Schwab & Co., Inc. dated June 20, 2003 (13)
10.54	Amendment Number Six to the Master Loan and Security Agreement with Greenwich Capital Financing Products, Inc. dated June 30, 2003 (13)
10.55	Promissory Note in favor of Greenwich Capital Financing Products, Inc. dated June 30, 2003 (13)
10.56	Third Amendment to Credit Agreement with E-Loan Auto Fund One LLC and Merrill Lynch Bank USA dated July 14, 2003 (13)
10.57	First Amendment to Servicing and Custodian Agreement with E-Loan Auto Fund LLC and Systems & Services Technologies, Inc. dated July 14, 2003 (14)
10.58	Fourteenth Modification Agreement with GMAC Bank dated August 11, 2003 (14)
10.59	Amendment Two to Marketing, Promotion, Distribution, and Related Services zipRealty, Inc. dated August 22, 2003 (14)+
10.60	Second Amendment to Servicing and Custodian Agreement with E-Loan Auto Fund LLC and Systems & Services Technologies, Inc. dated September 1, 2003 (14)
10.61	Sixteenth Modification Agreement with GMAC Bank dated September 10, 2003 (14)
10.62	Amendment Number Seven to the Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated September 16, 2003 (14)
10.63	Amendment Number Eight to the Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated September 24, 2003 (14)
10.64	Seventeenth Modification Agreement with GMAC Mortgage Corporation dated November 12, 2003
10.65	Amendment Number Nine to the Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated November 13, 2003
10.66	Home Equity Line of Credit (HELOC) Revolving Credit Loan Purchase, Sale & Servicing Agreement with Wachovia Bank, N.A. dated February 4, 2004+
10.67	Master Repurchase Agreement with Merrill Lynch Mortgage Capital, Inc. dated February 6, 2004
10.68	Separation Agreement and Release of Claims with Joseph J. Kennedy dated January 29, 2004
10.69	Eighteenth Modification Agreement with GMAC Mortgage Corporation dated January 13, 2004
10.70	Nineteenth Modification Agreement with GMAC Mortgage Corporation dated February 25, 2004
10.71	Amendment Number Ten to the Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated March 11, 2004
10.72	Severance Agreement and Release of Claims with Robert Purcell dated February 25, 2004
21.1	List of Subsidiaries of E-Loan, Inc.
23.1	Consent of PricewaterhouseCoopers LLP, Independent Auditors
31.1	Chief Executive Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002#
31.2	Chief Financial Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002#
32.1	Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002##
32.2	Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,asadopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002##

___________

1. Filed with Registration Statement on Form S-1 (No. 333-74945) filed on March 24, 1999, as amended, which Registration Statement became effective June 28, 1999.
2. Filed with Quarterly Report on Form 10-Q (FQE 09/30/99) on November 15, 1999, as amended.
3. Filed with Quarterly Report on Form 10-Q (FQE 06/30/00) on August 14, 2000.
4. Filed with Annual Report on Form 10-K (FYE 12/31/00) on April 2, 2001.
5. Filed with Annual Report on Form 10-K/A (FYE 12/31/00) on April 23, 2001.
6. Filed with Quarterly Report on Form 10-Q (FQE 09/30/01) on November 14, 2001.
7. Filed with Annual Report on Form 10-K (FYE 12/31/01) on April 1, 2002.
8. Filed with Quarterly Report on Form 10-Q (FQE 06/30/02) on August 14, 2002.
9. Filed with Quarterly Report on Form 10-Q (FQE 09/30/02) on November 14, 2002.
10. Filed with Current Report on Form 8-K on December 11, 2002.
11. Filed with Annual Report on Form 10-K (FYE 12/31/02) on March 31, 2003.
12. Filed with Quarterly Report on Form 10-Q (FQE 03/31/03 on May 15, 2003.
13. Filed with Quarterly Report on Form 10-Q (FQE 06/30/03) on August 13, 2003.
14. Filed with Quarterly Report on Form 10-Q (FQE 09/30/03) on November 14, 2003.

* Confidential Treatment Granted

+ Confidential Treatment Requested

# Filed herewith

## Furnished herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

E-LOAN, Inc., a Delaware corporation

By   /s/ Matthew Roberts

Matthew Roberts, Chief Financial Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Christian A. Larsen and Matthew Roberts, and each of them, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorneys-in-fact, or his substitute or substitutes, the power and authority to perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Christian A. Larsen Christian A. Larsen	Chief Executive Officer, President and Chairman of the Board of Directors	March 12, 2004
/s/ Mark Lefanowicz Mark Lefanowicz	Chief Operating Officer and Director	March 12, 2004
/s/ Robert C. Kagle Robert C. Kagle	Director	March 12, 2004
/s/ Wade Randlett Wade Randlett	Director	March 12, 2004
/s/ Claus H. Lund Claus H. Lund	Director, Audit Committee Chairman	March 12, 2004

E-LOAN, INC.

INDEX TO FINANCIAL STATEMENTS

FINANCIAL STATEMENTS	Page
Report of Independent Auditors	F-2
Balance Sheets	F-3
Statements of Operations	F-4
Statements of Stockholders' Equity	F-5
Statements of Cash Flows	F-6
Notes to the Financial Statements	F-7

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of E-LOAN, Inc.;

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1)) present fairly, in all material respects, the financial position of E-LOAN, Inc. and its subsidiary at December 31, 2003 and December 31, 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

San Francisco, California
March 12, 2004

E-LOAN, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 and 2003
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                                                   2002         2003
                                                                                -----------  -----------

ASSETS
Current assets:
    Cash and cash equivalents (includes $2,500 and $4,850 of
       restricted cash)....................................................... $    36,321  $    33,973
    Loans held-for-sale.......................................................     393,386       50,874
    Accounts receivable, prepaids and other current assets....................      10,779       28,287
                                                                                -----------  -----------
          Total current assets................................................     440,486      113,134
Fixed assets, net.............................................................       6,262       11,484
Retained interests in auto loans - trading....................................       3,969       11,658
Deposits......................................................................       1,319           --
                                                                                -----------  -----------
           Total assets....................................................... $   452,036  $   136,276
                                                                                ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Warehouse and other lines payable......................................... $   383,647  $    44,283
    Accounts payable, accrued expenses and other current liabilities..........      12,339       10,366
    Capital lease obligation..................................................          10           --
                                                                                -----------  -----------
           Total current liabilities..........................................     395,996       54,649
                                                                                -----------  -----------
           Total liabilities..................................................     395,996       54,649
                                                                                -----------  -----------
Commitments and contingencies (Note 19):
Stockholders' equity:
    Preferred stock, 5,000,000 $0.001 par value shares authorized at
      December 31, 2002 and December 31, 2003; 0 shares issued and
      outstanding at December 31, 2002 and December 31, 2003..................          --           --
    Common stock, 150,000,000 $0.001 par value shares authorized at
      December 31, 2002 and December 31, 2003; 59,420,446 and
      62,136,790 shares issued and outstanding at December 31, 2002
      and December 31, 2003...................................................          59           62
Additional paid-in capital....................................................     262,194      265,144
Accumulated deficit...........................................................    (206,213)    (183,579)
                                                                                -----------  -----------
           Total stockholders' equity.........................................      56,040       81,627
                                                                                -----------  -----------
           Total liabilities and stockholders' equity......................... $   452,036  $   136,276
                                                                                ===========  ===========

The accompanying notes are an integral part of these financial statements.

E-LOAN, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                            2001         2002          2003
                                                         -----------  -----------   -----------
Revenues (Note 16)..................................... $    67,950  $   103,288   $   153,008

Operating expenses:
    Operations.........................................      42,946       53,854        72,882
    Sales and marketing................................      16,785       25,365        41,368
    Technology.........................................       6,325        5,625         7,651
    General and administrative.........................       5,784        6,936         8,509
    Amortization of non-cash marketing costs...........       5,970           --            --
    Amortization of unearned compensation..............       5,164           --            --
    Amortization of goodwill and intangible assets.....      28,144           --            --
                                                         -----------  -----------   -----------
           Total operating expenses....................     111,118       91,780       130,410
                                                         -----------  -----------   -----------
Income (loss) from  operations.........................     (43,168)      11,508        22,598
Other income, net......................................       3,638          107         1,184
                                                         -----------  -----------   -----------
Income (loss) before taxes.............................     (39,530)      11,615        23,782
Income taxes...........................................          --         (964)       (1,148)
                                                         -----------  -----------   -----------
Net income (loss)...................................... $   (39,530) $    10,651   $    22,634
                                                         ===========  ===========   ===========

Net income (loss) per share:
    Basic.............................................. $     (0.73) $      0.18   $      0.37
                                                         ===========  ===========   ===========
    Diluted............................................ $     (0.73) $      0.18   $      0.34
                                                         ===========  ===========   ===========

    Weighted-average shares - basic....................      53,797       57,613        60,678
                                                         ===========  ===========   ===========
    Weighted-average shares - diluted..................      53,797       60,358        66,037
                                                         ===========  ===========   ===========

The accompanying notes are an integral part of these financial statements.

E-LOAN, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
($ IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                                                                           Market-
                                                                                  Addi-      ing                  Total
                                                Common Stock         Unearned    tional    Services   Accum-     Stock-
                                            -----------------------  Compensa-   Paid-in   Receiv-    ulated    holders'
                                               Shares      Amount      tion      Capital     able     Deficit    Equity
                                            ------------  ---------  ---------  ---------  --------  ---------  ---------
Balance at December 31, 2000...............  53,449,236  $      53  $  (8,625) $ 259,362  $ (5,970) $(177,334) $  67,486
Common stock issued upon
   exercise of stock options, net..........     272,104         --         --         87        --         --         87
Issuance of common stock through ESPP......     288,811          1         --        290        --         --        291
Issuance of warrants in relation to
   warehouse line..........................          --         --         --        300        --         --        300
Marketing Services Receivable, net of
   of amortization.........................          --         --         --         --     5,970         --      5,970
Unearned compensation......................          --         --      8,625     (3,461)       --         --      5,164
Net loss...................................          --         --         --         --        --    (39,530)   (39,530)
                                            ------------  ---------  ---------  ---------  --------  ---------  ---------
Balance at December 31, 2001...............  54,010,151         54         --    256,578        --   (216,864)    39,768
Common stock issued upon
   exercise of stock options, net..........     173,402         --         --        177        --         --        177
Issuance of common stock through ESPP......     519,912          1         --        470        --         --        471
Issuance of common stock through
   convertible debt, net of issuance costs.   4,716,981          4         --      4,634        --         --      4,638
Issuance of warrants in relation to
   line of credit..........................          --         --         --        335        --         --        335
Net income.................................          --         --         --         --        --     10,651     10,651
                                            ------------  ---------  ---------  ---------  --------  ---------  ---------
Balance at December 31, 2002...............  59,420,446         59         --    262,194        --   (206,213)    56,040
Common stock issued upon
   exercise of stock options, net..........   1,810,622          2         --      1,951        --         --      1,953
Issuance of common stock through ESPP......     905,722          1         --        999        --         --      1,000
Net income.................................          --         --         --         --        --     22,634     22,634
                                            ------------  ---------  ---------  ---------  --------  ---------  ---------
Balance at December 31, 2003...............  62,136,790  $      62  $      --  $ 265,144  $     --  $(183,579) $  81,627
                                            ============  =========  =========  =========  ========  =========  =========

The accompanying notes are an integral part of these financial statements.

E-LOAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003
(IN THOUSANDS)

                                                                    2001         2002          2003
                                                                 -----------  -----------   -----------
Cash flows from operating activities:
   Net income (loss)........................................... $   (39,530) $    10,651   $    22,634
   Adjustments to reconcile net income (loss) to net cash
     used in operating activities:
     Amortization of unearned compensation.....................       5,164           --            --
     Amortization of goodwill and intangible assets............      28,144           --            --
     Non-cash marketing costs..................................       5,970           --            --
     Gain on sale of equity investment.........................      (3,237)          --            --
     Depreciation and amortization of fixed assets.............       3,853        4,025         4,874
     Changes in operating assets and liabilities:
       Loans held-for-sale.....................................    (139,500)    (231,140)      342,512
       Retained interests in auto loans........................          --       (3,969)       (7,689)
       Accounts receivable, prepaids, deposits
         and other assets......................................       1,576       (2,471)      (16,189)
       Accounts payable, accrued expenses and
         other payables........................................      (4,394)       4,804        (1,973)
                                                                 -----------  -----------   -----------
         Net cash (used in) provided by operating activities...    (141,954)    (218,100)      344,169
                                                                 -----------  -----------   -----------
Cash flows from investing activities:
   Acquisition of fixed assets.................................      (2,233)      (4,072)      (10,096)
   Disposal of fixed assets....................................         190           --            --
   Proceeds from sale of equity investment.....................       4,708           --            --
                                                                 -----------  -----------   -----------
         Net cash (used in) provided by investing activities...       2,665       (4,072)      (10,096)
                                                                 -----------  -----------   -----------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net.................         373          621         2,953
   Proceeds from notes payable.................................      10,000           --        12,100
   Repayments of notes payable.................................      (7,060)          --       (12,100)
   Proceeds from warehouse and other lines payable.............   3,124,921    4,546,238     4,827,455
   Repayments of warehouse and other lines payable.............  (2,984,452)  (4,320,739)   (5,166,819)
   Payments on obligations under capital leases, net...........        (414)        (165)          (10)
                                                                 -----------  -----------   -----------
         Net cash (used in) provided by financing activities...     143,368      225,955      (336,421)
                                                                 -----------  -----------   -----------
Net increase (decrease) in cash................................       4,079        3,783        (2,348)
Cash and cash equivalents, beginning of period.................      28,459       32,538        36,321
                                                                 -----------  -----------   -----------
Cash and cash equivalents, end of period....................... $    32,538  $    36,321   $    33,973
                                                                 ===========  ===========   ===========
Supplemental cash flow information:
   Cash paid for interest...................................... $    10,037  $     8,856   $    10,237
                                                                 ===========  ===========   ===========
   Cash paid for income taxes.................................. $        --  $        27   $     3,427
                                                                 ===========  ===========   ===========
Non-cash financing activities:
   Furniture, equipment and software under capital leases...... $        97  $        --   $        --
                                                                 ===========  ===========   ===========
   Conversion of convertible debt into common stock.............$        --  $     5,000   $        --
                                                                 ===========  ===========   ===========

The accompanying notes are an integral part of these financial statements.

E-LOAN, Inc.
Notes to the Consolidated Financial Statements

1. The Company

E-LOAN, Inc. (the "Company") was incorporated on August 26, 1996 and began marketing its services in June 1997. The Company is a consumer direct lender of first and second mortgage loans, home equity loans and home equity lines of credit and auto loans. The Company operates as a single operating segment.

The Company completed its initial public offering of 4,020,000 shares of its common stock on June 28, 1999, raising $52.3 million, net of underwriting discount. Concurrently, the Company sold 960,061 shares of its common stock for $12.5 million, net of underwriting discount, in a private placement to Forum Holdings, Inc., an investment subsidiary of Group Arnault. The net proceeds of $62.5 million were received on July 2, 1999. Simultaneous with the closing of the initial public offering, all the convertible preferred stock and mandatorily redeemable convertible preferred stock were automatically converted into an aggregate of 20,493,921 shares of common stock. On April 25, 2000, the Company entered into a Securities Purchase Agreement with six institutional investors to sell an aggregate of 10,666,664 shares of common stock at a purchase price of $3.75 per share in a private placement. The aggregate gross proceeds of $40.0 million were received on June 15, 2000. On September 17, 1999, the Company acquired Electronic Vehicle Remarketing, Inc. ("EVRI"), a leading provider of online auto loans. Under the terms of the agreement, the Company issued 2,879,997 shares of common stock to five investors. As a result of the acquisition, the Company recorded $78.0 million in goodwill and $1.4 million of acquired intangible assets, which was amortized on a straight-line basis over a two-year period. This acquisition was accounted for as a purchase transaction.

Reclassification

Certain amounts in the financial statements have been reclassified to conform to the 2002 and 2003 presentation.

Principles of Consolidation

These consolidated financial statements include the accounts of E-Loan and its wholly owned subsidiary, Escrow Closing Services, Inc. ("ECS"). ECS was incorporated on October 10, 2003 and began marketing its services in November 2003. The amounts included in the accompanying consolidated balance sheet, statement of operations, statement of cash flows and statement of stockholders' equity are not material for the year ended December 31, 2003. All intercompany accounts and transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

Use of estimates in the preparation of financial statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers all highly liquid monetary instruments with an original maturity of three months or less from the date of purchase and documentary drafts, to be cash equivalents. As more fully described in Note 10, prior to March 2004, the Company was required to maintain a minimum cash and cash equivalents balance of the higher of $15 million (including $2.5 million of Restricted Cash). The following summarizes cash and cash equivalents at December 31, 2002 and 2003 (dollars in thousands):

                                                      December 31, December 31,
                                                         2002         2003
                                                      -----------  -----------
Cash................................................ $    33,221  $    28,179
Certificates of deposit, unrestricted.................       600           75
Documentary drafts..................................          --          869
Restricted cash.....................................       2,500        4,850
                                                      -----------  -----------
                                                     $    36,321  $    33,973
                                                      ===========  ===========

Documentary drafts

The Company originates auto loans directly to consumers partially through the use of a documentary draft process. This process requires the borrower and the auto dealer to provide a series of supporting documents in order to complete the loan. Examples of required supporting documentation included copies of the borrower's driver's license, bill of sale, proof of insurance, and application for title registration.

Documentary drafts consist of cash allocated to satisfy documentary drafts presented by borrowers before the required supporting documents were received by the Company to complete the loan. If the required documentation is not provided as agreed to by the borrower and auto dealer, then the allocation of cash is reversed and the cash balance is restored. The Company's documentary draft process allows for at least two business days to process the required supporting documentation prior to determining whether to reverse or honor the original presentment by the auto dealer.

Restricted Cash

As described in Note 10, prior to March 2004, one of the Company's warehouse lines required the restriction of $2.5 million in cash as additional collateral. This restricted cash is being held in certificates of deposit which mature in less than 90 days and is classified as a current asset on the Company's accompanying consolidated balance sheet. As a result of an amendment in March 2004, this restriction was removed in its entirety.

In December 2003, the Company renegotiated its line of credit with Wells Fargo Bank, National Association (See Note 12). As part of the amendment, the Company was required to provide restricted cash in the amount of $2.35 million as collateral for this line of credit. This restricted cash is being held in certificates of deposit which mature in less than 90 days and is classified as a current asset on the Company's accompanying consolidated balance sheet. This line of credit is being utilized to support letters of credit related to the new Pleasanton, California facility as well as a letter of credit related to the Company's surety bonds.

Derivative instruments

On January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative and Hedging Activities" ("SFAS 133"), as subsequently amended by Statement of Financial Accounting No. 138. In accounting for its derivative financial instruments, SFAS 133 requires an entity to recognize all derivative assets or liabilities in the statement of financial condition and measure those instruments at fair value. The accounting for changes in fair value of the derivative depends on the intended use of the derivative and the resulting designation. An entity that elects to apply hedge accounting is required to establish at the inception of the hedge the method it will use in assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffectiveness of the hedge. These methods must be consistent with the entity's approach to managing risk. The Company is a party to mortgage rate lock commitments to fund mortgage loans at interest rates previously agreed (locked) by both the Company and the borrower for specified periods of time. When the borrower locks their interest rate, the Company effectively extends a put option to the borrower, whereby the borrower is not obligated to enter into the loan agreement, but the Company must honor the interest rate for the specified time period. Under SFAS 133 mortgage interest rate locks are derivatives. The Company is exposed to interest rate risk during the accumulation of interest rate lock commitments and loans prior to sale. The Company utilizes either a best efforts sell forward commitment or a mandatory sell forward commitment to economically hedge the changes in fair value of the loan due to changes in market interest rates. Both best efforts and mandatory sell forward sale commitments are derivatives under SFAS 133. Throughout the lock period the changes in the market value of interest rate lock commitments, best efforts and mandatory forward sale commitments are recorded as unrealized gains and losses and are included in the statement of operations in mortgage revenue.

The Company's management has made complex judgments in their application of SFAS 133. The judgments include the identification of hedging instruments, hedged items, nature of the risk being hedged, and how the hedging instrument's effectiveness will be assessed. The Company designates forward delivery commitments, where the company intends to deliver the underlying loan into the commitment, as a fair value SFAS 133 hedge at the commitment date. In addition, the Company designates all best efforts sell forward commitments as fair value SFAS 133 hedges for underlying loans at funding date. The Company does not designate mandatory sell forward agreements as SFAS 133 hedges but does utilize them to economically hedge the changes in fair value of rate lock commitments with borrowers for which a best efforts sell forward commitment has not been obtained. The Company did not have a material gain or loss representing the amount of hedge ineffectiveness related to designated SFAS 133 hedges during the twelve months ended December 31, 2002 and 2003. The effect on the Company's income statement from marking to market the locked pipeline and forward commitments from applying SFAS 133 was a $0.8 million gain, $0.6 million gain and $1.9 million loss included in mortgage revenues for the years ended December 31, 2001, December 31, 2002 and 2003, respectively.

In September 2003, the Company began hedging its interest rate risk on auto loan approvals. When the Company issues an auto loan approval, the Company extends a put option to the borrower, whereby the borrower is not obligated to enter into the loan agreement, but the Company must honor the interest rate for up to a 45-day period. Under SFAS 133, auto loan approvals are not considered derivatives. However, the company is still exposed to interest rate risk from issuance of approval to loan sale. The Company enters into amortizing swap contracts to economically hedge the interest rate changes in auto loan approvals. These swap contracts are considered derivatives under SFAS 133. The Company marks-to-market any changes in the value of outstanding swap contracts, which are recorded as unrealized gains and losses and included in the statement of operations in auto revenue.

Sale of auto loans to qualified special purpose entity

On June 17, 2002, the Company entered into an arrangement to sell auto loan receivables to a qualified special purpose entity (QSPE), E-Loan Auto Fund One, LLC ("E-Loan Auto"). These transactions involve the Company surrendering control over these assets to assure that the sold assets have been isolated from the Company and its creditors. As E-Loan Auto has met the appropriate tests to be considered a QSPE, the assets and liabilities of E-Loan Auto are appropriately not consolidated in financial statements of the Company. E-Loan Auto has obtained a secured borrowing facility from Merrill Lynch Bank USA to finance all purchases of loans from the Company. The Company recognizes a gain on the sale of auto loan receivables to E-Loan Auto in the period in which the sale occurs, which represents the difference between the sale proceeds to the Company and the Company's net carrying value of the receivables. Included in the proceeds received by the Company from the sale of loans is a beneficial interest related to loans owned by the QSPE, which is reflected on the Company's balance sheet as a retained interest asset. These retained interest assets are recorded on the balance sheet at fair value as trading assets, and are marked to market at each subsequent reporting period. In order to determine the fair value management estimates future excess cash flows to be received by the Company over the life of the loans. The Company makes various assumptions in order to determine the fair value of the estimated future excess cash flows to be generated by the auto loans sold to the QSPE. The most significant assumptions are the cumulative credit losses to be incurred on the pool of auto loan receivables sold, prepayment rates of the auto loans and the rate at which the estimated future excess cash flows are discounted. The assumptions used represent the Company's best estimates, and the use of different assumptions could produce different financial results. The Company will continue to monitor and may update its assumptions over time.

Loans held-for-sale

Mortgage loans held-for-sale consists of residential property mortgages having maturities up to 30 years as well as second mortgages on residential properties. Pursuant to the mortgage terms, the borrowers have pledged the underlying real estate as collateral for the loans. It is the Company's practice to sell these loans to mortgage loan purchasers shortly after they are funded. Mortgage loans held-for-sale are recorded at the lower of cost or aggregate market value. Cost generally consists of loan principal balance adjusted for net deferred origination income and SFAS 133 adjustments (see Note 3). The net deferred origination income is recognized at the time of sale. No valuation adjustment was required at December 31, 2002 or 2003.

Auto loans held-for-sale consists of automobile loans having maturities up to 72 months. Pursuant to the loan terms, the borrowers have pledged the value of the automobile as collateral for the loan. It is the Company's practice to sell these loans to the QSPE (see Note 7) shortly after they are funded. Auto loans held-for-sale are recorded at the lower of cost or aggregate market value. No valuation adjustment was required at December 31, 2002 or 2003.

Fixed assets

Fixed assets are recorded at cost and depreciated using the straight-line method over their useful lives, which is generally three years for computers and software and five years for furniture and fixtures. Leasehold improvements are amortized over the remaining life of the lease. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. The Company assesses impairment of its fixed assets when there has been an event that might indicate that the undiscounted future cash flows from the asset may not be recoverable. If the estimated undiscounted future cash flows are not sufficient to recover the carrying value of the asset, the carrying value of the asset is written down to its estimated fair value. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations in the period realized.

In 1999, the Company adopted SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, which requires that the Company expense computer software costs as they are incurred in the preliminary project stage. Once the capitalization criteria of the SOP have been met, external direct costs of materials and services consumed in developing or obtaining internal-use computer software and payroll and payroll related costs for employees who are directly associated with and who devote time to the internal-use computer software are capitalized. Capitalized costs are generally amortized over one to three years on a straight-line basis. As of December 31, 2002 and 2003, the Company had capitalized approximately $4.8 million and $7.7 million in internally developed software costs of which $2.4 million and $4.0 million had been amortized, respectively. Amortization recorded during the year ended December 31, 2001, December 31, 2002 and 2003 amounted to $1.0 million, $1.4 million and $1.6 million, respectively.

Goodwill and intangible assets

The Company recorded $78.0 million in goodwill and $1.4 million of acquired intangible assets resulting from the acquisition of EVRI on September 17, 1999, which was amortized on a straight-line basis over a two-year period. Amortization of goodwill and acquired intangible assets for the year ended December 31, 2001 was $28.1 million. As of December 31, 2001, goodwill and intangible assets were fully amortized. Therefore, there was no goodwill and intangible asset amortization recorded during 2002 and 2003.

Equity investments

The Company accounted for investments in entities where its ownership interest was between 20% and 50% under the equity method. These investments were recorded in deposits. The Company's proportionate share of income related to these equity investments in the amount of $3.3 million is included in other income, net during 2001. The Company had no remaining equity investments as of December 31, 2002 or 2003. Therefore, there was no proportionate share of income or loss recorded during 2002 and 2003.

Revenue

Mortgage Revenues

The Company's mortgage revenues are derived from the origination and sale of loans. Mortgage loans are funded through the Company's warehouse lines of credit and sold to mortgage loan purchasers typically within thirty days. Mortgage loan revenues consist of proceeds in excess of the carrying value of the loan, origination fees less certain direct origination costs and other processing fees. These revenues are recognized at the time the loan is sold. The Company sells these loans to loan purchasers on a servicing released basis without recourse, subject to certain representations and warranties. Additionally, the Company is responsible for a minimum number of payments to be made on these loans. As such, the Company records reserves as a contra-revenue at the time a loan is sold, based on certain assumptions in anticipation of future losses (see Note 11).

Interest Income on Mortgage and Home Equity Loans

The Company generates revenues from interest income on mortgage and home equity loans. The revenues realized are based on the loan amount multiplied by the contractual interest rate from the time of funding by the Company through time of sale. These revenues are recognized as earned during the period from funding to sale.

Home Equity Revenues

Home equity revenues are derived from the origination and sale of loans. Home equity loans are funded through the Company's warehouse lines of credit and sold to home equity loan purchasers typically within sixty days. Home equity loan revenues consist of proceeds in excess of the carrying value of the loan, origination fees less certain direct origination costs and other processing costs. These revenues are recognized at the time the loan is sold. The Company sells these loans to loan purchasers on a servicing released basis without recourse, subject to certain representations and warranties. Additionally, the Company is responsible for a minimum number of payments to be made on these loans. As such, the Company records reserves as a contra-revenue at the time a loan is sold, based on certain assumptions in anticipation of future losses (see Note 11).

Auto Revenues

The Company funds prime auto loans using a line of credit and then sells them to a qualified special purpose entity (QSPE), which was created in July 2002 (see Note 7). Revenues from these sales consist of the estimated future discounted cash flows net of interest, servicing fees and credit losses. Revenues on prime auto loan sales are recognized when the loan is sold to the QSPE.

Prior to the third quarter of 2003, sub-prime auto loans were sold to sub-prime auto loan purchasers. The revenue on these loans consisted of the mark-up to the lending partner's loan price or a set origination fee. These revenues were recognized at the time the loan was sold. In the third quarter of 2003, the Company stopped processing and funding sub-prime auto loans and shifted this portion of the business to a referral based system. Loan applications that do not meet the prime auto lending criteria are referred out to other sub-prime lenders in exchange for a fee. This fee is recognized as revenue at the time of transfer to the sub-prime lender.

Other Revenues

The Company generates revenues from fees paid by various partners in exchange for consumer loan applications generated by advertising such partners' products on the Company's website. The current consumer loan programs offered include credit cards and unsecured personal loans. Additionally, the Company earns revenue from its credit report services. The fees related to these credit report services are paid upfront. As such, any fees that have been paid but not yet earned at the end of each period are accounted for as deferred revenue and are included in accounts payable, accrued expenses and other current liabilities in the accompanying consolidated balance sheets. These revenues are recognized as earned.

Advertising and marketing costs

Advertising and marketing costs related to various media content advertising such as television, direct mail and radio are charged to operating expenses as incurred. These costs include the cost of production as well as the cost of any air time. Total advertising expenses for the years ended December 31, 2001, 2002, and 2003 were $14.1 million, $20.7 million, and $36.6 million, respectively.

Income taxes

The Company accounts for income taxes using the liability method in accordance with SFAS No. 109, Accounting for Income Taxes. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company's deferred tax asset arises principally from net operating loss carryforward (NOLs). There are significant judgments and estimates involved in projecting the recoverability of the deferred tax asset, particularly with respect to the existence of future taxable income sufficient to realize NOLs. The Company reported its first profitable year in 2002 and was again profitable in 2003. However, the sustained low interest rate environment created favorable operating conditions for the Company. During the fourth quarter of 2003, mortgage refinancing volume declined sharply and the Company reported a loss from operations and is projecting a loss for the first quarter of 2004. Management will continue to monitor projections of future taxable income and when it believes realization of the tax benefits associated with the NOLs is more likely than not, management will reduce the valuation allowance by recording a benefit through the income tax provision recorded in the statement of operations. Based upon the Company's performance throughout the coming year it is possible that management would reduce the valuation allowance during 2004; however, management can provide no assurances as to the amount of such reduction, the period in which it might occur or if it will occur at all.

Stock-based compensation

The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations, and complies with the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting For Stock-Based Compensation -- Transition And Disclosure -- An Amendment Of SFAS No. 123. Under APB No. 25, compensation expense is based on the excess of the estimated fair value of the Company's stock over the exercise price, if any, on the date of grant. The Company accounts for stock issued to non-employees in accordance with the provisions of SFAS No. 123 and the Emerging Issues Task Force Consensus in Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

The following pro forma net income (loss) information has been prepared as if the Company had followed the provisions of SFAS No. 123 (in thousands, except per share amounts):

                                                                   Years Ended December 31,
                                                            -------------------------------------
                                                               2001         2002         2003
                                                            -----------  -----------  -----------
Net income (loss):
   As reported............................................ $   (39,530) $    10,651  $    22,634
     Add: Amortization of unearned compensation included
     in reported net income (loss), net of tax............       5,164           --           --
     Less: Stock-based employee compensation expense
     excluded from reported net income (loss), net of tax.      (5,373)      (4,841)      (5,260)
                                                            -----------  -----------  -----------
   Pro forma.............................................. $   (39,739) $     5,810  $    17,374

Basic net income (loss) per share:
   As reported.............................................$     (0.73) $      0.18  $      0.37
   Pro forma.............................................. $     (0.83) $      0.10  $      0.29
Diluted net income (loss) per share:
   As reported............................................ $     (0.73) $      0.18  $      0.34
   Pro forma.............................................. $     (0.74) $      0.10  $      0.26

Net income (loss) per share

The Company computes net income (loss) per share in accordance with SFAS No. 128, Earnings per Share. Under the provisions of SFAS No. 128 basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potential dilutive shares outstanding during the period, to the extent such potential dilutive shares are dilutive. Potential dilutive shares are composed of incremental common shares issuable upon the exercise of stock options and warrants, and the conversion of debt into common stock. Anti- dilutive shares in the amounts of 18.4 million, 14.1 million and 3.6 million were excluded from the dilutive shares outstanding for the periods ended December 31, 2001, 2002 and 2003, respectively.

The following table sets forth the computation of diluted net income (loss) per share for the periods indicated (dollars in thousands, except per share amounts):

                                                                  Years Ended December 31,
                                                            -------------------------------------
                                                               2001         2002         2003
                                                            -----------  -----------  -----------
Numerator:
   Net income (loss)...................................... $   (39,530) $    10,651  $    22,634
   Interest expense from convertible note.................          --          152           --
                                                            -----------  -----------  -----------
       Net income (loss) assuming dilution................ $   (39,530) $    10,803  $    22,634
                                                            ===========  ===========  ===========
Denominator:
   Weighted average common shares, basic..................      53,797       57,613       60,678
   Effect of potentially dilutive securities:
      Convertible note....................................          --        1,374           --
      Warrants............................................          --          138          697
      Employee stock option plan..........................          --        1,233        4,662
                                                            -----------  -----------  -----------
   Weighted average number of shares
      assuming dilution...................................      53,797       60,358       66,037
                                                            ===========  ===========  ===========
Diluted net income (loss) per share....................... $     (0.73) $      0.18  $      0.34
                                                            ===========  ===========  ===========

Comprehensive income

The Company adopted SFAS No. 130, Reporting Comprehensive Income, during 1998. The Company classifies items of "other comprehensive income" by their nature in the financial statements and displays the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. To date, the Company has not had any transactions that are required to be reported in other comprehensive income.

Recent Accounting Pronouncements

In November 2002, the FASB issued FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB interpretation No. 34)". This Interpretation addresses the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. This Interpretation also incorporates, without change, the guidance in FASB Interpretation No. 34, Disclosure of Indirect Guarantees of Indebtedness of Others, which is being superseded. The initial recognition and initial measurement provisions of this Interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor's fiscal year-end. The disclosure requirements in this Interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of this interpretation has had no effect on the Company's financial statements.

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities -- an interpretation of ARB No. 51" ("FIN 46"). The objective of this Interpretation is not to restrict the use of variable interest entities but to improve financial reporting by enterprises involved with variable interest entities. FIN 46 states that a business enterprise with a controlling financial interest in a variable interest entity should include the assets, liabilities, and results of the activities of the variable interest entity in consolidated financial statements with those of the business enterprise. FIN 46 applied immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The adoption of this interpretation has had no effect on the Company's financial statements.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure".  This Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  This Statement is effective for fiscal years ending after December 15, 2002 for transition guidance and annual disclosure provisions and for financial reports containing financial statements for interim periods beginning after December 15, 2002 for interim disclosure provisions. The Company has adopted this statement, the result of which has had no effect on the Company's financial statements. In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" ("SFAS No. 149"). SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement requires that contracts with comparable characteristics be accounted for consistently as either derivatives or hybrid instruments. This Statement is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of this statement has had no effect on the Company's financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity".  SFAS No. 150 changes the accounting for certain financial instruments that under previous guidance issuers could account for as equity.  It requires that those instruments be classified as liabilities in balance sheets.  The guidance in SFAS No. 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective on July 1, 2003.  The adoption of this statement has had no effect on the Company's financial statements.

In a December 11, 2003 speech at the American Institute of Certified Public Accountants and Securities and Exchange Commission ("SEC") expressed the opinion that rate-lock commitments represent written put options, and therefore be valued as a liability. The SEC expressed that they expect registrants to disclose the effect on the financial statement of recognizing the rate-lock commitments as written put options, for quarters commencing after March 15, 2004. The Company currently accounts for its loan origination commitments as derivatives and records changes in the fair value of the commitments in the statement of operations. Depending on the estimated fair value of the loan origination commitments, the Company may record a derivative asset or liability. The Company is currently analyzing the impact of the SEC's position and will, if required, account for its loan origination commitments as prescribed.

3. Loans Held-for-Sale

The inventory of mortgage and home equity loans consists primarily of first and second trust deed mortgages and home equity lines of credit on residential properties located throughout the United States. All mortgage and home equity loans held-for-sale are pledged as collateral for borrowings at December 31, 2002 and 2003 (see Note 10).

The inventory of auto loans consists primarily of loans against new and used automobiles located throughout the United States. All of the auto loans held-for-sale are pledged as collateral for borrowings at December 31, 2003 (see Note 10). The following summarizes loans held-for-sale at December 31, 2002 and 2003 (dollars in thousands):

                                           December 31,
                                       --------------------
                                         2002       2003
                                       ---------  ---------
Mortgage............................. $ 370,854  $  32,811
Home equity..........................    17,851     13,803
Auto.................................     4,048      4,158
Net deferred origination revenue.....       633        102
                                       ---------  ---------
                                      $ 393,386  $  50,874
                                       =========  =========

Included in loans held-for-sale is a SFAS 133 fair value adjustment amount of $2.0 million and $0.1 million for the years ended December 31, 2002 and 2003, respectively. The SFAS 133 amount represents the change in fair value from rate lock commitment date to funding of those loans held-for-sale. The total fair value of loans held-for-sale, including the expected embedded gain on those loans, is $401.7 million and $51.8 million at December 31, 2002 and 2003, respectively.

4. Accounts receivable, prepaids and other current assets

The following summarizes accounts receivable, prepaids and other current assets at December 31, 2002 and 2003 (dollars in thousands):

                                           December 31,
                                       --------------------
                                         2002       2003
                                       ---------  ---------
Prepaids............................. $   3,511  $   4,574
Accounts receivable..................     4,152     21,233
Interest receivable..................     1,432      1,541
Other current assets.................     1,684        939
                                       ---------  ---------
                                      $  10,779  $  28,287
                                       =========  =========

Included in prepaids at December 31, 2002 and 2003 are prepayments for sales and marketing in the amounts of $0.6 million and $2.3 million, respectively. Included in accounts receivable is the receivable due to the Company from sales of mortgage loans on its sale agreement with Greenwich Capital Financial Products, Inc. ("Greenwich Capital") in the amounts of $1.9 million and $15.5 million at December 31, 2002 and 2003, respectively (see Note 10). Included in other current assets is an amount related to the fair value of SFAS 133 derivatives of $1.0 million and $0.1 million at December 31, 2002 and 2003, respectively.

5. Significant Customers and Concentrations of Credit Risk

Cash and cash equivalents, including restricted cash totaling $36.3 million and $34.0 million at December 31, 2002 and 2003, respectively, is held by federally insured financial institutions and exceeds existing federal deposit insurance coverage limits at each institution.

Approximately 63% and 46% of all mortgage loans sold during the years ended December 31, 2002 and 2003, respectively, were sold to one mortgage loan purchaser and approximately 40% and 86% of all auto loans sold during the years ended December 31, 2002 and 2003 were sold to one auto loan purchaser. Approximately 75% and 45% of all home equity loans in 2002 and 2003 were sold to one purchaser, respectively.

6. Fixed Assets

Fixed assets are recorded at cost and consist of the following (dollars in thousands):

                                                                              December 31,
                                                                         ------------------------
                                                                            2002         2003
                                                                         -----------  -----------
  Computer equipment and software...................................... $    13,948  $    20,787
  Furniture and fixtures...............................................       1,871        1,897
  Equipment and software under capital leases..........................         203          203
  Leasehold improvements...............................................       1,832        5,063
                                                                         -----------  -----------
                                                                             17,854       27,950
  Accumulated depreciation and amortization............................     (11,592)     (16,466)
                                                                         -----------  -----------
                                                                        $     6,262  $    11,484
                                                                         ===========  ===========

Depreciation and amortization expense for the years ended December 31, 2001, 2002 and 2003 was $3.9 million, $4.0 million and $4.9 million, respectively.

As of December 31, 2002 and 2003, respectively, the accumulated amortization for equipment and software under capital leases was $0.1 million and $0.0 million. All equipment and software under capital lease served as collateral for the related lease obligations (see Note 19).

