MORTGAGE LOAN PURCHASE AGREEMENT
This Mortgage Loan Purchase Agreement (the "Agreement"), dated as of
January 1, 2007, is between HSI Asset Securitization Corporation, a Delaware
corporation (the "Company"), and HSBC Bank USA, National Association, a national
banking association (the "Seller").
The Company and the Seller hereby recite and agree as follows:
1. Defined Terms. Terms used without definition herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement,
dated as of January 1, 2007, by and among the Company, as depositor, Citibank,
as master servicer (the "Master Servicer") Citibank, N.A. as securities
administrator and ▇▇▇▇▇ Fargo Bank, N.A. as custodian (the "Custodian"), and
(the "Securities Administrator") Deutsche Bank National Trust Company, as
trustee (the "Trustee"), relating to the issuance of the HSI Asset Loan
Obligation Trust 2007-AR1 Mortgage Pass-Through Certificates, Series 2007-AR1
(the "Pooling and Servicing Agreement"). Unless otherwise defined herein,
capitalized terms used herein shall have the same meanings assigned to them in
the Pooling and Servicing Agreement.
2. Purchase of Mortgage Loans. The Seller hereby sells, transfers, assigns
and conveys, and the Company hereby purchases the mortgage loans (the "Mortgage
Loans") listed on the Mortgage Loan Schedule in Exhibit 1. The Company and
Seller intend that the conveyance by Seller to the Company of all its right,
title and interest in and to the Mortgage Loans pursuant to this Section 2 shall
be, and be construed as, a sale of the Mortgage Loans by Seller to the Company.
It is, further, not intended that such conveyance be deemed to be a pledge of
the Mortgage Loans by the Seller to the Company to secure a debt or other
obligation of the Seller. However, in the event that the Mortgage Loans are held
to be property of the Seller, or if for any reason this Agreement is held or
deemed to create a security interest in the Mortgage Loans, then it is intended
that (a) this Agreement shall be a security agreement within the meaning of
Articles 8 and 9 of the New York Uniform Commercial Code and the Uniform
Commercial Code of any other applicable jurisdiction; (b) the conveyance
provided for in this paragraph shall be deemed to be, and hereby is, a grant by
the Seller to the Company of a security interest in all of the Seller's right,
title and interest, whether now owned or hereafter acquired, in and to any and
all general intangibles, payment intangibles, accounts, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit, goods,
letters of credit, advices of credit and investment property consisting of,
arising from or relating to any of the following: (A) the Mortgage Loans, the
related Mortgage Note, the Mortgage, any insurance policies and all other
documents in the related Mortgage File, (B) all monies due or to become due
pursuant to the Mortgage Loans in accordance with the terms thereof and (C) all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property; (c) the possession by the
Trustee, the Securities Administrator or any other agent of the Trustee of
Mortgage Notes or such other items of property as constitute instruments, money,
payment intangibles, negotiable documents, goods, deposit accounts, letters of
credit, advices of credit investment property or chattel paper shall be deemed
to be possession by the secured party, or possession by a purchaser or a person
designated by such secured party, for purposes of perfecting the security
interest pursuant to the New York Uniform Commercial Code
and the Uniform Commercial Code of any other applicable jurisdiction (including,
without limitation, Sections 8-106, 9-313 and 9-106 thereof); and (d)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments receipts or confirmations from, securities
intermediaries, bailees or agents of, or persons holding for (as applicable) the
Trustee for the purpose of perfecting such security interest under applicable
law. The Seller shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
determined to create a security interest in the Mortgage Loans and the other
property described above, such security interest would be determined to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement. Without limiting the
generality of the foregoing, the Seller shall prepare and deliver to the Company
not less than 15 days prior to any filing date, and the Company shall file, or
shall cause to be filed, at the expense of the Seller, all filings necessary to
maintain the effectiveness of any original filings necessary under the Uniform
Commercial Code as in effect in any jurisdiction to perfect the Company's
security interest in or lien on the Mortgage Loans, including without limitation
(x) continuation statements, and (y) such other statements as may be occasioned
by (1) any change of name of the Seller or the Company, (2) any change of
location of the place of business or the chief executive office of the Seller
or, (3) any transfer of any interest of the Seller in any Mortgage Loan.
