Amended/Restated Credit Agreement/Servicing Facility

AMENDED AND RESTATED
CREDIT AGREEMENT
(SERVICING FACILITY)


Dated as of June 25, 1999


Between


DORAL FINANCIAL CORPORATION,


DORAL MORTGAGE CORPORATION,


THE LENDERS PARTY HERETO


And


BANKERS TRUST COMPANY,
as Agent


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TABLE OF CONTENTS


PAGE
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ARTICLE 1 DEFINITIONS...................................................................................1


Section 1.1 Defined Terms.........................................................................1


Section 1.2 Terms Generally......................................................................13


ARTICLE 2 AMOUNTS AND TERMS OF LOANS...................................................................13


Section 2.1 Commitments..........................................................................13


Section 2.2 Method of Borrowing and of Conversions/Continuations.................................13


Section 2.3 Conversions/Continuations of Loans...................................................14


Section 2.4 Disbursement of Funds................................................................15


Section 2.5 Notes................................................................................15


Section 2.6 Interest.............................................................................16


Section 2.7 Termination of Commitments...........................................................16


Section 2.8 Mandatory Repayments.................................................................17


Section 2.9 Optional Prepayments.................................................................17


Section 2.10 Fees.................................................................................17


Section 2.11 Payments, Etc,.......................................................................18


Section 2.12 Eurodollar Rate Not Determinable; Illegality or Impropriety..........................19


Section 2.13 Reserve Requirements; Change in Circumstances........................................20


Section 2.14 Indemnity............................................................................21


Section 2.15 Taxes................................................................................22


Section 2.16 Sharing of Setoffs...................................................................23


ARTICLE 3 CONDITIONS TO LOANS..........................................................................23


Section 3.1 Conditions to Loans..................................................................23


ARTICLE 4 REPRESENTATIONS AND WARRANTIES...............................................................25


Section 4.1 Corporate Existence; Compliance with Law and Contractual Obligations.................26


Section 4.2 Corporate Power; Authorization; Enforceable Obligations..............................26


Section 4.3 No Legal or Contractual Bar..........................................................26


Section 4.4 Financial Information................................................................26


Section 4.5 No Material Litigation...............................................................27


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Section 4.6 Taxes................................................................................27


Section 4.7 Investment Company Act...............................................................27


Section 4.8 Subsidiaries.........................................................................27


Section 4.9 Use of Proceeds......................................................................28


Section 4.10 ERISA................................................................................28


Section 4.11 Security Interests...................................................................28


Section 4.12 Agency Approvals.....................................................................28


Section 4.13 Solvency.............................................................................29


Section 4.14 Minimum Servicing Portfolio..........................................................29


Section 4.15 Year 2000 Compliance.................................................................29


ARTICLE 5 COVENANTS....................................................................................29


Section 5.1 Affirmative Covenants................................................................29


Section 5.2 Negative Covenants of Each Borrower..................................................34


Section 5.3 Additional Negative Covenants........................................................38


ARTICLE 6 EVENTS OF DEFAULT............................................................................39


Section 6.1 Events of Default....................................................................39


ARTICLE 7 THE AGENT....................................................................................41


Section 7.1 Appointment of Agent.................................................................41


Section 7.2 Nature of Duties of Agent............................................................41


Section 7.3 Lack of Reliance on Agent............................................................42


Section 7.4 Certain Rights of Agent..............................................................42


Section 7.5 Reliance by Agent....................................................................43


Section 7.6 Indemnification of Agent.............................................................43


Section 7.7 Agent in its Individual Capacity.....................................................43


Section 7.8 Holders of Notes.....................................................................43


Section 7.9 Successor Agent......................................................................44


ARTICLE 8 MISCELLANEOUS PROVISIONS.....................................................................44


Section 8.1 Notices..............................................................................44


Section 8.2 Amendments, Etc......................................................................45


Section 8.3 No Waiver; Remedies Cumulative.......................................................45


Section 8.4 Payment of Expenses, Etc.............................................................46


Section 8.5 Right of Setoff......................................................................46


Section 8.6 Benefit of Agreement.................................................................47


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Section 8.7 GOVERNING LAW; SUBMISSION TO JURISDICTION............................................49


Section 8.8 Counterparts.........................................................................50


Section 8.9 Headings Descriptive.................................................................50


Section 8.10 Survival of Representations and Indemnities..........................................50


Section 8.11 Severability.........................................................................51


Section 8.12 Indemnification of Collateral Agent..................................................51


Section 8.13 Joint and Several Nature of the Obligations..........................................51


Section 8.14 Certain Waivers......................................................................51