7. Retained Interests in Auto Loans

In June 2002, the Company created a qualified special purpose entity, E-Loan Auto Fund One, LLC ("E-Loan Auto"), which purchases prime auto loans from the Company and then holds the loans. For the twelve months ended December 31, 2002 and 2003, the Company sold $173.4 million and $515.7 million in auto loans to E-Loan Auto and recognized $3.1 million and $7.0 million in related non-cash gain on sale. In exchange for the loans sold, the Company received cash of $172.6 million and $513.1 million from E-Loan Auto and a retained interest valued at $4.0 million and $11.5 million in the loans sold to E-Loan Auto. For the year ended December 31, 2003, the average loan characteristics on auto loans sold to E-Loan Auto were $18,700 loan size, 729 credit score, 15% new versus used car, and an average APR of 5.31%. The retained interest represents the Company's portion of the present value of the expected excess cash flows over the life of the loans, remaining after payment of interest, servicing fees and credit losses. Included in the retained interest is a contributed basis in the loans sold to E-Loan Auto of 0.5%. The contributed basis is the difference between the loan amount and the cash sale proceeds received from E-Loan Auto of 99.5% (of the unpaid principal balance), which represents over collateralization in those loans. The contributed basis is returned to the Company as part of the defined distribution of cash flows from E-Loan Auto. Cash flows are to be distributed by E-Loan Auto in the following manner: first to the hedge counterparty, second to the servicer, custodian and administrator, third to the lender for interest expense, fourth to the lender for principal payments, fifth to the Company and the lender any remaining cash flows, to be distributed 85% and 15%, respectively, up to $800 million in originations. After $800 million in originations, all remaining cash flows will be paid directly to the Company. The servicing fee is passed through to a sub-servicer of the Company, and as such the Company does not capitalize a servicing asset for the loans sold to E-Loan Auto, since the cost to sub-service equals the servicing fee.

The following table provides a summary of activity in the retained interests in auto loans since inception:

	2002	2003
Beginning Balance January 1,	$ 0	$ 3,969
Contributed basis in loans sold to E-Loan Auto	818	2,579
Non-cash gain on sale	3,124	6,997
Accretion of present value discount	27	1,043
Excess cash flows received	0	(2,904)
Fair value adjustment	0	(26)
Ending Balance December 31,	$3,969	$11,658

At December 31, 2003, key valuation assumptions used to value the retained interests and the sensitivity of those assumptions to immediate 10% and 25% adverse changes in those assumptions are as follows:

	December 31, 2003(dollars in thousands)
Balance sheet carrying value of retained interests - fair value	$11,658
Weighted-average life (in months)	51.6
Prepayment speed assumptions (ABS)	1.4
Impact on fair value of 10% adverse change (1.54)	($322)
Impact on fair value of 25% adverse change (1.75)	($814)
Expected credit losses (life of loan loss rate)	61 bps
Impact on fair value of 10% adverse change (67 bps)	($263)
Impact on fair value of 25% adverse change (76 bps)	($329)
Residual cash flows discount rate (average annual rate)	12.0%
Impact on fair value of 10% adverse change (13.2%)	($189)
Impact on fair value of 25% adverse change (15.0%)	($463)

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value of the retained interests based on a variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also in the above table, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments but increased credit losses), which might magnify or counteract the sensitivities.

The discount rate was determined by assessing the risk related to the asset to account for the present value of the cash flows to be received over the life of the loans. As a result, the retained interest asset is an interest earning asset, and the difference between the discounted cash flows and the actual cash flows received over time are accreted and included as interest income in Other Income, net. The loss rates are based on actual loss experience to date from the seasoned portions of the portfolio. The Company then compares these rates to those of two major national banks to ensure its loss rates are within a range of what other market participants would estimate. The prepayment speed projects prepayments on a monthly percentage of the original loan balance. All assumptions are monitored by management and are updated to reflect actual performance.

8. Deposits

Deposits consist of amounts paid in relation to leased premises held by the Company in Jacksonville, Florida and the Company's surety bonds. At December 31, 2002, the Company had $1.3 million in deposits. The leased premises in Jacksonville, Florida expired in 2003. The deposit associated with the Company's surety bonds was reclassified in 2003 to restricted cash (see Note 2). As a result, there were no deposits recorded on the accompanying consolidated balance sheet at December 31, 2003.

9. Income Taxes

Significant components of the provision for income taxes are as follows (in thousands):

                                                                  Years Ended December 31,
                                                            -------------------------------------
                                                               2001         2002         2003
                                                            -----------  -----------  -----------
Federal:
      Current............................................. $        --  $        --  $        --
      Deferred............................................          --           --           --
                                                            -----------  -----------  -----------
                                                                    --           --           --
State:
      Current.............................................          --        1,692        1,148
      Deferred............................................          --         (728)          --
                                                            -----------  -----------  -----------
                                                                    --          964        1,148
                                                            -----------  -----------  -----------
Income tax provision...................................... $        --  $       964  $     1,148
                                                            ===========  ===========  ===========

The provision for income taxes was at rates other than the U.S. Federal statutory rate for the following reasons:

                                           Years Ended December 31,
                                       -------------------------------
                                         2001       2002       2003
                                       ---------  ---------  ---------
U.S. Federal statutory rate..........     -34.0%      34.0%      34.0%
State taxes..........................      -7.2%       6.1%       4.6%
Unearned compensation................       5.4%        --         --
Goodwill.............................      29.3%        --         --
Change in valuation allowance........       1.8%     -32.5%     -33.4%
Warrants.............................       6.2%        --         --
Other................................      -1.5%       0.7%      -0.4%
                                       ---------  ---------  ---------
                                            0.0%       8.3%       4.8%
                                       =========  =========  =========

At December 31, 2003 the Company had net operating loss carryforwards of approximately $59.4 million for federal tax purposes and $63.7 million for state tax purposes. The federal carryforwards expire in the years 2013 through 2021. For federal and state tax purposes, a portion of the Company's net operating loss may be subject to certain limitations on annual utilization in case of changes in ownership, as defined by federal and state tax laws. A state tax provision was required, in substantial part, due to the suspension of California state net operating loss carryforwards. This suspension was in place for both 2002 and 2003.

The primary components of temporary differences, which give rise to deferred taxes are as follows (dollars in thousands):

                                                            Years Ended December 31,
                                                            ------------------------
                                                               2002         2003
                                                            -----------  -----------
  Deferred tax  assets:
     Net operating loss carryforwards..................... $    28,766  $    24,616
     Reserves and accruals................................         665        1,238
     Fixed assets.........................................         404          794
     Mark-to-market of securities.........................       3,367       (1,029)
     Capitalized development costs........................      (1,058)      (1,511)
     Other................................................         140          242
                                                            -----------  -----------
           Total deferred tax assets...................... $    32,284  $    24,350
                                                            ===========  ===========

Management evaluates the recoverability of the deferred tax assets and the level of the valuation allowance. Due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns, the Company has recorded a valuation allowance against its net deferred tax assets at December 31, 2002 and 2003, in the amount of $31.6 million and $23.6 million, respectively. At such time as it is determined that it is more likely than not that the deferred tax asset will be realizable, the valuation allowance will be reduced.

10. Warehouse and Other Lines Payable

The Company has a warehouse line of credit for borrowings of up to $75 million for the interim financing of mortgage loans with GMAC Mortgage Corporation. The interest rate charged on borrowings against these funds is variable based on LIBOR plus various percentage points. This warehouse line requires the Company to pay GMAC a non-use fee when the average outstanding principal amount of borrowings is less than 50% of the total commitment at a rate of 0.25% per annum on the daily average unutilized commitment. Borrowings are collateralized by the related mortgage loans held-for-sale. This line of credit agreement generally requires the Company to comply with various financial and non-financial covenants. In particular, the Company must maintain a minimum cash balance of $15.0 million. The Company had to obtain a waiver as a result of failure to meet a current ratio covenant for the months ended April 30, 2003 and May 31, 2003, but was in compliance with these covenants for all other periods and at December 31, 2003. The committed line of credit expires on March 31, 2005.

The Company has an agreement to finance up to $400 million of mortgage loan inventory pending sale of these loans to the ultimate mortgage loan investors with Greenwich Capital. Of this amount, $200 million is available in committed funds. This loan inventory financing is secured by the related mortgage loans. The interest rate charged on borrowings against these funds is based on LIBOR plus various percentage points. As part of this agreement the Company had to pay a commitment fee of $1.0 million for the period March 31, 2003 through March 30, 2004. The commitment fee was reduced to $750,000 for the period March 15, 2004 through March 14, 2005. This agreement includes various financial and non-financial covenants. In particular, the Company must maintain a minimum cash and cash equivalents balance of $15 million. Prior to an amendment in March 2004, the Company was required to maintain a restriction of $2.5 million in cash as additional collateral. Subsequent to the amendment, there is no restriction on cash related to this facility. The Company was in compliance with these covenants during the twelve months ended and at December 31, 2003. The line will expire on March 14, 2005.

In addition, the Company has an uncommitted mortgage loan purchase and sale agreement with Greenwich Capital. Under the terms of this agreement, mortgage loans which are subject to a mandatory sell forward commitment between the Company and an investor, but have not yet been purchased, may be sold to Greenwich Capital with the accompanying trade assignment. Revenue derived from sales under this agreement is included as a receivable on the balance sheet (see Note 4). The balance of loans sold related to these receivables was $48.7 million and $305.1 million as of December 31, 2002 and 2003, respectively.

As of December 31, 2003, the Company had a $10 million line of credit facility with Merrill Lynch Mortgage Capital, Inc. to support the interim funding of auto loans prior to their sale to the ultimate auto loan purchaser. The interest rate charged on this line is based on LIBOR plus various percentage points. This facility requires the Company to pay an unused line fee equal to 0.50% per year on the average daily unused line balance. This facility expires on July 13, 2004. This line includes various financial and non-financial covenants. The Company was in compliance with these covenants during the twelve months ended and at December 31, 2003.

The following summarizes warehouse and other lines payable at December 31, 2002 and 2003 (dollars in thousands):

                                           December 31,
                                       --------------------
                                         2002       2003
                                       ---------  ---------
Warehouse lines - GMAC............... $  68,955  $   8,066
Warehouse lines - Greenwich..........   311,549     31,462
Line of credit - Auto................     3,143      4,755
                                       ---------  ---------
                                      $ 383,647  $  44,283
                                       =========  =========

11. Accounts Payable, Accrued Expenses and Other Current Liabilities

The following summarizes accounts payable, accrued expenses and other current liabilities at December 31, 2002 and 2003 (dollars in thousands):

                                           December 31,
                                       --------------------
                                         2002       2003
                                       ---------  ---------
Accounts payable..................... $   4,637  $   5,398
Accrued compensation.................     2,710      1,987
Income tax payable...................     1,665       (614)
Other current liabilities............     1,898        862
Reserves.............................       900      2,386
Interest payable.....................       529        347
                                       ---------  ---------
                                      $  12,339  $  10,366
                                       =========  =========

Included in other current liabilities is an amount related to the fair value of SFAS 133 derivatives of $1.7 million and $0.9 million at December 31, 2002 and 2003, respectively.

Included in the accounts payable, accrued expenses and other current liabilities is an amount related to reserves the Company established for representation and warranties and premium repayment liability. The Company sells loans to loan purchasers on a servicing released basis without recourse. As such, the risk of loss or default by the borrower has generally been assumed by these purchasers. However, the Company is usually required by these purchasers to make certain representations relating to credit information, loan documentation and collateral. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase loans or indemnify these purchasers for any losses from borrower defaults. In connection with a majority of its loan sales agreements, the Company is also responsible for ensuring that the borrower makes a minimum number of payments on each loan, or else the Company may be required to refund the premium paid to it by the loan purchaser. As such, the Company records reserves based on certain assumptions in anticipation of future losses as a result of current activity.

Loss reserves due to violations of representations and warranties are recorded based on a percentage of current month originations. The Company currently calculates this loss rate exposure based on its historical loss rates as well as similar lending portfolios. Once the Company has endured a complete economic cycle, the rate will be adjusted based on actual losses as a percentage of origination volume on a historical basis. Premium repayment reserves, generated through early loan prepayments related to loans sold to investors, are recorded based on a rate determined by calculating actual prepayments as a percentage of originations on a historical basis applied to current month originations. The Company began funding home equity loans in December 2000. The following illustrates the changes in the reserve balances for the years ended December 31, 2001, 2002 and 2003 by product (in thousands):

                                          Mortgage   Home Equity   Auto       Total
                                          ---------  ----------  ---------  ---------
Balance at 1/1/01....................... $     239  $       --  $     113  $     352
   Increase to reserve..................       313          62        247        622
   Losses incurred......................      (183)        (26)      (286)      (495)
                                          ---------  ----------  ---------  ---------
Balance at 12/31/01..................... $     369  $       36  $      74  $     479
                                          =========  ==========  =========  =========

Balance at 1/1/02....................... $     369  $       36  $      74  $     479
   Increase to reserve..................       535         294        193      1,022
   Losses incurred......................      (286)       (169)      (146)      (601)
                                          ---------  ----------  ---------  ---------
Balance at 12/31/02..................... $     618  $      161  $     121  $     900
                                          =========  ==========  =========  =========

Balance at 1/1/03....................... $     618  $      161  $     121  $     900
   Increase to reserve..................     1,459       1,852        147      3,458
   Losses incurred......................      (768)     (1,047)      (157)    (1,972)
                                          ---------  ----------  ---------  ---------
Balance at 12/31/03..................... $   1,309  $      966  $     111  $   2,386
                                          =========  ==========  =========  =========

12. Notes Payable

On July 12, 2001 the Company sold a $5 million convertible note to The Charles Schwab Corporation, which was convertible into shares of its common stock at a conversion price of $1.06 per share and which was scheduled to mature on January 19, 2003 (see Note 19). The convertible note bore interest at a rate of 8% per annum and was payable quarterly. On April 12, 2002, The Charles Schwab Corporation exercised its option to convert the amount due under the $5 million convertible note into 4,716,981 shares of the Company's common stock, in lieu of repayment, and therefore the note was converted rather than redeemed.

On June 30, 2003, the Company obtained a $5 million line of credit from Wells Fargo Bank, National Association to support working capital needs. The interest rate charged on borrowings against these funds is based on LIBOR plus 2% and is payable monthly. The line of credit was scheduled to expire on June 30, 2004. On December 11, 2003, the agreement was amended to reduce the line of credit to $2,350,000 and extend the expiration date to June 30, 2005. As part of the amendment, the Company was required to provide restricted cash as collateral for this line of credit (see Note 2). Currently, the line of credit is being utilized to support letters of credit related to the new Pleasanton, California facility as well as a letter of credit related to the Company's surety bonds. The Company was in compliance with all debt covenants for this agreement during the year ended and at December 31, 2003. No balance was outstanding on this line as of December 31, 2003.

13. Stockholders' Equity

Common and preferred stock

As of December 31, 2003, the Company was authorized to issue 150,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of December 31, 2003 the 5,000,000 shares of preferred stock are undesignated. On June 28, 1999, the Company completed its initial public offering, upon which all outstanding convertible preferred shares automatically converted into 20,493,921 shares of common stock.

Warrants

On April 25, 2000, the Company issued two warrants to purchase up to 13.1 million shares of common stock to The Charles Schwab Corporation pursuant to a marketing agreement with Schwab. The total valuation of both of these warrants was determined to be $12.5 million. The assumptions used to value the warrants are detailed in Note 18. The amount was recorded as a contra-equity item called marketing services receivable and was expensed over a one-year term based on the Company's unilateral cancellation right on or before the end of the agreement's first year. The marketing services receivable concluded amortization on June 30, 2001 (see Note 20). On July 12, 2001 the Company exchanged the warrant to purchase 6,600,000 shares at $15 per share for a new warrant to purchase 1,389,000 shares at $5 per share (see Note 20). On June 27, 2003, this warrant was net exercised for 254,566 shares of common stock.

In February 2001, the Company issued a warrant to purchase 300,000 shares of common stock to Greenwich Capital in connection with a warehouse agreement at an exercise price of $1.55 per share until February 23, 2006. In July 2003, Greenwich Capital assigned a portion of the warrant to an institutional investor in the amount of 150,000 common shares. At December 31, 2003, both warrants remain outstanding.

In June 2002, the Company issued a warrant to purchase 800,000 shares of common stock to Merrill Lynch Mortgage Capital, Inc. in connection with a line of credit agreement at an exercise price of $1.22 per share until June 1, 2005. At December 31, 2003 this warrant remained outstanding.

14. Employee Benefit Plans

401(k) Savings Plan

The Company has a savings plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code (the "401(k) Plan"). Under the 401(k) Plan, participating employees may defer a percentage (not to exceed 20%) of their eligible pretax earnings up to the Internal Revenue Service's annual contribution limit. All employees of the Company age 18 years or older are eligible to participate in the 401(k) Plan. The Company did not match employee contributions during the years ended December 31, 2001, 2002 or 2003.

Stock Option and Employee Stock Purchase Plans

As of December 31, 2003, the Company had reserved up to 17,898,375 shares of common stock issuable upon exercise of options issued to certain employees, directors, and consultants pursuant to the Company's 1997 Stock Option Plan. Such options were exercisable at fair market value prices established at the date of grant (based on the closing price of the Company's stock on date of grant), and have a term of ten years. Initial optionee grants have a vested interest in 25% of the option shares upon the optionee's completion of one year of service measured from the grant date. The balance will vest in equal successive monthly installments of 1/48 upon the optionee's completion of each of the next 36 months of service. If an option holder ceases to be employed by the Company, vested options held at the date of termination may be exercised within three months. Options under the plan may be either Incentive Stock Options, as defined under Section 422 of the Internal Revenue Code, or Nonstatutory Options. During the years ended December 31, 2001, 2002 and 2003, 3,612,500, 1,922,450 and 2,205,750 options had been granted and 3,541,406 options were still available for grant under the Company's stock option plan at December 31, 2003.

Options granted during the years ended December 31, 1998 and 1999 resulted in unearned compensation of $5.7 million and $38.2 million, respectively. The amounts recorded represented the difference between the exercise price and the deemed fair value of the Company's common stock for shares subject to the options granted. The amortization of unearned compensation was charged to operations on an accelerated basis over the four-year vesting period of the options. For the years ended December 31, 2001, 2002 and 2003, the amortization of unearned compensation related to stock options was $5.2 million, $0 and $0, respectively. Management accelerated the vesting of compensatory options in the fourth quarter of 2001 resulting in the full amortization of unearned compensation as of December 31, 2001.

In March 1999, the Company adopted the 1999 Employee Stock Purchase Plan (the "Purchase Plan") under which 1,500,000 shares of common stock were reserved for issuance. The Purchase Plan provides for an annual automatic increase in the number of shares of common stock reserved under the Purchase Plan by an amount equal to the lesser of 1,500,000 shares, 2% of the then outstanding shares, or a lesser amount determined by the Company's Board of Directors. Since the initial registration of 1,500,000 shares under the Purchase Plan, an additional 1,068,984 shares have been added to the 1999 Purchase Plan by the automatic increase mechanism. As of December 31, 2003, a total of 2,568,984 shares were authorized for issuance under the Purchase Plan. Employees who participate in the Purchase Plan may have up to 15% of their earnings withheld and used to purchase shares of common stock on specified dates as determined by the Board. The price of common stock purchased under the Purchase Plan is equal to 85% of the lower of the fair market value of the common stock, at the commencement date or the ending date of each 24-month offering period. Each offering period includes four six-month purchase periods. No compensation expense is recorded in connection with this plan.

Sales under the Purchase Plan for the years ended December 31, 2002 and 2003 were 519,912 and 905,722 shares of common stock at an average price of $0.90 and $1.10, respectively. As of December 31, 2003, 671,154 shares of the Company's common stock remained reserved and available for issuance under this plan.

The following information concerning the Company's stock option plan and employee stock purchase plan was provided in accordance with SFAS No. 123, Accounting for Stock-Based Compensation. As permitted by SFAS No. 123, the Company accounted for such plans in accordance with APB No. 25 and related interpretations. The fair value of each stock option was estimated on the date of grant using the minimum value and fair value option-pricing models with assuming no expected dividends and the following weighted average assumptions.

                                                                   Years Ended December 31,
                                                            -------------------------------------
                                                               2001         2002         2003
                                                            -----------  -----------  -----------
Stock option plan:
   Expected stock price volatility........................      105.00 %      90.00 %      67.62 %
   Risk-free interest rate................................        4.48 %       3.86 %       2.97 %
   Expected life of options (years).......................           5            5            5

Stock purchase plan:
   Expected stock price volatility........................      105.00 %      87.00 %      87.18 %
   Risk-free interest rate................................        3.19 %       2.90 %       2.36 %
   Expected life of options (years).......................           2            2            2

As a result of the above assumptions, the weighted average fair value of options granted during the years ending December 31, 2001, 2002 and 2003 was $1.08, $1.05 and $2.07, respectively. The weighted average fair value of stock purchased during the three years ending December 31, 2001, 2002 and 2003 was $2.95, $0.94 and $1.01,respectively.

A summary of the status of the Company's stock option plan and changes during those periods is presented below:

                                                      Weighted
                                                       average
                                          Number of   exercise
                                           Shares       price
                                         -----------  ---------

Outstanding as of December 31, 2000.....  9,476,295  $    4.45
 Granted................................  3,612,500       1.38
 Exercised..............................   (272,104)      0.32
 Terminated/forfeited................... (2,243,732)      5.67
                                         -----------
Outstanding as of December 31, 2001..... 10,572,959       3.25
 Granted................................  1,922,450       1.50
 Exercised..............................   (173,402)      1.02
 Terminated/forfeited...................   (848,671)      3.87
                                         -----------
Outstanding as of December 31, 2002..... 11,473,336       2.95
 Granted................................  2,205,750       3.50
 Exercised.............................. (1,583,658)      1.34
 Terminated/forfeited................... (1,503,195)      3.53
                                         -----------
Outstanding as of December 31, 2003..... 10,592,233  $    3.22
                                         ===========

The following table summarizes information about stock options outstanding at December 31, 2003:

                        Options Outstanding                Options Exercisable
                   -------------------------------------- --------------------------
                                               Weighted
                                   Weighted     Average                   Weighted
                                    Average    Remaining                   Average
    Range of          Number       Exercise   Contractual    Number       Exercise
 Exercises Prices   Outstanding      Price       Life      Exercisable      Price
- ------------------ -------------  ----------- ----------- -------------  -----------
$  0.05 - $  1.26     2,861,682  $      1.11        7.09     1,795,333  $      1.08
$  1.27 - $  1.90     1,874,619  $      1.50        7.97       858,268  $      1.49
$  1.91 - $  3.07     2,891,940  $      2.23        6.52     2,008,127  $      2.08
$  3.08 - $ 46.00     2,963,992  $      7.31        7.46     1,784,939  $      9.23
                   -------------                          -------------
                     10,592,233  $      3.22        7.19     6,446,667  $      3.70
                   =============                          =============

15. Segment and Geographic Information

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS No. 131 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions how to allocate resources and assess performance. The Company's chief decision-maker(s), as defined under SFAS No. 131, are the Chief Executive Officer and the executive team. The Company has determined that it operates in a single reportable operating segment: online consumer direct lending, specializing in mortgage, home equity and auto loans.

All of the Company's revenues are generated from transactions originating in the United States.

16. Revenues and Other Income, Net

The following table provides the components of revenues (in thousands):

                                                Years Ended December 31,
                                            --------------------------------
                                              2000        2001       2002
                                            ---------  ----------  ---------
Revenues:
   Mortgage............................... $  38,999  $   61,212  $  95,248
   Interest income on mortgage loans......    11,568      15,093     18,547
   Home equity............................     4,978      13,176     23,355
   Interest income on home equity loans...       888       2,379      4,146
   Auto...................................    10,594      10,582     10,371
   Other..................................       923         846      1,341
                                            ---------  ----------  ---------
                                           $  67,950  $  103,288  $ 153,008
                                            =========  ==========  =========

The following table provides the components of other income, net (in thousands):

                                                  Years Ended December 31,
                                              --------------------------------
                                                 2001       2002       2003
                                               ---------  ---------  ---------
Interest on cash equivalents................. $     745  $     240  $     184
Interest expense on non-warehouse
   facility borrowings.......................      (359)      (160)       (44)
Equity investment gain/(loss)................     3,252         --         --
Interest income on retained interest asset...        --         27      1,044
                                               ---------  ---------  ---------
                                              $   3,638  $     107  $   1,184
                                               =========  =========  =========

In December 2001, the Company sold its entire equity investment in Finance All, the parent company of E-LOAN Japan, for $4.7 million. The Company recorded a one-time gain on sale of equity investment in the amount of $3.3 million, in connection with this sale. The book value of the investment at the time of sale was $1.4 million.

In June 2002, the Company created a qualified special purpose entity, E-Loan Auto Fund One, LLC ("E-Loan Auto"), which purchases prime auto loans from the Company and then holds the loans. In exchange for the loans sold, the Company receives cash and a retained interest. A discount rate has been applied to the asset to account for the present value of the cash flows to be received over the life of the loans. As a result, the retained interest asset is an interest earning asset, and the difference between the discounted cash flows and the actual cash flows received over time are accreted and included as interest income in Other Income, net. This accretion amounted to approximately $27,000 and $1.0 million in 2002 and 2003, respectively.

17. Operating Expenses

The following table provides the components of operating expenses (in thousands):

                                                      Years Ended December 31,
                                                   -------------------------------
                                                     2001       2002       2003
                                                   ---------  ---------  ---------
Compensation and benefits........................ $  29,076  $  39,373  $  55,602
Processing costs.................................     8,525      9,987     11,448
Advertising and marketing........................    14,063     20,707     36,649
Occupancy and administration.....................     9,857     11,770     15,116
Interest expense on warehouse borrowings.........    10,319      9,943     11,595
Amortization of unearned compensation............     5,164         --         --
Amortization of goodwill and intangible assets...    28,144         --         --
Non-cash marketing costs.........................     5,970         --         --
                                                   ---------  ---------  ---------
         Total operating expenses................ $ 111,118  $  91,780  $ 130,410
                                                   =========  =========  =========

Commissions and bonus compensation comprised 22%, 27%, and 24% of total compensation and benefits in the years ended December 31, 2001, 2002, and 2003, respectively. Net occupancy costs comprised 28%, 26%, and 30% of total occupancy and administration in the years ended December 31, 2001, 2002, and 2003, respectively.

The following table provides detail of the operations component of total operating expenses classified by the following revenue-related categories (in thousands):

                                                 Years Ended December 31,
                                             ---------------------------------
                                                2001        2002       2003
                                             ----------  ----------  ---------
Mortgage .................................. $   20,940  $   28,315  $  36,422
Interest expense on mortgage loans.........      8,678       7,242      8,856
Home equity................................      3,094       8,139     14,290
Interest expense on home equity loans......        782       1,235      2,342
Auto.......................................      9,285       8,842     10,971
Other......................................        167          81          1
                                             ----------  ----------  ---------
Total operations........................... $   42,946  $   53,854  $  72,882
                                             ==========  ==========  =========

18. Fair Value of Financial Instruments

The fair value of a financial instrument is the amount for which the instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation sale. Fair value estimates are subjective in nature and involve uncertainties and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The fair value of loans held-for-sale includes the expected gain on those loans upon sale to the loan purchaser (see Note 3). The carrying value of the Company's other financial instruments, including cash and cash equivalents, accounts receivable, derivatives, warehouse lines, and all other financial assets and liabilities approximate their fair value because of the short-term maturity of those instruments or because they carry interest rates which approximate market.

19. Commitments and Contingencies

Leases

The Company leases office space under two operating leases, which expire in November 2004 and June 2010, respectively. A portion of the facility that expires in November 2004 is under sublease and expires in March 2004. Rent expense under operating leases amounted to $0.8 million, $1.5 million and $2.5 million for the years ended December 31, 2001, 2002 and 2003, respectively.

The Company's lease obligations under operating leases are as follows (in thousands):

       Years Ending December 31,
 2004....................................................... $   2,537
 2005.......................................................     2,658
 2006.......................................................     2,658
 2007.......................................................     2,658
 2008 and thereafter........................................     6,645
                                                              ---------
Total minimum lease payments................................ $  17,156
                                                              =========

The Company had no capital lease obligations outstanding as of December 31, 2003.

The Company has an available line of credit in the amount $2,350,000. The Company is required to provide restricted cash as collateral for this line of credit (see Note 2). Currently, the line of credit is being utilized to support letters of credit related to the new Pleasanton, California facility as well as a letter of credit related to the Company's surety bonds.

Legal

The Company has been named as a defendant in five related lawsuits filed in the Federal District Court for the Southern District of New York between August 10, 2001 and September 25, 2001. The lawsuits purport to be class actions filed on behalf of the plaintiffs and others similarly situated. They name as defendants E-LOAN, Christian Larsen, Janina Pawlowski, Frank Siskowski, The Goldman Sachs Group, Inc., FleetBoston Robertson Stephens, Inc., Merrill Lynch Pierce Fenner & Smith, Inc., Credit Suisse First Boston Corp. and J.P. Morgan Chase & Co., some of which were involved in the Company's initial public offering. The complaints have since been consolidated into a single action. The Consolidated Amended Complaint alleges, among other things, that the underwriters of the Company's initial public offering violated Section 12(a) of the Securities Act of 1933 by receiving excessive and undisclosed commissions and fees, and by entering into unlawful private agreements with brokers' customers, and that all defendants violated Section 11 of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 under the Securities Exchange Act of 1934 by making material false and misleading statements in the Company's initial public offering prospectus concerning brokers' commissions and private agreements with brokers' customers. The plaintiffs seek to recover damages on behalf of all those who purchased or otherwise acquired E-LOAN securities during the respective class period. Similar complaints have been filed against over 300 other issuers that have had initial public offerings since 1998 and all such actions have been included in a single coordinated proceeding.  On October 9, 2002, the Company's individual defendants were dismissed, without prejudice, from the lawsuit, pursuant to a stipulated agreement with the plaintiffs.

On June 25, 2003, a committee of the Company's Board of Directors conditionally approved a proposed partial settlement with the plaintiffs in this matter. The settlement would provide, among other things, a release of the Company and of the individual defendants for the conduct alleged in the action to be wrongful in the Amended Complaint. The Company would agree to undertake other responsibilities under the partial settlement, including agreeing to assign away, not assert, or release certain potential claims the Company may have against its underwriters. Any direct financial impact of the proposed settlement is expected to be borne by the Company's insurers. The committee agreed to approve the settlement subject to a number of conditions, including the participation of a substantial number of other Issuer Defendants in the proposed settlement, the consent of the Company's insurers to the settlement, and the completion of acceptable final settlement documentation. Furthermore, the settlement is subject to a hearing on fairness and approval by the Court overseeing the IPO Litigation.  Due to the inherent uncertainties of litigation, and because the settlement has not yet been approved by the Court, the ultimate outcome of the matter cannot be predicted.

The Company is subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material adverse effect on the Company's results of operations, financial position or liquidity.

Mortgage bankers' blanket bond

As of December 31, 2003, the Company carried a mortgage bankers' blanket bond and errors and omissions insurance coverage for $5.0 million. The premiums for the bond and insurance coverage are paid through September 2004.

Marketing Commitments

The Company has entered into fixed contracts to purchase national television spots through the third quarter of 2004. The Company pays for this media in monthly installments, generally thirty days in advance of the scheduled start date of the media. Future minimum payments under these contracts amount to approximately $3.9 million for 2004.

Loan commitments and hedging activities

The Company originates mortgage loans and sells them primarily through whole loan sales. The market values of mortgage loans are sensitive to changes in market interest rates. If interest rates rise between the time the Company enters into a rate lock with the borrower, the subsequent funding of the loan and the time the mortgage loans are committed for sale, there may be a decline in the market value of the mortgage loans. To protect against such possible declines, the Company has adopted an economic hedging strategy.

Individual mortgage loan risks are aggregated by loan type and pipeline production status and matched, based on duration, with the appropriate hedging instrument, thus mitigating basis risk until closing and delivery. The Company currently hedges its mortgage pipeline through mandatory forward sales of Fannie Mae mortgage-backed securities and both mandatory and best efforts forward sale agreements with the ultimate investor. The Company determines which alternative provides the best execution in the secondary market.

The Company believes that it has implemented a cost-effective economic hedging program to provide a high level of protection against changes in the market value of rate-lock commitments. However, an effective strategy is complex and no hedging strategy can completely insulate the Company against such changes.

At December 31, 2003, the Company had provided locks to originate mortgage and home equity loans (excluding variable rate home equity lines of credit) amounting to approximately $183.3 million (the "locked pipeline"). At December 31, 2003, the Company had entered into best efforts forward loan sale agreements amounting to approximately $68.7 million. These forward loan sale agreements do not subject the Company to mandatory delivery and there is no penalty if the Company does not deliver into the commitment. The Company is exposed to counterparty risk, however, it is our policy and practice to use well-established U.S. financial institutions to mitigate this risk; the Company does not require collateral to support these commitments, and there has been no failure on the part of the counterparties to meet the terms of these agreements to date.

At December 31, 2003, the Company had entered into mandatory sell forward commitments amounting to approximately $54.9 million. The Company adjusts the amount of mandatory sell forward commitments held to offset changes in the locked pipeline and changes in the market value of unsold loans. At December 31, 2003, the Company had entered into $14.5 million of commitments with third party investors to deliver loans related to funded loans held-for-sale.

The Company issues auto loan approvals on its prime auto loan production. Approved auto loan applicants are provided a guaranteed rate for up to a 45 day period. At December 31, 2003, the Company had entered into amortizing swap contracts in the amount of $14.5 million, as an economic hedge of anticipated funded loans from auto loan approvals.

20. Related Party Transactions

Loan Agreement with Christian A. Larsen

On April 2, 2001, the Company entered into a loan agreement with Christian A. Larsen, Chairman of the Board and Chief Executive Officer, that provided the Company with the ability to draw funds up to an aggregate of $7.5 million upon demand. Under the terms of the loan agreement, the loan commitment under the loan agreement was required to be reduced by an amount equal to the principal amount of any subsequent loan received by the Company. Upon the sale of a $5 million convertible note to The Charles Schwab Corporation, the loan commitment under the loan agreement was reduced to $2.5 million. The loan agreement with Mr. Larsen expired on January 5, 2002 and no amounts are owed under any borrowings made pursuant to the loan agreement.

Contribution to Californians for Privacy Now

During 2003, the Company contributed approximately $600,000 to Californians for Privacy Now, a Recipient Committee advocating enhancement of consumer financial privacy rights. The contribution was authorized by the Company's Board of Directors, after a determination that the promotion and enhancement of consumer financial privacy rights is in the best interests of the Company. Christian A. Larsen served as the Treasurer of Californians for Privacy Now from July 2, 2002 until June 28, 2003, when he relinquished his title as Treasurer and became Executive Director of the Recipient Committee.

Agreements With The Charles Schwab Corporation

Common Stock Purchase

On April 25, 2000, the Company sold 2,666,666 shares of its common stock to The Charles Schwab Corporation (Schwab) at a purchase price of $3.75 per share. The sale was part of a $40 million private placement sale of the Company's common stock. Following the purchase of shares, Schwab beneficially owned approximately 5% of the Company's outstanding shares of common stock.

Marketing Agreement

On April 25, 2000, the Company entered into a four-year Marketing Agreement with Schwab to become the exclusive provider of mortgage loans to the Schwab customer base through a co-branded website at http://schwab.eloan.com. In consideration, the Company agreed to pay Schwab cash marketing fee payments and to issue to Schwab warrants to purchase shares of its common stock. This agreement was terminated in November 2002. As part of the Marketing Agreement, Daniel O. Leemon, a member of Schwab's management committee, was nominated to the Company's board of directors and served until October 2002.

The Company recorded revenue earned from the sale of loans attributable to the marketing agreement of $5,435,000, $7,485,000 and $0 for the twelve months ended December 31, 2001, 2002 and 2003, respectively. The volume of loans associated with the above revenue was $305.3 million, $349.5 million, and $0 for the twelve months ended December 31, 2001, 2002 and 2003, respectively.

Cash Marketing Costs

The original agreement stipulated that Schwab would receive cash marketing fees in the amount of $929,000, $3,547,000, $11,100,000 and $13,284,000 for each of the four years of the agreement, respectively. The escalating payments correlated to the anticipated future benefit from the marketing agreement as of April 2000. Through an amendment to the agreement, the Company obtained a unilateral right to cancel the agreement on or before June 30, 2001, which if exercised, no marketing fees would be owed for years 2 through 4 of the agreement. Also as an amendment to the agreement, the first year payment of $929,000 was reduced to $779,000. Based on the Company's ability to cancel, the first year's cash marketing fee payment of $779,000 was amortized ratably over the first year of the agreement.

Through a series of subsequent amendments, the marketing fees payable to Schwab were reduced to better match the then anticipated future benefit from the marketing agreement. The Company recorded cash marketing costs of $1,100,000, $972,000 and $0 for the twelve months ended December 31, 2001, 2002 and 2003, respectively.

In addition to marketing fees paid to Schwab, the Company incurred other advertising expense directed toward the Schwab customer base known as co-op marketing costs. The co-op marketing costs covered such items as direct mail pieces sent to Schwab customers. There was no minimum co-op marketing expense required under the agreement. The co-op marketing costs were a pass through of expenses and did not represent revenue for Schwab. The Company recorded co-op marketing costs of $475,000, $91,000 and $0, for the twelve months ended December 31, 2001, 2002 and 2003, respectively.

Non-cash Marketing Costs Non-cash Marketing Costs

In addition to the cash compensation under the Marketing Agreement, the Company issued two warrants to purchase 13.1 million shares of common stock to Schwab. The first warrant to purchase 6,500,000 shares of common stock at an exercise price of $3.75, had a three year term and expired on April 25, 2003, unexercised. Half of the 6,500,000 shares under the warrant were exercisable following the one year anniversary of the date of grant, and all of the shares were exercisable following the two year anniversary, if immediately prior to exercise the Company's stock had traded at $5.75 for five consecutive days. Once exercised, the shares would have been subject to a one- year holding period before they were saleable. The second warrant to purchase 6,600,000 shares of common stock at an exercise price of $15.00, had a three and a quarter year term and an expiration date of July 25, 2003. The second warrant did not contain the same restrictions included in the first warrant, and was net exercised by Schwab on June 27, 2003 for 254,566 shares of common stock. The warrants were not subject to cancellation when the Marketing Agreement was terminated. The average of the high and low price of the Company's common stock as reported by the Nasdaq National Market on April 24, 2000 (prior to date of issuance), and April 25, 2000 (the date of issuance of the warrants and the public announcement of the agreement) was $4.16 and $7.60 per share, respectively. Following the issuance of the warrants on April 25, 2000 (and shares acquired in the private placement), Schwab beneficially owned approximately 16% of the Company's outstanding shares of common stock. Beneficial ownership includes shares directly held and those issuable under warrants that are exercisable within sixty days of April 25, 2000, regardless of whether the warrant exercise price is less that the market price.

The total valuation of both of these warrants was determined to be $12,460,000. The first warrant was valued using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 6.0%, term of three years and volatility of 80%.  The second warrant was also valued using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 6.0%, term of three and 1/4 years and volatility of 70%. The difference between the total valuation of the warrants and the Black-Scholes option pricing model output is primarily attributable to discounts relating to both the dilution impact from the potential issuance of the shares of common stock underlying the warrants and the restrictions upon the exercise of the first warrant and the ability to sell the shares issuable upon exercise of that warrant. The total valuation was recorded as a contra-equity item called marketing services receivable and was expensed over a one-year term, consistent with the treatment of the first year cash payment due to the unilateral cancellation right.  The Company recorded $6.0 million in non- cash marketing costs in the year ended December 31, 2001 related to the issuance of these warrants. As of December 31, 2001, the warrants were fully amortized.

Convertible Debt

On July 12, 2001, the Company sold a $5 million convertible note to The Charles Schwab Corporation, which was convertible into shares of its common stock at a conversion price of $1.06 per share and which was scheduled to mature on January 19, 2003. The Company issued the note for general corporate purposes and in order to obtain adequate excess cash reserves above its minimum cash covenant requirements under its warehouse lines of credit. As the convertible feature was issuable in the Company's stock, no value was ascribed to the convertible feature of the note at the time it was issued (in accordance with APB 14 and SFAS 133). The convertible note bore interest at a rate of 8% per annum and was payable quarterly. Schwab beneficially owned approximately 19% of the Company's outstanding shares at the time the note was issued on July 12, 2001 (after giving effect to the warrant exchange described below). Beneficial ownership includes shares directly held and those issuable under warrants that are exercisable within sixty days of July 12, 2001, regardless of whether the warrant exercise price is less than the market price. Schwab received a total of $183,000 and $113,000 in interest payments on this note for the years ended December 31, 2001 and 2002, respectively.

On April 12, 2002, Schwab exercised its option to convert the amount due under the $5 million convertible note into 4,716,981 shares of the Company's common stock, in lieu of repayment, and therefore the note was converted rather than redeemed. Following conversion of the convertible note on April 12, 2002, Schwab beneficially owned 15,272,647 shares of our common stock which equaled approximately 23% of our total outstanding shares of common stock. Beneficial ownership includes shares directly held and those issuable under warrants that are exercisable within sixty days of April 12, 2002, regardless of whether the warrants exercise price is less than the market price.

