EXHIBIT 4
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.,
Depositor,
HOMEQ SERVICING CORPORATION,
Servicer,
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
Servicer,
FIRST NLC FINANCIAL SERVICES, LLC,
Responsible Party,
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
--------------------------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2006
--------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ HOME EQUITY LOAN TRUST 2006-2
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2006-2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans.................................
Section 2.02 Acceptance by the Trustee of the Mortgage Loans..............
Section 2.03 Representations and Warranties; Remedies for Breaches of
Representations and Warranties with Respect to the
Mortgage Loans...............................................
Section 2.04 Execution and Delivery of Certificates.......................
Section 2.05 REMIC Matters................................................
Section 2.06 Representations and Warranties of the Depositor..............
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicers to Service Mortgage Loans..........................
Section 3.02 Subservicing Agreements between a Servicer and Subservicers..
Section 3.03 Successor Subservicers.......................................
Section 3.04 Liability of the Servicers...................................
Section 3.05 No Contractual Relationship between Subservicers
and the Trustee..............................................
Section 3.06 Assumption or Termination of Subservicing Agreements
by Trustee...................................................
Section 3.07 Collection of Certain Mortgage Loan Payments.................
Section 3.08 Subservicing Accounts........................................
Section 3.09 Collection of Taxes, Assessments and Similar Items;
Escrow Accounts..............................................
Section 3.10 Collection Accounts..........................................
Section 3.11 Withdrawals from the Collection Accounts.....................
Section 3.12 Investment of Funds in the Collection Accounts
and the Distribution Account.................................
Section 3.13 Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage........................................
Section 3.14 Enforcement of "Due-on-Sale" Clauses; Assumption Agreements..
Section 3.15 Realization upon Defaulted Mortgage Loans....................
Section 3.16 Release of Mortgage Files....................................
Section 3.17 Title, Conservation and Disposition of REO Property..........
Section 3.18 Notification of Adjustments..................................
Section 3.19 Access to Certain Documentation and Information
Regarding the Mortgage Loans.................................
Section 3.20 Documents, Records and Funds in Possession of the
Servicers to Be Held for the Trustee.........................
Section 3.21 Servicing Compensation.......................................
Section 3.22 Annual Statement as to Compliance............................
Section 3.23 Annual Reports on Assessment of Compliance with
Servicing Criteria; Annual Independent Public Accountants'
Attestation Report...........................................
Section 3.24 Trustee to Act as Servicer...................................
Section 3.25 Compensating Interest........................................
Section 3.26 Credit Reporting; ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.....................
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICERS
Section 4.01 Advances.....................................................
Section 4.02 Priorities of Distribution...................................
Section 4.03 Monthly Statements to Certificateholders.....................
Section 4.04 Certain Matters Relating to the Determination of LIBOR.......
Section 4.05 Allocation of Applied Realized Loss Amounts..................
Section 4.06 Swap Account.................................................
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.............................................
Section 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates.....................................
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates............
Section 5.04 Persons Deemed Owners........................................
Section 5.05 Access to List of Certificateholders' Names and Addresses....
Section 5.06 Maintenance of Office or Agency..............................
ARTICLE VI
THE DEPOSITOR AND THE SERVICERS
Section 6.01 Respective Liabilities of the Depositor and the Servicers....
Section 6.02 Merger or Consolidation of the Depositor or a Servicer.......
Section 6.03 Limitation on Liability of the Depositor, the Servicers
and Others...................................................
Section 6.04 Limitation on Resignation of a Servicer......................
Section 6.05 Additional Indemnification by the Servicers; Third
Party Claims.................................................
ARTICLE VII
DEFAULT
Section 7.01 Events of Default............................................
Section 7.02 Trustee to Act; Appointment of Successor.....................
Section 7.03 Notification to Certificateholders...........................
Section 7.04 No Termination Without Cause.................................
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 Duties of the Trustee........................................
Section 8.02 Certain Matters Affecting the Trustee........................
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans........
Section 8.04 Trustee May Own Certificates.................................
Section 8.05 Trustee's Fees and Expenses..................................
Section 8.06 Eligibility Requirements for the Trustee.....................
Section 8.07 Resignation and Removal of the Trustee.......................
Section 8.08 Successor Trustee............................................
Section 8.09 Merger or Consolidation of the Trustee.......................
Section 8.10 Appointment of Co-Trustee or Separate Trustee................
Section 8.11 Tax Matters..................................................
Section 8.12 Periodic Filings.............................................
Section 8.13 Tax Treatment of Upper-Tier CarryForward Amounts, Basis
Risk CarryForward Amounts and Class IO Shortfalls; Tax
Classification of the Excess Reserve Fund Account, Swap
Account and the Interest Rate Swap Agreement.................
ARTICLE IX
TERMINATION
Section 9.01 Termination upon Liquidation or Purchase of the
Mortgage Loans...............................................
Section 9.02 Final Distribution on the Certificates.......................
Section 9.03 Additional Termination Requirements..........................
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment...................................................
Section 10.02 Recordation of Agreement; Counterparts......................
Section 10.03 Governing Law...............................................
Section 10.04 Intention of Parties........................................
Section 10.05 Notices.....................................................
Section 10.06 Severability of Provisions..................................
Section 10.07 Assignment; Sales; Advance Facilities.......................
Section 10.08 Limitation on Rights of Certificateholders..................
Section 10.09 Inspection and Audit Rights.................................
Section 10.10 Certificates Nonassessable and Fully Paid...................
Section 10.11 Rule of Construction........................................
Section 10.12 Waiver of Jury Trial........................................
Section 10.13 Rights of the Swap Provider.................................
Section 10.14 Regulation AB Compliance; Intent of the Parties;
Reasonableness..............................................
SCHEDULES
Schedule I Mortgage Loan Schedule
Schedule II Representations and Warranties of HomEq Servicing Corporation, as
Servicer
Schedule III Representations and Warranties of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I
Inc. as to the Mortgage Loans
Schedule IV Representations and Warranties of First NLC as to the First NLC
Mortgage Loans
Schedule V Representations and Warranties of JPMorgan, as Servicer
EXHIBITS
Exhibit A Form of Class A, Class M and Class B Certificate
Exhibit B Form of Class P Certificate
Exhibit C Form of Class R Certificate
Exhibit D Form of Class X Certificate
Exhibit E Form of Initial Certification of Trustee
Exhibit F Form of Document Certification and Exception Report of Trustee
Exhibit G Form of Residual Transfer Affidavit
Exhibit H Form of Transferor Certificate
Exhibit I Form of Rule 144A Letter
Exhibit J Form of Request for Release
Exhibit K Form of Contents for Each Mortgage File
Exhibit L Form of Certification to be provided with Form 10-K
Exhibit M Form of Certification to be provided by the Trustee to Depositor
Exhibit N Form of Certification to be provided by the Servicer to Depositor
Exhibit O First NLC Purchase Agreement
Exhibit P Meritage Agreements
Exhibit Q AIG Agreements
Exhibit R Accredited Agreements
Exhibit S CHL Agreements
Exhibit T Form of Servicer Power of Attorney
Exhibit U Servicing Criteria
Exhibit V Additional Form 10-D Disclosure
Exhibit W Additional Form 10-K Disclosure
Exhibit X Form 8-K Disclosure Information
Exhibit Y Interest Rate Swap Agreement
Exhibit Z Subservicing Agreement
Exhibit AA Form of Additional Disclosure Notification
THIS POOLING AND SERVICING AGREEMENT, dated as of March 1, 2006,
among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC., a Delaware corporation (the
"Depositor"), HOMEQ SERVICING CORPORATION, a New Jersey corporation (the
"Servicer"), FIRST NLC FINANCIAL SERVICES, LLC, a Florida limited liability
company ("First NLC") and DEUTSCHE BANK NATIONAL TRUST COMPANY, a national
banking association, as trustee (the "Trustee").
W I T N E S S E T H:
- - - - - - - - - -
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
PRELIMINARY STATEMENT
The Trustee shall elect that four segregated asset pools within the
Trust Fund (exclusive of (i) the Prepayment Premiums, (ii) the Swap Assets,
(iii) the Excess Reserve Fund Account, and (iv) the right of the Offered
Certificates to receive Upper-Tier CarryForward Amounts including, but without
duplication, Basis Risk CarryForward Amounts and the obligation to pay Class IO
Shortfalls) be treated for federal income tax purposes as comprising four REMICs
(each, a "Trust REMIC" or, in the alternative, Pooling-Tier REMIC-1,
Pooling-Tier REMIC-2, the Lower-Tier REMIC and the Upper-Tier REMIC,
respectively). The Class X Interest, Class IO Interest and each Class of Offered
Certificates (other than the right of each Class of Offered Certificates to
receive Upper-Tier CarryForward Amounts including, but without duplication,
Basis Risk CarryForward Amounts and the obligation to pay Class IO Shortfalls)
represents ownership of a regular interest in a REMIC for purposes of the REMIC
Provisions. The Class R Certificates represent ownership of the sole class of
residual interest in each Trust REMIC for purposes of the REMIC Provisions. The
Startup Day for each Trust REMIC described herein is the Closing Date. The
latest possible maturity date for each regular interest is the latest date
referenced in Section 2.05. The Upper-Tier REMIC shall hold as assets the
several classes of uncertificated Lower-Tier Regular Interests, set out below.
The Lower-Tier REMIC shall hold as assets the several classes of uncertificated
Pooling-Tier REMIC-2 Regular Interests. Pooling-Tier REMIC-2 shall hold as
assets the several classes of uncertificated Pooling-Tier REMIC-1 Regular
Interests. Pooling-Tier REMIC-1 shall hold as assets the assets of the Trust
Fund (exclusive of (i) the Prepayment Premiums, (ii) the Swap Assets, (iii) the
Excess Reserve Fund Account, and (iv) the right of the Offered Certificates to
receive Upper-Tier CarryForward Amounts including, but without duplication,
Basis Risk CarryForward Amounts and the obligation to pay Class IO Shortfalls).
For federal income tax purposes, each Class of Offered Certificates
represents a beneficial ownership of a regular interest in the Upper-Tier REMIC,
the right to receive Upper-Tier CarryForward Amounts (including, but without
duplication, Basis Risk CarryForward Amounts), and the obligation to pay Class
IO Shortfalls, the Class X Certificates represent beneficial ownership of the
Class X Interest, the Class IO Interest, the Interest Rate Swap Agreement, the
Swap Account, the Excess Reserve Fund Account and the right to receive Class IO
Shortfalls subject to the obligation to pay Upper-Tier CarryForward Amounts
(including, but without duplication, Basis Risk CarryForward Amounts), and the
Class P Certificates represent beneficial ownership of the Prepayment Premiums,
which portions of the Trust Fund shall be treated as a grantor trust.
Pooling-Tier REMIC-1
--------------------
Pooling-Tier REMIC-1 shall issue the following interests in
Pooling-Tier REMIC-1, and each such interest, other than the Class PT1-R
Interest is hereby designated as a regular interest in the Pooling-Tier REMIC-1.
Pooling-Tier REMIC-1 shall also issue the Class PT1-R Interest, which is hereby
designated as the sole class of residual interest in Pooling-Tier REMIC-1. The
Class PT1-R Interest shall be represented by the Class R Certificates, shall not
have a principal balance and shall have no interest rate.
Initial
Pooling-Tier
Pooling-Tier REMIC-1 Pooling-Tier REMIC-1 REMIC-1 Principal
Interest Interest Rate Amount
-------------------- -------------------- ------------------
Class PT1-1 (1) $ 54,793,488.20
Class PT1-2A (2) $ 19,329,759.45
Class PT1-2B (3) $ 19,329,759.45
Class PT1-3A (2) $ 17,631,244.40
Class PT1-3B (3) $ 17,631,244.40
Class PT1-4A (2) $ 17,677,388.60
Class PT1-4B (3) $ 17,677,388.60
Class PT1-5A (2) $ 16,737,361.20
Class PT1-5B (3) $ 16,737,361.20
Class PT1-6A (2) $ 15,860,088.70
Class PT1-6B (3) $ 15,860,088.70
Class PT1-7A (2) $ 15,339,580.15
Class PT1-7B (3) $ 15,339,580.15
Class PT1-8A (2) $ 14,842,447.45
Class PT1-8B (3) $ 14,842,447.45
Class PT1-9A (2) $ 14,366,750.50
Class PT1-9B (3) $ 14,366,750.50
Class PT1-10A (2) $ 13,910,591.95
Class PT1-10B (3) $ 13,910,591.95
Class PT1-11A (2) $ 13,472,248.35
Class PT1-11B (3) $ 13,472,248.35
Class PT1-12A (2) $ 13,049,662.35
Class PT1-12B (3) $ 13,049,662.35
Class PT1-13A (2) $ 12,640,122.45
Class PT1-13B (3) $ 12,640,122.45
Class PT1-14A (2) $ 12,202,553.70
Class PT1-14B (3) $ 12,202,553.70
Class PT1-15A (2) $ 11,678,771.80
Class PT1-15B (3) $ 11,678,771.80
Class PT1-16A (2) $ 11,177,045.85
Class PT1-16B (3) $ 11,177,045.85
Class PT1-17A (2) $ 10,697,003.35
Class PT1-17B (3) $ 10,697,003.35
Class PT1-18A (2) $ 10,237,703.20
Class PT1-18B (3) $ 10,237,703.20
Class PT1-19A (2) $ 9,798,242.50
Class PT1-19B (3) $ 9,798,242.50
Class PT1-20A (2) $ 9,986,870.75
Class PT1-20B (3) $ 9,986,870.75
Class PT1-21A (2) $ 94,300,024.70
Class PT1-21B (3) $ 94,300,024.70
Class PT1-22A (2) $ 59,677,496.45
Class PT1-22B (3) $ 59,677,496.45
Class PT1-23A (2) $ 2,229,058.25
Class PT1-23B (3) $ 2,229,058.25
Class PT1-24A (2) $ 2,002,993.00
Class PT1-24B (3) $ 2,002,993.00
Class PT1-25A (2) $ 1,928,073.25
Class PT1-25B (3) $ 1,928,073.25
Class PT1-26A (2) $ 1,855,980.00
Class PT1-26B (3) $ 1,855,980.00
Class PT1-27A (2) $ 1,786,607.90
Class PT1-27B (3) $ 1,786,607.90
Class PT1-28A (2) $ 1,720,048.05
Class PT1-28B (3) $ 1,720,048.05
Class PT1-29A (2) $ 1,655,912.30
Class PT1-29B (3) $ 1,655,912.30
Class PT1-30A (2) $ 1,594,062.20
Class PT1-30B (3) $ 1,594,062.20
Class PT1-31A (2) $ 1,534,540.65
Class PT1-31B (3) $ 1,534,540.65
Class PT1-32A (2) $ 2,809,909.95
Class PT1-32B (3) $ 2,809,909.95
Class PT1-33A (2) $ 8,300,544.00
Class PT1-33B (3) $ 8,300,544.00
Class PT1-34A (2) $ 1,286,662.70
Class PT1-34B (3) $ 1,286,662.70
Class PT1-35A (2) $ 952,627.55
Class PT1-35B (3) $ 952,627.55
Class PT1-36A (2) $ 919,883.50
Class PT1-36B (3) $ 919,883.50
Class PT1-37A (2) $ 888,250.95
Class PT1-37B (3) $ 888,250.95
Class PT1-38A (2) $ 857,693.80
Class PT1-38B (3) $ 857,693.80
Class PT1-39A (2) $ 828,180.00
Class PT1-39B (3) $ 828,180.00
Class PT1-40A (2) $ 799,686.45
Class PT1-40B (3) $ 799,686.45
Class PT1-41A (2) $ 772,139.55
Class PT1-41B (3) $ 772,139.55
Class PT1-42A (2) $ 745,529.35
Class PT1-42B (3) $ 745,529.35
Class PT1-43A (2) $ 719,825.45
Class PT1-43B (3) $ 719,825.45
Class PT1-44A (2) $ 694,997.70
Class PT1-44B (3) $ 694,997.70
Class PT1-45A (2) $ 671,016.05
Class PT1-45B (3) $ 671,016.05
Class PT1-46A (2) $ 647,857.00
Class PT1-46B (3) $ 647,857.00
Class PT1-47A (2) $ 625,483.85
Class PT1-47B (3) $ 625,483.85
Class PT1-48A (2) $ 603,873.90
Class PT1-48B (3) $ 603,873.90
Class PT1-49A (2) $ 583,002.15
Class PT1-49B (3) $ 583,002.15
Class PT1-50A (2) $ 562,843.65
Class PT1-50B (3) $ 562,843.65
Class PT1-51A (2) $ 543,374.25
Class PT1-51B (3) $ 543,374.25
Class PT1-52A (2) $ 524,570.85
Class PT1-52B (3) $ 524,570.85
Class PT1-53A (2) $ 506,410.80
Class PT1-53B (3) $ 506,410.80
Class PT1-54A (2) $ 488,872.50
Class PT1-54B (3) $ 488,872.50
Class PT1-55A (2) $ 13,472,409.00
Class PT1-55B (3) $ 13,472,409.00
Class PT1-R (4) (4)
-----------------
(1) For any Distribution Date (and the related Interest Accrual Period), this
Pooling-Tier REMIC-1 Regular Interest shall bear interest at a per annum
rate (its "Pooling-Tier REMIC-1 Interest Rate") equal to the Pooling-Tier
REMIC-1 WAC Rate.
(2) For any Distribution Date (and the related Interest Accrual Period), this
Pooling-Tier REMIC-1 Regular Interest shall bear interest at a per annum
rate (its "Pooling-Tier REMIC-1 Interest Rate") equal to the product of
(i) 2 and (ii) the Pooling-Tier REMIC-1 WAC Rate, subject to a maximum
rate of 10.30%.
(3) For any Distribution Date (and the related Interest Accrual Period), this
Pooling-Tier REMIC-1 Regular Interest shall bear interest at a per annum
rate (its "Pooling-Tier REMIC-1 Interest Rate") equal to the excess, if
any, of (A) the product of (i) 2 and (ii) the Pooling-Tier REMIC-1 WAC
Rate over (B) 10.30%.
(4) The Class PT1-R Interest shall not have a principal balance and shall not
bear interest.
On each Distribution Date, the interest distributable in respect of
the Mortgage Loans for such Distribution Date shall be deemed to be distributed
to the Pooling-Tier REMIC-1 Regular Interests at the rates shown above.
On each Distribution Date, Realized Losses, Subsequent Recoveries
and payments of principal in respect of the Mortgage Loans shall be allocated to
the outstanding Pooling-Tier REMIC-1 Regular Interest with the lowest numerical
denomination until the Pooling-Tier REMIC-1 Principal Amount of such interest is
reduced to zero, provided that, with respect to Pooling-Tier REMIC-1 Regular
Interests with the same numerical denomination, such Realized Losses, Subsequent
Recoveries and payments of principal shall be allocated pro rata between such
Pooling-Tier REMIC-1 Regular Interests, until the Pooling-Tier REMIC-1 Principal
Amount of such interests is reduced to zero.
Pooling-Tier REMIC-2
Pooling-Tier REMIC-2 shall issue the following interests in
Pooling-Tier REMIC-2, and each such interest, other than the Class PT2-R
Interest, is hereby designated as a regular interest in Pooling-Tier REMIC-2.
The Class PT2-R Interest is hereby designated as the sole class of residual
interest in Pooling-Tier REMIC-2 and shall be represented by the Class R
Certificates.
Corresponding
Pooling-Tier Pooling-Tier Pooling-Tier REMIC-2 Pooling-Tier Corresponding Corresponding
REMIC-2 REMIC-2 Initial Principal REMIC-2 IO Pooling-Tier REMIC-1 Scheduled Crossover
Interest Interest Rate Amount Interest Regular Interest Distribution Date
-----------------------------------------------------------------------------------------------------------------------------------
Class PT2-1 (1) $ 54,793,488.20 N/A N/A N/A
Class PT2-2A (2) $ 19,329,759.45 Class PT2-IO-2 N/A N/A
Class PT2-2B (3) $ 19,329,759.45 N/A N/A N/A
Class PT2-3A (2) $ 17,631,244.40 Class PT2-IO-3 N/A N/A
Class PT2-3B (3) $ 17,631,244.40 N/A N/A N/A
Class PT2-4A (2) $ 17,677,388.60 Class PT2-IO-4 N/A N/A
Class PT2-4B (3) $ 17,677,388.60 N/A N/A N/A
Class PT2-5A (2) $ 16,737,361.20 Class PT2-IO-5 N/A N/A
Class PT2-5B (3) $ 16,737,361.20 N/A N/A N/A
Class PT2-6A (2) $ 15,860,088.70 Class PT2-IO-6 N/A N/A
Class PT2-6B (3) $ 15,860,088.70 N/A N/A N/A
Class PT2-7A (2) $ 15,339,580.15 Class PT2-IO-7 N/A N/A
Class PT2-7B (3) $ 15,339,580.15 N/A N/A N/A
Class PT2-8A (2) $ 14,842,447.45 Class PT2-IO-8 N/A N/A
Class PT2-8B (3) $ 14,842,447.45 N/A N/A N/A
Class PT2-9A (2) $ 14,366,750.50 Class PT2-IO-9 N/A N/A
Class PT2-9B (3) $ 14,366,750.50 N/A N/A N/A
Class PT2-10A (2) $ 13,910,591.95 Class PT2-IO-10 N/A N/A
Class PT2-10B (3) $ 13,910,591.95 N/A N/A N/A
Class PT2-11A (2) $ 13,472,248.35 Class PT2-IO-11 N/A N/A
Class PT2-11B (3) $ 13,472,248.35 N/A N/A N/A
Class PT2-12A (2) $ 13,049,662.35 Class PT2-IO-12 N/A N/A
Class PT2-12B (3) $ 13,049,662.35 N/A N/A N/A
Class PT2-13A (2) $ 12,640,122.45 Class PT2-IO-13 N/A N/A
Class PT2-13B (3) $ 12,640,122.45 N/A N/A N/A
Class PT2-14A (2) $ 12,202,553.70 Class PT2-IO-14 N/A N/A
Class PT2-14B (3) $ 12,202,553.70 N/A N/A N/A
Class PT2-15A (2) $ 11,678,771.80 Class PT2-IO-15 N/A N/A
Class PT2-15B (3) $ 11,678,771.80 N/A N/A N/A
Class PT2-16A (2) $ 11,177,045.85 Class PT2-IO-16 N/A N/A
Class PT2-16B (3) $ 11,177,045.85 N/A N/A N/A
Class PT2-17A (2) $ 10,697,003.35 Class PT2-IO-17 N/A N/A
Class PT2-17B (3) $ 10,697,003.35 N/A N/A N/A
Class PT2-18A (2) $ 10,237,703.20 Class PT2-IO-18 N/A N/A
Class PT2-18B (3) $ 10,237,703.20 N/A N/A N/A
Class PT2-19A (2) $ 9,798,242.50 Class PT2-IO-19 N/A N/A
Class PT2-19B (3) $ 9,798,242.50 N/A N/A N/A
Class PT2-20A (2) $ 9,986,870.75 Class PT2-IO-20 N/A N/A
Class PT2-20B (3) $ 9,986,870.75 N/A N/A N/A
Class PT2-21A (2) $ 94,300,024.70 Class PT2-IO-21 N/A N/A
Class PT2-21B (3) $ 94,300,024.70 N/A N/A N/A
Class PT2-22A (2) $ 59,677,496.45 Class PT2-IO-22 N/A N/A
Class PT2-22B (3) $ 59,677,496.45 N/A N/A N/A
Class PT2-23A (2) $ 2,229,058.25 Class PT2-IO-23 N/A N/A
Class PT2-23B (3) $ 2,229,058.25 N/A N/A N/A
Class PT2-24A (2) $ 2,002,993.00 Class PT2-IO-24 N/A N/A
Class PT2-24B (3) $ 2,002,993.00 N/A N/A N/A
Class PT2-25A (2) $ 1,928,073.25 Class PT2-IO-25 N/A N/A
Class PT2-25B (3) $ 1,928,073.25 N/A N/A N/A
Class PT2-26A (2) $ 1,855,980.00 Class PT2-IO-26 N/A N/A
Class PT2-26B (3) $ 1,855,980.00 N/A N/A N/A
Class PT2-27A (2) $ 1,786,607.90 Class PT2-IO-27 N/A N/A
Class PT2-27B (3) $ 1,786,607.90 N/A N/A N/A
Class PT2-28A (2) $ 1,720,048.05 Class PT2-IO-28 N/A N/A
Class PT2-28B (3) $ 1,720,048.05 N/A N/A N/A
Class PT2-29A (2) $ 1,655,912.30 Class PT2-IO-29 N/A N/A
Class PT2-29B (3) $ 1,655,912.30 N/A N/A N/A
Class PT2-30A (2) $ 1,594,062.20 Class PT2-IO-30 N/A N/A
Class PT2-30B (3) $ 1,594,062.20 N/A N/A N/A
Class PT2-31A (2) $ 1,534,540.65 Class PT2-IO-31 N/A N/A
Class PT2-31B (3) $ 1,534,540.65 N/A N/A N/A
Class PT2-32A (2) $ 2,809,909.95 Class PT2-IO-32 N/A N/A
Class PT2-32B (3) $ 2,809,909.95 N/A N/A N/A
Class PT2-33A (2) $ 8,300,544.00 Class PT2-IO-33 N/A N/A
Class PT2-33B (3) $ 8,300,544.00 N/A N/A N/A
Class PT2-34A (2) $ 1,286,662.70 Class PT2-IO-34 N/A N/A
Class PT2-34B (3) $ 1,286,662.70 N/A N/A N/A
Class PT2-35A (2) $ 952,627.55 Class PT2-IO-35 N/A N/A
Class PT2-35B (3) $ 952,627.55 N/A N/A N/A
Class PT2-36A (2) $ 919,883.50 Class PT2-IO-36 N/A N/A
Class PT2-36B (3) $ 919,883.50 N/A N/A N/A
Class PT2-37A (2) $ 888,250.95 Class PT2-IO-37 N/A N/A
Class PT2-37B (3) $ 888,250.95 N/A N/A N/A
Class PT2-38A (2) $ 857,693.80 Class PT2-IO-38 N/A N/A
Class PT2-38B (3) $ 857,693.80 N/A N/A N/A
Class PT2-39A (2) $ 828,180.00 Class PT2-IO-39 N/A N/A
Class PT2-39B (3) $ 828,180.00 N/A N/A N/A
Class PT2-40A (2) $ 799,686.45 Class PT2-IO-40 N/A N/A
Class PT2-40B (3) $ 799,686.45 N/A N/A N/A
Class PT2-41A (2) $ 772,139.55 Class PT2-IO-41 N/A N/A
Class PT2-41B (3) $ 772,139.55 N/A N/A N/A
Class PT2-42A (2) $ 745,529.35 Class PT2-IO-42 N/A N/A
Class PT2-42B (3) $ 745,529.35 N/A N/A N/A
Class PT2-43A (2) $ 719,825.45 Class PT2-IO-43 N/A N/A
Class PT2-43B (3) $ 719,825.45 N/A N/A N/A
Class PT2-44A (2) $ 694,997.70 Class PT2-IO-44 N/A N/A
Class PT2-44B (3) $ 694,997.70 N/A N/A N/A
Class PT2-45A (2) $ 671,016.05 Class PT2-IO-45 N/A N/A
Class PT2-45B (3) $ 671,016.05 N/A N/A N/A
Class PT2-46A (2) $ 647,857.00 Class PT2-IO-46 N/A N/A
Class PT2-46B (3) $ 647,857.00 N/A N/A N/A
Class PT2-47A (2) $ 625,483.85 Class PT2-IO-47 N/A N/A
Class PT2-47B (3) $ 625,483.85 N/A N/A N/A
Class PT2-48A (2) $ 603,873.90 Class PT2-IO-48 N/A N/A
Class PT2-48B (3) $ 603,873.90 N/A N/A N/A
Class PT2-49A (2) $ 583,002.15 Class PT2-IO-49 N/A N/A
Class PT2-49B (3) $ 583,002.15 N/A N/A N/A
Class PT2-50A (2) $ 562,843.65 Class PT2-IO-50 N/A N/A
Class PT2-50B (3) $ 562,843.65 N/A N/A N/A
Class PT2-51A (2) $ 543,374.25 Class PT2-IO-51 N/A N/A
Class PT2-51B (3) $ 543,374.25 N/A N/A N/A
Class PT2-52A (2) $ 524,570.85 Class PT2-IO-52 N/A N/A
Class PT2-52B (3) $ 524,570.85 N/A N/A N/A
Class PT2-53A (2) $ 506,410.80 Class PT2-IO-53 N/A N/A
Class PT2-53B (3) $ 506,410.80 N/A N/A N/A
Class PT2-54A (2) $ 488,872.50 Class PT2-IO-54 N/A N/A
Class PT2-54B (3) $ 488,872.50 N/A N/A N/A
Class PT2-55A (2) $ 13,472,409.00 Class PT2-IO-55 N/A N/A
Class PT2-55B (3) $ 13,472,409.00 N/A N/A N/A
Class PT2-IO-2 (4) (4) N/A Class PT1-2A April 2006
Class PT2-IO-3 (4) (4) N/A Class PT1-3A May 2006
Class PT2-IO-4 (4) (4) N/A Class PT1-4A June 2006
Class PT2-IO-5 (4) (4) N/A Class PT1-5A July 2006
Class PT2-IO-6 (4) (4) N/A Class PT1-6A August 2006
Class PT2-IO-7 (4) (4) N/A Class PT1-7A September 2006
Class PT2-IO-8 (4) (4) N/A Class PT1-8A October 2006
Class PT2-IO-9 (4) (4) N/A Class PT1-9A November 2006
Class PT2-IO-10 (4) (4) N/A Class PT1-10A December 2006
Class PT2-IO-11 (4) (4) N/A Class PT1-11A January 2007
Class PT2-IO-12 (4) (4) N/A Class PT1-12A February 2007
Class PT2-IO-13 (4) (4) N/A Class PT1-13A March 2007
Class PT2-IO-14 (4) (4) N/A Class PT1-14A April 2007
Class PT2-IO-15 (4) (4) N/A Class PT1-15A May 2007
Class PT2-IO-16 (4) (4) N/A Class PT1-16A June 2007
Class PT2-IO-17 (4) (4) N/A Class PT1-17A July 2007
Class PT2-IO-18 (4) (4) N/A Class PT1-18A August 2007
Class PT2-IO-19 (4) (4) N/A Class PT1-19A September 2007
Class PT2-IO-20 (4) (4) N/A Class PT1-20A October 2007
Class PT2-IO-21 (4) (4) N/A Class PT1-21A November 2007
Class PT2-IO-22 (4) (4) N/A Class PT1-22A December 2007
Class PT2-IO-23 (4) (4) N/A Class PT1-23A January 2008
Class PT2-IO-24 (4) (4) N/A Class PT1-24A February 2008
Class PT2-IO-25 (4) (4) N/A Class PT1-25A March 2008
Class PT2-IO-26 (4) (4) N/A Class PT1-26A April 2008
Class PT2-IO-27 (4) (4) N/A Class PT1-27A May 2008
Class PT2-IO-28 (4) (4) N/A Class PT1-28A June 2008
Class PT2-IO-29 (4) (4) N/A Class PT1-29A July 2008
Class PT2-IO-30 (4) (4) N/A Class PT1-30A August 2008
Class PT2-IO-31 (4) (4) N/A Class PT1-31A September 2008
Class PT2-IO-32 (4) (4) N/A Class PT1-32A October 2008
Class PT2-IO-33 (4) (4) N/A Class PT1-33A November 2008
Class PT2-IO-34 (4) (4) N/A Class PT1-34A December 2008
Class PT2-IO-35 (4) (4) N/A Class PT1-35A January 2009
Class PT2-IO-36 (4) (4) N/A Class PT1-36A February 2009
Class PT2-IO-37 (4) (4) N/A Class PT1-37A March 2009
Class PT2-IO-38 (4) (4) N/A Class PT1-38A April 2009
Class PT2-IO-39 (4) (4) N/A Class PT1-39A May 2009
Class PT2-IO-40 (4) (4) N/A Class PT1-40A June 2009
Class PT2-IO-41 (4) (4) N/A Class PT1-41A July 2009
Class PT2-IO-42 (4) (4) N/A Class PT1-42A August 2009
Class PT2-IO-43 (4) (4) N/A Class PT1-43A September 2009
Class PT2-IO-44 (4) (4) N/A Class PT1-44A October 2009
Class PT2-IO-45 (4) (4) N/A Class PT1-45A November 2009
Class PT2-IO-46 (4) (4) N/A Class PT1-46A December 2009
Class PT2-IO-47 (4) (4) N/A Class PT1-47A January 2010
Class PT2-IO-48 (4) (4) N/A Class PT1-48A February 2010
Class PT2-IO-49 (4) (4) N/A Class PT1-49A March 2010
Class PT2-IO-50 (4) (4) N/A Class PT1-50A April 2010
Class PT2-IO-51 (4) (4) N/A Class PT1-51A May 2010
Class PT2-IO-52 (4) (4) N/A Class PT1-52A June 2010
Class PT2-IO-53 (4) (4) N/A Class PT1-53A July 2010
Class PT2-IO-54 (4) (4) N/A Class PT1-54A August 2010
Class PT2-IO-55 (4) (4) N/A Class PT1-55A September 2010
Class PT2-R (5) (5) N/A N/A N/A
-----------------
(1) For any Distribution Date (and the related Interest Accrual Period), this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per annum
rate (its "Pooling-Tier REMIC-2 Interest Rate") equal to the Pooling-Tier
REMIC-1 WAC Rate.
(2) For any Distribution Date (and the related Interest Accrual Period), this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per annum
rate (its "Pooling-Tier REMIC-2 Interest Rate") equal to the weighted
average of the Pooling-Tier REMIC-1 Interest Rates on the Pooling-Tier
REMIC-1 Regular Interests and having an "A" in their class designation,
provided that, on each Distribution Date on which interest is
distributable on the Corresponding Pooling-Tier REMIC-2 IO Interest, this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per annum
rate equal to Swap LIBOR subject to a maximum rate equal to the weighted
average of the Pooling-Tier REMIC-1 Interest Rates on the Pooling-Tier
REMIC-1 Regular Interests and having an "A" in their class designation.
(3) For any Distribution Date (and the related Interest Accrual Period), this
Pooling-Tier REMIC-2 Regular Interest shall bear interest at a per annum
rate (its "Pooling-Tier REMIC-2 Interest Rate") equal to the weighted
average of the Pooling-Tier REMIC-1 Interest Rates on the Pooling-Tier
REMIC-1 Regular Interests and having a "B" in their class designation.
(4) Each Pooling-Tier REMIC-2 IO is an interest-only interest and does not
have a principal balance but has a notional balance ("Pooling-Tier REMIC-2
IO Notional Balance") equal to the Pooling-Tier REMIC-2 Principal Amount
of the Corresponding Pooling-Tier REMIC-1 Regular Interest. From the
Closing Date through and including the Corresponding Scheduled Crossover
Distribution Date, each Pooling-Tier REMIC-2 IO Interest shall be entitled
to receive interest that accrues on the Corresponding Pooling-Tier REMIC-1
Regular Interest at a rate equal to the excess, if any, of (i) the
Pooling-Tier REMIC-1 Interest Rate for the Corresponding Pooling-Tier
REMIC-1 Regular Interest over (ii) Swap LIBOR. After the Corresponding
Scheduled Crossover Distribution Date, the Pooling-Tier REMIC-2 IO
Interest shall not accrue interest.
(5) The Class PT2-R Interest shall not have a principal balance and shall not
bear interest.
On each Distribution Date, the interest distributable in respect of
the Mortgage Loans for such Distribution Date shall be distributed to the
Pooling-Tier REMIC-2 Regular Interests at the Pooling-Tier REMIC-2 Interest
Rates shown above.
On each Distribution Date, Realized Losses, Subsequent Recoveries
and payments of principal in respect of the Mortgage Loans shall be allocated to
the then outstanding Pooling-Tier REMIC-2 Regular Interests (other than the
Pooling-Tier REMIC-2 IO Interests) with the lowest numerical denomination until
the Pooling-Tier REMIC-2 Principal Amount of such interest is reduced to zero,
provided that, for Pooling-Tier REMIC-2 Regular Interests Mortgage Loans with
the same numerical denomination, such Realized Losses, Subsequent Recoveries and
payments of principal shall be allocated pro rata between such Pooling-Tier
REMIC-2 Regular Interests, until the Pooling-Tier REMIC-2 Principal Amount of
such interests is reduced to zero.
Lower-Tier REMIC
The Lower-Tier REMIC shall issue the following interests, and each
such interest, other than the Class LT-R Interest, is hereby designated as a
regular interest in the Lower-Tier REMIC. The Class LT-R Interest is hereby
designated as the sole class of residual interest in the Lower-Tier REMIC and
shall be represented by the Class R Certificates.
Corresponding Upper-Tier
Lower-Tier REMIC Interest Lower-Tier Interest Rate Initial Lower-Tier Principal Amount REMIC Regular Interest
------------------------------------------------------------------------------------------------------------------------------------
Class LT-A-1 (1) 1/2 initial Class Certificate Balance of A-1
Corresponding Upper-Tier Regular Interest
Class LT-A-2 (1) 1/2 initial Class Certificate Balance of A-2
Corresponding Upper-Tier Regular Interest
Class LT-A-3 (1) 1/2 initial Class Certificate Balance of A-3
Corresponding Upper-Tier Regular Interest
Class LT-A-4 (1) 1/2 initial Class Certificate Balance of A-4
Corresponding Upper-Tier Regular Interest
Class LT-M-1 (1) 1/2 initial Class Certificate Balance of M-1
Corresponding Upper-Tier Regular Interest
Class LT-M-2 (1) 1/2 initial Class Certificate Balance of M-2
Corresponding Upper-Tier Regular Interest
Class LT-M-3 (1) 1/2 initial Class Certificate Balance of M-3
Corresponding Upper-Tier Regular Interest
Class LT-M-4 (1) 1/2 initial Class Certificate Balance of M-4
Corresponding Upper-Tier Regular Interest
Class LT-M-5 (1) 1/2 initial Class Certificate Balance of M-5
Corresponding Upper-Tier Regular Interest
Class LT-M-6 (1) 1/2 initial Class Certificate Balance of M-6
Corresponding Upper-Tier Regular Interest
Class LT-B-1 (1) 1/2 initial Class Certificate Balance of B-1
Corresponding Upper-Tier Regular Interest
Class LT-B-2 (1) 1/2 initial Class Certificate Balance of B-2
Corresponding Upper-Tier Regular Interest
Class LT-B-3 (1) 1/2 initial Class Certificate Balance of B-3
Corresponding Upper-Tier Regular Interest
Class LT-Accrual (1) 1/2 Pool Stated Principal Balance plus 1/2 N/A
Subordinated Amount
Class LT-IO (2) (2) N/A
Class LT-R (3) (3) N/A
-----------------
(1) The interest rate with respect to any Distribution Date for these
interests is a per annum variable rate equal to the weighted average of
the Pooling-Tier REMIC-2 Interest Rates of the Pooling-Tier REMIC-2
Regular Interests (other than the Pooling-Tier REMIC-2 IO Interests).
(2) This Lower-Tier Regular Interest is an interest-only interest and does not
have a Lower-Tier Principal Amount. On each Distribution Date, this
Lower-Tier Regular Interest shall be entitled to receive all interest
distributable on the Pooling-Tier REMIC-2 IO Interests.
(3) The Class LT-R Interest is the sole class of residual interest in the
Lower-Tier REMIC and it does not have a principal amount or an interest
rate.
Each Lower-Tier Regular Interest is hereby designated as a regular
interest in the Lower-Tier REMIC. The Class LT-A-1, Class LT-A-2, Class LT-A-3,
Class LT-A-4, Class LT-M-1, Class LT-M-2, Class LT-M-3, Class LT-M-4, Class
LT-M-5, Class LT-M-6, Class LT-B-1, Class LT-B-2 and Class LT-B-3 Interests are
hereby designated the LT-Accretion Directed Classes (the "LT-Accretion Directed
Classes").
On each Distribution Date, 50% of the increase in the Subordinated
Amount shall be payable as a reduction of the Lower-Tier Principal Amount of the
LT-Accretion Directed Classes (each such Class will be reduced by an amount
equal to 50% of any increase in the Subordinated Amount that is attributable to
a reduction in the Class Certificate Balance of its Corresponding Class) and
shall be accrued and added to the Lower-Tier Principal Amount of the Class
LT-Accrual Interest. On each Distribution Date, the increase in the Lower-Tier
Principal Amount of the Class LT-Accrual Interest shall not exceed interest
accruals for such Distribution Date for the Class LT-Accrual Interest. In the
event that: (i) 50% of the increase in the Subordinated Amount exceeds (ii)
interest accruals on the Class LT-Accrual Interest for such Distribution Date,
the excess for such Distribution Date (accumulated with all such excesses for
all prior Distribution Dates) will be added to any increase in the Subordinated
Amount for purposes of determining the amount of interest accrual on the Class
LT-Accrual Interest payable as principal on the LT-Accretion Directed Classes on
the next Distribution Date pursuant to the first sentence of this paragraph. All
payments of scheduled principal and prepayments of principal generated by the
Mortgage Loans and all Subsequent Recoveries allocable to principal shall be
allocated (i) 50% to the Class LT-Accrual Interest and (ii) 50% to the
LT-Accretion Directed Classes (such principal payments and Subsequent Recoveries
shall be allocated among such LT-Accretion Directed Classes in an amount equal
to 50% of the principal amounts and Subsequent Recoveries allocated to their
respective Corresponding Classes), until paid in full. Notwithstanding the
above, principal payments allocated to the Class X Interest that result in the
reduction in the Subordinated Amount shall be allocated to the Class LT-Accrual
Interest (until paid in full). Realized Losses shall be applied so that after
all distributions have been made on each Distribution Date (i) the Lower-Tier
Principal Amount of each LT-Accretion Directed Class is equal to 50% of the
Class Certificate Balance of its Corresponding Class, and (ii) the Class
LT-Accrual Interest is equal to 50% of the aggregate Stated Principal Balance of
the Mortgage Loans plus 50% of the Subordinated Amount. Any increase in the
Class Certificate Balance of a Class of Offered Certificates as a result of a
Subsequent Recovery shall increase the Lower-Tier Principal Amount of the
Corresponding Lower-Tier Regular Interest by 50% of such increase, and the
remaining 50% of such increase shall increase the Lower-Tier Principal Amount of
the Class LT-Accrual Interest.
Upper-Tier REMIC
The Upper-Tier REMIC shall issue the following interests, and each
such interest, other than the Class UT-R Interest, is hereby designated as a
regular interest in the Upper-Tier REMIC. The Class UT-R Interest is hereby
designated as the sole class of residual interests in the Upper-Tier REMIC and
shall be represented by the Class R Certificates.