3. Purchase Price; Purchase and Sale. The purchase price (the "Purchase
Price") for the Mortgage Loans shall be $436,164,519.16 inclusive of accrued and
unpaid interest on the Mortgage Loans at the weighted average interest rate
borne by the Mortgage Loans from the date hereof to but not including the
Closing Date, payable by the Company to the Seller on the Closing Date either
(i) by appropriate notation of an inter-company transfer between affiliates of
HSBC or (ii) in immediately available federal funds wired to such bank as may be
designated by the Seller.
Upon payment of the Purchase Price, the Seller shall be deemed to have
transferred, assigned, set over and otherwise conveyed to the Company all the
right, title and interest of the Seller in and to the Mortgage Loans as of the
Cut-Off Date, including all interest and principal due on the Mortgage Loans
after the Cut-Off Date (including Scheduled Payments due after the Cut-Off Date
but received by the Seller on or before the Cut-Off Date, but not including
payments of principal and interest due on the Mortgage Loans on or before the
Cut-Off Date), together with all of the Seller's right, title and interest in
and to the proceeds of any related title, hazard, primary mortgage or other
insurance policies.
The Company hereby directs the Seller, and the Seller hereby agrees, to
deliver to the Trustee all documents, instruments and agreements required to be
delivered by the Company to the Trustee under the Pooling and Servicing
Agreement and such other documents, instruments and agreements as the Company or
the Trustee shall reasonably request.
4. Representations and Warranties. The Seller hereby represents and
warrants to the Company with respect to each Mortgage Loan as of the date hereof
and as of the Closing Date as follows:
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(a) With respect to each Mortgage Loan, as of the date hereof and as
of the Closing Date:
(1) There is no default, breach, violation or event of
acceleration existing under the mortgage or the Mortgage
Note and there are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums,
leasehold payments, or other outstanding charges affecting
the related Mortgaged Property;
(2) 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, or in the process
of being recorded, in the applicable public recording office
if necessary to maintain the lien priority of the mortgage.
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 title insurer, to the extent required by the
policy, and which assumption agreement has been delivered to
the custodian;
(3) 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 under the Mortgage Note or the
mortgage, 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;
(4) All buildings upon the Mortgaged Property are insured by an
insurer in accordance with the applicable underwriting
guidelines against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area
where the Mortgaged Property is located;
(5) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real
estate settlement procedures, predatory and abusive lending,
consumer credit protection, equal credit opportunity, fair
housing or disclosure laws (i) applicable to the origination
and servicing of Mortgage Loans of a type similar to the
Mortgage Loans to be transferred to the Trust and (ii)
applicable to any prepayment penalty associated with the
Mortgage Loans at origination, have been complied with;
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(6) 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;
(7) The mortgage is a valid, existing and enforceable first or
second lien on the Mortgaged Property, including all
improvements on the Mortgaged Property subject only to:
(i) the lien of current real property taxes and assessments
not yet due and payable;
(ii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of
the date of recording acceptable to mortgage lending
institutions generally and specifically referred to in
the lender's title insurance policy delivered to the
originator of the Mortgage Loan and which do not
materially and adversely affect the appraised value of
the Mortgaged Property;
(iii) to the extent the Mortgage Loan is a Second Lien
Mortgage Loan, the related first lien on the Mortgaged
Property; and
(iv) 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. Any security
agreement, chattel mortgage or equivalent document
related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, existing
and enforceable first or second lien and first or
second priority security interest on the property
described therein. 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;
(8) The Mortgage Note and the related mortgage are genuine and
each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws;
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(9) The Mortgage Loan is covered by an American Land Title