Warrant Exchange

On July 12, 2001, the Company issued a $5.0 million convertible note to Schwab, convertible into shares of the Company's common stock at a conversion price of $1.06 per share. In order to facilitate Schwab's purchase of the convertible debt and to meet its requirement that its fully diluted percent ownership in the Company be less than 25%, on July 12, 2001 Schwab surrendered its warrant to purchase 6,600,000 shares of common stock at an exercise price of $15.00 ("surrendered warrant") and the Company issued Schwab a new warrant to purchase 1,389,000 shares of common stock at an exercise price of $5.00 and with an expiration date of July 25, 2003 ("exchange warrant"). At the time of the exchange, the Company determined the value of the surrendered warrant and the exchange warrant to be of equal value (approximately $240,000). The surrendered warrant was valued using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 3.95%, remaining term of 2 years and volatility of 98%.  The exchange warrant was also valued using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 3.95%, remaining term of 2 years and volatility of 98%.  The difference between the valuation of each warrant and its respective Black-Scholes option pricing model output is primarily attributable to discounts which were applied to reflect liquidity and dilution. A liquidity discount was applied to both warrants to estimate the discount to market that would be required for the holder to try and recognize the value through open market sales. A second discount was applied to the surrendered warrant to reflect the dilution impact from the potential issuance of the shares of common stock underlying the warrant. This dilution discount was not applied to the exchange warrant because of the smaller number of shares it represented.  In valuing the surrendered warrant as part of the warrant exchange, we updated assumptions that change over time (e.g. risk-free interest rate, volatility, remaining term of set expiration date) from those used in its original valuation in April 2000. As each warrant was determined to be of approximate equal value, no additional value was recorded at the time of exchange. The Company incurred additional costs related to legal, accounting and filing fees to register the shares underlying the exchange warrant. The Company derived a benefit in the warrant exchange, since the exchange enabled Schwab to participate in the convertible note issuance. As a result of the exchange, Schwab reduced the number of shares it was entitled to purchase, but increased the likelihood that at some point in the future the exercise price would be less than the market price of the Company's common stock. The exchange warrant was net exercised by Schwab on June 27, 2003, for 254,566 shares of common stock. The average of the high and low price of the Company's common stock as reported by the Nasdaq National Market on July 12, 2001 (the date of issuance of the exchange warrant) was $1.02 per share.

Loans with Executive Officers and Directors

Under Section 402 of the Sarbanes-Oxley Act of 2002, certain extensions of credit to directors and executive officers of publicly traded and reporting companies are prohibited effective July 30, 2002. Personal loans in existence prior to July 30, 2002 may continue in effect, provided there is no material modification to any term or renewal of such loan. However, the Act provides an exception for consumer credit loans that are (i) made or provided in the ordinary course of the consumer credit business of the issuer, (ii) of a type that is generally made available by such issuer to public, and (iii) made by such issuer on market terms, or terms that are no more favorable than those offered by the issuer to the general public for such extensions of credit.

The Company, like many financial institutions, has followed a policy of granting mortgage, home equity and auto loans to its directors and executive officers and members of their immediate families in the ordinary course of the Company's business. During the fiscal year ended December 31, 2003, the Company granted loans to certain of its executive officers and directors. All of these loans were made on market terms and in compliance with the Sarbanes-Oxley Act of 2002. In addition, in management's opinion, these loans were made in the ordinary course of business, were made in compliance with applicable laws on substantially the same terms, including interest rates and collateral, as those prevailing for comparable transactions with other persons of similar creditworthiness and, in the opinion of management, did not involve more than a normal risk of collectibility or present other unfavorable features. These loans have been sold to institutional purchasers in the secondary market for at least their respective face values. At the end of the fiscal year ended December 31, 2003, no loans from any such persons were held by the Company.

21. Risks and Uncertainties

The Company has a limited operating history and its prospects are subject to the risks, expenses and uncertainties frequently encountered by companies in the new and rapidly evolving markets for internet products and services. These risks include the failure to develop and extend the Company's online service brands, the rejection of the Company's services by consumers, vendors and/or advertisers, the inability of the Company to maintain and increase the levels of traffic on its online services, as well as other risks and uncertainties.

Additionally, in the normal course of business, companies in the mortgage banking and auto finance industries encounter certain economic and regulatory risks. Economic risks include interest rate risk, credit risk and market risk. The Company is subject to interest rate risk to the extent that in a rising interest rate environment, the Company will generally experience a decrease in loan production, which may negatively impact the Company's operations. Credit risk is the risk of default, primarily in the Company's loan portfolio that result from borrowers' inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of loans held-for-sale and in commitments to originate loans. Regulatory risks include administrative enforcement actions and/or civil or criminal liability resulting from the Company's failure to comply with the laws and regulations applicable to the Company's business.

The Company depends on three warehouse credit facilities to finance the mortgage loan inventory pending ultimate sale to mortgage loan investors. The warehouse credit facilities include both committed and uncommitted lines of credit. The Company also has a line of credit to finance the auto loan inventory pending ultimate sale to auto investors. All of these facilities have operating and financial covenants including the requirement that the Company maintain two mortgage warehouse facilities (with minimum borrowing capacity limits) and the maintenance of certain financial ratios. In particular, the Company must maintain a minimum cash and cash equivalents balance of the higher of $15 million. Failure to comply with these covenants on either or both lines could result in the obligation to repay all amounts outstanding at the time of termination. In the past, the Company has obtained waivers from these lenders due to failure to comply with certain covenants.

Typically, the Company sells its loans on a servicing released basis without recourse. By doing so, it reduces its risk of loss or default by the borrower, except that it may be required to repurchase the loan in the event of an early payment default. Although loans are sold without recourse, the Company may be required to repurchase the loan if it breaches the representations or warranties that it makes in connection with the sale of the loan, or if the loan does not comply with the underwriting standards or other requirements of the ultimate loan purchaser.

While the Company achieved its first profitable year during 2002, the Company experienced a pre-tax loss of $1.5 million in the fourth quarter of 2003. The Company may not regain or increase profitability on a quarterly or annual basis in the future. If revenues grow more slowly than anticipated, or if operating expenses exceed expectations or cannot be adjusted accordingly, the business, results of operations and financial condition will be adversely affected. Management believes that its cash and cash equivalents held at December 31, 2003 will be sufficient to fund its operating activities and capital expenditures, and meet all other obligations including its minimum cash and cash equivalent covenants through at least December 31, 2004.

22. Subsequent Events

Effective January 1, 2004, the Company's Board of Directors authorized an increase of 1,000,000 shares to the number of shares authorized for issuance under the Company's 1997 Stock Plan, and an increase of 1,242,735 shares to the number of shares authorized for issuance under the Company's 1999 Employee Stock Purchase Plan, in accordance with the annual automatic increase provision contained in the respective Plans.

On January 29, 2004, the Company announced the resignation of its President and Chief Operating Officer, Joseph Kennedy. In accordance with a Separation Agreement, also dated January 29, 2004, the Company agreed to pay Mr. Kennedy approximately $312,000 related to severance, benefits and employer taxes. Additionally, the Company agreed to accelerate the vesting of all unvested options held by Mr. Kennedy and to extend the exercise period for such options through April 12, 2004, which modifications were estimated to amount to a $635,500 non-cash compensation charge. These compensation charges will be recorded in2004.

On February 6, 2004 the Company entered into a new uncommitted warehouse line of credit agreement for borrowings of up to $200 million for the interim financing of mortgage loans with Merrill Lynch Mortgage Capital Inc. The interest rate charged on borrowings against these funds is variable based on LIBOR plus various percentage points. Borrowings are collateralized by the related mortgage loans held-for-sale. The uncommitted line of credit expires on February 4, 2005. This line of credit agreement generally requires the Company to comply with various financial and non-financial covenants. In particular, the Company must maintain a minimum unrestricted cash balance of $12.5 million. Failure to comply with these, or any other covenants, could result in the obligation to repay all amounts then outstanding.

EXHIBITS

10.4	Loan Purchase Agreement with Norwest Funding Inc. dated May 18, 1998   PDF
10.6	Loan Purchase Agreement with Aurora Loan Services Inc. dated August 23, 2000   PDF
10.13	Correspondent Agreement with GMAC Mortgage Corporation dated January 25, 2002   PDF
10.64	Seventeenth Modification Agreement with GMAC Mortgage Corporation dated November 12, 2003   PDF
10.65	Amendment Number Nine to the Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated November 13, 2003   PDF
10.66	Home Equity Line of Credit (HELOC) Revolving Credit Loan Purchase, Sale & Servicing Agreement with Wachovia Bank, N.A. dated February 4, 2004+   PDF
10.67	Master Repurchase Agreement with Merrill Lynch Mortgage Capital, Inc. dated February 6, 2004   PDF
10.68	Separation Agreement and Release of Claims with Joseph J. Kennedy dated January 29, 2004   PDF
10.69	Eighteenth Modification Agreement with GMAC Mortgage Corporation dated January 13, 2004   PDF
10.70	Nineteenth Modification Agreement with GMAC Mortgage Corporation dated February 25, 2004   PDF
10.71	Amendment Number Ten to the Master Loan and Security Agreement with Greenwich Capital Financial Products, Inc. dated March 11, 2004   PDF
10.72	Severance Agreement and Release of Claims with Robert Purcell dated February 25, 2004   PDF
21.1	List of Subsidiaries of E-Loan, Inc.
23.1	Consent of PricewaterhouseCoopers LLP, Independent Auditors
31.1	Chief Executive Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002#
31.2	Chief Financial Officer Certification of Periodic Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002#
32.1	Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002##
32.2	Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,asadopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002##

+ Confidential Treatment Requested

# Filed herewith

## Furnished herewith

^PDF PDF format filed as a courtesy.

EX-10.4

EX-10.6

Exhibit 10.6

FORM OF LOAN PURCHASE AGREEMENT

(SERVICING RELEASED TRANSACTIONS)

This is a LOAN PURCHASE AGREEMENT (the "Agreement"), dated as of August 23, 2000, (Seller No. 7544), by and between Aurora Loan Services Inc., having an office at 2530 S. Parker Road, Suite 601, Aurora, Colorado 80014 ("ALS") and E-Loan, Inc., having an office at 5875 Arnold Road, Dublin, California 94568 (the "Seller").

W I T N E S S E T H:

WHEREAS, the Seller desires to sell, from time to time, to ALS, and ALS desires to purchase, from time to time, from the Seller, certain conventional, adjustable and/or fixed rate residential first mortgage loans (the "Mortgage Loans") which shall be delivered on a servicing released basis, on various dated (each a "Purchasing Date") as provided in the Aurora Loan Services Inc. Seller Guide, as amended from time to time (the "Seller Guide")*;

WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or other security instrument creating a first lien on a residential dwelling located in the jurisdiction indicated in the Delivery Commitment Confirmation for the related Mortgage Loan;

WHEREAS, ALS and the Seller have agreed that the Mortgage Loans shall be conveyed in the manner set forth in the Seller Guide; and

WHEREAS, this Agreement is the "Loan Purchase Agreement" referred to in Section 100 of the Seller Guide;

NOW, THEREFORE, in consideration of the promises and mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ALS and the Seller agree as follows:

SECTION 1. Agreement to Purchase. The Seller agrees to sell, and ALS agrees to purchase, from time to time, Mortgage Loans as further described in the related Purchase Advice and the related servicing rights thereto, pursuant to the terms and conditions of the Seller Guide.

SECTION 2. Incorporation of Seller Guide; Conflicts; Seller Agreement. The terms and provisions of the Seller Guide and all forms therein are hereby incorporated and made a part hereof and are an integral part of this Agreement. In the event of any conflict, inconsistency or discrepancy between any of the provisions of the Seller Guide and any of the provisions of this Agreement, the provisions of this Agreement shall control and be binding upon ALS and the Seller. The Seller hereby (i) acknowledges that it has received and reviewed the Seller Guide and (ii) agrees to be bound by the terms and conditions set forth therein.

SECTION 3. Counterparts. This Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

SECTION 4. Successors and Assigns; Assignment of Loan Purchase Agreement. This Agreement shall bind and inure to the benefit of and be enforceable by the Seller and ALS and their respective successors and assigns. This Agreement shall not be assigned, pledged or hypothecated by the Seller to a third party without the consent of ALS.

SECTION 5. Defined Terms. Capitalized terms used but not defined herein shall have the respective meanings set forth in Section 8 of the Seller Guide.

SECTION 6. Costs. All costs and expenses incurred in connection with the transfer and delivery of the Mortgage Loans, shall be paid by the party identified in the Seller Guide, as applicable, or if no party is identified, by the Seller.

SECTION 7. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if mailed, by registered or certified mail, return receipt requested, or, if by other means, when received by the other party at (i) the address in the Seller Guide if to ALS, and (ii) as follows if to the Seller:

E-Loan, Inc.
5875 Arnold Road
Dublin, California 94568
Attn: Steve Majerus

With a copy to:

E-Loan, Inc.
5875 Arnold Road
Dublin, California 94568
Attn: Ed Giedgowd, Esq.

or such other address as may hereafter be furnished to the other party by like notice. Any such demand, notice or communication hereunder shall be deemed to have been received on the date delivered to or received at the premises of the addressee (as evidenced, in the case of registered or certified mail, by the date noted on the return receipt).

SECTION 8. Governing Law. This Agreement and the Seller Guide shall be construed in accordance wind the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with the laws of the State of New York, except to the extent preempted by Federal law.

SECTION 9. Waivers. No term or provision of this Agreement may be waived or modified unless such waiver or modification is in writing and signed by the party against whom such waiver or modification is sought to be enforced.

SECTION 10. Reproduction of Documents. This Agreement and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any party at the closing, and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro- card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

SECTION 11. Further Agreements. The Seller and ALS each agree to execute and deliver to the other such reasonable and appropriate additional documents, instruments or agreements as may be necessary or appropriate to effectuate the purposes of the Seller Guide.

SECTION 12. Confidentiality. The Seller hereby agrees that the terms and conditions of any Purchase Advice, this Agreement, the Seller Guide and all Delivery Commitments shall be kept confidential and their contents shall not be divulged to any party without ALS' consent except to the extent that it is necessary for the Seller to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies.

SECTION 13. State of Incorporation. The Seller is duly organized validly existing and in good standing under the laws of the state of Delaware.

IN WITNESS WHEREOF, the Seller and ALS have caused their names to by signed hereto by their respective officers thereunto duly authorized as of the date first above written.

AURORA LOAN SERVICES INC.
(Purchaser)

By: /s/ Kevin A. Tamane
Name: Kevin A. Tamane
Title: Senior Vice President

E-LOAN, INC.
(Seller)

By: /s/ Steven M. Majerus
Name: Steven M. Majerus
Title: Vice President Secondary Marketing

*E-LOAN, Inc. will obtain and provide a copy of the Aurora Loan Services Inc. Seller Guide upon request.

EX-10.13

Exhibit 10.13

CORRESPONDENT AGREEMENT
for Purchase and Sale of Residential Mortgage Loans

This Correspondent Agreement ("Agreement") is made and entered into as of the 25^th day of January, 2002, by and between GMAC Mortgage Corporation ("GMACM"), a Pennsylvania corporation, and E-Loan Incorporated ("Correspondent"), a Delaware corporation.

RECITALS

This agreement is entered into with reference to and includes the following:

A. GMACM is a mortgage banker engaged, among other things, in the business of originating, purchasing, selling, and servicing mortgage loans.

B. Correspondent is engaged in the business of originating, processing, closing, and selling residential mortgage loans.

C. Correspondent is a mortgagee approved, and will remain approved, by the Federal Housing Administration of the Department of Housing and Urban Development (FHA), the Department of Veterans Affairs (VA), Federal National Mortgage Association (FannieMae), Federal Home Loan Mortgage Corporation (FHLMC), and/or any governmental or quasi-governmental agency or insurer which is engaged in the mortgage lending industry. In the event that any other approval is required to be obtained in order to originate, process, close, fund, or service any Loan (hereinafter defined), Correspondent agrees to take whatever action is required to obtain such approval.

D. GMACM desires from time to time to purchase from Correspondent, and Correspondent desires to sell, one-to-four family, first and second lien residential mortgage loans (individually, a "Loan") made to individual borrowers (individually, a "Borrower"), closed in Correspondent's name, on a servicing released basis, and upon such terms and conditions as set forth in this Agreement and in the GMAC Mortgage Correspondent Lending Manual and written directions provided by GMACM and amended time to time (collectively the "Correspondent Manual")* which is made a part of this Agreement and incorporated herein as if set forth at length.

In consideration of the above recitals and the mutual covenants and promises contained herein, and intending to be legally bound, the parties do hereby agree as follows:

1. TERM

This Agreement shall be effective as of January 25, 2002, and shall continue until terminated by either party.

2. TERMINATION
1. This Agreement may be terminated by either party without penalty or cause upon 15 days' written notice to other party.
2. In addition, GMACM shall have the right to terminate this Agreement immediately by notice in writing to Correspondent in the event of any of the following:
1. Correspondent defaults in any of its obligations under this Agreement or any other agreements between the parties and such default is not cured within ten (10) business days after notice to Correspondent of such default;
2. Correspondent fails to deliver acceptable Loans to GMACM under the terms and conditions of this Agreement and the Correspondent Manual;
3. Correspondent shall Initiate or suffer any proceedings of insolvency or reorganization under the bankruptcy code, or other federal or state receivership laws, or make any common law assignment for the benefit of creditors, or be unable to pay its debts as the same become due;
4. Correspondent assigns or attempts to assign its rights and obligations hereunder;
5. Correspondent by operation of law becomes unable to faithfully perform its duties pursuant to this Agreement; or
6. GMACM suffers any involuntary sale or execution upon any interest in any Loan purchased hereunder and such is the result of any act or omission on the part of Correspondent.
3. Termination shall not affect the obligations of Correspondent with respect to any event occurring before termination. However, termination of this Agreement, except under Paragraph 2 (a), shall be deemed to be for or with cause, and GMACM, at its option, shall have the right to cancel any open Loan registration confirmation(s) or other commitment agreements.
4. Correspondent agrees that in the event of a breach by Correspondent of this Agreement or any other agreement between GMACM and Correspondent, or upon the default of Correspondent under any instrument payable to GMACM, or upon failure of Correspondent to pay any amounts due GMACM, GMACM shall have the immediate right to set-off from and against any amounts otherwise due or payable to Correspondent
3. SERVICES OF CORRESPONDENT
1. Correspondent will assist prospective Borrowers in completing credit applications and such other documents in the form designated by GMACM and as GMACM may require for Loans which meet the then current underwriting standards and loan policies of GMACM, including the Correspondent Manual. Correspondent will promptly submit all information generated pursuant to such application to GMACM, or the applicable agency, for its review and approval.
2. "NON DELEGATED UNDERWRITING" Correspondent may request approval to be authorized as a delegated underwriter. If such request is approved in writing by GMACM, Correspondent shall make credit commitments on behalf of GMACM, under the terms specified In the written approval or an amendment to this agreement, and in compliance with applicable law and the Correspondent Manual. Unless and until notified otherwise by GMACM in writing, Correspondent is NOT authorized as a delegated underwriter and must send all loans to GMACM or an authorized contract underwriting service for underwriting approval. Correspondent shall obtain real estate appraisals only from those appraisers, which are licensed or certified according to state law requirements. All appraisals must meet secondary market requirements and in addition satisfy all requirements mandated by state and federal law, including, without limitation, FIRREA, for the particular transaction (refer to Underwriting Section of the Correspondent Manual).
3. "DELEGATED UNDERWRITING" The Correspondent is hereby authorized as a delegated underwriter for the programs listed below and is authorized to make credit commitments on behalf of GMACM in compliance with applicable law and the Correspondent Manual. Unless and until notified otherwise by GMACM, Correspondent is authorized as a delegated underwriter for programs outlined in the GMACM Product Matrix to a maximum loan amount of $650,000. Loans in excess of $650,000 and sub-prime and high LTV loans require exception approval and are underwritten at GMACM.
4. Correspondent, at its own expense, shall furnish to GMACM all credit data, financial statements, real estate information, and such additional items as GMACM, from time to time, may require. In addition, Correspondent, at its own expense, shall perform such other functions as GMACM may require to close, fund, and complete the Loan transaction.
5. Prior to purchase of the Loan by GMACM and after purchase, if required, Correspondent agrees to execute such assignments, endorsements, or other documentation as necessary to transfer ownership of the Loan to GMACM and/or such other assignee as may be designated by GMACM, concurrent with the closing of such Loan or as GMACM may otherwise direct.
6. Correspondent shall deliver to GMACM all Loan documents required by the Correspondent Manual, within the applicable time period required in the Correspondent Manual and commitment confirmation.
7. If Correspondent fails to make proper and timely required delivery in connection with any registration or reservation ("registration"), the parties agree and acknowledge that GMACM will suffer damages, including, but not necessarily limited to, the decline in market value of the Loan, processing costs, investment losses, and obligations to investors to whom a registered Loan has been committed, legal costs incurred as a result of non-delivery and in enforcement of GMACM's rights, and Correspondent shall be liable for all such damages and other damages incurred by GMACM, in addition to any other rights, remedies or damages of GMACM at law, in equity or under this Agreement.
8. All Loans will be purchased in accordance with pricing and options provided in the Correspondent Manual. Any change in pricing policy shall be effective only by written amendment of the Correspondent Manual or other written notice by GMACM to Correspondent.
9. All Loans which Correspondent desires to sell to GMACM under this Agreement must be registered with GMACM subject to any limitations in the Correspondent Manual. Following acceptance by GMACM of a registered Loan, Correspondent shall be obligated to deliver the Loan to GMACM in accordance with the terms and conditions of the applicable delivery program and this Agreement.
4. OBLIGATIONS OF GMACM

Subsequent to Loan purchase, GMACM may reverify appraisals, credit reports, and other information as it may determine necessary at GMACM's expense in order to assure itself of the correctness of information in each Loan file.

5. FEES

Correspondent may retain, to the extent permitted by state, federal and local law and the requirements of the applicable investors, as a processing fee, an origination fee and all lawful discounts collected in excess of the GMACM's quoted price. GMACM may withhold, set off, and apply any fees otherwise due and payable to Correspondent to any obligations of Correspondent to GMACM. In no event shall any compensation be paid to Correspondent unless a Loan is funded. GMACM has the right to withhold any fees or payments until the Loan file is complete and Correspondent has performed its obligations hereunder.

6. APPLICABILITY OF REPRESENTATIONS AND WARRANTIES

Each Loan shall be subject to all representations and warranties specified in this Agreement, including, without limitation, those in the Correspondent Manual, irrespective of the provisions of any other documents or conduct of the parties with respect thereto, including without limitation, GMACM's examination of documents and files, and this Agreement shall exclusively govern the rights of the parties hereto despite the fact that the Loan will be subsequent to this Agreement. Each representation and warranty herein and the Correspondent Manual shall survive the purchase of a Loan and shall insure to the benefit of GMACM, its successors and assigns.

7. CORRESPONDENT'S REPRESENTATIONS, WARRANTIES, AND COVENANTS REGARDING LOANS

Correspondent makes to GMACM in connection with each Loan purchased by GMACM and with this Agreement, all of the representations, warranties, and covenants set forth in the Correspondent Manual and herein which representations, covenants and warranties shall be true at the time of registration, at the time of delivery and which shall survive the purchase of each Loan by GMACM and shall continue in effect as to each Loans for so long as any amount due from the borrower remains outstanding and unpaid.

8. ADDITIONAL REPRESENTATIONS, WARRANTIES, AND COVENANTS

Correspondent makes to GMACM in connection with this Agreement, all of the representations, warranties, and covenants set forth in the Correspondent Manual and herein which representations, covenants and warranties shall be true at the time of the execution hereof, as well as at the time of registration of each Loan, at the time of delivery and which shall survive the purchase of each Loan by GMACM.

1. Correspondent is a corporation duly organized and validly existing in good standing in the jurisdiction of its chartering or incorporation, and Correspondent and each of its directors, officers, agents, and employees have acquired and will, during the term of this Agreement, maintain all necessary licenses and qualifications to transact its business. Correspondent shall submit to GMACM copies of all such licenses as requested by GMACM.
2. Correspondent has all necessary corporate authority and has taken all required corporate action to enter into this Agreement and to perform the transactions contemplated hereunder.
3. Correspondent is a mortgagee approved, and will remain approved, by the Federal Housing Administration of the Department of Housing and Urban Development (FHA), the Department of Veterans Affairs (VA), and/or any governmental or quasi-governmental agency or insurer which is engaged in the mortgage lending Industry.
4. The execution and delivery of this Agreement by Correspondent and the obligations which it will perform hereunder do not, and will not, violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination, award or contract having applicability to Correspondent or the articles of incorporation or bylaws of Correspondent.
5. This Agreement constitutes, when duly executed and delivered by Correspondent, a legal, valid, and binding obligation of Correspondent, enforceable against Correspondent according to its terms.
6. There are no actions, suits, or proceedings pending or threatened against or affecting Correspondent or the properties of the Correspondent before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which if determined adversely to Correspondent, would have a material adverse effect on the financial condition, properties, or operations of Correspondent or upon Correspondent's ability to perform its duties hereunder.
7. Correspondent agrees to make current audited financial statements available to GMACM upon request, and in any case, within ninety (90) days after the completion of each fiscal year of correspondent. GMACM will rely on these statements as part of its determination of whether to continue to purchase Loans under this Agreement.
8. Correspondent agrees it will not use for its own benefit or will not disclose to any person or entity confidential information relating to GMACM which it has acquired or which it may acquire during the term of this Agreement.
9. Correspondent has in full force and effect and will continue to maintain a fidelity bond and an errors and omissions policy or policies or mortgage banker's blanket bond covering all its activities hereunder, with terms acceptable to FNMA and FHLMC and shall provide to GMACM, on an annual basis or as required by GMACM, satisfactory evidence thereof.
9. INDEMNIFICATION AND REPURCHASE

Correspondent acknowledges that GMACM shall have relied upon the representations and warranties expressed in this Agreement and the Correspondent Manual. All of Correspondent's representations and warranties are and shall be true and shall survive as provided in Paragraph 7 herein. No representation or warranty made by Correspondent in connection with the purchase of each Loan by GMACM contains any untrue statement of any material fact or fails to state any material fact necessary to make such representation or warranty not misleading.

In addition to any other remedies of GMACM set forth herein or in the Correspondent Manual, Correspondent shall repurchase applicable Loans and shall indemnify and hold GMACM harmless from losses (Including the loss of servicing rights), damages, deficiencies, claims or expenses (including reasonable attorneys' fees) incurred by GMACM to the extent required by and in accordance with the provisions of the Correspondent Manual.

In addition to all other remedies available to it, GMACM shall be entitled to offset any amounts it owes Correspondent by any amounts Correspondent is required to pay to GMACM under this section and the sections of the Correspondent Manual relating to Repurchase and Indemnification. The indemnity provided in this Section shall remain in full force and effect regardless of any investigation made by GMACM or its representatives or any cancellation of this Agreement, and shall survive this Agreement as to each Loan for so long as any amount due from the Borrower remains outstanding and unpaid. Upon receipt of notice of claim covered by any indemnity or other indemnity in this Agreement, whether such claim appears to be valid or not, Correspondent shall immediately assume the representation of GMACM and the defense of such claim at its own cost and expense to the satisfaction of GMACM, with counsel approved by GMACM, and Correspondent shall be directly responsible for the payment of any settlement, award or judgment relating to such claim.

10. RELATIONSHIP OF PARTIES

It is agreed that Correspondent and GMACM are not partners or joint ventures, but shall have the status of and act in all matters hereunder as independent contractors. Correspondent shall hold funds collected on account of any Loan in trust for GMACM. Correspondent is not an agent or partner of GMACM and has no authority and is intended to have no power to create, extinguish, or modify any right, obligation, or liability of GMACM to any person whatsoever.

It is expressly understood that, notwithstanding the execution of this Agreement and the covenants and agreements contained herein, GMACM may make Loans with or without the assistance of Correspondent and may use the services of other correspondent and lenders; and Correspondent may sell mortgage loans to other correspondent and lenders.

11. JURY WAIVER/ ATTORNEY FEES AND EXPENSES

If any legal action or proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach or default in connection with any of the provisions of this Agreement, the successful or prevailing party shall be entitled to immediately recover from the other party, its costs, plus reasonable attorneys' fees incurred in such action(s) or proceeding(s) in addition to any other relief to which it may be entitled. Except as expressly provided hereunder to the contrary, each party shall bear its own costs and expenses incurred in connection with the preparation of this Agreement and the performance of the obligations contemplated hereby.

After consultation with counsel, and with knowledge of the consequences, Correspondent and GMACM hereby waive all rights to demand a jury trial and agree that all suits shall be heard by a judge only.

12. WAIVERS/REMEDIES CUMULATIVE

GMACM's delay or failure to enforce any provision of this Agreement shall not constitute a waiver of that provision or any other provision or agreement with Correspondent.

All remedies afforded by this Agreement shall be cumulative and in addition to all other remedies provided herein or afforded by law or in equity.

13. NOTICES

All notices required under this Agreement shall be considered given (i) when deposited in the United States Mail, certified mail, return receipt requested, (ii) on the third business day after mailing via regular first class mail, or (iii) on the next business day after mailing by a nationally recognized overnight mail carrier, bearing sufficient postage and addressed as set forth below, unless another address is designated in writing:

Purchaser:	Correspondent:
GMAC Mortgage Corporation Correspondent Lending Group 100 Witmer Road, PO Box 963 Horsham, PA 19044-0963 Attention: Cathy A. Williams        Vice President, Wholesale Lending cc: Attention: Legal Department	_______________________________________ _______________________________________ Attention: _____________________________

14. ASSIGNMENT

Correspondent shall not assign this Agreement or any of its rights hereunder. Neither shall Correspondent delegate any duty hereunder without the prior written consent of GMACM.

15. BROKERAGE

Each party represents and warrants that there are no claims for brokerage commissions or finder's fees in connection with the transactions contemplated by this Agreement. Each party agrees to exonerate, indemnify, and hold harmless the other in respect to any and all losses sustained by the other as a result of liability to any broker or finder on basis of any arrangement made on, behalf of such party.

16. CAPTIONS; DEFINED TERMS

The captions of each section in this Agreement are included for convenient reference of the parties and in no way are intended to define, limit, or imply the obligations of the parties. Terms used with an initial capital letter which are defined in the Correspondent Manual and not otherwise defined herein shall have the meaning given them by the Correspondent Manual.

17. ENTIRE AGREEMENT

The exhibits attached hereto or material referred to in this Agreement, including the Correspondent Manual, are incorporated by reference into this Agreement. To the extent there are differences between requirements as stated in the Correspondent Manual and as stated in this Agreement, the provisions of this Agreement shall control. This Agreement, the Correspondent Manual and the material referred to herein or therein or executed concurrently herewith constitute the entire Agreement and supersede any and all prior agreements, representations, and understandings of the parties, written or oral. No addendum, supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both parties hereto, however amendments to the Correspondent Manual shall be effective, as provided in Paragraph 13 above, upon their delivery by GMACM by mail or courier to Correspondent. Notwithstanding the foregoing, amendments to the Correspondent Manual relating to pricing and underwriting shall not apply to Loans which were registered prior to the delivery of such amendments to Correspondent.

18. SEVERABILITY

In the event that any provision of this Agreement conflicts with applicable law, such conflict shall not affect the other provisions of this Agreement which can be given effect without the conflicting provisions, and to this end the provisions of this Agreement are declared to be severable.

19. NOTICE TO BORROWERS

Correspondent shall mail notice of transfer of servicing to the Borrower of each Loan as required by federal law (RESPA). Such notice shall be in a form approved by GMACM prior to mailing. Such notice shall be sent through the United States Mail, first class postage prepaid at the Correspondent's expense.

20. SOLICITATION

A. Neither Correspondent nor any affiliate of Correspondent shall solicit any Borrower of a Loan for the sale or renewal of insurance with respect to such Loan.

B. Neither Correspondent nor any affiliate of Correspondent shall, during the remaining term of any of the Loans, take any action to personally, by telephone, by mail or otherwise, solicit the refinancing or prepayment of the Loans by the Borrowers, in whole or in part, or otherwise solicit the Borrowers for any purpose, without the prior written consent and approval of GMACM.

C. Notwithstanding anything contained herein to the contrary, for purposes of this Agreement, solicitation shall not be deemed to include general advertisements directed to the public at large and contained in newspapers or other broadcast media.

21. GOVERNING LAW AND VENUE

This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. Venue for any action arising out of relating to this Agreement, including the formation, validity, or interpretation thereof and the performance or breach thereof, shall be only in the Commonwealth of Pennsylvania. Each party consents that any State or Federal Court in the Commonwealth of Pennsylvania otherwise having jurisdiction shall also have jurisdiction of the parties.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

GMAC Mortgage Corporation	E-Loan, Inc.
By: /s/ Marianne Mainardi Name: Marianne Mainardi Title: Vice President, Correspondent Lending	By: /s/ Steven M. Majerus Name: Steven M. Majerus Title: Vice President, Secondary Lending

* E-LOAN, Inc. will obtain and provide a copy of the GMAC Mortgage Correspondent Lending Manual upon request.

EX-10.64

Exhibit 10.64

SEVENTEENTH MODIFICATION AGREEMENT

THIS SEVENTEENTH MODIFICATION AGREEMENT (the "Agreement") is made as of the 12^th day of November, 2003, by and among E-LOAN, INC. (the "Borrower"), and GMAC Mortgage Corporation, a Pennsylvania corporation ("GMACM"), as successor to all rights, title, interest and obligations under that certain Master Warehouse Loan Purchase and Sale Agreement dated as of September 24, 2003 ("Purchase Agreement"), by and among GMACM and GMAC Bank, a federal savings bank (the "Lender").

BACKGROUND

The Borrower and the Lender entered into a Warehouse Credit Agreement, dated as of November 1, 2001, as amended (as so amended, the "Warehouse Credit Agreement") pursuant to which the Lender agreed to make advances (the "Advances") to the Borrower in accordance with the provisions of the Warehouse Credit Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Warehouse Credit Agreement.

The Advances are evidenced by the Borrower's Fourth Amended and Restated Note, dated as of May 6, 2003 (the "Note") in the stated principal amount of $155,000,000 and secured by, among other things, a Warehouse Security Agreement dated as of November 1, 2001, as amended (as so amended, the "Warehouse Security Agreement") between the Borrower and the Lender granting the Lender a security interest in certain of the Borrower's assets.

Pursuant to the Purchase Agreement, GMACM is the successor of all rights, title, interest and obligations of Lender under the Warehouse Credit Agreement and Collateral Documents.

The Borrower has requested that GMACM make certain modifications to the terms of the Warehouse Credit Agreement, and GMACM has agreed to such modification, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Warehouse Credit Agreement. The Warehouse Credit Agreement is hereby amended as follows:

(a) The definition of "Commitment" contained in Section 1.01 of the Warehouse Credit Agreement is amended to read in full as follows:

""Commitment" shall mean the obligation of the Lender to make Advances in an aggregate principal amount outstanding at any time not to exceed $150,000,000, or such other amount as Lender, in its sole discretion, may determine from time to time."

(b) The definition of "Expiry Date " contained in Section 1.01 of the Warehouse Credit Agreement is revised as follows:

""Expiry Date" shall mean the earlier of (i) January 31, 2004, as such date may be extended upon mutual agreement between the Borrower and the Lender from time to time, and (ii) the date that is 120 days after the date on which the Lender shall have given the Borrower the notice referred to in Section 9.13 hereof."

2. References to Credit Documents. Upon the effectiveness of this Agreement:

(a) Each reference in the Warehouse Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import, and each reference in the Restated Note and the Warehouse Security Agreement to the Warehouse Credit Agreement, shall mean and be a reference to the Warehouse Credit Agreement as amended hereby;

(b) Each reference in the Warehouse Credit Agreement and the Warehouse Security Agreement to the Note shall mean and be a reference to the Restated Note; and

(c) Each reference in the Warehouse Credit Agreement and the Note to the Warehouse Security Agreement shall mean and be a reference to the Warehouse Security Agreement as amended hereby.

3. Ratification of Documents.

(a) Except as specifically amended herein or amended and restated in the Restated Note, the Warehouse Credit Agreement, the Note and the Warehouse Security Agreement shall remain unaltered and in full force and effect and are hereby ratified and confirmed.

(b) The execution, delivery and effectiveness of this Agreement and the Restated Note shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lender under the Warehouse Credit Agreement, the Note or the Warehouse Security Agreement nor constitute a waiver of any default or Event of Default under the Warehouse Credit Agreement, the Note or the Warehouse Security Agreement.

4. Representations and Warranties. The Borrower hereby certifies that (i) the representations and warranties which it made in the Warehouse Credit Agreement and the Warehouse Security Agreement are true and correct as of the date hereof and (ii) no Event of Default and no event which could become an Event of Default with the passage of time or the giving of notice, or both, under the Note, the Warehouse Credit Agreement or the Warehouse Security Agreement exists on the date hereof.

5. Miscellaneous.

(a) This Agreement shall be governed by and construed according to the laws of the State of Delaware without regard to principles of conflicts of laws and shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns.

(b) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(c) This Agreement is intended to take effect as a document under seal.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

E-LOAN, INC. Attorney-In-Fact for GMAC MORTGAGE CORPORATION

By: /s/ Joseph Kennedy
President By: /s/ John Doulong
Name: John Doulong
Title: Vice President of GMAC Bank

EX-10.65

Exhibit 10.65

AMENDMENT NUMBER NINE
to the
Master Loan and Security Agreement
Dated as of March 21, 2002
by and between
E-LOAN, INC.
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.

This AMENDMENT NUMBER NINE is made this 13^th day of November, 2003, by and between E-LOAN, INC., having an address at 5875 Arnold Road, Dublin, California 94568 (the "Borrower") and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., having an address at 600 Steamboat Road, Greenwich, Connecticut 06830 (the "Lender"), to the Master Loan and Security Agreement, dated as of March 21, 2002, by and between the Borrower and the Lender, as amended (the "Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

RECITALS

WHEREAS, the Borrower has requested that the Lender agree to amend the Agreement to make certain modifications to definition of Maximum Credit under the Agreement as more expressly set forth below.

WHEREAS, as of the date of this Amendment Number Nine, the Borrower represents to the Lender that it is in compliance with all of the representations and warranties and all of the affirmative and negative covenants set forth in the Agreement and is not in default under the Agreement.

WHEREAS, the Borrower and the Lender have agreed to amend the Agreement as set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1. Effective as of November 13, 2003, Section 1 of the Agreement is hereby amended by deleting clause (3) to the definition of Maximum Credit and replacing it with the following:

(3)   the Maximum Credit for Mortgage Loans which are HELOCs or Second Lien Mortgage Loans may not exceed $130 million at any time; provided that, solely to the extent that the Lender has agreed to act as lead or co-lead underwriter with respect to such Mortgage Loans, such amount shall be increased to $150 million;

SECTION 2. Effective as of November 13, 2003, Section 1 of the Agreement is hereby amended by deleting clause (6) to the definition of Maximum Credit and replacing it with the following:

(6)   the Maximum Credit for all HELOCs and Second Lien Mortgage Loans that are not covered by a Takeout Commitment may not exceed $60 million at any time and the Maximum Credit for all Mortgage Loans that are not covered by a Takeout Commitment may not exceed $100 million at any time.

SECTION 3. Fees and Expenses. The Borrower agrees to pay to the Lender all fees and out of pocket expenses incurred by the Lender in connection with this Amendment Number Nine (including all reasonable fees and out of pocket costs and expenses of the Lender's legal counsel incurred in connection with this Amendment Number Nine), in accordance with Section 11.03 of the Loan Agreement.

SECTION 4. Defined Terms. Any terms capitalized but not otherwise defined herein shall have the respective meanings set forth in the Agreement.

SECTION 5. Limited Effect. Except as amended hereby, the Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment Number Nine need not be made in the Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Agreement, any reference in any of such items to the Agreement being sufficient to refer to the Agreement as amended hereby.

SECTION 6. Representations. In order to induce the Lender to execute and deliver this Amendment Number Nine, the Borrower hereby represents to the Lender that as of the date hereof, the Borrower is in full compliance with all of the terms and conditions of the Agreement and no Default or Event of Default has occurred and is continuing under the Agreement.

SECTION 7. Governing Law. This Amendment Number Nine shall be construed in accordance with the laws of the State of New York and the obligations, rights, and remedies of the parties hereunder shall be determined in accordance with such laws without regard to conflict of laws doctrine applied in such state (other than Section 5-1401 of the New York General Obligations Law).

SECTION 8. Counterparts. This Amendment Number Nine may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.

[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the Borrower and the Lender have caused this Amendment Number Nine to be executed and delivered by their duly authorized officers as of the day and year first above written.

E-LOAN, INC.
(Borrower)

By: /s/ Steven Majerus
Name:
Title:

GREENWICH CAPITAL FINANCIAL PRODUCTS. INC.
(Lender)

By: /s/ Anthony Palmisano
Name: Anthony Palmisano
Title: Vice President

EX-10.66

Exhibit 10.66

EXECUTION COPY ** Confidential treatment requested           

HOME EQUITY LINE OF CREDIT (HELOC)

REVOLVING CREDIT LOAN

PURCHASE, SALE & SERVICING AGREEMENT

dated as of February 3, 2004

between

WACHOVIA BANK, N.A.