Corresponding
Upper-Tier REMIC Upper-Tier Initial Principal Class of
Interest Interest Rate Upper-Tier Amount Certificates
--------------------------------------------------------------------------------
Class A-1 (1) $ 401,660,000 Class A-1
Class A-2 (1) $ 111,040,000 Class A-2
Class A-3 (1) $ 163,635,000 Class A-3
Class A-4 (1) $ 92,765,000 Class A-4
Class M-1 (1) $ 37,857,000 Class M-1
Class M-2 (1) $ 34,869,000 Class M-2
Class M-3 (1) $ 20,921,000 Class M-3
Class M-4 (1) $ 18,431,000 Class M-4
Class M-5 (1) $ 16,936,000 Class M-5
Class M-6 (1) $ 16,438,000 Class M-6
Class B-1 (1) $ 14,944,000 Class B-1
Class B-2 (1) $ 14,446,000 Class B-2
Class B-3 (1) $ 10,460,000 Class B-3
Class IO (2) (2) N/A
Class X (3) (3) Class X
Class UT-R (4) (4) Class R
-----------------
(1) For any Distribution Date (and the related Interest Accrual Period) this
interest shall bear interest at the lesser of (i) the Pass-Through Rate
(determined without regard to the WAC Cap) for the Corresponding Class of
Certificates and (ii) the Upper-Tier REMIC WAC Rate.
(2) This interest is an interest-only interest and does not have a principal
balance. On each Distribution Date, the Class IO Interest shall be
entitled to receive all interest distributable on the Class LT-IO
Interest. This interest shall be beneficially owned by the holders of the
Class X Certificates and shall be held as an asset of the Swap Account.
(3) The Class X Interest has an initial principal balance of $41,843,245 but
will not accrue interest on such balance but will accrue interest on a
notional principal balance. As of any Distribution Date, the Class X
Interest shall have a notional principal balance equal to the aggregate of
the Lower-Tier Principal Amounts of the Lower-Tier Regular Interests
(other than the Class LT-IO Interest) as of the first day of the related
Interest Accrual Period. With respect to any Interest Accrual Period, the
Class X Interest shall bear interest at a rate equal to the excess, if
any, of the Upper-Tier REMIC WAC Rate over the product of (i) 2 and (ii)
the weighted average of the Lower-Tier Interest Rates of the Lower-Tier
REMIC Interests (other than the Class LT-IO Interest), where the
Lower-Tier Interest Rate on each of the Class LT-Accrual Interest is
subject to a cap equal to zero and each LT-Accretion Directed Class is
subject to a cap equal to the Upper-Tier Interest Rate on its
Corresponding Class of Upper-Tier Regular Interest. With respect to any
Distribution Date, interest that so accrues on the notional principal
balance of the Class X Interest shall be deferred in an amount equal to
any increase in the Subordinated Amount on such Distribution Date. Such
deferred interest shall not itself bear interest.
(4) The Class UT-R Interest does not have an interest rate or a principal
balance.
On each Distribution Date, interest distributable in respect of the
Lower-Tier Interests for such Distribution Date shall be deemed to be
distributed on the interests in the Upper-Tier REMIC at the rates shown above,
provided that the Class IO Interest shall be entitled to receive interest before
any other interest in the Upper-Tier REMIC.
On each Distribution Date, all Realized Losses, Subsequent
Recoveries and all payments of principal shall be allocated to the Upper-Tier
Interests until the outstanding principal balance of each such interest equals
the outstanding Class Certificate Balance of the Corresponding Class of
Certificates as of such Distribution Date.
The Certificates
----------------
Class Class Certificate
Class Designation Pass-Through Rate Balance
-----------------------------------------------------------------
Class A-1 (1) $401,660,000
Class A-2 (1) $111,040,000
Class A-3 (1) $163,635,000
Class A-4 (1) $ 92,765,000
Class M-1 (2) $ 37,857,000
Class M-2 (2) $ 34,869,000
Class M-3 (2) $ 20,921,000
Class M-4 (2) $ 18,431,000
Class M-5 (2) $ 16,936,000
Class M-6 (2) $ 16,438,000
Class B-1 (2) $ 14,944,000
Class B-2 (2) $ 14,446,000
Class B-3 (2) $ 10,460,000
Class X (3) $ 0(3)
Class R (4) $ 0(4)
-----------------
(1) The Class A-1, Class A-2, Class A-3, Class A-4 Interest will bear interest
during each Interest Accrual Period at a per annum rate equal to (a) on or
prior to the Optional Termination Date, the lesser of (i) LIBOR plus the
applicable Pass-Through Margin, (ii) the WAC Cap or (b) after the Optional
Termination Date, the least of (i) LIBOR plus the applicable Pass-Through
Margin and (ii) the WAC Cap.
(2) The Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class B-1, Class B-2 and Class B-3 Interests will bear interest during
each Interest Accrual Period at a per annum rate equal to (a) on or prior
to the Optional Termination Date, the lesser of (i) LIBOR plus the
applicable Pass-Through Margin, and (ii) the WAC Cap or (b) after the
Optional Termination Date, the lesser of (i) LIBOR plus the applicable
Pass-Through Margin, and (ii) the WAC Cap.
(3) The Class X Certificates will represent beneficial ownership of the Class
X Interest, the Class IO Interest, the Interest Rate Swap Agreement, the
right to Class IO Shortfalls and amounts in the Excess Reserve Fund
Account and the Swap Account, subject to the obligation to make payments
from the Excess Reserve Fund Account in respect of Basis Risk CarryForward
Amounts and amounts in the Swap Account subject to the obligation to make
Net Swap Payments, Swap Termination Payments, Basis Risk CarryForward
Amounts and, without duplication, Upper Tier CarryForward Amounts. For
federal income tax purposes, the Trustee will treat a Class X
Certificateholder's obligation to make payments from the Excess Reserve
Fund Account or the Swap Account as payments made pursuant to an interest
rate cap contract written by the Class X Certificateholders in favor of
each Class of Offered Certificates. Such rights of the Class X
Certificateholders and Offered Certificateholders shall be treated as held
in a portion of the Trust Fund that is treated as a grantor trust under
subpart E, Part I of subchapter J of the Code.
(4) The Class R Certificates do not have an interest rate or a principal
balance.
(5) Each of these Certificates will represent not only the ownership of the
Corresponding Class of Upper-Tier Regular Interest but also the right to
receive payments from the Excess Reserve Fund Account and the Swap Account
in respect of any Basis Risk CarryForward Amounts and, without
duplication, Upper-Tier CarryForward Amounts. Each of these Certificates
will also be subject to the obligation to pay Class IO Shortfalls as
described in Section 8.13. For federal income tax purposes, any amount
distributed on the Offered Certificates on any such Distribution Date in
excess of the amount distributable on their Corresponding Class of
Upper-Tier Regular Interest on such Distribution Date shall be treated as
having been paid from the Excess Reserve Fund Account or the Swap Account,
as applicable, and any amount distributable on such Corresponding Class of
Upper-Tier Regular Interest on such Distribution Date in excess of the
amount distributable on the Offered Certificates on such Distribution Date
shall be treated as having been paid to the Swap Account, all pursuant to,
and as further provided in, Section 8.13. For federal income tax purposes,
the Trustee will treat a Certificateholder's right to receive payments
from the Excess Reserve Fund Account or the Swap Account as payments made
pursuant to an interest rate cap contract written by the Class X
Certificateholders.
The minimum denomination for each Class of Certificates, other than
the Class P, Class R and the Class X Certificates, will be $25,000 with integral
multiples of $1 in excess thereof. The minimum denomination for the Class P and
the Class X Certificates will each be a 1% Percentage Interest in such Class.
The Class R Certificate will represent a 100% Percentage Interest in such Class.
It is expected that each Class of Certificates will receive its
final distribution of principal and interest on or prior to the Final Scheduled
Distribution Date.
Set forth below are designations of Classes of Certificates to the
categories used herein:
Book-Entry Certificates........... All Classes of Certificates other than the
Physical Certificates.
Class A Certificates.............. Class A-1, Class A-2, Class A-3 and
Class A-4 Certificates.
Delay Certificates................ None.
ERISA-Restricted Certificates..... Class R Certificates, Class P Certificates
and Class X Certificates; any certificate
with a rating below the lowest applicable
permitted rating under the Underwriters'
Exemption.
Non-Delay Certificates............ Class A, Class X and Subordinated
Certificates.
Offered Certificates.............. All Certificates other than the Private
Certificates.
Physical Certificates............. Class P, Class X and Class R Certificates.
Private Certificates.............. Class P, Class X and Class R Certificates.
Rating Agencies................... Fitch, ▇▇▇▇▇'▇ and Standard & Poor's.
Regular Certificates.............. All Classes of Certificates other than the
Class P and Class R Certificates.
Residual Certificates............. Class R Certificates.
Subordinated Certificates......... Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6,
Class B-1, Class B-2 and Class B-3
Certificates.
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan,
those mortgage servicing practices set forth in Section 3.01(a) of this
Agreement.
Account: Any of the Collection Accounts, the Distribution Account,
any Escrow Account, the Excess Reserve Fund Account or the Swap Account. Each
Account shall be an Eligible Account.
Accredited: Accredited Home Lenders, Inc., a California corporation,
and its successors in interest.
Accredited Agreements: The Accredited Purchase Agreement and the
Accredited Assignment Agreement, each of which are attached hereto as Exhibit R.
Accredited Assignment Agreement: The Assignment and Recognition
Agreement, dated as of the Closing Date, among the Sponsor, the Depositor and
Accredited.
Accredited Mortgage Loans: The Mortgage Loans purchased by the
Sponsor pursuant to the Accredited Purchase Agreement for which Accredited is
identified as Originator on the Mortgage Loan Schedule.
Accredited Purchase Agreement: With respect to Accredited Mortgage
Loans purchased by Sponsor prior to December 1, 2005 (as set forth on the
Mortgage Loan Schedule), the Fourth Amended and Restated Mortgage Loan Purchase
and Warranties Agreement, dated as of August 1, 2005, and with respect to
Accredited Mortgage Loans purchased by Sponsor on or after December 1, 2005 (as
set forth on the Mortgage Loan Schedule), the Fifth Amended and Restated
Mortgage Loan Purchase and Warranties Agreement, dated as of December 1, 2005,
in each case by and between Accredited and the Sponsor.
Accrued Certificate Interest Distribution Amount: With respect to
any Distribution Date for each Class of Offered Certificates, the amount of
interest accrued during the related Interest Accrual Period at the applicable
Pass-Through Rate on the related Class Certificate Balance immediately prior to
such Distribution Date, as reduced by such Class's share of Net Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls for such Distribution
Date allocated to such Class pursuant to Section 4.02.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan.
Adjusted Net Mortgage Rate: As to each Mortgage Loan and at any
time, the per annum rate equal to the Mortgage Rate less the Expense Fee Rate.
Adjustment Date: As to any Adjustable Rate Mortgage Loan, the first
Due Date on which the related Mortgage Rate adjusts as set forth in the related
Mortgage Note and each Due Date thereafter on which the Mortgage Rate adjusts as
set forth in the related Mortgage Note.
Advance: Any P&I Advance or Servicing Advance.
Advance Facility: A financing or other facility as described in
Section 10.07.
Advancing Person: The Person to whom any Servicer's rights under
this Agreement to be reimbursed for any P&I Advances or Servicing Advances have
been assigned pursuant to Section 10.07.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
or supplements hereto.
AIG: AIG Federal Savings Bank, a federally chartered savings bank,
and its successors in interest.
AIG Agreements: The AIG Purchase Agreement and the AIG Assignment
Agreement, each of which are attached hereto as Exhibit Q.
AIG Assignment Agreement: The Assignment and Recognition Agreement,
dated as of the Closing Date, among the Sponsor, the Depositor and AIG.
AIG Mortgage Loans: The Mortgage Loans purchased by the Sponsor
pursuant to the AIG Purchase Agreement for which AIG is identified as Originator
on the Mortgage Loan Schedule.
AIG Purchase Agreement: The Third Amended and Restated Mortgage Loan
Purchase and Warranties Agreement, dated as of December 1, 2005, by and between
AIG and the Sponsor, solely insofar as such agreement relates to the AIG
Mortgage Loans.
Amount Held for Future Distribution: As to the Certificates on any
Distribution Date, the aggregate amount held in each Collection Account at the
close of business on the related Determination Date on account of (i) Principal
Prepayments, Insurance Proceeds, Condemnation Proceeds and Liquidation Proceeds
on the Mortgage Loans received after the end of the related Prepayment Period
and (ii) all Scheduled Payments on the Mortgage Loans due after the end of the
related Due Period.
Analytics Company: Intex Solutions, Inc., or any other bond
analytics service provider identified to the Trustee by the Depositor.
Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which the aggregate Class Certificate Balance of the
Offered Certificates after distributions of principal on such Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date.
Appraised Value: 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.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form (other than the assignee's
name and recording information not yet returned from the recording office),
reflecting the sale of the Mortgage to the Trustee.
Available Funds: With respect to any Distribution Date and the
Mortgage Loans to the extent received by the Trustee (x) the sum of (i) all
scheduled installments of interest (net of the related Expense Fees) and
principal due on the Due Date on such Mortgage Loans in the related Due Period
and received by the Servicers and the Countrywide Servicer on or prior to the
related Determination Date, together with any P&I Advances in respect thereof;
(ii) all Condemnation Proceeds, Insurance Proceeds and Liquidation Proceeds
received by the Servicers and the Countrywide Servicer during the related
Prepayment Period (in each case, net of unreimbursed expenses incurred in
connection with a liquidation or foreclosure and unreimbursed Advances, if any);
(iii) all partial or full prepayments on the Mortgage Loans received by the
Servicers and the Countrywide Servicer during the related Prepayment Period
together with all Compensating Interest, if applicable, paid by the Servicers
and the Countrywide Servicer thereon (excluding any Prepayment Charges); (iv)
all Substitution Adjustment Amounts with respect to the substitutions of
Mortgage Loans that occur with respect to such Distribution Date; (v) amounts
received with respect to such Distribution Date as the Repurchase Price in
respect of a Mortgage Loan repurchased with respect to such Distribution Date;
(vi) the proceeds received with respect to the termination of the Trust Fund
pursuant to clause (a) of Section 9.01; and (vii) the Closing Date Deposit
Amount; reduced by (y) amounts in reimbursement for Advances previously made
with respect to the Mortgage Loans and other amounts as to which the Servicers,
the Countrywide Servicer, the Depositor or the Trustee are entitled to be paid
or reimbursed pursuant to this Agreement or the CHL Sale and Servicing
Agreement.
Balloon Loan: Any Mortgage Loan that requires only payments of
interest until the stated maturity date of the Mortgage Loan or Scheduled
Payments of principal which (not including the payment due on its stated
maturity date) are based on an amortization schedule that would be insufficient
to fully amortize the principal thereof by the stated maturity date of the
Mortgage Loan.
Basic Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the Principal Remittance Amount for such
Distribution Date over (ii) the Excess Subordinated Amount, if any, for such
Distribution Date.
Basis Risk CarryForward Amount: With respect to each Class of
Certificates, as of any Distribution Date, the sum of (A) if on such
Distribution Date the Pass-Through Rate for any Class of Offered Certificates is
based upon the WAC Cap, the excess of (i) the Accrued Certificate Interest
Distribution Amount such Class of Certificates would otherwise be entitled to
receive on such Distribution Date had such Pass-Through Rate not been subject to
any WAC Cap (that is, had such rate been calculated as the sum of LIBOR and the
applicable Pass-Through Margin on such Class of Certificates for such
Distribution Date and the resulting amount being reduced by allocated Net
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls) over (ii) the
Accrued Certificate Interest Distribution Amount received on such Distribution
Date on such Class of Offered Certificates at the WAC Cap for such Distribution
Date and (B) the Basis Risk CarryForward Amount for such Class of Certificates
for all previous Distribution Dates not previously paid, together with interest
thereon at a rate equal to the sum of LIBOR and the applicable Pass-Through
Margin for such Class of Certificates for such Distribution Date.
Basis Risk Payment: For any Distribution Date, an amount equal to
the lesser of (i) the aggregate of the Basis Risk CarryForward Amounts for such
Distribution Date and (ii) the Class X Distributable Amount (prior to any
reduction for amounts paid from the Excess Reserve Fund Account to pay any Basis
Risk CarryForward Amount or any Swap Termination Payment).
Best's: Best's Key Rating Guide, as the same shall be amended from
time to time.
Book-Entry Certificates: As specified in the Preliminary Statement.
Business Day: Any day other than (i) Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions, in (a) the States of
Arizona, New York, California, Texas, Maryland, Minnesota, New Jersey or
Delaware, (b) a State in which any Servicer's servicing operations are located,
or (c) the State in which the Trustee's operations are located, are authorized
or obligated by law or executive order to be closed.
Certificate: Any one of the Certificates executed by the Trustee in
substantially the forms attached hereto as exhibits.
Certificate Balance: With respect to any Class of Certificates,
other than the Class X, Class P or Class R Certificates, at any date, the
maximum dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the Denomination thereof minus all
distributions of principal previously made with respect thereto and in the case
of any Certificates, reduced by any Applied Realized Loss Amounts allocated to
such Class of Certificates pursuant to Section 4.05; provided, however, that
immediately following the Distribution Date on which a Subsequent Recovery is
distributed, the Class Certificate Balances of any Class or Classes of
Certificates that have been previously reduced by Applied Realized Loss Amounts
will be increased, in order of seniority, by the amount of the Subsequent
Recovery distributed on such Distribution Date (up to the amount of the Unpaid
Realized Loss Amount for such Class or Classes for such Distribution Date). The
Class X, Class P and Class R Certificates have no Certificate Balance.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section
5.02.
Certificateholder or Holder: The person in whose name a Certificate
is registered in the Certificate Register, except that, solely for the purpose
of giving any consent pursuant to this Agreement, any Certificate registered in
the name of the Depositor or any Affiliate of the Depositor shall be deemed not
to be Outstanding and the Percentage Interest evidenced thereby shall not be
taken into account in determining whether the requisite amount of Percentage
Interests necessary to effect such consent has been obtained; provided, however,
that if any such Person (including the Depositor) owns 100% of the Percentage
Interests evidenced by a Class of Certificates, such Certificates shall be
deemed to be Outstanding for purposes of any provision hereof that requires the
consent of the Holders of Certificates of a particular Class as a condition to
the taking of any action hereunder. The Trustee is entitled to rely conclusively
on a certification of the Depositor or any Affiliate of the Depositor in
determining which Certificates are registered in the name of an Affiliate of the
Depositor.
CHL: Countrywide Home Loans, Inc., a New York corporation, and its
successors in interest.
CHL Agreements: Collectively, the CHL Sale and Servicing Agreement
and the CHL Assignment Agreement, each of which are attached hereto as Exhibit
S.
CHL Assignment Agreement: The Assignment and Recognition Agreement,
dated as of the Closing Date, among the Sponsor, the Depositor, the Countrywide
Servicer and CHL.
CHL Event of Default: An event of default in the CHL Sale and
Servicing Agreement.
CHL Mortgage Loans: The Mortgage Loans purchased by the Sponsor
pursuant to the CHL Sale and Servicing Agreement for which CHL is identified as
Originator on the Mortgage Loan Schedule.
CHL Sale and Servicing Agreement: The Mortgage Loan Sale and
Servicing Agreement, dated as of October 1, 2005, by and among CHL, Countrywide
Servicing and the Sponsor, as amended by the Amendment Regulation AB, dated as
of January 26, 2006, by and among CHL, Countrywide Servicing and the Sponsor
solely insofar as such agreement, as so amended, relates to the CHL Mortgage
Loans.
Class: All Certificates bearing the same class designation as set
forth in the Preliminary Statement.
Class A Certificates: As specified in the Preliminary Statement.
Class A Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the aggregate Class Certificate Balances of
the Class A Certificates immediately prior to such Distribution Date over (ii)
the lesser of (A) 54.40% of the aggregate Stated Principal Balance of the
Mortgage Loans for such Distribution Date and (B) the excess, if any, of the
aggregate Stated Principal Balance of the Mortgage Loans for such Distribution
Date over $4,981,226.
Class A-1 Certificates: All Certificates bearing the class
designation of "Class A-1".
Class A-2 Certificates: All Certificates bearing the class
designation of "Class A-2".
Class A-3 Certificates: All Certificates bearing the class
designation of "Class A-3".
Class A-4 Certificates: All Certificates bearing the class
designation of "Class A-4".
Class B Certificates: The Class B-1, Class B-2 and Class B-3
Certificates.
Class B-1 Certificates: All Certificates bearing the class
designation of "Class B-1".
Class B-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (E) the Class Certificate Balance of the Class M-4
Certificates (after taking into account the distribution of the Class M-4
Principal Distribution Amount for such Distribution Date), (F) the Class
Certificate Balance of the Class M-5 Certificates (after taking into account the
distribution of the Class M-5 Principal Distribution Amount for such
Distribution Date), (G) the Class Certificate Balance of the Class M-6
Certificates (after taking into account the distribution of the Class M-6
Principal Distribution Amount for such Distribution Date) and (H) the Class
Certificate Balance of the Class B-1 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (A) 86.60% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and (B) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date over $4,981,226.
Class B-2 Certificates: All Certificates bearing the class
designation of "Class B-2".
Class B-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (E) the Class Certificate Balance of the Class M-4
Certificates (after taking into account the distribution of the Class M-4
Principal Distribution Amount for such Distribution Date), (F) the Class
Certificate Balance of the Class M-5 Certificates (after taking into account the
distribution of the Class M-5 Principal Distribution Amount for such
Distribution Date), (G) the Class Certificate Balance of the Class M-6
Certificates (after taking into account the distribution of the Class M-6
Principal Distribution Amount for such Distribution Date), (H) the Class
Certificate Balance of the Class B-1 Certificates (after taking into account the
distribution of the Class B-1 Principal Distribution Amount for such
Distribution Date), and (I) the Class Certificate Balance of the Class B-2
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 89.50% of the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date over
$4,981,226.
Class B-3 Certificates: All Certificates bearing the class
designation of "Class B-3".
Class B-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (E) the Class Certificate Balance of the Class M-4
Certificates (after taking into account the distribution of the Class M-4
Principal Distribution Amount for such Distribution Date), (F) the Class
Certificate Balance of the Class M-5 Certificates (after taking into account the
distribution of the Class M-5 Principal Distribution Amount for such
Distribution Date), (G) the Class Certificate Balance of the Class M-6
Certificates (after taking into account the distribution of the Class M-6
Principal Distribution Amount for such Distribution Date), (H) the Class
Certificate Balance of the Class B-1 Certificates (after taking into account the
distribution of the Class B-1 Principal Distribution Amount for such
Distribution Date), (I) the Class Certificate Balance of the Class B-2
Certificates (after taking into account the distribution of the Class B-2
Principal Distribution Amount for such Distribution Date) and (J) the Class
Certificate Balance of the Class B-3 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (A) 91.60% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and (B) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date over $4,981,226.
Class Certificate Balance: With respect to any Class and as to any
date of determination, the aggregate of the Certificate Balances of all
Certificates of such Class as of such date.
Class IO Interest: As specified in the Preliminary Statement.
Class IO Shortfalls: As defined in Section 8.13. For the avoidance
of doubt, the Class IO Shortfall for any Distribution Date shall equal the
amount payable to the Class X Certificates in respect of amounts due to the Swap
Provider on such Distribution Date (other than Defaulted Swap Termination
Payments) in excess of the amount payable on the Class X Interest (prior to any
reduction for Basis Risk Payments or Defaulted Swap Termination Payments) on
such Distribution Date, all as further provided in Section 8.13.
Class LT-R Interest: The residual interest in the Lower-Tier REMIC
as described in the Preliminary Statement and the related footnote thereto.
Class M Certificates: The Class M-1, Class M-2, Class M-3, Class
M-4, Class M-5 and Class M-6 Certificates.
Class M-1 Enhancement Percentage: With respect to any Distribution
Date, the percentage obtained by dividing (x) the sum of (i) the aggregate Class
Certificate Balances of the Class M and Class B Certificates (other than the
Class M-1 Certificates) and (ii) the Subordinated Amount, in each case after
taking into account the distributions of the related Principal Distribution
Amount and any principal payments on those Classes of Certificates from the Swap
Account on that Distribution Date, by (y) the aggregate Stated Principal Balance
of the Mortgage Loans for that Distribution Date.
Class M-1 Certificates: All Certificates bearing the class
designation of "Class M-1".
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), and (B) the Class Certificate Balance of the Class M-1 Certificates
immediately prior to such Distribution Date over (ii) the lesser of (A) 62.00%
of the aggregate Stated Principal Balance of the Mortgage Loans for such
Distribution Date and (B) the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date over $4,981,226.
Class M-2 Certificates: All Certificates bearing the class
designation of "Class M-2".
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date) and (C) the Class Certificate Balance of the
Class M-2 Certificates immediately prior to such Distribution Date over (ii) the
lesser of (A) 69.00% of the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date and (B) the excess, if any, of the aggregate
Stated Principal Balance of the Mortgage Loans for such Distribution Date over
$4,981,226.
Class M-3 Certificates: All Certificates bearing the class
designation of "Class M-3".
Class M-3 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date) and (D) the Class
Certificate Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (A) 73.20% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and (B) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date over $4,981,226.
Class M-4 Certificates: All Certificates bearing the class
designation of "Class M-4".
Class M-4 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), and (E) the Class Certificate Balance of the Class M-4
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 76.90% of the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date over
$4,981,226.
Class M-5 Certificates: All Certificates bearing the class
designation of "Class M-5".
Class M-5 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (E) the Class Certificate Balance of the Class M-4
Certificates (after taking into account the distribution of the Class M-4
Principal Distribution Amount for such Distribution Date) and (F) the Class
Certificate Balance of the Class M-5 Certificates immediately prior to such
Distribution Date over (ii) the lesser of (A) 80.30% of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date and (B) the
excess, if any, of the aggregate Stated Principal Balance of the Mortgage Loans
for such Distribution Date over $4,981,226.
Class M-6 Certificates: All Certificates bearing the class
designation of "Class M-6".
Class M-6 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the aggregate Class
Certificate Balances of the Class A Certificates (after taking into account the
distribution of the Class A Principal Distribution Amount for such Distribution
Date), (B) the Class Certificate Balance of the Class M-1 Certificates (after
taking into account the distribution of the Class M-1 Principal Distribution
Amount for such Distribution Date), (C) the Class Certificate Balance of the
Class M-2 Certificates (after taking into account the distribution of the Class
M-2 Principal Distribution Amount for such Distribution Date), (D) the Class
Certificate Balance of the Class M-3 Certificates (after taking into account the
distribution of the Class M-3 Principal Distribution Amount for such
Distribution Date), (E) the Class Certificate Balance of the Class M-4
Certificates (after taking into account the distribution of the Class M-4
Principal Distribution Amount for such Distribution Date), (F) the Class
Certificate Balance of the Class M-5 Certificates (after taking into account the
distribution of the Class M-5 Principal Distribution Amount for such
Distribution Date) and (G) the Class Certificate Balance of the Class M-6
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(A) 83.60% of the aggregate Stated Principal Balance of the Mortgage Loans for
such Distribution Date and (B) the excess, if any, of the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date over
$4,981,226.
Class P Certificates: All Certificates bearing the class designation
of "Class P".
Class PT1-R Interest: The residual interest in Pooling-Tier REMIC-1
as described in the Preliminary Statement and the related footnote thereto.
Class PT2-R Interest: The residual interest in Pooling-Tier REMIC-2
as described in the Preliminary Statement and the related footnote thereto.
Class R Certificates: All Certificates bearing the class designation
of "Class R".
Class UT-R Interest: The residual interest in the Upper-Tier REMIC
as described in the Preliminary Statement and the related footnote thereto.
Class X Certificates: All Certificates bearing the class designation
of "Class X".
Class X Distributable Amount: On any Distribution Date, the sum of
(i) as a distribution in respect of interest, the amount of interest that has
accrued on the Class X Interest and not applied as an Extra Principal
Distribution Amount on such Distribution Date, plus any such accrued interest
remaining undistributed from prior Distribution Dates, plus, without
duplication, (ii) as a distribution in respect of principal, any portion of the
principal balance of the Class X Interest which is distributable as a
Subordination Reduction Amount, minus (iii) any amounts paid from the Excess
Reserve Fund Account to pay any Basis Risk CarryForward Amount or any Defaulted
Swap Termination Payment.
Class X Interest: The Upper-Tier Regular Interest represented by the
Class X Certificates as specified and described in the Preliminary Statement and
the related footnote thereto.
Closing Date: March 30, 2006.
Closing Date Deposit Amount: $11.39 (all of which is allocable to
principal) deposited by the Depositor into the Distribution Account on the
Closing Date.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: As defined in Section 3.10(a).
Combined Loan to Value Ratio or CLTV: As of any date and as to any
Second Lien Mortgage Loan, the ratio, expressed as a percentage, of the (a) sum
of (i) the outstanding principal balance of the Second Lien Mortgage Loan and
(ii) the outstanding principal balance as of such date of any mortgage loan or
mortgage loans that are senior or equal in priority to the Second Lien Mortgage
Loan and which are secured by the same Mortgaged Property to (b) the Appraised
Value as determined pursuant to the Underwriting Guidelines of the related
Mortgaged Property as of the origination of the Second Lien Mortgage Loan.
Commission: The United States Securities and Exchange Commission.
Compensating Interest: For any Distribution Date and each Servicer,
the lesser of (a) the amount by which all Prepayment Interest Shortfalls
resulting from Principal Prepayment exceeds all Prepayment Interest Excesses for
such Distribution Date on the Mortgage Loans serviced by the applicable Servicer
and (b) the amount of the aggregate Servicing Fee paid to or retained by the
applicable Servicer for such Distribution Date. For any Distribution Date and
the Countrywide Servicer, the amount, if any, required to be paid by the
Countrywide Servicer pursuant to the CHL Agreements to compensate for Prepayment
Interest Shortfalls with respect to such Distribution Date.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation.
Convertible Mortgage Loan: Any individual Adjustable Rate Mortgage
Loan which contains a provision whereby the Mortgagor is permitted to convert
the Adjustable Rate Mortgage Loan to a Fixed Rate Mortgage Loan in accordance
with the terms of the related Mortgage Note.
Corporate Trust Office: The designated office of the Trustee in the
State of California at which at any particular time its corporate trust business
with respect to this Agreement is administered, which office at the date of the
execution of this Agreement is located at ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Trust Administration-MS06X2, facsimile no. (714)
247-6329 and which is the address to which notices to and correspondence with
the Trustee should be directed.
Corresponding Class: The class of interests in the Lower-Tier REMIC
or Upper-Tier REMIC that corresponds to the class of interests in the other such
REMIC or to a Class of Certificates in the manner set out below:
Corresponding
Corresponding Lower-Tier Upper-Tier Regular Corresponding Class
Class Designation Interest of Certificates
--------------------------------------------------------------------------------
Class LT-A-1 Class A-1 Class A-1
Class LT-A-2 Class A-2 Class A-2
Class LT-A-3 Class A-3 Class A-3
Class LT-A-4 Class A-4 Class A-4
Class LT-M-1 Class M-1 Class M-1
Class LT-M-2 Class M-2 Class M-2
Class LT-M-3 Class M-3 Class M-3
Class LT-M-4 Class M-4 Class M-4
Class LT-M-5 Class M-5 Class M-5
Class LT-M-6 Class M-6 Class M-6
Class LT-B-1 Class B-1 Class B-1
Class LT-B-2 Class B-2 Class B-2
Class LT-B-3 Class B-3 Class B-3
N/A Class X Class X
Corresponding Pooling-Tier REMIC-1 Regular Interest: As described in
the Preliminary Statement.
Corresponding Pooling-Tier REMIC-2 IO Interest: As described in the
Preliminary Statement.
Corresponding Scheduled Crossover Distribution Date: The
Distribution Date in the month and year specified in the Preliminary Statement
corresponding to a Pooling-Tier REMIC-2 IO Interest.
Countrywide Servicer: Countrywide Home Loans Servicing LP, a Texas
limited partnership, and its successors in interest, and if a successor is
appointed under the CHL Agreements, such successor.
Cumulative Loss Percentage: With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred from the Cut-off Date through the last day of
the related Prepayment Period and the denominator of which is the Cut-off Date
Pool Principal Balance of the Mortgage Loans.
Cumulative Loss Trigger Event: With respect to any Distribution
Date, a Cumulative Loss Trigger Event exists if the quotient (expressed as a
percentage) of (x) the aggregate amount of Realized Losses incurred since the
Cut-off Date through the last day of the related Prepayment Period divided by
(y) the Cut-off Date Pool Principal Balance exceeds the applicable cumulative
loss percentages set forth below with respect to such Distribution Date:
Distribution Date Occurring In Cumulative Loss Percentage
--------------------------------------------------------------------------------
April 2008 through March 2009 1.450% for the first month, plus an
additional 1/12th of 1.800% for each
month thereafter (e.g., 2.350% in October
2008)
April 2009 through March 2010 3.250% for the first month, plus an
additional 1/12th of 1.850% for each
month thereafter (e.g., 4.175% in October
2009)
April 2010 through March 2011 5.100% for the first month, plus an
additional 1/12th of 1.500% for each
month thereafter (e.g., 5.850% in October
2010)
April 2011 through March 2012 6.600% for the first month, plus an
additional 1/12th of 0.800% for each
month thereafter (e.g., 7.000% in
October 2011)
April 2012 and thereafter 7.400%
Custodial File: With respect to each Mortgage Loan, the file
retained by the Trustee consisting of items (i) - (viii) as listed on Exhibit K
hereto.
Cut-off Date: March 1, 2006.
Cut-off Date Pool Principal Balance: The aggregate Stated Principal
Balances of all Mortgage Loans as of the Cut-off Date plus the portion of the
Closing Date Deposit Amount allocable to principal.
Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated
Principal Balance thereof as of the close of business on the Cut-off Date (after
giving effect to payments of principal due on that date, whether or not
received).
Data Tape Information: The information provided by the Originators
as of the Cut-off Date to the Depositor or the Sponsor setting forth the
following information with respect to each Mortgage Loan: (1) the Mortgagor's
name; (2) as to each Mortgage Loan, the Scheduled Principal Balance as of the
Cut-off Date; (3) the Mortgage Rate Cap; (4) the Index; (5) a code indicating
whether the Mortgaged Property is owner occupied; (6) the type of Mortgaged
Property; (7) the first date on which the Scheduled Payment was due on the
Mortgage Loan and, if such date is not consistent with the Due Date currently in
effect, such Due Date; (8) the "paid through date" based on payments received
from the related Mortgagor; (9) the original principal amount of the Mortgage
Loan; (10) with respect to Adjustable Rate Mortgage Loans, the Maximum Mortgage
Rate; (11) the type of Mortgage Loan (i.e., Fixed Rate or Adjustable Rate
Mortgage Loan, First Lien Mortgage Loan or Second Lien Mortgage Loan); (12) a
code indicating the purpose of the loan (i.e., purchase, rate and term
refinance, equity take out refinance); (13) a code indicating the documentation
style (i.e., full, asset verification, income verification and no
documentation); (14) the credit risk score (FICO score); (15) the loan credit
grade classification (as described in the underwriting guidelines); (16) with
respect to each Adjustable Rate Mortgage Loan, the Minimum Mortgage Rate; (17)
the Mortgage Rate at origination; (18) with respect to each Adjustable Rate
Mortgage Loan, the first Adjustment Date immediately following the Cut-off Date;
(19) the value of the Mortgaged Property; (20) a code indicating the type of
Prepayment Charges applicable to such Mortgage Loan (including any prepayment
penalty term), if any; (21) with respect to each Adjustable Rate Mortgage Loan,
the Periodic Mortgage Rate Cap; (22) the applicable Originator of such Mortgage
Loan; (23) with respect to each First Lien Mortgage Loan, the LTV at
origination, and with respect to each Second Lien Mortgage Loan, the CLTV at
origination; and (24) if such Mortgage Loan is covered by a primary mortgage
insurance policy or a lender-paid primary mortgage insurance policy, the primary
mortgage insurance rate. With respect to the Mortgage Loans in the aggregate,
the Data Tape Information shall set forth the following information, as of the
Cut-off Date: (1) the number of Mortgage Loans; (2) the current aggregate
outstanding principal balance of the Mortgage Loans; (3) the weighted average
Mortgage Rate of the Mortgage Loans; and (4) the weighted average maturity of
the Mortgage Loans.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the United
States Bankruptcy Code in the Scheduled Payment for such Mortgage Loan which
became final and non-appealable, except such a reduction resulting from a
Deficient Valuation or any reduction that results in a permanent forgiveness of
principal.
Defaulted Swap Termination Payment: Any Swap Termination Payment
required to be paid by the Trust to the Swap Provider pursuant to the Interest
Rate Swap Agreement as a result of an Event of Default (as defined in the
Interest Rate Swap Agreement) with respect to which the Swap Provider is the
defaulting party or a Termination Event (as defined in the Interest Rate Swap
Agreement) (other than Illegality or a Tax Event that is not a Tax Event Upon
Merger (each as defined in the Interest Rate Swap Agreement )) with respect to
which the Swap Provider is the sole Affected Party (as defined in the Interest
Rate Swap Agreement).
Deficient Valuation: With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the United States
Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).
Delay Certificates: As specified in the Preliminary Statement.
Deleted Mortgage Loan: As defined in Section 2.03.
Delinquency Trigger Event: With respect to any Distribution Date, a
Delinquency Trigger Event exists if the quotient (expressed as a percentage) of
(x) the rolling three month average of the aggregate Stated Principal Balance of
60+ Day Delinquent Mortgage Loans (including Mortgage Loans in foreclosure and
Mortgage Loans related to REO Property) and (y) (1) until the aggregate Class
Certificate Balance of the Class A Certificates have been reduced to zero, the
aggregate Stated Principal Balance of the Mortgage Loans for such Distribution
Date equals or exceeds 35.09% of the prior period's Senior Enhancement
Percentage and (2) after the aggregate Class Certificate Balance of the Class A
Certificates have been reduced to zero, the aggregate Stated Principal Balance
of the Mortgage Loans for such Distribution Date equals or exceeds 42.11% of the
prior period's Class M Enhancement Percentage.
Denomination: With respect to each Certificate, the amount set forth
on the face thereof as the "Initial Certificate Balance of this Certificate" or
the Percentage Interest appearing on the face thereof.
Depositor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., a Delaware
corporation, and its successors in interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code of
the State of New York.
Depository Institution: Any depository institution or trust company,
including the Trustee, that (a) is incorporated under the laws of the United
States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations that
are rated "P-1" by Moody's, "F1+" by Fitch and "A-1" by Standard & Poor's (to
the extent they are Rating Agencies hereunder).
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to each Distribution Date, the 18th
day (or if such day is not a Business Day, the immediately preceding Business
Day) in the calendar month in which such Distribution Date occurs.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.07(d) in the name of the Trustee
for the benefit of the Certificateholders and designated "Deutsche Bank National
Trust Company in trust for registered Holders of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan
Trust 2006-2 Mortgage Pass-Through Certificates, Series 2006-2." Funds in the
Distribution Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date,
12:00 noon New York City time on the second Business Day immediately preceding
such Distribution Date.
Distribution Date: The 25th day of each calendar month, or if such
day is not a Business Day, the next succeeding Business Day, commencing in April
2006.
Document Certification and Exception Report: The report attached to
Exhibit F hereto.
Due Date: The day of the month on which the Scheduled Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the calendar month preceding the month in which
such Distribution Date occurs and ending on the first day of the calendar month
in which such Distribution Date occurs.
Eligible Account: Either (i) an account maintained with a federal or
state-chartered depository institution or trust company that complies with the
definition of Eligible Institution, (ii) an account maintained with the
corporate trust department of a federal depository institution or
state-chartered depository institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the U.S. Code of Federal
Regulation Section 9.10(b), which, in either case, has corporate trust powers
and is acting in its fiduciary capacity or (iii) any other account acceptable to
each Rating Agency. Eligible Accounts may bear interest, and may include, if
otherwise qualified under this definition, accounts maintained with the Trustee.
Each Eligible Account shall be a separate account.
Eligible Institution: A federal or state-chartered depository
institution or trust company the commercial paper, short-term debt obligations,
or other short-term deposits of which are rated "A-1+" by Standard & Poor's if
the amounts on deposit are to be held in the account for no more than 365 days
(or at least "A-2" by Standard & Poor's if the amounts on deposit are to be held
in the account for no more than 30 days), or the long-term unsecured debt
obligations of which are rated at least "AA-" by Standard & Poor's if the
amounts on deposit are to be held in the account for no more than 365 days, and
the commercial paper, short-term debt obligations or other short-term deposits
of which are rated at least "P-1" by Moody's and "F1+" by Fitch (or a comparable
rating if another Rating Agency is specified by the Depositor by written notice
to the Servicers and the Trustee) (in each case, to the extent they are
designated as Rating Agencies in the Preliminary Statement).
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of Prohibited
Transaction Exemption ("PTE") 2002-41, 67 Fed. Reg. 54487 (2002) (or any
successor thereto), or any substantially similar administrative exemption
granted by the U.S. Department of Labor.
ERISA-Restricted Certificate: As specified in the Preliminary
Statement.
Escrow Account: The Eligible Account or Accounts established and
maintained pursuant to Section 3.09(b).
Escrow Payments: As defined in Section 3.09(b).
Event of Default: As defined in Section 7.01 or in the CHL
Agreements, as applicable.
Excess Reserve Fund Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Sections 3.07(b) and 3.07(c) in the
name of the Trustee for the benefit of the Regular Certificateholders and
designated "Deutsche Bank National Trust Company in trust for registered Holders
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2, Mortgage Pass-Through
Certificates, Series 2006-2." Funds in the Excess Reserve Fund Account shall be
held in trust for the Regular Certificateholders for the uses and purposes set
forth in this Agreement. Amounts on deposit in the Excess Reserve Fund Account
shall not be invested.
Excess Subordinated Amount: With respect to any Distribution Date,
the excess, if any, of (a) the Subordinated Amount on such Distribution Date
over (b) the Specified Subordinated Amount for such Distribution Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expense Fee Rate: As to each Mortgage Loan, a per-annum rate equal
to the sum of the Servicing Fee Rate, the Trustee Fee Rate and any lender-paid
primary mortgage insurance fee rate, if applicable.
Expense Fees: As to each Mortgage Loan, the sum of the Servicing
Fee, the Trustee Fee and any lender-paid primary mortgage insurance fee, if
applicable.
Extra Principal Distribution Amount: As of any Distribution Date,
the lesser of (x) the related Total Monthly Excess Spread for such Distribution
Date and (y) the related Subordination Deficiency for such Distribution Date.
▇▇▇▇▇▇ Mae: The Federal National Mortgage Association, or any
successor thereto.
▇▇▇▇▇▇ ▇▇▇ Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇ ▇▇▇
Servicers' Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the applicable Originator or the Depositor, as applicable, as contemplated by
this Agreement, the Meritage Agreements, the Accredited Agreements, the CHL
Agreements or the AIG Agreements, as applicable), a determination made by the
applicable Servicer that all Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and other payments or recoveries which the applicable
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. Each Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
Final Scheduled Distribution Date: The Final Scheduled Distribution
Date for each Class of Certificates is the Distribution Date in February 2036.
First Lien Mortgage Loan: A Mortgage Loan secured by a first lien
Mortgage on the related Mortgaged Property.
First NLC: First NLC Financial Services, LLC, a Florida limited
liability company, and its successors in interest.
