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Cl. 725, 422 F.2d 887 (1970). Respondent’s position ignores both
the reality and the language in the Sellers’ & Servicers’ Guide
that delivery of the mortgage by an originator is “optional”.
Respondent argues that the prior approval purchase contracts
are not options because these contracts lack a fixed purchase
price that petitioner will pay in the event an originator
delivered a mortgage. Respondent contends that the price was not
fixed because an originator could deliver a mortgage at either
the maximum required net yield or the alternate required net
yield, which was not fixed until an originator converted a prior
approval purchase contract into a mandatory delivery contract.
The prior approval purchase contracts establish a formula to
determine the price, which petitioner and an originator agreed to
use. Form 6 identified the amount of the mortgage that
petitioner was obligated to purchase. The maximum required net
yield provides the minimum price that petitioner would pay to an
originator to purchase the mortgage. While the alternate
required net yield allowed an originator to potentially receive a
more favorable purchase price, we do not think that this feature
of the contract changes the fact that the parties to the prior
approval purchase contracts agreed to a formula that determined
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