Section 8.15 Subrogation, Etc.....................................................................52


Section 8.16 Confidentiality......................................................................53


Section 8.17 Integration..........................................................................53


Section 8.18 Effectiveness........................................................................54


Section 8.19 Ratification; No Novation............................................................55


Section 8.20 WAIVER OF JURY TRIAL.................................................................55


EXHIBITS


Exhibit A Form of Note Exhibit B Amended and Restated Security and Collateral Agency Agreement Exhibit C-1 Form of Opinion of Borrowers' New York Counsel Exhibit C-2 Form of Opinion of Borrowers' Puerto Rico Counsel Exhibit D-1 Officer's Certificate (DFC) Exhibit D-2 Officer's Certificate (DMC) Exhibit E Notice of Borrowing Exhibit F Notice of Conversion/Continuation Exhibit G Form of Power of Attorney Exhibit H Addresses for Notices Exhibit I Material Litigation Exhibit J Form of Confidentiality Agreement Exhibit K Permitted Subordinated Indebtedness Exhibit L-1 Form of Pledged Servicing Portfolio Report Exhibit L-2 Form of Recourse Servicing Portfolio Report Exhibit L-3 Form of Recourse Servicing Portfolio Statistics Report Exhibit M Authorized Officers Exhibit N Form of Assignment and Acceptance Exhibit O Form of Additional Lender Agreement


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AMENDED AND RESTATED CREDIT AGREEMENT
(SERVICING FACILITY)


THIS AMENDED AND RESTATED CREDIT AGREEMENT (SERVICING FACILITY) is made and dated as of June 25, 1999, by and between the Lenders party hereto from time to time, BANKERS TRUST COMPANY, a New York banking corporation, as agent for the Lenders, DORAL FINANCIAL CORPORATION, a corporation organized under the laws of the Commonwealth of Puerto Rico ("DFC"), and DORAL MORTGAGE CORPORATION, a corporation organized under the laws of the Commonwealth of Puerto Rico, and a wholly-owned subsidiary of DFC ("DMC"), and together with DFC, each a "BORROWER" and collectively, the "BORROWERS"), with reference to the First Amended and Restated Credit Agreement, dated as of June 26, 1998, between the Borrowers, the Banker Trust Company, as agent thereunder, and the lenders party thereto (as amended to the date hereof, the "ORIGINAL CREDIT AGREEMENT"). Capitalized terms not otherwise defined herein are defined in Article I.


The Lenders, the Agent and the Borrowers wish to amend and restate the Original Credit Agreement in its entirety.


ACCORDINGLY, the parties hereto agree that the Original Credit Agreement is amended and restated in its entirety as follows:


ARTICLE 1
DEFINITIONS


SECTION 1.1 DEFINED TERMS.


For purposes of this Agreement, the terms set forth below shall have the following meanings:


"ACCUMULATED FUNDING DEFICIENCY" shall mean a funding
deficiency described in Section 302 of ERISA.


"ACKNOWLEDGMENT AGREEMENT" shall mean an acknowledgment
agreement in form and substance satisfactory to the Agent pursuant to
which FNMA, FHLMC, GNMA or any other Person which owns Mortgage Loans
or has issued mortgaged-backed securities for which either Borrower
holds direct servicing rights, acknowledges and recognizes the
security interest in such rights granted to the Secured Parties.


"ADJUSTED TANGIBLE NET WORTH" shall mean, as of any date, (a)
the sum of: (i) Book Net Worth as of such date, (ii) one percent
(1.0%) of the outstanding principal balance of Mortgage Loans in the
Servicing Portfolio as of such date, and (iii) the aggregate principal
amount of Permitted Subordinated Indebtedness outstanding as of such
date, less (b)(i) fifty percent (50%) of the amount of "interest only
strip securities", (ii) all purchased loan administration contracts
and (iii) all other assets that would be classified as intangible
assets under GAAP, including purchased and capitalized value of


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servicing rights, goodwill (whether representing the excess cost over
book value of assets acquired or otherwise), patents, trademarks,
trade names, copyrights, franchises, deferred charges (including
unamortized debt discount and expense, organization and acquisition
costs and research and product development costs), and in accordance
with FASB 65, as amended by FASB 122, by the Financial Accounting
Standards Board, any originated mortgage servicing rights.


"ADJUSTMENT DATE" shall have the meaning given such term in
Section 8.6(h).


"AFFILIATE" shall mean, as to any Person, any other Person
directly or indirectly Controlling, Controlled by or under direct or
indirect common Control with, such Person, whether through the
ownership of voting securities, by contract or otherwise. "Control" as
used herein (and all forms of the word) means the power to direct the
management and policies of a Person.