First NLC Mortgage Loans: The Mortgage Loans purchased by the
Sponsor pursuant to the First NLC Purchase Agreement for which First NLC is
identified as Originator on the Mortgage Loan Schedule.
First NLC Purchase Agreement: The Amended and Restated Mortgage Loan
Purchase and Warranties Agreement, dated as of September 29, 2005, by and
between First NLC and the Sponsor, which is attached hereto as Exhibit ▇.
▇▇▇▇▇: Fitch, Inc., and its successors in interest. If Fitch is
designated as a Rating Agency in the Preliminary Statement, for purposes of
Section 12.05(b) the address for notices to Fitch shall be Fitch, Inc., ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: MBS Monitoring - ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2, or such other address as Fitch may
hereafter furnish to the Depositor, the Trustee and the Servicers.
Fixed Rate Mortgage Loan: A fixed rate Mortgage Loan.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note to be added
to the applicable Index to determine the Mortgage Rate.
HomEq: HomEq Servicing Corporation, a New Jersey corporation, and
its successors in interest.
Index: As to each Adjustable Rate Mortgage Loan, the index from time
to time in effect for the adjustment of the Mortgage Rate set forth as such on
the related Mortgage Note.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect, including any replacement policy or policies for any Insurance
Policies.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Accrual Period: With respect to each Class of Non-Delay
Certificates and the Corresponding Class of Lower-Tier Regular Interests and any
Distribution Date, the period commencing on the Distribution Date occurring in
the month preceding the month in which the current Distribution Date occurs and
ending on the day immediately preceding the current Distribution Date (or, in
the case of the first Distribution Date, the period from and including the
Closing Date to but excluding such first Distribution Date). For purposes of
computing interest accruals on each Class of Non-Delay Certificates, each
Interest Accrual Period has the actual number of days in such month and each
year is assumed to have 360 days.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the Mortgage
Loan Schedule, on which the Mortgage Rate is adjusted.
Interest Rate Swap Agreement: The interest rate swap agreement,
dated as of the Closing Date, between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Services Inc. and
the Trustee, a copy of which is attached hereto as Exhibit Y.
Interest Remittance Amount: With respect to any Distribution Date
and the Mortgage Loans, that portion of Available Funds attributable to interest
relating to Mortgage Loans.
Investment Account: As defined in Section 3.12(a).
Investor: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the investor pursuant to the MERS Procedures
Manual.
Investor-Based Exemption: Any of Prohibited Transaction Class
Exemption ("PTCE") 84-14 (for transactions by independent "qualified
professional asset managers"), PTCE 90-1 (for transactions by insurance company
pooled separate accounts), PTCE 91-38 (for transactions by bank collective
investment funds), PTCE 95-60 (for transactions by insurance company general
accounts) or PTCE 96-23 (for transactions effected by "in-house asset
managers"), or any comparable exemption available under Similar Law.
JPMorgan: JPMorgan Chase Bank, National Association, a national
banking association, and its successors in interest.
Late Collections: With respect to any Mortgage Loan and any Due
Period, all amounts received after the Determination Date immediately following
such Due Period, whether as late payments of Scheduled Payments or as Insurance
Proceeds, Condemnation Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of principal and/or interest due (without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note) but delinquent for such Due Period and not previously recovered.
LIBOR: With respect to any Interest Accrual Period for the Offered
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee shall request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Trustee (after
consultation with the Depositor), at approximately 11:00 a.m. (New York City
time) on such date for one-month U.S. dollar loans to leading European banks.
LIBOR Determination Date: With respect to any Interest Accrual
Period for the Offered Certificates, the second London Business Day preceding
the commencement of such Interest Accrual Period.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which either (a) was
liquidated in the calendar month preceding the month of such Distribution Date
and as to which the applicable Servicer or the Countrywide Servicer has
certified to the Trustee that it has received all amounts it expects to receive
in connection with the liquidation of such Mortgage Loan including the final
disposition of an REO Property, or (b) is a Second Lien Mortgage Loan (1) that
is delinquent 180 days or longer, (2) for which the related first lien mortgage
loan is not a Mortgage Loan, and (3) as to which the applicable Servicer or the
Countrywide Servicer has certified to the Trustee that it does not believe there
is a reasonable likelihood that any further net proceeds will be received or
recovered with respect to such Second Lien Mortgage Loan.
Liquidation Proceeds: Cash received in connection with the
liquidation of a Liquidated Mortgage Loan, whether through a trustee's sale,
foreclosure sale or otherwise, including any Subsequent Recoveries.
Loan-to-Value Ratio or LTV: With respect to any First Lien Mortgage
Loan, the ratio (expressed as a percentage) of the original outstanding
principal amount of the First Lien Mortgage Loan as of the Cut-off Date (unless
otherwise indicated), to the lesser of (a) the Appraised Value of the Mortgaged
Property at origination, and (b) if the First Lien Mortgage Loan was made to
finance the acquisition of the related Mortgaged Property, the purchase price of
the Mortgaged Property.
London Business Day: Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
Lower-Tier Interest Rate: As described in the Preliminary Statement.
Lower-Tier Principal Amount: As described in the Preliminary
Statement.
Lower-Tier Regular Interest: Each of the Class LT-A-1, Class LT-A-2,
Class LT-A-3, Class LT-A-4, Class LT-M-1, Class LT-M-2, Class LT-M-3, Class
LT-M-4, Class LT-M-5, Class LT-M-6, Class LT-B-1, Class LT-B-2, Class LT-B-3,
Class LT-IO and Class LT-Accrual Interests as described in the Preliminary
Statement.
Lower-Tier REMIC: As described in the Preliminary Statement.
Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the maximum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be increased during the
lifetime of such Adjustable Rate Mortgage Loan.
Meritage: Meritage Mortgage Corporation, an Oregon corporation, and
its successors in interest.
Meritage Agreements: The Meritage Purchase Agreement and the
Meritage Assignment Agreement, each of which are attached hereto as Exhibit P.
Meritage Assignment Agreement: The Assignment and Recognition
Agreement, dated as of the Closing Date, among the Sponsor, the Depositor and
Meritage.
Meritage Mortgage Loans: The Mortgage Loans purchased by the Sponsor
pursuant to the Meritage Purchase Agreement for which Meritage is identified as
Originator on the Mortgage Loan Schedule.
Meritage Purchase Agreement: With respect to Meritage Mortgage Loans
purchased by the Sponsor prior to November 1, 2005 (as set forth on the Mortgage
Loan Schedule), the Amended and Restated Mortgage Loan Purchase and Warranties
Agreement, dated as of June 1, 2005, and with respect to Meritage Mortgage Loans
purchased by the Sponsor on or after November 1, 2005 (as set forth on the
Mortgage Loan Schedule), the Second Amended and Restated Mortgage Loan Purchase
and Warranties Agreement, dated as of November 1, 2005, in each case by and
between Meritage and the Sponsor.
MERS: Mortgage Electronic Registration System, Inc.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Originators have designated or will designate MERS as, and have taken or will
take such action as is necessary to cause MERS to be, the mortgagee of record,
as nominee for the Originators, in accordance with MERS Procedure Manual and (b)
the Originators have designated or will designate the Trustee as the Investor on
the MERS(R) System.
MERS Procedures Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified from time to time.
MERS(R) System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, a rate that (i) is set forth on the Data Tape Information and in the
related Mortgage Note and (ii) is the minimum interest rate to which the
Mortgage Rate on such Adjustable Rate Mortgage Loan may be decreased during the
lifetime of such Adjustable Rate Mortgage Loan.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.03.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and its successors in
interest. If ▇▇▇▇▇'▇ is designated as a Rating Agency in the Preliminary
Statement, for purposes of Section 10.05(b), the address for notices to Moody's
shall be ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: Residential Mortgage Pass-Through Group, or such other address
as Moody's may hereafter furnish to the Depositor, the Trustee and the
Servicers.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a Delaware corporation.
Mortgage: The mortgage, deed of trust or other instrument identified
on the Mortgage Loan Schedule as securing a Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
contained in either the Servicing File or Custodial File.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes,
without limitation, the Mortgage File, the Scheduled Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition proceeds, Prepayment Charges, and all other rights, benefits,
proceeds and obligations arising from or in connection with such Mortgage Loan,
excluding replaced or repurchased Mortgage Loans.
Mortgage Loan Schedule: A schedule of Mortgage Loans delivered to
the Trustee and referred to on Schedule I, such schedule setting forth the
following information with respect to each Mortgage Loan: (1) the Mortgage Loan
number; (2) the city, state and zip code of the Mortgaged Property; (3) the
number and type of residential units constituting the Mortgaged Property; (4)
the current Mortgage Rate; (5) the current net Mortgage Rate; (6) the current
Scheduled Payment; (7) with respect to each Adjustable Rate Mortgage Loan, the
Gross Margin; (8) the original term to maturity; (9) the scheduled maturity
date; (10) the principal balance of the Mortgage Loan as of the Cut-off Date
after deduction of payments of principal due on or before the Cut-off Date
whether or not collected; (11) with respect to each Adjustable Rate Mortgage
Loan, the next Interest Rate Adjustment Date; (12) with respect to each
Adjustable Rate Mortgage Loan, the lifetime Mortgage Interest Rate Cap; (13)
whether the Mortgage Loan is convertible or not; (14) the Servicing Fee; (15)
the applicable Originator's name; (16) the date such Mortgage Loan was sold by
the applicable Originator to the Sponsor; (17) whether such Mortgage Loan
provides for a Prepayment Charge as well as the term and amount of such
Prepayment Charge, if any; (18) with respect to each First Lien Mortgage Loan,
the LTV at origination, and with respect to each Second Lien Mortgage Loan, the
CLTV at origination; (19) a field indicating whether the Mortgage Loan is
serviced by the JPMorgan, HomEq or the Countrywide Servicer; (20) the date on
which servicing of the Mortgage Loan was transferred to the applicable Servicer;
and (21) with respect to each CHL Mortgage Loan, the Servicing Fee Rate.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne on a Mortgage Note,
which shall be adjusted from time to time in the case of an Adjustable Rate
Mortgage Loan.
Mortgage Rate Caps: With respect to an Adjustable Rate Mortgage
Loan, the Periodic Mortgage Rate Cap, the Maximum Mortgage Rate, and the Minimum
Mortgage Rate for such Mortgage Loan.
Mortgaged Property: With respect to each Mortgage Loan, the real
property (or leasehold estate, if applicable) identified on the Mortgage Loan
Schedule as securing repayment of the debt evidenced by the related Mortgage
Note.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Monthly Excess Cash Flow: For any Distribution Date the, that
portion of the Interest Remittance Amount and Principal Remittance Amount
remaining for distribution pursuant to subsection 4.02(a)(iii) (before giving
effect to distributions pursuant to such subsection).
Net Prepayment Interest Shortfall: For any Distribution Date, the
amount by which the sum of the Prepayment Interest Shortfalls for such
Distribution Date exceeds the sum of (i) all Prepayment Interest Excesses for
such Distribution Date and (ii) Compensating Interest payments made with respect
to such Distribution Date.
Net Swap Payment: With respect to any Distribution Date, any net
payment (other than a Swap Termination Payment) payable by the Trust to the Swap
Provider on the related Fixed Rate Payer Payment Date (as defined in the
Interest Rate Swap Agreement).
Net Swap Receipt: With respect to any Distribution Date, any net
payment (other than a Swap Termination Payment) made by the Swap Provider to the
Trust on the related Floating Rate Payer Payment Date (as defined in the
Interest Rate Swap Agreement).
NIM Issuer: The entity established as the issuer of the NIM
Securities.
NIM Securities: Any debt securities secured or otherwise backed by
some or all of the Class X and Class P Certificates that are rated by one or
more Rating Agencies.
NIM Trustee: The trustee for the NIM Securities.
Non-Delay Certificates: As specified in the Preliminary Statement.
Non-Permitted Transferee: A Person other than a Permitted
Transferee.
Nonrecoverable P&I Advance: Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the applicable Servicer, will not or, in the
case of a proposed P&I Advance, would not be ultimately recoverable from related
late payments, Insurance Proceeds, Condemnation Proceeds, or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein, or in the
case of the Countrywide Servicer, a P&I Advance determined by the Countrywide
Servicer to be not recoverable pursuant to the CHL Agreements.
Nonrecoverable Servicing Advance: Any Servicing Advances previously
made or proposed to be made in respect of a Mortgage Loan or REO Property,
which, in accordance with Accepted Servicing Practices, will not or, in the case
of a proposed Servicing Advance, would not be ultimately recoverable from
related Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds or
otherwise.
Notice of Final Distribution: The notice to be provided pursuant to
Section 9.02 to the effect that final distribution on any of the Certificates
shall be made only upon presentation and surrender thereof.
Offered Certificates: As specified in the Preliminary Statement.
Officer's Certificate: A certificate signed by an officer of any
Servicer or Subservicer with responsibility for the servicing of the Mortgage
Loans required to be serviced by such Servicer or Subservicer and listed on a
list delivered to the Trustee pursuant to this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
in-house counsel for the applicable Servicer or a Subservicer, reasonably
acceptable to the Trustee (and/or such other Persons as may be set forth
herein), provided that any Opinion of Counsel relating to (a) qualification of
any Trust REMIC or (b) compliance with the REMIC Provisions, must be (unless
otherwise stated in such Opinion of Counsel) an opinion of counsel who (i) is in
fact independent of such Servicer or the Countrywide Servicer, (ii) does not
have any material direct or indirect financial interest in such Servicer or the
Countrywide Servicer or in an Affiliate of either and (iii) is not connected
with such Servicer or the Countrywide Servicer as an officer, employee, director
or person performing similar functions.
Optional Termination Date: The Distribution Date on which the
aggregate Stated Principal Balance of the Mortgage Loans, as of the last day of
the related Due Period, is equal to 10% or less of the Cut-off Date Pool
Principal Balance.
Originators: The Responsible Party, CHL, Accredited, Meritage, AIG,
Aames Capital Corporation and Acoustic Home Loans, LLC.
OTS: Office of Thrift Supervision, and any successor thereto.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to this
Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with
a Stated Principal Balance greater than zero which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.
Ownership Interest: As to any Residual Certificate, any ownership
interest in such Certificate including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial.
P&I Advance: As to any Mortgage Loan or REO Property, any advance
made by the applicable Servicer or the Countrywide Servicer in respect of any
Remittance Date representing the aggregate of all payments of principal and
interest, net of the Servicing Fee, that were due during the related Due Period
on the Mortgage Loans and that were delinquent on the related Determination
Date, plus certain amounts representing assumed payments not covered by any
current net income on the Mortgaged Properties acquired by foreclosure or deed
in lieu of foreclosure as determined pursuant to Section 4.01 or the CHL
Agreements, as applicable.
Pass-Through Margin: With respect to each Class of Regular
Certificates (except as set forth in the following sentence), the following
percentages: Class A-1, 0.0700%; Class A-2, 0.1100%; Class A-3, 0.1700%; Class
A-4, 0.2800%; Class M-1, 0.3400%; Class M-2, 0.3600%; Class M-3, 0.3800%; Class
M-4, 0.4700%; Class M-5, 0.5000%; Class M-6, 0.5800%; Class B-1, 1.1000%; Class
B-2, 1.2500%; and Class B-3, 2.1500%. On the first Distribution Date after the
Optional Termination Date, the Pass-Through Margins shall increase to: Class
A-1, 0.1400%; Class A-2, 0.2200%; Class A-3, 0.3400%; Class A-4, 0.5600%; Class
M-1, 0.5100%; Class M-2, 0.5400%; Class M-3, 0.5700%; Class M-4, 0.7050%; Class
M-5, 0.7500%; Class M-6, 0.8700%; Class B-1, 1.6500%; Class B-2, 1.8750%; and
Class B-3, 3.2250%.
Pass-Through Rate: For each Class of Regular Certificates, each
Pooling-Tier REMIC-1 Regular Interest, each Pooling-Tier REMIC-2 Regular
Interest, each Lower-Tier Regular Interest and each Upper-Tier Regular Interest,
the per annum rate set forth or calculated in the manner described in the
Preliminary Statement.
PCAOB: The Public Company Accounting Oversight Board.
Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Periodic Mortgage Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the periodic limit on each Mortgage Rate adjustment as set forth
in the related Mortgage Note.
Permitted Investments: Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued by any Servicer, the Trustee or any of their respective
Affiliates:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of, or
bankers' acceptances (which shall each have an original maturity of not
more than 90 days and, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days or a remaining
maturity of more than 30 days) denominated in United States dollars and
issued by, any Depository Institution and rated "P-1" by Moody's, "F1+" by
Fitch and "A-1+" by Standard & Poor's (to the extent they are Rating
Agencies hereunder and are so rated by such Rating Agency);
(iii) repurchase obligations with respect to any security described
in clause (i) above entered into with a Depository Institution (acting as
principal);
(iv) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the United States
of America or any State thereof and that are rated by each Rating Agency
that rates such securities in its highest long-term unsecured rating
categories at the time of such investment or contractual commitment
providing for such investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition
thereof) that is rated by each Rating Agency that rates such securities in
its highest short-term unsecured debt rating available at the time of such
investment;
(vi) units of money market funds, including money market funds
advised by the Depositor, the Trustee or an Affiliate thereof, that have
been rated "Aaa" by Moody's, "AAAm" by Standard & Poor's and at least "AA"
by Fitch (to the extent they are Rating Agencies hereunder and such funds
are so rated by such Rating Agency); and
(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies as a permitted
investment of funds backing "Aaa" or "AAA" rated securities;
provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations.
Permitted Transferee: Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in Section 860E(c)(1) of the Code) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in Section 1381(a)(2)(C) of the Code, (v) a Person that is not a U.S.
Person or a U.S. Person with respect to whom income from a Residual Certificate
is attributable to a foreign permanent establishment or fixed base, within the
meaning of an applicable income tax treaty of such Person or any other U.S.
Person, (vi) an "electing large partnership" within the meaning of Section 775
of the Code and (vii) any other Person so designated by the Depositor based upon
an Opinion of Counsel that the Transfer of an Ownership Interest in a Residual
Certificate to such Person may cause any Trust REMIC to fail to qualify as a
REMIC at any time that the Certificates are outstanding. The terms "United
States", "State" and "international organization" shall have the meanings set
forth in Section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State or
political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of ▇▇▇▇▇▇▇ Mac, a majority of its board
of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Physical Certificates: As specified in the Preliminary Statement.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans for such
Distribution Date that were Outstanding Mortgage Loans on the Due Date in the
related Due Period.
Pooling-Tier Interest Rate: As specified in the Preliminary
Statement.
Pooling-Tier REMIC-1: As described in the Preliminary Statement.
Pooling-Tier REMIC-1 Interest Rate: As described in the Preliminary
Statement.
Pooling-Tier REMIC-1 Principal Amount: As described in the
Preliminary Statement.
Pooling-Tier REMIC-1 Regular Interest: As described in the
Preliminary Statement.
Pooling-Tier REMIC-1 WAC Rate: With respect to the Mortgage Loans as
of any Distribution Date, a per annum rate equal to (a) the weighted average of
the Adjusted Net Mortgage Rates for each such Mortgage Loan then in effect on
the beginning of the related Due Period on the Mortgage Loans, adjusted in each
case to accrue on the basis of a 360-day year and the actual number of days in
the related Interest Accrual Period.
Pooling-Tier REMIC-2: As described in the Preliminary Statement.
Pooling-Tier REMIC-2 Interest Rate: As described in the Preliminary
Statement.
Pooling-Tier REMIC-2 IO Interest: Any of the Pooling-Tier REMIC-2
Regular Interests with the designation "IO" in its name.
Pooling-Tier REMIC-2 IO Notional Balance: As described in the
Preliminary Statement.
Pooling-Tier REMIC-2 Principal Amount: As described in the
Preliminary Statement.
Pooling-Tier REMIC-2 Regular Interest: As described in the
Preliminary Statement.
Prepayment Charge: Any prepayment premium, penalty or charge
collected by any Servicer with respect to a Mortgage Loan from a Mortgagor in
connection with any voluntary Principal Prepayment pursuant to the terms of the
related Mortgage Note.
Prepayment Interest Excess: With respect to any Distribution Date,
any interest collected by any Servicer with respect to any Mortgage Loan
serviced by such Servicer as to which a Principal Prepayment in Full occurs from
the 1st day of the month through the 15th day of the month in which such
Distribution Date occurs and that represents interest that accrues from the 1st
day of such month to the date of such Principal Prepayment in Full.
Prepayment Interest Shortfall: With respect to any Distribution Date
and the Servicers, the sum of, for each Mortgage Loan that was, during the
portion of the Prepayment Period from and including the 16th day of the month
preceding the month in which such Distribution Date occurs (or from the day
following the Cut-off Date, in the case of the first Distribution Date) through
the last day of such month, the subject of a Principal Prepayment which is not
accompanied by an amount equal to one month of interest that would have been due
on such Mortgage Loan on the Due Date in the following month and which was
applied by the applicable Servicer to reduce the outstanding principal balance
of such Mortgage Loan on a date preceding such Due Date an amount equal to the
product of (a) the Mortgage Rate net of the Servicing Fee Rate for such Mortgage
Loan, (b) the amount of the Principal Prepayment for such Mortgage Loan, (c)
1/360 and (d) the number of days commencing on the date on which such Principal
Prepayment was applied and ending on the last day of the calendar month in which
the related Prepayment Period begins. With respect to any Distribution Date and
the Countrywide Servicer, as determined pursuant to the CHL Agreements.
Prepayment Period: With respect to any Distribution Date and any
Servicer or the Countrywide Servicer, either (a) the period commencing on the
16th day of the month preceding the month in which such Distribution Date occurs
(or in the case of the first Distribution Date, commencing on the Cut-off Date)
and ending on the 15th day of the month in which such Distribution Date occurs,
or (b) the calendar month prior to that Distribution Date, with respect to any
partial principal prepayments in the case of either Servicer or any involuntary
principal prepayments in full in the case of JPMorgan.
Principal Distribution Amount: For any Distribution Date, the sum of
(i) the Basic Principal Distribution Amount for such Distribution Date and (ii)
the Extra Principal Distribution Amount for such Distribution Date.
Principal Prepayment: Any full or partial payment or other recovery
of principal on a Mortgage Loan (including upon liquidation of a Mortgage Loan)
which is received by the applicable Servicer or the Countrywide Servicer, as
applicable, in advance of its scheduled Due Date, excluding any Prepayment
Charge thereon.
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Principal Remittance Amount: With respect to any Distribution Date,
the amount equal to the sum of the following amounts (without duplication) with
respect to the related Due Period: (i) each scheduled payment of principal on a
Mortgage Loan due during such Due Period and received by the applicable Servicer
or the Countrywide Servicer, as applicable, on or prior to the related
Determination Date or advanced by the applicable Servicer for the related
Remittance Date, and all Principal Prepayments received during the related
Prepayment Period; (ii) all Liquidation Proceeds, Condemnation Proceeds and
Insurance Proceeds on the Mortgage Loans allocable to principal actually
collected by the applicable Servicer or the Countrywide Servicer, as applicable,
during the related Prepayment Period; (iii) the portion of the Repurchase Price
allocable to principal with respect to each Mortgage Loan repurchased with
respect to such Distribution Date; (iv) all Substitution Adjustment Amounts
allocable to principal received in connection with the substitutions of Mortgage
Loans with respect to such Distribution Date; (v) with respect to the
Distribution Date in April 2006 only, the portion of the Closing Date Deposit
Amount allocable to principal; and (vi) the allocable portion of the proceeds
received with respect to the termination of the Trust Fund pursuant to clause
(a) of Section 9.01 (to the extent such proceeds relate to principal).
Private Certificates: As specified in the Preliminary Statement.
Prospectus Supplement: The Prospectus Supplement, dated March 24,
2006, relating to the Offered Certificates.
PTCE 95-60: As defined in Section 5.02(b).
Purchase Agreements: Collectively, the Meritage Purchase Agreement,
the CHL Sale and Servicing Agreement, the Accredited Purchase Agreement, the AIG
Purchase Agreement and the First NLC Purchase Agreement.
Rating Agency: Each of the Rating Agencies specified in the
Preliminary Statement. If such organization or a successor is no longer in
existence, "Rating Agency" shall be such nationally recognized statistical
rating organization, or other comparable Person, as is designated by the
Depositor, notice of which designation shall be given to the Trustee. References
herein to a given rating or rating category of a Rating Agency shall mean such
rating category without giving effect to any modifiers. For purposes of Section
10.05(b), the addresses for notices to each Rating Agency shall be the address
specified therefor in the definition corresponding to the name of such Rating
Agency, or such other address as either such Rating Agency may hereafter furnish
to the Depositor, the Trustee and the Servicers.
Realized Losses: With respect to any date of determination and any
Liquidated Mortgage Loan, the amount, if any, by which (a) the unpaid principal
balance of such Liquidated Mortgage Loan together with accrued and unpaid
interest thereon exceeds (b) the Liquidation Proceeds with respect thereto net
of the expenses incurred by the applicable Servicer in connection with the
liquidation of such Liquidated Mortgage Loan and net of the amount of
unreimbursed Servicing Advances with respect to such Liquidated Mortgage Loan.
Record Date: With respect to any Distribution Date, the close of
business on the Business Day immediately preceding such Distribution Date;
provided, however, that for any Certificate issued in definitive form, the
Record Date shall be the close of business on the last Business Day of the month
preceding the month in which such applicable Distribution Date occurs.
Reference Bank: As defined in Section 4.04.
Regular Certificates: As specified in the Preliminary Statement.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have been
provided by the Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (January 7, 2005))
or by the staff of the Commission, or as may be provided by the Commission or
its staff from time to time.
Relief Act Interest Shortfall: With respect to any Distribution Date
and any Mortgage Loan, any reduction in the amount of interest collectible on
such Mortgage Loan for the most recently ended Due Period as a result of the
application of the Servicemembers Civil Relief Act or any similar state
statutes.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
Remittance Date: With respect to any Distribution Date, the second
Business Day immediately preceding such Distribution Date.
REO Disposition: The final sale by the applicable Servicer of any
REO Property.
REO Imputed Interest: As to any REO Property, for any period, an
amount equivalent to interest (at the Mortgage Rate net of the Servicing Fee
Rate that would have been applicable to the related Mortgage Loan had it been
outstanding) on the unpaid principal balance of the Mortgage Loan as of the date
of acquisition thereof (as such balance is reduced pursuant to Section 3.17 by
any income from the REO Property treated as a recovery of principal).
REO Mortgage Loan: A Mortgage Loan where title to the related
Mortgaged Property has been obtained by the applicable Servicer in the name of
the Trustee on behalf of the Certificateholders, or obtained by the Countrywide
Servicer in the manner set forth in the CHL Agreements.
REO Property: A Mortgaged Property acquired by the Trust Fund
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Replacement Swap Provider Payment: Any payments that have been
received by the Trust as a result of entering into a replacement interest rate
swap agreement following an Additional Termination Event described in Part
1(h)(ii) of the Interest Rate Swap Agreement.
Reportable Event: As defined in Section 8.12(g).
Repurchase Price: With respect to any Mortgage Loan, (a) in the case
of any Mortgage Loan repurchased by the Depositor or the Responsible Party, an
amount equal to the sum of (i) the unpaid principal balance of such Mortgage
Loan as of the date of repurchase, (ii) interest on such unpaid principal
balance of such Mortgage Loan at the Mortgage Rate from the last date through
which interest has been paid and distributed to the Trustee to the date of
repurchase, (iii) all unreimbursed Servicing Advances and (iv) all costs and
expenses incurred by the Trustee arising out of or based upon such breach,
including without limitation, costs and expenses relating to the Trustee's
enforcement of the repurchase obligation of the Depositor or the Responsible
Party hereunder, and (b) in the case of any Mortgage Loan repurchased by
Meritage, CHL, Accredited or AIG, the repurchase price specified in the Meritage
Agreements, the CHL Agreements, the Accredited Agreements or the AIG Agreements,
as applicable. In addition to the Repurchase Price, the Responsible Party is
obligated to make certain indemnification payments for material breaches of
representations and warranties as further set forth in Section 2.03(o) in this
Agreement, and each of Meritage, Accredited, CHL and AIG is obligated to make
certain indemnification payments for material breaches of representations and
warranties as further set forth in the Meritage Agreements, the Accredited
Agreements, the CHL Agreements and the AIG Agreements, as applicable.
Request for Release: The Request for Release submitted by the
applicable Servicer to the Trustee substantially in the form of Exhibit J.
Residual Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any
managing director, any vice president, any assistant vice president, any
assistant secretary, any assistant treasurer, any associate, or any other
officer of the Trustee, customarily performing functions similar to those
performed by any of the above designated officers who at such time shall be
officers to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Agreement.
Responsible Party: First NLC.
Rule 144A Letter: As defined in Section 5.02(b).
Sarbanes Certification: As defined in Section 8.12(c).
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan
due on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified herein, shall give effect to any related Debt
Service Reduction and any Deficient Valuation that affects the amount of the
monthly payment due on such Mortgage Loan.
Second Lien Mortgage Loan: A Mortgage Loan secured by a second lien
Mortgage on the related Mortgaged Property.
Securities Act: The Securities Act of 1933, as amended.
Senior Defaulted Swap Termination Payment: As of any date, the
lesser of (x) any Replacement Swap Provider Payment and (y) any Swap Termination
Payment owed to the Swap Provider.
Senior Enhancement Percentage: With respect to any Distribution
Date, the percentage obtained by dividing (x) the sum of (i) the aggregate Class
Certificate Balance of the Subordinated Certificates and (ii) the Subordinated
Amount, in each case after taking into account the distribution of the Principal
Distribution Amount and any principal payments on those Classes of Certificates
from the Swap Account on that Distribution Date, by (y) the aggregate Stated
Principal Balance of the Mortgage Loans for such Distribution Date.
Senior Specified Enhancement Percentage: As of any date of
determination, 45.60%.
Servicer: JPMorgan or HomEq, as applicable, and if a successor is
appointed hereunder, such successor. When the term "Servicer" is used in this
Agreement in connection with the administration of servicing obligations with
respect to any Mortgage Loan, Mortgaged Property, REO Property or Mortgage File,
"Servicer" shall mean the Person identified as the Servicer on such Mortgage
Loan on the Mortgage Loan Schedule.
Servicer Remittance Report: As defined in Section 4.03(d).
Servicing Advances: The reasonable "out-of-pocket" costs and
expenses (including legal fees) incurred by the applicable Servicer or the
Countrywide Servicer in the performance of its servicing obligations in
connection with a default, delinquency or other unanticipated event, including,
but not limited to, the cost of (i) the preservation, restoration, inspection
and protection of a Mortgaged Property, (ii) any enforcement, administrative or
judicial proceedings, including foreclosures and litigation, in respect of a
particular Mortgage Loan, (iii) the management (including reasonable fees in
connection therewith) and liquidation of any REO Property and (iv) the
performance of its obligations under Sections 3.01, 3.09, 3.13 and 3.15, in the
case of such Servicer, or the applicable provisions of the CHL Agreements, in
the case of the Countrywide Servicer. The Servicing Advances shall also include
any reasonable "out-of-pocket" costs and expenses (including legal fees)
incurred by such Servicer in connection with executing and recording instruments
of satisfaction, deeds of reconveyance or Assignments of Mortgage in connection
with any foreclosure in respect of any Mortgage Loan to the extent not recovered
from the Mortgagor or otherwise payable under this Agreement. Neither any
Servicer nor the Countrywide Servicer shall be required to make any
Nonrecoverable Servicing Advances.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of Regulation AB, which as of the Closing Date are listed on Exhibit U
hereto.
Servicing Fee: With respect to each Servicer and the Countrywide
Servicer and each Mortgage Loan, and for any calendar month, an amount equal to
one month's interest (or in the event of any payment of interest which
accompanies a Principal Prepayment in Full made by the Mortgagor during such
calendar month, interest for the number of days covered by such payment of
interest) at the Servicing Fee Rate on the applicable Stated Principal Balance
of such Mortgage Loan as of the first day of such calendar month. Such fee shall
be payable monthly, and shall be pro rated for any portion of a month during
which the Mortgage Loan is serviced by such Servicer under this Agreement or the
Countrywide Servicer under the CHL Sale and Servicing Agreement. The Servicing
Fee is payable solely from the interest portion (including recoveries with
respect to interest from Liquidation Proceeds, Insurance Proceeds, Condemnation
Proceeds and proceeds received with respect to REO Properties, to the extent
permitted by Section 3.11) of such Scheduled Payment collected by such Servicer,
or as otherwise provided under Section 3.11.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per
annum.
Servicing File: With respect to each Mortgage Loan, the file
retained by the applicable Servicer or the Countrywide Servicer consisting of
originals or copies of all documents in the Mortgage File which are not
delivered to the Trustee in the Custodial File and copies of the Mortgage Loan
Documents set forth in Exhibit K hereto.
Servicing Function Participant: As defined in Section 3.23(a).
Servicing Officer: Any officer of any Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by any Servicer on the Closing Date pursuant to this Agreement, as
such list may from time to time be amended, or in the case of the Countrywide
Servicer, as defined in the CHL Agreements.
Servicing Transfer Date: With respect to any Mortgage Loan, the date
on which servicing of such Mortgage Loan was transferred to the applicable
Servicer (as set forth on the Mortgage Loan Schedule).
Similar Law: As defined in Section 5.02(b).
60+ Day Delinquent Mortgage Loan: (i) Each Mortgage Loan with
respect to which any portion of a Scheduled Payment is, as of the last day of
the prior Due Period, two months or more past due (without giving effect to any
grace period), including, without limitation, such Mortgage Loans that are
subject to bankruptcy proceedings, (ii) each Mortgage Loan in foreclosure and
(iii) all REO Property.
Specified Subordinated Amount: Prior to the Stepdown Date, an amount
equal to 4.20% of the Cut-off Date Pool Principal Balance. On and after the
Stepdown Date, an amount equal to 8.40% of the aggregate Stated Principal
Balance of the Mortgage Loans for such Distribution Date, subject, until the
Class Certificate Balance of each Class of Offered Certificates has been reduced
to zero, to a minimum amount equal to 0.50% of the Cut-off Date Pool Principal
Balance; provided, however, that if, on any Distribution Date, a Trigger Event
exists, the Specified Subordinated Amount shall not be reduced to the applicable
percentage of the then current aggregate Stated Principal Balance of the
Mortgage Loans until the Distribution Date on which a Trigger Event no longer
exists. When the Class Certificate Balance of each Class of Offered Certificates
has been reduced to zero, the Specified Subordinated Amount will thereafter
equal zero.
Sponsor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York
corporation, and its successors in interest, as purchaser of the Mortgage Loans
under each of the Purchase Agreements.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors in interest. If Standard &
Poor's is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 10.05(b) the address for notices to Standard & Poor's shall
be Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Residential Mortgage Surveillance Group - ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust
2006-2, or such other address as Standard & Poor's may hereafter furnish to the
Depositor, the Trustee and the Servicers.
Standard & Poor's Glossary: The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
Startup Day: The Closing Date.
Stated Principal Balance: As to each Mortgage Loan and as of any
date of determination, (i) the principal balance of the Mortgage Loan at the
Cut-off Date after giving effect to payments of principal due on or before such
date (whether or not received), minus (ii) all amounts previously remitted to
the Trustee with respect to the related Mortgage Loan representing payments or
recoveries of principal including advances in respect of scheduled payments of
principal. For purposes of any Distribution Date, the Stated Principal Balance
of any Mortgage Loan will give effect to any scheduled payments of principal
received by the applicable Servicer or the Countrywide Servicer on or prior to
the related Determination Date or advanced by the applicable Servicer or the
Countrywide Servicer for the related Remittance Date and any unscheduled
principal payments and other unscheduled principal collections received during
the related Prepayment Period, and the Stated Principal Balance of any Mortgage
Loan that has prepaid in full or has become a Liquidated Mortgage Loan during
the related Prepayment Period shall be zero.
Stepdown Date: The later to occur of (i) the earlier to occur of (a)
the Distribution Date in April 2009 and (b) the Distribution Date following the
Distribution Date on which the aggregate Class Certificate Balances of the Class
A Certificates have been reduced to zero and (ii) the first Distribution Date on
which the Senior Enhancement Percentage (calculated for this purpose only after
taking into account payments of principal on the Mortgage Loans applied to
reduce the Stated Principal Balances of the Mortgage Loans for the applicable
Distribution Date but prior to any allocation of the Principal Distribution
Amount and principal payments from the Swap Account to the Certificates on such
Distribution Date) is greater than or equal to the Senior Specified Enhancement
Percentage.
Subcontractor: Any third-party or Affiliated vendor, subcontractor
or other Person utilized by a Servicer, the Countrywide Servicer, a Subservicer,
or the Trustee that is not responsible for the overall servicing (as "servicing"
is commonly understood by participants in the mortgage-backed securities market)
of Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to Mortgage Loans.
Subordinated Amount: With respect to any Distribution Date, the
excess, if any, of (a) the aggregate Stated Principal Balance of the Mortgage
Loans for such Distribution Date over (b) the aggregate of the Class Certificate
Balances of the Offered Certificates as of such Distribution Date (after giving
effect to the payment of the Principal Remittance Amount on such Certificates on
such Distribution Date).
Subordinated Certificates: As specified in the Preliminary
Statement.
Subordination Deficiency: With respect to any Distribution Date, the
excess, if any, of (a) the Specified Subordinated Amount applicable to such
Distribution Date over (b) the Subordinated Amount applicable to such
Distribution Date.
Subordination Reduction Amount: With respect to any Distribution
Date, an amount equal to the lesser of (a) the Excess Subordinated Amount and
(b) the Net Monthly Excess Cash Flow.
Subsequent Recovery: With respect to any Mortgage Loan or related
Mortgaged Property that became a Liquidated Mortgage Loan or was otherwise
disposed of, all amounts received in respect of such Liquidated Mortgage Loan
after an Applied Realized Loss Amount related to such Mortgage Loan or Mortgaged
Property is allocated to reduce the Class Certificate Balance of any Class of
Subordinated Certificates. Any Subsequent Recovery that is received during a
Prepayment Period will be treated as Liquidation Proceeds and included as part
of the Principal Remittance Amount for the related Distribution Date.
Subservicer: Any Person that services Mortgage Loans on behalf of a
Servicer or the Countrywide Servicer, as applicable, or any Subservicer and is
responsible for the performance (whether directly or through Subservicers or
Subcontractors) of a substantial portion of the material servicing functions
required to be performed by a Servicer under this Agreement or by the
Countrywide Servicer pursuant to the CHL Agreements, with respect to some or all
of the Mortgage Loans, that are identified in Item 1122(d) of Regulation AB.
Subservicing Account: As defined in Section 3.08.
Subservicing Agreements: As defined in Section 3.02(a), or a
subservicing agreement entered into pursuant to the CHL Agreements, as
applicable.
Substitute Mortgage Loan: A Mortgage Loan (i) substituted by the
Responsible Party, Meritage, AIG, CHL, Accredited or Depositor for a Deleted
Mortgage Loan that satisfies the criteria set forth in the definition of
"Qualified Substitute Mortgage Loan" in the applicable Purchase Agreement or
(ii) substituted by the Depositor for a Deleted Mortgage Loan, which, if
substituted by the Depositor, must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit J, (a)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
more than 10% less than, the Stated Principal Balance of the Deleted Mortgage
Loan; (b) be accruing interest at a rate no lower than and not more than 1% per
annum higher than, that of the Deleted Mortgage Loan; (c) have a Loan-to-Value
Ratio or a Combined Loan-to-Value Ratio, as applicable, no higher than that of
the Deleted Mortgage Loan; (d) have a remaining term to maturity no greater than
(and not more than one year less than that of) the Deleted Mortgage Loan; and
(e) comply with each representation and warranty set forth in Section 2.03.
Substitution Adjustment Amount: As defined in Section 2.03.
Swap Account: As defined in Section 4.06.
Swap Assets: Collectively, the Swap Account, the Interest Rate Swap
Agreement, the Class IO Interest and the right to receive Class IO Shortfalls,
subject to the obligation to pay amounts specified in Section 4.06.
Swap LIBOR: With respect to any Distribution Date (and the related
Interest Accrual Period), the product of (i) USD-LIBOR-BBA (as used in the
Interest Swap Agreement), (ii) two, and (iii) the quotient of (a) the actual
number of days in the Interest Accrual Period for the Offered Certificates
divided by (b) 30.
Swap Payment Allocation: For any Class of Certificates and any
Distribution Date, that Class's pro rata share of the Net Swap Receipts, if any,
for that Distribution Date, based on the Class Certificate Balances of the
Classes of Certificates.
Swap Payment Rate: For any Distribution Date, a fraction, the
numerator of which is any Net Swap Payment or Swap Termination Payment (other
than a Defaulted Swap Termination Payment) owed to the Swap Provider for such
Distribution Date and the denominator of which is the aggregate Stated Principal
Balance of the Mortgage Loans at the beginning of the related Due Period,
multiplied by 12.
Swap Provider: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Services Inc., a Delaware
corporation, and its successors in interest.
Swap Termination Payment: Any payment payable by the Trust or the
Swap Provider upon termination of the Interest Rate Swap Agreement as a result
of an Event of Default (as defined in the Interest Rate Swap Agreement) or a
Termination Event (as defined in the Interest Rate Swap Agreement).
Tax Matters Person: The Holder of the Class R Certificates
designated as "tax matters person" of each Trust REMIC in the manner provided
under Treasury Regulations Section 1.860F-4(d) and Treasury Regulations Section
301.6231(a)(7)-1.
Tax Service Contract: As defined in Section 3.09(a).
Telerate Page 3750: The display page currently so designated on the
Bridge Telerate Service (or such other page as may replace that page on that
service for displaying comparable rates or prices).
Total Monthly Excess Spread: As to any Distribution Date, an amount
equal to the excess if any, of (i) the interest on the Mortgage Loans received
by the Servicers or the Countrywide Servicer on or prior to the related
Determination Date (other than Prepayment Interest Excesses) or advanced by the
Servicers or the Countrywide Servicer for the related Remittance Date (net of
Expense Fees) over (ii) the sum of (A) the amounts payable to the Certificates
pursuant to Section 4.02(a)(i) on such Distribution Date and (B) any Net Swap
Payments or Swap Termination Payments (other than a Defaulted Swap Termination
Payment that is not a Senior Defaulted Swap Termination Payment) to the Swap
Provider.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Transferor Certificate: As defined in Section 5.02(b).
Trigger Event: Either a Cumulative Loss Trigger Event or a
Delinquency Trigger Event.
Trust: The express trust created hereunder in Section 2.01(c).
Trust Fund: The corpus of the trust created hereunder consisting of
(i) the Mortgage Loans and all interest and principal with respect thereto
received on or after the related Cut-off Date, other than such amounts which
were due on the Mortgage Loans on or prior to the related Cut-off Date; (ii) the
Collection Accounts, Excess Reserve Fund Account, the Distribution Account, and
all amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise; (iv) the Closing Date
Deposit Amount; (v) the Interest Rate Swap Agreement; (vi) the Swap Assets;
(vii) the Depositor's rights under the Meritage Agreements, the Accredited
Agreements, the CHL Agreements and the AIG Agreements (solely insofar as such
agreements relate to the Meritage Mortgage Loans, the Accredited Agreements, the
CHL Agreements or the AIG Mortgage Loans, as applicable); and (viii) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing.