Association lender's title insurance policy;
(10) The Mortgage Loan was (a) originated by the applicable
Mortgage Loan Seller or by a savings and loan association, a
savings bank, a commercial bank, credit union, insurance
company or similar institution which is supervised and
examined by a federal or state authority, or by a mortgagee
approved as such by the Secretary of HUD or (b) acquired by
the applicable Mortgage Loan Seller through loan brokers or
correspondents in which case the Mortgage Loan was
re-underwritten by the applicable Mortgage Loan Seller in
accordance with the applicable underwriting guidelines
(including exception practices as set forth in such
underwriting guidelines) and each such loan broker or
correspondent shall be a qualified correspondent;
(11) 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;
(12) 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;
(13) The Mortgaged Property is free of damage and waste and there
is no proceeding pending for the total or partial
condemnation of the Mortgaged Property;
(14) No Mortgage Loan is (i)(a) subject to the provisions of the
Homeownership and Equity Protection Act of 1994 as amended
("HOEPA") or (b) has an annual percentage rate or total
points and fees that exceeds the HOEPA thresholds (as
defined in 12 CFR 226.32 (a)(1)(i) and (ii)), (ii) a "high
cost" mortgage loan, "covered" mortgage loan, "high risk
home" mortgage loan, or "predatory" mortgage loan or any
other comparable term, no matter how defined under any
federal, state or local law, (iii) subject to any comparable
federal, state or local statutes or regulations, or any
other statute or regulation providing for heightened
regulatory scrutiny or assignee liability to holders of such
Mortgage Loans, or (iv) a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the current
Standard & Poor's LEVELS(R) Glossary Revised, Appendix E).
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(15) No Mortgage Loan is secured by real property or secured by a
manufactured home located in the state of Georgia unless (x)
such Mortgage Loan was originated prior to October 1, 2002
or after March 6, 2003, or (y) the property securing the
Mortgage Loan is not, nor will be, occupied by the mortgagor
as the mortgagor's principal dwelling;
(16) Each Mortgage Loan constitutes a "qualified mortgage" under
section 860G(a)(3)(A) of the Code and Treasury Regulation
Section 1.860G-2(a)(1);
(17) With respect to each Mortgage Loan, the applicable Servicer
or its subservicer has fully and accurately furnished
complete information (i.e., favorable or unfavorable) on the
related borrower credit files to Equifax, Experian and Trans
Union Credit Information Company, in accordance with the
Fair Credit Reporting Act and its implementing regulations,
on a monthly basis;
(18) With respect to any Mortgage Loan that contains a provision
permitting imposition of a premium upon a prepayment prior
to maturity: (i) prior to the Mortgage Loan's origination,
the related mortgagor agreed to such premium in exchange for
a monetary benefit, including but not limited to a rate or
fee reduction, (ii) prior to the Mortgage Loan's
origination, the related mortgagor was offered the option of
obtaining a Mortgage Loan that did not require payment of
such a premium; provided, that such offer may have been
evidenced by the applicable Mortgage Loan Seller's rate
sheet/pricing grid relating to such Mortgage Loan, which
provided that the Mortgage Loan had a full prepayment
premium buy-out pricing adjustment available, (iii) the
prepayment premium is disclosed to the related mortgagor in
the mortgage loan documents pursuant to applicable state and
federal law, and (iv) notwithstanding any state or federal
law to the contrary, the servicers shall not impose such
prepayment charge in any instance when the Mortgage Loan is
accelerated or paid off in connection with the workout of a
delinquent Mortgage Loan or as the result of the mortgagor's
default in making the loan payments;
(19) No mortgagor was required to purchase any credit insurance
product (e.g., life, mortgage, disability, accident,
unemployment or health insurance product) or debt
cancellation agreement as a condition of obtaining the
extension of credit. No mortgagor obtained a prepaid single
premium credit insurance policy (e.g., life, mortgage,
disability, accident, unemployment or health insurance
product) or debt cancellation agreement in connection with
the origination of the Mortgage Loan. No proceeds from any
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Mortgage Loan were used to purchase single premium credit
insurance policies or debt cancellation agreements as part
of the origination of, or as a condition to closing, such
Mortgage Loan; and
(20) All points and fees related to each Mortgage Loan were
disclosed in writing to the related borrower in accordance
with applicable state and federal laws and regulations.