Purchaser

AND

E-LOAN, INC.

Seller

EXECUTION COPY ** Confidential treatment requested           

Table of Contents

ARTICLE I: DEFINITIONS	*
Section 1.01 Defined Terms.	*
ARTICLE II: SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS	*
Section 2.01 Sale and Conveyance of Revolving Credit Loans.	*
Section 2.02 Delivery of Documents, Possession of Mortgage Files.	*
Section 2.03 Books and Records.	*
Section 2.04 Defective Documents; Delivery of Revolving Credit Loan Documents.	*
Section 2.05 Transfer of Revolving Credit Loans.	*
Section 2.06 Certain Revolving Credit Loan Not Acceptable for Purchase.	*
ARTICLE III: REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER; REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS	*
Section 3.01 Representations and Warranties of each Seller.	*
Section 3.02 Representations and Warranties of the Servicer.	*
Section 3.03 Representations and Warranties as to Individual Revolving Credit Loans.	*
Section 3.04 Repurchase and Substitution.	*
Section 3.05 Additional Covenants of Seller and Servicer	*
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND CONDITIONS PRECEDENT TO FUNDING	*
Section 4.01 Representations and Warranties of Purchaser.	*
Section 4.02 Conditions Precedent to Closing.	*
ARTICLE V: ADMINISTRATION AND SERVICING OF MORTGAGE LOANS	*
Section 5.01 Seller to Act as Servicer; Servicing Standards; Additional Documents; Consent of the Purchaser.	*
Section 5.02 Collection of Revolving Credit Loan Payments.	*
Section 5.03 Reports for Foreclosure Sales.	*
Section 5.04 Establishment of Collection Account; Deposits in Collection Account.	*
Section 5.05 Permitted Withdrawals from the Collection Account.	*
Section 5.06 Maintenance of Primary Insurance Policies; Collections Thereunder.	*
Section 5.07 Transfer of Accounts.	*
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy.	*
Section 5.09 Fidelity Bond; Errors and Omissions Insurance.	*
Section 5.10 Management of REO Properties.	*
Section 5.11 Realization Upon Specially Serviced Revolving Credit Loans.	*
Section 5.12 Investment of Funds in the Collection Account.	*
ARTICLE VI: REPORTS; REMITTANCES; ADVANCES	*
Section 6.01 Remittances.	*
Section 6.02 Reporting.	*
Section 6.03 [Reserved].	*
Section 6.04 Non-recoverable Advances.	*
Section 6.05 Itemization of Servicing Advances.	*
Section 6.06 Officer's Certificate.	*
ARTICLE VII: GENERAL SERVICING PROCEDURE	*
Section 7.01 Enforcement of Due-on-Sale Clauses, Assumption Agreements.	*
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.	*
Section 7.03 Servicing Compensation.	*
Section 7.04 Annual Statement as to Compliance.	*
Section 7.05 Annual Independent Certified Public Accountants' Servicing Report.	*
Section 7.06 ICSA Data Security Reviews.	*
Section 7.07 Purchaser's Right to Examine Servicer Records.	*
Section 7.08 Optional Purchase of Delinquent Revolving Credit Loans.	*
ARTICLE VIII: REPORTS TO BE PREPARED BY THE SERVICER	*
Section 8.01 The Servicer's Reporting Requirements.	*
ARTICLE IX: THE SELLER	*
Section 9.01 Indemnification; Third Party Claims.	*
Section 9.02 Merger or Consolidation of the Seller.	*
Section 9.03 Limitation on Liability of the Seller and Others.	*
Section 9.04 Servicer Not to Resign.	*
ARTICLE X: DEFAULT	*
Section 10.01 Events of Default.	*
ARTICLE XI: TERMINATION	*
Section 11.01 Term and Termination of Servicing.	*
Section 11.02 Survival.	*
ARTICLE XII: GENERAL PROVISIONS	*
Section 12.01 Successor to the Servicer.	*
Section 12.02 Governing Law.	*
Section 12.03 Notices.	*
Section 12.04 Severability of Provisions.	*
Section 12.05 Schedules and Exhibits.	*
Section 12.06 General Interpretive Principles.	*
Section 12.07 Waivers and Amendments, Noncontractual Remedies; Preservation of Remedies.	*
Section 12.08 Captions.	*
Section 12.09 Counterparts; Effectiveness.	*
Section 12.10 Entire Agreement; Amendment.	*
Section 12.11 Further Assurances.	*
Section 12.12 Intention of the Seller.	*

EXECUTION COPY ** Confidential treatment requested           

Schedules*

A. Revolving Credit Loan Schedule Data Fields

B. Content of Mortgage File

B-1 Legal Documents

B-2 Credit Documents

C. Seller Guide- Applicable Guidelines and Restrictions

D. Sample Purchase Price and Terms Letter

Exhibits*

Exhibit 2.05 Form of Assignment, Assumption and Recognition Agreement

Exhibit 5.03 Form of Notice of Foreclosure

Exhibit 5.04-1 Form of Collection Account Certification

Exhibit 5.04-2 Form of Collection Account Letter Agreement

Exhibit 6.02(a) Report P-139 -- Monthly Statement of Mortgage Accounts

Exhibit 6.02(b) Report S-213 -- Summary of Curtailments Made Remittance Report

Exhibit 6.02(c) Report S-214 -- Summary of Paid in Full Remittance Report

Exhibit 6.02(d) Report S-215 -- Consolidation of Remittance Report

Exhibit 6.02(e) Report S1AE -- Monthly Draw Report

Exhibit 8.01 Report P-195 Delinquency Report

Exhibit 9 Form of Officer's Certificate

Exhibit 10 Form of Warranty Bill of Sale

*Exhibits and schedules have been omitted in accordance with Item 601 of Regulation S-K, and will be provided upon request.

EXECUTION COPY ** Confidential treatment requested           

HELOC MORTGAGE LOAN PURCHASE, SALE & SERVICING AGREEMENT

This HELOC Revolving Credit Loan Purchase, Sale & Servicing Agreement, dated as of February 3, 2004, is entered into between Wachovia Bank, N.A. ("Purchaser") and E-Loan, Inc., a Delaware corporation ("Seller").

PRELIMINARY STATEMENT

1. Seller is engaged in the business, inter alia, of making variable rate open-end home equity mortgage loans to individuals, the repayment of which is secured by a first or second lien mortgage on such individuals' residences.

2. Wachovia Bank, N.A. is engaged in the business, inter alia, of purchasing and making variable rate open-end home equity mortgage loans for its own account.

3. Seller has established certain terms, conditions and loan programs for making variable rate open-end home equity mortgage loans as described in Seller's Program and Underwriting Guidelines (the "Seller Guide") and Wachovia Bank, N.A. is willing to purchase certain mortgage loans that comply with the terms of such terms, conditions and loan programs (the "Revolving Credit Loans"). The applicable provisions of the Seller Guide are attached hereto as Schedule C.

4. Wachovia Bank, N.A. and Seller desire to establish a flow program whereby Seller will make variable rate open-end home equity mortgage loans which meet the applicable provisions of the Seller Guide, and Wachovia Bank, N.A. will, on a regular basis, purchase such mortgage loans from Seller, as applicable, provided the parties agree on the price, date and other conditions or considerations as set forth in this Agreement.

5. Wachovia Bank, N.A. and Seller wish to prescribe the terms and manner of purchase by Wachovia Bank, N.A. and sale by Seller of the Revolving Credit Loans, and the servicing of the Revolving Credit Loans prior to transfer of the servicing to Wachovia Bank, N.A. or its designee by Seller, as the Servicer, in this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, Wachovia Bank, N.A. and Seller agree as follows :

EXECUTION COPY ** Confidential treatment requested           

EX-10.67

Exhibit 10.67

MASTER REPURCHASE AGREEMENT

Between:

MERRILL LYNCH MORTGAGE CAPITAL INC., as Buyer

and

E-LOAN, INC., as Seller

Dated as of February 6, 2004

TABLE OF CONTENTS

 
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 9.
Section 10.
Section 11.
Section 12.
Section 13.
Section 14.
Section 15.
Section 16.
Section 17.
Section 18.
Section 19.
Section 20.
Section 21.
Section 22.
Section 23.
Section 24.
Section 25.
Section 26.
Section 27.
Section 28.
Section 29.
Section 30.
Section 31.
Section 32.
Section 33.
Section 34.  
APPLICABILITY
DEFINITIONS
INITIATION; TERMINATION
MARGIN AMOUNT MAINTENANCE
INCOME PAYMENTS
REQUIREMENTS OF LAW
TAXES.
SECURITY INTEREST
PAYMENT, TRANSFER AND CUSTODY
HYPOTHECATION OR PLEDGE OF PURCHASED Mortgage Loan
REPRESENTATIONS
COVENANTS
EVENTS OF DEFAULT
REMEDIES
INDEMNIFICATION AND EXPENSES; RECOURSE
Servicing
SINGLE AGREEMENT
Set-off
NOTICES AND OTHER COMMUNICATIONS
ENTIRE AGREEMENT; SEVERABILITY
NON-ASSIGNABILITY
TERMINABILITY
GOVERNING LAW
Submission To Jurisdiction; Waivers
NO WAIVERS, ETC.
NETTING
DUE DILIGENCE
BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT
MISCELLANEOUS
CONFIDENTIALITY
Intent
Disclosure Relating to Certain Federal Protections
CONFLICTS
AUTHORIZATIONS Page
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26
27
29
29
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35
42
45
47
48
49
49
50
50
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54
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58
58

EXHIBITS

SCHEDULE 1 Representations and Warranties Re: Mortgage Loans

SCHEDULE 2 Existing Indebtedness*

EXHIBIT I Form of Confirmation Letter*

EXHIBIT II Form of Opinion Letter*

EXHIBIT III [Intentionally Omitted]

EXHIBIT IV Form of Account Agreement*

EXHIBIT V Mortgage Loan Schedule Fields*

EXHIBIT VI Mortgage File Documents*

EXHIBIT VII Underwriting Guidelines*

EXHIBIT VIII Seller's Officer's Certificate*

EXHIBIT IX Form of Servicer Notice*

EXHIBIT X Authorized Representatives*

EXHIBIT XI Responsible Officers*

*Exhibits and schedules have been omitted in accordance with Item 601 of Regulation S-K, and will be provided upon request.

MASTER REPURCHASE AGREEMENT

This is a MASTER REPURCHASE AGREEMENT, dated as of February 6, 2004, between E-LOAN, INC., a Delaware corporation (the "Seller") and MERRILL LYNCH MORTGAGE CAPITAL INC., a New York corporation (the "Buyer").

Section 1.    APPLICABILITY

From time to time the parties hereto shall enter into transactions in which the respective Seller agrees to transfer to Buyer Mortgage Loans against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to the Seller such Mortgage Loans at a date certain not later than the date 364 days after the related Purchase Date, against the transfer of funds by the Seller. Each such transaction shall be referred to herein as a "Transaction" and shall be governed by this Repurchase Agreement, unless otherwise agreed in writing. This Repurchase Agreement is not a commitment by Buyer to enter into Transactions with Seller but rather sets forth the procedures to be used in connection with periodic requests for Buyer to enter into Transactions with Seller. The parties hereby acknowledges that Buyer and Seller are under no obligation to agree to enter into, or to enter into, any Transaction pursuant to this Repurchase Agreement.

Section 2.    DEFINITIONS

As used herein, the following terms shall have the following meanings (all terms defined in this Section 2 or in other provisions of this Repurchase Agreement in the singular to have the same meanings when used in the plural and vice versa)

"Accepted Servicing Practices" shall mean, with respect to any Mortgage Loan, those mortgage servicing practices of prudent mortgage lending institutions which service mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located.

"Account Agreement" shall mean a letter agreement between the Seller, the Buyer, and a depository institution acceptable to Buyer in its sole discretion substantially in the form of Exhibit IV attached hereto.

"Additional Purchased Mortgage Loans" shall mean Mortgage Loans or cash provided by the Seller to Buyer or its designee pursuant to Section 4 of this Repurchase Agreement.

"Affiliate" shall mean with respect to any Person, any "affiliate" of such Person, as such term is defined in the Bankruptcy Code.

"Aged Loan" shall mean a Mortgage Loan which as been held by the Custodian for the benefit of the Buyer for a period of greater than 60 days but no greater than 90 days.

"Agency" shall mean Freddie Mac, Fannie Mae or Ginnie Mae as applicable.

"Agency Takeout Commitment" shall mean a commitment by an Agency to purchase the Mortgage Loan under any of its cash purchase programs.

"Appraised Value" shall mean the value set forth in an appraisal made in connection with the origination of the related Mortgage Loan as the value of the Mortgaged Property.

"Asset Value" shall mean with respect to each Eligible Mortgage Loan, the applicable Purchase Price Percentage for the related Purchased Mortgage Loan multiplied by the lesser of (a) the Market Value of such Mortgage Loan and (b) the outstanding principal balance of such Mortgage Loan.

"Authorized Representative" shall mean, for the purposes of this Repurchase Agreement only, an agent or Responsible Officer of the Seller listed on Exhibit X hereto, as such Exhibit X may be amended from time to time .

"Bailee Letter" shall have the meaning assigned to such term in the Custodial Agreement.

"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as amended from time to time.

"Business Day" shall mean a day other than (i) a Saturday or Sunday, (ii) any day on which banking institutions are authorized or required by law, executive order or governmental decree to be closed in the State of New York or (iii) any day on which the New York Stock Exchange is closed.

"Buyer" shall mean Merrill Lynch Mortgage Capital Inc., its successors in interest and assigns.

"Buyer Takeout Mortgage Loan" shall mean a Mortgage Loan subject to a Takeout Commitment where the Buyer or its Affiliate is the Takeout Investor.

"Capital Lease Obligations" shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Repurchase Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

"Cash Equivalents" shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody's and in either case maturing within 90 days after the day of acquisition, (e) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody's, (f) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition.

"Change in Control" shall mean (A) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of outstanding share of voting stock of the Seller at any time if after giving effect to such acquisition (i) such Person or Persons owns twenty percent (20%) or more of such outstanding voting stock or (ii) the existing shareholders of the Seller do not own more than fifty (50%) of such outstanding shares of voting stock; or

(B) the sale, transfer, or other disposition of all or substantially all of a Seller's assets (excluding any such action taken in connection with any securitization transaction).

"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

"Collection Account" shall mean the account established by a financial institution acceptable to Buyer subject to an Account Agreement, into which all Income shall be deposited.

"Combined Loan-to-Value Ratio" or "CLTV" shall mean, with respect to any Second Lien Mortgage Loan, the sum of the original principal balance of such Mortgage Loan and the outstanding principal balance of any related first lien as of the date of origination of the Mortgage Loan, divided by the Appraised Value of the Mortgaged Property as of the origination date.

"Committed Mortgage Loan" shall mean a Mortgage Loan which is the subject of a Takeout Commitment with a Takeout Investor.

"Confirmation" shall mean a Confirmation Letter in the form of Exhibit I hereto.

"Conforming Mortgage Loan" shall mean a first lien Mortgage Loan that conforms to the requirements of an Agency for cash purchase and if not subject to a Takeout Commitment, is otherwise subject to an Interest Rate Protection Agreement.

"Credit Limit" shall mean, with respect to each HELOC, the maximum amount permitted under the terms of the related Credit Line Agreement.

"Credit Line Agreement" shall mean, with respect to each HELOC, the related home equity line of credit agreement, account agreement and promissory note (if any) executed by the related Mortgagor and any amendment or modification thereof.

"Custodial Agreement" shall mean that certain Custodial Agreement dated as of the date hereof, among Seller, Buyer and Custodian as the same may be amended from time to time.

"Custodian" shall mean Deutsche Bank National Trust Company, or any successor thereto under the Custodial Agreement.

"Default" shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.

"Delinquent Mortgage Loan" shall mean any Mortgage Loan as to which any Monthly Payment, or part thereof, remains unpaid for 30 days or more from the original Due Date for such Monthly Payment.

"Disbursement Account" shall mean the account established by the Disbursement Agent subject to the Disbursement Agreement, into which the Purchase Price for the Purchased Mortgage Loans that are Wet-Ink Mortgage Loans shall be deposited.

"Disbursement Agent" shall mean Deutsche Bank National Trust Company, its successor or assigns.

"Disbursement Agreement" shall mean that certain Disbursement Agreement by and between the Disbursement Agent and the Buyer, dated as of the date hereof, setting forth the terms pursuant to which the Disbursement Agent shall disburse funds related to Wet-Ink Mortgage Loans.

"Dollars" and "$" shall mean lawful money of the United States of America.

"Due Date" shall mean the day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

"Due Diligence Review" shall mean the performance by Buyer of any or all of the reviews permitted under Section 27 hereof with respect to any or all of the Mortgage Loans, as desired by the Buyer from time to time.

"Effective Date" shall mean the date upon which the conditions precedent set forth in Section 3(a) shall have been satisfied.

"Electronic Tracking Agreement" shall mean an Electronic Tracking Agreement among Buyer, Seller, MERS and MERSCORP, Inc., to the extent applicable.

"Eligible Mortgage Loan" shall mean a Purchased Mortgage Loan which (i) complies with the representations and warranties set forth on Schedule 1 to this Repurchase Agreement and (ii) is a Conforming Mortgage Loan, a Jumbo Mortgage Loan, a HELOC or a Sub-Prime Mortgage Loan.

"ERISA" shall, with respect to any Person, mean the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor thereto, and the regulations promulgated and rulings issued thereunder.

"ERISA Affiliate" shall, with respect to any Person, mean any Person which is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which such Person is a member, or (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which such Person is a member.

"Escrow Payments" shall mean, with respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, condominium charges, and any other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.

"Estimated Purchase Price" shall have the meaning specified in Section 3(b)(vii) hereof.

"Event of Default" shall have the meaning specified in Section 13.01 hereof.

"Event of Insolvency" shall mean, for any Person:

1. that such Person or any Affiliate shall discontinue or abandon operation of its business; or
2.  that such Person or any Affiliate shall fail generally to, or admit in writing its inability to, pay its debts as they become due; or
3. a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of such Person or any Affiliate in an involuntary case under any applicable bankruptcy, insolvency, liquidation, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of such Person or any Affiliate, or for any substantial part of its property, or for the winding-up or liquidation of its affairs; or
4.  the commencement by such Person or any Affiliate of a voluntary case under any applicable bankruptcy, insolvency or other similar Law now or hereafter in effect, or such Person's or any Affiliate's consent to the entry of an order for relief in an involuntary case under any such Law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official of such Person, or for any substantial part of its property, or any general assignment for the benefit of creditors; or
5. that such Person or any Affiliate shall become insolvent; or
6. if such Person or any Affiliate is a corporation, such Person or any Affiliate, or any of their Subsidiaries, shall take any corporate action in furtherance of, or the action of which would result in any of the actions set forth in the preceding clause (a), (b), (c), (d) or (e).

"Event of Termination" shall, with respect to the Seller, mean (i) with respect to any Plan, a reportable event, as defined in Section 4043 of ERISA, as to which the PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, or (ii) the withdrawal of the Seller or any ERISA Affiliate thereof from a Plan during a plan year in which it is a substantial employer, as defined in Section 4001(a)(2) of ERISA, or (iii) the failure by the Seller or any ERISA Affiliate thereof to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA with respect to any Plan, including, without limitation, the failure to make on or before its due date a required installment under Section 412(m) of the Code or Section 302(e) of ERISA, or (iv) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by the Seller or any ERISA Affiliate thereof to terminate any Plan, or (v) the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of tax-exempt status of the trust of which such Plan is a part if the Seller or any ERISA Affiliate thereof fails to timely provide security to the Plan in accordance with the provisions of said Sections, or (vi) the institution by the PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or (vii) the receipt by the Seller or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action of the type described in the previous clause (vi) has been taken by the PBGC with respect to such Multiemployer Plan, or (viii) any event or circumstance exists which may reasonably be expected to constitute grounds for the Seller or any ERISA Affiliate thereof to incur liability under Title IV of ERISA or under Sections 412(c)(11) or 412(n) of the Code with respect to any Plan.

"Expenses" shall mean all present and future expenses incurred by or on behalf of the Buyer in connection with this Repurchase Agreement or any of the other Repurchase Documents and any amendment, supplement or other modification or waiver related hereto or thereto, whether incurred heretofore or hereafter, which expenses shall include the cost of title, lien, judgment and other record searches; attorneys' fees; and costs of preparing and recording any UCC financing statements or other filings necessary to perfect the security interest created hereby.

"Fannie Mae" shall mean Fannie Mae, or any successor thereto.

"Fidelity Insurance" shall mean insurance coverage with respect to employee errors, omissions, dishonesty, forgery, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud in an aggregate amount acceptable to Seller's regulators.

"Financial Statements" shall mean the consolidated financial statements of the Seller prepared in accordance with GAAP for the year or other period then ended. Such financial statements will be audited, in the case of annual statements, by PricewaterhouseCoopers LLP or such other independent certified public accountants approved by the Buyer (which approval shall not be unreasonably withheld).

"First Payment Default" shall mean, with respect to a Mortgage Loan, the failure of the Mortgagor to make the first Monthly Payment due under the Mortgage Loan on or before its scheduled Due Date.

"FHA" shall mean the Federal Housing Administration, an agency within the United States Department of Housing and Urban Development, or any successor thereto, and including the Federal Housing Commissioner and the Secretary of Housing and Urban Development where appropriate under the FHA Regulations.

"FHA Approved Mortgagee" shall mean a corporation or institution approved as a mortgagee by the FHA under the National Housing Act, as amended from time to time, and applicable FHA Regulations, and eligible to own and service mortgage loans such as the FHA Loans.

"FHA Loan" shall mean a Mortgage Loan which is the subject of an FHA Mortgage Insurance Contract.

"FHA Mortgage Insurance" shall mean, mortgage insurance authorized under the National Housing Act, as amended from time to time, and provided by the FHA.

"FHA Mortgage Insurance Contract" shall mean the contractual obligation of the FHA respecting the insurance of a Mortgage Loan.

"FHA Regulations" shall mean the regulations promulgated by the Department of Housing and Urban Development under the National Housing Act, as amended from time to time and codified in 24 Code of Federal Regulations, and other Department of Housing and Urban Development issuances relating to FHA Loans, including the related handbooks, circulars, notices and mortgagee letters.

"Fitch" shall mean Fitch Ratings, Inc., or any successor thereto.

"Freddie Mac" shall mean Freddie Mac, or any successor thereto.

"GAAP" shall mean generally accepted accounting principles in the United States of America, applied on a consistent basis and applied to both classification of items and amounts, and shall include, without limitation, the official interpretations thereof by the Financial Accounting Standards Board, its predecessors and successors.

"Ginnie Mae" shall mean the Government National Mortgage Association and any successor thereto.

"Governmental Authority" shall mean the government of the United States of America or of any state, county, municipality or other political subdivision thereof or any governmental body, agency, authority, department or commission (including, without limitation, any taxing authority) or any instrumentality or officer of any of the foregoing (including, without limitation, any court or tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation, partnership or other entity directly or indirectly owned by or controlled by the foregoing.

"Guarantee" shall mean, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have correlative meanings.

"HELOC" shall mean a home equity revolving line of credit secured by a mortgage, deed of trust or other instrument creating a first or second lien on the related Mortgaged Property, which lien secures the related line of credit and (i) that is underwritten in accordance with Seller's Underwriting Guidelines and (ii) that either (a) will be sold or securitized by the Seller or (b) is subject to a Takeout Commitment.

"High Cost Mortgage Loan" shall mean a Mortgage Loan which (a) is subject to Section 226.32 of Regulation Z or any similar state law (relating to high interest rate credit/lending transactions), or (b) contains any term or condition, or involve any loan origination practice, that has been defined as "predatory", "covered" (other than New Jersey Covered Loans) or "threshold" under applicable federal, state or local law, or which has been expressly categorized as an "unfair" or "deceptive" term, condition, or practice in any applicable federal, state or local law (or the regulations promulgated thereunder) dealing with "predatory" or "high cost" mortgage lending (or a similarly classified loan using different terminology under a law, regulation or ordinance imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees).

"HUD" shall mean the Department of Housing and Urban Development.

"Income" shall mean, with respect to any Mortgage Loan at any time, any principal thereof then payable and all interest, dividends or other distributions payable thereon.

"Indebtedness" shall mean, with respect to any Person, (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business, so long as such trade accounts payable are payable within 90 days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (e) Capital Lease Obligations of such Person; (f) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements; (g) Indebtedness of others Guaranteed by such Person; (h) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; and (i) Indebtedness of general partnerships of which such Person is a general partner.

"Interest Rate Protection Agreement" shall mean, with respect to any or all of the Purchased Mortgage Loans, any short sale of a US Treasury Security, or futures contract, or mortgage related security, or Eurodollar futures contract, or options related contract, or interest rate swap, cap or collar agreement or Take-out Commitment, or similar arrangement providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by a Seller and an Affiliate of the Buyer, and acceptable to the Buyer.

"Jumbo Mortgage Loan" shall mean a first lien Mortgage Loan with a principal balance of not more than $2,000,000 that (i) except with respect to the original principal balance thereof, conforms to the requirements for securitization or cash purchase by an Agency, and (ii) that either (a) will be sold or securitized by the Seller or (b) is subject to Takeout Commitment.

"Late Payment Fee" shall mean the excess of the Price Differential paid as a result of its calculation at the Post-Default Rate over the Price Differential as would have been calculated at the Pricing Rate.

"Law" shall mean, any law, treaty, rule or regulation or determination of an arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

"LIBOR Period" shall mean, with respect to each Payment Date, the period from and including the immediately preceding Payment Date (or, with respect to the first LIBOR Period for each Transaction, from and including the related Purchase Date) to but excluding such Payment Date, unless otherwise agreed to by the Buyer and the Seller and set forth in the related Confirmation.

"LIBOR Period Commencement Date" shall mean (a) with respect to the initial LIBOR Period with respect to a Transaction, the Purchase Date, and (b) with respect to each succeeding LIBOR Period with respect to a Transaction, the Payment Date, or if the LIBOR Period is other than one month, the last day of the immediately preceding LIBOR Period.

"LIBOR Rate" shall mean, with respect to each day during the applicable LIBOR Period, the rate per annum equal to the one month British Bankers Association Rate as reported on the display designated as "BBAM" "Page DG8 4a" on Bloomberg (or such other display as may replace "BBAM" "Page DG8 4a on Bloomberg), as of 8:00 a.m., New York City time, on the date two Business Days prior to the commencement of such LIBOR Period, and if such rate shall not be so quoted, or if the related LIBOR Period shall be less than one month, the rate per annum at which the Buyer or its Affiliate is offered dollar deposits at or about 8:00 a.m., New York City time, on the date two Business Days prior to the commencement of the such LIBOR Period, by prime banks in the interbank eurodollar market where the eurodollar and foreign currency exchange operations in respect of its Transactions are then being conducted for delivery on such day for a period of one month or such other period as agreed upon in writing by the Buyer and the Seller and in an amount comparable to the amount of the Transactions outstanding on such day.

"Lien" shall mean any lien, claim, charge, restriction, pledge, security interest, mortgage, deed of trust or other encumbrance.

"Loan-to-Value Ratio" or "LTV" shall mean with respect to any Mortgage Loan, the ratio of the original outstanding principal amount of such Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at origination or (b) if the Mortgaged Property was purchased within 12 months of the origination of such Mortgage Loan, the purchase price of the Mortgaged Property.

"Margin Call" shall have the meaning specified in Section 4.

"Margin Deficit" shall have the meaning specified in Section 4.

"Margin Excess" shall have the meaning specified in Section 4(e)

"Market Value" shall mean, as of any date with respect to any Purchased Mortgage Loan, the price at which such Mortgage Loan could readily be sold as determined by the Buyer in its sole discretion. Without limiting the generality of the foregoing, the Seller acknowledges that the Market Value of a Purchased Mortgage Loan may be reduced to zero by Buyer if:

1. such Purchased Mortgage Loan ceases to be an Eligible Mortgage Loan;
2. the Purchased Mortgage Loan has been released from the possession of the Custodian under the Custodial Agreement (other than to a Take- out Investor pursuant to a Bailee Letter) for a period in excess of 10 calendar days;
3. the Purchased Mortgage Loan is a Wet-Ink Mortgage Loan for which the related Mortgage File has not been received and certified by the Custodian by the seventh Business Day following the related Purchase Date;
4. such Purchased Mortgage Loan is a Delinquent Mortgage Loan;
5. such Purchased Mortgage Loan is a New Jersey Covered Loan and has not been made subject to a Takeout Commitment on or before the date which is 30 days after the related Purchase Date;
6. such Purchased Mortgage Loan is rejected by the related Takeout Investor;
7. such Purchased Mortgage Loan has been subject to a Transaction hereunder for period of greater than (i) with respect to each New Jersey Covered Loan, 45 days, or (ii) with respect to each Mortgage Loan other than a New Jersey Covered Loan, 90 days;
8. the Buyer has determined in its sole discretion that the Purchased Mortgage Loan is not eligible for whole loan sale or securitization in a transaction consistent with the prevailing sale and securitization industry with respect to substantially similar Mortgage Loans;
9. such Purchased Mortgage Loan contains a breach of a representation or warranty made by the Seller in this Repurchase Agreement or the Custodial Agreement;
10. when the Purchase Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all HELOCs exceeds $100,000,000;
11. when the Purchase Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all Sub-Prime Mortgage Loans that are Purchased Mortgage Loans exceeds $30,000,000;
12. when the Purchase Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all Wet-Ink Mortgage Loans that are Purchased Mortgaged Loans exceeds $50,000,000;
13. when the Purchase Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all Super Jumbo Mortgage Loans that are Purchased Mortgaged Loans exceeds $10,000,000; or
14. when the Purchase Price for such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the aggregate Purchase Price of all Aged Loans that are Purchased Mortgaged Loans exceeds $10,000,000.

"Material Adverse Effect" shall mean a material adverse effect on (a) the Property, business, operations, financial condition or prospects of the Seller or any Affiliate, (b) the ability of the Seller or any Affiliate to perform its obligations under any of the Repurchase Documents to which it is a party, (c) the validity or enforceability of any of the Repurchase Documents, (d) the rights and remedies of the Buyer or any Affiliate under any of the Repurchase Documents, (e) the timely payment of any amounts payable under the Repurchase Documents, or (f) the Market Value of the Purchased Mortgage Loans.

"Maximum Purchase Price" shall mean $200,000,000.

"MERS" shall mean Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

"MERS System" shall mean the system of recording transfers of mortgages electronically maintained by MERS.

"Monthly Payment" shall mean the scheduled monthly payment of principal and interest on a Mortgage Loan.

"Moody's" shall mean Moody's Investor's Service, Inc. or any successors thereto.

"Mortgage" shall mean each mortgage, assignment of rents, security agreement and fixture filing, or deed of trust, assignment of rents, security agreement and fixture filing, deed to secure debt, assignment of rents, security agreement and fixture filing, or similar instrument creating and evidencing a first lien or second lien on real property and other property and rights incidental thereto.

"Mortgage File" shall mean, with respect to a Mortgage Loan, the documents and instruments relating to such Mortgage Loan and set forth in Exhibit VI hereto.

"Mortgage Interest Rate" shall mean the rate of interest borne on a Mortgage Loan from time to time in accordance with the terms of the related Mortgage Note.

"Mortgage Loan" shall mean any first or second lien, one-to-four-family residential mortgage loan, HELOC, Jumbo Mortgage Loan, Sub-Prime Mortgage Loan or Conforming Mortgage Loan evidenced by a Mortgage Note and secured by a Mortgage, which Mortgage Loan is subject to a Transaction hereunder, which in no event shall include any mortgage loan which (a) is subject to Section 226.32 of Regulation Z or any similar state law (relating to high interest rate credit/lending transactions), (b) includes any single premium credit life or accident and health insurance or disability insurance, or (c) is a High Cost Mortgage Loan.

"Mortgage Loan Schedule" shall mean with respect to any Transaction as of any date, a mortgage loan schedule in the form of a computer tape or other electronic medium generated by the Seller and delivered to Buyer and the Custodian, which provides information (including, without limitation, the information set forth on Exhibit V attached hereto) relating to the Purchased Mortgage Loans in a format acceptable to the Buyer.

"Mortgage Loan Schedule and Exception Report" shall have the meaning set forth in the applicable Custodial Agreement.

"Mortgage Note" shall mean the promissory note or other evidence of the indebtedness of a Mortgagor secured by a Mortgage.

"Mortgaged Property" shall mean the real property securing repayment of the debt evidenced by a Mortgage Note.

"Mortgagor" shall mean the obligor or obligors on a Mortgage Note, including any Person who has assumed or guaranteed the obligations of the obligor thereunder.

"Multiemployer Plan" shall mean, with respect to any Person, a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding five years contributed to by such Person or any ERISA Affiliate thereof on behalf of its employees and which is covered by Title IV of ERISA.

"Net Income" shall mean, for any Person for any period, the net income of such Person for such period as determined in accordance with GAAP.

"New Jersey Covered Loan" shall mean a Mortgage Loan that is designated as a "covered home loan" (but not a "high-cost home loan") under the New Jersey Home Ownership Security Act, N.J.S.A. 46:10B-22.

"Non-Excluded Taxes" shall have the meaning set forth in Section 7(a) hereof.

"Obligations" shall mean (a) any amounts due and payable by the Seller to Buyer in connection with a Transaction hereunder, together with interest thereon (including interest which would be payable as post-petition interest in connection with any bankruptcy or similar proceeding) and all other fees or expenses which are payable hereunder or under any of the Repurchase Documents and (b) all other obligations or amounts due and payable by the Seller to the Buyer or an Affiliate of Buyer under any other contract or agreement.

"Other Taxes" shall have the meaning set forth in Section 7(b) hereof.

"Payment Date" shall mean the 5^th day of each month, or if such date is not a Business Day, the Business Day immediately preceding the last day of the month.

"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

"Periodic Advance Repurchase Payment" shall have the meaning specified in Section 5(a).

"Person" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof).

"Plan" shall mean, with respect to any Person, any employee benefit or similar plan that is or was at any time during the current year or immediately preceding five years established or maintained by such Person or any ERISA Affiliate thereof and that is covered by Title IV of ERISA, other than a Multiemployer Plan.

"PMI Policy" shall mean a policy of primary mortgage guaranty insurance issued by a Qualified Insurer, as required by this Repurchase Agreement with respect to certain Mortgage Loans.

"Post-Default Rate" shall mean a rate equal to the sum of (a) the Pricing Rate plus (b) two percent (2.00%).

"Price Differential" shall mean, with respect to any Transaction hereunder as of any date, the aggregate amount obtained by daily application of the Pricing Rate (or, during the continuation of an Event of Default, by daily application of the Post-Default Rate) for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the Repurchase Date (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction).

"Pricing Rate" shall mean a rate per annum equal to the sum of (a) the LIBOR Rate plus (b) the Pricing Spread.

"Pricing Spread" shall mean:

1. with respect to Transactions the subject of which are Mortgage Loans which are Conforming Mortgage Loans other than Wet-Ink Loans, 0.75%;
2. with respect to Transactions the subject of Mortgage Loans which are Jumbo Mortgage Loans which are other than Wet-Ink Loans, 0.75%;
3. with respect to Transactions the subject of which are Mortgage Loans which are Conforming Mortgage Loans which are Wet-Ink Loans, 0.875%;
4. with respect to Transactions the subject of which are Mortgage Loans which are Jumbo Mortgage Loans which are Wet-Ink Loans, 0.875%;
5. with respect to Transactions the subject of which are Mortgage Loans which are Super Jumbo Mortgage Loans, 1.0%;
6. with respect to Transactions the subject of which are Mortgage Loans which are Sub-Prime Mortgage Loans, 1.0%; or
7. with respect to Transactions the subject of which are Mortgage Loans which are HELOCs, 1.0%.

"Property" shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.

"Purchase Date" shall mean the date on which Purchased Mortgage Loans are transferred by Seller to the Buyer or its designee.

"Purchase Price" shall mean,

8. on the Purchase Date, the price at which each Purchased Mortgage Loan is transferred by Seller to Buyer which shall equal the applicable Purchase Price Percentage multiplied by the lesser of (i) the Market Value of such Mortgage Loan on the Purchase Date and (ii) the outstanding principal balance of the Mortgage Loan; and
9. thereafter, except where Buyer and Seller agree otherwise, such Purchase Price decreased by the amount of any cash, Income and Periodic Advance Repurchase Payments actually received by Buyer pursuant to Sections 5 or applied to reduce Seller's obligations under Section 4(b) hereof.

"Purchase Price Percentage" shall mean:

1. with respect to each Mortgage Loan that is a Buyer Takeout Mortgage Loan, 99%;
2. with respect to each Conforming Mortgage Loan which is not a Wet-Ink Loan, an Aged Loan or a Buyer Takeout Mortgage Loan, 98%;
3. with respect to each HELOC which is not a Wet-Ink Loan, an Aged Loan or a Buyer Takeout Mortgage Loan, 98%;
4. with respect to each Jumbo Mortgage Loan which is not a Wet-Ink Mortgage Loan, an Aged Loan or a Buyer Takeout Mortgage Loan, 98%;
5. with respect to each Conforming Mortgage Loan, Jumbo Mortgage Loan or HELOC which is a Wet-Ink Mortgage Loan, 97%;
6. with respect to each Sub-Prime Mortgage or Super Jumbo Mortgage Loan which is a Wet-Ink Mortgage Loan, 96%;
7. with respect to each Sub-Prime Mortgage Loan which is not a Wet-Ink Loan, an Aged Loan or a Buyer Takeout Mortgage Loan, 96%;
8. with respect to each Super Jumbo Mortgage Loan which is not a Wet-Ink Loan, an Aged Loan or a Buyer Takeout Mortgage Loan, 96%; and
9. with respect to each Aged Loan, 50%.

"Purchased Mortgage Loan Report" shall mean a report, delivered with each Transaction Request, on the last day of each month (or if such date is not a Business Day, the next preceding Business Day), or upon the request of the Buyer, including a Mortgage Loan Schedule in the form of Exhibit V hereto, setting forth information with respect to the Purchased Mortgage Loans (and Mortgage Loans proposed to be the subject of a Transaction on the related Purchase Date, if applicable).

"Purchased Mortgage Loans" shall mean the Mortgage Loans sold by the Seller to Buyer in a Transaction, and any Additional Purchased Mortgage Loans as evidenced by a Confirmation and a Trust Receipt.

"Qualified Insurer" shall mean a mortgage guaranty insurance company duly authorized and licensed where required by law to transact mortgage guaranty insurance business and acceptable under the Underwriting Guidelines.

"Rating Agency" shall mean any of S&P, Moody's or Fitch.

"Records" shall mean all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by Seller or any other person or entity with respect to a Purchased Mortgage Loan. Records shall include the Mortgage Notes, any Mortgages, the Mortgage Files, the credit files related to the Purchased Mortgage Loan and any other instruments necessary to document or service a Mortgage Loan.

"Regulations T, U and X" shall mean Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

"Reportable Event" shall mean any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .13, .14, .16, ..18, .19 or .20 of PBGC Reg. 2615.

"Repurchase Agreement" shall mean this Master Repurchase Agreement between Buyer and the Seller, dated as of the date hereof as the same may be further amended, supplemented or otherwise modified in accordance with the terms hereof.

"Repurchase Assets" shall have the meaning provided in Section 8 hereof.

"Repurchase Date" shall mean the date on which the Seller is to repurchase the Purchased Mortgage Loans subject to a Transaction from Buyer as specified in the related Confirmation, or if not so specified on a date requested pursuant to Section 3(d) or on the Termination Date, including any date determined by application of the provisions of Sections 3 or 14, or the date identified to Buyer by the Seller as the date that the related Mortgage Loan is to be sold pursuant to a Take-out Commitment.

"Repurchase Documents" shall mean this Repurchase Agreement, the Custodial Agreement, the Electronic Tracking Agreement, if applicable, a Servicer Notice, if any, and the Account Agreement.

"Repurchase Price" shall mean the price at which Purchased Mortgage Loans are to be transferred from Buyer or its designee to the Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination.

"Requirement of Law" shall mean as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its Property is subject.

"Responsible Officer" shall mean an officer of the Seller listed on Exhibit XI hereto, as such Exhibit XI may be amended from time to time.

"Reset Date" shall mean the last day of the related LIBOR Period.

"S&P" shall mean Standard & Poor's Ratings Services, or any successor thereto.

"Second Lien Mortgage Loan" shall mean a Mortgage Loan secured by a second lien on the related Mortgaged Property.

"Seller" shall mean E-Loan, Inc., a Delaware corporation, or any successor in interest thereto.