Trust REMIC: Any of Pooling-Tier REMIC-1, Pooling-Tier REMIC-2, the
Lower-Tier REMIC or the Upper-Tier REMIC, as applicable.
Trustee: Deutsche Bank National Trust Company, a national banking
association, and its successors in interest and, if a successor trustee is
appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to the
product of (a) one-twelfth of the Trustee Fee Rate and (b) (i) the aggregate
Stated Principal Balance of the Mortgage Loans as of the first day of the
related Interest Accrual Period and (ii) with respect to the Distribution Date
in April 2006 only, the portion of the Closing Date Deposit Amount allocable to
principal.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.0045% per
annum.
Trustee Float Period: With respect to the Distribution Date and the
related amounts in the Distribution Account, the period commencing on the
Business Day immediately preceding such Distribution Date and ending on such
Distribution Date.
Underwriters' Exemption: Any exemption listed under footnote 1 of,
and amended by, Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487
(2002), or any successor exemption.
Unpaid Interest Amount: As of any Distribution Date and any Class of
Certificates, the sum of (a) the portion of the Accrued Certificate Interest
Distribution Amount from Distribution Dates prior to the current Distribution
Date remaining unpaid immediately prior to the current Distribution Date and (b)
interest on the amount in clause (a) above at the applicable Pass-Through Rate
(to the extent permitted by applicable law).
Unpaid Realized Loss Amount: With respect to any Class of
Subordinated Certificates and as to any Distribution Date, is the excess of (i)
the Applied Realized Loss Amounts with respect to such Class over (ii) the sum
of (a) all distributions in reduction of such Applied Realized Loss Amounts on
all previous Distribution Dates, and (b) the amount by which the Class
Certificate Balance of such Class has been increased due to the distribution of
any Subsequent Recoveries on all previous Distribution Dates. Any amounts
distributed to a Class of Subordinated Certificates in respect of any Unpaid
Realized Loss Amount will not be applied to reduce the Class Certificate Balance
of such Class.
Upper-Tier CarryForward Amount: With respect to each Class of
Offered Certificates, as of any Distribution Date, the sum of (A) if on such
Distribution Date the Upper-Tier Interest Rate for the Class of Corresponding
Upper-Tier REMIC Regular Interest is based upon the Upper-Tier REMIC WAC Rate,
the excess, if any, of (i) the amount of interest such Class of Upper-Tier
Regular Interest would otherwise be entitled to receive on such Distribution
Date had such Upper-Tier REMIC Regular Interest not been subject to the
Upper-Tier REMIC WAC Rate, over (ii) the amount of interest payable on such
Class of Certificates on such Distribution Date taking into account the
Upper-Tier REMIC WAC Rate and (B) the Upper-Tier CarryForward Amount for such
Class of Certificates for all previous Distribution Dates not previously paid,
together with interest thereon at a rate equal to the applicable Upper-Tier
Interest Rate for such Class of Certificates for such Distribution Date, without
giving effect to the Upper-Tier REMIC WAC Rate.
Upper-Tier Interest Rate: As described in the Preliminary Statement.
Upper-Tier Regular Interest: As described in the Preliminary
Statement.
Upper-Tier REMIC: As described in the Preliminary Statement.
Upper-Tier REMIC WAC Rate: For any Distribution Date, the weighted
average of the Lower-Tier Interest Rates on the Lower-Tier Regular Interests
(other than the Class LT-IO Interest) as of the first day of the related
Interest Accrual Period, weighted on the basis of the Lower-Tier Principal
Amounts of such Lower-Tier Regular Interests as of the first day of the related
Interest Accrual Period.
U.S. Person: (i) A citizen or resident of the United States; (ii) a
corporation (or entity treated as a corporation for tax purposes) created or
organized in the United States or under the laws of the United States or of any
State thereof, including, for this purpose, the District of Columbia; (iii) a
partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any State
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations); (iv) an estate whose income is
includible in gross income for United States income tax purposes regardless of
its source; or (v) a trust, if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. Persons have authority to control substantial decisions of the trust.
Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as U.S. Persons prior to such date, may elect to continue to
be U.S. Persons.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X
Certificates, if any (such Voting Rights to be allocated among the holders of
Certificates of each such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class P
Certificates, if any, and (c) the remaining Voting Rights shall be allocated
among Holders of the remaining Classes of Certificates in proportion to the
Certificate Balances of their respective Certificates on such date.
WAC Cap: With respect to the Mortgage Loans as of any Distribution
Date, the weighted average of the Adjusted Net Mortgage Rates then in effect on
the beginning of the related Due Period on the Mortgage Loans minus the Swap
Payment Rate, adjusted in each case to accrue on the basis of a 360-day year and
the actual number of days in the related Interest Accrual Period.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Mortgage Loans. (a) The Depositor,
concurrently with the execution and delivery hereof, hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trustee for the benefit of the
Certificateholders, without recourse, all the right, title and interest of the
Depositor in and to the Trust Fund, and the Trustee, on behalf of the Trust,
hereby accepts the Trust Fund.
(b) In connection with the transfer and assignment of each Mortgage
Loan, the Depositor has delivered or caused to be delivered to the Trustee, for
the benefit of the Certificateholders the following documents or instruments
with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _____________, without recourse" and signed
(which may be by facsimile signature) in the name of the last endorsee by
an authorized officer. To the extent that there is no room on the face of
the Mortgage Note for endorsements, the endorsement may be contained on an
allonge, unless the Trustee is advised in writing by the applicable
Originator (pursuant to the applicable Purchase Agreement) or the
Depositor, as applicable, that state law does not so allow;
(ii) the original of any guaranty executed in connection with the
Mortgage Note;
(iii) the original Mortgage with evidence of recording thereon or a
certified true copy of such Mortgage submitted for recording. If, in
connection with any Mortgage Loan, the original Mortgage cannot be
delivered with evidence of recording thereon on or prior to the Closing
Date because of a delay caused by the public recording office where such
Mortgage has been delivered for recordation or because such Mortgage has
been lost or because such public recording office retains the original
recorded Mortgage, the applicable Originator or the Depositor, as
applicable, shall deliver or cause to be delivered to the Trustee a
photocopy of such Mortgage certified by the applicable Originator or the
Depositor, as applicable, to be a true and complete copy of such Mortgage
and shall forward to the Trustee such original recorded Mortgage within 14
days following the applicable Originator's or the Depositor's receipt of
such Mortgage from the applicable public recording office; or in the case
of a Mortgage where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, a copy of such Mortgage
certified by such public recording office to be a true and complete copy
of the original recorded Mortgage;
(iv) the originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon;
(v) the original Assignment of Mortgage for each Mortgage Loan
endorsed in blank (except with respect to MERS Designated Mortgage Loans);
(vi) the originals of all intervening assignments of Mortgage (if
any) evidencing a complete chain of assignment from the applicable
originator (or MERS with respect to each MERS Designated Mortgage Loan) to
the last endorsee with evidence of recording thereon or a certified true
copy of such intervening assignments of Mortgage submitted for recording,
or if any such intervening assignment has not been returned from the
applicable recording office or has been lost or if such public recording
office retains the original recorded assignments of Mortgage, the
Responsible Party or the Depositor, as applicable, shall deliver or cause
to be delivered a photocopy of such intervening assignment, certified by
the Responsible Party or the Depositor, as applicable, to be a true and
complete copy of such intervening assignment and shall forward to the
Trustee such original recorded intervening assignment within 14 days
following the Responsible Party or the Depositor's receipt of such from
the applicable public recording office; or in the case of an intervening
assignment where a public recording office retains the original recorded
intervening assignment or in the case where an intervening assignment is
lost after recordation in a public recording office, a copy of such
intervening assignment certified by such public recording office to be a
true and complete copy of the original recorded intervening assignment;
(vii) the original mortgagee title insurance policy or attorney's
opinion of title and abstract of title, or, in the event such original
title policy is unavailable, a certified true copy of the related policy
binder or commitment for title certified to be true and complete by the
title insurance company; and
(viii) the original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Mortgage (if
provided).
The Depositor will use its reasonable efforts to assist the Trustee
in enforcing the obligations of the Responsible Party under this Agreement, the
obligations of Meritage under the Meritage Agreements, the obligations of CHL
under the CHL Agreements, the obligations of Accredited under the Accredited
Agreements and the obligations of AIG under the AIG Agreements.
The Depositor shall cause to be delivered to the Trustee the
applicable recorded document promptly upon receipt from the respective recording
office but in no event later than 180 days from the Closing Date.
If any Mortgage has been recorded in the name of Mortgage Electronic
Registration System, Inc. ("MERS") or its designee, no Assignment of Mortgage in
favor of the Trustee will be required to be prepared or delivered and instead,
the applicable Servicer shall take all reasonable actions as are necessary at
the expense of the applicable Originator to the extent permitted under the
related Purchase Agreement and otherwise at the expense of the Depositor to
cause the Trust to be shown as the owner of the related Mortgage Loan on the
records of MERS for the purpose of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
From time to time, the Depositor or the applicable Servicer, as
applicable, shall forward to the Trustee additional original documents,
additional documents evidencing an assumption, modification, consolidation or
extension of a Mortgage Loan in accordance with the terms of this Agreement upon
receipt of such documents. All such mortgage documents held by the Trustee as to
each Mortgage Loan shall constitute the "Custodial File".
No later than thirty (30) Business Days following the later of the
Closing Date and the date of receipt by the applicable Servicer of the complete
recording information for a Mortgage and except as set forth below, such
Servicer shall promptly submit or cause to be submitted for recording, at the
expense of the applicable Originator as required pursuant to the related
Purchase Agreement and at no expense to the Trust Fund, the Trustee, the
Servicers, or the Depositor, in the appropriate public office for real property
records, each Assignment of Mortgage referred to in Section 2.01(b)(v).
Notwithstanding the foregoing, however, for administrative convenience and
facilitation of servicing and to reduce closing costs, the Assignments of
Mortgage shall not be required to be completed and submitted for recording with
respect to any Mortgage Loan (i) if the Trustee and each Rating Agency have
received an Opinion of Counsel, satisfactory in form and substance to the
Trustee and each Rating Agency to the effect that the recordation of such
Assignments of Mortgage in any specific jurisdiction is not necessary to protect
the Trustee's interest in the related Mortgage Note, (ii) if such Mortgage Loan
is a MERS Designated Mortgage Loan or (iii) if the Rating Agencies have each
notified the Depositor in writing that not recording any such Assignments of
Mortgage would not cause the initial ratings on any Offered Certificates to be
downgraded or withdrawn; provided, however, that no Servicer shall be held
responsible or liable for any loss that occurs because an Assignment of Mortgage
was not recorded, but only to the extent the applicable Servicer does not have
prior knowledge of the act or omission that causes such loss. Unless the
Depositor gives the Servicers notice to the contrary, the Depositor is deemed to
have given the Servicers notice that the condition set forth in clause (iii)
above is applicable. However, with respect to the Assignments of Mortgage
referred to in clauses (i) and (ii) above, if foreclosure proceedings occur
against a Mortgaged Property, the applicable Servicer shall record such
Assignment of Mortgage at the expense of the related Originator (and at no
expense to the applicable Servicer) as required pursuant to the related Purchase
Agreement. If the Assignment of Mortgage is to be recorded, the Mortgage shall
be assigned to "Deutsche Bank National Trust Company, as trustee under the
Pooling and Servicing Agreement dated as of March 1, 2006, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home
Equity Loan Trust 2006-2." In the event that any such Assignment of Mortgage is
lost or returned unrecorded because of a defect therein, the Depositor shall
promptly cause to be delivered a substitute Assignment of Mortgage to cure such
defect and thereafter cause each such assignment to be duly recorded. If there
is such a defect with respect to a Meritage Mortgage Loan, an Accredited
Mortgage Loan, a CHL Mortgage Loan or an AIG Mortgage Loan, the Trustee shall
take such actions, with the Depositor's consent, to enforce the rights of the
Trust as "Sponsor" under the Meritage Agreements, the Accredited Agreements, the
CHL Agreements or the AIG Agreements, as applicable.
On or prior to the Closing Date, the Depositor shall deliver to the
Trustee a copy of the Data Tape Information in an electronic, machine readable
medium in a form mutually acceptable to the Depositor and the Trustee.
(c) The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust (the "Trust") to be known, for convenience, as "▇▇▇▇▇▇ ▇▇▇▇▇▇▇ HOME EQUITY
LOAN TRUST 2006-2" and Deutsche Bank National Trust Company is hereby appointed
as Trustee in accordance with the provisions of this Agreement. The parties
hereto acknowledge and agree that it is the policy and intention of the Trust to
acquire only Mortgage Loans meeting the requirements set forth in this
Agreement, including without limitation, the representation and warranty set
forth in paragraph (aaa) of Schedule IV to this Agreement. The Trust's fiscal
year is the calendar year.
(d) The Trust shall have the capacity, power and authority, and the
Trustee on behalf of the Trust is hereby authorized, to accept the sale,
transfer, assignment, set over and conveyance by the Depositor to the Trust of
all the right, title and interest of the Depositor in and to the Trust Fund
(including, without limitation, the Mortgage Loans, the Meritage Agreements, the
Accredited Agreements, the CHL Agreements and the AIG Agreements) pursuant to
Section 2.01(a). The Trustee on behalf of the Trust is hereby directed to enter
into the Interest Rate Swap Agreement.
Section 2.02 Acceptance by the Trustee of the Mortgage Loans. The
Trustee shall acknowledge, on the Closing Date, receipt by the Trustee of the
documents identified in the Initial Certification in the form annexed hereto as
Exhibit E, and declares that it holds and will hold such documents and the other
documents delivered to it pursuant to Section 2.01, and that it holds or will
hold such other assets as are included in the Trust Fund, in trust for the
exclusive use and benefit of all present and future Certificateholders. The
Trustee shall maintain possession of the related Mortgage Notes in the State of
California, unless otherwise permitted by the Rating Agencies.
In connection with the Closing Date, the Trustee shall be required
to deliver via facsimile (with original to follow the next Business Day) to the
Depositor and the Servicers or the Countrywide Servicer, as applicable, an
Initial Certification prior to the Closing Date, or, as the Depositor agrees to,
on the Closing Date, certifying receipt of a Mortgage Note and Assignment of
Mortgage for each applicable Mortgage Loan. The Trustee shall not be responsible
to verify the validity, sufficiency or genuineness of any document in any
Custodial File.
Within 90 days after the Closing Date, the Trustee shall, for the
benefit of the Holders of the Certificates, ascertain that all documents
identified in the Document Certification and Exception Report in the form
attached hereto as Exhibit F are in its possession, and shall deliver to the
Depositor, the Servicers or the Countrywide Servicer, as applicable, a Document
Certification and Exception Report, in the form annexed hereto as Exhibit F, to
the effect that, as to each applicable Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as an exception and not covered by
such certification): (i) all documents identified in the Document Certification
and Exception Report and required to be reviewed by it are in its possession;
(ii) such documents have been reviewed by it and appear regular on their face
and relate to such Mortgage Loan; (iii) based on its examination and only as to
the foregoing documents, the information set forth in items (1), (2) and (9) of
the Mortgage Loan Schedule and items (1), (9) and (17) of the Data Tape
Information respecting such Mortgage Loan accurately reflects the information
set forth in the Custodial File; and (iv) each Mortgage Note has been endorsed
as provided in Section 2.01 of this Agreement. The Trustee shall not be
responsible to verify the validity, sufficiency or genuineness of any document
in any Custodial File.
Within 90 days after the Closing Date, each Servicer (for the
benefit of the Holders of the Certificates, based solely on the list of MERS
Designated Mortgage Loans and screen printouts from the MERS System provided to
such Servicer by each applicable Originator no later than 45 days after the
Closing Date) shall confirm, on behalf of the Trust, that the Trustee is shown
as the Investor with respect to each MERS Designated Mortgage Loan on such
screen printouts. If the Trustee is not shown as the Investor with respect to
any MERS Designated Mortgage Loans on such screen printouts, such Servicer shall
promptly notify the related Originator of such fact, and such Person shall then
either cure such defect or repurchase such Mortgage Loan in accordance with
Section 2.03.
The Trustee shall retain possession and custody of each applicable
Custodial File in accordance with and subject to the terms and conditions set
forth herein. The applicable Servicer shall promptly deliver to the Trustee upon
the execution or receipt thereof, the originals of such other documents or
instruments constituting the Custodial File as come into the possession of the
applicable Servicer from time to time.
The Responsible Party shall deliver (or the Depositor, as
applicable, shall use reasonable efforts to cause Meritage, Accredited and AIG
to deliver) to the applicable Servicer copies of all trailing documents required
to be included in the Custodial File at the same time the original or certified
copies thereof are delivered to the Trustee including but not limited to such
documents as the title insurance policy and any other Mortgage Loan Documents
upon return from the public recording office. Such documents shall be delivered
by the Responsible Party at the Responsible Party's expense (or the Depositor,
as applicable, shall use reasonable efforts to cause Meritage, Accredited and
AIG to deliver such documents at Meritage's expense, Accredited's expense or
AIG's expense, as applicable, pursuant to the Meritage Agreements, the
Accredited Agreements or the AIG Agreements, as applicable) to such Servicer.
Section 2.03 Representations and Warranties; Remedies for Breaches
of Representations and Warranties with Respect to the Mortgage Loans. (a) HomEq
hereby makes the representations and warranties set forth in Schedule II hereto
to the Depositor and the Trustee as of the dates set forth in such Schedule and
JPMorgan hereby makes the representations and warranties set forth in Schedule
IV hereto to the Depositor and the Trustee as of the dates set forth in such
Schedule. Upon discovery by any of the parties hereto of a breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other.
(b) The Depositor hereby makes the representations and warranties
set forth in Schedules III hereto to the Trustee as of the dates set forth in
such Schedule.
(c) First NLC hereby makes the representations and warranties set
forth in Schedule IV hereto to the Depositor, the Servicers and the Trustee as
of the dates set forth in such Schedule.
(d) It is understood and agreed by the parties hereto that the
representations and warranties set forth in this Section 2.03 shall survive the
transfer of the Mortgage Loans by the Depositor to the Trustee, and shall inure
to the benefit of the parties to whom the representations and warranties were
made notwithstanding any restrictive or qualified endorsement on any Mortgage
Note or Assignment of Mortgage or the examination or failure to examine any
Mortgage File.
(e) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made by the Depositor or the Responsible Party, as
applicable, under this Agreement, that materially and adversely affects the
value of any Mortgage Loan or the interests of the Trustee or the
Certificateholders therein, the party discovering such breach shall give prompt
written notice thereof to the other parties. Upon receiving written notice of a
breach of a representation and warranty or written notice that a Mortgage Loan
does not constitute a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code, the Trustee shall in turn notify the Responsible Party
or the Depositor, as applicable, in writing to correct or cure, in accordance
with the this Agreement, any such breach of a representation or warranty made by
the Responsible Party or the Depositor, as applicable, under this Agreement
within sixty (60) days from the date of notice from the Trustee or the discovery
by the Responsible Party or the Depositor, as applicable, of the breach, and if
the Responsible Party or the Depositor, as applicable, fails or is unable to
correct or cure the defect or breach within such period, the Trustee shall
notify the Depositor of such failure to correct or cure. Unless otherwise
directed by the Depositor within five (5) Business Days after notifying the
Depositor of such failure by the Responsible Party or the Depositor, as
applicable, to correct or cure, the Trustee shall notify the Responsible Party
or the Depositor, as applicable, to repurchase the Mortgage Loan (a "Deleted
Mortgage Loan") at the Repurchase Price or, if permitted hereunder, substitute a
Substitute Mortgage Loan for such Mortgage Loan, in each case, pursuant to this
Agreement. Notwithstanding the foregoing, in the event that the Trustee receives
notice of a breach by First NLC of any of the representations and warranties set
forth in paragraphs (rr), (zz), (aaa), (ccc), (jjj), (kkk), (lll), (mmm), (nnn),
(ooo) and (ppp) of Schedule IV, the Trustee shall notify the Responsible Party
or the Depositor, as applicable, to repurchase the Mortgage Loan at the
Repurchase Price within sixty (60) days of the Responsible Party's or the
Depositor's receipt of such notice, as applicable. If, within ten (10) Business
Days of receipt of such notice by the Responsible Party or the Depositor, as
applicable, the Responsible Party or the Depositor, as applicable, fails to
repurchase such Mortgage Loan, the Trustee shall notify the Depositor of such
failure. The Trustee shall pursue all legal remedies available to the Trustee
against the Responsible Party under this Agreement, if the Trustee has received
written notice from the Depositor directing the Trustee to pursue such remedies.
(f) In the event any Mortgage Loan does not conform to the
requirements as determined in the Trustee's review of the related Custodial
File, the Trustee shall notify the applicable Originator, the applicable
Servicer or the Countrywide Servicer, as applicable, the Trustee (if applicable)
and the Depositor in writing, and request that such Originator correct or cure
such defect as required under this Agreement, the CHL Agreements, the Accredited
Agreements, the AIG Agreements or the Meritage Agreements, as applicable, and if
such Originator fails or is unable to correct or cure the defect within the
period set forth in this Agreement, the CHL Agreements, the Accredited
Agreements, the AIG Agreements or the Meritage Agreements, as applicable, the
Trustee shall notify the Depositor of such failure to correct or cure. Unless
otherwise directed by the Depositor within five (5) Business Days after
notifying the Depositor of such failure by the applicable Originator or the
Depositor, as applicable, to correct or cure, the Trustee shall notify the
applicable Originator or the Depositor, as applicable, to repurchase the
Mortgage Loan at the Repurchase Price or, if permitted hereunder, substitute a
Substitute Mortgage Loan for such Mortgage Loan, in each case, pursuant to the
terms of this Agreement, as applicable. If, within ten (10) Business Days of
receipt of such notice by the applicable Originator or the Depositor, as
applicable, such Originator or the Depositor, as applicable, fails to repurchase
such Mortgage Loan, the Trustee shall notify the Depositor of such failure. The
Trustee shall pursue all legal remedies available to the Trustee against the
applicable Originator or the Depositor, as applicable, under this Agreement, the
CHL Agreements, the Accredited Agreements, the AIG Agreements or the Meritage
Agreements, as applicable, if the Trustee has received written notice from the
Depositor directing the Trustee to pursue such remedies.
(g) Within 90 days of the earlier of either discovery by or notice
to the Depositor of any breach of a representation or warranty set forth on
Schedule III hereto that materially and adversely affects the value of any
Mortgage Loan or the interest of the Trustee or the Certificateholders therein,
the Depositor shall use its best efforts to promptly cure such breach in all
material respects and, if such defect or breach cannot be remedied, the
Depositor shall purchase such Mortgage Loan at the Repurchase Price or, if
permitted hereunder, substitute a Substitute Mortgage Loan for such Mortgage
Loan. Within 90 days of the earlier of discovery by the Depositor or receipt of
notice by the Depositor of the breach of a representation and warranty set forth
in Schedule IV to this Agreement (with respect to the First NLC Mortgage Loans),
the Meritage Assignment Agreement (with respect to the Meritage Mortgage Loans),
the CHL Assignment Agreement (with respect to the CHL Mortgage Loans), the
Accredited Assignment Agreement (with respect to the Accredited Mortgage Loans)
or the AIG Assignment Agreement (with respect to the AIG Mortgage Loans), that
(1) materially and adversely affects the interests of the Certificateholders in
any Mortgage Loan and (2) has not been cured, repurchased or substituted for by
the applicable Originator in accordance with the terms of this Agreement, the
Meritage Agreements, the CHL Agreements, the Accredited Agreements or the AIG
Agreements, as applicable, (i) the Depositor shall, within the time period
permitted therefor under such agreement, (A) in the case of a breach by First
NLC, take such action described in Section 2.03(f) of this Agreement in respect
of such Mortgage Loan, (B) in the case of Meritage, take such action described
in Section 5 of the Meritage Assignment Agreement in respect of such Mortgage
Loan, (C) in the case of CHL, take such action described in Section 5 of the CHL
Assignment Agreement in respect of such Mortgage Loan, (D) in the case of
Accredited, take such action described in Section 5 of the Accredited Assignment
Agreement in respect of such Mortgage Loan, or (E) in the case of AIG, take such
action described in Section 5 of the AIG Assignment Agreement in respect of such
Mortgage Loan, in each case of clauses (A), (B) or (C), as if the Depositor were
the applicable Originator, and (ii) the Trustee shall promptly deliver to the
Depositor or its designee the related Mortgage File in accordance with the
applicable Servicer's direction in a Request for Release and, upon Depositor's
request, shall assign to the Depositor all of its rights with respect to such
Originator's breach under this Agreement, the Meritage Assignment Agreement, the
CHL Assignment Agreement, the Accredited Assignment Agreement or the AIG
Assignment Agreement, as applicable, which assignment shall be evidenced by a
writing prepared by the Depositor and executed by the Trustee in favor of the
Depositor. Any obligation of the Depositor under this subsection shall terminate
upon receipt by the Trustee of a confirmation from each Rating Agency that such
termination will not cause a downgrade, qualification or withdrawal of the
rating then assigned to any Class of Certificates by any Rating Agency.
(h) Within 90 days of the earlier of either discovery by or notice
to the Responsible Party of any breach of a representation or warranty set forth
on Schedule IV that materially and adversely affects the value of any Mortgage
Loan or the interest of the Trustee or the Certificateholders therein, the
Responsible Party shall use its best efforts to promptly cure such breach in all
material respects and, if such defect or breach cannot be remedied, the
Responsible Party shall, at the Depositor's option, purchase such Mortgage Loan
at the Repurchase Price or, if permitted hereunder, substitute a Substitute
Mortgage Loan for such Mortgage Loan, if applicable.
(i) Any substitution of a Substitute Mortgage Loan by the
Responsible Party shall be made in accordance with the substitution procedures
set forth in the First NLC Purchase Agreement, which provisions shall be as set
forth in such agreements as if they were set forth herein. With respect to any
Substitute Mortgage Loan or Loans substituted by the Depositor or the
Responsible Party, the Depositor or the Responsible Party, as applicable, shall
deliver to the Trustee for the benefit of the Certificateholders the Mortgage
Note, the Mortgage, the related Assignment of Mortgage, and such other documents
and agreements as are required by Section 2.01, with the Mortgage Note endorsed
and the Mortgage assigned as required by Section 2.01. With respect to any
Substitute Mortgage Loan or Loans substituted by Meritage, CHL, Accredited or
AIG, the Depositor shall use reasonable efforts to cause Meritage, CHL,
Accredited or AIG, as applicable, to deliver to the Trustee for the benefit of
the Certificateholders the Mortgage Note, the Mortgage, the related Assignment
of Mortgage, and such other documents and agreements as are required by Section
2.01, with the Mortgage Note endorsed and the Mortgage assigned as required by
Section 2.01. Notwithstanding anything to the contrary set forth in this
Agreement, no substitution under this Agreement is permitted to be made (a) in
any calendar month after the Determination Date for such month or (b) if the
substitution were to be made on or after the second anniversary of the Closing
Date. Scheduled Payments due with respect to Substitute Mortgage Loans in the
Due Period of substitution shall not be part of the Trust Fund and will be
retained by the Depositor or the Responsible Party on the next succeeding
Distribution Date. For the Due Period of substitution, distributions to
Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for such Due Period and thereafter the Depositor or the
Responsible Party shall be entitled to retain all amounts received in respect of
such Deleted Mortgage Loan.
(j) The applicable Servicer, based upon information provided by the
Depositor or the applicable Originator, shall amend the Mortgage Loan Schedule
for the benefit of the Certificateholders to reflect the removal of such Deleted
Mortgage Loan and the substitution of the Substitute Mortgage Loan or Loans and
the applicable Servicer shall deliver the amended Mortgage Loan Schedule to the
Trustee. Upon such substitution, the Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects, and, if the substitution
is made by the Depositor, the Depositor shall be deemed to have made with
respect to such Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties made pursuant to Section
2.03(b) with respect to such Mortgage Loan. Upon any such substitution and the
deposit into the related Collection Account of the amount required to be
deposited therein in connection with such substitution as described in Section
2.03(k), the Trustee shall release the Mortgage File held for the benefit of the
Certificateholders relating to such Deleted Mortgage Loan to the applicable
Originator and the Trustee shall execute and deliver at the direction of the
Depositor or the applicable Originator, such instruments of transfer or
assignment prepared by the Depositor or the applicable Originator, in each case
without recourse, as shall be necessary to vest title in the Depositor or the
applicable Originator, of the Trustee's interest in any Deleted Mortgage Loan
substituted for pursuant to this Section 2.03.
(k) For any month in which the Depositor substitutes one or more
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the applicable
Servicer will determine the amount (if any) by which the aggregate unpaid
principal balance of all such Substitute Mortgage Loans as of the date of
substitution is less than the aggregate unpaid principal balance of all such
Deleted Mortgage Loans. The amount of such shortage, plus an amount equal to the
sum of (i) any accrued and unpaid interest on the Deleted Mortgage Loans and
(ii) all unreimbursed Servicing Advances with respect to such Deleted Mortgage
Loans, or the amount of any similar shortage with respect to a Substitute
Mortgage Loan substituted by the Responsible Party under this Agreement
(collectively, the "Substitution Adjustment Amount"), shall be deposited into
the related Collection Account by the Depositor on or before the Distribution
Account Deposit Date for the Distribution Date following the Prepayment Period
during which the related Mortgage Loan became required to be purchased or
replaced hereunder. The Depositor shall use reasonable efforts to cause
Meritage, CHL, Accredited or AIG, as the case may be, to remit to the applicable
Servicer for deposit into the related Collection Account any Substitution
Adjustment Amount on or before the Distribution Account Deposit Date for the
Distribution Date following the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.
(l) Any Mortgage Loan repurchased pursuant to this Section 2.03 will
be removed from the Trust Fund. The applicable Servicer shall amend the Mortgage
Loan Schedule for the benefit of the Certificateholders to reflect the removal
of any Mortgage Loan repurchased and such Servicer shall deliver the amended
Mortgage Loan Schedule to the Trustee. For purposes of determining the
applicable Repurchase Price, any such repurchase shall occur or shall be deemed
to occur as of the last day of the applicable Prepayment Period.
(m) In the event that the Depositor or the Responsible Party shall
have repurchased a Mortgage Loan pursuant to this Agreement, the Repurchase
Price therefor shall be deposited by the applicable Servicer in the related
Collection Account pursuant to Section 3.10 on or before the Distribution
Account Deposit Date for the Distribution Date following the Prepayment Period
during which the Depositor or the Responsible Party, as applicable, repurchased
such Mortgage Loan and upon such deposit of the Repurchase Price and receipt of
a Request for Release in the form of Exhibit J hereto, the Trustee shall release
the related Custodial File held for the benefit of the Certificateholders to
such Person as directed by the applicable Servicer, and the Trustee shall
execute and deliver at such Person's direction such instruments of transfer or
assignment prepared by such Person, in each case without recourse, as shall be
necessary to transfer title from the Trustee.
(n) In addition to any repurchase or substitution obligation by the
Responsible Party under this Agreement, the Responsible Party shall indemnify
the Depositor and its Affiliates, the Servicers, the Sponsor, the Trustee and
the Trust for any breach of any representation and warranty of the Responsible
Party set forth in this Agreement, in accordance with the indemnification
provisions relating to breaches of representation and warranty (including
without limitation, the representations and warranties set forth in paragraph
(aaa) of Schedule IV to this Agreement) and defective Mortgage Loans set forth
in the First NLC Purchase Agreement as if such indemnification provisions were
set forth herein for the benefit of the Depositor and its Affiliates, the
Servicers, the Sponsor, the Trustee and the Trust. This indemnity shall survive
the termination of this Agreement.
(o) It is understood and agreed by the parties hereto that the
obligation of the Depositor under this Agreement, the Responsible Party under
this Agreement, Meritage under the Meritage Agreements, CHL under the CHL
Agreements, Accredited under the Accredited Agreements or AIG under the AIG
Agreements, to cure, repurchase or substitute any Mortgage Loan as to which a
breach of a representation and warranty has occurred and is continuing, together
with any related indemnification obligations set forth herein, shall constitute
the sole remedies against such Persons respecting such breach available to
Certificateholders, the Depositor (if applicable), or the Trustee on their
behalf.
(p) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made by Meritage, CHL, Accredited or AIG pursuant to
the Meritage Agreements, the CHL Agreements, the Accredited Agreements or the
AIG Agreements, as applicable, the party discovering such breach shall give
prompt written notice thereof to the other parties to this Agreement and
Meritage, CHL, Accredited or AIG, as applicable. The Trustee shall take such
action, with the Depositor's consent, with respect to such breach under the
Meritage Agreements, the CHL Agreements, the Accredited Agreements or AIG
Agreements, as the case may be, as may be necessary or appropriate to enforce
the rights of the Trust with respect thereto.
The provisions of this Section 2.03 shall survive delivery of the
respective Custodial Files to the Trustee for the benefit of the
Certificateholders.
Section 2.04 Execution and Delivery of Certificates. The Trustee
acknowledges the transfer and assignment to it of the Trust Fund and,
concurrently with such transfer and assignment, has executed and delivered to or
upon the order of the Depositor, the Certificates in authorized Denominations
evidencing directly or indirectly the entire ownership of the Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates.
Section 2.05 REMIC Matters. The Preliminary Statement sets forth the
designations for federal income tax purposes of all interests created hereby.
The "Startup Day" of each Trust REMIC for purposes of the REMIC Provisions shall
be the Closing Date. The "latest possible maturity date" of the regular
interests in each Trust REMIC is the Distribution Date occurring in February
2036, which is the Distribution Date in the month following the month in which
the latest maturity date of any Mortgage Loan occurs. Amounts distributable to
the Class X Certificates (prior to any reduction for any Basis Risk Payment or
Swap Termination Payment), exclusive of any amounts received from the Swap
Provider, shall be deemed paid from the Upper-Tier REMIC in respect of the Class
X Interest to the Holders of the Class X Certificates prior to distribution of
any Basis Risk Payments to the Offered Certificates. For federal income tax
purposes, any amount distributed on the Offered Certificates on any Distribution
Date in excess of the amount distributable on their Corresponding Class of
Upper-Tier Regular Interest on such Distribution Date shall be treated as having
been paid from the Excess Reserve Fund Account or the Swap Account, as
applicable, and any amount distributable on such Corresponding Class of
Upper-Tier Regular Interest on such Distribution Date in excess of the amount
distributable on the Corresponding Class of Offered Certificates on such
Distribution Date shall be treated as having been paid to the Excess Reserve
Fund Account or the Swap Account, all pursuant to and as further provided in
Section 8.13.
Section 2.06 Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Trustee and the
Servicers that as of the date of this Agreement or as of such date specifically
provided herein:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey
the Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed
and delivered by the Depositor, all requisite corporate action having been
taken, and, assuming the due authorization, execution and delivery hereof by the
other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration
or filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Depositor
with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been made on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement;
(g) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that may materially and adversely affect its
performance hereunder; and
(h) Immediately prior to the transfer and assignment by the
Depositor to the Trustee on the Closing Date, the Depositor had good title to,
and was the sole owner of each Mortgage Loan, free of any interest of any other
Person, and the Depositor has transferred all right, title and interest in each
Mortgage Loan to the Trustee. The transfer of the Mortgage Note and the Mortgage
as and in the manner contemplated by this Agreement is sufficient either (i)
fully to transfer to the Trustee, for the benefit of the Certificateholders, all
right, title, and interest of the Depositor thereto as note holder and mortgagee
or (ii) to grant to the Trustee, for the benefit of the Certificateholders, the
security interest referred to in Section 10.04.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.06 shall survive delivery of the
respective Custodial Files to the Trustee and shall inure to the benefit of the
Trustee.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01 Servicers to Service Mortgage Loans. (a) For and on
behalf of the Certificateholders, each Servicer shall service and administer the
Mortgage Loans for which it is acting as Servicer in accordance with the terms
of this Agreement and the respective Mortgage Loans and, to the extent
consistent with such terms, in the same manner in which it services and
administers similar mortgage loans for its own portfolio, giving due
consideration to customary and usual standards of practice of mortgage lenders
and loan servicers administering similar mortgage loans but without regard to:
(i) any relationship that such Servicer, any Subservicer or any
Affiliate of such Servicer or any Subservicer may have with the related
Mortgagor;
(ii) the ownership or non ownership of any Certificate by such
Servicer or any Affiliate of such Servicer;
(iii) such Servicer's obligation to make P&I Advances or Servicing
Advances; or
(iv) such Servicer's or any Subservicer's right to receive
compensation for its services hereunder or with respect to any particular
transaction.
Notwithstanding any provision in this Agreement to the contrary, the
Servicers shall not have any obligation or responsibility to service the
Mortgage Loans serviced by the Countrywide Servicer.
To the extent consistent with the foregoing, each Servicer shall
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes. Subject only to the above described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, each Servicer
shall have full power and authority, acting alone or through Subservicers as
provided in Section 3.02, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing, each Servicer in
its own name or in the name of a Subservicer is hereby authorized and empowered
by the Trustee when the applicable Servicer believes it appropriate in its best
judgment in accordance with Accepted Servicing Practices, to execute and deliver
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed in lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee. Each Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
Each Servicer covenants that its computer and other systems used in servicing
the Mortgage Loans operate in a manner such that the applicable Servicer can
service the Mortgage Loans in accordance with the terms of this Pooling and
Servicing Agreement. Each Servicer shall also comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
standard hazard insurance policy. Subject to Section 3.16, the Trustee shall
execute, at the written request of a Servicer, and furnish to such Servicer and
any Subservicer such documents provided to the Trustee as are necessary or
appropriate to enable such Servicer or any Subservicer to carry out its
servicing and administrative duties hereunder, and the Trustee hereby grants to
each Servicer, and this Agreement shall constitute, a power of attorney to carry
out such duties, including a power of attorney in the form of Exhibit T hereto
to take title to Mortgaged Properties after foreclosure in the name of and on
behalf of the Trustee. The Trustee shall execute a separate power of attorney in
favor of each Servicer for the purposes described herein to the extent necessary
or desirable to enable each Servicer to perform its duties hereunder. The
Trustee shall not be liable for the actions of any Servicer or any Subservicers
under such powers of attorney. Notwithstanding anything contained herein to the
contrary, no Servicer or Subservicer shall without the Trustee's consent: (i)
initiate any action, suit or proceeding solely under the Trustee's name without
indicating such Servicer's or Subservicer's, as applicable, representative
capacity, or (ii) take any action with the intent to, or which actually does
cause, the Trustee to be registered to do business in any state.
(b) Subject to Section 3.09(b), in accordance with the standards of
the preceding paragraph, each Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3.09(b), and further as provided in Section 3.11.
Any cost incurred by a Servicer or by Subservicers in effecting the timely
payment of taxes and assessments on a Mortgaged Property shall not be added to
the unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit.
(c) Notwithstanding anything in this Agreement to the contrary, a
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.01) and neither Servicer shall (i) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance (except for reductions resulting
from actual payments of principal) or change the final maturity date on such
Mortgage Loan (except for a reduction of interest payments resulting from the
application of the Servicemembers Civil Relief Act or any similar state
statutes) or (ii) permit any modification, waiver or amendment of any term of
any Mortgage Loan that would both (A) effect an exchange or reissuance of such
Mortgage Loan under Section 1001 of the Code (or final, temporary or proposed
Treasury regulations promulgated thereunder) and (B) cause any Trust REMIC to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions after the startup date" under the
REMIC Provisions, or (iii) except as provided in Section 3.07(a), waive any
Prepayment Charges.
(d) Each Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release that
Servicer from the responsibilities or liabilities arising under this Agreement.
(e) In the event that the Mortgage Loan Documents relating to any
Mortgage Loan contain provisions requiring the related Mortgagor to submit to
binding arbitration with respect to any disputes arising in connection with such
Mortgage Loan, the applicable Servicer shall be entitled to waive any such
provisions on behalf of the Trust and to send written notice of such waiver to
the related Mortgagor, although the Mortgagor may still require arbitration of
such disputes at its option.
Section 3.02 Subservicing Agreements between a Servicer and
Subservicers. (a) Each Servicer may enter into subservicing agreements with
Subservicers for the servicing and administration of the Mortgage Loans
("Subservicing Agreements"). Each Servicer represents and warrants to the other
parties hereto that, except as otherwise set forth herein, no Subservicing
Agreement is in effect as of the Closing Date with respect to any Mortgage Loans
required to be serviced by it hereunder. The applicable Servicer shall give
notice to the Depositor and the Trustee of any such Subservicer and Subservicing
Agreement, which notice shall contain all information (including without
limitation a copy of the Subservicing Agreement) reasonably necessary to enable
the Trustee, pursuant to Section 8.12(g), to accurately and timely report the
event under Item 6.02 of Form 8-K pursuant to the Exchange Act (if such reports
under the Exchange Act are required to be filed under the Exchange Act). No
Subservicing Agreement shall be effective until 30 days after such written
notice is received by both the Depositor and the Trustee. The Trustee shall not
be required to review or consent to such Subservicing Agreements and shall have
no liability in connection therewith.
(b) Each Subservicer shall be (i) authorized to transact business in
the state or states in which the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution that has deposit accounts
insured by the FDIC and (iii) a ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae approved mortgage
servicer. Each Subservicing Agreement must impose on the Subservicer
requirements conforming to the provisions set forth in Section 3.08 and provide
for servicing of the Mortgage Loans consistent with the terms of this Agreement.
Each Servicer will examine each Subservicing Agreement to which it is a party
and will be familiar with the terms thereof. The terms of any Subservicing
Agreement will not be inconsistent with any of the provisions of this Agreement.
Each Servicer and the respective Subservicers may enter into and make amendments
to the Subservicing Agreements or enter into different forms of Subservicing
Agreements; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement, and that no
such amendment or different form shall be made or entered into which could be
reasonably expected to be materially adverse to the interests of the Trustee,
without the consent of the Trustee. Any variation without the consent of the
Trustee from the provisions set forth in Section 3.08 relating to insurance or
priority requirements of Subservicing Accounts, or credits and charges to the
Subservicing Accounts or the timing and amount of remittances by the
Subservicers to such Servicer, are conclusively deemed to be inconsistent with
this Agreement and therefore prohibited. Each Servicer shall deliver to the
Trustee and the Depositor copies of all Subservicing Agreements, and any
amendments or modifications thereof, promptly upon such Servicer's execution and
delivery of such instruments.
(c) As part of its servicing activities hereunder, each Servicer
(except as otherwise provided in the last sentence of this paragraph), for the
benefit of the Trustee, shall enforce the obligations of each Subservicer under
the related Subservicing Agreement to which such Servicer is a party, including,
without limitation, any obligation to make advances in respect of delinquent
payments as required by a Subservicing Agreement. Such enforcement, including,
without limitation, the legal prosecution of claims, termination of Subservicing
Agreements, and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as such Servicer, in its good
faith business judgment, would require were it the owner of the related Mortgage
Loans. Each Servicer shall pay the costs of such enforcement at its own expense,
and shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement, to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.