(21) The Seller has good title to the Mortgage Loans and the
Mortgage Loans were subject to no offsets, defenses or
counterclaims.
(22) The information set forth in the Mortgage Loan Schedule is
complete, true and correct as of the Cut-off Date.
(23) As of the Closing Date, there is no mechanics' lien or claim
for work, labor or material affecting the premise except
those which are insured against by the title insurance
policy.
(24) At time of origination, 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.
(25) the Mortgage File contains an appraisal of the related
Mortgaged Property which satisfied the standards of FNMA and
FHLMC.
(26) If the Mortgage Property is in a FEMA designated flood area,
a flood insurance policy is in effect.
It is understood and agreed that the representations and warranties of the
Seller set forth in this Section 4 shall survive the Closing Date. Upon the
discovery by either the Seller or the Company of a breach of any of the
foregoing representations and warranties that adversely and materially affects
the value of the related Mortgage Loan and that does not also constitute a
breach of a representation or warranty of the applicable Mortgage Loan Seller
under the applicable Transfer Agreement, the party discovering the breach shall
give prompt written notice to the other. Within 30 days of the earlier of either
discovery by or notice to the Seller of any breach of any of the foregoing
representations or warranties that materially and adversely affects the value of
any Mortgage Loan, the Seller shall use its best efforts to cure such breach in
all material respects and, if such defect or breach cannot be remedied, the
Seller shall, at the Company's option as specified in writing and provided to
the Seller, (i) if such 30 day period expires prior to the second anniversary of
the Closing Date, remove such Mortgage Loan from the Trust Fund and substitute
in its place a Substitute Mortgage Loan; or (ii) repurchase such Mortgage Loan
at the Repurchase Price. Notwithstanding the foregoing, with respect to any of
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the foregoing representations and warranties made in subparagraphs (b) of this
Section 4, a breach of any such representation or warranty shall be deemed to
materially and adversely affect the value of the affected Mortgage Loan and the
interests of Certificateholders therein, thus requiring the Seller to repurchase
or substitute such Mortgage Loan irrespective of the Seller's knowledge of the
breach or violation of the representation or warranty.
5. Repurchase and Substitution of Mortgage Loans. In the event a Mortgage
Loan Seller fails to perform its repurchase or substitution obligations under
its related Transfer Agreement resulting from the insolvency or financial
inability of such Mortgage Loan Seller to do so, the Seller may, in its sole
discretion, opt to undertake such repurchase or substitution.
6. Underwriting. The Seller hereby agrees to furnish any and all
information, documents, certificates, letters or opinions with respect to the
Mortgage Loans, reasonably requested by the Company in order to perform any of
its obligations or satisfy any of the conditions on its part to be performed or
satisfied pursuant to the underwriting agreement dated January [__], 2007, among
the Company, the Seller and HSBC Securities (USA) Inc., or the Purchase
Agreement at or prior to the Closing Date.
7. Notices. All demands, notices and communications hereunder shall be in
writing, shall be effective only upon receipt and shall, if sent to the Company,
be addressed to it at HSI Asset Securitization Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Head MBS Principal Finance, or,
if sent to the Seller, be addressed to it at HSBC Bank USA, National
Association, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Head MBS Principal Finance.
8. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated except by a
writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought. This Agreement may be signed in any number
of counterparts, each of which shall be deemed an original, which taken together
shall constitute one and the same instrument. This Agreement shall bind and
inure to the benefit of and be enforceable by the Company and the Seller and
their respective successors and assigns.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company and the Seller have caused this Agreement
to be duly executed by their respective officers as of the day and year first
above written.
HSI ASSET SECURITIZATION CORPORATION
By:
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
HSBC BANK USA, NATIONAL ASSOCIATION
By:
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Officer #14311
EXHIBIT 1
Mortgage Loan Schedule
[To be retained in a separate closing binder entitled "HALO 2007-AR1 Mortgage
Loan Schedules" at the Chicago offices of Mayer, Brown, ▇▇▇▇ & Maw LLP]
1-1