"Servicer" shall mean E-Loan, Inc. or any successor or permitted assigns.

"Servicer Notice" shall mean the notice acknowledged by the Servicer substantially in the form of Exhibit IX hereto.

"Servicing Agreement" shall mean any servicing agreement entered into among a Seller and a Servicer, as the same may be amended from time to time.

"Settlement Account" shall have the meaning set forth in of the Custodial Agreement.

"Settlement Account Control Agreement" shall mean the Settlement Account Control Agreement entered into among the Buyer, the Seller and the Custodian, dated as of the date hereof as the same may be further amended, supplemented or otherwise modified in accordance with its terms.

"Settlement Agent" shall mean with respect to any Transaction the subject of which is a Wet-Ink Mortgage Loan, the entity approved by Buyer, in its sole discretion, which may be a title company, escrow company or attorney in accordance with local law and practice in the jurisdiction where the related Wet-Ink Mortgage Loan is being originated. A Settlement Agent is deemed approved unless Buyer notifies Seller otherwise at any time electronically or in writing.

"Single-Employer Plan" shall mean a single- employer plan as defined in Section 4001(a)(15) of ERISA which is subject to the provisions of Title IV of ERISA.

"Subsidiary" shall mean, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

"Sub-Prime Mortgage Loan" shall mean a first lien Mortgage Loan which originated in accordance with the criteria established by Buyer for sub-prime mortgage loans, as determined by Buyer in its sole discretion, and which (i) will be sold by the Seller within 90 days of origination and (ii) are eligible for securitization or whole loan purchase.

"Super Jumbo Mortgage Loan" shall mean a Jumbo Mortgage Loan with a principal balance of greater than $1,000,000 and not greater than $2,000,000.

"Takeout Commitment" means a commitment of Seller to sell one or more Mortgage Loans to a Takeout Investor, and the corresponding Takeout Investor's commitment back to Seller to effectuate the foregoing.

"Takeout Investor" shall mean any institution which has made a Takeout Commitment and has been approved by Buyer.

"Tangible Net Worth" shall mean, for any Person as of a particular date,

(a) all amounts which would be included under capital on a balance sheet of such Person at such date, determined in accordance with GAAP, less

(b) (i) amounts owing to such Person from Affiliates, or from officers, employees, shareholders or other Persons similarly affiliated with such Person, (ii) intangible assets and (iii) deferred tax charge.

"Taxes" shall have the meaning set forth in Section 7(a) hereof.

"Termination Date" shall mean the date which is 364 days from the date hereof which shall be February 4, 2005.

"Termination Event" shall have the meaning set forth in Section 13.02 hereof.

"Test Period" shall mean any period of three (3) consecutive months.

"Transaction" shall have the meaning specified in Section 1.

"Transaction Request" shall mean a request from the Seller to Buyer to enter into a Transaction.

"Trust Receipt" shall have the meaning set forth in the Custodial Agreement.

"Underwriting Guidelines" shall mean the underwriting guidelines of the Seller, attached hereto as Exhibit VII.

"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

"VA" shall mean the U.S. Department of Veterans Affairs, an agency of the United States of America, or any successor thereto including the Secretary of Veterans Affairs.

"VA Approved Lender" shall mean a lender which is approved by the VA to act as a lender in connection with the origination of VA Loans.

"VA Loan" shall mean a Mortgage Loan which is subject of a VA Loan Guaranty Agreement as evidenced by a VA Loan Guaranty Agreement, or a Mortgage Loan which is a vender loan sold by the VA.

"VA Loan Guaranty Agreement" shall mean the obligation of the United States to pay a specific percentage of a Mortgage Loan (subject to a maximum amount) upon default of the Mortgagor pursuant to the Servicemen's Readjustment Act, as amended.

"Wet-Ink Mortgage Loan" shall mean a Mortgage Loan which any Seller is selling to Buyer simultaneously with the origination thereof and for which the Mortgage Loan Documents have not been delivered to the Custodian.

"Wet-Ink Trust Receipt" shall mean a trust receipt issued by Custodian evidencing Purchased Mortgage Loans which are Wet- Ink Mortgage Loans, substantially in the form attached to the Custodial Agreement.

"Wiring Schedule" shall mean, for each Wet- Ink Mortgage Loan, a schedule setting forth the loan identification number, the loan amount to be funded by wire transfer and wiring directions for such Wet-Ink Mortgage Loan.

Section 3.    INITIATION; TERMINATION

1. Conditions Precedent to Initial Transaction. Buyer's agreement to enter into the initial Transaction hereunder is subject to the satisfaction, immediately prior to or concurrently with the making of such Transaction, of the condition precedent that Buyer shall have received from the Seller any fees and expenses payable hereunder, and all of the following documents, each of which shall be satisfactory to Buyer and its counsel in form and substance:
1. The following Repurchase Documents delivered to the Buyer:
1. Repurchase Agreement. This Repurchase Agreement, duly executed by the parties thereto;
2. Custodial Agreement. The Custodial Agreement, duly executed by the parties thereto;
3. Account Agreement. An Account Agreement, duly executed by the parties thereto in form and substance acceptable to the Buyer; and
4. Electronic Tracking Agreement. To the extent Seller is selling Mortgage Loans which are registered on the MERS® System, an Electronic Tracking Agreement entered into, duly executed and delivered by the parties thereto, in full force and effect, free of any modification, breach or waiver.
5. Disbursement Agreement. A Disbursement Agreement, duly executed by the parties thereto in form and substance acceptable to the Buyer and the accounts, computer systems and agreements with the Disbursement Agent necessary systems and agreements with the Disbursement Agent necessary for distributing the Purchase Price related to Wet-Ink Mortgage Loans under the Disbursement Agreement shall have been established.
6. Settlement Account Control Agreement. The Settlement Account Control Agreement, executed and delivered by a duly authorized officer of each of the Buyer, Seller and Custodian.
2. Opinions of Counsel.
1. An opinion or opinions of counsel to the Seller, substantially in the form of Exhibit II.
3. Seller Organizational Documents. A certificate of corporate existence of the Seller delivered to Buyer prior to the Effective Date (or if unavailable, as soon as available thereafter) and certified copies of the charter and by-laws (or equivalent documents) of the Seller and of all corporate or other authority for the Seller with respect to the execution, delivery and performance of the Repurchase Documents and each other document to be delivered by the Seller from time to time in connection herewith.
4. Security Interest. Evidence that all other actions necessary or, in the opinion of Buyer, desirable to perfect and protect Buyer's interest in the Purchased Mortgage Loans and other Repurchase Assets have been taken, including, without limitation, UCC searches and duly authorized and filed Uniform Commercial Code financing statements on Form UCC- 1.
5. Underwriting Guidelines. A true and correct copy of the Underwriting Guidelines certified by an officer of the Seller.
6. Insurance. Evidence that Seller has added Buyer as an additional insured under the Seller's Fidelity Insurance.
7. Other Documents. Such other documents as Buyer may reasonably request, in form and substance reasonably acceptable to Buyer.
2. Conditions Precedent to all Transactions. Upon satisfaction of the conditions set forth in the Section 3(b), the Buyer may enter into a Transaction with Seller. This Agreement is not a commitment by Buyer to enter into Transactions with Seller or Seller to enter into Transactions with Buyer but rather sets forth the procedures to be used in connection with periodic requests for Buyer to enter into Transactions with Seller. The parties hereby acknowledges that Buyer and Seller are under no obligation to agree to enter into, or to enter into, any Transaction pursuant to this Agreement. Buyer's agreement to enter into each Transaction (including the initial Transaction) is subject to the satisfaction of the following further conditions precedent, both immediately prior to entering into such Transaction and also after giving effect thereto to the intended use thereof:
1. Buyer shall have executed and delivered a Confirmation in accordance with the procedures set forth in Section 3(c);
2. No Termination Event, Default or Event of Default shall have occurred and be continuing under the Repurchase Documents;
3. Both immediately prior to the Transaction and also after giving effect thereto, the representations and warranties made by the Seller in Section 11 hereof, shall be true, correct and complete on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);
4. After giving effect to the requested Transaction, the aggregate outstanding Purchase Price for all Purchased Mortgage Loans subject to then outstanding Transactions under this Repurchase Agreement shall not exceed the Maximum Purchase Price;
5. After giving effect to the requested Transaction, the Asset Value of all Purchased Mortgage Loans exceeds the aggregate Repurchase Price for such Transactions;
6. With respect to Transactions the subject of which are Mortgage Loans other than Wet-Ink Mortgage Loans on or prior to 10 a.m. (New York Time) one (1) day prior to the related Purchase Date, the Seller shall have delivered to the Buyer (a) a Transaction Request, and (b) a Purchased Mortgage Loan Report;
7. With respect to Transactions the subject of which are Wet-Ink Mortgage Loans:
1. By 4:00 p.m. (New York City time) one (1) Business Day prior to the related Purchase Date, the Buyer shall have received the approximate amount of the related Purchase Price (the "Estimated Purchase Price");
2. By 3:45 p.m. (New York City time) on the related Purchase Date, the Buyer and the Disbursement Agent shall have received (a) the final Mortgage Loan Schedule, including, without limitation, a schedule setting forth the mortgage loan identification number, the Mortgagor name and the approximate outstanding principal balance of Wet-Ink Mortgage Loans to be purchased by Buyer on such Purchase Date, (b) an updated report setting forth the approximate outstanding principal balance of Wet-Ink Mortgage Loans to be purchased by the Buyer on such Purchase Date and the amount of the related Purchase Price (the "Actual Purchase Price") and (c) a Wiring Schedule; and
3. By 4:00 p.m. (New York City time) on the related Purchase Date, the Buyer shall have received a Wet-Ink Trust Receipt for each Wet-Ink Mortgage Loan with the related Mortgage Loan Schedule attached thereto.
8. The Seller shall have delivered to the Custodian the Mortgage File with respect to each Purchased Mortgage Loan which is not a Wet- Ink Mortgage Loan and the Custodian shall have issued a Trust Receipt with respect to each such Purchased Mortgage Loan to the Buyer and (B) with respect to each Wet-Ink Mortgage Loan, by no later than 1:00 p.m. (New York Time) on the seventh Business Day following the applicable Purchase Date, Seller shall deliver the Mortgage File to the Custodian;
9. The Buyer shall have received all fees and expenses of counsel to the Buyer as contemplated by Sections 15(b) and 27 which amounts, at the Buyer's option, may be withheld from the proceeds remitted by Buyer to the Seller pursuant to any Transaction hereunder;
10. None of the following shall have occurred and/or be continuing:
1. an event or events shall have occurred in the good faith determination of the Buyer resulting in the effective absence of a "repo market" or comparable "lending market" for financing debt obligations secured by securities or an event or events shall have occurred resulting in the Buyer not being able to finance Purchased Mortgage Loans through the "repo market" or "lending market" with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; or
2. there shall have occurred a material adverse change in the financial condition of the Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of the Buyer to fund its obligations under this Repurchase Agreement; or
11. Each Transaction Request delivered by the Seller hereunder shall constitute a certification by the Seller that all the conditions set forth in this Section 3(b) (other than clause (x) hereof) have been satisfied (both as of the date of such notice or request and as of the date of such purchase).
3. Initiation; Confirmation.
1. The Seller shall deliver a Transaction Request to the Buyer on or prior to 10:00 a.m. on the date one (1) Business Day prior to entering into any Transaction. Such Transaction Request shall include a Mortgage Loan Schedule with respect to the Mortgage Loans to be sold in such requested Transaction. Following receipt of such request, Buyer may agree to enter into such requested Transaction or may notify Seller of its intention not to enter into such Transaction. Buyer shall confirm the terms of each Transaction by issuing a written confirmation to the Seller promptly after the parties enter into such Transaction in the form of Exhibit I attached hereto (a "Confirmation"). Such Confirmation shall set forth (A) the Purchase Date, (B) the Purchase Price, (C) the Repurchase Date, (D) the Pricing Rate applicable to the Transaction, (E) the applicable Purchase Price Percentages, (F) LIBOR Period and (G) additional terms or conditions not inconsistent with this Repurchase Agreement.
2. The Repurchase Date for each Transaction shall not be later than the date which is 90 days after the related Purchase Date. The LIBOR Period for each Transaction shall be one month, unless agreed to in writing by the Buyer.
3. Each Confirmation, together with this Repurchase Agreement, shall be conclusive evidence of the terms of the Transaction(s) covered thereby unless objected to in writing by the Seller no more than two (2) Business Days after the date the Confirmation was received by the Seller or unless a corrected Confirmation is sent by Buyer. An objection sent by Seller must state specifically that writing which is an objection, must specify the provision(s) being objected to by the Seller, must set forth such provision(s) in the manner that the Seller believes they should be stated, and must be received by Buyer no more than two (2) Business Days after the Confirmation was received by the Seller.
4. Subject to the terms and conditions of this Repurchase Agreement, during such period the Seller may sell, repurchase and resell Eligible Mortgage Loans hereunder.
5. In no event shall a Transaction be entered into when the Repurchase Date for such Transaction would be later than the Termination Date.
6. No later than 5:00 p.m., New York City time, one (1) Business Day prior to the requested Purchase Date, the Seller shall deliver to the Custodian the Mortgage Loan File pertaining to each Eligible Mortgage Loan (other than a Wet-Ink Mortgage Loan) to be purchased by the Buyer.
7. Subject to the provisions of this Section 3, the Purchase Price will then be made available to the Seller by the Buyer transferring, via wire transfer, in the aggregate amount of such Purchase Price in funds immediately available; provided that the Purchase Price on account of Wet-Ink Mortgage Loans shall be remitted to the Disbursement Account.
8. With respect to Transactions the subject of which are Wet-Ink Mortgage Loans:
1. The conditions set forth in subsection (b)(vii) of this Section shall have been satisfied.
4. Repurchase; Purchase Price Decrease
1. The Seller may repurchase Purchased Mortgage Loans without penalty or premium, subject to the last sentence of this Section 3(d)(i), on any date. The Repurchase Price payable for the repurchase of any such Purchased Mortgage Loan shall be reduced as provided in Section 5(d). If the Seller intends to make such a repurchase, the Seller shall give one (1) Business Day's prior written notice thereof to the Buyer, designating the Purchased Mortgage Loans to be repurchased. If such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, and, on receipt, such amount shall be applied to the Repurchase Price for the designated Purchased Mortgage Loans. If any Purchased Mortgage Loan is repurchased on any date other than the Reset Date for such Transaction, the Seller shall pay to the Buyer any amount required to compensate such Buyer for any additional losses, costs or expenses which it may reasonably incur as a result of such repurchase, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Buyer to fund or maintain such Transaction.
2. Seller may at any time, and from time to time, request a Purchase Price Decrease (a "Purchase Price Decrease") by sending a notice to the Buyer at least one (1) Business Day prior to the date that the Seller intends to effectuate such Purchase Price Decrease, specifying the Purchase Price Decrease Date (a "Purchase Price Decrease Date") of such decrease (a "Purchase Price Decrease Notice"). The Purchase Price Decrease amount shall be due and payable in cash on the Purchase Price Decrease Date specified therein. If a Purchase Price Decrease Notice is given, such Purchase Price Decrease Notice shall be revocable at any time prior to 12:00 noon (New York City time) on the Business Day preceding the requested Purchase Price Decrease Date by delivery of written notice thereof to the Buyer. Notwithstanding the foregoing, any Purchase Price Decrease must be in an amount not less than $1,000,000.
3. On the Repurchase Date, termination of the Transaction will be effected by reassignment to the Seller or its designee of the Purchased Mortgage Loans (and any Income in respect thereof received by Buyer not previously credited or transferred to, or applied to the obligations of, the Seller pursuant to Section 5) against the simultaneous transfer of the Repurchase Price to an account of Buyer. The Seller is obligated to obtain the Mortgage Files from Buyer or its designee at the Seller's expense on the Repurchase Date.

Section 4.    MARGIN AMOUNT MAINTENANCE

1. The Buyer shall determine the Market Value of the Purchased Mortgage Loans on a weekly basis, or at such intervals as determined by the Buyer in its sole discretion.
2. If at any time the aggregate Asset Value of all related Purchased Mortgage Loans subject to all Transactions is less than the aggregate Repurchase Price for all such Transactions (a "Margin Deficit"), then Buyer may by notice to Seller (as such notice is more particularly set forth below, a "Margin Call"), require Seller to transfer to Buyer or its designee cash or Eligible Mortgage Loans approved by the Buyer in its sole discretion ("Additional Purchased Mortgage Loans") so that the aggregate Asset Value of the Purchased Mortgage Loans, including any such cash or Additional Purchased Mortgage Loans or cash, will thereupon equal or exceed the aggregate Purchase Price for all Transactions. If Buyer delivers a Margin Call to the Seller on or prior to 9:30 a.m. (New York City time) on any Business Day, then the Seller shall transfer cash or Additional Purchased Mortgage Loans to Buyer no later than 5 p.m. (New York City time) that day. In the event the Buyer delivers a Margin Call to a Seller after 9:30 a.m. (New York City time) on any Business Day, the Seller shall be required to transfer cash or Additional Purchased Mortgage Loans no later than 5 p.m. (New York City time) on the subsequent Business Day.
3. Buyer's election, in its sole and absolute discretion, not to make a Margin Call at any time there is a Margin Deficit shall not in any way limit or impair its right to make a Margin Call at any time a Margin Deficit exists.
4. Any cash transferred to the Buyer pursuant to Section 4(b) above shall be credited to the Repurchase Price of the related Transactions.
5. On any day on which the aggregate Asset Value of the Purchased Mortgage Loans exceeds the then outstanding aggregate Purchase Price of all Transactions (a "Margin Excess"), so long as no Default or Event of Default has occurred and is continuing, Buyer shall, upon receipt of written request from Seller remit an amount equal to such Margin Excess to Seller as additional Purchase Price with respect to the Transactions, provided that in no event shall the Purchase Price exceed the Purchase Price as calculated on the applicable Purchase Date. Any request received by the Buyer after 2:00 p.m. (eastern time) shall be remitted by the Buyer on the next Business Day.
6. Buyer shall not be obligated to remit the additional Purchase Price requested pursuant to a request for Margin Excess which (i) Buyer reasonably determines is based on erroneous information or would result in a Transaction other than in accordance with the terms of this Agreement, or (ii) does not reflect Buyer's current determination of Market Value as provided in the definition thereof.

Section 5.    INCOME PAYMENTS

1. Notwithstanding that Buyer and the Seller intend that the Transactions hereunder be sales to Buyer of the Purchased Mortgage Loans, Seller shall pay to Buyer the accreted value of the Price Differential (less any amount of such Price Differential previously paid by the Seller to Buyer) plus the amount of any unpaid Margin Deficit (each such payment, a "Periodic Advance Repurchase Payment") on each Payment Date. Notwithstanding the preceding sentence, if Seller fails to make all or part of the Periodic Advance Repurchase Payment by 5:00 p.m. (New York time) on any Payment Date, the Pricing Rate shall be equal to the Post-Default Rate until the Periodic Advance Repurchase Payment is received in full by Buyer.
2. The Seller shall hold for the benefit of, and in trust for, Buyer all Income, including without limitation all Income received by or on behalf of the Seller with respect to such Purchased Mortgage Loans. All Income shall be held in trust for Buyer, shall constitute the property of Buyer and shall not be commingled with other property of the Seller, any Affiliate of the Seller except as expressly permitted above. With respect to each Payment Date, the Seller shall remit all Income as follows:
1. first, to the payment of all costs and fees payable by the Seller pursuant to this Repurchase Agreement;
2. second, to the Buyer in payment of any accrued and unpaid Price Differential; and
3. third, without limiting the rights of Buyer under Section 4 of this Repurchase Agreement, to the Buyer, in the amount of any unpaid Margin Deficit.
4. After the occurrence of a Default or an Event of Default, the Seller shall deposit such Income in a deposit account (the title of which shall indicate that the funds therein are being held in trust for Buyer) (the "Collection Account") with a financial institution acceptable to Buyer and subject to the Account Agreement. All such Income shall be held in trust for Buyer, shall constitute the property of Buyer and shall not be commingled with other property of the Seller or any Affiliate of the Seller except as expressly permitted above. Funds deposited in the Collection Account during any month shall be held therein, in trust for the Buyer, until the next Payment Date.
3. To the extent that the Buyer receives any funds from a Takeout Investor with respect to the purchase by such Takeout Investor of a Mortgage Loan, the Buyer shall promptly apply such funds in accordance with the same order of priority set forth in Section 5(b) hereof.
4. Notwithstanding the preceding provisions, if an Event of Default has occurred, all funds in the Collection Account shall be withdrawn and applied as determined by the Buyer.
5. Buyer shall offset against the Repurchase Price of each such Transaction all Income and Periodic Advance Repurchase Payments actually received by Buyer pursuant to Section 5(a), excluding any Late Payment Fees paid pursuant to any Periodic Advance Repurchase Payments made at the Post-Default Rate pursuant to Section 5(a).

Section 6.    REQUIREMENTS OF LAW

1. If any Requirement of Law (other than with respect to any amendment made to the Buyer's certificate of incorporation and by-laws or other organizational or governing documents) or any change in the interpretation or application thereof or compliance by the Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:
1. shall subject the Buyer to any tax of any kind whatsoever with respect to this Repurchase Agreement or any Transaction (excluding net income taxes branch profits taxes, franchise taxes or similar taxes imposed on the Buyer as a result of any present or former connection between the Buyer and the United States, other than any such connection arising solely from the Buyer having executed, delivered or performed its obligations or received a payment under, or enforced, this Repurchase Agreement) or change the basis of taxation of payments to the Buyer in respect thereof;
2. shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, or other extensions of credit by, or any other acquisition of funds by, any office of the Buyer which is not otherwise included in the determination of the LIBOR Rate hereunder;
3. shall impose on the Buyer any other condition;

and the result of any of the foregoing is to increase the cost to the Buyer, by an amount which the Buyer deems to be material, of entering, continuing or maintaining any Transaction or to reduce any amount due or owing hereunder in respect thereof, then, in any such case, the Seller shall promptly pay the Buyer such additional amount or amounts as calculated by the Buyer in good faith as will compensate the Buyer for such increased cost or reduced amount receivable.

2. If the Buyer shall have determined that the adoption of or any change in any Requirement of Law (other than with respect to any amendment made to the Buyer's certificate of incorporation and by-laws or other organizational or governing documents) regarding capital adequacy or in the interpretation or application thereof or compliance by the Buyer or any corporation controlling the Buyer with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on the Buyer's or such corporation's capital as a consequence of its obligations hereunder to a level below that which the Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration the Buyer's or such corporation's policies with respect to capital adequacy) by an amount deemed by the Buyer to be material, then from time to time, the Seller shall promptly pay to the Buyer such additional amount or amounts as will compensate the Buyer for such reduction.
3. If the Buyer becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Seller of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section submitted by the Buyer to the Seller shall be conclusive in the absence of manifest error.

Section 7.    TAXES.

1. Any and all payments by the Seller under or in respect of this Repurchase Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto, whether now or hereafter imposed, levied, collected, withheld or assessed by any taxation authority or other Governmental Authority (collectively, "Taxes"), unless required by law. If the Seller shall be required under any applicable Requirement of Law to deduct or withhold any Taxes from or in respect of any sum payable under or in respect of this Repurchase Agreement to the Buyer, (i) the Seller shall make all such deductions and withholdings in respect of Taxes, (ii) the Seller shall pay the full amount deducted or withheld in respect of Taxes to the relevant taxation authority or other governmental authority in accordance with the applicable Requirement of Law, and (iii) the sum payable by the Seller shall be increased as may be necessary so that after the Seller has made all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 7) such Buyer receives an amount equal to the sum it would have received had no such deductions or withholdings been made in respect of Non-Excluded Taxes. For purposes of this Repurchase Agreement, the term "Non-Excluded Taxes" are Taxes other than, in the case of the Buyer, Taxes that are imposed on its overall net income (and franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction under the laws of which such Buyer is organized or of its principal office, or any political subdivision thereof, unless such Taxes are imposed as a result of such Buyer having executed, delivered or performed its obligations or received payments under, or enforced, this Repurchase Agreement (in which case such Taxes will be treated as Non-Excluded Taxes).
2. If on the date of the assignment pursuant to which a Buyer assignee becomes a party to this Repurchase Agreement, the Buyer assignor was entitled to payments under this Section 7, then, to such extent (and only to such extent), the term "Non-Excluded Taxes" shall include (in addition to Taxes that may be imposed in the future or other amounts otherwise includable in Taxes) such Taxes, if any, applicable with respect to such Buyer assignee on such date. Any additional Taxes in respect of a Buyer that result solely and directly from a change in the principal office of such Buyer shall be treated as any Taxes other than Non-Excluded Taxes ("Excluded Taxes") unless (A) any such additional Taxes are imposed as a result of a change in the applicable Requirement of Law, or in the interpretation or application thereof, occurring after the date of such change or (B) such change is made pursuant to the terms of Section 7(d) or otherwise as a result of a request therefor by the Seller.
3. In addition, the Seller hereby agrees to pay any present or future stamp, recording, documentary, excise, property or similar taxes, charges or levies that arise from any payment made under or in respect of this Repurchase Agreement or from the execution, delivery or registration of, any performance under, or otherwise with respect to, this Repurchase Agreement (collectively, "Other Taxes").
4. The Seller hereby agrees to indemnify the Buyer, and to hold it harmless against, the full amount of Non-Excluded Taxes and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable under this Section 7, imposed on or paid by the Buyer, and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. The indemnity by the Seller provided for in this Section 7(d) shall apply and be made whether or not the Non-Excluded Taxes or Other Taxes for which indemnification hereunder is sought have been correctly or legally asserted. Amounts payable by the Seller under the indemnity set forth in this Section 7(d) shall be paid within 10 days from the date on which the Buyer makes written demand therefor.
5. As soon as practicable after the date of any payment of Taxes or Other Taxes by the Seller to the relevant Governmental Authority, the Seller will deliver to the Buyer the original or a certified copy of the receipt issued by such Governmental Authority evidencing payment thereof.
6. Without prejudice to the survival of any other agreement of the Seller hereunder, the agreements and obligations of the Seller contained in this Section 7 shall survive the termination of this Repurchase Agreement with respect to Transactions entered into prior to the effective date of termination. Nothing contained in this Section 7 shall require the Buyer to make available any of its tax returns or any other information that it deems to be confidential or proprietary.
7. Each party to this Repurchase Agreement acknowledges that it is its intent for purposes of U.S. federal, state and local income and franchise taxes, to treat the Transaction as indebtedness of the Seller that is secured by the Purchased Mortgage Loans and the Purchased Mortgage Loans as owned by the Seller for federal income tax purposes in the absence of a Default by the Seller. All parties to this Repurchase Agreement agree to such treatment and agree to take no action inconsistent with this treatment, unless required by law.

Section 8.    SECURITY INTEREST

Although the parties intend that all Transactions hereunder be sales and purchases (other than for accounting and tax purposes) and not loans, in the event any such Transactions are deemed to be loans, the Seller hereby pledges to Buyer as security for the performance by the Seller of its Obligations and hereby grants, assigns and pledges to Buyer a fully perfected first priority security interest in the Purchased Mortgage Loans, the Records, and all servicing rights related to the Purchased Mortgage Loans, the Repurchase Documents (to the extent such Repurchase Documents and the Seller's right thereunder relate to the Purchased Mortgage Loans), any Property relating to any Purchased Mortgage Loan or the related Mortgaged Property, any Takeout Commitments relating to any Purchased Mortgage Loan, all insurance policies and insurance proceeds relating to any Purchased Mortgage Loan or the related Mortgaged Property, including but not limited to any payments or proceeds under any related primary insurance, hazard insurance, FHA Mortgage Insurance Contracts and VA Loan Guaranty Agreements (if any), any Income relating to any Purchased Mortgage Loan, the Collection Account, any Interest Rate Protection Agreements relating to any Purchased Mortgage Loan, and any other instruments, investment property, contract rights, accounts (including any interest of the Seller in escrow accounts) and any other contract rights, accounts, payments, rights to payment (including payments of interest or finance charges) and general intangibles to the extent that the forgoing relates to any Purchased Mortgage Loan and any other assets relating to the Purchased Mortgage Loans (including, without limitation, any other accounts) or any interest in the Purchased Mortgage Loans, all collateral under any other secured debt facility between Seller or Affiliates of Seller (other than E-Loan Auto Fund One, LLC) on the one hand and the Buyer or the Buyer's Affiliates on the other, and any proceeds (including the related securitization proceeds) and distributions and any other property, rights, title or interests as are specified on a Trust Receipt and Mortgage Loan Schedule and Exception Report with respect to any of the foregoing, in all instances, whether now owned or hereafter acquired, now existing or hereafter created (collectively, the "Repurchase Assets").

The Seller hereby authorizes the Buyer to file such financing statement or statements relating to the Repurchase Assets as the Buyer, at its option, may deem appropriate. The Seller shall pay the filing costs for any financing statement or statements prepared pursuant to this Section 8.

Section 9.    PAYMENT, TRANSFER AND CUSTODY

1. Unless otherwise mutually agreed in writing, all transfers of funds to be made by the Seller hereunder shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Buyer at the following account maintained by the Buyer: MLMCI, Account No. 00812914, for the account of MLMCI Matchbook, Bankers Trust, N.Y., ABA# 021 001 033, not later than 5:00 p.m. New York City time, on the date on which such payment shall become due (and each such payment made after such time shall be deemed to have been made on the next succeeding Business Day). The Seller acknowledges that it has no rights of withdrawal from the foregoing account.
2. On the Purchase Date for each Transaction, ownership of the Purchased Mortgage Loans shall be transferred to the Buyer or its designee against the simultaneous transfer of the Purchase Price to the following account of the Seller (or as otherwise directed by the Seller): Bankers Trust Company, Account No. 01419663, ABA No. 021001033, for the account of LA ASSET BASED, REF: ELOAN/MERRILL LYNCH CTOL 38285. With respect to the Purchased Mortgage Loans being sold by a Seller on a Purchase Date, the Seller hereby sells, transfers, conveys and assigns to Buyer or its designee without recourse, but subject to the terms of this Repurchase Agreement, all the right, title and interest of the Seller in and to the Purchased Mortgage Loans together with all right, title and interest in and to the proceeds of any related Repurchase Assets.
3. In connection with such sale, transfer, conveyance and assignment, on or prior to each Purchase Date, the Seller shall deliver or cause to be delivered and released to Buyer or its designee the Mortgage File for the related Purchased Mortgage Loans.

Section 10.    HYPOTHECATION OR PLEDGE OF PURCHASED Mortgage Loan

Title to all Purchased Mortgage Loans and Repurchase Assets shall pass to Buyer and Buyer shall have free and unrestricted use of all Purchased Mortgage Loans. Nothing in this Repurchase Agreement shall preclude the Buyer from engaging in repurchase transactions with the Purchased Mortgage Loans or otherwise pledging, repledging, transferring, hypothecating, or rehypothecating the Purchased Mortgage Loans. Nothing contained in this Repurchase Agreement shall obligate the Buyer to segregate any Purchased Mortgage Loans delivered to the Buyer by the Seller.

Section 11.    REPRESENTATIONS

(1) The Seller represents and warrants to the Buyer that as of the Purchase Date for any Purchased Mortgage Loans by the Buyer from the Seller and as of the date of this Repurchase Agreement and any Transaction hereunder and at all times while the Repurchase Documents and any Transaction hereunder is in full force and effect:

1. Acting as Principal. The Seller will engage in such Transactions as principal (or, if agreed in writing in advance of any Transaction by the other party hereto, as agent for a disclosed principal).
2. No Broker.  The Seller has not dealt with any broker, investment banker, agent, or other person, except for the Buyer, who may be entitled to any commission or compensation in connection with the sale of Purchased Mortgage Loans pursuant to this Repurchase Agreement.
3. Financial Statements. The Seller has heretofore furnished to the Buyer a copy of its (a) consolidated balance sheet and the consolidated balance sheets of its consolidated Subsidiaries for the fiscal year ended December 31, 2002 and the related consolidated statements of income and retained earnings and of cash flows for the Seller and its consolidated Subsidiaries for such fiscal year, setting forth in each case in comparative form the figures for the previous year, with the opinion thereon of PricewaterhouseCoopers LLP and (b) consolidated balance sheet and the consolidated balance sheets of its consolidated Subsidiaries for the quarterly fiscal period(s) of the Seller ended March, June and September 2003 and the related consolidated statements of income and retained earnings and of cash flows for the Seller and its consolidated Subsidiaries for such quarterly fiscal period(s), setting forth in each case in comparative form the figures for the previous year. All such financial statements are complete and correct and fairly present, in all material respects, the consolidated financial condition of the Seller and its Subsidiaries and the consolidated results of their operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis. Since December 31, 2002, there has been no material adverse change in the consolidated business, operations or financial condition of the Seller and its consolidated Subsidiaries taken as a whole from that set forth in said financial statements nor is the Seller aware of any state of facts which (without notice or the lapse of time) would or could result in any such material adverse change. The Seller does not have, on the date of the statements delivered pursuant to this section (the "Statement Date"), any liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of the Seller except as heretofore disclosed to the Buyer in writing.
4. Organization, Etc. The Seller is a corporation duly organized, validly existing and in good standing under the laws of Delaware. The Seller (a) has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect; (b) is qualified to do business and is in good standing in all other jurisdictions in which the nature of the business conducted by it makes such qualification necessary, except where failure so to qualify would not be reasonably likely (either individually or in the aggregate) to have a Material Adverse Effect; and (c) has full power and authority to execute, deliver and perform its obligations under the Repurchase Documents.
5. Authorization, Compliance, Etc. The execution and delivery of, and the performance by the Seller of its obligations under, the Repurchase Documents to which it is a party (a) are within the Seller's powers, (b) have been duly authorized by all requisite action, (c) do not violate any provision of applicable law, rule or regulation, or any order, writ, injunction or decree of any court or other Governmental Authority, or its organizational documents, (d) do not violate any indenture, agreement, document or instrument to which the Seller or any of its Subsidiaries is a party, or by which any of them or any of their properties, any of the Repurchase Assets is bound or to which any of them is subject and (e) are not in conflict with, do not result in a breach of, or constitute (with due notice or lapse of time or both) a default under, or except as may be provided by any Repurchase Document, result in the creation or imposition of any Lien upon any of the property or assets of the Seller or any of its Subsidiaries pursuant to, any such indenture, agreement, document or instrument. The Seller is not required to obtain any consent, approval or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the consummation of the Transactions contemplated herein and the execution, delivery or performance of the Repurchase Documents to which it is a party.
6. Litigation. There are no actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other legal or arbitrable proceedings affecting the Seller or any of its Subsidiaries or affecting any of the Repurchase Assets or any of the other properties of the Seller before any Governmental Authority which (i) questions or challenges the validity or enforceability of the Repurchase Documents or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater than $100,000, (iii) individually or in the aggregate, if adversely determined, would have a Material Adverse Effect, or (iv) requires filing with the SEC in accordance with its regulations.
7. Purchased Mortgage Loans.
1. The Seller has not assigned, pledged, or otherwise conveyed or encumbered any Purchased Mortgage Loan to any other Person, and immediately prior to the sale of such Mortgage Loan to the Buyer, the Seller was the sole owner of such Purchased Mortgage Loan and had good and marketable title thereto, free and clear of all Liens, in each case except for Liens to be released simultaneously with the sale to the Buyer hereunder.
2. The provisions of this Repurchase Agreement are effective to either constitute a sale of Repurchase Assets to the Buyer or to create in favor of the Buyer a valid security interest in all right, title and interest of the Seller in, to and under the Repurchase Assets.
8. Chief Executive Office/Jurisdiction of Organization. On the Effective Date, the Seller's chief executive office is, and has been, located at 6230 Stoneridge Mall Road, Pleasanton, CA 94588. The Seller's jurisdiction of organization is Delaware.
9. Location of Books and Records. The location where the Seller keeps its books and records, including all computer tapes and records related to the Repurchase Assets is its chief executive office.
10. Filing and Payment of Taxes. The Seller has and its Subsidiaries have filed on a timely basis all federal, state and local tax and information returns, reports and any other information statements or schedules that are required to be filed by or in respect of them and have paid all taxes due pursuant to such returns, reports or other information statements or schedules or pursuant to any assessment received by them, except for any such taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided. The charges, accruals and reserves on the books of the Seller and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of the Seller, adequate.
11. Enforceability. This Repurchase Agreement and all of the other Repurchase Documents executed and delivered by the Seller in connection herewith are legal, valid and binding obligations of the Seller and are enforceable against the Seller in accordance with their terms except as such enforceability may be limited by (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors rights generally and (ii) general principles of equity.
12. Ability to Perform. The Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in the Repurchase Documents to which it is a party on its part to be performed
13. Material Adverse Effect. Since December 31, 2002, there has been no development or event nor, to the Seller's knowledge, any prospective development or event, which has had or could have a Material Adverse Effect.
14. No Default. No Default or Event of Default has occurred and is continuing.
15. Underwriting Guidelines. The Underwriting Guidelines provided to Buyer are the true and correct Underwriting Guidelines of the Seller.
16. Adverse Selection. The Seller has not selected the Purchased Mortgage Loans in a manner so as to adversely affect Buyer's interests.
17. Tangible Net Worth. On the initial Purchase Date, the Tangible Net Worth of the Seller is not less than $40,000,000.
18. Indebtedness. The Seller does not have any Indebtedness, except as disclosed on Schedule 2 to this Repurchase Agreement.
19. Accurate and Complete Disclosure. The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Seller to the Buyer in connection with the negotiation, preparation or delivery of this Repurchase Agreement and the other Repurchase Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. All written information furnished after the date hereof by or on behalf of the Seller to the Buyer in connection with this Repurchase Agreement and the other Repurchase Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in every material respect, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. There is no fact known to the Seller, after due inquiry, that could reasonably be expected to have a Material Adverse Effect that has not been disclosed herein, in the other Repurchase Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Buyer for use in connection with the transactions contemplated hereby or thereby.
20. Margin Regulations. The use of all funds acquired by the Seller under this Repurchase Agreement will not conflict with or contravene any of Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve System as the same may from time to time be amended, supplemented or otherwise modified.
21. Investment Company. Neither Seller nor any of its Subsidiaries is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended.
22. Solvency. As of the date hereof and immediately after giving effect to each Transaction, the fair value of the assets of the Seller is greater than the fair value of the liabilities (including, without limitation, contingent liabilities if and to the extent required to be recorded as a liability on the financial statements of the Seller in accordance with GAAP) of the Seller and the Seller is solvent and, after giving effect to the transactions contemplated by this Repurchase Agreement and the other Repurchase Documents, will not be rendered insolvent or left with an unreasonably small amount of capital with which to conduct its business and perform its obligations. The Seller does not intend to incur, nor does it believe that it has incurred, debts beyond its ability to pay such debts as they mature. The Seller is not contemplating the commencement of an insolvency, bankruptcy, liquidation, or consolidation proceeding or the appointment of a receiver, liquidator, conservator, trustee, or similar official in respect of itself or any of its property.
23. ERISA.
1. No liability under Section 4062, 4063, 4064 or 4069 of ERISA has been or is expected by the Seller to be incurred by the Seller or any ERISA Affiliate thereof with respect to any Plan which is a Single-Employer Plan in an amount that could reasonably be expected to have a Material Adverse Effect.
2. No Plan of the Seller which is a Single-Employer Plan had an accumulated funding deficiency, whether or not waived, as of the last day of the most recent fiscal year of such Plan ended prior to the date hereof. Neither the Seller nor any ERISA Affiliate thereof is (i) required to give security to any Plan which is a Single-Employer Plan pursuant to Section 401(a) (29) of the Code or Section 307 of ERISA, or (ii) subject to a Lien in favor of such a Plan under Section 302(f) of ERISA.
3. Each Plan of the Seller, each of its Subsidiaries and each of its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code, except where the failure to comply would not result in any Material Adverse Effect.
4. Neither the Seller nor any of its Subsidiaries has incurred a tax liability under Section 4975 of the Code or a penalty under Section 502(i) of ERISA in respect of any Plan which has not been paid in full, except where the incurrence of such tax or penalty would not result in a Material Adverse Effect.
5. Neither the Seller nor any of its Subsidiaries or any ERISA Affiliate thereof has incurred or reasonably expects to incur any withdrawal liability under Section 4201 of ERISA as a result of a complete or partial withdrawal from a Multiemployer Plan which will result in withdrawal liability to the Seller, any of its Subsidiaries or any ERISA Affiliate thereof in an amount that could reasonably be expected to have a Material Adverse Effect.
24. Agency Approvals. The Seller is HUD/FHA Mortgagee with a Title II approval and a VA Prior Approval Lender. The Seller is also approved by Fannie Mae as an approved lender and Freddie Mac as an approved seller/servicer. In each such case, the Seller is in good standing, with no event having occurred or the Seller having any reason whatsoever to believe or suspect will occur prior to the issuance of the consummation of the related Takeout Commitment, as the case may be, including, without limitation, a change in insurance coverage which would either make the Seller unable to comply with the eligibility requirements for maintaining all such applicable approvals or require notification to the relevant Agency or to the Department of Housing and Urban Development, FHA or VA. The Seller has adequate financial standing, servicing facilities, procedures and experienced personnel necessary for the sound servicing of mortgage loans of the same types as may from time to time constitute Mortgage Loans and in accordance with Accepted Servicing Practices.
25. Mortgage Loan Schedule. The information set forth in the related Mortgage Loan Schedule and all other information or data furnished by, or on behalf of, Seller to Buyer is complete, true and correct in all material respects, and Seller acknowledges that Buyer has not verified the accuracy of such information or data.
26. No Reliance. The Seller has made its own independent decisions to enter into the Repurchase Documents and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including without limitation, legal counsel and accountants) as it has deemed necessary. Seller is not relying upon any advice from Buyer as to any aspect of the Transactions, including without limitation, the legal, accounting or tax treatment of such Transactions.
27. Plan Assets. The Seller is not an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code, and the Purchased Mortgage Loans are not "plan assets" within the meaning of 29 CFR 2510.3-101 in the Seller's hands.