(d) Each Servicer shall cause any Subservicer engaged by such
Servicer (or by any Subservicer) for the benefit of the Depositor and the
Trustee to comply with the provisions of this Section 3.02 and with Sections
3.22, 3.23, 6.02 and 6.05 of this Agreement to the same extent as if such
Subservicer were such Servicer, and to provide the information required with
respect to such Subservicer under Section 8.12(f) of this Agreement. Such
Servicer shall be responsible for obtaining from each such Subservicer and
delivering to applicable Persons any servicer compliance statement required to
be delivered by such Subservicer under Section 3.22 and any assessment of
compliance report and related accountant's attestation required to be delivered
by such Subservicer under Section 3.23, in each case as and when required to be
delivered.
(e) Subject to the conditions set forth in this Section 3.02(e),
each Servicer and any Subservicer engaged by such Servicer is permitted to
utilize one or more Subcontractors to perform certain of its obligations
hereunder. Such Servicer shall promptly upon request provide to the Depositor a
written description (in form and substance satisfactory to the Depositor) of the
role and function of each Subcontractor utilized by such Servicer or any such
Subservicer, specifying, not later than the date specified for delivery of the
annual report on assessment of compliance set forth in Section 3.23(b), (i) the
identity of each such Subcontractor, if any, that is "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB, and (ii)
which elements of the Servicing Criteria will be addressed in assessments of
compliance provided by each Subcontractor identified pursuant to clause (i) of
this paragraph. As a condition to the utilization by such Servicer or any such
Subservicer of any Subcontractor determined to be "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB, such
Servicer shall cause any such Subcontractor used by such Servicer (or by any
such Subservicer) for the benefit of the Depositor and the Trustee to comply
with the provisions of Section 3.23 of this Agreement to the same extent as if
such Subcontractor were such Servicer. Such Servicer shall be responsible for
obtaining from each such Subcontractor and delivering to the applicable Persons
any assessment of compliance report and related accountant's attestation
required to be delivered by such Subcontractor under Section 3.23, in each case
as and when required to be delivered.
Notwithstanding the foregoing, if a Servicer engages a Subcontractor
in connection with the performance of any of its duties under this Agreement,
such Servicer shall be responsible for determining whether such Subcontractor is
a "servicer" within the meaning of Item 1101 of Regulation AB and whether any
such affiliate or third-party vendor meets the criteria in Item 1108(a)(2)(i)
through (iii) of Regulation AB. If a Servicer determines, pursuant to the
preceding sentence, that such Subcontractor is a "servicer" within the meaning
of Item 1101 of Regulation AB and meets the criteria in Item 1108(a)(2)(i)
through (iii) of Regulation AB, then such Subcontractor shall be deemed to be a
Subservicer for purposes of this Agreement, the engagement of such Subservicer
shall not be effective unless and until notice is given pursuant to Section
3.02(a) and such Servicer shall comply with Section 3.02(d) with respect
thereto.
(f) As of the Closing Date, JPMorgan has appointed Chase Home
Finance LLC ("CHF") to act as the sole Subservicer pursuant to a Subservicing
Agreement (a copy of which is attached hereto as Exhibit Z) with respect to
JPMorgan's servicing obligations under this Agreement. So long as JPMorgan is
not a rated servicer by each Rating Agency, JPMorgan agrees that prior to
replacing CHF as Subservicer, other than with an affiliate of JPMorgan that is a
rated servicer, it will obtain confirmation from each Rating Agency that such
replacement of CHF as Subservicer with respect to JPMorgan's servicing
obligations related to the Mortgage Loans will not cause the then current rating
on any Class of Certificates to be qualified, withdrawn or lowered by any Rating
Agency and agrees that any replacement subservicer shall agree to subservice in
accordance with the terms of this Agreement, including but not limited to the
consideration of whether to waive a Prepayment Charge hereunder.
Section 3.03 Successor Subservicers. Each Servicer shall be entitled
to terminate any Subservicing Agreement to which such Servicer is a party and
the rights and obligations of any Subservicer pursuant to any such Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement; provided, however, that the termination, resignation or removal of a
Subservicer shall be not be effective until 30 days after written notice is
received by both the Depositor and the Trustee that contains all information
reasonably necessary to enable the Trustee, pursuant to Section 8.12(g), to
accurately and timely report the event under Item 6.02 of Form 8-K pursuant to
the Exchange Act (if such reports under the Exchange Act are required to be
filed under the Exchange Act). In the event of termination of any Subservicer,
all servicing obligations of such Subservicer shall be assumed simultaneously by
the applicable Servicer party to the related Subservicing Agreement without any
act or deed on the part of such Subservicer or such Servicer, and such Servicer
either shall service directly the related Mortgage Loans or shall enter into a
Subservicing Agreement with a successor Subservicer which qualifies under
Section 3.02.
Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Depositor or the Trustee without
fee, in accordance with the terms of this Agreement, in the event that the
Servicer party to the related Subservicing Agreement shall, for any reason, no
longer be a Servicer (including termination due to an Event of Default).
Section 3.04 Liability of the Servicers. Notwithstanding any
Subservicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between a Servicer and a Subservicer or reference to
actions taken through a Subservicer or otherwise, such Servicer shall remain
obligated and primarily liable to the Trustee for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
such Servicer alone were servicing and administering such Mortgage Loans. Each
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of such Servicer by such Subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Section 3.05 No Contractual Relationship between Subservicers and
the Trustee. Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
related Servicer alone, and the Trustee (or any successor to such servicer)
shall not be deemed a party thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section 3.06. Each Servicer shall be solely liable for all fees owed by
it to any Subservicer, irrespective of whether such Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.
Section 3.06 Assumption or Termination of Subservicing Agreements by
Trustee. In the event a Servicer or the Countrywide Servicer at any time shall
for any reason no longer be a Servicer or the Countrywide Servicer (including by
reason of the occurrence of an Event of Default), the Trustee, or its designee,
or the successor servicer if the successor is not the Trustee, shall thereupon
assume all of the rights and obligations of such Servicer or the Countrywide
Servicer under each Subservicing Agreement that such Servicer or the Countrywide
Servicer may have entered into, with copies thereof provided to the Trustee, or
the successor servicer if the successor is not the Trustee, prior to the
Trustee, or the successor servicer if the successor is not the Trustee, assuming
such rights and obligations, unless the Trustee elects to terminate any
Subservicing Agreement in accordance with its terms as provided in Section 3.03.
Upon such assumption, the Trustee, its designee or the successor
servicer shall be deemed, subject to Section 3.03, to have assumed all of such
Servicer's interest therein and to have replaced such Servicer or the
Countrywide Servicer as a party to each Subservicing Agreement to which the
predecessor Servicer was a party to the same extent as if each Subservicing
Agreement had been assigned to the assuming party, except that (i) such Servicer
or the Countrywide Servicer shall not thereby be relieved of any liability or
obligations under any such Subservicing Agreement that arose before it ceased to
be a Servicer or the Countrywide Servicer and (ii) none of the Depositor, the
Trustee, their designees or any successor to such Servicer or the Countrywide
Servicer shall be deemed to have assumed any liability or obligation of such
servicer that arose before it ceased to be a servicer.
Each Servicer at its expense shall, upon request of the Trustee, its
designee or the successor servicer deliver to the assuming party all documents
and records relating to each Subservicing Agreement to which it is a party and
the Mortgage Loans then being serviced by it and an accounting of amounts
collected and held by or on behalf of it, and otherwise use its best efforts to
effect the orderly and efficient transfer of the Subservicing Agreements to the
assuming party.
Section 3.07 Collection of Certain Mortgage Loan Payments. (a) Each
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions
of any applicable Insurance Policies, follow such collection procedures as it
would follow with respect to mortgage loans comparable to the Mortgage Loans and
held for its own account. Consistent with the foregoing and Accepted Servicing
Practices, each Servicer may (i) waive any late payment charge or, if
applicable, any penalty interest, or (ii) extend the Due Dates for the Scheduled
Payments due on a Mortgage Note for a period of not greater than 180 days;
provided that any extension pursuant to clause (ii) above shall not affect the
amortization schedule of any Mortgage Loan for purposes of any computation
hereunder, except as provided below. In the event of any such arrangement
pursuant to clause (ii) above, the applicable Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.01
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, subject to Section 4.01(d)
pursuant to which such Servicer shall not be required to make any such advances
that are Nonrecoverable P&I Advances. Notwithstanding the foregoing, a Servicer
may waive, or permit a Subservicer to waive, in whole or in part, a Prepayment
Charge only under the following circumstances: (i) such waiver relates to a
default or a reasonably foreseeable default and would, in the reasonable
judgment of such Servicer, maximize recovery of total proceeds taking into
account the value of such Prepayment Charge and the related Mortgage Loan, (ii)
such Prepayment Charge is not permitted to be collected by applicable federal,
state or local law or regulation or (iii) the collection of such Prepayment
Charge would be considered "predatory" pursuant to written guidance published or
issued by any applicable federal, state or local regulatory authority acting in
its official capacity and having jurisdiction over such matters. If a Prepayment
Charge is waived other than as permitted by the prior sentence, then the
applicable Servicer is required to pay the amount of such waived Prepayment
Charge, for the benefit of the Holders of the Class P Certificates, by
depositing such amount into the related Collection Account together with and at
the time that the amount prepaid on the related Mortgage Loan is required to be
deposited into the related Collection Account; provided, however, that the
applicable Servicer shall not have an obligation to pay the amount of any
uncollected Prepayment Charge if the failure to collect such amount is the
direct result of inaccurate or incomplete information on the Mortgage Loan
Schedule in effect at such time.
(b) (i) The Trustee shall establish and maintain the Excess Reserve
Fund Account, on behalf of the Class X Certificateholders, to receive any Basis
Risk Payment and to secure their limited recourse obligation to pay to the
Offered Certificateholders Basis Risk CarryForward Amounts (prior to using any
Net Swap Receipts). For the avoidance of doubt, any Basis Risk CarryForward
Amounts shall be paid to the Offered Certificates first from the Excess Reserve
Fund Account and then from the Swap Account.
(ii) On each Distribution Date, the Trustee shall deposit the amount
of any Basis Risk Payment for such date into the Excess Reserve Fund
Account.
(c) (i) On each Distribution Date on which there exists a Basis Risk
CarryForward Amount on any Class of Certificates, the Trustee shall (1) withdraw
from the Distribution Account and deposit in the Excess Reserve Fund Account, as
set forth in Section 4.02(a)(iii)(S), the lesser of (x) the Class X
Distributable Amount (without regard to the reduction in clause (iii) in the
definition thereof) (to the extent remaining after the distributions specified
in Sections 4.02(a)(iii)(A)-(R)) and (y) the aggregate Basis Risk CarryForward
Amounts for such Distribution Date and (2) withdraw from the Excess Reserve Fund
Account amounts necessary to pay to such Class or Classes of Certificates the
Basis Risk CarryForward Amount. Such payments, along with payments from the Swap
Account, shall be allocated to those Classes on a pro rata basis based upon the
amount of Basis Risk CarryForward Amount owed to each such Class and shall be
paid in the priority set forth in Section 4.02(a)(iii)(T).
(ii) The Trustee shall account for the Excess Reserve Fund Account
as an asset of a grantor trust under subpart E, Part I of the subchapter J
of the Code and not an asset of any Trust REMIC. The beneficial owners of
the Excess Reserve Fund Account are the Class X Certificateholders. For
all federal tax purposes, amounts transferred by the Upper Tier REMIC to
the Excess Reserve Fund Account shall be treated as distributions by the
Trustee to the Class X Certificateholders.
(iii) Any Basis Risk CarryForward Amounts paid by the Trustee to the
Offered Certificateholders shall be accounted for by the Trustee as
amounts paid first to the Holders of the Class X Certificates and then to
the respective Class or Classes of Offered Certificates. In addition, the
Trustee shall account for the Offered Certificateholders' rights to
receive payments of Basis Risk CarryForward Amounts (along with payments
of Basis Risk CarryForward Amounts, without duplication, and Upper-Tier
CarryForward Amounts from the Swap Account) as rights in a limited
recourse interest rate cap contract written by the Class X
Certificateholders in favor of the Offered Certificateholders.
(iv) Notwithstanding any provision contained in this Agreement, the
Trustee shall not be required to make any payments from the Excess Reserve
Fund Account except as expressly set forth in this Section 3.07(c) and
Sections 4.02(a)(iii)(T)-(V).
(d) The Trustee shall establish and maintain the Distribution
Account on behalf of the Certificateholders. The Depositor shall cause to be
deposited into the Distribution Account on the Closing Date the Closing Date
Deposit Amount. The Trustee shall, promptly upon receipt, deposit in the
Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Servicers to the Trustee
pursuant to Section 3.11 or by the Countrywide Servicer pursuant to the
CHL Agreements;
(ii) any amount deposited by the Servicers pursuant to Section
3.12(b) or by the Countrywide Servicer pursuant to the CHL Agreements in
connection with any losses on Permitted Investments; and
(iii) any other amounts deposited hereunder or by the Countrywide
Servicer pursuant to the CHL Agreements which are required to be deposited
in the Distribution Account.
In the event that any Servicer or the Countrywide Servicer shall
remit any amount not required to be remitted, it may at any time direct the
Trustee in writing to withdraw such amount from the Distribution Account, any
provision herein to the contrary notwithstanding. Such direction may be
accomplished by delivering notice to the Trustee which describes the amounts
deposited in error in the Distribution Account. All funds deposited in the
Distribution Account shall be held by the Trustee in trust for the
Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 4.02.
(e) The Trustee may invest the funds in the Distribution Account, in
one or more Permitted Investments, in accordance with Section 3.12. Each
Servicer or the Countrywide Servicer shall direct the Trustee to withdraw from
the Distribution Account and to remit to such Servicer or the Countrywide
Servicer no less than monthly, all income and gain realized from the investment
of the portion of funds deposited in the Distribution Account by such Servicer
or the Countrywide Servicer (except during the Trustee Float Period). The
Trustee may withdraw from the Distribution Account any income or gain earned
from the investment of funds deposited therein during the Trustee Float Period
for its own benefit.
(f) Each Servicer or the Countrywide Servicer shall give notice to
the Trustee, each Rating Agency and the Depositor of any proposed change of the
location of the related Collection Account within a reasonable period of time
prior to any change thereof.
(g) In order to comply with laws, rules and regulations applicable
to banking institutions, including those relating to the funding of terrorist
activities and money laundering, the Trustee is required to obtain, verify and
record certain information relating to individuals and entities which maintain a
business relationship with the Trustee. Accordingly, each of the parties agrees
to provide to the Trustee upon its request from time to time such party's
complete name, address, tax identification number and such other identifying
information together with copies of such party's constituting documentation,
securities disclosure documentation and such other identifying documentation as
may be available for such party.
Section 3.08 Subservicing Accounts. In those cases where a
Subservicer is servicing a Mortgage Loan pursuant to a Subservicing Agreement,
the Subservicer will be required to establish and maintain one or more
segregated accounts (collectively, the "Subservicing Account"). The Subservicing
Account shall be an Eligible Account and shall otherwise be acceptable to the
related Servicer. The Subservicer shall deposit in the clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Subservicer's receipt thereof, all proceeds of Mortgage Loans received by
the Subservicer less its servicing compensation to the extent permitted by the
Subservicing Agreement, and shall thereafter deposit such amounts in the
Subservicing Account, in no event more than two Business Days after the deposit
of such funds into the clearing account. The Subservicer shall thereafter
deposit such proceeds in the related Collection Account of the applicable
Servicer or remit such proceeds to such Servicer for deposit in the related
Collection Account of such Servicer not later than two Business Days after the
deposit of such amounts in the Subservicing Account. For purposes of this
Agreement, such Servicer shall be deemed to have received payments on the
Mortgage Loans when the Subservicer receives such payments.
Section 3.09 Collection of Taxes, Assessments and Similar Items;
Escrow Accounts. (a) Each Servicer shall enforce the obligations under each
paid-in-full, life-of-the-loan tax service contract in effect with respect to
each First Lien Mortgage Loan (each, a "Tax Service Contract") serviced by such
Servicer. Each Tax Service Contract shall be assigned to the Trustee, or a
successor Servicer at the applicable Servicer's expense in the event that a
Servicer is terminated as Servicer of the related Mortgage Loan.
(b) To the extent that the services described in this paragraph (b)
are not otherwise provided pursuant to the Tax Service Contracts described in
paragraph (a) above, each Servicer undertakes to perform such functions with
respect to the Mortgage Loans serviced by such Servicer. To the extent the
related Mortgage provides for Escrow Payments, the related Servicer shall
establish and maintain, or cause to be established and maintained, one or more
segregated accounts (the "Escrow Accounts"), which shall be Eligible Accounts.
Each Servicer shall deposit in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after such Servicer's
receipt thereof, all collections from the Mortgagors (or related advances from
Subservicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments")
collected on account of the Mortgage Loans and shall thereafter deposit such
Escrow Payments in the Escrow Accounts, in no event more than two Business Days
after the deposit of such funds in the clearing account, for the purpose of
effecting the payment of any such items as required under the terms of this
Agreement. Withdrawals of amounts from an Escrow Account may be made only to (i)
effect payment of taxes, assessments, hazard insurance premiums, and comparable
items; (ii) reimburse such Servicer (or a Subservicer to the extent provided in
the related Subservicing Agreement) out of related collections for any advances
made pursuant to Section 3.01 (with respect to taxes and assessments) and
Section 3.13 (with respect to hazard insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages; (iv) pay interest, if required and as
described below, to Mortgagors on balances in the Escrow Account; (v) clear and
terminate the Escrow Account at the termination of such Servicer's obligations
and responsibilities in respect of the Mortgage Loans under this Agreement; (vi)
to transfer such funds to a replacement Escrow Account that meets the
requirements hereof; or (vii) recover amounts deposited in error. As part of its
servicing duties, each Servicer or Subservicers shall pay to the Mortgagors
interest on funds in Escrow Accounts, to the extent required by law and, to the
extent that interest earned on funds in the Escrow Accounts is insufficient, to
pay such interest from its or their own funds, without any reimbursement
therefor. To the extent that a Mortgage does not provide for Escrow Payments,
the applicable Servicer shall determine whether any such payments are made by
the Mortgagor in a manner and at a time that avoids the loss of the Mortgaged
Property due to a tax sale or the foreclosure of a tax lien. The applicable
Servicer assumes full responsibility for the payment of all such bills within
such time and shall effect payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments; provided, however, that such advances are deemed to be Servicing
Advances.
Section 3.10 Collection Accounts. (a) On behalf of the Trustee, each
Servicer shall establish and maintain, or cause to be established and
maintained, one or more separate Eligible Accounts (such account or accounts,
the "Collection Account"), held in trust for the benefit of the Trustee. On
behalf of the Trustee, each Servicer shall deposit or cause to be deposited in
the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after such Servicer's receipt thereof, and shall
thereafter deposit in the related Collection Account, in no event more than two
Business Days after the deposit of such funds into the clearing account, as and
when received or as otherwise required hereunder, the following payments and
collections received or made by it subsequent to the Cut-off Date (other than in
respect of principal or interest on the related Mortgage Loans due on or before
the Cut-off Date), or payments (other than Principal Prepayments) received by it
on or prior to the related Cut-off Date but allocable to a Due Period subsequent
thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Condemnation Proceeds to the extent
such Insurance Proceeds and Condemnation Proceeds are not to be applied to
the restoration of the related Mortgaged Property or released to the
related Mortgagor in accordance with the express requirements of law or in
accordance with Accepted Servicing Practices and Liquidation Proceeds;
(iv) any amounts required to be deposited pursuant to Section 3.12
in connection with any losses realized on Permitted Investments with
respect to funds held in the related Collection Account;
(v) any amounts required to be deposited by such Servicer pursuant
to the second paragraph of Section 3.13(a) in respect of any blanket
policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with this Agreement; and
(vii) all Prepayment Charges collected or paid (pursuant to Section
3.07(a)) by such Servicer.
The foregoing requirements for deposit in the Collection Accounts
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees and other similar fees and charges need
not be deposited by each Servicer in the related Collection Account and shall,
upon collection, belong to the applicable Servicer as additional compensation
for its servicing activities. In the event a Servicer shall deposit in the
related Collection Account any amount not required to be deposited therein, it
may at any time withdraw such amount from its Collection Account, any provision
herein to the contrary notwithstanding.
(b) Funds in the Collection Accounts may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. Each
Servicer shall give notice to the Trustee of the location of the related
Collection Account maintained by it when established and prior to any change
thereof in accordance with Section 3.07(f).
Section 3.11 Withdrawals from the Collection Accounts. (a) Each
Servicer shall, from time to time, make withdrawals from the related Collection
Account for any of the following purposes or as described in Section 4.01:
(i) on or prior to each Remittance Date, to remit to the Trustee (A)
the Trustee Fee with respect to such Distribution Date and (B) all
Available Funds (without reduction for amounts owed to the Depositor or
the Trustee as provided for in the definition of "Available Funds") in
respect of the related Distribution Date together with all amounts
representing Prepayment Charges from the Mortgage Loans received by the
applicable Servicer during the related Prepayment Period;
(ii) to reimburse such Servicer for P&I Advances, but only to the
extent of amounts received which represent Late Collections (net of the
related Servicing Fees) of Scheduled Payments on Mortgage Loans with
respect to which such P&I Advances were made in accordance with the
provisions of Section 4.01 (such Servicer's right for recovery or
reimbursement has priority over the Trust as stated in the definition of
"Available Funds");
(iii) to pay such Servicer or any Subservicer (a) any unpaid
Servicing Fees or (b) any unreimbursed Servicing Advances with respect to
each Mortgage Loan serviced by such Servicer or Subservicer, but only to
the extent of any Late Collections, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds or other amounts as may be collected by such
Servicer from a Mortgagor, or otherwise received with respect to such
Mortgage Loan (or the related REO Property) (such Servicer's right for
recovery or reimbursement has priority over the Trust as stated in the
definition of "Available Funds");
(iv) to pay to such Servicer as servicing compensation (in addition
to the Servicing Fee) on the Remittance Date any interest or investment
income earned on funds deposited in its Collection Account;
(v) to pay to the Responsible Party, with respect to each Mortgage
Loan that has previously been repurchased or replaced pursuant to this
Agreement, all amounts received thereon subsequent to the date of purchase
or substitution, as further described herein;
(vi) to reimburse such Servicer for (A) any P&I Advance or Servicing
Advance previously made which such Servicer has determined to be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance in
accordance with the provisions of Section 4.01 and (B) any unpaid
Servicing Fees related to any Second Lien Mortgage Loan to the extent not
recoverable from Liquidation Proceeds, Insurance Proceeds or other amounts
received with respect to the related Second Lien Mortgage Loan under
Section 3.11(a)(iii) (such Servicer's right for recovery or reimbursement
has priority over the Trust as stated in the definition of "Available
Funds");
(vii) to pay, or to reimburse such Servicer for advances in respect
of, expenses incurred in connection with any Mortgage Loan serviced by
such Servicer pursuant to Section 3.15 (such Servicer's right for recovery
or reimbursement has priority over the Trust);
(viii) to reimburse such Servicer or the Depositor for expenses
incurred by or reimbursable to such Servicer or the Depositor, as the case
may be, pursuant to Section 6.03 (such Servicer's right for recovery or
reimbursement has priority over the Trust as stated in the definition of
"Available Funds");
(ix) to reimburse such Servicer or the Trustee, as the case may be,
for expenses reasonably incurred in respect of the breach or defect giving
rise to the repurchase obligation of the Responsible Party or the
Depositor, as applicable, that were included in the Repurchase Price of
the Mortgage Loan, including any expenses arising out of the enforcement
of the repurchase obligation, to the extent not otherwise paid pursuant to
the terms hereof (such Servicer's right for recovery or reimbursement has
priority over the Trust as stated in the definition of "Available Funds");
(x) to withdraw any amounts deposited in the related Collection
Account in error;
(xi) to withdraw any amounts held in the related Collection Account
and not required to be remitted to the Trustee on the Remittance Date
occurring in the month in which such amounts are deposited into such
Collection Account, to reimburse such Servicer for ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇
Advances;
(xii) to invest funds in Permitted Investments in accordance with
Section 3.12; and
(xiii) to clear and terminate the related Collection Account upon
termination of this Agreement.
(b) Each Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the related Collection Account, to the extent held by or on
behalf of it, pursuant to subclauses (a)(ii), (iii), (v), (vi), (vii), (viii)
and (ix) above. Each Servicer shall provide written notification (as set forth
in Section 4.01(d)) to the Trustee, on or prior to the next succeeding
Remittance Date, upon making any withdrawals from the related Collection Account
pursuant to subclause (a)(vi) above.
(c) Each Servicer shall be responsible for reviewing and reconciling
the applicable Collection Account in accordance with Accepted Servicing
Practices. Each Servicer shall act promptly to resolve any discrepancies.
Section 3.12 Investment of Funds in the Collection Accounts and the
Distribution Account. (a) Each Servicer may invest the funds in the related
Collection Account and the related Escrow Account (to the extent permitted by
law and the related Mortgage Loan documents) and the Trustee may (but is not
obligated to) invest funds in the Distribution Account during the Trustee Float
Period, and, with respect to the portion of funds in the Distribution Account
deposited by a Servicer, shall (except during the Trustee Float Period) invest
such funds in the Distribution Account at the direction of such Servicer (for
purposes of this Section 3.12, such Accounts are referred to as an "Investment
Account"), in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand no later than the Business Day
immediately preceding the date on which such funds are required to be withdrawn
from such account pursuant to this Agreement; provided, however, that the
Trustee shall have no obligation to invest funds deposited into the Distribution
Account by a Servicer on the Remittance Date later than 10:00 a.m. (Pacific
Standard Time). If no investment instruction is given in a timely manner, the
Trustee shall hold the funds in the Distribution Account uninvested. All such
Permitted Investments shall be held to maturity, unless payable on demand. Any
investment of funds in an Investment Account (other than investments made during
the Trustee Float Period) shall be made in the name of the Trustee in Permitted
Investments selected by the applicable Servicer. The applicable Servicer shall
be entitled to sole possession (except with respect to investment direction of
funds and any income and gain realized on any investment in the Distribution
Account during the Trustee Float Period, which shall be for the sole benefit of
the Trustee) over each such related investment, and any certificate or other
instrument evidencing any such investment shall be delivered directly to the
applicable Servicer, or with respect to investments during the Trustee Float
Period, the Trustee or its agent (with a copy to the Trustee or its agent if
related to investment of funds in the Distribution Account not during the
Trustee Float Period), together with any document of transfer necessary to
transfer title to such investment to the applicable Servicer, or with respect to
investments during the Trustee Float Period, the Trustee or its agent. In the
event amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the applicable Servicer, or with respect
to investments during the Trustee Float Period, the Trustee may:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on such
date; and
(y) demand payment of all amounts due thereunder that such
Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit in an
Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the related Collection Account or Escrow Account held by or on
behalf of the related Servicer, shall be for the benefit of such Servicer and
shall be subject to its withdrawal in the manner set forth in Section 3.11. Such
Servicer shall deposit in its Collection Account or Escrow Account, as
applicable, the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
(c) All income and gain realized from the investment of the portion
of funds deposited in the Distribution Account by a Servicer and held by the
Trustee, shall be for the benefit of such Servicer (except for any income or
gain realized from the investment of funds on deposit in the Distribution
Account during the Trustee Float Period, which shall be for the benefit of the
Trustee) and shall be subject to the Trustee's withdrawal in the manner set
forth in Section 3.07(e). Each Servicer shall deposit in the Distribution
Account (except with respect to losses incurred during the Trustee Float Period)
the amount of any loss of principal incurred in respect of any such Permitted
Investment made with funds in such accounts immediately upon realization of such
loss.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee shall take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate proceedings.
(e) The Trustee shall not be liable for the amount of any loss
incurred with respect of any investment or lack of investment of funds held in
any Investment Account or the Distribution Account (except that if any losses
are incurred from the investment of funds deposited in the Distribution Account
during the Trustee Float Period, the Trustee shall be responsible for
reimbursing the Trust for such loss immediately upon realization of such loss)
if made in accordance with this Section 3.12.
(f) The Trustee or its Affiliates shall be permitted to receive
additional compensation that could be deemed to be in the Trustee's economic
self-interest for (i) serving as investment adviser, administrator, shareholder,
servicing agent, custodian or sub-custodian with respect to certain of the
Permitted Investments, (ii) using Affiliates to effect transactions in certain
Permitted Investments and (iii) effecting transactions in certain Permitted
Investments. Such compensation shall not be considered an amount that is
reimbursable or payable pursuant to this Agreement.
Section 3.13 Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage. (a) Each Servicer shall cause to be maintained
for each Mortgage Loan serviced by such Servicer fire insurance with extended
coverage on the related Mortgaged Property in an amount which is at least equal
to the least of (i) the outstanding principal balance of such Mortgage Loan,
(ii) the amount necessary to fully compensate for any damage or loss to the
improvements that are a part of such property on a replacement cost basis and
(iii) the maximum insurable value of the improvements which are a part of such
Mortgaged Property, in each case in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each Servicer shall also cause to be maintained
fire insurance with extended coverage on each REO Property serviced by such
Servicer in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property. Each Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by any Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that such Servicer would follow in
servicing loans held for its own account, subject to the terms and conditions of
the related Mortgage and Mortgage Note) shall be deposited in the related
Collection Account, subject to withdrawal pursuant to Section 3.11. Any cost
incurred by any Servicer in maintaining any such insurance shall not, for the
purpose of calculating distributions to the Trustee, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
or REO Property is at any time in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards and
flood insurance has been made available, the applicable Servicer will cause to
be maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the unpaid principal balance of
the related Mortgage Loan and (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).
In the event that any Servicer shall obtain and maintain a blanket
policy with an insurer either (i) acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac or
(ii) having a General Policy Rating of A:X or better from Best's (or such other
rating that is comparable to such rating) insuring against hazard losses on all
of the Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first two sentences of this Section 3.13, it
being understood and agreed that such policy may contain a deductible clause, in
which case such Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy complying
with the first two sentences of this Section 3.13, and there shall have been one
or more losses which would have been covered by such policy, deposit to the
related Collection Account from its own funds the amount not otherwise payable
under the blanket policy because of such deductible clause. In connection with
its activities as administrator and servicer of the Mortgage Loans, each
Servicer agrees to prepare and present, on behalf of itself and the Trustee
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.
(b) Each Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of such Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac if it were the purchaser of the
Mortgage Loans, unless such Servicer has obtained a waiver of such requirements
from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. Each Servicer shall also maintain a fidelity
bond in the form and amount that would meet the requirements of ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac, unless such Servicer has obtained a waiver of such requirements
from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. Each Servicer shall provide the Trustee upon
request with copies of any such insurance policies and fidelity bond. Each
Servicer shall be deemed to have complied with this provision if an Affiliate of
the applicable Servicer has such errors and omissions and fidelity bond coverage
and, by the terms of such insurance policy or fidelity bond, the coverage
afforded thereunder extends to such Servicer. Any such errors and omissions
policy and fidelity bond shall by its terms not be cancelable without thirty
days' prior written notice to the Trustee. Each Servicer shall also cause each
Subservicer to maintain a policy of insurance covering errors and omissions and
a fidelity bond which would meet such requirements.
Section 3.14 Enforcement of "Due-on-Sale" Clauses; Assumption
Agreements. Each Servicer will, to the extent it has knowledge of any conveyance
or prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that no
Servicer shall be required to take such action if, in its sole business
judgment, such Servicer believes it is not in the best interests of the Trust
Fund and shall not exercise any such rights if prohibited by law from doing so.
If a Servicer reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause or if any of the other conditions set forth in the
proviso to the preceding sentence apply, such Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. Each Servicer is
also authorized to enter into a substitution of liability agreement with such
person, pursuant to which the original Mortgagor is released from liability and
such person is substituted as the Mortgagor and becomes liable under the
Mortgage Note; provided, that no such substitution shall be effective unless
such person satisfies the underwriting criteria of such Servicer and such
substitution is in the best interest of the Certificateholders as determined by
such Servicer. In connection with any assumption, modification or substitution,
such Servicer shall apply such underwriting standards and follow such practices
and procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. No
Servicer shall take or enter into any assumption and modification agreement,
however, unless (to the extent practicable in the circumstances) it shall have
received confirmation, in writing, of the continued effectiveness of any
applicable hazard insurance policy, or a new policy meeting the requirements of
this Section is obtained. Any fee collected by a Servicer in respect of an
assumption or substitution of liability agreement will be retained by such
Servicer as additional servicing compensation. In connection with any such
assumption, no material term of the Mortgage Note (including but not limited to
the related Mortgage Rate and the amount of the Scheduled Payment) may be
amended or modified, except as otherwise required pursuant to the terms thereof.
Each Servicer shall notify the Trustee that any such substitution, modification
or assumption agreement has been completed and shall forward to the Trustee the
executed original of such substitution or assumption agreement, which document
shall be added to the related Mortgage File and shall, for all purposes, be
considered a part of such Mortgage File to the same extent as all other
documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, a Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which such Servicer may be restricted by law from preventing, for any
reason whatsoever. For purposes of this Section 3.14, the term "assumption" is
deemed to also include a sale (of the Mortgaged Property) subject to the
Mortgage that is not accompanied by an assumption or substitution of liability
agreement.
Section 3.15 Realization upon Defaulted Mortgage Loans. Each
Servicer shall use its best efforts, consistent with Accepted Servicing
Practices, to foreclose upon or otherwise comparably convert (which may include
an acquisition of REO Property) the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07, and which are not released from this Agreement
pursuant to any other provision hereof. Each Servicer shall use reasonable
efforts to realize upon such defaulted Mortgage Loans in such manner as will
maximize the receipt of principal and interest by the Trustee, taking into
account, among other things, the timing of foreclosure proceedings; provided,
however, with respect to any Second Lien Mortgage Loan for which the related
first lien mortgage loan is not included in the Trust Fund, if, after such
Mortgage Loan becomes 180 days or more delinquent, the applicable Servicer
determines that a significant net recovery is not possible through foreclosure,
such Mortgage Loan may be charged off and the Mortgage Loan will be treated as a
Liquidated Mortgage Loan giving rise to a Realized Loss. The foregoing is
subject to the provisions that, in any case in which Mortgaged Property shall
have suffered damage from an uninsured cause, a Servicer shall not be required
to expend its own funds toward the restoration of such property unless it shall
determine in its sole discretion (i) that such restoration will increase the net
proceeds of liquidation of the related Mortgage Loan to the Trustee, after
reimbursement to itself for such expenses, and (ii) that such expenses will be
recoverable by such Servicer through Insurance Proceeds, Condemnation Proceeds
or Liquidation Proceeds from the related Mortgaged Property, as contemplated in
Section 3.11. Each Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the related property, as
contemplated in Section 3.11.
The proceeds of any liquidation or REO Disposition, as well as any
recovery resulting from a partial collection of Insurance Proceeds, Condemnation
Proceeds or Liquidation Proceeds or any income from an REO Property, will be
applied in the following order of priority: first, to reimburse the applicable
Servicer or any Subservicer for any related unreimbursed Servicing Advances,
pursuant to Section 3.11 or 3.17; second, to reimburse the applicable Servicer
for any related ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances, pursuant to Section 3.11; third, to
accrued and unpaid interest on the Mortgage Loan or REO Imputed Interest, at the
Mortgage Rate, to the date of the liquidation or REO Disposition, or to the Due
Date prior to the Remittance Date on which such amounts are to be distributed if
not in connection with a liquidation or REO Disposition; and fourth, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than a full recovery thereof, that amount will be
allocated as follows: first, to unpaid Servicing Fees; and second, as interest
at the Mortgage Rate (net of the Servicing Fee Rate). The portion of the
recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
applicable Servicer or any Subservicer pursuant to Section 3.11 or 3.17. The
portions of the recovery so allocated to interest at the Mortgage Rate (net of
the Servicing Fee Rate) and to principal of the Mortgage Loan shall be applied
as follows: first, to reimburse the applicable Servicer or any Subservicer for
any related unreimbursed Servicing Advances in accordance with Section 3.11 or
3.17, and second, to the Trustee in accordance with the provisions of Section
4.02, subject to the last paragraph of Section 3.17 with respect to certain
excess recoveries from an REO Disposition.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in
the event a Servicer has received actual notice of, or has actual knowledge of
the presence of, hazardous or toxic substances or wastes on the related
Mortgaged Property, or if the Trustee otherwise requests, such Servicer shall
cause an environmental inspection or review of such Mortgaged Property to be
conducted by a qualified inspector. Upon completion of the inspection, such
Servicer shall promptly provide the Trustee and the Depositor with a written
report of the environmental inspection.
After reviewing the environmental inspection report, the applicable
Servicer shall determine consistent with Accepted Servicing Practices how such
Servicer shall proceed with respect to the Mortgaged Property. In the event (a)
the environmental inspection report indicates that the Mortgaged Property is
contaminated by hazardous or toxic substances or wastes and (b) the applicable
Servicer determines, consistent with Accepted Servicing Practices, to proceed
with foreclosure or acceptance of a deed in lieu of foreclosure, such Servicer
shall be reimbursed for all reasonable costs associated with such foreclosure or
acceptance of a deed in lieu of foreclosure and any related environmental
clean-up costs, as applicable, from the related Liquidation Proceeds, or if the
Liquidation Proceeds are insufficient to fully reimburse such Servicer, such
Servicer shall be entitled to be reimbursed from amounts in the related
Collection Account pursuant to Section 3.11. In the event the applicable
Servicer determines not to proceed with foreclosure or acceptance of a deed in
lieu of foreclosure, such Servicer shall be reimbursed from general collections
for all Servicing Advances made with respect to the related Mortgaged Property
from the related Collection Account pursuant to Section 3.11. The Trustee shall
not be responsible for any determination made by the applicable Servicer
pursuant to this paragraph or otherwise.
In the event HomEq elects to charge-off a Second Lien Mortgage Loan
180 days or more delinquent pursuant to this Section 3.15, no Second Lien
Mortgage Loan shall be characterized as a Liquidated Mortgage Loan, unless the
Depositor consents in writing to such characterization after HomEq has provided
the Depositor with a combined equity analysis of such Second Lien Mortgage Loan
and the related first lien mortgage loan; provided, that if the Depositor has
failed to notify HomEq within 3 Business Days of receipt of such combined equity
analysis, then the Depositor shall be deemed to have consented to such
characterization. In the event HomEq elects to charge off a Second Lien Mortgage
Loan 180 days or more delinquent pursuant to this Section 3.15, HomEq shall
notify the Trustee of such election, which notice may be provided in a Servicer
Remittance Report delivered pursuant to Section 4.03(d). JPMorgan may elect to
charge-off a Second Lien Mortgage Loan pursuant to this Section 3.15 without
such written consent, so long as such Second Lien Mortgage Loan is 180 days or
more delinquent. JPMorgan shall notify the Trustee of such election, which
notice may be provided in a Servicer Remittance Report delivered pursuant to
Section 4.03(d).
Section 3.16 Release of Mortgage Files. (a) Upon the payment in full
of any Mortgage Loan, or the receipt by a Servicer of a notification that
payment in full shall be escrowed in a manner customary for such purposes, such
Servicer will, on or before the last day of the month in which such payment in
full occurs, notify the Trustee by a certification (which certification shall
include a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the related
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Custodial File by
submitting a Request for Release (in writing or an electronic format acceptable
to the Trustee) to the Trustee. Upon receipt of such certification and Request
for Release, the Trustee shall promptly release the related Custodial File to
such Servicer within five (5) Business Days. No expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be chargeable
to the related Collection Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Insurance Policy relating to the Mortgage Loans, the Trustee shall, upon
request of such Servicer and delivery to the Trustee of a Request for Release in
written or electronic form, release the related Custodial File to such Servicer,
and the Trustee shall, at the direction of such Servicer, execute such documents
as shall be necessary to the prosecution of any such proceedings and such
Servicer shall retain the Mortgage File in trust for the benefit of the Trustee.
Such Request for Release shall obligate the applicable Servicer to return each
and every document previously requested from the Custodial File to the Trustee
when the need therefor by such Servicer no longer exists, unless the Mortgage
Loan has been charged-off or liquidated and the Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the related Collection Account or the
Mortgage File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and such Servicer has
delivered to the Trustee a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
charged-off or liquidated and that all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
related Collection Account have been so deposited, or that such Mortgage Loan
has become an REO Property, a copy of the Request for Release shall be released
by the Trustee to the applicable Servicer or its designee upon request therefor.
Upon receipt of a Request for Release under this Section 3.16, the Trustee shall
deliver the related Custodial File to the requesting Servicer; provided,
however, that in the event a Servicer has not previously received copies of the
relevant Mortgage Loan Documents necessary to service the related Mortgage Loan
in accordance with Accepted Servicing Practices, the Responsible Party shall
reimburse the Trustee for any overnight courier charges incurred for the
requested Custodial Files.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the applicable Servicer copies of any court pleadings,
requests for trustee's sale or other documents reasonably necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity, or shall exercise and deliver to such Servicer a power of attorney
sufficient to authorize such Servicer to execute such documents on its behalf.
Each such certification shall include a request that such pleadings or documents
be executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.17 Title, Conservation and Disposition of REO Property.
(a) This Section shall apply only to REO Properties acquired for the account of
the Trustee and shall not apply to any REO Property relating to a Mortgage Loan
which was purchased or repurchased from the Trustee pursuant to any provision
hereof. In the event that title to any such REO Property is acquired, the
applicable Servicer shall cause the deed or certificate of sale to be issued in
the name of the Trustee, on behalf of the Certificateholders. Upon written
request by the applicable Servicer, the Trustee shall provide such Servicer with
a power of attorney prepared by such Servicer with respect to such REO Property.
(b) Each Servicer shall manage, conserve, protect and operate each
related REO Property for the Trustee solely for the purpose of its prompt
disposition and sale. Each Servicer, either itself or through an agent selected
by such Servicer, shall manage, conserve, protect and operate the REO Property
in the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. Each Servicer
shall attempt to sell the same (and may temporarily rent the same for a period
not greater than one year, except as otherwise provided below) on such terms and
conditions as such Servicer deems to be in the best interest of the Trustee. The
Trustee shall have no obligations with respect to any REO Dispositions.
(c) Each Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets and shall deposit such funds in the
related Collection Account.
(d) Each Servicer shall deposit net of reimbursement to such
Servicer for any related outstanding Servicing Advances and unpaid Servicing
Fees provided in Section 3.11, or cause to be deposited, in no event more than
two (2) Business Days following such Servicer's receipt thereof in the related
Collection Account all revenues received with respect to the related REO
Property and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of the REO Property.
(e) Each Servicer, upon an REO Disposition, shall be entitled to
reimbursement for any related unreimbursed Servicing Advances as well as any
unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.11.
(f) Any net proceeds from an REO Disposition which are in excess of
the unpaid principal balance of the related Mortgage Loan plus all unpaid REO
Imputed Interest thereon through the date of the REO Disposition shall be
retained by the applicable Servicer as additional servicing compensation.