"AGENCY" shall mean FHA, FHLMC, FNMA, GNMA or VA.


"AGENT" shall mean Bankers Trust Company, in its capacity as
agent for the Lenders hereunder, and any successor agent appointed
pursuant to Section 7.9.


"AGREEMENT" shall mean this Agreement, as amended, modified
or supplemented from time to time.


"AMENDMENT EFFECTIVE DATE" shall have the meaning given such
term in Section 8.18.


"APPLICANT LENDER" shall have the meaning given such term in
Section 8.6(g).


"AUTHORIZED OFFICERS" shall mean those officers identified on
Exhibit M attached hereto; provided that DFC or DMC, as the case may
be, may, with respect to its Authorized Officers, by notice to the
Agent in accordance with Section 8.1, add or delete any person from
the list of Authorized Officers set forth above.


"BASE EURODOLLAR RATE" shall mean, with respect to any
Eurodollar Loan, a rate per annum equal to the offered rate for U.S.
Dollar deposits, in an amount equal to amount of the Eurodollar Loan
proposed to be subject to such rate and with maturities comparable to
such Eurodollar Interest Period, that appears on Telerate Page 3750 as
of approximately 11:00 a.m., London time, two (2) Eurodollar Business
Days prior to the commencement of such Eurodollar Interest Period;
provided that if such rate does not appear on Telerate Page 3750, the
"Base Eurodollar Rate" applicable to a particular Eurodollar Interest
Period shall mean a rate per annum equal to the rate at which U.S.
Dollar deposits, in an amount equal to the principal amount of the
Eurodollar Loans proposed to be subject to such rate and with
maturities comparable to such Eurodollar Interest Period, are offered
in immediately available funds in the London Interbank Market to the
London office of the Agent by leading banks in the London Interbank
Market as of approximately 11:00 a.m., London time, two (2) Eurodollar
Business Days prior to the commencement of the Eurodollar Interest
Period to which such Base Eurodollar Rate is applicable.


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"BOARD" shall mean the Board of Governors of the Federal
Reserve System of the United States and any successor thereto.


"BOOK NET WORTH" shall mean (a) the sum of (i) the net worth,
determined in accordance with GAAP consistently applied, of (A) DFC on
a non-consolidated basis, (B) DMC, (C) Centro Hipotecaro de Puerto
Rico, Inc. and (D) other Subsidiaries of DFC engaged primarily in the
business of mortgage banking (as reasonably determined by the Agent,
but excluding Doral Bank, Doral Securities, Inc., Doral Bank FSB and
Doral Money, Inc.) and (ii) the amount of intercompany payables
between DFC and DMC, less (b) the sum of (i) the amount of
intercompany receivables between DFC and DMC and (ii) investments by
DFC and/or DMC in any Subsidiaries, which investments are listed under
the account titled "Other Assets" (as such term is used in the
consolidated statement of financial condition of DFC dated as of
December 31, 1998) or which are listed under other accounts.
Notwithstanding the foregoing, if at any time any of the entities
listed in clauses (B), (C) or (D) above become businesses engaged
primarily in activities other than mortgage banking (as reasonably
determined by the Agent), then the net worth of such entity shall not
be included in clause (i) for the purposes of calculating Book Net
Worth.


"BORROWER" and "BORROWERS" shall have the meaning given such
terms in the introductory paragraph of this Agreement.


"BORROWING" shall mean a borrowing pursuant to a Notice of
Borrowing consisting of Loans made concurrently by all of the Lenders.


"BORROWING DATE" shall mean any date on which the Lenders
make Loans at the Borrowers' request pursuant to Section 2.2.


"BUSINESS DAY" shall mean any day other than (i) a Saturday,
Sunday and any other day on which banks in New York City are required
or authorized to close or (ii) any public or bank holiday in the
Commonwealth of Puerto Rico.


"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations issues
thereunder as from time to time in effect.


"COLLATERAL" shall have the meaning given such term in
Section 2 of the Security Agreement.


"COLLATERAL AGENT" shall mean initially Bankers Trust
Company, in its capacity as "Collateral Agent" under the Security
Agreement, and any successor collateral agent thereto acceptable to
the Required Lenders and the Borrowers and designated as the
"Collateral Agent" under the Security Agreement.