Section 12.    COVENANTS

On and as of the date of this Repurchase Agreement and each Purchase Date and until this Repurchase Agreement is no longer in force with respect to any Transaction, the Seller covenants as follows:

1. Preservation of Existence; Compliance with Law. The Seller shall:
1. Preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises necessary for the operation of its business;
2. Comply with the requirements of all applicable laws, rules, regulations and orders, whether now in effect or hereafter enacted or promulgated by any applicable Governmental Authority (including, without limitation, all environmental laws);
3. Maintain all licenses, permits or other approvals necessary for the Seller to conduct its business and to perform its obligations under the Repurchase Documents, and shall conduct its business strictly in accordance with applicable law;
4. Keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied; and
5. Permit representatives of the Buyer, upon reasonable notice (unless an Event of Default shall have occurred and is continuing, in which case, no prior notice shall be required), during normal business hours, to examine, copy and make extracts from its books and records, to inspect any of its Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by the Buyer, subject to the provisions set forth in Section 27 hereof.
2. Taxes, Etc.
1. The Seller shall pay and discharge or cause to be paid and discharged, when due, or adequately reserve for the payment of, all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits or upon any of its property, real, personal or mixed (including without limitation, the Repurchase Assets) or upon any part thereof, as well as any other lawful claims which, if unpaid, might become a Lien upon such properties or any part thereof, except for any such taxes as are appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are provided.
2. The Seller shall file on a timely basis all federal, state and local tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it and pay all taxes due pursuant to such returns, reports and other information statements or schedules or pursuant to any assessment received by it.
3. Notice of Proceedings or Adverse Change. The Seller shall give notice to the Buyer immediately after a Responsible Officer of the Seller has any knowledge of:
1. the occurrence of any Default or Event of Default or Termination Event;
2. any (a) default or event of default under any Indebtedness of the Seller or (b) litigation, investigation, regulatory action or proceeding that is pending or threatened by or against the Seller in any federal or state court or before any Governmental Authority which, if not cured or if adversely determined, would reasonably be expected to have a Material Adverse Effect or constitute a Default or Event of Default, and (c) any Material Adverse Effect with respect to the Seller;
3. any litigation or proceeding that is pending or threatened against (a) the Seller in which the amount involved exceeds $100,000 and is not covered by insurance, in which injunctive or similar relief is sought, or which, would reasonably be expected to have a Material Adverse Effect and (b) any litigation or proceeding that is pending or threatened in connection with any of the Repurchase Assets, which, if adversely determined, would reasonably be expected to have a Material Adverse Effect;
4. and, as soon as reasonably possible, notice of any of the following events:
1. a change in the insurance coverage of the Seller, with a copy of evidence of same attached;
2. any material change in accounting policies or financial reporting practices of the Seller;
3. promptly upon receipt of notice or knowledge of any Lien or security interest (other than security interests created hereby or under any other Repurchase Document) on, or claim asserted against, any of the Repurchase Assets; and
4. any other event, circumstance or condition that has resulted, or has a possibility of resulting, in a Material Adverse Effect; and
5. Promptly, but no later than two (2) Business Days after the Seller receives any of the same, deliver to the Buyer a true, complete, and correct copy of any schedule, report, notice, or any other document delivered to the Seller by any Person pursuant to, or in connection with, any of the Repurchase Assets.
4. Financial Reporting. The Seller shall maintain a system of accounting established and administered in accordance with GAAP, and furnish to the Buyer:
1. Within one hundred twenty (120) days after the close of each fiscal year, Financial Statements, including a statement of income and changes in shareholders' equity of the Seller for such year, and the related balance sheet as at the end of such year, all in reasonable detail and accompanied by an opinion of an accounting firm as to said financial statements;
2. Within sixty (60) days after the close of each of the Seller's first three fiscal quarters in each fiscal year unaudited balance sheets and income statements, for the period from the beginning of such fiscal quarter to the end of such fiscal quarter, subject, however, to year end adjustments;
3. Within thirty (30) days after the end of each calendar month, the unaudited balance sheets of the Seller as at the end of such period and the related unaudited consolidated statements of income and retained earnings and of cash flows for the Seller for such period and the portion of the fiscal year through the end of such period, subject, however, to year end adjustments;
4. Simultaneously with the furnishing of each of the Financial Statements to be delivered pursuant to subsection (ii) above, or monthly upon Buyer's request, a certificate in the form of Exhibit VIII hereto and certified by an executive officer of the Seller;
5. If applicable, copies of any 10-Ks and 10-Qs, and upon Buyer's request, any registration statements and other "corporate finance" SEC filings (other than 8-Ks) by the Seller, within 5 Business Days of their filing with the SEC; provided, that, the Seller or any Affiliate will provide the Buyer with a copy of the annual 10-K filed with the SEC by the Seller or its Affiliates, no later than 90 days after the end of the year; and
6. Promptly, from time to time, such other information regarding the business affairs, operations and financial condition of the Seller as the Buyer may reasonably request.
5. Visitation and Inspection Rights. Subject to the provisions of Section 27, the Seller shall permit the Buyer to inspect, and to discuss with the Seller's officers, agents and auditors, the affairs, finances, and accounts of the Seller, the Repurchase Assets, and the Seller's books and records, and to make abstracts or reproductions thereof and to duplicate, reduce to hard copy or otherwise use any and all computer or electronically stored information or data, in each case, (i) during normal business hours, (ii) upon reasonable notice (provided, that upon the occurrence of an Event of Default, no notice shall be required), and (iii) at the expense of the Seller to discuss with its officers, its affairs, finances, and accounts.
6. Reimbursement of Expenses. On the date of execution of this Repurchase Agreement, the Seller shall reimburse the Buyer for all expenses relating to this Repurchase Agreement incurred by the Buyer on or prior to such date. From and after such date, the Seller shall promptly reimburse the Buyer for all expenses of effectuating this Repurchase Agreement as the same are incurred by the Buyer and within thirty (30) days of the receipt of invoices therefor.
7. Further Assurances. The Seller shall execute and deliver to the Buyer all further documents, financing statements, agreements and instruments, and take all further action that may be required under applicable law, or that the Buyer may reasonably request, in order to effectuate the transactions contemplated by this Repurchase Agreement and the Repurchase Documents or, without limiting any of the foregoing, to grant, preserve, protect and perfect the validity and first-priority of the security interests created or intended to be created hereby. The Seller shall do all things necessary to preserve the Repurchase Assets so that they remain subject to a first priority perfected security interest hereunder. Without limiting the foregoing, the Seller will comply with all rules, regulations, and other laws of any Governmental Authority and cause the Repurchase Assets to comply with all applicable rules, regulations and other laws. The Seller will not allow any default for which the Seller is responsible to occur under any Repurchase Assets or any Repurchase Document and the Seller shall fully perform or cause to be performed when due all of its obligations under any Repurchase Assets or the Repurchase Documents.
8. True and Correct Information. All information, reports, exhibits, schedules, financial statements or certificates of Seller or any of its Affiliates thereof or any of their officers furnished to Buyer hereunder and during Buyer's diligence of the Seller are and will be true and complete and do not omit to disclose any material facts necessary to make the statements therein or therein, in light of the circumstances in which they are made, not misleading. All required financial statements, information and reports delivered by the Seller to the Buyer pursuant to this Repurchase Agreement shall be prepared in accordance with GAAP, or in applicable, to SEC filings, the appropriate SEC accounting requirements.
9. ERISA Events.
1. Promptly upon becoming aware of the occurrence of any Event of Termination which together with all other Events of Termination occurring within the prior 12 months involve a payment of money by or a potential aggregate liability of the Seller or any ERISA Affiliate thereof or any combination of such entities in excess of $100,000 the Seller shall give the Buyer a written notice specifying the nature thereof, what action the Seller or any ERISA Affiliate thereof has taken and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto;
2. Promptly upon receipt thereof, the Seller shall furnish to the Buyer copies of (i) all notices received by the Seller or any ERISA Affiliate thereof of the PBGC's intent to terminate any Plan or to have a trustee appointed to administer any Plan; (ii) all notices received by the Seller or any ERISA Affiliate thereof from the sponsor of a Multiemployer Plan pursuant to Section 4202 of ERISA involving a withdrawal liability in excess of $100,000; and (iii) all funding waiver requests filed by the Seller or any ERISA Affiliate thereof with the Internal Revenue Service with respect to any Plan, the accrued benefits of which exceed the present value of the plan assets as of the date the waiver request is filed by more than $100,000, and all communications received by the Seller or any ERISA Affiliate thereof from the Internal Revenue Service with respect to any such funding waiver request.
10. Financial Condition Covenants.
1. Maintenance of Tangible Net Worth. (A) Seller shall maintain a Tangible Net Worth of not less than $40,000,000 and (B) Seller shall maintain a Tangible Net Worth at the end of any calendar quarter of not less than 80% of its Tangible Net Worth at the beginning of the preceding calendar quarter. For example, Seller shall maintain a Tangible Net Worth on June 30 of not less than 80% of its Tangible Net Worth on January 1^st.
2. Maintenance of Ratio of Indebtedness to Tangible Net Worth. The Seller shall maintain the ratio of Indebtedness to Tangible Net Worth no greater than 12:1.
3. Maintenance of Liquidity. The Seller shall ensure that, as of the end of each calendar month, it has Cash Equivalents in an amount not less than $12,500,000.
11. Hedging. If requested by the Buyer in writing, the Seller shall have entered into Interest Rate Protection Agreements, in an amount in accordance with the Buyer's written request, with Buyer or any Affiliate, having terms with respect to protection against fluctuations in interest rates reasonably acceptable to the Buyer.
12. No Adverse Selection. The Seller shall not select Eligible Mortgage Loans to be sold to Buyer as Purchased Mortgage Loans using any type of adverse selection or other selection criteria which would adversely affect the Buyer.
13. Mortgage Loan Schedule. On the Friday of each calendar week (or if such date is not a Business Day, the next preceding Business Day), or with such greater frequency as requested by Buyer, the Seller shall provide to Buyer, electronically, in a format mutually acceptable to Buyer, a Mortgage Loan Schedule. The Seller shall not cause the Purchased Mortgage Loans to be serviced by any servicer other than a servicer expressly approved in writing by Buyer, which approval shall be deemed granted by Buyer with respect to the Seller with the execution of this Repurchase Agreement.
14. Insurance. The Seller shall continue to maintain insurance coverage with respect to employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud in an aggregate amount at least equal to $5,000,000. The Seller shall maintain a fidelity bond in respect of its officers, employees and agents, with respect to any claims made in connection with all or any portion of the Repurchase Assets. The Seller shall notify the Buyer of any material change in the terms of any such fidelity bond or insurance policy.
15. Books and Records. The Seller shall, to the extent practicable, maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing the Repurchase Assets in the event of the destruction of the originals thereof), and keep and maintain or obtain, as and when required, all documents, books, records and other information reasonably necessary or advisable for the collection of all Repurchase Assets.
16. Security Interest. The Seller shall do all things necessary to preserve the Repurchase Assets so that they remains subject to a first priority perfected security interest hereunder. Without limiting the foregoing, the Seller will comply with all rules, regulations and other laws of any Governmental Authority and cause the Repurchase Assets to comply with all applicable rules, regulations and other laws. The Seller will not allow any default for which the Seller is responsible to occur under any Repurchase Assets or any Repurchase Documents and the Seller shall fully perform or cause to be performed when due all of its obligations under any Repurchase Assets or the Repurchase Documents.
17. Illegal Activities. The Seller shall not engage in any conduct or activity that could subject its assets to forfeiture or seizure.
18. Material Change in Business. The Seller shall not make any material change in the nature of its business as carried on at the date hereof.
19. Limitation on Dividends and Distributions. The Seller shall not make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity interest of the Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of the Seller, either directly or indirectly, whether in cash or property or in obligations of the Seller or any of the Seller's consolidated Subsidiaries in any calendar year; in excess of 50% of the net income of the Seller for such calendar year (determined in accordance with GAAP); provided that no such dividends or other distributions may be made at any time following the occurrence and during the continuation of an Event of Default.
20. Disposition of Assets; Liens. The Seller shall not create, incur, assume or suffer to exist any mortgage, pledge, Lien, charge or other encumbrance of any nature whatsoever on any of the Repurchase Assets, whether real, personal or mixed, now or hereafter owned, other than the Liens created in connection with the transactions contemplated by this Repurchase Agreement; nor shall the Seller cause any of the Purchased Mortgage Loans to be sold, pledged, assigned or transferred.
21. Transactions with Affiliates. The Seller shall not enter into any transaction, including, without limitation, the purchase, sale, lease or exchange of property or assets or the rendering or accepting of any service with any Affiliate, unless such transaction is (a) not otherwise prohibited in this Repurchase Agreement, (b) in the ordinary course of the Seller's business and (c) upon fair and reasonable terms no less favorable to the Seller, as the case may be, than it would obtain in a comparable arm's length transaction with a Person which is not an Affiliate.
22. ERISA Matters.
1. The Seller shall not permit any event or condition which is described in any of clauses (i) through (vii) of the definition of "Event of Termination" to occur or exist with respect to any Plan or Multiemployer Plan if such event or condition, together with all other events or conditions described in the definition of Event of Termination occurring within the prior 12 months, involves the payment of money by or an incurrence of liability of the Seller or any ERISA Affiliate thereof, or any combination of such entities in an amount in excess of $100,000.
2. The Seller shall not be an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code and (b) the Seller shall not use "plan assets" within the meaning of 29 CFR 2510.3-101 to engage in this Repurchase Agreement or the Transactions hereunder.
23. Consolidations, Mergers and Sales of Assets. The Seller shall not (i) consolidate or merge with or into any other Person or (ii) sell, lease or otherwise transfer all or substantially all of its assets to any other Person; provided that the Seller may merge or consolidate with another Person if the Seller is the Person surviving such merger.
24. Mortgage Loan Reports. The Seller will furnish to Buyer monthly electronic Mortgage Loan performance data, including, without limitation, delinquency reports, pool analytic reports and static pool reports (i.e., delinquency, foreclosure and net charge-off reports) and monthly stratification reports summarizing the characteristics of the Mortgage Loans.
25. Agency Approvals; Servicing. The Seller shall maintain its status with Fannie Mae as an approved lender and Freddie Mac as an approved seller/servicer, in each case in good standing (each such approval, an "Agency Approval"). The Seller shall service all Purchased Mortgage Loans which are subject to an Agency Takeout Commitment in accordance with the applicable Agency guide. Should the Seller, for any reason, cease to possess all such applicable Agency Approvals to the extent necessary, or should notification to the relevant Agency Approval or to HUD, FHA or VA be required, the Seller shall so notify Buyer immediately in writing. Notwithstanding the preceding sentence, the Seller shall take all necessary action to maintain all of its applicable Agency Approvals at all times during the term of this Repurchase Agreement and each outstanding Transaction.
26. Guarantees. The Seller shall not create, incur, assume or suffer to exist any Guarantees, except (i) to the extent reflected in the Seller's financial statements or notes thereto and (ii) to the extent the aggregate Guarantees of the Seller do not exceed $2,500,000.
27. Takeout Payments. With respect to each Mortgage Loan subject to a Takeout Commitment, the Seller shall arrange that all payments under the related Takeout Commitment shall be paid directly to the Buyer at the account set forth in Section 9 hereof, or to an account approved by the Buyer in writing prior to such payment. With respect to any Agency Takeout Commitment, if applicable, (1) with respect to the wire transfer instructions as set forth in Freddie Mac Form 987 (Wire Transfer Authorization for a Cash Warehouse Delivery) such wire transfer instructions are identical to Buyer's wire instructions or the Buyer has approved such wire transfer instructions in writing in its sole discretion, or (2) the Payee Number set forth on Fannie Mae Form 1068 (Fixed-Rate, Graduated-Payment, or Growing-Equity Mortgage Loan Schedule) or Fannie Mae Form 1069 (Adjustable-Rate Mortgage Loan Schedule), as applicable, is identical to the Payee Number that has been identified by Buyer in writing as Buyer's Payee Number or the Buyer has approved the related Payee Number in writing in its sole discretion; With respect to any Takeout Commitment with an Agency for which the Agency is swapping the related Mortgage Loans for a mortgage backed security, the applicable Agency documents list Buyer as sole subscriber.
28. Underwriting Guidelines. Without the prior written consent of Buyer, the Seller shall not amend or otherwise modify the Underwriting Guidelines in a material manner. Without limiting the foregoing, in the event that the Seller makes any material amendment or modification to the Underwriting Guidelines, the Seller shall promptly deliver to Buyer a complete copy of the amended or modified Underwriting Guidelines.

Section 13.    EVENTS OF DEFAULT

Section 13.01    Events of Default. If any of the following events (each an "Event of Default") occur, the Seller and Buyer shall have the rights set forth in Section 14, as applicable:

1. the Seller shall default in the payment of (i) any amount payable by it hereunder or under any other Repurchase Document, (ii) Expenses or (iii) any other Obligations, when the same shall become due and payable, whether at the due date thereof, or by acceleration or otherwise; or
2. the failure of the Seller to perform, comply with or observe any term, covenant or agreement applicable to the Seller contained in Sections 12(a)(i), (h), (j), (n), (r), (s), (t), (u), (v), (w), (x), (y), (z), (aa) or (bb); or
3. any representation, warranty or certification made or deemed made herein or in any other Repurchase Document by the Seller or any certificate furnished to the Buyer pursuant to the provisions hereof or thereof or any information with respect to the Purchased Mortgage Loans furnished in writing by on behalf of the Seller shall prove to have been untrue or misleading in any material respect as of the time made or furnished (other than the representations and warranties set forth in Schedule 1, which shall be considered solely for the purpose of determining the Market Value of the Purchased Mortgage Loans; unless (i) the Seller shall have made any such representations and warranties with actual knowledge that they were materially false or misleading at the time made; or (ii) any such representations and warranties have been determined in good faith by the Buyer in its sole discretion to be materially false or misleading on a regular basis); or
4. the Seller shall fail to observe or perform any other covenant or agreement contained in this Repurchase Agreement (and not identified in clause (b) of Section 13.01) or any other Repurchase Document, and if such default shall be capable of being remedied, and such failure to observe or perform shall continue unremedied for a period of two (2) Business Days; or
5. a judgment or judgments for the payment of money in excess of $100,000 in the aggregate shall be rendered against the Seller or any of its Affiliates by one or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof, and the Seller or any such Affiliate shall not, within said period of 30 days, or such longer period during which execution of the same shall have been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal; or
6. any "event of default" or any other default which permits a demand for, or requires, the early repayment of obligations due by the Seller or its Affiliates under (i) any agreement (after the expiration of any applicable grace period under any such agreement) relating to any Indebtedness of the Seller or any Affiliate, as applicable, to which the Buyer or any Affiliate is a party or (ii) any agreement (after the expiration of any applicable grace period under any such agreement) relating to any Indebtedness of the Seller or any Affiliate, as applicable; or
7. an Event of Insolvency shall have occurred with respect to the Seller; or
8. for any reason, this Repurchase Agreement at any time shall not be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance with its terms, or any Lien granted pursuant thereto shall fail to be perfected and of first priority, or any Person (other than Buyer) shall contest the validity, enforceability, perfection or priority of any Lien granted pursuant thereto, or any party thereto (other than Buyer) shall seek to disaffirm, terminate, limit or reduce its obligations hereunder; or
9. the Seller shall grant, or suffer to exist, any Lien on any Repurchase Asset (except any Lien in favor of the Buyer); or (A) the Repurchase Assets shall not have been sold to the Buyer, or (B) the Liens contemplated hereby shall cease or fail to be first priority perfected Liens on any Repurchase Assets in favor of the Buyer or shall be Liens in favor of any Person other than the Buyer; or
10. any material adverse change in the Property, business, prospects, financial condition or operations of the Seller or any of its Affiliates shall occur, in each case as determined by Buyer in its sole good faith discretion, or any other condition shall exist which, in Buyer's sole good faith discretion, constitutes a material impairment of the Seller's ability to perform its obligations under this Repurchase Agreement or any other Repurchase Document.
11. (i) any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan of Seller, (ii) any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Seller or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Plan of Seller, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Buyer, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Plan of Seller shall terminate for purposes of Title IV of ERISA, (v) the Seller or any Commonly Controlled Entity shall, or in the reasonable opinion of the Buyer is likely to, incur any liability in connection with a withdrawal from, or the insolvency or reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan of Seller; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or
12. Seller's audited annual financial statements or the notes thereto or other opinions or conclusions stated therein shall be qualified or limited by reference to the status of Seller as a "going concern" or a reference of similar import.

Section 13.02    Termination Event.

1. If the following event (a "Termination Event") occurs, the Buyer shall have the rights set forth in Section 13.02(b):
1. The senior debt obligations or short-term debt obligations of Merrill Lynch & Co., Inc. shall be rated below the four highest generic grades (without regard to any pluses and minuses reflecting gradations within such generic grades) by any nationally recognized statistical rating organization.
2. A Change in Control of the Seller shall have occurred.
3. any change or development involving a prospective change in taxation or other applicable law or regulation or interpretation thereof in the United States directly affecting the Purchased Mortgage Loans or the consequences of Buyer owning, or holding a security interest in, the Purchased Mortgage Loans; the imposition of exchange controls by the United States, that directly affects the Purchased Mortgage Loans or the consequences of Buyer owning, or holding a security interest in, the Purchased Mortgage Loans; or the imposition of exchange controls by the United States, that directly affects the financial markets of the United States, and makes it, in the sole judgment of Buyer, inadvisable or impracticable to enter into Transactions with the Mortgage Loans.
2. The Seller shall repurchase any Purchased Mortgage Loans subject to a Transaction hereunder within 60 days following receipt of a request therefor from Buyer following the occurrence of a Termination Event.

Section 14.    REMEDIES

1. If an Event of Default occurs with respect to the Seller, the following rights and remedies are available to the Buyer; provided, that an Event of Default shall be deemed to be continuing unless expressly waived by the Buyer in writing.
1. At the option of the Buyer, exercised by written notice to the Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Event of Insolvency of the Seller), the Repurchase Date for each Transaction hereunder, if it has not already occurred, shall be deemed immediately to occur. The Buyer shall (except upon the occurrence of an Act of Insolvency of the Seller) give notice to the Seller of the exercise of such option as promptly as practicable.
2. If the Buyer exercises or is deemed to have exercised the option referred to in subsection (a)(i) of this Section,
1. the Seller's obligations in such Transactions to repurchase all Purchased Mortgage Loans, at the Repurchase Price therefor on the Repurchase Date determined in accordance with subsection (a)(i) of this Section, (1) shall thereupon become immediately due and payable and (2) all Income paid after such exercise or deemed exercise shall be retained by the Buyer and applied to the aggregate unpaid Repurchase Price and any other amounts owed by the Seller hereunder;
2. to the extent permitted by applicable law, the Repurchase Price with respect to each such Transaction shall be increased by the aggregate amount obtained by daily application of, on a 360 day per year basis for the actual number of days during the period from and including the date of the exercise or deemed exercise of such option to but excluding the date of payment of the Repurchase Price as so increased, (x) the Post-Default Rate in effect following an Event of Default to (y) the Repurchase Price for such Transaction as of the Repurchase Date as determined pursuant to subsection (a)(i) of this Section (decreased as of any day by (i) any amounts actually in the possession of Buyer pursuant to clause (C) of this subsection, and (ii) any proceeds from the sale of Purchased Mortgage Loans applied to the Repurchase Price pursuant to subsection (a)(iv) of this Section; and
3. all Income actually received by the Buyer pursuant to Section 5 (excluding any Late Payment Fees paid pursuant to Section 5(a)) shall be applied to the aggregate unpaid Repurchase Price owed by the Seller.
3. Upon the occurrence of one or more Events of Default, the Buyer shall have the right to obtain physical possession of all files of the Seller relating to the Purchased Mortgage Loans and the Repurchase Assets and all documents relating to the Purchased Mortgage Loans which are then or may thereafter come in to the possession of the Seller or any third party acting for the Seller and the Seller shall deliver to the Buyer such assignments as the Buyer shall request. The Buyer shall be entitled to specific performance of all agreements of the Seller contained in the Repurchase Documents.
4. At any time on the Business Day following notice to the Seller (which notice may be the notice given under subsection (a)(i) of this Section), in the event the Seller has not repurchased all Purchased Mortgage Loans, the Buyer may (A) immediately sell, without demand or further notice of any kind, at a public or private sale and at such price or prices as the Buyer may deem satisfactory any or all Purchased Mortgage Loans and the Repurchase Assets subject to a such Transactions hereunder and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the Seller hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Mortgage Loans, to give the Seller credit for such Purchased Mortgage Loans and the Repurchase Assets in an amount equal to the Market Value of the Purchased Mortgage Loans against the aggregate unpaid Repurchase Price and any other amounts owing by the Seller hereunder. The proceeds of any disposition of Purchased Mortgage Loans and the Repurchase Assets shall be applied first to the costs and expenses incurred by the Buyer in connection with the Seller's default; second to costs of cover and/or related Interest Rate Protection Agreements; third to the Repurchase Price; and fourth to any other outstanding obligation of the Seller to the Buyer or its Affiliates.
5. The Seller shall be liable to Buyer for (i) the amount of all reasonable legal or other expenses (including, without limitation, all costs and expenses of Buyer in connection with the enforcement of this Repurchase Agreement or any other agreement evidencing a Transaction, whether in action, suit or litigation or bankruptcy, insolvency or other similar proceeding affecting creditors' rights generally, further including, without limitation, the reasonable fees and expenses of counsel incurred in connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (including all fees, expenses and commissions) of entering into replacement transactions and entering into or terminating Interest Rate Protection Agreement in connection with or as a result of an Event of Default, and (iii) any other loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default in respect of a Transaction.
6. The Buyer shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or applicable law.
2. Buyer may exercise one or more of the remedies available to Buyer immediately upon the occurrence of an Event of Default and at any time thereafter without notice to the Seller. All rights and remedies arising under this Repurchase Agreement as amended from time to time hereunder are cumulative and not exclusive of any other rights or remedies which Buyer may have.
3. Buyer may enforce its rights and remedies hereunder without prior judicial process or hearing, and the Seller hereby expressly waives any defenses the Seller might otherwise have to require Buyer to enforce its rights by judicial process. The Seller also waives any defense (other than a defense of payment or performance) the Seller might otherwise have arising from the use of nonjudicial process, enforcement and sale of all or any portion of the Repurchase Assets, or from any other election of remedies. The Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm's length.
4. To the extent permitted by applicable law, the Seller shall be liable to the Buyer for interest on any amounts owing by the Seller hereunder, from the date the Seller becomes liable for such amounts hereunder until such amounts are (i) paid in full by the Seller or (ii) satisfied in full by the exercise of the Buyer's rights hereunder. Interest on any sum payable by the Seller to the Buyer under this paragraph 14(d) shall be at a rate equal to the Post-Default Rate.

Section 15.    INDEMNIFICATION AND EXPENSES; RECOURSE

1. The Seller agrees to hold the Buyer, and its Affiliates and their officers, directors, employees, agents and advisors (each an "Indemnified Party") harmless from and indemnify any Indemnified Party against all liabilities, losses, damages, judgments, costs and expenses of any kind which may be imposed on, incurred by or asserted against such Indemnified Party (collectively, "Costs"), relating to or arising out of this Repurchase Agreement, any other Repurchase Document or any transaction contemplated hereby or thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Repurchase Agreement, any other Repurchase Document or any transaction contemplated hereby or thereby, that, in each case, results from anything other than the Indemnified Party's gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Seller agrees to hold any Indemnified Party harmless from and indemnify such Indemnified Party against all Costs with respect to all Purchased Mortgage Loans relating to or arising out of any taxes incurred or assessed in connection with the ownership of the Purchased Mortgage Loans, that, in each case, results from anything other than the Indemnified Party's gross negligence or willful misconduct. In any suit, proceeding or action brought by an Indemnified Party in connection with any Purchased Mortgage Loan for any sum owing thereunder, or to enforce any provisions of any Purchased Mortgage Loan, the Seller will save, indemnify and hold such Indemnified Party harmless from and against all expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by the Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from the Seller. The Seller also agrees to reimburse an Indemnified Party as and when billed by such Indemnified Party for all the Indemnified Party's costs and expenses incurred in connection with the enforcement or the preservation of the Buyer's rights under this Repurchase Agreement, any other Repurchase Document or any transaction contemplated hereby or thereby, including without limitation the reasonable fees and disbursements of its counsel.
2. The Seller agrees to pay as and when billed by the Buyer all of the out-of-pocket costs and expenses incurred by the Buyer in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Repurchase Agreement, any other Repurchase Document or any other documents prepared in connection herewith or therewith. The Seller agrees to pay as and when billed by the Buyer all of the reasonable out-of-pocket costs and expenses incurred in connection with the consummation and administration of the transactions contemplated hereby and thereby including without limitation filing fees and all the reasonable fees, disbursements and expenses of counsel to the Buyer which amount shall be deducted from the Purchase Price paid for the first Transaction hereunder. Subject to the limitations set forth in Section 27 hereof, the Seller agrees to pay the Buyer all the reasonable out of pocket due diligence, inspection, testing and review costs and expenses incurred by the Buyer with respect to Purchased Mortgage Loans submitted by the Seller for purchase under this Repurchase Agreement, including, but not limited to, those out of pocket costs and expenses incurred by the Buyer pursuant to Sections 15(b) and 27 hereof.
3. The obligations of the Seller from time to time to pay the Repurchase Price, the Periodic Advance Repurchase Payments, and all other amounts due under this Repurchase Agreement shall be full recourse obligations of the Seller.

Section 16.    Servicing

1. The Sellers, on Buyer's behalf, shall contract with Servicer to, or if a Seller is the Servicer, such Seller shall, service the Mortgage Loans consistent with the degree of skill and care that such Seller customarily requires with respect to similar Mortgage Loans owned or managed by it and in accordance with Accepted Servicing Practices. The Servicer shall (i) comply with all applicable Federal, State and local laws and regulations, (ii) maintain all state and federal licenses necessary for it to perform its servicing responsibilities hereunder and (iii) not impair the rights of Buyer in any Purchased Mortgage Loans or any payment thereunder. Buyer may terminate the servicing of any Purchased Mortgage Loan with the then existing servicer in accordance with Section 16(e) hereof.
2. The Seller shall cause the Servicer to hold or cause to be held all escrow funds collected by the Seller with respect to any Purchased Mortgage Loans in trust accounts and shall apply the same for the purposes for which such funds were collected.
3. The Seller shall cause the Servicer to deposit all collections received by the Seller on account of the Purchased Mortgage Loans in the Collection Account no later than two Business Days following receipt.
4. The Sellers shall provide promptly to Buyer (i) a Servicer Notice addressed to and agreed to by the Servicer of the related Purchased Mortgage Loans, advising such Servicer of such matters as Buyer may reasonably request, including, without limitation, recognition by the Servicer of Buyer's interest in such Purchased Mortgage Loans and the Servicer's agreement that upon receipt of notice of an Event of Default from Buyer, it will follow the instructions of Buyer with respect to the Purchased Mortgage Loans and any related Income with respect thereto.
5. Upon the occurrence of a Default or Event of Default hereunder or a material default under the Servicing Agreement, Buyer shall have the right to immediately terminate the Servicer's right to service the Purchased Mortgage Loans without payment of any penalty or termination fee. The Seller shall cooperate in transferring the servicing of the Purchased Mortgage Loans to a successor servicer appointed by Buyer in its sole discretion.
6. If the Seller should discover that, for any reason whatsoever, any entity responsible to the Seller by contract for managing or servicing any such Purchased Mortgage Loan has failed to perform fully the Seller's obligations under the Repurchase Documents or any of the obligations of such entities with respect to the Purchased Mortgage Loans, the Seller shall promptly notify Buyer.

Section 17.    SINGLE AGREEMENT

Buyer and the Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and that each has been entered into in consideration of the other Transactions. Accordingly, each of Buyer and the Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transaction hereunder; (iii) that payments, deliveries, and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries, and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries, and other transfers may be applied against each other and netted and (iv) to promptly provide notice to the other after any such set off or application.

Section 18.    Set-off

In addition to any rights and remedies of the Buyer hereunder and by law, the Buyer shall have the right, without prior notice to the Seller, any such notice being expressly waived by the Seller to the extent permitted by applicable law, upon any amount becoming due and payable by the Seller hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Buyer or any Affiliate thereof to or for the credit or the account of the Seller or any Affiliate thereof. The Buyer agrees promptly to notify the Seller after any such set-off and application made by the Buyer; provided that the failure to give such notice shall not affect the validity of such set-off and application.

Section 19.    NOTICES AND OTHER COMMUNICATIONS

Except as otherwise expressly permitted by this Repurchase Agreement, all notices, requests and other communications provided for herein (including without limitation any modifications of, or waivers, requests or consents under, this Repurchase Agreement) shall be given or made in writing (including without limitation by telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof or thereof); or, as to any party, at such other address as shall be designated by such party in a written notice to each other party. Except as otherwise provided in this Repurchase Agreement and except for notices given under Section 3 (which shall be effective only on receipt), all such communications shall be deemed to have been duly given when transmitted by telecopy or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid.

Section 20.    ENTIRE AGREEMENT; SEVERABILITY

This Repurchase Agreement, together with the Repurchase Documents, constitute the entire understanding between Buyer and the Seller with respect to the subject matter they cover and shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions involving Purchased Mortgage Loans. By acceptance of this Repurchase Agreement, Buyer and Seller acknowledge that they have not made, and are not relying upon, any statements, representations, promises or undertakings not contained in this Repurchase Agreement. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

Section 21.    NON-ASSIGNABILITY

The rights and obligations of the parties under this Repurchase Agreement and under any Transaction shall not be assigned by the Seller without the prior written consent of Buyer. Subject to the foregoing, this Repurchase Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. Nothing in this Repurchase Agreement express or implied, shall give to any Person, other than the parties to this Repurchase Agreement and their successors hereunder, any benefit of any legal or equitable right, power, remedy or claim under this Repurchase Agreement. Prior to the occurrence of an Event of Default, Buyer may from time to time assign all or a portion of its rights and obligations under this Repurchase Agreement and the Repurchase Documents to an Affiliate of the Buyer without the prior consent of the Seller or to another Person with the prior consent of Seller, which consent shall not be unreasonably withheld or delayed; provided, however that Buyer shall maintain, for review by the Seller upon written request, a register of assignees and a copy of an executed assignment and acceptance by Buyer and assignee ("Assignment and Acceptance"), specifying the percentage or portion of such rights and obligations assigned. Upon such assignment, (a) such assignee shall be a party hereto and to each Repurchase Document to the extent of the percentage or portion set forth in the Assignment and Acceptance, and shall succeed to the applicable rights and obligations of Buyer hereunder, and (b) Buyer shall, to the extent that such rights and obligations have been so assigned by it be released from its obligations hereunder and under the Repurchase Documents. After the occurrence of an Event of Default, Buyer may assign all or a portion of its rights and obligations under this Repurchase Agreement and the Repurchase Documents to any Person without the prior consent of Seller. Unless otherwise stated in the Assignment and Acceptance, the Seller shall continue to take directions solely from Buyer unless otherwise notified by Buyer in writing. Buyer may distribute to any prospective assignee any document or other information delivered to Buyer by Seller.

Subject to acceptance and recording thereof pursuant to the following paragraph of this Section, from and after the effective date specified in each assignment and acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such assignment and acceptance, have the rights and obligations of Buyer under this Agreement. Any assignment or transfer by Buyer of rights or obligations under this Agreement that does not comply with this Section 21 shall be treated for purposes of this Agreement as a sale by such Buyer of a participation in such rights and obligations in accordance with the following paragraph of this Section.

The Seller shall maintain a register (the "Register") on which it will record the Buyer's rights hereunder, and each assignment and acceptance and participation. The Register shall include the names and addresses of Buyers (including all assignees, successors and participants). Failure to make any such recordation, or any error in such recordation shall not affect the Seller's obligations in respect of such rights. If Buyer sells a participation in its rights hereunder, it shall provide Seller, or maintain as agent of Seller, the information described in this paragraph and permit Seller to review such information as reasonably needed for Seller to comply with its obligations under this Agreement or under any applicable law or governmental regulation or procedure.

The Buyer may sell participations to one or more Persons in or to all or a portion of its rights and obligations under this Repurchase Agreement; provided, however, that (i) the Buyer's obligations under this Repurchase Agreement shall remain unchanged, (ii) the Buyer shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) the Seller shall continue to deal solely and directly with the Buyer in connection with the Buyer's rights and obligations under this Repurchase Agreement and the other Repurchase Documents. Notwithstanding the terms of Section 8, each participant of the Buyer shall be entitled to the additional compensation and other rights and protections afforded the Buyer under Section 8 to the same extent as the Buyer would have been entitled to receive them with respect to the participation sold to such participant.

The Buyer may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 21, disclose to the assignee or participant or proposed assignee or participant, as the case may be, any information relating to the Seller or any of its Subsidiaries or to any aspect of the Transactions that has been furnished to the Buyer by or on behalf of the Seller or any of its Subsidiaries; provided that such assignee or participant agrees to hold such information subject to the confidentiality provisions of this Repurchase Agreement.

The Buyer may at any time create a security interest in all or any portion of its rights under this Repurchase Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Buyer from its obligations hereunder.

In the event the Buyer assigns all or a portion of its rights and obligations under this Repurchase Agreement, the parties hereto agree to negotiate in good faith an amendment to this Repurchase Agreement to add Agency provisions similar to those included in repurchase agreements for similar syndicated repurchase facilities.

Section 22.    TERMINABILITY

Each representation and warranty made or deemed to be made by entering into a Transaction, herein or pursuant hereto shall survive the making of such representation and warranty, and the Buyer shall not be deemed to have waived any Default that may arise because any such representation or warranty shall have proved to be false or misleading, notwithstanding that the Buyer may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time the Transaction was made. Notwithstanding any such termination or the occurrence of an Event of Default, all of the representations and warranties and covenants hereunder shall continue and survive. The obligations of the Seller under Section 15 hereof shall survive the termination of this Repurchase Agreement.

Section 23.    GOVERNING LAW

THIS REPURCHASE AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

Section 24.    Submission To Jurisdiction; Waivers

BUYER AND THE SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

1. SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS REPURCHASE AGREEMENT AND THE OTHER REPURCHASE DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
2. CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
3. AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE BUYER SHALL HAVE BEEN NOTIFIED; AND
4. AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
5. THE BUYER AND THE SELLER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS REPURCHASE AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 25.    NO WAIVERS, ETC.

No failure on the part of the Buyer to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under any Repurchase Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any Repurchase Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. An Event of Default shall be deemed to be continuing unless expressly waived by the Buyer in writing.

Section 26.    NETTING

If the Buyer and the Seller are "financial institutions" as now or hereinafter defined in Section 4402 of Title 12 of the United States Code ("Section 4402") and any rules or regulations promulgated thereunder,

1. All amounts to be paid or advanced by one party to or on behalf of the other under this Repurchase Agreement or any Transaction hereunder shall be deemed to be "payment obligations" and all amounts to be received by or on behalf of one party from the other under this Repurchase Agreement or any Transaction hereunder shall be deemed to be "payment entitlements" within the meaning of Section 4402, and this Repurchase Agreement shall be deemed to be a "netting contract" as defined in Section 4402.
2. The payment obligations and the payment entitlements of the parties hereto pursuant to this Repurchase Agreement and any Transaction hereunder shall be netted as follows. In the event that either party (the "Defaulting Party") shall fail to honor any payment obligation under this Repurchase Agreement or any Transaction hereunder, the other party (the "Nondefaulting Party") shall be entitled to reduce the amount of any payment to be made by the Nondefaulting Party to the Defaulting Party by the amount of the payment obligation that the Defaulting Party failed to honor.