(g) Each Servicer shall use its reasonable best efforts to sell, or
cause its Subservicer to sell, in accordance with Accepted Servicing Practices,
any REO Property serviced by such Servicer or Subservicer as soon as possible,
but in no event later than the conclusion of the third calendar year beginning
after the year of its acquisition by Pooling-Tier REMIC-1 unless (i) such
Servicer applies for an extension of such period from the Internal Revenue
Service pursuant to the REMIC Provisions and Code Section 856(e)(3), in which
event such REO Property shall be sold within the applicable extension period, or
(ii) such Servicer obtains for the Trustee an Opinion of Counsel, addressed to
the Depositor, the Trustee and such Servicer, to the effect that the holding by
the Pooling-Tier REMIC-1 of such REO Property subsequent to such period will not
result in the imposition of taxes on "prohibited transactions" as defined in
Section 860F of the Code or cause any Trust REMIC to fail to qualify as a REMIC
under the REMIC Provisions or comparable provisions of relevant state laws at
any time. Each Servicer shall manage, conserve, protect and operate each REO
Property serviced by such Servicer for the Trustee solely for the purpose of its
prompt disposition and sale in a manner which does not cause such REO Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) or result in the receipt by the Pooling-Tier REMIC-1 of any "income
from non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the
Code or any "net income from foreclosure property" which is subject to taxation
under Section 860G(a)(1) of the Code. Pursuant to its efforts to sell such REO
Property, the applicable Servicer shall either itself or through an agent
selected by such Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Trustee on behalf of the Certificateholders, rent the same, or
any part thereof, as such Servicer deems to be in the best interest of the
Trustee on behalf of the Certificateholders for the period prior to the sale of
such REO Property; provided, however, that any rent received or accrued with
respect to such REO Property qualifies as "rents from real property" as defined
in Section 856(d) of the Code.
Section 3.18 Notification of Adjustments. With respect to each
Adjustable Rate Mortgage Loan, the applicable Servicer shall adjust the Mortgage
Rate on the related Adjustment Date and shall adjust the Scheduled Payment on
the related mortgage payment adjustment date, if applicable, in compliance with
the requirements of applicable law and the related Mortgage and Mortgage Note.
In the event that an Index becomes unavailable or otherwise unpublished, the
related Servicer shall select a comparable alternative index over which it has
no direct control and which is readily verifiable. Each Servicer shall execute
and deliver any and all necessary notices required under applicable law and the
terms of the related Mortgage Note and Mortgage regarding the Mortgage Rate and
Scheduled Payment adjustments. Each Servicer shall promptly, upon written
request therefor, deliver to the Trustee such notifications and any additional
applicable data regarding such adjustments and the methods used to calculate and
implement such adjustments. Upon the discovery by a Servicer or the receipt of
notice from the Trustee that a Servicer has failed to adjust a Mortgage Rate or
Scheduled Payment in accordance with the terms of the related Mortgage Note,
such Servicer shall deposit in the related Collection Account from its own funds
the amount of any interest loss caused as such interest loss occurs.
Section 3.19 Access to Certain Documentation and Information
Regarding the Mortgage Loans. The applicable Servicer shall provide, or cause
the Subservicer to provide, to the Depositor, the Trustee, the OTS or the FDIC
and the examiners and supervisory agents thereof, access to the documentation
regarding the Mortgage Loans in its possession required by applicable
regulations of the OTS. Such access shall be afforded without charge, but only
upon five (5) Business Days' prior written request and during normal business
hours at the offices of the applicable Servicer or any Subservicer. Nothing in
this Section shall derogate from the obligation of any such party to observe any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of any such party to provide access as provided in this Section
as a result of such obligation shall not constitute a breach of this Section.
Section 3.20 Documents, Records and Funds in Possession of the
Servicers to Be Held for the Trustee. Each Servicer shall account fully to the
Trustee for any funds received by such Servicer or which otherwise are collected
by such Servicer as Liquidation Proceeds, Condemnation Proceeds or Insurance
Proceeds in respect of any Mortgage Loan serviced by such Servicer. All Mortgage
Files and funds collected or held by, or under the control of, a Servicer in
respect of any Mortgage Loans, whether from the collection of principal and
interest payments or from Liquidation Proceeds, including, but not limited to,
any funds on deposit in its Collection Account, shall be held by such Servicer
for and on behalf of the Trustee and shall be and remain the sole and exclusive
property of the Trustee, subject to the applicable provisions of this Agreement.
Each Servicer also agrees that it shall not create, incur or subject any
Mortgage File or any funds that are deposited in any Collection Account, the
Distribution Account or any Escrow Account, or any funds that otherwise are or
may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of setoff against any Mortgage File or any funds collected on, or
in connection with, a Mortgage Loan, except, however, that such Servicer shall
be entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to such Servicer under this Agreement.
Section 3.21 Servicing Compensation. (a) As compensation for its
activities hereunder, each Servicer shall, with respect to each Mortgage Loan
serviced by it, be entitled to retain from deposits to its Collection Account
and from Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and REO
Proceeds related to such Mortgage Loan, the Servicing Fee with respect to each
Mortgage Loan (less any portion of such amounts retained by any Subservicer). In
addition, each Servicer shall be entitled to recover unpaid Servicing Fees out
of related late collections to the extent permitted in Section 3.11. The right
to receive the Servicing Fee may not be transferred in whole or in part except
in connection with the transfer of all of a Servicer's responsibilities and
obligations under this Agreement; provided, however, that each Servicer may pay
from the Servicing Fee any amounts due to a Subservicer pursuant to a
Subservicing Agreement entered into under Section 3.02.
(b) Additional servicing compensation in the form of assumption or
modification fees, late payment charges, NSF fees, reconveyance fees and other
similar fees and charges (other than Prepayment Charges) shall be retained by a
Servicer only to the extent such fees or charges are received by such Servicer.
Each Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to withdraw
from the related Collection Account, and pursuant to Section 3.07(e), to direct
the Trustee to withdraw from the Distribution Account and remit to the
applicable Servicer (except for monies invested during the Trustee Float
Period), as additional servicing compensation, interest or other income earned
on the related portions of deposits therein. Each Servicer shall also be
entitled as additional servicing compensation, to interest or other income
earned on deposits in the related Escrow Account (to the extent permitted by law
and the related Mortgage Loan documents) in accordance with Section 3.12. HomEq
and JPMorgan shall also be entitled to retain net Prepayment Interest Excesses
(to the extent not required to offset Prepayment Interest Shortfalls), but only
to the extent such amounts are received by such Servicer.
(c) Each Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder (including payment of
premiums for any blanket policy insuring against hazard losses pursuant to
Section 3.13, servicing compensation of the Subservicer to the extent not
retained by it and the fees and expenses of independent accountants and any
agents appointed by such Servicer), and shall not be entitled to reimbursement
therefor from the Trust Fund except as specifically provided in Section 3.11.
Section 3.22 Annual Statement as to Compliance. Each Servicer shall
deliver or cause to be delivered, and shall cause each Subservicer engaged by
such Servicer to deliver or cause to be delivered to the Depositor, the Rating
Agencies and the Trustee on or before March 5th of each calendar year,
commencing in 2007, an Officer's Certificate stating, as to each signatory
thereof, that (i) a review of the activities of the Servicer or Subservicer, as
applicable, during the preceding calendar year and of its performance under this
Agreement or the applicable Subservicing Agreement, as the case may be, has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, such Servicer or Subservicer, as applicable,
has fulfilled all of its obligations under this Agreement or the applicable
Subservicing Agreement, as the case may be, in all material respects, throughout
such year, or, if there has been a default in the fulfillment of any such
obligation in any material respect, specifying each such default known to such
officers and the nature and status thereof. Promptly after receipt of each such
Officer's Certificate, the Depositor shall review each such Officer's
Certificate and, if applicable, consult with the applicable Servicer or
Subservicer as to the nature of any defaults by the applicable Servicer or any
related Subservicer in the fulfillment of any of such Servicer's or any related
Subservicer's obligations. The obligations of each Servicer and each Subservicer
under this Section apply to each Servicer and each Subservicer that serviced a
Mortgage Loan, as applicable, during the applicable period, whether or not such
Servicer or such Subservicer is acting as a Servicer or a Subservicer at the
time such Officer's Certificate is required to be delivered. None of the
Servicers or Subservicer shall be required to cause the delivery of any
Officer's Certificate required by this Section until March 10th in any given
year so long as it has received written confirmation from the Depositor that a
Form 10-K is not required to be filed in respect of the Trust for the preceding
calendar year.
Section 3.23 Annual Reports on Assessment of Compliance with
Servicing Criteria; Annual Independent Public Accountants' Attestation Report.
(a) Not later than March 5th of each calendar year commencing in 2007, each
Servicer and the Trustee shall deliver, and each Servicer shall cause each
Subservicer engaged by such Servicer and such Servicer and the Trustee shall
cause each Subcontractor utilized by such Servicer (or by any Subservicer) or
the Trustee, as applicable, and determined by such Servicer or the Trustee, as
applicable, pursuant to Section 3.02(e) to be "participating in a servicing
function" within the meaning of Item 1122 of Regulation AB (in each case, a
"Servicing Function Participant"), to deliver, each at its own expense, to the
Depositor and the Trustee, a report on an assessment of compliance with the
Servicing Criteria applicable to it that contains (A) a statement by such party
of its responsibility for assessing compliance with the Servicing Criteria
applicable to it, (B) a statement that such party used the Servicing Criteria to
assess compliance with the applicable Servicing Criteria, (C) such party's
assessment of compliance with the applicable Servicing Criteria as of and for
the period ending the end of the fiscal year covered by the Form 10-K required
to be filed pursuant to Section 8.12, including, if there has been any material
instance of noncompliance with the applicable Servicing Criteria, a discussion
of each such failure and the nature and status thereof, and (D) a statement that
a registered public accounting firm has issued an attestation report on such
Person's assessment of compliance with the applicable Servicing Criteria as of
and for such period. Each such assessment of compliance report shall be
addressed to the Depositor and signed by an authorized officer of the applicable
company, and shall address each of the applicable Servicing Criteria set forth
on Exhibit U hereto, or as set forth in the notification furnished to the
Depositor and the Trustee pursuant to Section 3.23(c). The Servicers and the
Trustee hereby acknowledge and agree that their respective assessments of
compliance will cover the items identified on Exhibit U hereto as being covered
by such party. The parties to this Agreement acknowledge that where a particular
Servicing Criteria has multiple components, each party's assessment of
compliance (and related attestation of compliance) will relate only to those
components that are applicable to such party. Promptly after receipt of each
such report on assessment of compliance, the Depositor shall review each such
report and, if applicable, consult with the applicable Servicer or the Trustee
as to the nature of any material instance of noncompliance with the Servicing
Criteria applicable to it (and each Subservicer or Servicing Function
Participant engaged or utilized by the applicable Servicer, such Subservicer or
the Trustee, as applicable), as the case may be. None of the Servicers, the
Trustee or any Subservicer or Servicing Function Participant shall be required
to cause the delivery of any such assessments until March 10th in any given year
so long as it has received written confirmation from the Depositor that a Form
10-K is not required to be filed in respect of the Trust for the preceding
calendar year.
(b) Not later than March 5th of each calendar year commencing in
2007, each Servicer and the Trustee shall cause, and each Servicer shall cause
each Subservicer engaged by such Servicer, and each Servicer and the Trustee
shall cause each Servicing Function Participant utilized by the Trustee or such
Servicer, as applicable (or by any Subservicer engaged by such Servicer), to
cause, each at its own expense, a registered public accounting firm (which may
also render other services to such party) and that is a member of the American
Institute of Certified Public Accountants to furnish a report to the Trustee and
the Depositor, with a copy to the Rating Agencies, to the effect that (i) it has
obtained a representation regarding certain matters from the management of such
Person, which includes an assertion that such Person has complied with the
Servicing Criteria applicable to it pursuant to Section 3.23(a) and (ii) on the
basis of an examination conducted by such firm in accordance with standards for
attestation engagements issued or adopted by the PCAOB, that attests to and
reports on such Person's assessment of compliance with the Servicing Criteria
applicable to it. In the event that an overall opinion cannot be expressed, such
registered public accounting firm shall state in such report why it was unable
to express such an opinion. Each such related accountant's attestation report
shall be made in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X
under the Securities Act and the Exchange Act. Such report must be available for
general use and not contain restricted use language. Promptly after receipt of
each such accountants' attestation report, the Depositor shall review the report
and, if applicable, consult with the applicable Servicer or the Trustee, as
applicable, as to the nature of any defaults by such Servicer or the Trustee, as
applicable (and each Subservicer or Servicing Function Participant engaged or
utilized by such Servicer or the Trustee, as applicable, or by any Subservicer
engaged by a Servicer), as the case may be, in the fulfillment of any of such
Servicers', the Trustee's or the applicable Subservicer's or Servicing Function
Participant's obligations hereunder or under any applicable sub-servicing
agreement. None of the Servicers or the Trustee or any Servicing Function
Participant shall be required to cause the delivery of any such attestation
required by this paragraph until March 10th in any given year so long as it has
received written confirmation from the Depositor that a Form 10-K is not
required to be filed in respect of the Trust for the preceding calendar year.
(c) Unless previously provided under Section 3.02, no later than
February 1 of each fiscal year, commencing in 2007, each Servicer shall notify
the Trustee and the Depositor as to the name of each Subservicer engaged by it
and each Servicing Function Participant utilized by it and by each Subservicer
engaged by it, but only to the extent there has been a change in the information
in such notification from notices previously delivered and the Trustee shall
notify the Depositor as to the name of each Servicing Function Participant
utilized by it and each such notice will specify what specific Servicing
Criteria will be addressed in the report on assessment of compliance prepared by
such Servicing Function Participant in each case, to the extent of any change
from the prior year's notice, if any. When a Servicer or the Trustee submits its
assessment pursuant to Section 3.23(a), such Servicer and the Trustee, as
applicable, will also at such time include the assessment (and related
attestation pursuant to Section 3.23(b)) of each Servicing Function Participant
utilized by it and by each Subservicer engaged by it.
Section 3.24 Trustee to Act as Servicer. (a) Subject to Section
7.02, in the event that any Servicer or the Countrywide Servicer shall for any
reason no longer be a Servicer hereunder or under the CHL Agreements (including
by reason of an Event of Default), the Trustee or its successor shall thereupon
assume all of the rights and obligations of such Servicer hereunder or the
Countrywide Servicer under the CHL Agreements, as applicable, arising thereafter
(except that the Trustee shall not be (i) liable for losses of such predecessor
servicer pursuant to Section 3.10 or any acts or omissions of such predecessor
servicer hereunder or under the CHL Agreements), (ii) obligated to effectuate
repurchases or substitutions of Mortgage Loans hereunder or under the CHL
Agreements, including but not limited to repurchases or substitutions pursuant
to Section 2.03, (iii) responsible for expenses of such predecessor Servicer
pursuant to Section 2.03 or (iv) deemed to have made any representations and
warranties of such Servicer hereunder or the Countrywide Servicer under the CHL
Agreements, as applicable. Any such assumption shall be subject to Section 7.02.
(b) Every Subservicing Agreement entered into by a Servicer shall
contain a provision giving the successor Servicer the option to terminate such
agreement in the event a successor Servicer is appointed.
(c) If any Servicer or the Countrywide Servicer shall for any reason
no longer be a Servicer hereunder or under the CHL Agreements, as applicable
(including by reason of any Event of Default), the Trustee (or any other
successor servicer) may, at its option, succeed to any rights and obligations of
such Servicer or the Countrywide Servicer under any Subservicing Agreement in
accordance with the terms thereof; provided that the Trustee (or any other
successor servicer) shall not incur any liability or have any obligations in its
capacity as successor servicer under a Subservicing Agreement arising prior to
the date of such succession unless it expressly elects to succeed to the rights
and obligations of such Servicer or the Countrywide Servicer thereunder; and
such Servicer or the Countrywide Servicer, as applicable, shall not thereby be
relieved of any liability or obligations under the Subservicing Agreement
arising prior to the date of such succession.
(d) The applicable Servicer shall, upon request of the Trustee, but
at the expense of such Servicer, deliver to the assuming party all documents and
records relating to each Subservicing Agreement (if any) to which it is party
and the Mortgage Loans then being serviced thereunder and an accounting of
amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of such Subservicing Agreement to the
assuming party.
Section 3.25 Compensating Interest. Each Servicer shall remit to the
Trustee on each Remittance Date for deposit in the Distribution Account an
amount from its own funds equal to the Compensating Interest payable by such
Servicer for the related Distribution Date.
Section 3.26 Credit Reporting; ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. (a) With
respect to each Mortgage Loan, each Servicer agrees to fully furnish, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and TransUnion Credit Information
Company (three of the credit repositories), on a monthly basis.
(b) Each Servicer shall comply with Title V of the
▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999 and all applicable regulations promulgated
thereunder, relating to the Mortgage Loans required to be serviced by it and the
related borrowers and shall provide all required notices thereunder.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICERS
Section 4.01 Advances. (a) The amount of P&I Advances to be made by each
Servicer for any Remittance Date shall equal, subject to Section 4.01(c), the
sum of (i) the aggregate amount of Scheduled Payments (with each interest
portion thereof net of the related Servicing Fee), due during the Due Period
immediately preceding such Remittance Date in respect of the Mortgage Loans
serviced by such Servicer, which Scheduled Payments were not received as of the
close of business on the related Determination Date (provided, however, that
with respect to any Balloon Loan that is delinquent on its maturity date, the
applicable Servicer will not be required to advance the principal portion of the
related balloon payment but will be required to continue to make P&I Advances in
accordance with this Section 4.01(a) with respect to such Balloon Loan in an
amount equal to the assumed scheduled interest that would otherwise be due based
on the original amortization schedule for such Balloon Loan (with interest at
the Adjusted Net Mortgage Rate)), plus (ii) with respect to each REO Property
serviced by such Servicer, which REO Property was acquired during or prior to
the related Prepayment Period and as to which such REO Property an REO
Disposition did not occur during the related Prepayment Period, an amount equal
to the excess, if any, of the Scheduled Payments (with each interest portion
thereof net of the related Servicing Fee) that would have been due on the
related Due Date in respect of the related Mortgage Loans, over the net income
from such REO Property transferred to the related Collection Account for
distribution on such Remittance Date.
(b) On each Remittance Date, each Servicer shall remit in
immediately available funds to the Trustee an amount equal to the aggregate
amount of P&I Advances, if any, to be made in respect of the Mortgage Loans and
REO Properties serviced by such Servicer for the related Remittance Date either
(i) from its own funds or (ii) from the related Collection Account, to the
extent of funds held therein for future distribution (in which case, such
Servicer will cause to be made an appropriate entry in the records of the
related Collection Account that Amounts Held for Future Distribution have been,
as permitted by this Section 4.01, used by such Servicer in discharge of any
such P&I Advance) or (iii) in the form of any combination of (i) and (ii)
aggregating the total amount of P&I Advances to be made by such Servicer with
respect to such Mortgage Loans and REO Properties. Any Amounts Held for Future
Distribution and so used shall be appropriately reflected in such Servicer's
records and replaced by such Servicer by deposit in the related Collection
Account on or before any future Remittance Date to the extent required.
(c) The obligation of each Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
paragraph (d) below, and, with respect to any Mortgage Loan or REO Property,
shall continue until a Final Recovery Determination in connection therewith or
the removal thereof from coverage under this Agreement, except as otherwise
provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I Advance
or Servicing Advance shall be required to be made hereunder by any Servicer if
such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance. The
determination by any Servicer that it has made a Nonrecoverable P&I Advance or a
Nonrecoverable Servicing Advance or that any proposed P&I Advance or Servicing
Advance, if made, would constitute a Nonrecoverable P&I Advance or a
Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officer's Certificate of such Servicer delivered to the Trustee.
(e) Except as otherwise provided herein, the applicable Servicer
shall be entitled to reimbursement pursuant to Section 3.11 for Servicing
Advances from recoveries from the related Mortgagor or from all Liquidation
Proceeds and other payments or recoveries (including Insurance Proceeds and
Condemnation Proceeds) with respect to the related Mortgage Loan.
Section 4.02 Priorities of Distribution. (a) On each Distribution
Date, the Trustee shall allocate from amounts then on deposit in the
Distribution Account in the following order of priority and to the extent of the
Available Funds remaining and, on such Distribution Date, shall make
distributions on the Certificates in accordance with such allocation:
(i) to the holders of each Class of Offered Certificates and to the
Swap Account in the following order of priority:
(A) to the Swap Account, the sum of (x) all Net Swap Payments
and (y) any Swap Termination Payment owed to the Swap Provider,
including, without limitation, the lesser of (i) any Replacement
Swap Provider Payment and (ii) any Senior Defaulted Swap Termination
Payment but not including any other Defaulted Swap Termination
Payment;
(B) to the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates, the related Accrued Certificate Interest Distribution
Amounts and any related Unpaid Interest Amounts for such
Distribution Date, allocated pro rata based on their respective
entitlements to those amounts;
(C) from any remaining Interest Remittance Amounts, to the
Class M-1 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(D) from any remaining Interest Remittance Amounts, to the
Class M-2 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(E) from any remaining Interest Remittance Amounts, to the
Class M-3 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(F) from any remaining Interest Remittance Amounts, to the
Class M-4 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(G) from any remaining Interest Remittance Amounts, to the
Class M-5 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(H) from any remaining Interest Remittance Amounts, to the
Class M-6 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(I) from any remaining Interest Remittance Amounts, to the
Class B-1 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(J) from any remaining Interest Remittance Amounts, to the
Class B-2 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date; and
(K) from any remaining Interest Remittance Amounts, to the
Class B-3 Certificates, the Accrued Certificate Interest
Distribution Amount for such Class on such Distribution Date;
(ii) (A) on each Distribution Date (1) before the Stepdown Date or
(2) with respect to which a Trigger Event is in effect, to the holders of
the related Class or Classes of Offered Certificates then entitled to
distributions of principal as set forth below, from amounts remaining on
deposit in the Distribution Account after making distributions pursuant to
clause (i) above, an amount equal to the Principal Distribution Amount in
the following order of priority:
(1) to the Class A Certificates, allocated as described in Section
4.02(b), until the respective Class Certificate Balances thereof are
reduced to zero; and
(2) sequentially to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class M-4,
Class M-5, Class M-6, Class B-1, Class B-2 and Class B-3 Certificates, in
that order, until the respective Class Certificate Balances are reduced to
zero;
(B) on each Distribution Date (1) on and after the Stepdown
Date and (2) as long as a Trigger Event is not in effect, to the
holders of the related Class or Classes of Offered Certificates then
entitled to distribution of principal, from amounts remaining on
deposit in the Distribution Account after making distributions
pursuant to clause (i) above, an amount equal to, in the aggregate,
the Principal Distribution Amount in the following amounts and order
of priority:
(1) to the Class A Certificates, the lesser of (x) the Principal
Distribution Amount and (y) the Class A Principal Distribution Amount,
allocated as described in Section 4.02(b), until the respective Class
Certificate Balances thereof are reduced to zero;
(2) to the Class M-1 Certificates, the lesser of (x) the excess of
(i) the Principal Distribution Amount over (ii) the amount distributed to
the Class A Certificateholders in clause (ii)(B)(a) above and (y) the
Class M-1 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(3) to the Class M-2 Certificates, the lesser of (x) the excess of
(i) the Principal Distribution Amount over (ii) the amount distributed to
the Class A Certificateholders in clause (ii)(B)(a) above and to the Class
M-1 Certificates in clause (ii)(B)(b) above and (y) the Class M-2
Principal Distribution Amount, until the Class Certificate Balance thereof
has been reduced to zero;
(4) to the Class M-3 Certificates, the lesser of (x) the excess of
(i) the Principal Distribution Amount over (ii) the amount distributed to
the Class A Certificateholders in clause (ii)(B)(a) above, to the Class
M-1 Certificates in clause (ii)(B)(b) above and to the Class M-2
Certificates in clause (ii)(B)(c) above and (y) the Class M-3 Principal
Distribution Amount, until the Class Certificate Balance thereof has been
reduced to zero;
(5) to the Class M-4 Certificates, the lesser of (x) the excess of
(i) the Principal Distribution Amount over (ii) the amount distributed to
the Class A Certificateholders in clause (ii)(B)(a) above, to the Class
M-1 Certificates in clause (ii)(B)(b) above, to the Class M-2 Certificates
in clause (ii)(B)(c) above and to the Class M-3 Certificates in clause
(ii)(B)(d) above and (y) the Class M-4 Principal Distribution Amount,
until the Class Certificate Balance thereof has been reduced to zero;
(6) to the Class M-5 Certificates, the lesser of (x) the excess of
(i) the Principal Distribution Amount over (ii) the amount distributed to
the Class A Certificateholders in clause (ii)(B)(a) above, to the Class
M-1 Certificates in clause (ii)(B)(b) above, to the Class M-2 Certificates
in clause (ii)(B)(c) above, to the Class M-3 Certificates in clause
(ii)(B)(d) above and to the Class M-4 Certificates in clause (ii)(B)(e)
above and (y) the Class M-5 Principal Distribution Amount, until the Class
Certificate Balance thereof has been reduced to zero;
(7) to the Class M-6 Certificates, the lesser of (x) the excess of
(i) the Principal Distribution Amount over (ii) the amount distributed to
the Class A Certificateholders in clause (ii)(B)(a) above, to the Class
M-1 Certificates in clause (ii)(B)(b) above, to the Class M-2 Certificates
in clause (ii)(B)(c) above, to the Class M-3 Certificates in clause
(ii)(B)(d) above, to the Class M-4 Certificates in clause (ii)(B)(e) above
and to the Class M-5 Certificates in clause (ii)(B)(f) above and (y) the
Class M-6 Principal Distribution Amount, until the Class Certificate
Balance thereof has been reduced to zero;
(8) to the Class B-1 Certificates, the lesser of (x) the excess of
(i) the Principal Distribution Amount over (ii) the amount distributed to
the Class A Certificateholders in clause (ii)(B)(a) above, to the Class
M-1 Certificates in clause (ii)(B)(b) above, to the Class M-2 Certificates
in clause (ii)(B)(c) above, to the Class M-3 Certificates in clause
(ii)(B)(d) above, to the Class M-4 Certificates in clause (ii)(B)(e)
above, to the Class M-5 Certificates in clause (ii)(B)(f) above and to the
Class M-6 Certificates in clause (ii)(B)(g) above and (y) the Class B-1
Principal Distribution Amount, until the Class Certificate Balance thereof
has been reduced to zero;
(9) to the Class B-2 Certificates, the lesser of (x) the excess of
(i) the Principal Distribution Amount over (ii) the amount distributed to
the Class A Certificateholders in clause (ii)(B)(a) above, to the Class
M-1 Certificates in clause (ii)(B)(b) above, to the Class M-2 Certificates
in clause (ii)(B)(c) above, to the Class M-3 Certificates in clause
(ii)(B)(d) above, to the Class M-4 Certificates in clause (ii)(B)(e)
above, to the Class M-5 Certificates in clause (ii)(B)(f) above, to the
Class M-6 Certificates in clause (ii)(B)(g) above and to the Class B-1
Certificates in clause (ii)(B)(h) above and (y) the Class B-2 Principal
Distribution Amount, until the Class Certificate Balance thereof has been
reduced to zero; and
(10) to the Class B-3 Certificates, the lesser of (x) the excess of
(i) the Principal Distribution Amount over (ii) the amount distributed to
the Class A Certificateholders in clause (ii)(B)(a) above, to the Class
M-1 Certificates in clause (ii)(B)(b) above, to the Class M-2 Certificates
in clause (ii)(B)(c) above, to the Class M-3 Certificates in clause
(ii)(B)(d) above, to the Class M-4 Certificates in clause (ii)(B)(e)
above, to the Class M-5 Certificates in clause (ii)(B)(f) above, to the
Class M-6 Certificates in clause (ii)(B)(g) above, to the Class B-1
Certificates in clause (ii)(B)(h) above and to the Class B-2 Certificates
in clause (ii)(B)(i) above and (y) the Class B-3 Principal Distribution
Amount, until the Class Certificate Balance thereof has been reduced to
zero;
(iii) any amount remaining after the distributions in clauses (i)
and (ii) above, plus as specifically indicated below, from amounts on
deposit in the Excess Reserve Fund Account, shall be distributed in the
following order of priority:
(A) to the Class M-1 Certificates, any Unpaid Interest Amount
for such Class;
(B) to the Class M-1 Certificates, any Unpaid Realized Loss
Amount for such Class;
(C) to the Class M-2 Certificates, any Unpaid Interest Amount
for such Class;
(D) to the Class M-2 Certificates, any Unpaid Realized Loss
Amount for such Class;
(E) to the Class M-3 Certificates, any Unpaid Interest Amount
for such Class;
(F) to the Class M-3 Certificates, any Unpaid Realized Loss
Amount for such Class;
(G) to the Class M-4 Certificates, any Unpaid Interest Amount
for such Class;
(H) to the Class M-4 Certificates, any Unpaid Realized Loss
Amount for such Class;
(I) to the Class M-5 Certificates, any Unpaid Interest Amount
for such Class;
(J) to the Class M-5 Certificates, any Unpaid Realized Loss
Amount for such Class;
(K) to the Class M-6 Certificates, any Unpaid Interest Amount
for such Class;
(L) to the Class M-6 Certificates, any Unpaid Realized Loss
Amount for such Class;
(M) to the Class B-1 Certificates, any Unpaid Interest Amount
for such Class;
(N) to the Class B-1 Certificates, any Unpaid Realized Loss
Amount for such Class;
(O) to the Class B-2 Certificates, any Unpaid Interest Amount
for such Class;
(P) to the Class B-2 Certificates, any Unpaid Realized Loss
Amount for such Class;
(Q) to the Class B-3 Certificates, any Unpaid Interest Amount
for such Class;
(R) to the Class B-3 Certificates, any Unpaid Realized Loss
Amount for such Class;
(S) to the Excess Reserve Fund Account, the amount of any
Basis Risk Payment (without regard to Net Swap Receipts) for such
Distribution Date;
(T) from funds on deposit in the Excess Reserve Fund Account
with respect to such Distribution Date, an amount equal to any
remaining Basis Risk CarryForward Amount with respect to the Offered
Certificates for such Distribution Date, allocated to the Offered
Certificates in the same order and priority in which the Accrued
Certificate Interest Distribution Amount is allocated among such
Classes of Certificates, with the allocation to the Class A
Certificates being (a) first, among the Class A Certificates, pro
rata, based on their respective Class Certificate Balances and (b)
second, any remaining amounts to the Class A Certificates, pro rata,
based on any Basis Risk CarryForward Amounts remaining unpaid, in
order to reimburse such unpaid amounts;
(U) to the Swap Account, the amount of any remaining Defaulted
Swap Termination Payment (other than a Senior Defaulted Swap
Termination Payment) owed to the Swap Provider;
(V) to the Class X Certificates, the remainder of the Class X
Distributable Amount not distributed pursuant to Sections
4.02(a)(iii)(A)-(U); and
(W) to the Class R Certificates, any remaining amount in the
Trust REMICs.
If on any Distribution Date, as a result of the foregoing allocation
rules, any Class of Class A Certificates does not receive in full the related
Accrued Certificate Interest Distribution Amount or the related Unpaid Interest
Amount, if any, then such shortfall will be allocated to the Holders of such
Class, with interest thereon, on future Distribution Dates, as an Unpaid
Interest Amount, subject to the priorities described above.
(b) On each Distribution Date, prior to any distributions on any
other Class of Certificates, all amounts representing Prepayment Charges from
the Mortgage Loans received during the related Prepayment Period shall be
distributed by the Trustee to the holders of the Class P Certificates.
Any principal distributions allocated to the Class A Certificates
shall be allocated sequentially, first to the Class A-1 Certificates, until
their Class Certificate Balance has been reduced to zero, then to the Class A-2
Certificates, until their Class Certificate Balance has been reduced to zero,
then to the Class A-3 Certificates, until their Class Certificate Balance has
been reduced to zero and then to the Class A-4 Certificates, until their Class
Certificate Balance has been reduced to zero. Notwithstanding the foregoing, on
and after the Distribution Date on which the aggregate Class Certificate
Balances of the Subordinated Certificates and the principal balance of the Class
X Certificates have been reduced to zero, any principal distributions allocated
to the Class A Certificates shall be allocated, pro rata among the Class A
Certificates, based on their respective Class Certificate Balances, until their
respective Class Certificate Balances have been reduced to zero.
(c) On any Distribution Date, any Relief Act Shortfalls and Net
Prepayment Interest Shortfalls for such Distribution Date shall be allocated by
the Trustee as a reduction in the following order:
(1) First, to the amount of interest payable to the Class X
Certificates; and
(2) Second, pro rata, as a reduction of the Accrued Certificate
Interest Distribution Amount for the Class A, Class M and
Class B Certificates, based on the amount of interest to which
such Classes would otherwise be entitled.
Section 4.03 Monthly Statements to Certificateholders. (a) Not later
than each Distribution Date, the Trustee shall make available to each
Certificateholder, the Servicers, the Depositor and each Rating Agency a
statement setting forth with respect to the related distribution:
(i) the actual Distribution Date, the related Record Date, the
Interest Accrual Period(s) for each Class for such Distribution Date and
the LIBOR Determination Date for such Interest Accrual Period;
(ii) the amount of Available Funds;
(iii) the amount of Available Funds allocable to principal, the
Principal Remittance Amount (separately identifying the components
thereof) and the Principal Distribution Amount (separately identifying the
components thereof);
(iv) the amount of Available Funds allocable to interest and each
Interest Remittance Amount;
(v) the amount of any Unpaid Interest Amount for each Class included
in such distribution and any remaining Unpaid Interest Amounts after
giving effect to such distribution, any Basis Risk CarryForward Amount for
each Class and the amount of such Basis Risk CarryForward Amount covered
by withdrawals from the Excess Reserve Fund Account on such Distribution
Date;
(vi) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable to
such Holders if there were sufficient funds available therefor, the amount
of the shortfall and the allocation of the shortfall as between principal
and interest, including any Basis Risk CarryForward Amount not covered by
amounts in the Excess Reserve Fund Account;
(vii) the Class Certificate Balance of each Class of Certificates
before and after giving effect to the distribution of principal on such
Distribution Date;
(viii) the Pool Stated Principal Balance for the following
Distribution Date;
(ix) the amount of Expense Fees paid to or retained by the Servicers
or the Countrywide Servicer and the Trustee (stated separately and in the
aggregate) with respect to such Distribution Date;
(x) the Pass-Through Rate for each such Class of Certificates with
respect to such Distribution Date;
(xi) the amount of Advances included in the distribution on such
Distribution Date reported by the Servicers and the Countrywide Servicer
(and the Trustee as successor servicer and any other successor servicer,
if applicable) as of the close of business on the Determination Date
immediately preceding such Distribution Date;
(xii) the number and aggregate outstanding principal balances of
Mortgage Loans (1) as to which the Scheduled Payment is delinquent 31 to
60 days, 61 to 90 days and 90+ days, (2) that have become REO Property,
(3) that are in foreclosure and (4) that are in bankruptcy, in each case
as of the close of business on the last Business Day of the immediately
preceding month;
(xiii) for each of the preceding 12 calendar months, or all calendar
months since the related Cut-off Date, whichever is less, the aggregate
dollar amount of the Scheduled Payments (A) due on all outstanding
Mortgage Loans on each of the Due Dates in each such month and (B)
delinquent 60 days or more on each of the Due Dates in each such month;
(xiv) with respect to any Mortgage Loans that became REO Properties
during the preceding calendar month, the aggregate number of such Mortgage
Loans and the aggregate outstanding principal balance of such Mortgage
Loans as of the close of business on the last Business Day of the
immediately preceding month;
(xv) the total number and outstanding principal balance of any REO
Properties (and market value, if available) as of the close of business on
the last Business Day of the immediately preceding month;
(xvi) whether a Trigger Event has occurred and is continuing
(separately identifying the components of the calculation resulting in the
existence of the Trigger Event and the aggregate outstanding balance of
all 60+ Day Delinquent Mortgage Loans);
(xvii) the amount on deposit in the Excess Reserve Fund Account
(after giving effect to distributions on such Distribution Date);
(xviii) in the aggregate and for each Class of Certificates, the
aggregate amount of Applied Realized Loss Amounts incurred during the
preceding calendar month and aggregate Applied Realized Loss Amounts
through such Distribution Date;
(xix) the amount of any Net Monthly Excess Cash Flow on such
Distribution Date and the allocation of it to the Certificateholders with
respect to Unpaid Interest Amounts, Applied Realized Loss Amounts, and
Basis Risk CarryForward Amounts;
(xx) the amount of any Net Swap Payments, Net Swap Receipts, Swap
Termination Payments or Defaulted Swap Termination Payments;
(xxi) the calculations of LIBOR and Swap LIBOR;
(xxii) the Subordinated Amount and Specified Subordinated Amount;
(xxiii) Prepayment Charges collected or paid (pursuant to Section
3.07(a) or the CHL Agreements, as applicable) by the Servicers and the
Countrywide Servicer;
(xxiv) the Cumulative Loss Percentage and the aggregate amount of
Realized Losses used to calculate the Cumulative Loss Percentage;
(xxv) the amount distributed on the Class X Certificates;
(xxvi) the amount of any Subsequent Recoveries for such Distribution
Date; and
(xxvii) the number of Mortgage Loans at the beginning and end of the
applicable reporting period, the pool factor (being the Stated Principal
Balance of the Mortgage Loans for the related Distribution Date divided by
the Cut-off Date Principal Balance), and the weighted average interest
rate, and weighted average remaining term.
In addition, each Form 10-D prepared and filed by the Trustee
pursuant to Section 8.12 shall include the following information with respect to
the related distribution:
(i) material breaches of Mortgage Loan representations and
warranties under this Agreement of which the Trustee has actual knowledge
or has received written notice; and
(ii) material breaches of any covenants under this Agreement of
which the Trustee has actual knowledge or has received written notice.
(b) The Trustee's responsibility for providing the above statement
to the Certificateholders, each Rating Agency, and the Depositor is limited, if
applicable, to the availability, timeliness and accuracy of the information
derived from the Servicers, the Countrywide Servicer and the Responsible Party.
The Trustee shall make available the above statement via the Trustee's internet
website. The Trustee's website will initially be located at
▇▇▇▇▇://▇▇▇.▇▇▇.▇▇.▇▇▇/▇▇▇▇ and assistance in using the website can be obtained
by calling the Trustee's investor relations desk at ▇-▇▇▇-▇▇▇-▇▇▇▇. Parties that
are unable to use the website are entitled to have a paper copy mailed to them
via first class mail by calling the investor relations desk and indicating such.
The Trustee may change the way the monthly statements to Certificateholders are
distributed in order to make such distribution more convenient and/or more
accessible to the above parties and the Trustee shall provide timely and
adequate notification to all above parties regarding any such changes. As a
condition to access the Trustee's internet website, the Trustee may require
registration and the acceptance of a disclaimer. The Trustee will not be liable
for the dissemination of information in accordance with this Agreement.
The Trustee shall make available to each Analytics Company, either
electronically or via the Trustee's internet website, each statement to
Certificateholders prepared pursuant to Section 4.03(a). The Trustee (and the
applicable Servicer, if such discrepancy results from or arises out of any
information provided by the applicable Servicer pursuant to this Agreement)
shall cooperate in good faith with the Depositor to reconcile any discrepancies
in such statements, and the Trustee shall provide any corrections to such
statements to each Analytics Company as soon as reasonably practicable after the
related Distribution Date.
The Trustee will also be entitled to rely on but shall not be
responsible for the content or accuracy of any information provided by third
parties for purposes of preparing the monthly statement to Certificateholders
and may affix thereto any disclaimer it deems appropriate in its reasonable
discretion (without suggesting liability on the part of any other party hereto).
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at any
time during the calendar year was a Certificateholder, a statement containing
the information set forth in clauses (a)(i) and (a)(ii) of this Section 4.03
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time in effect.
(d) Not later than the Determination Date for each Distribution
Date, the Servicer shall furnish to the Trustee, a monthly remittance advice
statement (the "Servicer Remittance Report") (in a format mutually agreed upon
by the Servicer and the Trustee) containing such information as shall be
reasonably requested (i) by the Depositor to enable the Depositor to disclose
"static pool information", as required by Item 1105 of Regulation AB, with
respect to the Mortgage Loans, and (ii) by the Trustee to enable the Trustee to
provide the reports required by Section 4.03(a) as to the accompanying
remittance and the period ending on the close of business on the last day of the
related Prepayment Period.
The Servicer Remittance Report shall, at a minimum, document, on
such Determination Date, Mortgage Loan payment activity on an individual
Mortgage Loan basis, as follows:
(i) with respect to each Scheduled Payment, the amount of such
remittance allocable to principal (including a separate breakdown of any
Principal Prepayment, including the date of such prepayment, and any
Prepayment Charges, received during the related Prepayment Period along
with a detailed report of interest on principal prepayment amounts
remitted in accordance with Section 3.25);
(ii) with respect to each Scheduled Payment, the amount of such
remittance allocable to interest;
(iii) the amount of servicing compensation received by such Servicer
during the prior distribution period;
(iv) the individual and aggregate Stated Principal Balance of the
Mortgage Loans;
(v) the aggregate expenses reimbursed to such Servicer during the
prior distribution period pursuant to Section 3.11; and
(vi) the number and aggregate outstanding principal balances of
Mortgage Loans (a) delinquent 31 to 60 days, 61 to 90 days and 90+ days;
(b) as to which foreclosure or bankruptcy proceedings of the related
mortgagor have commenced; and (c) as to which REO Property has been
acquired.
(e) Notwithstanding anything in Section 4.03(d) to the contrary,
JPMorgan shall be deemed to have satisfied the requirement to timely deliver the
Servicer Remittance Report set forth in Section 4.03(d) above if the Trustee and
the Depositor receive such report on or prior to the 18th day of the calendar
month in which the related Determination Date occurs; provided, however, that if
such day is not a Business Day, JPMorgan shall be deemed to have satisfied the
requirement to timely deliver the Servicer Remittance Report set forth in
Section 4.03(d) above if the Trustee and the Depositor receive such report (i)
on the next Business Day succeeding such 18th day, if such succeeding Business
Day is not later than the 20th day of such calendar month or (ii) on the
Business Day immediately preceding such 18th day, if such succeeding Business
Day is later than the 20th day of such calendar month.
(f) For all purposes of this Agreement, with respect to any Mortgage
Loan, delinquencies shall be determined and reported based on the so-called
"OTS" methodology for determining delinquencies on mortgage loans similar to the
Mortgage Loans. By way of example, a Mortgage Loan would be delinquent with
respect to a Scheduled Payment due on a Due Date if such Scheduled Payment is
not made by the close of business on the Mortgage Loan's next succeeding Due
Date, and a Mortgage Loan would be more than 30-days Delinquent with respect to
such Scheduled Payment if such Scheduled Payment were not made by the close of
business on the Mortgage Loan's second succeeding Due Date. Each Servicer hereby
represents and warrants to the Depositor that this delinquency recognition
policy is not less restrictive than any delinquency recognition policy
established by the primary safety and soundness regulator, if any, of such
Servicer.
Section 4.04 Certain Matters Relating to the Determination of LIBOR.