"COLLATERAL VALUE OF THE PLEDGED SERVICING PORTFOLIO" shall
mean, at the time of determination thereof, an amount equal to the
lesser of (i) 70% of the fair market value of the servicing rights
relating to the Mortgage Loans included in the Pledged Servicing
Portfolio and (ii) 1.10% of the unpaid principal balance of the
Mortgage Loans included in the Pledged Servicing


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Portfolio (in each case as reflected on the most recent Pledged
Servicing Valuation Report delivered to the Agent, provided that if no
Pledged Servicing Valuation Report has been delivered to the Agent in
accordance with Section 5.1(a)(ix)(B), then the Collateral Value of
the Pledged Servicing Portfolio shall be an amount determined by the
Agent in its sole discretion).


"COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make Loans hereunder as set forth in
Section 2.1, as such commitment may be modified pursuant to Section
8.6(c).


"COMMITMENT FEE" shall have the meaning given such term in
Section 2.10(a).


"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which
it or any of its property is bound.


"CONVERSION/CONTINUATION DATE" shall mean (a) any date on
which the Lenders, pursuant to Sections 2.2 and 2.3, convert Loans to
Loans bearing interest at a different interest rate, or continue
outstanding Eurodollar Loans for an additional Eurodollar Interest
Period (which date shall be a Eurodollar Business Day in the case of a
conversion of Prime Loans into Eurodollar Loans or the continuation of
a Eurodollar Loan) and (b) the last day of each Eurodollar Interest
Period in the case of a Eurodollar Loan.


"DEFAULTING LENDER" shall have the meaning given such term in
Section 2.4(b).


"DFC" shall have the meaning given such term in the
introductory paragraph of this Agreement.


"DMC" shall have the meaning given such term in the
introductory paragraph of this Agreement.


"ELIGIBLE SERVICING RECEIVABLE" shall have the meaning given
such term in the Warehouse Credit Agreement.


"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as the same may from time to time be supplemented or
amended, and the rules and regulations issued thereunder as from time
to time in effect.


"ERISA AFFILIATE" shall mean each trade or business,
including the Borrowers, whether or not incorporated, that together
with the Borrowers would be treated as a single employer under section
4001 of ERISA.


"EURODOLLAR BUSINESS DAY" shall mean any Business Day on
which commercial banks are open for international business (including
dealings in dollar deposits) in London, England.


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"EURODOLLAR INTEREST PERIOD" shall mean, with respect to any
Eurodollar Loan, the period commencing on the Borrowing Date or a
Conversion/Continuation Date for such Eurodollar Loan, as the case may
be, and ending one, two or three months thereafter as the Borrowers
may elect in the applicable Notice of Borrowing or Notice of
Conversion/Continuation; provided that (a) any Eurodollar Interest
Period that would otherwise end on a day that is not a Eurodollar
Business Day shall be extended to the next succeeding Eurodollar
Business Day, unless such Eurodollar Business Day falls in another
calendar month, in which case such Eurodollar Interest Period shall
end on the next preceding Eurodollar Business Day; (b) any Eurodollar
Interest Period that begins on the last Eurodollar Business Day of a
calendar month or any Eurodollar Interest Period that begins on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Eurodollar Interest Period shall end on the
last Eurodollar Business Day of such calendar month at the end of such
Eurodollar Interest Period; and (c) no Eurodollar Interest Period
shall end after the Maturity Date.


"EURODOLLAR LOAN" shall mean any Loan bearing interest at the
rate set forth in Section 2.6(a).


"EURODOLLAR RATE" shall mean, with respect to any Eurodollar
Interest Period, a rate per annum equal to the quotient obtained by
dividing (a) the Base Eurodollar Rate applicable to such Eurodollar
Interest Period by (b) one minus the Reserve Requirement (expressed as
a decimal) applicable to such Eurodollar Interest Period. The
Eurodollar Rate shall be rounded, if necessary, to the next higher
one-sixteenth of one percent (1/16 of 1%).


"EVENT OF DEFAULT" shall have the meaning given such term in
Article VI.


"FEDERAL FUNDS RATE" shall mean, for any period, a
fluctuating interest rate per annum equal for each day during such
period to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the preceding Business Day) by the Federal
Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three (3) Federal
funds brokers of recognized standing selected by it.


"FHA" shall mean the Federal Housing Administration and any
successor thereto.


"FHLMC" shall mean the Federal Home Loan Mortgage Corporation
and any successor thereto.


"FNMA" shall mean the Federal National Mortgage Association
and any successor thereto.


"FNMA/FHLMC SERVICING PORTFOLIO" shall mean the portfolio of
outstanding Mortgage Loans (excluding Mortgage Loans owned by either
Borrower or its Affiliates that are not serviced pursuant to a
Permitted Affiliate Servicing Agreement) that are


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