Section 27.    DUE DILIGENCE

The Seller acknowledges that Buyer has the right to perform continuing due diligence reviews with respect to the Mortgage Loans and the Seller, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and the Seller agrees that upon reasonable prior notice unless an Event of Default shall have occurred, in which case no notice is required, to the Seller, Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Mortgage Files and any and all documents, records, agreements, instruments or information relating to such Mortgage Loans in the possession or under the control of the Seller and/or the Custodian. The Seller also shall make available to Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Mortgage Files and the Mortgage Loans. Without limiting the generality of the foregoing, the Seller acknowledges that Buyer may purchase Mortgage Loans from the Seller based solely upon the information provided by the Seller to Buyer in the Purchased Mortgage Loan Schedule and the representations, warranties and covenants contained herein, and that Buyer, at its option, has the right at any time to conduct a partial or complete due diligence review on some or all of the Mortgage Loans purchased in a Transaction, including, without limitation, ordering broker's price opinions, new credit reports and new appraisals on the related Mortgaged Properties and otherwise re-generating the information used to originate such Mortgage Loan. Buyer may underwrite such Mortgage Loans itself or engage a mutually agreed upon third party underwriter to perform such underwriting. The Seller agrees to cooperate with Buyer and any third party underwriter in connection with such underwriting, including, but not limited to, providing Buyer and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Mortgage Loans in the possession, or under the control, of the Seller. The Seller further agrees that the Seller shall pay all out-of-pocket costs and expenses incurred by Buyer in connection with Buyer's activities pursuant to this Section 27 ("Due Diligence Costs"); provided, that such Due Diligence Costs shall not exceed $20,000 per calendar year unless a Default or Event of Default shall have occurred, in which event Buyer shall have the right to perform due diligence, at the sole expense of Seller without regard to the dollar limitation set forth herein.

Section 28.    BUYER'S APPOINTMENT AS ATTORNEY-IN-FACT

1. The Seller hereby irrevocably constitutes and appoints the Buyer and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Seller and in the name of the Seller or in its own name, from time to time in the Buyer's discretion, for the purpose of carrying out the terms of this Repurchase Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be reasonably necessary or desirable to accomplish the purposes of this Repurchase Agreement, and, without limiting the generality of the foregoing, the Seller hereby gives the Buyer the power and right, on behalf of the Seller, without assent by, but with notice to, the Seller, if an Event of Default shall have occurred and be continuing, to do the following:
1. in the name of the Seller, or in its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any other Repurchase Assets and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Buyer for the purpose of collecting any and all such moneys due with respect to any other Repurchase Assets whenever payable;
2. to pay or discharge taxes and Liens levied or placed on or threatened against the Repurchase Assets;
3. (A) to direct any party liable for any payment under any Repurchase Assets to make payment of any and all moneys due or to become due thereunder directly to the Buyer or as the Buyer shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Repurchase Assets; (C) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any Repurchase Assets; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Repurchase Assets or any proceeds thereof and to enforce any other right in respect of any Repurchase Assets; (E) to defend any suit, action or proceeding brought against the Seller with respect to any Repurchase Assets; (F) to settle, compromise or adjust any suit, action or proceeding described in clause (E) above and, in connection therewith, to give such discharges or releases as the Buyer may deem appropriate; and (G) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Repurchase Assets as fully and completely as though the Buyer were the absolute owner thereof for all purposes, and to do, at the Buyer's option and the Seller's expense, at any time, and from time to time, all acts and things which the Buyer deems necessary to protect, preserve or realize upon the Repurchase Assets and the Buyer's Liens thereon and to effect the intent of this Repurchase Agreement, all as fully and effectively as the Seller might do.
2. The Seller hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.
3. The Seller also authorizes the Buyer, if an Event of Default shall have occurred, from time to time, to execute, in connection with any sale provided for in Section 14 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Repurchase Assets.
4. The powers conferred on the Buyer hereunder are solely to protect the Buyer's interests in the Repurchase Assets and shall not impose any duty upon it to exercise any such powers. The Buyer shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Seller for any act or failure to act hereunder, except for its or their own gross negligence or willful misconduct.

Section 29.    MISCELLANEOUS

1. Counterparts. This Repurchase Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Repurchase Agreement by signing any such counterpart.
2. Captions. The captions and headings appearing herein are for included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Repurchase Agreement.
3. Acknowledgment. The Seller hereby acknowledges that:
1. it has been advised by counsel in the negotiation, execution and delivery of this Repurchase Agreement and the other Repurchase Documents;
2. the Buyer has no fiduciary relationship to the Seller; and
3. no joint venture exists between the Buyer and the Seller.

Section 30.    CONFIDENTIALITY

The Buyer and the Seller hereby acknowledge and agree that all oral, written or computer-readable information provided by one party to any other regarding the terms set forth in any of the Repurchase Documents or the Transactions contemplated thereby (the "Confidential Terms") shall be kept confidential and shall not be divulged to any party without the prior written consent of such other party except to the extent that (i) it is necessary to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies or regulatory bodies or in order to comply with any applicable federal or state laws, (ii) any of the Confidential Terms are in the public domain other than due to a breach of this covenant, or (iii) in the event of an Event of Default the Buyer determines such information to be necessary or desirable to disclose in connection with the marketing and sales of the Purchased Mortgage Loans or otherwise to enforce or exercise the Buyer's rights hereunder. The provisions set forth in this Section 30 shall survive the termination of this Repurchase Agreement. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Repurchase Document, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal income tax treatment of the Transactions, any fact relevant to understanding the federal tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal income tax treatment; provided that Seller may not disclose the name of or identifying information with respect to Buyer or Agent or any pricing terms (including, without limitation, the Pricing Rate, Purchase Price Percentage and Purchase Price) or other nonpublic business or financial information (including any sublimits and financial covenants) that is unrelated to the purported or claimed federal income tax treatment of the Transactions and is not relevant to understanding the purported or claimed federal income tax treatment of the Transactions, without the prior written consent of the Buyer."

Section 31.    Intent

1. The parties recognize that each Transaction is a "repurchase agreement" as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Mortgage Loans subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a "securities contract" as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).
2. It is understood that either party's right to liquidate Mortgage Loans delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended.
3. The parties agree and acknowledge that if a party hereto is an "insured depository institution," as such term is defined in the Federal Deposit Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a "qualified financial contract," as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).
4. It is understood that this Repurchase Agreement constitutes a "netting contract" as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a "covered contractual payment entitlement" or "covered contractual payment obligation", respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a "financial institution" as that term is defined in FDICIA).

Section 32.    DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

The parties acknowledge that they have been advised that:

1. in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission ("SEC") under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not protect the other party with respect to any Transaction hereunder;
2. in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and
3. in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.

Section 33.    CONFLICTS

In the event of any conflict between the terms of this Repurchase Agreement, any other Repurchase Document and any Confirmation, the documents shall control in the following order of priority: first, the terms of the Confirmation shall prevail, then the terms of this Repurchase Agreement shall prevail, and then the terms of the Repurchase Documents shall prevail.

Section 34.    AUTHORIZATIONS

Any of the persons whose signatures and titles appear on Exhibit X are authorized, acting singly, to act for Seller or Buyer, as the case may be, under this Repurchase Agreement.

Section 35.    ACKNOWLEDGEMENT OF ANTI-PREDATORY LENDING POLICIES

Buyer has in place internal policies and procedures that expressly prohibit its purchase of any High Cost Mortgage Loan.

[THIS SPACE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have entered into this Repurchase Agreement as of the date set forth above.

BUYER:

MERRILL LYNCH MORTGAGE CAPITAL INC.

By: /s/ John Winchester
Name:
Title:

Address for Notices:

4 World Financial Center
10^th Floor
New York, New York 10080

Attention: James B. Cason
Telecopier No.: (212) 449-3673
Telephone No.: (212) 449-1219

SELLER:

E-LOAN, INC.

By: /s/ Matt Roberts
Name: Matt Roberts
Title: CFO

Address for Notices:
6230 Stoneridge Mall Road
Pleasanton, CA 94588

Attention: Ed. Giedgowd
Telecopier No.: 925-520-1099
Telephone No: 925-847-6331

SCHEDULE 1

REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS

The Seller makes the following representations and warranties to the Buyer, with respect to each Mortgage Loan, that as of the Purchase Date for the purchase of any Purchased Mortgage Loans by the Buyer from the Seller and as of the date of this Repurchase Agreement and any Transaction hereunder relating to such Mortgage Loan is outstanding and at all times while the Repurchase Documents and any Transaction hereunder is in full force and effect. For purposes of this Schedule 1 and the representations and warranties set forth herein, a breach of a representation or warranty shall be deemed to have been cured with respect to a Mortgage Loan if and when the Seller has taken or caused to be taken action such that the event, circumstance or condition that gave rise to such breach no longer adversely affects such Mortgage Loan. With respect to those representations and warranties which are made to the best of the Seller's knowledge, if it is discovered by the Seller or the Buyer that the substance of such representation and warranty is inaccurate, notwithstanding the Seller's lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty.

(a)    Mortgage Loans as Described. The information set forth in the related Mortgage Loan Schedule is complete, true and correct;

(b)    Payments Current. All payments required to be made up to the close of business on the Purchase Date for such Mortgage Loan under the terms of the Mortgage Note have been made and credited. No payment required under the Mortgage Loan is delinquent nor has any payment under the Mortgage Loan been delinquent at any time since the origination of the Mortgage Loan. The first Monthly Payment shall be made, or shall have been made, with respect to the Mortgage Loan on its Due Date or within the grace period, all in accordance with the terms of the related Mortgage Note;

(c)    No Outstanding Charges. There are no delinquent taxes, ground rents, water charges, sewer rents, governmental assessments, municipal charges, insurance premiums, leasehold payments, including assessments payable in future installments or other outstanding charges affecting the related Mortgaged Property. The Seller has not advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required under the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage Loan proceeds, whichever is later, to the day which precedes by no more than sixty (60) days the Due Date of the first installment of principal and interest;

(d)    Original Terms Unmodified. The terms of the Mortgage Note and the Mortgage have not been impaired, waived, altered or modified in any respect, except by written instruments, recorded in the applicable public recording office if necessary to maintain the lien priority of the Mortgage, and which have been delivered to the Custodian; the substance of any such waiver, alteration or modification has been approved by the insurer under the Primary Insurance Policy, if any, and the title insurer, to the extent required by the related policy, and is reflected on the related Mortgage Loan Schedule. No instrument of waiver, alteration or modification has been executed, and no Mortgagor has been released, in whole or in part, except in connection with an assumption agreement approved by the insurer under the Primary Insurance Policy, if any, the title insurer, to the extent required by the policy, and which assumption agreement has been delivered to the Custodian and the terms of which are reflected in the related Mortgage Loan Schedule;

(e)    No Defenses. The Mortgage Note and the Mortgage are not subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of the Mortgage Note and the Mortgage, or the exercise of any right thereunder, render the Mortgage unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto, and no Mortgagor was a debtor of any state or federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was originated;

(f)    Hazard Insurance. The Mortgaged Property is insured by a fire and extended perils insurance policy, issued by a Qualified Insurer, and such other hazards as are customary in the area where the Mortgaged Property is located, and to the extent required by Seller as of the date of origination consistent with the Underwriting Guidelines, against earthquake and other risks insured against by Persons operating like properties in the locality of the Mortgaged Property, in an amount not less than the greatest of (i) 100% of the replacement cost of all improvements to the Mortgaged Property, (ii) the outstanding principal balance of the Mortgage Loan, or (iii) the amount necessary to avoid the operation of any co-insurance provisions with respect to the Mortgaged Property, and consistent with the amount that would have been required as of the date of origination in accordance with the Underwriting Guidelines. If any portion of the Mortgaged Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (1) the outstanding principal balance of the Mortgage Loan (2) the full insurable value of the Mortgaged Property, and (3) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1974. All such insurance policies (collectively, the "hazard insurance policy") contain a standard mortgagee clause naming Seller, its successors and assigns (including, without limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled without 30 days' prior written notice to the mortgagee. No such notice has been received by Seller. All premiums on such insurance policy have been paid. The related Mortgage obligates the Mortgagor to maintain all such insurance and, at such Mortgagor's failure to do so, authorizes the mortgagee to maintain such insurance at the Mortgagor's cost and expense and to seek reimbursement therefor from such Mortgagor. Where required by state law or regulation, the Mortgagor has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a "master" or "blanket" hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. The hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. Seller has not engaged in, and has no knowledge of the Mortgagor's having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Seller;

(g)    Compliance with Applicable Law. Any and all requirements of any federal, state or local law including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws applicable to the Mortgage Loan have been complied with, the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations, and Seller shall maintain or shall cause its agent to maintain in its possession, available for the inspection of Buyer, and shall deliver to Buyer, upon demand, evidence of compliance with all such requirements;

(h)    No Satisfaction of Mortgage. The Mortgage has not been satisfied, cancelled, subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such satisfaction, cancellation, subordination, rescission or release. The Seller has not waived the performance by the Mortgagor of any action, if the Mortgagor's failure to perform such action would cause the Mortgage Loan to be in default, nor has the Seller waived any default resulting from any action or inaction by the Mortgagor;

(i)    Valid First or Second Lien. The Mortgage is a valid, subsisting, enforceable and perfected (a) with respect to each first lien Mortgage Loan, first priority lien and first priority security interest, or (b) with respect to each Second Lien Mortgage Loan, second priority lien and second priority security interest, in each case, on the real property included in the Mortgaged Property, including all buildings on the Mortgaged Property and all installations and mechanical, electrical, plumbing, heating and air conditioning systems located in or annexed to such buildings, and all additions, alterations and replacements made at any time with respect to the foregoing. The lien of the Mortgage is subject only to:

1. the lien of current real property taxes and assessments not yet due and payable;
2. covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording acceptable to prudent mortgage lending institutions generally and specifically referred to in Buyer's title insurance policy delivered to the originator of the Mortgage Loan and (a) referred to or otherwise considered in the appraisal made for the originator of the Mortgage Loan or (b) which do not adversely affect the Appraised Value of the Mortgaged Property set forth in such appraisal;
3. other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by the Mortgage or the use, enjoyment, value or marketability of the related Mortgaged Property; and
4. with respect to each Mortgage Loan which is a Second Lien Mortgage Loan, a first lien on the Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, subsisting and enforceable (a) with respect to each first lien Mortgage Loan, first priority lien and first priority security interest, or (b) with respect to each Second Lien Mortgage Loan, second priority lien and second priority security interest, in each case, on the property described therein and Seller has full right to pledge and assign the same to Buyer. The Mortgaged Property was not, as of the date of origination of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or other security instrument creating a lien subordinate to the lien of the Mortgage;

(j)    Validity of Mortgage Documents. The Mortgage Note and the Mortgage and any other agreement executed and delivered by a Mortgagor or guarantor, if applicable, in connection with a Mortgage Loan are genuine, and each is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms. All parties to the Mortgage Note, the Mortgage and any other such related agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage and any such agreement, and the Mortgage Note, the Mortgage and any other such related agreement have been duly and properly executed by such related parties. No fraud, error, omission, misrepresentation, negligence or similar occurrence with respect to a Mortgage Loan has taken place on the part of any Person, including, without limitation, the Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan. Seller has reviewed all of the documents constituting the Mortgage File and has made such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein. To the best of Seller's knowledge, except as disclosed to Buyer in writing, all tax identifications and property descriptions are legally sufficient; and tax segregation, where required, has been completed;

(k)    Full Disbursement of Proceeds. The proceeds of the Mortgage Loan have been fully disbursed to or for the account of the Mortgagor and, except with respect to any HELOC, there is no obligation for the Mortgagee to advance additional funds thereunder and any and all requirements as to completion of any on-site or off-site improvement and as to disbursements of any escrow funds therefor have been complied with. All costs, fees and expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage have been paid, and the Mortgagor is not entitled to any refund of any amounts paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage;

(l)    Ownership. Seller has full right to sell the Mortgage Loan to Buyer free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and has full right and authority subject to no interest or participation of, or agreement with, any other party, to sell each Mortgage Loan pursuant to this Repurchase Agreement and following the sale of each Mortgage Loan, Buyer will own such Mortgage Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest except any such security interest created pursuant to the terms of this Repurchase Agreement;

(m)    Doing Business. All parties which have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (i) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (ii) either (A) organized under the laws of such state, (B) qualified to do business in such state, (C) a federal savings and loan association, a savings bank or a national bank having a principal office in such state, or (D) not doing business in such state;

(n)    Title Insurance. The Mortgage Loan is covered by either (i) an attorney's opinion of title and abstract of title, the form and substance of which is acceptable to prudent mortgage lending institutions making mortgage loans in the area wherein the Mortgaged Property is located or (ii) an ALTA lender's title insurance policy or other generally acceptable form of policy or insurance acceptable to Fannie Mae or Freddie Mac and each such title insurance policy is issued by a title insurer acceptable to Fannie Mae or Freddie Mac and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring Seller, its successors and assigns, as to the first priority lien or second priority lien, as applicable of the Mortgage, as applicable in the original principal amount of the Mortgage Loan (or to the extent a Mortgage Note provides for negative amortization, the maximum amount of negative amortization in accordance with the Mortgage), subject only to the exceptions contained in clauses (i), (ii), (iii), and (iv) of paragraph (i) of this Schedule 1, and in the case of adjustable rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly Payment. Where required by state law or regulation, the Mortgagor has been given the opportunity to choose the carrier of the required mortgage title insurance. Additionally, such lender's title insurance policy affirmatively insures ingress and egress and against encroachments by or upon the Mortgaged Property or any interest therein. The title policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or to replace the standard survey exception with a specific survey reading. Seller, its successors and assigns, are the sole insureds of such lender's title insurance policy, and such lender's title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Repurchase Agreement. No claims have been made under such lender's title insurance policy, and no prior holder or servicer of the related Mortgage, including Seller, has done, by act or omission, anything which would impair the coverage of such lender's title insurance policy, including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Seller;

(o)    No Defaults. There is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration, and the Seller has not waived any default, breach, violation or event of acceleration;

(p)    No Mechanics' Liens. There are no mechanics' or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under law could give rise to such lien) affecting the related Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the related Mortgage;

(q)    Location of Improvements; No Encroachments. All improvements which were considered in determining the Appraised Value of the related Mortgaged Property lay wholly within the boundaries and building restriction lines of the Mortgaged Property, and no improvements on adjoining properties encroach upon the Mortgaged Property. No improvement located on or being part of the Mortgage Property is in violation of any applicable zoning law or regulation;

(r)    Origination. The Mortgage Loan was originated by or in conjunction with a mortgagee approved by the Secretary of Housing and Urban Development pursuant to s 203 and 211 of the National Housing Act, a lender approved by Fannie Mae, a seller/servicer approved by Freddie Mac, a savings and loan association, a savings bank, a commercial bank, credit union, insurance company or similar banking institution which is supervised and examined by a federal or state authority. Principal payments on the Mortgage Loan commenced no more than 60 days after funds were disbursed in connection with the Mortgage Loan. The Mortgage Interest Rate is adjusted, with respect to adjustable rate Mortgage Loans, on each Interest Rate Adjustment Date to equal the Index plus the Gross Margin (rounded up or down to the nearest .125%), subject to the Mortgage Interest Rate Cap. Other than with respect to HELOCs, the Mortgage Note is payable on the first day of each month in equal monthly installments of principal and interest, which installments of interest, with respect to adjustable rate Mortgage Loans, are subject to change due to the adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment Date, with interest calculated and payable in arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity date, over an original term of not more than 30 years from commencement of amortization. The Due Date of the first payment under the Mortgage Note is no more than 60 days from the date of the Mortgage Note;

(s)    Payment Provisions. The Mortgage Note does not permit negative amortization;

(t)    Customary Provisions. The Mortgage Note has a stated maturity. The Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage Loan will be able to deliver good and merchantable title to the Mortgaged Property. There is no homestead or other exemption available to a Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage. The Mortgage Note and Mortgage are on forms acceptable to Freddie Mac or Fannie Mae; each HELOC was underwritten in accordance with the Underwriting Guidelines in effect at the time that the Mortgage Loan was written.

(u)    Collection Practices; Escrow Deposits; Interest Rate Adjustments. The origination and collection practices used by the Seller with respect to each Mortgage Note and Mortgage have been in all respects legal, proper, prudent and customary in the mortgage origination and servicing industry. The Mortgage Loan has been serviced by the Seller and any predecessor servicer in accordance with the terms of the Mortgage Note. With respect to escrow deposits and Escrow Payments, if any, all such payments are in the possession of, or under the control of, the Seller and there exist no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made. No escrow deposits or Escrow Payments or other charges or payments due the Seller have been capitalized under any Mortgage or the related Mortgage Note and no such escrow deposits or Escrow Payments are being held by the Seller for any work on a Mortgaged Property which has not been completed. All Mortgage Interest Rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note. Any interest required to be paid pursuant to state and local law has been properly paid and credited;

(v)    Mortgaged Property Undamaged. The Mortgaged Property is free of damage by fire, earthquake or earth movement, windstorm, flood, tornado or other casualty and waste, and there is no proceeding pending for the total or partial condemnation thereof;

(w)    Customary Provisions. The Mortgagor has not notified the Seller and the Seller has no knowledge of any relief requested or allowed to the Mortgagor under the Soldiers and Sailors Civil Relief Act of 1940;

(x)    Conformance with Agency Standards. The Mortgage Loan was underwritten in accordance with the Underwriting Guidelines in effect at the time the Mortgage Loan was originated which underwriting standards, and, other than with respect to the HELOCs, satisfy the standards of Fannie Mae and Freddie Mac under one of their respective home mortgage purchase programs (except that the principal balance of Jumbo Mortgage Loans may have exceeded the limits of Fannie Mae and Freddie Mac). Other than with respect to HELOCs, the Mortgage Note and Mortgage are on forms acceptable to Fannie Mae and Freddie Mac;

(y)    No Additional Collateral. The Mortgage Note is not and has not been secured by any collateral except the lien of the corresponding Mortgage on the Mortgaged Property and the security interest of any applicable security agreement or chattel mortgage referred to in (j) above;

(z)    Appraisal. Except with respect to the HELOCs originated in accordance with the Underwriting Guidelines, the Mortgage File contains an appraisal of the related Mortgaged Property which satisfied the standards of Fannie Mae and Freddie Mac and was made and signed, prior to the approval of the Mortgage Loan application, by a qualified appraiser, duly appointed by the Seller, who had no interest, direct or indirect in the Mortgaged Property or in any loan made on the security thereof, whose compensation is not affected by the approval or disapproval of the Mortgage Loan and who met the minimum qualifications of Fannie Mae and Freddie Mac. Each appraisal of the Mortgage Loan was made in accordance with the requirements of Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date the Mortgage Loan was originated;

(aa)    Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in the Mortgage, and no fees or expenses are or will become payable by the Buyer to the trustee under the deed of trust, except in connection with a trustee's sale after default by the Mortgagor;

(bb)    No Buydown Provisions; No Graduated Payments or Contingent Interests. Other than those Mortgage Loans acceptable for purchase by an Agency, no Mortgage Loan contains provisions pursuant to which Monthly Payments are (a) paid or partially paid with funds deposited in any separate account established by the Seller, the Mortgagor, or anyone on behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or (c) contains any other similar provisions which may constitute a "buydown" provision. The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared appreciation or other contingent interest feature;

(cc)    Mortgagor Acknowledgment. The Mortgagor has executed a statement to the effect that the Mortgagor has received all disclosure materials required by applicable law with respect to the making of fixed rate mortgage loans in the case of Fixed Rate Mortgage Loans, and adjustable rate mortgage loans in the case of Adjustable Rate Mortgage Loans and rescission materials with respect to Refinanced Mortgage Loans, and such statement is and will remain in the Mortgage File;

(dd)    No Construction Loans. No Mortgage Loan was made in connection with (a) the construction or rehabilitation of a Mortgaged Property or (b) facilitating the trade-in or exchange of a Mortgaged Property;

(ee)    Acceptable Investment. The Seller has no knowledge of any circumstances or condition with respect to the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor's credit standing that can reasonably be expected to cause the Mortgage Loan to be an unacceptable investment, cause the Mortgage Loan to become delinquent, or adversely affect the value of the Mortgage Loan;

(ff)    LTV, PMI Policy. No Jumbo Mortgage Loan or Sub- Prime Mortgage Loan has an LTV ("loan-to-value" ratio) in excess of 95%. No HELOC has a "combined loan-to-value" ratio in excess of 100%. Except with respect to HELOCs, each Mortgage Loan with an LTV at origination in excess of 80% is and will be subject to a lender paid Mortgage Insurance Policy or a Primary Mortgage Insurance Policy, issued by a Qualified Insurer, which insures that portion of the Mortgage Loan in excess of the portion of the Appraised Value of the Mortgaged Property required by the applicable Underwriting Guidelines or Agency. All provisions of such Primary Insurance Policy have been and are being complied with, such policy is in full force and effect, and all premiums due thereunder have been paid. Any Mortgage subject to any such Primary Insurance Policy obligates the Mortgagor thereunder to maintain such insurance and to pay all premiums and charges in connection therewith. The Mortgage Interest Rate for the Mortgage Loan does not include any such insurance premium;

(gg)    Capitalization of Interest. The Mortgage Note does not by its terms provide for the capitalization or forbearance of interest.

(hh)    No Equity Participation. No document relating to the Mortgage Loan provides for any contingent or additional interest in the form of participation in the cash flow of the Mortgaged Property or a sharing in the appreciation of the value of the Mortgaged Property. The indebtedness evidenced by the Mortgage Note is not convertible to an ownership interest in the Mortgaged Property or the Mortgagor and Seller has not financed nor does it own directly or indirectly, any equity of any form in the Mortgaged Property or the Mortgagor.

(ii)    Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have not been and shall not be used to satisfy, in whole or in part, any debt owed or owing by the Mortgagor to Seller or any Affiliate or correspondent of Seller, except in connection with a refinanced Mortgage Loan.

(jj)    Origination Date. The origination date is no earlier than sixty (60) days prior to the related Purchase Date.

(kk)    No Exception. The Custodian has not noted any material exceptions on a Mortgage Loan Schedule and Exception Report with respect to the Mortgage Loan which would materially adversely affect the Mortgage Loan or Buyer's interest in the Mortgage Loan.

(ll)    Occupancy of Mortgaged Property. The Mortgaged Property is lawfully occupied under applicable law; all inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy, have been made or obtained from the appropriate authorities;

(mm)    No Misrepresentation or Fraud. No error, omission, misrepresentation, negligence, fraud or similar occurrence with respect to a Mortgage Loan has taken place on the part of any person, including without limitation the Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan;

(nn)    Transfer of Mortgage Loans. Except with respect to Mortgage Loans registered with MERS, the Assignment of Mortgage is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located;

(oo)    Consolidated Future Advances. Any principal advances made to the Mortgagor prior to the Cut-off Date have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. Other than with respect to Second Lien Mortgage Loans, the lien of the Mortgage securing the consolidated principal amount is expressly insured as having first lien priority by a title insurance policy, an endorsement to the policy insuring the mortgagee's consolidated interest or by other title evidence acceptable to Fannie Mae and Freddie Mac. The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan;

(pp)    No Balloon Payment. No Mortgage Loan has a balloon payment feature;

(qq)    Condominiums/ Planned Unit Developments. If the Residential Dwelling on the Mortgaged Property is a condominium unit or a unit in a planned unit development (other than a de minimis planned unit development) such condominium or planned unit development project meets the eligibility requirements of Fannie Mae and Freddie Mac including Fannie Mae eligibility requirements for sale to Fannie Mae or is located in a condominium or planned unit development project which has received Fannie Mae project approval and the representations and warranties required by Fannie Mae with respect to such condominium or planned unit development have been made and remain true and correct in all respects;

(rr)    Downpayment. The source of the down payment with respect to each Mortgage Loan has been fully verified by the Seller;

(ss)    Calculation of Interest. Other than with respect to HELOCs, interest on each Mortgage Loan is calculated on the basis of a 360- day year consisting of twelve 30-day months; Interest on each HELOC is calculated on the basis of a 365-day year;

(tt)    Environmental Matters. The Mortgaged Property is in material compliance with all applicable local, state and federal environmental laws, rules or regulations pertaining to environmental hazards including, without limitation, asbestos, and neither the Seller nor, to the Seller's knowledge, the related Mortgagor, has received any notice of any violation or potential violation of such law nor is there any pending action or proceeding directly involving any Mortgaged Property of which the Seller is aware in which compliance with any environmental law, rule or regulation is an issue;

(uu)    Predatory Lending Regulations; High Cost Loans. No Mortgage Loan is a High Cost Mortgage Loan.

(vv)    Location and Type of Mortgaged Property. The Mortgaged Property is a fee simple property or subject to a Ground Lease located in the state identified in the Mortgage Loan Schedule and consists of a parcel of real property with a detached single family residence erected thereon, or a two- to four-family dwelling, or an individual condominium unit in a low-rise condominium project, or an individual unit in a planned unit development, provided, however, that any condominium project or planned unit development shall conform with the applicable Fannie Mae and Freddie Mac requirements regarding such dwellings, and no residence or dwelling is a mobile home or a manufactured dwelling. No portion of the Mortgaged Property is used for commercial purposes;

(ww)    Due on Sale. The Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the Mortgage thereunder;

(xx)    No Denial of Insurance. No action, inaction, or event has occurred and no state of facts exists or has existed that has resulted or will result in the exclusion from, denial of, or defense to coverage under any applicable pool insurance policy, special hazard insurance policy, PMI Policy or bankruptcy bond, irrespective of the cause of such failure of coverage. In connection with the placement of any such insurance, no commission, fee, or other compensation has been or will be received by the Seller or any designee of the Seller or any corporation in which the Seller or any officer, director, or employee had a financial interest at the time of placement of such insurance. The Seller has caused or will cause to be performed any and all acts required to preserve the rights and remedies of the Buyer in any insurance policies applicable to the Mortgage Loans including, without limitation, any necessary notifications of insurers, assignments of policies or interests therein, and establishments of coinsured, joint loss payee and mortgagee rights in favor of the Buyer;

(yy)    Flood Certification Contract. If any portion of the Mortgaged Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is available, the Seller has obtained a life of loan, transferable flood certification contract for each Mortgage Loan and such contract is assignable without penalty, premium or cost to the Buyer;

(zz)    Tax Service Contract. Other than with respect to HELOCs, the Seller has obtained, or will obtain, a life of loan, transferable real estate Tax Service Contract with an Approved Tax Service Contract Provider on each Mortgage Loan and such contract is assignable without penalty, premium or cost to the Buyer;

(aaa)    Recordation. Each original Mortgage was recorded and, except for those Mortgage Loans subject to the MERS identification system, all subsequent assignments of the original Mortgage (other than the assignment to the Buyer) have been recorded in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of the Seller, or is in the process of being recorded;

(bbb)    Simple Interest Mortgage Loans. Other than with respect to HELOCs, none of the Mortgage Loans are simple interest Mortgage Loans;

(ccc)    Documents Genuine. Such Purchased Mortgage Loan and all accompanying collateral documents are complete and authentic and all signatures thereon are genuine. Such Purchased Mortgage Loan is a "closed" loan fully funded by the Seller (other than with respect to HELOCs) and held in Seller's name.

(ddd)    Bona Fide Loan. Such Purchased Mortgage Loan arose from a bona fide loan, complying with all applicable State and Federal laws and regulations, to persons having legal capacity to contract and is not subject to any defense, set-off or counterclaim.

(eee)    Other Encumbrances. To the best of Seller's knowledge, any property subject to any security interest given in connection with such Purchased Mortgage Loan is not subject to any other encumbrances other than a stated first mortgage, if applicable, and encumbrances which may be allowed under the Underwriting Guidelines.

(fff)    Description. Each Purchased Mortgage Loan conforms to the description thereof as set forth on the related Mortgage Loan Schedule and Exception Report delivered to the Custodian and Buyer.

(ggg)    Located in U.S. No collateral (including, without limitation, the related real property and the dwellings thereon and otherwise) relating to a Purchased Mortgage Loan is located in any jurisdiction other than in one of the fifty (50) states of the United States of America or the District of Columbia.

(hhh)    Prepayment Penalty. With respect to each Mortgage Loan that has a Prepayment Penalty feature, each such Prepayment Penalty is enforceable and will be enforced by the Seller, and each Prepayment Penalty is permitted pursuant to federal, state and local law. No Mortgage Loan will impose a Prepayment Penalty for a term in excess of five years from the date such Mortgage Loan was originated. Except as otherwise set forth on the Mortgage Loan Schedule, with respect to each Mortgage Loan that contains a Prepayment Penalty, such Prepayment Penalty is not in excess of the maximum amount permitted under applicable law;

(iii)    Servicing Practices. Each Mortgage Loan has been serviced in all material respects in compliance with those mortgage servicing practices (including collection procedures) of prudent mortgage banking institutions which service mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located; and

(jjj)    Single-Premium Credit Life Insurance. None of the proceeds of the Mortgage Loan were used to finance single-premium credit insurance policies.

(kkk)    Takeout Commitment. If a Conforming Mortgage Loan or Jumbo Mortgage Loan is covered by a Take-out Commitment, it does not exceed the availability under such Take-out Commitment (taking into consideration mortgage loans which have been purchased by the respective Take- out Investor under the Take-out Commitment and mortgage loan which Seller has identified to Buyer as covered by such Take-out Commitment) and conforms to the requirements and the specifications set forth in such Take-out Commitment and the related regulations, rules, requirements and/or handbooks of the applicable Take-out Investor and is eligible for sale to and insurance or guaranty by, respectively the applicable Take-out Investor and applicable insurer.

Each Takeout Commitment is a legal, valid and binding obligation of Seller enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(lll)    FHA Mortgage Insurance; VA Loan Guaranty. With respect to the FHA Loans, the FHA Mortgage Insurance Contract is in full force and effect and there exists no impairment to full recovery without indemnity to the Department of Housing and Urban Development or the FHA under FHA Mortgage Insurance. With respect to the VA Loans, the VA Loan Guaranty Agreement is in full force and effect to the maximum extent stated therein. All necessary steps have been taken to keep such guaranty or insurance valid, binding and enforceable and each of such is the binding, valid and enforceable obligation of the FHA and the VA, respectively, to the full extent thereof, without surcharge, set-off or defense. Each FHA Loan and VA Loan was originated in accordance with the criteria of an Agency for purchase of such Mortgage Loans. Each Mortgage Loan which is represented to Buyer to have, or to be eligible for, FHA insurance is insured, or eligible to be insured, pursuant to the National Housing Act. Each Mortgage Loan which is represented by Seller to be guaranteed, or to be eligible for guaranty, by the VA is guaranteed, or eligible to be guaranteed, under the provisions of Chapter 37 of Title 38 of the United States Code. As to each FHA insurance certificate or each VA guaranty certificate, Seller has complied with applicable provisions of the insurance for guaranty contract and federal statutes and regulations, all premiums or other charges due in connection with such insurance or guarantee have been paid, there has been no act or omission which would or may invalidate any such insurance or guaranty, and the insurance or guaranty is, or when issued, will be, in full force and effect with respect to each Mortgage Loan. There are no defenses, counterclaims, or rights of setoff affecting the Mortgage Loans or affecting the validity or enforceability of any private mortgage insurance or FHA insurance applicable to the Mortgage Loans or any VA guaranty with respect to the Mortgage Loans.

*The remaining exhibits and schedules have been omitted in accordance with Item 601 of Regulation S-K, and will be provided upon request.

EX-10.68

Exhibit 10.68

SEPARATION AGREEMENT AND RELEASE OF CLAIMS

THIS SEPARATION AGREEMENT AND RELEASE OF CLAIMS (the "Agreement") is entered into by and between E-LOAN, INC., a Delaware corporation ("Company"), and JOSEPH J. KENNEDY ("Executive").

R E C I T A L S:

WHEREAS, Executive is currently an officer, director and employee of the Company;

WHEREAS, the parties wish to terminate Executive's employment and service on the Company's Board of Directors without dispute and pursuant to the following terms and conditions.

NOW, THEREFORE, in consideration of the mutual promises and undertakings herein, it is mutually agreed as follows:

A G R E E M E N T:

1. Termination of Employment. Executive hereby voluntarily resigns as the Company's President and Chief Operating Officer, and as a director of the Company, and the Company accepts his resignation, effective as of January 29, 2004. In addition, Executive hereby voluntarily resigns as an employee of the Company, and the Company accepts his resignation as an employee effective April 12, 2004 ("Termination Date"). As of the Termination Date, Executive's employment and all positions and assignments to and/or with the Company as well as all duties, responsibilities and authorities with the Company, will terminate.
2. Payments and Vesting of Stock Options.
1. Accrued Salary and Expenses. As of the Termination Date, the Company will have paid to Executive all accrued but unpaid salary, bonus, compensation time, vacation, and unreimbursed business expenses through the Termination Date. Upon finalizing the calculation of bonus earned on the Company's 2003 bonus plan, additional monies earned beyond those already paid to Executive in December 2003 will be paid in February, 2004. If monies paid in December 2003 represent overpayment of the actual bonus earned by Executive, the amount of such overpayment will be repaid to the Company by Executive through a deduction from the separation payment set forth in Section 2(b) below.
2. Separation Pay. The Company will pay to Executive upon the Termination Date, as separation pay, the equivalent of 12 months of the Executive's current base salary (less required deductions and withholdings, and not including any bonus) in an aggregate amount equal to $230,000.
3. Stock Options. Executive and the Company acknowledge and agree that (i) as of the date hereof Executive has been granted stock options (the "Options") under the Company's 1997 Stock Plan (the "Plan") to purchase an aggregate of 1,422,519 shares of the Company's common stock (the "Options"),1,228,769 of which Options will have vested as of the Termination Date and immediately prior to any acceleration under Section 2(c)(ii) below, and 100,000 of which have already been exercised as of the date hereof; (ii) subject to Section 8 hereof, all remaining unvested Options set forth in Exhibit A shall fully vest as of the Termination Date; (iii) the option exercise price for the Options is as set forth in Exhibit A to this Agreement; (iv) Executive may exercise the Options by executing and delivering such forms as are required under the Plan and the related stock option agreements, by payment of the option price in such manner as prescribed in the Plan (including by cashless exercise), and otherwise by complying with the terms of the Plan and related stock option agreements; (v) as a condition to the exercise of any Option during Executive's employment, Executive shall pay to the Company an amount equal to all federal, state and local taxes of any kind that the Company is required to withhold in connection with the exercise of such Option; and (vi) the Options shall be exercisable through April 12, 2006.
4. Group Medical Benefits and COBRA Rights. The Company will pay its share of Executive's group health insurance premium through the Termination Date. Executive's rights, if any, regarding continuation of group health insurance coverage will be governed by COBRA and applicable state law, effective April 13, 2004. Information regarding COBRA will be sent to Executive on the Termination Date. If Executive elects COBRA coverage, the Company will pay Executive's COBRA payments on his behalf through April 12, 2005.
3. Return of Company Property. Executive represents and warrants that he has returned or will return by the Termination Date all Company property and equipment in his possession or under his control, including, but not limited to, all files, memoranda, records, work papers, keys, credit cards, security access cards, telephone calling cards, manuals, notebooks, reports and other property of the Company that Executive received from the Company or its employees or that Executive generated in the course of employment with the Company. Executive will also turn over to the Company all embodiments of proprietary information (including, without limitation, notes, letters, documents, computer files and other records) which are in Executive's possession or control and shall not retain any copies or summaries of such records or information. Notwithstanding the foregoing, Executive shall be entitled to keep the computer he has been issued by the Company.
4. Confidentiality and Proprietary Information.
1. Confidential and Proprietary Information. The Uniform Trade Secrets Act defines a "trade secret" as: information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from no being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Executive shall forever hold in strictest confidence and trust all trade secrets and confidential or proprietary information of any nature and in any form which is treated as confidential by Company and which is not generally known to the public, and will not use or disclose for himself or on behalf of others such trade secrets and confidential or proprietary information.
2. Specific Performance; Injunctive Relief. If Executive breaches, or threatens to breach, the confidential and proprietary information covenants described herein, the Company, shall have the right, in addition to any other rights or remedies which it may have, to seek and obtain specific performance thereof and to enjoin such breach or threatened breach. The parties hereto acknowledge and agree that any such breach or threatened breach will cause irreparable injury to the Company, and that the Company could not be reasonably or adequately compensated in damages at law. The equitable remedies provided herein are not exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.
5. Indemnification. The Company agrees to indemnify and hold harmless Executive against any and all Claims (defined below) incurred or suffered by Executive in connection with his service to or employment with the Company up to the date of this Agreement to the fullest extent permitted by the Company's Certificate of Incorporation or Bylaws, directors and officers liability insurance policy, or as required by any indemnification agreement between the Company and Executive or applicable law.
6. Taxes. Executive agrees to be solely liable for and pay all taxes, if any, and any costs, interest, assessments, penalties, damages, attorneys' fees or other losses by reason of the payments set forth herein and to indemnify and hold the Company harmless from such amounts. Executive acknowledges that Company has made no representation regarding taxability of amounts received by Executive under the terms of this Agreement.
7. Release.
1. In consideration of the promises and undertakings contained herein, Executive on behalf of himself, his marital community, heirs, executors, administrators and assigns ("Executive Associated Persons" and herein collectively "Executive") hereby releases in full and forever discharges and acquits the Company and all of its related and affiliated entities, subsidiaries, as well as its and their former and current employees, agents, attorneys, shareholders, officers and directors ("Company Associated Persons") from any and all claims, causes of action, liabilities, demands, damages, penalties, debts, obligations, actions and causes of action ("Claims") whether now known or unknown, suspected or unsuspected, fixed or contingent, arising on or before the date hereof including but not limited to claims arising out of or relating to Executive's employment with the Company or termination therefrom, EXCEPT that Executive is not releasing, discharging or acquitting the Company from any Claims arising under the express terms of this Agreement or his rights to indemnification under the law. This Separation Agreement and Release specifically refers to and includes rights or claims arising under the federal Age Discrimination in Employment Act and any applicable provision of state law.
2. Without limiting the generality of the foregoing, the Claims released herein include any Claims arising out of, based upon or in any way related to (i) any prior employment agreements or arrangements, including that certain employment agreement dated March 26, 1999 between the Company and Executive (the "Employment Agreement"); (ii) any property, contract or tort claims, including wrongful discharge, breach of employment contract, breach of the covenant of good faith and fair dealing, retaliation, intentional or negligent infliction of emotional distress, tortious interference with existing or prospective economic advantage, negligence, misrepresentation, breach of privacy, defamation, loss of consortium, breach of fiduciary duty, violation of public policy or any other common law claim of any kind; (iii) any violation or alleged violation of Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended (the "ADEA"), the Older Workers Benefit Protection Act of 1990, the Equal Pay Act, as amended, the Fair Labor Standards Act, the Executive Retirement Income Security Act, the Americans With Disabilities Act, the Civil Rights Act of 1866, the Consolidated Omnibus Budget Reconciliation Act, the California Fair Employment and Housing Act, the California Labor Code, the California Family Rights Act; (iv) any claims for severance pay, bonus, sick leave, vacation or holiday pay, life insurance, health, disability or medical insurance or any other fringe benefit; and (v) any claim relating to or arising under any other local, state or federal statute or regulation or principle of common law (whether in contract or in tort) governing the employment of individuals, discrimination in employment and/or the payment of wages or benefits.