LIBOR shall be calculated by the Trustee in accordance with the definition of
"LIBOR". Until all of the Offered Certificates are paid in full, the Trustee
shall at all times retain at least four Reference Banks for the purpose of
determining LIBOR with respect to each LIBOR Determination Date. The Trustee
initially shall designate the Reference Banks (after consultation with the
Depositor). Each "Reference Bank" shall be a leading bank engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
shall not control, be controlled by, or be under common control with, the
Trustee and shall have an established place of business in London. If any such
Reference Bank should be unwilling or unable to act as such or if the Trustee
should terminate its appointment as Reference Bank, the Trustee shall promptly
appoint or cause to be appointed another Reference Bank (after consultation with
the Depositor). The Trustee shall have no liability or responsibility to any
Person for (i) the selection of any Reference Bank for purposes of determining
LIBOR or (ii) any inability to retain at least four Reference Banks which is
caused by circumstances beyond its reasonable control.
The Pass-Through Rate for each Class of Offered Certificates for
each Interest Accrual Period shall be determined by the Trustee on each LIBOR
Determination Date so long as the Offered Certificates are Outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes corresponding
to the Offered Certificates in the table relating to the Certificates in the
Preliminary Statement. The Trustee shall not have any liability or
responsibility to any Person for its inability, following a good-faith
reasonable effort, to obtain quotations from the Reference Banks or to determine
the arithmetic mean referred to in the definition of LIBOR, all as provided for
in this Section 4.04 and the definition of LIBOR. The establishment of LIBOR and
each Pass-Through Rate for the Offered Certificates by the Trustee shall (in the
absence of manifest error) be final, conclusive and binding upon each Holder of
a Certificate and the Trustee.
Section 4.05 Allocation of Applied Realized Loss Amounts. Any
Applied Realized Loss Amounts shall be allocated by the Trustee to the most
junior Class of Subordinated Certificates then Outstanding in reduction of the
Class Certificate Balance thereof.
Section 4.06 Swap Account. On the Closing Date, the Trustee shall
establish and maintain in its name, a separate non-interest bearing trust
account for the benefit of the holders of the Certificates (the "Swap Account")
as a part of the Trust Fund. The Swap Account shall be an Eligible Account, and
funds on deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including, without limitation, other moneys
of the Trustee held pursuant to this Agreement.
On any Distribution Date, Swap Termination Payments, Net Swap
Payments owed to the Swap Provider and Net Swap Receipts for that Distribution
Date will be deposited into the Swap Account. Funds in the Swap Account will be
distributed on each Distribution Date in the following order of priority:
(i) to the Swap Provider, all Net Swap Payments, if any, owed to the
Swap Provider for that Distribution Date;
(ii) to the Swap Provider, any Swap Termination Payment, including,
without limitation, any Senior Defaulted Swap Termination Payment but not
including any other Defaulted Swap Termination Payment owed to the Swap
Provider for that Distribution Date;
(iii) to the Class A Certificates, to pay Accrued Certificate
Interest Distribution Amounts and, if applicable, any Unpaid Interest
Amounts as described in Section 4.02(a)(i), to the extent unpaid from
Available Funds;
(iv) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class
M-4, Class M-5, Class M-6, Class B-1, Class B-2 and Class B-3
Certificates, in that order, to pay Accrued Certificate Interest
Distribution Amounts and, if applicable, any Unpaid Interest Amounts as
described in Section 4.02(a)(i) and Section 4.02(a)(iii), to the extent
unpaid from Available Funds;
(v) to the Offered Certificates, to pay principal as described and,
in the same manner and order of priority as set forth, in Section
4.02(a)(ii)(A) or Section 4.02(a)(ii)(B), as applicable, but only to the
extent necessary to restore the Subordinated Amount to the Specified
Subordinated Amount for prior or current Realized Losses not previously
reimbursed, after giving effect to payments and distributions from
Available Funds;
(vi) to the Class A Certificates, to pay Basis Risk CarryForward
Amounts and, without duplication, Upper Tier CarryForward Amounts, pro
rata, based on their Class Certificate Balances for such Distribution
Date, up to the Swap Payment Allocation for each Class of Class A
Certificates and to the extent unpaid from Available Funds (including
Basis Risk Payments on deposit in the Excess Reserve Fund Account);
(vii) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class
M-4, Class M-5, Class M-6, Class B-1, Class B-2 and Class B-3
Certificates, to pay Basis Risk CarryForward Amounts and, without
duplication, Upper Tier CarryForward Amounts, up to the Swap Payment
Allocation for each Class of Class M and Class B Certificates and to the
extent unpaid from Available Funds (including Basis Risk Payments on
deposit in the Excess Reserve Fund Account);
(viii) to the Offered Certificates, any remaining unpaid Basis Risk
CarryForward Amount and, without duplication, Upper Tier CarryForward
Amounts, pro rata, based on their respective remaining unpaid Basis Risk
CarryForward Amount after the allocation of payments as set forth in
clauses (vi) and (vii) above;
(ix) sequentially, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-3, Class
M-4, Class M-5, Class M-6, Class B-1, Class B-2 and Class B-3
Certificates, to pay any Unpaid Realized Loss Amount, to the extent unpaid
from Available Funds;
(x) to the Swap Provider, any remaining Defaulted Swap Termination
Payment owed to the Swap Provider for that Distribution Date; and
(xi) to the holders of the Class X Certificates, any remaining
amounts.
Notwithstanding the foregoing, in the event that the Trust receives
a Swap Termination Payment, the Trustee shall use the Swap Termination Payment
to enter into a replacement interest rate swap agreement as directed by the
Depositor with a successor Swap Provider meeting the ratings requirements set
forth in the Interest Rate Swap Agreement being terminated on the same remaining
terms as those in the Interest Rate Swap Agreement being terminated, so long as
the Swap Termination Payment is sufficient to obtain such replacement interest
rate swap agreement. In the event that the Trust receives a Swap Termination
Payment and a successor Swap Provider cannot be obtained, then the Trustee shall
deposit the Swap Termination Payment into the reserve account that is a
sub-account of the Swap Account. On each subsequent Distribution Date (so long
as funds are available in the reserve account), the Trustee shall withdraw from
the reserve account and deposit into the Swap Account an amount equal to the
amount of any Net Swap Receipt due the Trust (calculated in accordance with the
terms of the original Interest Rate Swap Agreement) and treat such amount as a
Net Swap Receipt for purposes of determining the distributions from the Swap
Account. In no event shall the Trustee be responsible for the selection of any
successor or replacement Swap Provider or any shortfalls caused by a failure to
enter into a replacement interest rate swap agreement.
Upon termination of the Trust, any amounts remaining in the Swap
Account shall be distributed pursuant to the priorities set forth in this
Section 4.06.
In the event that, upon the Trust entering into a replacement
interest rate swap following the occurrence of an Additional Termination Event
of the type described in Part 1(h)(ii) of the Interest Rate Swap Agreement, the
Trust is entitled to receive a payment from a replacement swap provider, the
Trustee shall direct the replacement swap provider to make such payment to the
Swap Account. Any Senior Defaulted Swap Termination Payment shall be made from
the Swap Account to the Swap Provider immediately upon receipt of such payment,
regardless of whether the date of receipt thereof is a Distribution Date. To the
extent that any Replacement Swap Provider Payment is made to an account other
than the Swap Account, then, notwithstanding anything to the contrary contained
in this Agreement, any Senior Defaulted Swap Termination Payment shall be paid
to the Swap Provider immediately upon receipt of such Replacement Swap Provider
Payment, regardless of whether the date of receipt thereof is a Distribution
Date and without regard to anything to the contrary contained in this Agreement.
For the avoidance of doubt, the parties agree that the Swap Provider shall have
first priority to any Replacement Swap Provider Payment over the payment by the
Trust to Certificateholders, any Servicer, the Responsible Party, the Trustee or
any other Person.
The Trustee shall account for the Swap Account as an asset of a
grantor trust under subpart E, Part I of subchapter J of the Code and not as an
asset of any Trust REMIC created pursuant to this Agreement. The beneficial
owners of the Swap Account are the Class X Certificateholders. For federal
income tax purposes, Net Swap Payments and Swap Termination Payments (other than
Senior Defaulted Swap Termination Payments) payable to the Swap Provider shall
be deemed to be paid to the Swap Account from the Upper-Tier REMIC, first, by
the Holder of the Class X Certificates (in respect of the Class IO Interest and,
if applicable, the Class X Interest) and second, other than any Defaulted Swap
Termination Payment, from the Upper-Tier REMIC by the Holders of the applicable
Class or Classes of Offered Certificates (in respect of Class IO Shortfalls) as
and to the extent provided in Section 8.13.
Any Basis Risk CarryForward Amounts and, without duplication,
Upper-Tier CarryForward Amounts distributed by the Trustee to the Offered
Certificateholders shall be accounted for by the Trustee, for federal income tax
purposes, as amounts paid first to the Holders of the Class X Certificates in
respect of the Class X Interest and (to the extent remaining after payments to
the Swap Provider) the Class IO Interest, and then to the respective Class or
Classes of Offered Certificates. In addition, the Trustee shall account for the
rights of Holders of each Class of Offered Certificates to receive payments of
Upper-Tier CarryForward Amounts (including, but without duplication, Basis Risk
CarryForward Amounts) from the Swap Account (along with Basis Risk CarryForward
Amounts payable from the Excess Reserve Fund Account) as rights in a separate
limited recourse interest rate cap contract written by the Class X
Certificateholders in favor of Holders of each such Class.
The Swap Account shall be an "outside reserve fund" for federal
income tax purposes and not an asset of any Trust REMIC. Furthermore, the
Holders of the Class X Certificates shall be the beneficial owners of the Swap
Account for all federal income tax purposes, and shall be taxable on all income
earned thereon.
With respect to the failure of the Swap Provider to perform any of
its obligations under the Interest Rate Swap Agreement, the breach by the Swap
Provider of any of its representations and warranties made pursuant to the
Interest Rate Swap Agreement, or the termination of the Interest Rate Swap
Agreement, the Trustee shall send any notices and make any demands, on behalf of
the Trust as are required under the Interest Rate Swap Agreement. To the extent
that the Swap Provider fails to make any payment required under terms of the
Interest Rate Swap Agreement, the Trustee shall immediately demand that ▇▇▇▇▇▇
▇▇▇▇▇▇▇, the guarantor of the Swap Provider's obligations under the guarantee of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ relating to the Interest Rate Swap Agreement, make any and all
payments then required to be made by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to such guarantee.
In addition, in the event a "Delivery Amount" (as defined in the Interest Rate
Swap Agreement) was due but was not delivered by the Swap Provider as required
by the Interest Rate Swap Agreement, the Trustee shall deliver a notice of
failure to transfer collateral on the next Business Day following such failure,
in accordance with the terms of the Interest Rate Swap Agreement. The Trustee
shall cause any replacement swap provider to provide a copy of the related
replacement interest rate swap agreement to the Trustee and the Depositor.
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates. The Certificates shall be
substantially in the forms attached hereto as exhibits. The Certificates shall
be issuable in registered form, in the minimum denominations, integral multiples
in excess thereof (except that one Certificate in each Class may be issued in a
different amount) and aggregate denominations per Class set forth in the
Preliminary Statement.
The Depositor hereby directs the Trustee to register the Class X and
Class P Certificates in the name of the Depositor or its designee. On a date as
to which the Depositor notifies the Trustee, the Trustee shall transfer the
Class X and Class P Certificates in the name of the NIM Trustee, or such other
name or names as the Depositor shall request, and to deliver the Class X and
Class P Certificates to the NIM Trustee or to such other Person or Persons as
the Depositor shall request.
Subject to Section 9.02 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (x) by wire
transfer in immediately available funds to the account of such Holder at a bank
or other entity having appropriate facilities therefor, if such Holder has so
notified the Trustee at least five Business Days prior to the related Record
Date or (y) by check mailed by first class mail to such Certificateholder at the
address of such Holder appearing in the Certificate Register.
The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of any such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless authenticated by the Trustee by manual signature, and
such authentication upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly executed and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the direction of the Depositor or any Affiliate thereof.
Section 5.02 Certificate Register; Registration of Transfer and
Exchange of Certificates. (a) The Trustee shall maintain, or cause to be
maintained in accordance with the provisions of Section 5.06, a Certificate
Register for the Trust Fund in which, subject to the provisions of subsections
(b) and (c) below and to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
transfer of any Certificate, the Trustee shall execute and deliver, in the name
of the designated transferee or transferees, one or more new Certificates of the
same Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No transfer of a Private Certificate shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such state securities laws. In
determining whether a transfer is being made pursuant to an effective
registration statement, the Trustee shall be entitled to rely solely upon a
written notice to such effect from the Depositor. Except with respect to (i) the
transfer of the Class X, Class P or Class R Certificates to the Depositor or an
Affiliate of the Depositor, (ii) the transfer of the Class X or Class P
Certificates to the NIM Issuer or the NIM Trustee, or (iii) a transfer of the
Class X or Class P Certificates from the NIM Issuer or the NIM Trustee to the
Depositor or an Affiliate of the Depositor, in the event that a transfer of a
Private Certificate which is a Physical Certificate is to be made in reliance
upon an exemption from the Securities Act and such laws, in order to assure
compliance with the Securities Act and such laws, the Certificateholder desiring
to effect such transfer shall certify to the Trustee in writing the facts
surrounding the transfer in substantially the form set forth in Exhibit H (the
"Transferor Certificate") and either (i) there shall be delivered to the Trustee
a letter in substantially the form of Exhibit I (the "Rule 144A Letter") or (ii)
there shall be delivered to the Trustee at the expense of the transferor an
Opinion of Counsel that such transfer may be made without registration under the
Securities Act. In the event that a transfer of a Private Certificate which is a
Book-Entry Certificate is to be made in reliance upon an exemption from the
Securities Act and such laws, in order to assure compliance with the Securities
Act and such laws, the Certificateholder desiring to effect such transfer will
be deemed to have made as of the transfer date each of the certifications set
forth in the Transferor Certificate in respect of such Certificate and the
transferee will be deemed to have made as of the transfer date each of the
certifications set forth in the Rule 144A Letter in respect of such Certificate,
in each case as if such Certificate were evidenced by a Physical Certificate.
The Depositor shall provide to any Holder of a Private Certificate and any
prospective transferee designated by any such Holder, information regarding the
related Certificates and the Mortgage Loans and such other information as shall
be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee and the Servicers shall cooperate with the Depositor in
providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and each Servicer against any liability that may result if the transfer is not
so exempt or is not made in accordance with such federal and state laws.
Except with respect to (i) the transfer of the Class R, Class X or
Class P Certificates to the Depositor or an Affiliate of the Depositor, (ii) the
transfer of the Class X or Class P Certificates to the NIM Issuer or the NIM
Trustee, or (iii) a transfer of the Class X or Class P Certificates from the NIM
Issuer or the NIM Trustee to the Depositor or an Affiliate of the Depositor, no
transfer of an ERISA-Restricted Certificate shall be made unless the Trustee
shall have received either (i) a representation from the transferee of such
Certificate acceptable to and in form and substance satisfactory to the Trustee
(in the event such Certificate is a Private Certificate or a Residual
Certificate, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
I), to the effect that such transferee is not an employee benefit plan or
arrangement subject to Section 406 of ERISA, a plan subject to Section 4975 of
the Code or a plan subject to any Federal, state or local law ("Similar Law")
materially similar to the foregoing provisions of ERISA or the Code, nor a
Person acting on behalf of any such plan or arrangement nor using the assets of
any such plan or arrangement to effect such transfer, or (ii) in the case of an
ERISA-Restricted Certificate other than a Residual Certificate or a Class P
Certificate that has been the subject of an ERISA-Qualifying Underwriting, and
the purchaser is an insurance company, a representation that the purchaser is an
insurance company that is purchasing such Certificates with funds contained in
an "insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under Sections I and III
of PTCE 95-60 or (iii) in the case of any such ERISA-Restricted Certificate
other than a Residual Certificate or Class P Certificate presented for
registration in the name of an employee benefit plan subject to Title I of
ERISA, a plan or arrangement subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a plan subject to Similar Law, or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, an Opinion of
Counsel satisfactory to the Trustee, which Opinion of Counsel shall not be an
expense of the Servicers, the Depositor, the Trustee or the Trust Fund,
addressed to the Trustee, to the effect that the purchase or holding of such
ERISA-Restricted Certificate will not constitute or result in a non-exempt
prohibited transaction within the meaning of ERISA, Section 4975 of the Code or
any Similar Law and will not subject the Depositor, the Trustee or the Servicers
to any obligation in addition to those expressly undertaken in this Agreement or
to any liability. For purposes of the preceding sentence, with respect to an
ERISA-Restricted Certificate that is not a Private Certificate or a Residual
Certificate, in the event the representation letter referred to in the preceding
sentence is not furnished, such representation shall be deemed to have been made
to the Trustee by the transferee's (including an initial acquirer's) acceptance
of the ERISA-Restricted Certificates. Notwithstanding anything else to the
contrary herein, (a) any purported transfer of an ERISA-Restricted Certificate,
other than a Class P Certificate or Residual Certificate, to or on behalf of an
employee benefit plan subject to ERISA, the Code or Similar Law without the
delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee as
described above shall be void and of no effect and (b) any purported transfer of
a Class P Certificate or Residual Certificate to a transferee that does not make
the representation in clause (i) above shall be void and of no effect.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.
As long as the Interest Rate Swap Agreement is in effect, each
beneficial owner of a Certificate other than an ERISA-Restricted Certificate, or
any interest therein, shall be deemed to have represented that either (i) it is
not a Plan or (ii) the acquisition and holding of the Certificate are eligible
for the exemptive relief available under at least one of the Investor-Based
Exemptions.
(c) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee;
(ii) No Ownership Interest in a Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Residual Certificate unless, in
addition to the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit G;
(iii) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Residual Certificate and (C)
not to Transfer its Ownership Interest in a Residual Certificate or to
cause the Transfer of an Ownership Interest in a Residual Certificate to
any other Person if it has actual knowledge that such Person is a
Non-Permitted Transferee;
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Residual Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Residual Certificate. The Trustee shall not have any
liability to any Person for any registration of Transfer of a Residual
Certificate that is in fact not permitted by Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit, Transferor
Certificate and the Rule 144A Letter. The Trustee shall be entitled but
not obligated to recover from any Holder of a Residual Certificate that
was in fact a Non-Permitted Transferee at the time it became a Holder or,
at such subsequent time as it became a Non-Permitted Transferee, all
payments made on such Residual Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and delivered
by the Trustee to the last preceding Permitted Transferee of such
Certificate; and
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Residual Certificate to any Holder
who is a Non-Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Residual Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund or the Trustee, to the
effect that the elimination of such restrictions will not cause any Trust REMIC
hereunder to fail to qualify as a REMIC at any time that the Certificates are
Outstanding or result in the imposition of any tax on the Trust Fund, a
Certificateholder or another Person. Each Person holding or acquiring any
Ownership Interest in a Residual Certificate hereby consents to any amendment of
this Agreement which, based on an Opinion of Counsel furnished to the Trustee,
is reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Residual Certificate is not transferred, directly or
indirectly, to a Person that is a Non-Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Residual Certificate which is held by a
Person that is a Non-Permitted Transferee to a Holder that is a Permitted
Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at
all times remain registered in the name of the Depository or its nominee and at
all times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Trustee or the Depositor is
unable to locate a qualified successor, or (y) the Depositor notifies the
Depository (and the Trustee consents) of its intent to terminate the book-entry
system through the Depository, and, upon receipt of notice of such intent from
the Depository, the Depository Participants holding beneficial interests in the
Book-Entry Certificates agree to initiate such termination, the Trustee shall
notify all Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of definitive, fully-registered Certificates
(the "Definitive Certificates") to Certificate Owners requesting the same. Upon
surrender to the Trustee of the related Class of Certificates by the Depository,
accompanied by the instructions from the Depository for registration, the
Trustee shall issue the Definitive Certificates. None of the Servicers, the
Depositor or the Trustee shall be liable for any delay in delivery of such
instruction and each may conclusively rely on, and shall be protected in relying
on, such instructions. The Depositor shall provide the Trustee with an adequate
inventory of Certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder; provided
that the Trustee shall not by virtue of its assumption of such obligations
become liable to any party for any act or failure to act of the Depository.
(f) Each Private Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer and accompanied by IRS Form W-8ECI, W-8BEN, W-8IMY (and
all appropriate attachments) or W-9 in form satisfactory to the Trustee, duly
executed by the Certificateholder or his attorney duly authorized in writing.
Each Certificate presented or surrendered for registration of transfer or
exchange shall be canceled and subsequently disposed of by the Trustee in
accordance with its customary practice. No service charge shall be made for any
registration of transfer or exchange of Private Certificates, but the Trustee
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Private
Certificates.
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Depositor, the Servicers and the
Trustee such security or indemnity as may be required by them to hold each of
them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 5.03 shall constitute complete and indefeasible evidence of
ownership, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 5.04 Persons Deemed Owners. The Servicers, the Trustee, the
Depositor, and any agent of a Servicer, the Depositor, or the Trustee may treat
the Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and none of the Servicers, the
Trustee, the Depositor, or any agent of a Servicer, the Depositor, or the
Trustee shall be affected by any notice to the contrary.
Section 5.05 Access to List of Certificateholders' Names and
Addresses. If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor or a Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the Depositor, such Servicer or the Certificateholders at
such recipients' expense the most recent list of the Certificateholders of such
Trust Fund held by the Trustee, if any. The Depositor and every
Certificateholder, by receiving and holding a Certificate, agree that the
Trustee shall not be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.
Section 5.06 Maintenance of Office or Agency. The Trustee will
maintain or cause to be maintained at its expense an office or offices or agency
or agencies in the United States where Certificates may be surrendered for
registration of transfer or exchange. The Trustee initially designates the
offices of its agent located at DB Services Tennessee, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Transfer Unit for such purposes. The
Trustee shall give prompt written notice to the Certificateholders of any change
in such location of any such office or agency.
ARTICLE VI
THE DEPOSITOR AND THE SERVICERS
Section 6.01 Respective Liabilities of the Depositor and the
Servicers. The Depositor and each of the Servicers shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.
Section 6.02 Merger or Consolidation of the Depositor or a Servicer.
(a) The Depositor and each of the Servicers will each keep in full effect its
existence, rights and franchises as a corporation or federally chartered savings
bank, as the case may be, under the laws of the United States or under the laws
of one of the states thereof and will each obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
(b) Any Person into which the Depositor or a Servicer may be merged
or consolidated, or any Person resulting from any merger or consolidation to
which the Depositor or a Servicer shall be a party, or any person succeeding to
the business of the Depositor or a Servicer, shall be the successor of the
Depositor or such Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or surviving Person to such Servicer shall be qualified to service
mortgage loans on behalf of, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. As a condition to the
succession to any Servicer under this Agreement by any Person (i) into which a
Servicer may be merged or consolidated, or (ii) which may be appointed as a
successor to a Servicer, such Servicer shall provide to the Depositor, at least
15 calendar days prior to the effective date of such succession or appointment,
(x) written notice to the Depositor of such succession or appointment and (y) in
writing and in form and substance reasonably satisfactory to the Depositor, all
information reasonably necessary to enable the Trustee, pursuant to Section
8.12(g), to accurately and timely report the event under Item 6.02 of Form 8-K
pursuant to the Exchange Act (if such reports under the Exchange Act are then
required to be filed under the Exchange Act).
Section 6.03 Limitation on Liability of the Depositor, the Servicers
and Others. Neither the Depositor, the Servicers nor any of their respective
directors, officers, employees or agents shall be under any liability to the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
Servicers or any such Person against any breach of representations or warranties
made by it herein or protect the Depositor, the Servicers or any such Person
from any liability which would otherwise be imposed by reasons of willful
misfeasance, bad faith or negligence (or gross negligence in the case of the
Depositor) in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, each Servicer and any director,
officer, employee or agent of the Depositor and each Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Depositor and its
Affiliates, the Sponsor, each Servicer and any director, officer, employee or
agent of the Depositor, the Sponsor or each Servicer shall be indemnified by the
Trust Fund and held harmless against any loss, liability or expense incurred in
connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement or
the Certificates other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement) and any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence (or gross negligence in the case of the Depositor) in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor any Servicer shall
be under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its respective duties hereunder and which in its opinion
may involve it in any expense or liability; provided, however, that each of the
Depositor and each Servicer may in its discretion undertake any such action (or
direct the Trustee to undertake such actions pursuant to Section 2.03 for the
benefit of the Certificateholders) that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor and the applicable Servicer shall be entitled to be reimbursed
therefor out of the applicable Collection Account.
Section 6.04 Limitation on Resignation of a Servicer. Subject to
Sections 7.01 and 10.07, no Servicer shall assign this Agreement or resign from
the obligations and duties hereby imposed on it except by mutual consent of the
Servicers, the Depositor and the Trustee or upon the determination that its
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by such Servicer. Any such determination permitting
the resignation of a Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Depositor and the Trustee which Opinion of Counsel
shall be in form and substance acceptable to the Depositor and the Trustee. No
such resignation shall become effective until a successor shall have assumed
such Servicer's responsibilities and obligations hereunder.
Notwithstanding the provisions of Section 6.04 herein to the
contrary, in the event that a Servicer determines that it will no longer engage
in the business of servicing mortgage loans, such Servicer may assign its rights
under this Agreement, provided that, (i) the Depositor in its sole discretion
has consented, which consent shall not be unreasonably withheld, (ii) the Rating
Agencies' ratings of the Certificates in effect immediately prior to such action
will not be qualified, reduced or withdrawn as a result thereof (as evidenced by
a letter to such effect from the Rating Agencies) and (iii) such Servicer shall
be liable for all costs and expenses associated with the transfer of servicing,
provided, further, that such Servicer shall indemnify and hold each of the Trust
Fund, the Trustee, the Depositor, the other Servicers hereunder, any
sub-servicer, the successor Servicer and each Certificateholder harmless against
any and all claims, losses, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments, and any other costs, fees and expenses that such
party may sustain in any way related to such assignment except with respect to a
successor Servicer's failure to comply with the terms of this Agreement. No
assignment by such Servicer shall become effective until a successor Servicer
acceptable to the Depositor and the Trustee shall have assumed in writing such
Servicer's responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement. Any such assignment shall not relieve the applicable Servicer of
responsibility for any of the obligations specified herein except to the extent
that such responsibilities have been expressly assumed by the successor
Servicer.
Section 6.05 Additional Indemnification by the Servicers; Third
Party Claims. (a) Each Servicer, severally and not jointly, shall indemnify the
Responsible Party, the Depositor, the Sponsor and the Trustee and any director,
officer, employee or agent of the Responsible Party, the Depositor, the Sponsor
or the Trustee and hold them harmless against any and all claims, losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments, and any other costs, fees and expenses that any of
them may sustain in any way related to (i) any breach by such Servicer of any of
its representations and warranties referred to in Section 2.03(a), (ii) any
error in any tax or information return prepared by such Servicer or (iii) the
failure of such Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement (including, without limitation, the
failure to deliver accurate and complete information on a timely basis pursuant
to Section 4.03(d)). The applicable Servicer immediately shall notify the
Depositor and the Trustee if such claim is made by a third party with respect to
this Agreement or the Mortgage Loans, assume (with the prior written consent of
the Depositor and the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or the Depositor, the Sponsor, the Responsible Party or the Trustee
in respect of such claim.
(b) Notwithstanding anything to the contrary contained in this
Agreement, each Servicer shall indemnify the Depositor, the Sponsor, the Trustee
and any director, officer, employee or agent of the Depositor, the Sponsor or
the Trustee and hold them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that any of them may
sustain in any way related to any failure by such Servicer or any Subservicer
engaged by such Servicer or any Subcontractor utilized by such Servicer to
deliver any information, report, certification or accountants' letter when and
as required under Sections 3.22, 3.23, 6.02 or 8.12, including without
limitation any failure by such Servicer to identify pursuant to Section 3.02(e)
any Subcontractor "participating in the servicing function" within the meaning
of Item 1122 of Regulation AB.
(c) If the indemnification provided for in this Section 6.05 is
unavailable or insufficient to hold harmless any Person entitled to
indemnification thereunder, then such Servicer shall contribute to the amount
paid or payable by the Person entitled to indemnification as a result of the
losses, claims, damages or liabilities of such Person in such proportion as is
appropriate to reflect the relative fault of such Person on the one hand and
such Servicer, on the other, in connection with such Servicer's obligations
pursuant to this Section 6.05. This Section 6.05 shall survive the termination
of this Agreement or the earlier resignation or removal of each Servicer.
ARTICLE VII
DEFAULT
Section 7.01 Events of Default. "Event of Default" wherever used
herein, means, with respect to each Servicer individually, any one of the
following events:
(a) any failure by a Servicer to remit to the Trustee any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of one Business Day after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been given to such
Servicer by the Depositor or by the Trustee, or to such Servicer, the Depositor
and the Trustee by Certificateholders entitled to at least 25% of the Voting
Rights in the Certificates; or
(b) any failure on the part of a Servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the part of
such Servicer set forth in this Agreement which continues unremedied for a
period of sixty (60) days (except that (x) such number of days shall be fifteen
in the case of a failure to pay any premium for any insurance policy required to
be maintained under this Agreement and (y) such number of days shall be ten in
the case of a failure to observe or perform any of the obligations set forth in
Sections 3.02, 3.22, 3.23, 6.02 or 8.12), after the earlier of (i) the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to such Servicer by the Depositor or by the Trustee, or to such
Servicer, the Depositor and the Trustee by Certificateholders entitled to at
least 25% of the Voting Rights in the Certificates and (ii) actual knowledge of
such failure by a Servicing Officer of such Servicer; or
(c) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against a Servicer and such
decree or order shall have remained in force undischarged or unstayed for a
period of sixty days; or
(d) a Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to a
Servicer or of or relating to all or substantially all of its property; or
(e) a Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(f) a breach of any representation and warranty of a Servicer
referred to in Section 2.03(a), which materially and adversely affects the
interests of the Certificateholders and which continues unremedied for a period
of thirty days after the date upon which written notice of such breach is given
to such Servicer by the Trustee or by the Depositor, or to such Servicer, the
Trustee and the Depositor by Certificateholders entitled to at least 25% of the
Voting Rights in the Certificates; or
(g) either (i) with respect to JPMorgan, any withdrawal or downgrade
of two or more levels (i.e., from "Above Average" to "Below Average" or the
equivalent) of JPMorgan's servicer rating, as of the Closing Date, by any Rating
Agency which results in a downgrade, qualification or withdrawal of the rating
assigned to any Class of Certificates by any Rating Agency or (ii) with respect
to HomEq, Fitch reduces its servicer rating of HomEq to "RPS2-" or lower,
▇▇▇▇▇'▇ reduces its servicer rating of HomEq to "SQ3" or lower, or S&P reduces
its servicer rating of HomEq to "Average" or lower.
If an Event of Default described in clauses (a) through (g) of this
Section 7.01 shall occur or if an Event of Default under the CHL Agreements
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Trustee may, and at the written
direction of a majority of the Voting Rights, the Trustee shall, by notice in
writing to the applicable Servicer or the Countrywide Servicer, as applicable
(with a copy to each Rating Agency), terminate all of the rights and obligations
of the applicable Servicer under this Agreement or the Countrywide Servicer
under the CHL Agreements, as applicable, and in and to the Mortgage Loans
serviced by the applicable Servicer or the Countrywide Servicer, as applicable,
and the proceeds thereof, other than its rights as a Certificateholder
hereunder; provided, however, that the Trustee shall not be required to give
written notice to such Servicer of the occurrence of an Event of Default
described in clauses (b) through (g) of this Section 7.01, or to the Countrywide
Servicer of the corresponding Event of Default (if any) under the CHL
Agreements, unless and until a Responsible Officer of the Trustee has actual
knowledge of the occurrence of such an event. In the event that a Responsible
Officer of the Trustee has actual knowledge of the occurrence of an Event of
Default described in clause (a) of this Section 7.01, or a corresponding Event
of Default under the CHL Agreements, the Trustee shall give written notice to
such Servicer or the Countrywide Servicer, as applicable, of the occurrence of
such an event within one Business Day of the first day on which such Responsible
Officer obtains actual knowledge of such occurrence; provided, that if such
failure is the failure to make a P&I Advance, the Trustee shall send such notice
prior to 12:00 noon New York time on the Distribution Date and, if the Event of
Default of such Servicer or the Countrywide Servicer, as applicable, was the
failure to make a P&I Advance, the Trustee, as successor servicer, shall make
such P&I Advance on the Distribution Date that such notice was delivered. On and
after the receipt by such Servicer or the Countrywide Servicer, as applicable,
of such written notice, all authority and power of such Servicer hereunder, or
the Countrywide Servicer under the CHL Agreements whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the Trustee. Subject
to Section 7.02, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of such Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any obligation
of such Servicer to pay amounts owed pursuant to Article VIII. The Servicer
agrees to cooperate with the Trustee in effecting the termination of such
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee of all cash amounts which shall at the time be
credited to the related Collection Account of such predecessor Servicer, or
thereafter be received with respect to the Mortgage Loans.
Notwithstanding any termination of the activities of a Servicer
hereunder, such Servicer shall be entitled to receive from the Trust Fund, prior
to transfer of its servicing obligations hereunder, payment of all accrued and
unpaid Servicing Fees and reimbursement for all outstanding P&I Advances and
Servicing Advances.
Section 7.02 Trustee to Act; Appointment of Successor. On and after
the time a Servicer or the Countrywide Servicer, as applicable, receives a
notice of termination pursuant to Section 3.24 or Section 7.01 or pursuant to
the CHL Agreements, as applicable, the Trustee shall, subject to and to the
extent provided in Section 3.05, be the successor to such Servicer or the
Countrywide Servicer, as applicable, in its capacity as servicer under this
Agreement or the CHL Agreements and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on such Servicer or the Countrywide Servicer, as
applicable, by the terms and provisions hereof or thereof and applicable law
including the obligation to make P&I Advances or Servicing Advances pursuant to
Section 3.24 or Section 7.01 or pursuant to the CHL Agreements, as applicable.
As compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans that such Servicer or the Countrywide Servicer, as
applicable, would have been entitled to charge to its Collection Account if such
Servicer or the Countrywide Servicer, as applicable, had continued to act
hereunder or thereunder, including, if such Servicer or the Countrywide
Servicer, as applicable, was receiving the Servicing Fee, the Servicing Fee and
the income on investments or gain related to its Collection Account and the
Distribution Account which such Servicer or the Countrywide Servicer, as
applicable, would be entitled to receive (in addition to income on investments
or gain related to the Distribution Account for the benefit of the Trustee
during the Trustee Float Period). Notwithstanding the foregoing, if the Trustee
has become the successor to the Servicer or the Countrywide Servicer, as
applicable, in accordance with Section 7.01, the Trustee may, if it shall be
unwilling to so act, or shall, if it is prohibited by applicable law from making
P&I Advances and Servicing Advances pursuant to Section 4.01 or pursuant to the
CHL Agreements, as applicable, if it is otherwise unable to so act or at the
written request of Certificateholders entitled to at least a majority of the
Voting Rights, appoint, or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution the appointment of
which does not adversely affect the then current rating of the Certificates by
each Rating Agency, as the successor to such servicer hereunder or thereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of such servicer hereunder or thereunder. Any successor to such servicer shall
be an institution which is a ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac approved servicer in
good standing, which has a net worth of at least $30,000,000, which is willing
to service the Mortgage Loans and which executes and delivers to the Depositor
and the Trustee an agreement accepting such delegation and assignment,
containing an assumption by such Person of the rights, powers, duties,
responsibilities, obligations and liabilities of such terminated servicer (other
than liabilities of such terminated servicer under Section 6.03 incurred prior
to termination of such servicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; provided, that each Rating Agency
acknowledges that its rating of the Certificates in effect immediately prior to
such assignment and delegation will not be qualified or reduced, as a result of
such assignment and delegation. Pending appointment of a successor to a servicer
hereunder or thereunder, the Trustee, unless the Trustee is prohibited by law
from so acting, shall, subject to Section 3.05, act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of the Servicing Fee Rate
and amounts paid to the predecessor servicer from investments. The Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. Neither the Trustee nor any
other successor Servicer shall be deemed to be in default hereunder by reason of
any failure to make, or any delay in making, any distribution hereunder or any
portion thereof or any failure to perform, or any delay in performing, any
duties or responsibilities hereunder, in either case caused by the failure of
the predecessor servicer to deliver or provide, or any delay in delivering or
providing, any cash, information, documents or records to it.
In the event that a Servicer is terminated pursuant to Section 7.01,
such terminated Servicer shall be responsible for the servicing transfer,
provide notices to the Mortgagors, arrange for and transfer the Servicing Files
to a successor Servicer, pay all of its own out-of-pocket costs and expenses at
its own expense and pay all costs and expenses of all other parties hereto
relating to the transfer of the related Servicing Files to a successor Servicer
(excluding set-up costs and other administrative expenses of the successor
Servicer), and in all other cases the successor Servicer shall pay for such
costs and expenses but shall not be entitled to reimbursement therefor from the
Trust Fund. Such amounts payable by the terminated Servicer shall be paid by the
terminated Servicer promptly upon presentation of reasonable documentation of
such costs. If the Trustee is the predecessor Servicer (except in the case where
the Trustee in its role as successor Servicer is being terminated pursuant to
Section 7.01 by reason of an Event of Default caused solely by the Trustee as
the successor servicer and not by the predecessor Servicer's actions or
omissions), such costs shall be paid by the prior terminated Servicer promptly
upon presentation of reasonable documentation of such costs.
Any successor to a Servicer as servicer shall give notice to the
related Mortgagors of such change of servicer and shall, during the term of its
service as servicer, maintain in force the policy or policies that each Servicer
is required to maintain pursuant to Section 3.13.
Section 7.03 Notification to Certificateholders. (a) Upon any
termination of or appointment of a successor to a Servicer or the Countrywide
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and each Rating Agency
notice of each such Event of Default hereunder known to the Trustee, unless such
event shall have been cured or waived.
Section 7.04 No Termination Without Cause. The Trustee shall not
terminate the Countrywide Servicer without cause.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01 Duties of the Trustee. The Trustee, before the
occurrence of an Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform such duties and only such
duties as are specifically set forth in this Agreement. In case of an Event of
Default has occurred and remains uncured, the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they are in
the form required by this Agreement. The Trustee shall not be responsible for
the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order, or other instrument.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct.
Unless an Event of Default known to the Trustee has occurred and is
continuing:
(a) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of the duties and obligations specifically set
forth in this Agreement, no implied covenants or obligations shall be read into
this Agreement against the Trustee, and the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming on their face to the requirements of this Agreement which it believed
in good faith to be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;
(b) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it is finally proven that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken, suffered, or omitted to be taken by it in good faith in accordance with
the direction of the Holders of Certificates evidencing not less than 25% of the
Voting Rights of Certificates relating to the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Agreement.
The Trustee shall be permitted to utilize one or more Subcontractors
for the performance of certain of its obligations under this Agreement, provided
that the Trustee complies with Section 3.02(e) as if the Trustee were a
"Servicer" pursuant to that Section. The Trustee shall indemnify the Depositor,
the Sponsor and any director, officer, employee or agent of the Depositor or the
Sponsor and hold them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that any of them may
sustain in any way related to the failure of the Trustee to perform any of its
obligations under Section 3.22 or Section 3.23, including without limitation any
failure by the Trustee to identify pursuant to Section 3.02(e) any Subcontractor
that is a Servicing Function Participant. This indemnity shall survive the
termination of this Agreement or the earlier resignation or removal of the
Trustee.
Section 8.02 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 8.01: (a) the Trustee may request and rely upon
and shall be protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties and the Trustee
shall have no responsibility to ascertain or confirm the genuineness of any
signature of any such party or parties;
(b) the Trustee may consult with counsel, financial advisers or
accountants and the advice of any such counsel, financial advisers or
accountants and any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel;
(c) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement;
(d) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the Holders of
Certificates evidencing not less than 25% of the Voting Rights allocated to each
Class of Certificates;
(e) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agents, accountants or attorneys
appointed with due care by it hereunder;
(f) the Trustee shall not be required to risk or expend its own
funds or otherwise incur any financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers hereunder if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not assured to it;
(g) the Trustee shall not be liable for any loss on any investment
of funds pursuant to this Agreement (other than as issuer of the investment
security and with respect to the investment of funds in the Distribution Account
during the Trustee Float Period);
(h) unless a Responsible Officer of the Trustee has actual knowledge
of the occurrence of an Event of Default, the Trustee shall not be deemed to
have knowledge of an Event of Default, until a Responsible Officer of the
Trustee shall have received written notice thereof; and
(i) the Trustee shall be under no obligation to exercise any of the
trusts, rights or powers vested in it by this Agreement or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity satisfactory to the Trustee against the costs, expenses
and liabilities which may be incurred therein or thereby.
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates shall be taken as the
statements of the Depositor and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement, the Interest Rate Swap Agreement or of the
Certificates or of any Mortgage Loan or related document other than with respect
to the Trustee's execution and authentication of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor or a
Servicer of any funds paid to the Depositor or the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from any Collection Account or the
Distribution Account by the Depositor or a Servicer.
The Trustee shall have no responsibility for filing or recording any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder (unless the Trustee shall have become the successor
Servicer).
The Trustee executes the Interest Rate Swap Agreement and the
Certificates not in its individual capacity but solely as Trustee of the Trust
Fund created by this Agreement, in the exercise of the powers and authority
conferred and vested in it by this Agreement. Each of the undertakings and
agreements made on the part of the Trustee on behalf of the Trust Fund in the
Interest Rate Swap Agreement and the Certificates is made and intended not as a
personal undertaking or agreement by the Trustee but is made and intended for
the purpose of binding only the Trust Fund.
Section 8.04 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not the Trustee.
Section 8.05 Trustee's Fees and Expenses. As compensation for its
activities under this Agreement, the Trustee may withdraw from the Distribution
Account on each Distribution Date the Trustee Fee for the Distribution Date and
any interest or investment income earned on funds deposited in the Distribution
Account during the Trustee Float Period. The Trustee and any director, officer,
employee, or agent of the Trustee shall be indemnified by the Trust Fund against
any loss, liability, or expense (including reasonable attorney's fees) resulting
from any error in any tax or information return prepared by any Servicer or
incurred in connection with any claim or legal action relating to (a) this
Agreement, (b) the Certificates or the Interest Rate Swap Agreement, or (c) the
performance of any of the Trustee's duties under this Agreement, the
Certificates or the Interest Rate Swap Agreement, other than any loss,
liability, or expense (i) resulting from any breach of any Servicer's
obligations in connection with this Agreement for which the related Servicer has
performed its obligation to indemnify the Trustee pursuant to Section 6.05, (ii)
resulting from any breach of the Responsible Party's obligations in connection
with this Agreement for which the related Responsible Party has performed its
obligations to indemnify the Trustee pursuant to Section 2.03(j) or (iii)
incurred because of willful misconduct, bad faith, or negligence in the
performance of any of the Trustee's duties under this Agreement. This indemnity
shall survive the termination of this Agreement or the resignation or removal of
the Trustee under this Agreement. Without limiting the foregoing, except as
otherwise agreed upon in writing by the Depositor and the Trustee, and except
for any expense, disbursement, or advance arising from the Trustee's negligence,
bad faith, or willful misconduct, the Trust Fund shall pay or reimburse the
Trustee, for all reasonable expenses, disbursements, and advances incurred or
made by the Trustee in accordance with this Agreement with respect to:
(A) the reasonable compensation, expenses, and disbursements
of its counsel not associated with the closing of the issuance of
the Certificates, and
(B) the reasonable compensation, expenses, and disbursements
of any accountant, engineer, or appraiser that is not regularly
employed by the Trustee, to the extent that the Trustee must engage
them to perform services under this Agreement.