Executive understands that if any fact with respect to any matter covered by this Agreement is found to be other than, or different from the facts now believed by Executive to be true, Executive expressly accepts and assumes the risk of such possible difference in facts and agrees that this Agreement shall be, and remain, in full force and effect notwithstanding such difference in fact.

Executive acknowledges and warrants that there are no claims or actions currently filed or pending relating to the subject matter of this Agreement. Executive further agrees that he will not initiate, assist or encourage any actions unless compelled to do so by subpoena or court order. Executive agrees that if any claim is brought on his behalf by any governmental agency or third party, he will not accept any monetary award or restitution resulting therefrom.

8. Review and Revocation Period.Executive acknowledges that he has been advised to consult an attorney before executing this Agreement and that Executive has executed this Agreement (including the waiver and release set forth above which release Executive's rights under the ADEA) after having been given up to 21 days to review this Agreement and consult legal counsel. Executive has the right to revoke the waiver and release of claims under the ADEA within 7 days of signing this Agreement, and the ADEA waiver and release will not become effective or enforceable until that revocation period has expired. Should he exercise his right to revoke the ADEA waiver within the 7-day period following his signing this Agreement, he will not receive the benefits described above in Sections 2(b), 2(c) or 2(d).
9. Company Release. The Company hereby forever and generally and completely releases and discharges Executive and his or her agents, successors, heirs, assigns, and affiliates, from any and all claims and demands of every kind and nature, in law, equity or otherwise, based on any actions, or failures to act, of Executive, and for damages actual and consequential, past present and future arising therefrom, EXCEPT that Company is not releasing, discharging or acquitting Executive from any claims or demands arising under the express terms of this Agreement. The Company represents and warrants that it has obtained any necessary approvals or authorizations from its Board of Directors required to consummate this Agreement and effectuate the resolution of all claims which are the subject of this Agreement.
10. General Release. The release set forth above is a general release and, except as expressly provided herein, is intended to encompass all known and unknown, foreseen and unforeseen claims which either party may have against the other or any party Associates up to and including the date of this Agreement. It is further understood and agreed that Executive and the Company expressly waive all rights under Section 1542 of the Civil Code of the State of California and any similar law of any state or territory of the United States. Said section provides as follows:

"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor."

11. Non-Disparagement. The parties agree that on and after the date hereof, neither they, nor any of their respective Associated Persons nor any authorized representative or agent, will make or publish, either verbally or in writing, any statement or comment which could be reasonably interpreted to be derogatory or injurious to either party, including any of their respective Associated Persons. The parties further agree to specifically instruct their respective Associated Persons regarding these non-disparagement provisions. The foregoing notwithstanding, the parties are not precluded from providing information or making statements or comments to or before any regulatory or administrative agency, governmental body or court of law when called upon to do so, which they believe in good faith to be true and which might otherwise be deemed to violate this section.
12. Authority. Both parties warrant and represent that each has the sole right and exclusive authority to execute this Agreement, and that neither is restricted in so doing.
13. Complete Agreement. This Agreement expresses the full and complete agreement between the parties regarding the subject matter hereof, and supersedes and replaces all prior arrangements or agreements regarding the subject matter hereof, including the Employment Agreement. No party has been or is being influenced to any extent or is relying upon any representation, covenant or statement by any other person unless set forth in this Agreement.
14. No Liability. The parties agree and understand that the payment of monies and giving of other consideration, and the execution of this release and the agreements contained herein do not constitute nor shall be construed as an admission of any liability whatsoever by the parties thereto, or the admission of the validity of any claim made by or against either party.
15. Severability. Should any portion of this Agreement be declared void or unenforceable, such portion shall be considered severable from the remainder, the validity of which shall remain unaffected.
16. Successors and Assigns. This Agreement, and all terms and provisions hereof, shall be binding upon and shall inure to the benefit of the parties and their respective heirs, legal representatives, successors and assigns. This Agreement shall be expressly assumed by any person or entity that succeeds to the Company's business by reason of merger, consolidation, combination, asset purchase or similar transaction, and in such event such person or entity shall be expressly bound by the terms hereof as if such person or entity were the original party hereto.
17. Representation. Both parties to this Agreement represent and warrant that this Agreement in all respects has been voluntarily and knowingly executed by them after having received independent legal advice, if they desired, from attorneys of their choice. Both parties also represent and warrant that they have carefully read this Agreement and the contents hereof are known and understood by them.
18. Further Assurances. Executive agrees to assist the Company and take all reasonable and necessary actions to ensure a professional transition hereunder.
19. Amendment and Waiver. This Agreement may be amended, modified or supplemented only by a writing executed by both the Company and Executive. Any party may in writing waive any provision of this Agreement to the extent such provision is for the benefit of the waiving party. No waiver by any party of a breach of any provisions of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a party to seek a remedy for noncompliance or breach by another party shall be construed as a waiver of any right or remedy with respect to such noncompliance or breach.
20. Rules of Construction. This Agreement has been negotiated by the parties and is to be interpreted according to its fair meaning as if the parties had prepared it together and not strictly for or against any party. All references to "parties" refer to the parties to this Agreement unless expressly indicated otherwise. References to Sections are to Sections of this Agreement unless expressly indicated otherwise. References to "provisions" of this Agreement refer to the terms, conditions and promises contained in this Agreement. "Including" means "including without limitation" and "includes" means "includes without limitation." "Or" is inclusive and includes "and." The headings of the sections of this Agreement are for convenience only and shall in no way determine any interpretation of this Agreement.
21. Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes. This Agreement may be executed by a party's signature transmitted by facsimile ("fax"), and copies of this Agreement executed and delivered by means of faxed signatures shall have the same force and effect as copies hereof executed and delivered with original signatures. All parties hereto may rely upon faxed signatures as if such signatures were originals. Any party executing and delivering this Agreement by fax shall promptly thereafter deliver a counterpart signature page of this Agreement containing said party's original signature. All parties hereto agree that a faxed signature page may be introduced into evidence in any proceeding arising out of or related to this Agreement as if it were an original signature page.
22. Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, and if not sent during normal business hours, then on the next business day; (iii) three days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.
23. Governing Law. This Agreement shall be governed by the law of the State of California applicable to contracts executed and wholly performed therein.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates indicated below.

E-LOAN, INC.

Exhibit A

Options as of April 12, 2004

Grant Number	Vesting Commencement Date	Exercise Price Per Share	Total Number of Shares	Vested Shares	Unvested Shares	Exercised Shares
00000298	02/22/99	$2.0000	100,000	100,000	0	100,000
N0000298	02/22/99	$2.0000	566,372	566,372	0	0
A0000298	02/22/99	$2.0000	81,147	81,147	0	0
00000896	06/23/00	$4.5938	26,958	17,583	9,375	0
00000897	06/23/00	$4.5938	123,042	123,042	0	0
00001668	05/02/01	$1.2600	26,629	3,668	22,961	0
00001669	05/02/01	$1.2600	123,371	105,707	17,664	0
00001826	10/08/01	$1.3100	31,250	0	31,250	0
00001827	10/08/01	$1.3100	118,750	93,750	25,000	0
00001890	12/14/01	$1.7700	22,245	0	22,245	0
00001891	12/14/01	$1.7700	177,755	112,500	65,255	0
00003001	08/08/03	$3.9400	15,810	15,810	0	0
00003002	08/08/03	$3.9400	9,190	9,190	0	0
TOTAL				1,228,769	193,750	100,000

EX-10.69

Exhibit 10.69

EIGHTEENTH MODIFICATION AGREEMENT

THIS EIGHTEENTH MODIFICATION AGREEMENT (the "Agreement") is made as of the 13^th day of January, 2004, by and among E-LOAN, INC. (the "Borrower"), and GMAC Mortgage Corporation, a Pennsylvania corporation ("GMACM"), as successor to all rights, title, interest and obligations under that certain Master Warehouse Loan Purchase and Sale Agreement dated as of September 24, 2003 ("Purchase Agreement"), by and among GMACM and GMAC Bank, a federal savings bank (the "Lender").

BACKGROUND

The Borrower and the Lender entered into a Warehouse Credit Agreement, dated as of November 1, 2001, as amended (as so amended, the "Warehouse Credit Agreement") pursuant to which the Lender agreed to make advances (the "Advances") to the Borrower in accordance with the provisions of the Warehouse Credit Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Warehouse Credit Agreement.

The Advances are evidenced by the Borrower's Fourth Amended and Restated Note, dated as of May 6, 2003 (the "Note") in the stated principal amount of $155,000,000 and secured by, among other things, a Warehouse Security Agreement dated as of November 1, 2001, as amended (as so amended, the "Warehouse Security Agreement") between the Borrower and the Lender granting the Lender a security interest in certain of the Borrower's assets.

Pursuant to the Purchase Agreement, GMACM is the successor of all rights, title, interest and obligations of Lender under the Warehouse Credit Agreement and Collateral Documents.

The Borrower has requested that GMACM make certain modifications to the terms of the Warehouse Credit Agreement, and GMACM has agreed to such modification, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Warehouse Credit Agreement. The Warehouse Credit Agreement is hereby amended as follows:

(a) The definition of "Expiry Date " contained in Section 1.01 of the Warehouse Credit Agreement is revised as follows:

""Expiry Date" shall mean the earlier of (i) March 31, 2004, as such date may be extended upon mutual agreement between the Borrower and the Lender from time to time, and (ii) the date that is 120 days after the date on which the Lender shall have given the Borrower the notice referred to in Section 9.13 hereof."

2. References to Credit Documents. Upon the effectiveness of this Agreement:

(a) Each reference in the Warehouse Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import, and each reference in the Restated Note and the Warehouse Security Agreement to the Warehouse Credit Agreement, shall mean and be a reference to the Warehouse Credit Agreement as amended hereby;

(b) Each reference in the Warehouse Credit Agreement and the Warehouse Security Agreement to the Note shall mean and be a reference to the Restated Note; and

(c) Each reference in the Warehouse Credit Agreement and the Note to the Warehouse Security Agreement shall mean and be a reference to the Warehouse Security Agreement as amended hereby.

3. Ratification of Documents.

(a) Except as specifically amended herein or amended and restated in the Restated Note, the Warehouse Credit Agreement, the Note and the Warehouse Security Agreement shall remain unaltered and in full force and effect and are hereby ratified and confirmed.

(b) The execution, delivery and effectiveness of this Agreement and the Restated Note shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lender under the Warehouse Credit Agreement, the Note or the Warehouse Security Agreement nor constitute a waiver of any default or Event of Default under the Warehouse Credit Agreement, the Note or the Warehouse Security Agreement.

4. Representations and Warranties. The Borrower hereby certifies that (i) the representations and warranties which it made in the Warehouse Credit Agreement and the Warehouse Security Agreement are true and correct as of the date hereof and (ii) no Event of Default and no event which could become an Event of Default with the passage of time or the giving of notice, or both, under the Note, the Warehouse Credit Agreement or the Warehouse Security Agreement exists on the date hereof.

5. Miscellaneous.

(a) This Agreement shall be governed by and construed according to the laws of the State of Delaware without regard to principles of conflicts of laws and shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns.

(b) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(c) This Agreement is intended to take effect as a document under seal.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

E-LOAN, INC.	Attorney-In-Fact for GMAC MORTGAGE
	CORPORATION

By:/s/ Joseph Kennedy	By:	/s/ John Doulong
President	Name:	John Doulong
	Title:	Senior Vice President of GMAC Bank

EX-10.70

Exhibit 10.70

NINETEENTH MODIFICATION AGREEMENT

THIS NINETEENTH MODIFICATION AGREEMENT (the "Agreement") is made as of the 25^th day of February, 2004, by and among E-LOAN, INC. (the "Borrower"), and GMAC Mortgage Corporation, a Pennsylvania corporation ("GMACM"), as successor to all rights, title, interest and obligations under that certain Master Warehouse Loan Purchase and Sale Agreement dated as of September 24, 2003 ("Purchase Agreement"), by and among GMACM and GMAC Bank, a federal savings bank (the "Lender").

BACKGROUND

The Borrower and the Lender entered into a Warehouse Credit Agreement, dated as of November 1, 2001, as amended (as so amended, the "Warehouse Credit Agreement") pursuant to which the Lender agreed to make advances (the "Advances") to the Borrower in accordance with the provisions of the Warehouse Credit Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Warehouse Credit Agreement.

The Advances are evidenced by the Borrower's Fourth Amended and Restated Note, dated as of May 6, 2003 (the "Note") in the stated principal amount of $155,000,000 and secured by, among other things, a Warehouse Security Agreement dated as of November 1, 2001, as amended (as so amended, the "Warehouse Security Agreement") between the Borrower and the Lender granting the Lender a security interest in certain of the Borrower's assets.

Pursuant to the Purchase Agreement, GMACM is the successor of all rights, title, interest and obligations of Lender under the Warehouse Credit Agreement and Collateral Documents.

The Borrower has requested that GMACM make certain modifications to the terms of the Warehouse Credit Agreement, and GMACM has agreed to such modification, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Warehouse Credit Agreement. The Warehouse Credit Agreement is hereby amended as follows:

(a) The definition of "Commitment" contained in Section 1.01 of the Warehouse Credit Agreement shall be amended to read in full as follows:

""Commitment" shall mean the obligation of the Lender to make Advances in an aggregate principal amount outstanding at any time not to exceed $75,000,000, or such other amount as Lender, in its sole discretion, may determine from time to time."

(b) The definition of "Expiry Date " contained in Section 1.01 of the Warehouse Credit Agreement is revised as follows:

""Expiry Date" shall mean the earlier of (i) March 31, 2005, as such date may be extended upon mutual agreement between the Borrower and the Lender from time to time, and (ii) the date that is 120 days after the date on which the Lender shall have given the Borrower the notice referred to in Section 9.13 hereof."

(c) Section 2.01 of the Warehouse Credit Agreement is amended to read in full as follows:

"2.01 Commitment. Subject to and upon the terms and conditions set forth herein, the Lender agrees, at any time and from time to time prior to the Expiry Date (or such earlier date as the Commitment shall have been terminated pursuant to the terms hereof), to make an advance or advances (each an "Advance" and, collectively, the "Advances") to the Borrower, which Advance: (i) shall be made at any time and from time to time in accordance with the terms hereof on and after the Effective Date and prior to the Expiry Date; (ii) shall bear interest as provided in Section 2.07; (iii) may be prepaid and reborrowed in accordance with the provisions hereof; and (iv) shall be made against the pledge by the Borrower of Eligible Mortgage Loans, Eligible Nonconforming Mortgage Loans, Eligible HELOCs/Second Mortgage Loans or Liquid Assets as Collateral for such Advance as provided herein and in the Warehouse Security Agreement; provided, however, that (1) the aggregate principal amount of Advances outstanding at any time shall not exceed the lesser of (x) the Commitment and (y) an amount equal to: the Borrowing Base, at such time minus (b) $1,000,000, (2) the aggregate principal amount of Advances outstanding at any time secured by Mortgage-backed Securities shall not exceed 0% of the Commitment, (3) the aggregate principal amount of Wet Advances outstanding at any time shall not exceed 40% of the Commitment, (4) the aggregate principal amount of Advances outstanding at any time secured by Jumbo Loans shall not exceed 40% of the Commitment, (5) the aggregate principal amount of Advances outstanding at any time secured by Eligible Nonconforming Mortgage Loans shall not exceed $5,000,000 (the "Nonconforming Commitment"), (6) the aggregate principal amount of Advances outstanding at any time secured by Credit A- Loans shall not exceed 100% of the Nonconforming Commitment, (7) the aggregate principal amount of Advances outstanding at any time secured by Credit B Loans shall not exceed 100% of the Nonconforming Commitment, (8) the aggregate principal amount of Advances outstanding at any time secured by Credit C Loans shall not exceed 40% of the Nonconforming Commitment, (9) the aggregate principal amount of Advances outstanding at any time secured by Credit D Loans shall not exceed 10% of the Nonconforming Commitment, (10) the aggregate principal amount of Advances outstanding at any time secured by Eligible HELOCs and Second Mortgage Loans shall not exceed $30,000,000 (the "HELOC Commitment"), (11) the aggregate principal amount of Advances outstanding at any time secured by HLTV Loans shall not exceed $5,000,000 (the "HLTV Commitment"), and (12) the aggregate principal amount of Advances outstanding at any time secured by Eligible Nonconforming Mortgage Loans, HLTV Loans, Eligible HELOCs and Second Mortgage Loans shall not exceed $40,000,000."

(d) Section 4.02(r) of the Warehouse Credit Agreement is hereby deleted in its entirety.

(e) Section 4.02(s) of the Warehouse Credit Agreement is hereby deleted in its entirety.

(f) Section 4.02(t) of the Warehouse Credit Agreement is amended to read in full as follows:

"(t) if on any date the aggregate principal amount of Advances secured by Eligible HELOCs and Second Mortgage Loans exceeds $30,000,000, the Borrower shall immediately prepay the principal of Advances secured by Eligible HELOCs and Second Mortgage Loans in an aggregate amount equal to such excess."

(g) Section 4.02(u) of the Warehouse Credit Agreement is amended to read in full as follows:

"(u) if on any date the aggregate principal amount of Advances secured by HLTV Loans exceeds $5,000,000, the Borrower shall immediately prepay the principal of Advances secured by HLTV Loans in an aggregate amount equal to such excess."

(h) Section 4.02(v) of the Warehouse Credit Agreement is amended to read in full as follows:

"(v) if on any date the aggregate principal amount of Advances secured by Eligible Nonconforming Mortgage Loans, HLTV Loans, Second Mortgage Loans and Eligible HELOCs exceeds $40,000,000, the Borrower shall immediately prepay the principal of Advances secured by Eligible Nonconforming Mortgage Loans, HLTV Loans, Second Mortgage Loans and Eligible HELOCs in an aggregate amount equal to such excess."

(i) Section 8.09 of the Warehouse Credit Agreement is amended to read in full as follows:

"8.09 Minimum Adjusted Tangible Net Worth. The Borrower will not permit its Adjusted Tangible Net Worth at any time during any fiscal year to be less than $40,000,000."

2. References to Credit Documents. Upon the effectiveness of this Agreement:

(a) Each reference in the Warehouse Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import, and each reference in the Restated Note and the Warehouse Security Agreement to the Warehouse Credit Agreement, shall mean and be a reference to the Warehouse Credit Agreement as amended hereby;

(b) Each reference in the Warehouse Credit Agreement and the Warehouse Security Agreement to the Note shall mean and be a reference to the Restated Note; and

(c) Each reference in the Warehouse Credit Agreement and the Note to the Warehouse Security Agreement shall mean and be a reference to the Warehouse Security Agreement as amended hereby.

3. Ratification of Documents.

(a) Except as specifically amended herein or amended and restated in the Restated Note, the Warehouse Credit Agreement, the Note and the Warehouse Security Agreement shall remain unaltered and in full force and effect and are hereby ratified and confirmed.

(b) The execution, delivery and effectiveness of this Agreement and the Restated Note shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lender under the Warehouse Credit Agreement, the Note or the Warehouse Security Agreement nor constitute a waiver of any default or Event of Default under the Warehouse Credit Agreement, the Note or the Warehouse Security Agreement.

4. Representations and Warranties. The Borrower hereby certifies that (i) the representations and warranties which it made in the Warehouse Credit Agreement and the Warehouse Security Agreement are true and correct as of the date hereof and (ii) no Event of Default and no event which could become an Event of Default with the passage of time or the giving of notice, or both, under the Note, the Warehouse Credit Agreement or the Warehouse Security Agreement exists on the date hereof.

5. Miscellaneous.

(a) This Agreement shall be governed by and construed according to the laws of the State of Delaware without regard to principles of conflicts of laws and shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns.

(b) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(c) This Agreement is intended to take effect as a document under seal.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

E-LOAN, INC. Attorney-In-Fact for GMAC MORTGAGE CORPORATION

By: /s/ Matt Roberts
CFO By: /s/ William Dentinger
William Dentinger
Risk Manager

EX-10.71

Exhibit 10.71

AMENDMENT NUMBER TEN
to the
Master Loan and Security Agreement
Dated as of March 21, 2002
by and between
E-LOAN, INC.
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.

This AMENDMENT NUMBER TEN is made this 11^th day of March, 2004, by and between E-LOAN, INC., having an address at 6230 Stoneridge Mall Road, Pleasanton, California 94588 (the "Borrower") and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., having an address at 600 Steamboat Road, Greenwich, Connecticut 06830 (the "Lender"), to the Master Loan and Security Agreement, dated as of March 21, 2002, by and between the Borrower and the Lender, as amended (the "Loan Agreement"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement.

RECITALS

WHEREAS, the Borrower has requested that the Lender agree to amend the Loan Agreement to extend the Termination Date thereunder to March 14, 2005 and the Borrower and the Lender have agreed to make such additional modifications to the Loan Agreement as more expressly set forth below.

WHEREAS, as of the date of this Amendment Number Ten, the Borrower represents to the Lender that it is in compliance with all of the representations and warranties and all of the affirmative and negative covenants set forth in the Loan Agreement and is not in default under the Loan Agreement.

WHEREAS, in order to induce the Lender to enter into this Amendment Number Ten, the Borrower has agreed to pay to the Lender an additional commitment fee in an amount equal to $750,000, payable as provided herein.

WHEREAS, the Borrower and the Lender have agreed to amend the Loan Agreement as set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1. Effective as of March 15, 2004, the definition of Collateral Value in Section 1 of the Loan Agreement is hereby amended by deleting the word "or" at the end of clause (10), by changing the "." at the end of section (11) to a ";" and by adding the following new clauses to the end thereof:

(12) if such Mortgage Loan is a HELOC or Second Lien Mortgage Loan and the inclusion of such Mortgage Loan would cause the weighted average combined loan-to-value ratio of the HELOC and Second Lien Mortgage Loans that are subject to this Loan Agreement to exceed 85%; or

(13) if such Mortgage Loan is a HELOC or Second Lien Mortgage Loan with a FICO score less than 680 and the inclusion of such Mortgage Loan would cause the Collateral Value of the HELOCs and Second Lien Mortgage Loans with FICO scores less than 680 to exceed 5% of the Collateral Value of all HELOCs and Second Lien Mortgage Loans then subject to the terms of this Loan Agreement;

SECTION 2. Effective as of March 15, 2004, Section 1 of the Loan Agreement is hereby amended by deleting clause (3) to the definition of Maximum Credit and replacing it with the following:

(3) the Maximum Credit for Mortgage Loans which are HELOCs or Second Lien Mortgage Loans may not exceed $175 million at any time;

SECTION 3. Effective as of March 15, 2004, Section 1 of the Loan Agreement is hereby amended by deleting clause (5) to the definition of Maximum Credit and replacing it with the following:

(5) the Maximum Credit for all High LTV Loans may not exceed $25 million at any time; and $5 million at any time.d suant to Section 5.01(n))n Escrow Letter has been obtained and the identity of the escrow agen

SECTION 4. Effective as of March 15, 2004, Section 1 of the Loan Agreement is hereby amended by deleting the definition of Maximum Uncommitted Amount and replacing it with the following:

"Maximum Uncommitted Amount" shall mean $200 million.

SECTION 5. Effective as of March 15, 2004, Section 1 of the Loan Agreement is hereby amended by deleting the definition of Termination Date and replacing it with the following:

"Termination Date" shall mean March 14, 2005, or such earlier date on which this Loan Agreement shall terminate in accordance with the provisions hereof or by operation of law.

SECTION 6. Effective as of March 15, 2004, Section 1 of the Loan Agreement is hereby amended by deleting the definition of Applicable Margin and replacing it with the following:

"Applicable Margin" shall mean with respect to Advances that are Tranche A Advances, Tranche B Advances and Tranche C Advances respectively, and which are secured by the Mortgage Loans, the applicable rate per annum set forth below for each day that such Advances shall be so secured:

Tranche A Advances              0.75%
Tranche B Advances              1.25%
Tranche C Advances              1.125%

SECTION 7. Effective as of March 15, 2004, Subsection 5.01 of the Loan Agreement is hereby amended by deleting Subsection 5.01(n) and renumbering Subsection 5.01(o) by changing "(o)" to "(n)."

SECTION 8. Effective as of March 15, 2004, Section 6.16 of the Loan Agreement is hereby amended to read in its entirety as follows:

6.16 Tangible Net Worth; Liquidity. The Borrower's Tangible Net Worth is not less than the greater of (i) $60,000,000 or (ii) any higher amount provided under any other repurchase, financing, credit or other similar transaction to which the Borrower is a party. The Borrower has Cash Equivalents in an amount not less than $15,000,000. The ratio of the Borrower's Total Indebtedness to Tangible Net Worth is not greater than the lesser of (i) 10:1 or (ii) any ratio provided under any other repurchase, financing, credit or other similar transaction to which the Borrower is a party.

SECTION 9. Effective as of March 15, 2004, Section 7.01(a)(i) of the Loan Agreement is hereby amended by changing "15 days" to "30 days."

SECTION 10. Effective as of March 15, 2004, Section 7.16 of the Loan Agreement is hereby amended to read in its entirety as follows:

7.16 Maintenance of Liquidity. The Borrower shall insure that, as of the end of each calendar month, it has Cash Equivalents in an amount of not less than $15,000,000.

SECTION 11. Effective as of March 15, 2004, Section 7.17 of the Loan Agreement is hereby amended to read in its entirety as follows:

7.17 Maintenance of Tangible Net Worth. The Borrower shall not permit Tangible Net Worth at any time to be less than $60,000,000 or such higher amount provided under any other repurchase, financing, credit or other similar facility entered into by the Borrower.

SECTION 12. Effective as of March 15, 2004, Section 7.27 of the Loan Agreement is hereby amended to read in its entirety as follows:

7.27 Committed Warehouse Facilities. The Borrower shall at all times have at least $75,000,000 available under committed revolving facilities (with recognized third party lenders other than with Lender). Such other committed revolving facilities shall permit Borrower to borrow at least $30,000,000 secured by wet loans.

SECTION 13. Commitment Fee. In order to induce the Lender to enter into this Amendment Number Ten with the Borrower, the Borrower hereby agrees to pay to the Lender a commitment fee equal to $750,000 to be paid to the Lender on or before April 2, 2004. Such commitment fee shall be paid in dollars, in immediately available funds, in accordance with the Lender's instructions.

SECTION 14. Fees and Expenses. The Borrower agrees to pay to the Lender all fees and out of pocket expenses incurred by the Lender in connection with this Amendment Number Ten (including all reasonable fees and out of pocket costs and expenses of the Lender's legal counsel incurred in connection with this Amendment Number Ten), in accordance with Section 11.03 of the Loan Agreement.

SECTION 15. Defined Terms. Any terms capitalized but not otherwise defined herein shall have the respective meanings set forth in the Loan Agreement.

SECTION 16. Limited Effect. Except as amended hereby, the Loan Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment Number Ten need not be made in the Loan Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Loan Agreement, any reference in any of such items to the Loan Agreement being sufficient to refer to the Loan Agreement as amended hereby.

SECTION 17. Representations. In order to induce the Lender to execute and deliver this Amendment Number Ten, the Borrower hereby represents to the Lender that as of the date hereof, the Borrower is in full compliance with all of the terms and conditions of the Loan Agreement and no Default or Event of Default has occurred and is continuing under the Loan Agreement.

SECTION 18. Governing Law. This Amendment Number Ten shall be construed in accordance with the laws of the State of New York and the obligations, rights, and remedies of the parties hereunder shall be determined in accordance with such laws without regard to conflict of laws doctrine applied in such state (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law).

SECTION 19. Counterparts. This Amendment Number Ten may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.

[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the Borrower and the Lender have caused this Amendment Number Ten to be executed and delivered by their duly authorized officers as of the day and year first above written.

E-LOAN, INC.
(Borrower)

By: /s/ Matt Roberts
Name: Matt Roberts
Title: CFO

GREENWICH CAPITAL FINANCIAL PRODUCTS. INC.
(Lender)

By: /s/ Anthony Palmisano
Name: Anthony Palmisano
Title: Senior Vice President

EX-10.72

Exhibit 10.72

February 25, 2004

Robert Purcell
409 Triomphe Ct.
Danville, CA 94506

Dear Bob:

This letter confirms that your employment with E-LOAN, Inc. (E-LOAN or the "Company") will terminate as of March 1, 2004. We would like to make this transition as smooth as possible for you and therefore we would like to provide you with the following information and materials that we hope will assist you.

Final Pay, Benefits, Stock Options & Exit Procedures

• March 1 is your termination date, and you will be paid all salary, and any unused vacation, earned through that day.
• Your participation in all E-LOAN employee benefits ends on March 1, with the exception of your medical, dental and vision coverage, which will end on March 31, 2004. You will have the option to continue your coverage beyond that date if you elect to do so in accordance with the federal law known as COBRA. Additional information about this option will be mailed to you.
• Your participation in E-LOAN's 401(k) program ends on March 1, 2004. Please find information that outlines your options for your 401(k) plan included in this packet.
• Your participation in E-Loan's Group Term Life Insurance plan ends on March 1. You will have the option of continuing your coverage beyond today by converting to an individual policy if you choose; please find a Life Insurance information sheet attached.
• According to Beverly Robinson, E-LOAN's Stock Administrator, you have Stock Options to exercise, which are included in what you have vested to date. Please contact Beverly Robinson at 925/847-6266 for more information.
• You did not participate in E-LOAN's Pre-paid Legal program. Therefore, no action is required of you.
• Tomorrow evening, we will provide you with a box to collect your personal belongings as we want to ensure none of your personal possessions gets misplaced. Likewise, please provide back to E-LOAN all equipment you have used during your employment with us. Please advise us now of any equipment you may have at home which belongs to E-LOAN, and we will make arrangements to pick it up at a mutually convenient time.
• We will need you to also return to Human Resources all Company documents created or received by you during your employment except your personal copies of documents evidencing your hire, compensation, benefits and stock options.

Severance Opportunity.

In order to help you to move on to other opportunities and to resolve any issues relating to your employment and termination, E-LOAN is willing to make the following severance opportunity available to you. In order to accept this opportunity, you must agree to and accept the terms of Section B., below, and they must become enforceable per Paragraph B.6, below. If you accept these terms and they become enforceable, the Severance Opportunity section of this letter (pp. 2-4) will become our "Severance Agreement."

A. E-LOAN:

E-LOAN agrees that, no later than five (5) business days after this Severance Agreement becomes effective and enforceable, it shall:

Provide you with a lump sum payment in the gross amount of $31,153.85, less all applicable tax withholdings, which amount is equal to 9 weeks of base salary. This includes consideration for the 3 weeks of Time Off you were asked to take at year-end 2003.

B. You:

1. You agree and represent that:

a.You have received all wages earned by you, including accrued but unused PTO through, March 1, 2004.

b. You understand that, even if you do not sign this Severance Agreement, you are bound by, and have continuing obligations under, the Proprietary Information and Inventions Agreement ("PIIA") signed by you on August 4, 2000.

c. You have either returned to the Company all items of property paid for and/or provided by the Company for your use during employment with the Company including, but not limited to, any laptops, computer and office equipment, software programs, cell phones, pagers, access cards and keys, credit and calling cards or you have set a time with Human Resources for this equipment to be picked up.

d. You have returned to the Company all documents (electronic and paper) created and received by you during your employment with the Company, and you have not retained any such documents, except you may keep your personal copies of (i) documents evidencing your hire, compensation, benefits and termination (including this letter); (ii) any materials distributed generally to stockholders of the Company, and (iii) your copy of the PIIA.

e. You have submitted a final request for reimbursement of reasonable and necessary business, travel and entertainment expenses incurred by you in the course and scope of your employment with the Company.

f. You understand that you must exercise your option shares, if any, that were vested as of Monday, March 1, 2004, before expiration of the post- termination exercise period specified in your stock option agreement(s), and that it is your responsibility to timely and properly exercise those options or they will terminate and cannot be reinstated.

2. You waive and release and promise never to assert any claims or causes of action, whether or not now known, against E-LOAN or its predecessors, successors, subsidiaries, officers, directors, agents, employees and assigns, with respect to any act, event or omission prior to the effective date of this Severance Agreement (per Paragraph B.6., below), including but not limited to, any matter arising out of or connected with your hire or employment with E-LOAN or the termination of that employment, including without limitation, claims of wrongful discharge, emotional distress, defamation, fraud, breach of contract, breach of the covenant of good faith and fair dealing, any claims of discrimination or harassment based on sex, age, race, national origin, disability or on any other basis, under Title VII of the Civil Rights Act of 1964, as amended, the California Fair Employment and Housing Act, the California Labor Code, the Age Discrimination in Employment Act of 1967, as amended, and all other laws and regulations relating to employment, except any claims you may have for:

a. unemployment or any state disability insurance benefits pursuant to the terms of applicable California law;

b. workers' compensation insurance benefits pursuant to Division 4 of the California Labor Code under the terms of any the Company worker's compensation insurance policy or fund;

c. continued participation in the Company's group health benefit plans pursuant to the terms and conditions of the federal law known as COBRA;

d. any benefit entitlements vested as the Termination Date, pursuant to written terms of any the Company employee benefit plan; and

e. stock and stock options pursuant to the terms of existing stock option, stock purchase, and/or stock issuance agreement(s) and any addenda or waivers thereto, existing as of the Termination Date between you and the Company.

You also expressly waive and release any and all rights and benefits conferred upon you under Section 1542 of the Civil Code of the State of California which reads as follows:

A general release does not extend to claims which the creditor (i.e., you) does not know or suspect to exist in his favor at the time of executing the release, which, if known by him, must have materially affected his settlement with the debtor (i.e., the Company).

You agree and understand that if, hereafter, you discover facts different from or in addition to those which you now know or believe to be true, that the waivers of this Paragraph B.2. shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery thereof.

3. Nothing contained in this Severance Agreement shall constitute or be treated as an admission by you or by E-LOAN, or any current or former employee of E-LOAN, of liability, or any wrongdoing, or of any violation of law.

4. You agree that you will not make any negative or disparaging statements or comments, either as fact or as opinion, about E-LOAN, including but not limited to its employees, officers, directors, products or services, operations, performance and other similar information concerning E-LOAN.

5. You agree that you will not disclose to any other person the fact or terms of the Severance Opportunity offered by this letter, except that you may disclose such information to your spouse, or to your attorney or accountant in order for such individuals to render services to you, provided that they agree to keep confidential and not disclose neither the fact nor terms of the Severance Opportunity offered by this letter.

6. You understand that you may have up to forty-five (45) days after receipt of this letter within which to review it, you should discuss it with an attorney of your own choosing, and you must decide whether or not to sign it. Furthermore, you shall have seven (7) days after you have agreed to and signed this Severance Agreement during which time you may decide to change your mind and revoke it but only as with respect to the release and waivers of Paragraph B.2. as to claims under the Age Discrimination in Employment Act ("ADEA"), in which case this Severance Agreement shall remain effective and enforceable in all other respects but you will receive 50% less payment under Paragraph A.1. If you wish to revoke your agreement to Paragraph B.2. as to claims under the ADEA, you may do so by delivering a written notice of revocation to Human Resources. Because of the seven (7) day revocation period, the terms of this Severance Agreement shall not become effective or enforceable until the eighth (8^th) day after the date you sign this Severance Agreement, provided that you return it to E-LOAN.

7. You agree that except for the agreements referenced in Paragraphs B.1.b. and B.2.d.-e., and any loan or debt obligations you owe to the Company, this Severance Agreement cancels, supercedes and replaces any and all prior agreements, written or otherwise, between you and E-LOAN. This letter shall constitute the full and complete agreement between you and E-LOAN regarding the subject matters covered, and can only be changed by another written agreement signed by you and the Head of Human Resources.

If you accept the terms of the Severance Opportunity Section of this letter, please indicate your agreement and acceptance by signing below on the enclosed copy of this letter and returning that signed copy to Human Resources. Bob, we wish you good fortune through your transition to your next opportunity.

Sincerely,

/s/ Ro Carbone

Ro Carbone
Human Resources

I HAVE READ THIS SEVERANCE OPPORTUNITY SECTION OF THIS LETTER (PP. 2-4), I UNDERSTAND IT AND KNOW I AM GIVING UP IMPORTANT RIGHTS; I AM AWARE OF MY RIGHT TO CONSULT WITH ANY ATTORNEY OF MY OWN CHOOSING BEFORE SIGNING BELOW AND I ACKNOWLEDGE THAT I HAVE BEEN ENCOURAGED TO CONSULT WITH SUCH AN ATTORNEY. I AGREE TO AND SIGN THE SEVERANCE OPPORTUNITY SECTION OF THIS LETTER WITH FULL APPRECIATION THAT AT NO TIME IN THE FUTURE MAY I PURSUE ANY OF THE RIGHTS I HAVE WAIVED AND RELEASED HEREIN.

Dated: 3/5, 2004	/s/ Robert Purcell
	Robert Purcell

EX-21.1

EX-23.1

Exhibit 23.1

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-110658, 333-101648, 333-58802 and 333-47812) and Form S-8 (Nos. 333-106137, 333-100314, 333-63372 and 333-84211) of E-LOAN, INC. of our report dated March 12, 2004, relating to the financial statements, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K.

San Francisco, California
March 12, 2004

EX-31.1

Exhibit 31.1

I, Christian A. Larsen, certify that:

1. I have reviewed this annual report on Form 10-K of E-LOAN, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 12, 2004

/s/ Christian A. Larsen
Christian A. Larsen
Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Matthew Roberts, certify that:

1. I have reviewed this annual report on Form 10-K of E-LOAN, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 12, 2004

/s/ Matthew Roberts
Matthew Roberts
Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of E-LOAN, Inc. (the "Company") on Form 10-K for the fiscal year ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Christian A. Larsen, as Chief Executive Officer and Chairman of the Board of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Christian A. Larsen
Christian A. Larsen
Chairman and Chief Executive Officer

March 12, 2004

A signed original of this written statement required by Section 906 has been provided to E-LOAN, Inc. and will be retained by E-LOAN, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of E-LOAN, Inc. (the "Company") on Form 10-K for the fiscal year ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Matthew Roberts, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Matthew Roberts
Matthew Roberts
Chief Financial Officer

March 12, 2004

A signed original of this written statement required by Section 906 has been provided to E-LOAN, Inc. and will be retained by E-LOAN, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.