Except as otherwise provided in this Agreement or a separate letter
agreement between the Trustee and the Depositor, the Trustee shall not be
entitled to payment or reimbursement for any routine ongoing expenses incurred
by the Trustee in the ordinary course of its duties as Trustee under this
Agreement or for any other expenses incurred by the Trustee; provided, however,
that no expense shall be reimbursed by the Trust Fund under this Agreement if it
would not constitute an "unanticipated expense incurred by the REMIC" within the
meaning of the REMIC Provisions.
Section 8.06 Eligibility Requirements for the Trustee. The Trustee
hereunder shall at all times be a corporation or association organized and doing
business under the laws of a state or the United States of America, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, subject to supervision or examination by
federal or state authority and with a credit rating which would not cause any of
the Rating Agencies to reduce their respective then current ratings of the
Certificates (or having provided such security from time to time as is
sufficient to avoid such reduction) as evidenced in writing by each Rating
Agency. If such corporation or association publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 8.06
the combined capital and surplus of such corporation or association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with this Section 8.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.07. The
entity serving as Trustee may have normal banking and trust relationships with
the Depositor, the Servicers, the Countrywide Servicer and their respective
Affiliates; provided, however, that such entity cannot be an Affiliate of the
Depositor, the Servicer or the Countrywide Servicer other than the Trustee in
its role as successor to the Servicer or the Countrywide Servicer.
Section 8.07 Resignation and Removal of the Trustee. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
written notice of resignation to the Depositor, the Servicers and each Rating
Agency not less than 60 days before the date specified in such notice, when,
subject to Section 8.08, such resignation is to take effect, and acceptance by a
successor trustee in accordance with Section 8.08 meeting the qualifications set
forth in Section 8.06. If no successor trustee meeting such qualifications shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice or resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with Section 8.06 and shall fail to resign after written request thereto by the
Depositor, or if at any time the Trustee shall become incapable of acting, or
shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or a tax is imposed with respect to
the Trust Fund by any state in which the Trustee or the Trust Fund is located
and the imposition of such tax would be avoided by the appointment of a
different trustee, then the Depositor may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, one copy of which shall
be delivered to the Trustee, one copy to each Servicer and one copy to the
successor trustee.
The Holders of Certificates entitled to at least a majority of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which shall be
delivered by the successor Trustee to each Servicer, one complete set to the
Trustee so removed and one complete set to the successor so appointed. The
successor trustee shall notify each Rating Agency of any removal of the Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to this Section 8.07 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 8.08.
Section 8.08 Successor Trustee. Any successor trustee appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the Depositor
and to its predecessor trustee and the Servicers an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein. The Depositor, the
Servicers and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties, and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of its acceptance, the successor trustee is
eligible under Section 8.06 and its appointment does not adversely affect the
then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice within 10 days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.
Section 8.09 Merger or Consolidation of the Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder; provided, that such corporation shall be eligible under Section 8.06
without the execution or filing of any paper or further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding. In
connection with the succession to the Trustee under this Agreement by any Person
(i) into which the Trustee may be merged or consolidated, or (ii) which may be
appointed as a successor to the Trustee, the Trustee shall notify the Depositor
of such succession or appointment and shall furnish to the Depositor in writing
and in form and substance reasonably satisfactory to the Depositor, all
information reasonably necessary for the Trustee to accurately and timely
report, pursuant to Section 8.12(g), the event under Item 6.02 of Form 8-K
pursuant to the Exchange Act (if such reports under the Exchange Act are
required to be filed under the Exchange Act).
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing any Mortgage Note may at the time be
located, the applicable Servicer or the Countrywide Servicer, as applicable, and
the Trustee acting jointly shall have the power and shall execute and deliver
all instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust Fund or any part thereof, whichever
is applicable, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the applicable Servicer or the
Countrywide Servicer, as applicable, and the Trustee may consider appropriate.
If any Servicer or the Countrywide Servicer, as applicable, shall not have
joined in such appointment within 15 days after the receipt by such Servicer or
the Countrywide Servicer, as applicable, of a request to do so or in the case an
Event of Default shall have occurred and be continuing, the Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 8.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(a) To the extent necessary to effectuate the purposes of this
Section 8.10, all rights, powers, duties and obligations conferred or imposed
upon the Trustee, except for the obligation of the Trustee under this Agreement
to advance funds on behalf of the applicable Servicer, shall be conferred or
imposed upon and exercised or performed by the Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to a Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the applicable Trust
Fund or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(b) No trustee hereunder shall be held personally liable because of
any act or omission of any other trustee hereunder and such appointment shall
not, and shall not be deemed to, constitute any such separate trustee or
co-trustee as agent of the Trustee;
(c) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee; and
(d) The Trust Fund, and not the Trustee, shall be liable for the
payment of reasonable compensation, reimbursement and indemnification to any
such separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the separate trustees and co-trustees, when
and as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11 Tax Matters. It is intended that the assets with
respect to which any REMIC election pertaining to the Trust Fund is to be made,
as set forth in the Preliminary Statement, shall constitute, and that the
conduct of matters relating to such assets shall be such as to qualify such
assets as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Trustee covenants and agrees that it shall act as agent (and the Trustee is
hereby appointed to act as agent) on behalf of each Trust REMIC and that in such
capacity it shall:
(a) prepare and file in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit (REMIC) Income Tax Return (Form 1066 or any successor form
adopted by the Internal Revenue Service) and prepare and file with the Internal
Revenue Service and applicable state or local tax authorities income tax or
information returns for each taxable year with respect to each Trust REMIC
containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
furnish to Certificateholders the schedules, statements or information at such
times and in such manner as may be required thereby;
(b) within thirty days of the Closing Date, apply for an employer
identification number from the Internal Revenue Service via Form SS-4 or any
other acceptable method for all tax entities and shall also furnish to the
Internal Revenue Service, on Form 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that the
Holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code;
(c) make an election that each of Pooling-Tier REMIC-1, Pooling-Tier
REMIC-2, the Lower-Tier REMIC and the Upper-Tier REMIC be treated as a REMIC on
the federal tax return for its first taxable year (and, if necessary, under
applicable state law);
(d) prepare and forward to the Certificateholders and to the
Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them in
accordance with the REMIC Provisions, including the calculation of any original
issue discount using the prepayment assumption (as described in the Prospectus
Supplement);
(e) provide information necessary for the computation of tax imposed
on the Transfer of a Residual Certificate to a Person that is a Non-Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax);
(f) to the extent that they are under its control, conduct matters
relating to such assets at all times that any Certificates are Outstanding so as
to maintain the status of each Trust REMIC as a REMIC under the REMIC
Provisions;
(g) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of any Trust
REMIC created hereunder;
(h) pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal or state tax, including prohibited
transaction taxes as described below, imposed on any Trust REMIC created
hereunder before its termination when and as the same shall be due and payable
(but such obligation shall not prevent the Trustee or any other appropriate
Person from contesting any such tax in appropriate proceedings and shall not
prevent the Trustee from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings);
(i) cause federal, state or local income tax or information returns
to be signed by the Trustee or such other Person as may be required to sign such
returns by the Code or state or local laws, regulations or rules; and
(j) maintain records relating to each Trust REMIC created hereunder,
including the income, expenses, assets, and liabilities thereof on a calendar
year basis and on the accrual method of accounting and the fair market value and
adjusted basis of the assets determined at such intervals as may be required by
the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information.
The Holder of the largest Percentage Interest of the Class R
Certificates shall act as Tax Matters Person for each Trust REMIC, within the
meaning of Treasury Regulations Section 1.860F-4(d), and the Trustee is hereby
designated as agent of such Certificateholder for such purpose (or if the
Trustee is not so permitted, such Holder shall be the Tax Matters Person in
accordance with the REMIC Provisions). In such capacity, the Trustee shall, as
and when necessary and appropriate, represent each Trust REMIC created hereunder
in any administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative adjustment
as to any taxable year of each Trust REMIC created hereunder, enter into
settlement agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of each Trust REMIC created hereunder, and
otherwise act on behalf of each Trust REMIC in relation to any tax matter or
controversy involving it.
The Trustee shall treat the rights of the Class P Certificateholders
to Prepayment Charges, the rights of the Class X Certificateholders to receive
amounts in the Excess Reserve Fund Account and the Swap Account (subject to the
obligation to pay Basis Risk CarryForward Amounts and Upper-Tier CarryForward
Amounts) and the rights of the Offered Certificateholders to receive Basis Risk
CarryForward Amounts and Upper-Tier CarryForward Amounts as the beneficial
ownership of interests in a grantor trust, and not as obligations of any Trust
REMIC created hereunder, for federal income tax purposes. The Trustee shall file
or cause to be filed with the Internal Revenue Service Form 1041 or such other
form as may be applicable and shall furnish or cause to be furnished, to the
Class P Certificateholders, Class X Certificateholders and Offered
Certificateholders, the respective amounts described above that are received, in
the time or times and in the manner required by the Code.
To enable the Trustee to perform its duties under this Agreement,
the Depositor shall provide to the Trustee within ten days after the Closing
Date all information or data that the Trustee requests in writing and determines
to be relevant for tax purposes to the valuations and offering prices of the
Certificates, including the price, yield, prepayment assumption, and projected
cash flows of the Certificates and the Mortgage Loans. Moreover, the Depositor
shall provide information to the Trustee concerning the value, if any, to each
Class of Certificates of the right to receive Basis Risk CarryForward Amounts
from the Excess Reserve Fund Account and Basis Risk CarryForward Amounts and
Upper-Tier CarryForward Amounts from the Swap Account. Thereafter, the Depositor
shall provide to the Trustee promptly upon written request therefor any
additional information or data that the Trustee may, from time to time,
reasonably request to enable the Trustee to perform its duties under this
Agreement; provided, however, that the Depositor shall not be required to
provide any information regarding the Mortgage Loans that the applicable
Servicer or the Countrywide Servicer is required to provide to the Trustee
pursuant to this Agreement or the CHL Sale and Servicing Agreement. The
Depositor hereby indemnifies the Trustee for any losses, liabilities, damages,
claims, or expenses of the Trustee arising from any errors or miscalculations of
the Trustee that result from any failure of the Depositor to provide pursuant to
this paragraph accurate information or data to the Trustee on a timely basis.
Neither the Servicers nor the Trustee shall (i) permit the creation
of any interests in any Trust REMIC other than the regular and residual
interests set forth in the Preliminary Statement, (ii) receive any amount
representing a fee or other compensation for services (except as otherwise
permitted by this Agreement or the related Mortgage Loan documents) or (iii)
otherwise knowingly or intentionally take any action, cause the Trust Fund to
take any action or fail to take (or fail to cause to be taken) any action
reasonably within its control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, could (i) endanger the status of any Trust REMIC as a REMIC or (ii)
result in the imposition of a tax upon any Trust REMIC or the Trust Fund
(including but not limited to the tax on "prohibited transactions" as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth
in Section 860G(d) of the Code, or the tax on "net income from foreclosure
property") unless the Trustee receives an Opinion of Counsel (at the expense of
the party seeking to take such action or, if such party fails to pay such
expense, at the expense of the Trust Fund, but in no event at the expense of the
Trustee) to the effect that the contemplated action will not, with respect to
the Trust Fund, any Trust REMIC created hereunder, endanger such status or
result in the imposition of such a tax).
If any tax is imposed on "prohibited transactions" of any Trust
REMIC as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of the Pooling-Tier REMIC-1 as defined in Section 860G(c)
of the Code, on any contribution to any Trust REMIC after the Start-up Day
pursuant to Section 860G(d) of the Code, or any other tax is imposed, including,
if applicable, any minimum tax imposed on any Trust REMIC pursuant to Sections
23153 and 24874 of the California Revenue and Taxation Code, if not paid as
otherwise provided for herein, the tax shall be paid by (i) the Trustee if such
tax arises out of or results from negligence of the Trustee in the performance
of any of its obligations under this Agreement, (ii) the applicable Servicer and
the Responsible Party, jointly, in the case of any such minimum tax, and the
Servicer if such tax arises out of or results from a breach by such Servicer of
any of its obligations under this Agreement, (iii) the Responsible Party if such
tax arises out of or results from the Responsible Party's obligation to
repurchase a Mortgage Loan pursuant to Section 2.03, or (iv) in all other cases,
or if the Trustee, the applicable Servicer or the Responsible Party fails to
honor its obligations under the preceding clause (i), (ii), or (iii), any such
tax will be paid with amounts otherwise to be distributed to the
Certificateholders, as provided in Section 4.02(a).
Section 8.12 Periodic Filings. (a) The Trustee and each Servicer
shall reasonably cooperate with the Depositor in connection with the reporting
requirements of the Trust under the Exchange Act. The Trustee shall prepare for
execution by the Depositor any Forms 8-K, 10-D and 10-K required by the Exchange
Act and the rules and regulations of the Commission thereunder, in order to
permit the timely filing thereof pursuant to the terms of this Section 8.12, and
the Trustee shall file (via the Commission's Electronic Data Gathering and
Retrieval System ("▇▇▇▇▇")) such Forms executed by the Depositor. The Trustee
shall have no duty to verify information received by it from other Persons
(other than Subcontractors utilized by the Trustee) in connection with its
duties under this Section 8.12.
(b) No later than 1:00 p.m. (Eastern Standard Time) (so long as the
Trustee has received from the Depositor the executed Form 10-D no later than
noon (Eastern Standard Time) on the preceding Business Day (or otherwise, the
Trustee will utilize reasonable best efforts to file such Form 10-D no later
than the filing deadline for such Form 10-D)) on any date within 15 calendar
days after each Distribution Date (subject to permitted extensions under the
Exchange Act), the Trustee shall prepare and file on behalf of the Trust any
Form 10-D required by the Exchange Act, in form and substance as required by the
Exchange Act. The Trustee shall file each Form 10-D with a copy of the related
Monthly Statement attached thereto. Any disclosure in addition to the Monthly
Statement that is required to be included on Form 10-D ("Additional Form 10-D
Disclosure") shall be prepared by the party responsible for preparing such
disclosure as set forth on Exhibit V hereto and provided to the Trustee in
▇▇▇▇▇-compatible form at the email address for the Trustee set forth in Section
10.05, using Exhibit AA and the Trustee shall compile such disclosure pursuant
to the following paragraph. As used in this Agreement, ▇▇▇▇▇-compatible form
means an electronic information storage format acceptable to the Trustee and the
party providing such information. The Trustee will have no duty or liability for
any failure hereunder to determine or prepare any Additional Form 10-D
Disclosure, except as set forth in the next paragraph.
As set forth on Exhibit V hereto, within 5 calendar days after the
related Distribution Date, certain parties to this Agreement shall be required
to provide to the Trustee and the Depositor, to the extent known by such
applicable parties, any Additional Form 10-D Disclosure, if applicable. In
addition, the Countrywide Servicer is obligated under the CHL Agreements to
provide certain information to the Trustee. The Trustee shall compile all such
information provided to it in a Form 10-D prepared by it.
The Trustee shall prepare and forward electronically a draft copy of
the Form 10-D to the Depositor sufficiently far in advance of, but in no event
less than two (2) Business Days prior to, when the Depositor is required to
execute such Form 10-D to permit the Depositor to review, verify and execute
such Form 10-D. No later than 2 Business Days prior to the 15th calendar day
after the related Distribution Date, an officer of the Depositor shall sign the
Form 10-D and return an electronic or fax copy of such signed Form 10-D (with an
original executed hard copy to follow by overnight mail) to the Trustee. If a
Form 10-D cannot be filed on time or if a previously filed Form 10-D needs to be
amended, the Trustee will follow the procedures set forth in Section
8.12(f)(ii). The signing party at the Depositor can be contacted at the
Depositor's address for notices set forth in Section 10.5(b)(ii)(a), or such
other address as to which the Depositor has provided prior written notice to the
Trustee. The Depositor acknowledges that the performance by the Trustee of its
duties under this Section 8.12(b) related to the timely preparation and filing
of Form 10-D is contingent, in part, upon each Servicer, the Countrywide
Servicer the Depositor and any other Person obligated to provide Additional Form
10-D Disclosure as set forth on Exhibit V hereto observing all applicable
deadlines in the performance of their duties under this Section 8.12(b) or the
applicable provisions of the CHL Agreements. The Trustee shall have no liability
for any loss, expense, damage, or claim arising out of or with respect to any
failure to properly prepare and/or timely file such Form 10-D, where such
failure results from the Trustee's inability or failure to obtain or receive, on
a timely basis, any information or signature from any party hereto (other than
the Trustee or any Subcontractor utilized by the Trustee) needed to prepare,
arrange for execution or file such Form 10-D, not resulting from its own
negligence, bad faith or willful misconduct.
(c) No later than 1:00 p.m. (Eastern Standard Time) (so long as the
Trustee has received from the Depositor the executed Form 10-K no later than
noon (Eastern Standard Time) on the preceding Business Day (or otherwise, the
Trustee shall utilize reasonable best efforts to file such Form 10-K no later
than the filing deadline for such Form 10-K)) on any date within 90 days after
the end of each fiscal year of the Trust or such earlier date as may be required
by the Exchange Act (the "10-K Filing Deadline"), commencing in March 2007, the
Trustee shall prepare and file on behalf of the Trust a Form 10-K, in form and
substance as required by the Exchange Act. Each such Form 10-K shall include the
following items, in each case to the extent they have been delivered to the
Trustee within the applicable time frames set forth in this Agreement, (i) an
annual compliance statement for each Servicer, the Countrywide Servicer and each
Subservicer engaged by any Servicer, the Countrywide Servicer and the Trustee,
as described under Section 3.22 or under the CHL Agreements, (ii)(A) the annual
reports on assessment of compliance with servicing criteria for the Trustee, the
Servicers, the Countrywide Servicer, each Subservicer engaged by any Servicer or
the Countrywide Servicer and each Servicing Function Participant utilized by a
Servicer or the Trustee, as described under Section 3.23, and (B) if any such
report on assessment of compliance with servicing criteria described under
Section 3.23 or under the CHL Agreements identifies any material instance of
noncompliance, disclosure identifying such instance of noncompliance, or such
report on assessment of compliance with servicing criteria described under
Section 3.23 or under the CHL Agreements is not included as an exhibit to such
Form 10-K, disclosure that such report is not included and an explanation why
such report is not included, (iii)(A) the registered public accounting firm
attestation report for the Trustee, each Servicer, the Countrywide Servicer,
each Subservicer engaged by any Servicer or the Countrywide Servicer and each
Servicing Function Participant utilized by a Servicer, the Countrywide Servicer
or the Trustee, as described under Section 3.23 or the CHL Agreements, and (B)
if any registered public accounting firm attestation report described under
Section 3.23 or the CHL Agreements identifies any material instance of
noncompliance, disclosure identifying such instance of noncompliance, or if any
such registered public accounting firm attestation report is not included as an
exhibit to such Form 10-K, disclosure that such report is not included and an
explanation why such report is not included, and (iv) a certification
substantially in the form attached hereto as Exhibit L, with such changes as may
be necessary or appropriate as a result of changes promulgated by the Commission
(the "Sarbanes Certification"), which shall be signed by the senior officer of
the Depositor in charge of securitization. Any disclosure or information in
addition to (i) through (iv) above that is required to be included on Form 10-K
("Additional Form 10-K Disclosure") shall be prepared by party responsible for
preparing such disclosure as set forth on Exhibit W hereto and provided to the
Trustee in ▇▇▇▇▇-compatible form at the email address for the Trustee set forth
in Section 10.05, using Exhibit AA and the Trustee shall compile such disclosure
pursuant to the following paragraph. The Trustee will have no duty or liability
for any failure hereunder to determine or prepare any Additional Form 10-K
Disclosure, except as set forth in the next paragraph.
As set forth on Exhibit W hereto, no later than March 1st of each
year (or, in the case of the Servicers, March 5th of each year) that the Trust
is subject to the Exchange Act reporting requirements, commencing in 2007,
certain parties to this Agreement shall be required to provide to the Trustee
and the Depositor, to the extent known by such applicable parties, any
Additional Form 10-K Disclosure, if applicable. In addition, the Countrywide
Servicer is obligated under the CHL Agreements to provide certain information to
the Trustee. The Trustee shall compile all such information provided to it in a
Form 10-K prepared by it.
The Trustee shall forward electronically a draft copy of the Form
10-K to the Depositor sufficiently far in advance of, but in no event less than
five (5) Business Days prior to, when the Depositor is required to execute such
Form 10-K to permit the Depositor to review, verify and execute such Form 10-K.
No later than 5:00 p.m. Eastern Standard Time on the 3rd Business Day prior to
the 10-K Filing Deadline, an officer of the Depositor shall sign the Form 10-K
and return an electronic or fax copy of such signed Form 10-K (with an original
executed hard copy to follow by overnight mail) to the Trustee. If a Form 10-K
cannot be filed on time or if a previously filed Form 10-K needs to be amended,
the Trustee will follow the procedures set forth in Section 8.12(f)(ii). The
signing party at the Depositor can be contacted at the Depositor's address for
notices set forth in Section 10.5(b)(ii)(a), or such other address as to which
the Depositor has provided prior written notice to the Trustee. The Depositor
acknowledges that the performance by the Trustee of its duties under this
Section 8.12(c) related to the timely preparation and filing of Form 10-K is
contingent, in part, upon each Servicer and the Countrywide Servicer (and any
Subservicer or Servicing Function Participant engaged by a Servicer or the
Countrywide Servicer) and the Depositor and any other Person obligated to
provide Additional Form 10-K Disclosure as set forth on Exhibit W hereto,
observing all applicable deadlines in the performance of their duties under this
Section 8.12(c), Section 8.12(d), Section 3.22 and Section 3.23 or the
applicable provisions of the CHL Agreements. The Trustee shall have no liability
for any loss, expense, damage or claim arising out of or with respect to any
failure to properly prepare and/or timely file such Form 10-K, where such
failure results from the Trustee's inability or failure to obtain or receive, on
a timely basis, any information or signature from any party hereto (other than
the Trustee or any Subcontractor utilized by the Trustee) needed to prepare,
arrange for execution or file such Form 10-K, not resulting from its own
negligence, bad faith or willful misconduct.
(d) In connection with the execution of a Sarbanes Certification,
the Trustee shall sign a certification (in the form attached hereto as Exhibit
M, with such changes as may be necessary or appropriate as a result of changes
promulgated by the Commission) for the benefit of the Depositor and its
officers, directors and Affiliates, and each Servicer shall sign a certification
solely with respect to such Servicer (substantially in the form attached hereto
as Exhibit N, with such changes as may be necessary or appropriate as a result
of changes promulgated by the Commission) for the benefit of the Depositor, the
Trustee and their respective officers, directors and Affiliates. Each such
certification shall be delivered to the Depositor no later than March 10th of
each year (or if such day is not a Business Day, the immediately preceding
Business Day) and the Depositor shall deliver the Sarbanes Certification no
later than the time set forth for the delivery to the Trustee of the signed Form
10-K pursuant to Section 8.12(d) for such year). In the event that prior to the
filing date of the Form 10-K in March of each year, the Trustee or any Servicer
has actual knowledge of information material to the Sarbanes Certification, that
party shall promptly notify the Depositor and each of the other parties signing
the certifications. In addition, (i) the Trustee shall indemnify and hold
harmless the Depositor and the Sponsor and their officers, directors, employees,
agents and Affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments
and other costs and expenses arising out of or based upon any breach of the
Trustee's obligations under this Section 8.12(d) or any material misstatement or
material omission contained in any information, report, certification,
accountants' letter or other material provided in written or electronic form
pursuant to Sections, 3.23 and 8.12 of this Agreement and Exhibits V, W and X to
this Agreement provided by or on behalf of the Trustee or any Subcontractor
utilized by the Trustee (excluding any information, report, certification,
accountants' letter or other materials provided in written or electronic form by
or on behalf of any Person other than the Trustee or any Subcontractor utilized
by the Trustee), negligence, bad faith or willful misconduct in connection
therewith, and (ii) each Servicer, severally and not jointly, shall indemnify
and hold harmless the Depositor, the Sponsor, the Trustee and their respective
officers, directors, employees, agents and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon any breach of the applicable Servicer's obligations under this
Section 8.12(d) or any material misstatement, omission, negligence, bad faith or
willful misconduct of such Servicer in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless any indemnified party, then (i) the Trustee agrees in connection with a
breach of the Trustee's obligations under this Section 8.12(d) or any material
misstatement or material omission contained in any information, report,
certification, accountants' letter or other material provided in written or
electronic form pursuant to Sections 3.23 and 8.12 of this Agreement and
Exhibits V, W and X to this Agreement provided by or on behalf of the Trustee or
any Subcontractor utilized by the Trustee (excluding any information, report,
certification, accountants' letter or other materials provided in written or
electronic form by or on behalf of any Person other than the Trustee or any
Subcontractor utilized by the Trustee), negligence, bad faith or willful
misconduct in connection therewith that it shall contribute to the amount paid
or payable by the Depositor and the Sponsor as a result of the losses, claims,
damages or liabilities of the Depositor and the Sponsor in such proportion as is
appropriate to reflect the relative fault of the Depositor and the Sponsor on
the one hand and the Trustee on the other and (ii) each Servicer agrees that it
shall contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities of such indemnified party
in such proportion as is appropriate to reflect the relative fault of such
indemnified party, on the one hand, and such Servicer, on the other hand, in
connection with a breach of the Servicers' obligations under this Section
8.12(d) or any material misstatement or omission, negligence, bad faith or
willful misconduct of such Servicer in connection therewith.
(e) Upon any filing with the Commission, the Trustee shall promptly
deliver to the Depositor a copy of each such executed report, statement or
information.
(f) (i) The obligations set forth in paragraphs (a) through (d) of
this Section shall only apply with respect to periods for which reports are
required to be filed with respect to the Trust under the Exchange Act. Prior to
January 30 of the first year in which the Trustee is able to do so under
applicable law, the Trustee shall file a Form 15 Suspension Notification with
respect to the Trust, with a copy to the Depositor. At any time after the filing
of a Form 15 Suspension Notification, if the number of Holders of the Offered
Certificates of record exceeds the number set forth in Section 15(d) of the
Exchange Act or the regulations promulgated pursuant thereto which would cause
the Trust to again become subject to the reporting requirements of the Exchange
Act, the Trustee shall recommence preparing and filing reports on Form 10-K,
10-D and 8-K as required pursuant to this Section 8.12 and the parties hereto
shall again have the obligations set forth in this Section.
(ii) In the event that the Trustee is unable to timely file with the
Commission all or any required portion of any Form 8-K, 10-D or 10-K
required to be filed pursuant to this Agreement because required
disclosure information was either not delivered to it or delivered to it
after the delivery deadlines set forth in this Agreement, the Trustee will
immediately notify the Depositor, the Servicers and the Countrywide
Servicer. In the case of Form 10-D and 10-K, the Depositor, Servicers and
the Trustee will thereupon cooperate to prepare and timely file a Form
12b-25 and a 10-D/A and 10-K/A as applicable, pursuant to Rule 12b-25 of
the Exchange Act. In the case of Form 8-K, the Trustee will, upon receipt
of all disclosure information required to be included on Form 8-K, include
such disclosure information on the next Form 10-D. In the event that any
previously filed Form 8-K, 10-D or 10-K needs to be amended, the party to
this Agreement deciding that an amendment to such Form 8-K, 10-D or 10-K
is required will notify the Depositor, the Trustee, the Servicers and the
Countrywide Servicer and such parties will cooperate to prepare any
necessary Form 8-K/A, 10-D/A or 10-K/A. Any Form 15, Form 12b-25 or any
amendment to Form 8-K, 10-D or 10-K shall be signed by an officer of the
Depositor. The Depositor acknowledges that the performance by the Trustee
of its duties under this Section 8.12(f) related to the timely preparation
and filing of Form 15, a Form 12b-25 or any amendment to Form 8-K, 10-D or
10-K is contingent, in part, upon the Servicers, the Countrywide Servicer
and the Depositor observing all applicable deadlines in the performance of
their duties under this Section 8.12 and Sections 3.22 and 3.23 or the
applicable provisions of the CHL Agreements. The Trustee shall have no
liability for any loss, expense, damage, claim arising out of or with
respect to any failure to properly prepare and/or timely file any such
Form 15, Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K, where
such failure results from the Trustee's inability or failure to obtain or
receive, on a timely basis, any information from any party hereto (other
than the Trustee or any Subcontractor utilized by the Trustee) needed to
prepare, arrange for execution or file such Form 15, Form 12b-25 or any
amendments to Forms 8-K, 10-D or 10-K, not resulting from its own
negligence, bad faith or willful misconduct.
(g) No later than 3:00 p.m. (Eastern Standard Time) (so long as the
Trustee has received from the Depositor the executed Form 8-K no later than 5:00
p.m. (Eastern Standard Time) on the 3rd Business Day after the Reportable Event
(as defined below) (or otherwise, the Trustee shall utilize reasonable best
efforts to file such Form 8-K no later than the filing deadline for such Form
8-K)) on any date within four (4) Business Days after the occurrence of an event
requiring disclosure on Form 8-K (each such event, a "Reportable Event"), and
also if requested by the Depositor, the Trustee shall prepare and file on behalf
of the Trust any Form 8-K, as required by the Exchange Act, provided that the
Depositor shall file the initial Form 8-K in connection with the issuance of the
Certificates. Any disclosure or information related to a Reportable Event or
that is otherwise required to be included on Form 8-K ("Form 8-K Disclosure
Information") shall be prepared by the party responsible for preparing such
disclosure as set forth on Exhibit X hereto and compiled by the Trustee pursuant
to the following paragraph. The Trustee will have no duty or liability for any
failure hereunder to determine or prepare any Form 8-K Disclosure Information or
any Form 8-K, except as set forth in the next paragraph.
As set forth on Exhibit X hereto, for so long as the Trust is
subject to the Exchange Act reporting requirements, no later than noon (Eastern
Standard Time) on the 2nd Business Day after the occurrence of a Reportable
Event, certain parties to this Agreement shall be required to provide to the
Depositor and the Trustee, to the extent known by such applicable parties, any
Form 8-K Disclosure Information, if applicable. In addition, the Countrywide
Servicer is obligated under the CHL Agreements to provide certain information to
the Trustee. The Trustee shall compile all such information provided to it in a
Form 8-K prepared by it.
The Trustee shall prepare and forward electronically a draft copy of
the Form 8-K to the Depositor sufficiently far in advance of, but in no event
later than noon (Eastern Standard Time) on the 3rd Business Day after a
Reportable Event, when the Depositor is required to execute such Form 8-K to
permit the Depositor to review, verify and execute such Form 8-K. No later than
the end of the 3rd Business Day after the Reportable Event, an officer of the
Depositor shall sign the Form 8-K and return an electronic or fax copy of such
signed Form 8-K (with an original executed hard copy to follow by overnight
mail) to the Trustee. If a Form 8-K cannot be filed on time or if a previously
filed Form 8-K needs to be amended, the Trustee will follow the procedures set
forth in Section 8.12(f)(ii). The signing party at the Depositor can be
contacted at the Depositor's address for notices set forth in Section
10.5(b)(ii)(a), or such other address as to which the Depositor has provided
prior written notice to the Trustee. The Depositor acknowledges that the
performance by the Trustee of its duties under this Section 8.12(g) related to
the timely preparation and filing of Form 8-K is contingent, in part, upon each
Servicer, the Countrywide Servicer, the Depositor and any other Person obligated
to provide Form 8-K Disclosure Information as set forth on Exhibit X hereto and
provided to the Trustee in ▇▇▇▇▇-compatible form at the email address for the
Trustee set forth in Section 10.05, using Exhibit AA observing all applicable
deadlines in the performance of their duties under this Section 8.12(g). The
Trustee shall have no liability for any loss, expense, damage or claim arising
out of or with respect to any failure to properly prepare and/or timely file
such Form 8-K, where such failure results from the Trustee's inability or
failure to obtain or receive, on a timely basis, any information or signature
from any party hereto (other than the Trustee or any Subcontractor utilized by
the Trustee) needed to prepare, arrange for execution or file such Form 8-K, not
resulting from its own negligence, bad faith or willful misconduct.
(h) The Trustee shall have no liability for any loss, expense,
damage or claim arising out of or resulting from (i) the accuracy or inaccuracy
of any Additional Form 10-D Disclosure, Additional Form 10-K Disclosure or Form
8-K Disclosure Information (excluding any information therein provided by the
Trustee or any Subcontractor utilized by the Trustee) provided to the Trustee in
connection with the preparation of Forms 10-D, 10-K and 8-K pursuant to this
Section 8.12, or (ii) the failure of the Depositor to timely execute and return
for filing any Forms 10-D, 10-K and 8-K required to be filed by the Trustee
pursuant to this Section 8.12, in either case, not resulting from the Trustee's
own negligence, bad faith or misconduct.
Section 8.13 Tax Treatment of Upper-Tier CarryForward Amounts, Basis
Risk CarryForward Amounts and Class IO Shortfalls; Tax Classification of the
Excess Reserve Fund Account, Swap Account and the Interest Rate Swap Agreement.
For federal income tax purposes, the Trustee shall treat the Excess Reserve Fund
Account and the Swap Account as beneficially owned by the holders of the Class X
Certificates and shall treat such portion of the Trust Fund as a grantor trust,
within the meaning of subpart E, Part I of subchapter J of the Code. The Trustee
shall treat the rights that each Class of Offered Certificates has to receive
payments of Basis Risk CarryForward Amounts, and to the extent not paid from the
Excess Reserve Fund Account, Basis Risk CarryForward Amounts and, without
duplication, Upper-Tier CarryForward Amounts from the Swap Account (together
with Basis Risk CarryForward Amounts from the Excess Reserve Fund Account) as
rights to receive payments under an interest rate cap contract written by the
Class X Certificateholder in favor of each such Class and beneficially owned by
each such Class through the grantor trust. Accordingly, each Class of
Certificates (excluding the Class X, Class P and Class R Certificates) will be
comprised of two components - an Upper-Tier Regular Interest and an interest in
an interest rate cap contract, and the Class X Certificates will be comprised of
four components - two Upper-Tier Regular Interests (the Class X Interest and the
Class IO Interest), an interest in the Excess Reserve Fund Account, subject to
obligation to pay Basis Risk CarryForward Amounts, and ownership of the Swap
Account and the Interest Rate Swap Agreement, subject to the obligation to pay
Upper-Tier CarryForward Amounts including, but without duplication, Basis Risk
CarryForward Amounts. The Trustee shall allocate the issue price for a Class of
Certificates among the respective components for purposes of determining the
issue price of the Upper-Tier Regular Interest component based on information
received from the Depositor. Unless otherwise advised by the Depositor in
writing, for federal income tax purposes, the Trustee is hereby directed to
assign a value of zero to the right of each Holder of a Offered Certificate to
receive the related Upper-Tier CarryForward Amounts and, without duplication,
the related Basis Risk CarryForward Amounts for purposes of allocating the
purchase price of a Offered Certificate acquired by an initial Holder thereof
between such right and the related Upper-Tier Regular Interest.
Holders of Offered Certificates shall also be treated as having
agreed to pay, on each Distribution Date, to the Holders of the Class X
Certificates an aggregate amount equal to the excess, if any, of (i) Net Swap
Payments and Swap Termination Payments (other than Defaulted Swap Termination
Payments) over (ii) the sum of amounts payable on the Class X Interest available
for such payments and amounts payable on the Class IO Interest (such excess, a
"Class IO Shortfall"), first from interest and then from principal distributable
on the Offered Certificates. A Class IO Shortfall payable from interest
collections shall be allocated pro rata among such Offered Certificates based on
the amount of interest otherwise payable to such Class of Offered Certificates,
and a Class IO Shortfall payable from principal collections shall be allocated
in reverse sequential order beginning with the most subordinate Class of Offered
Certificates then Outstanding.
Any payments of Class IO Shortfalls shall be treated for tax
purposes as having been received by the Holders of such Class of Offered
Certificates in respect of the corresponding Upper-Tier Regular Interest and as
having been paid by such Holders to the Holders of the Class X Certificates
through the Swap Account. In the event any class of Upper-Tier Regular Interest
corresponding to a class of Offered Certificates is subject to the Upper-Tier
REMIC WAC Rate, and such rate exceeds the applicable Pass-Through Rate of the
Corresponding Class of Certificates as a result of a Swap Termination Payment,
such excess shall be deemed first paid to the related Upper-Tier Regular
Interest and then paid to the Class X Certificates in a manner analogous to
Class IO Shortfalls.
ARTICLE IX
TERMINATION
Section 9.01 Termination upon Liquidation or Purchase of the
Mortgage Loans. Subject to Section 9.03, the obligations and responsibilities of
the Depositor, the Servicers and the Trustee created hereby with respect to the
Trust Fund shall terminate upon the earlier of (a) the purchase, on or after the
Optional Termination Date, by HomEq or JPMorgan, individually or together, of
all Mortgage Loans (and REO Properties) at the price equal to the sum of (i)
100% of the unpaid principal balance of each Mortgage Loan (other than in
respect of REO Property) plus accrued and unpaid interest thereon at the
applicable Mortgage Rate, (ii) the lesser of (x) the appraised value of any REO
Property as determined by the higher of two appraisals completed by two
independent appraisers selected by HomEq or JPMorgan, individually or together,
at the expense of HomEq or JPMorgan, individually or together, plus accrued and
unpaid interest on each Mortgage Loan at the applicable Mortgage Rate and (y)
the unpaid principal balance of each Mortgage Loan related to any REO Property,
in each case plus accrued and unpaid interest thereon at the applicable Mortgage
Rate, and (iii) any Swap Termination Payment owed to the Swap Provider pursuant
to the Interest Rate Swap Agreement, and (b) the later of (i) the maturity or
other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement. In no event shall the trusts
created hereby continue beyond the expiration of 21 years from the death of the
survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the
United States to the Court of St. James's, living on the date hereof.
Notwithstanding anything to the contrary contained herein, no such
purchase shall be permitted, unless (i) after distribution of the proceeds
thereof to the Certificateholders (other than the Holders of the Class X, Class
P and Residual Certificates) pursuant to Section 9.02, the distribution of the
remaining proceeds to the Class X and Class P Certificates is sufficient to pay
the outstanding principal amount of and accrued and unpaid interest on the NIM
Securities, to the extent the NIM Securities are then outstanding, or (ii) prior
to such purchase, HomEq shall have deposited in the related Collection Account
an amount to be remitted to the NIM Trustee that, together with such remaining
proceeds, will be sufficient to pay the outstanding principal amount of and
accrued and unpaid interest on the NIM Securities, to the extent the NIM
Securities are then outstanding.
Section 9.02 Final Distribution on the Certificates. If on any
Remittance Date, HomEq determines that there are no Outstanding Mortgage Loans
and no other funds or assets in the Trust Fund other than the funds in the
Collection Accounts, HomEq or JPMorgan, individually or together, shall direct
the Trustee promptly to send a Notice of Final Distribution to each
Certificateholder and the Swap Provider. If HomEq or JPMorgan, individually or
together, elects to terminate the Trust Fund pursuant to clause (a) of Section
9.01, HomEq or JPMorgan, individually or together, shall notify, by the 25th day
of the month preceding the month of the final distribution, HomEq or JPMorgan,
individually or together, shall notify the Depositor and the Trustee of the date
HomEq or JPMorgan, individually or together, intends to terminate the Trust Fund
and of the applicable repurchase price of the Mortgage Loans and REO Properties.
A Notice of Final Distribution, specifying the Distribution Date on
which Certificateholders may surrender their Certificates for payment of the
final distribution and cancellation, shall be given promptly by the Trustee by
letter to Certificateholders mailed not earlier than the 10th day and not later
than the 15th day of the month of such final distribution. Any such Notice of
Final Distribution shall specify (a) the Distribution Date upon which final
distribution on the Certificates will be made upon presentation and surrender of
Certificates at the office therein designated, (b) the amount of such final
distribution, (c) the location of the office or agency at which such
presentation and surrender must be made, and (d) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of the Certificates at the office therein
specified. The Trustee will give such Notice of Final Distribution to each
Rating Agency at the time such Notice of Final Distribution is given to
Certificateholders.
In the event such Notice of Final Distribution is given, HomEq shall
cause all funds in its Collection Account to be remitted to the Trustee for
deposit in the Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to HomEq the Custodial Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Certificateholders of each Class (after
reimbursement of all amounts due to the Servicers, the Countrywide Servicer, the
Depositor and the Trustee hereunder), in each case on the final Distribution
Date and in the order set forth in Section 4.02, in proportion to their
respective Percentage Interests, with respect to Certificateholders of the same
Class, up to an amount equal to (i) as to each Class of Regular Certificates
(except the Class X Certificates), the Certificate Balance thereof plus for each
such Class and the Class X Certificates accrued interest thereon in the case of
an interest-bearing Certificate and all other amounts to which such Classes are
entitled pursuant to Section 4.02 and (ii) as to the Residual Certificates, the
amount, if any, which remains on deposit in the Distribution Account (other than
the amounts retained to meet claims) after application pursuant to clause (i)
above.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain a part of the Trust Fund. If within one year after the
second notice all Certificates shall not have been surrendered for cancellation,
the Class R Certificateholders shall be entitled to all unclaimed funds and
other assets of the Trust Fund which remain subject hereto.
Section 9.03 Additional Termination Requirements. In the event the
Servicers exercises its purchase option with respect to the Mortgage Loans as
provided in Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless the Trustee has been supplied with
an Opinion of Counsel, at the expense of the Servicers to the effect that the
failure to comply with the requirements of this Section 9.03 will not (i) result
in the imposition of taxes on "prohibited transactions" on any Trust REMIC as
defined in Section 860F of the Code, or (ii) cause any Trust REMIC to fail to
qualify as a REMIC at any time that any Certificates are Outstanding:
(a) The Trustee shall sell all of the assets of the Trust Fund to
the Servicers and, by no later than the next Distribution Date after such sale,
shall distribute to the Certificateholders the proceeds of such sale in complete
liquidation of each Trust REMIC; and
(b) The Trustee shall attach a statement to the final federal income
tax return for each Trust REMIC stating that pursuant to Treasury Regulations
Section 1.860F-1, the first day of the 90-day liquidation period for each such
Trust REMIC was the date on which the Trustee sold the assets of the Trust Fund
to the Servicers.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01 Amendment. This Agreement may be amended from time to
time by the Depositor, the Responsible Party, the Servicers and the Trustee
without the consent of any of the Certificateholders (i) to cure any ambiguity
or mistake, (ii) to correct any defective provision herein or to supplement any
provision herein which may be inconsistent with any other provision herein,
(iii) to add to the duties of the Depositor or the Servicers, (iv) to add any
other provisions with respect to matters or questions arising hereunder or (v)
to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement; provided that any amendment pursuant to clauses
(iv) or (v) above shall not, as evidenced by an Opinion of Counsel (which
Opinion of Counsel shall not be an expense of the Trustee or the Trust Fund),
adversely affect in any material respect the interests of any Certificateholder;
and provided, further, that any such amendment pursuant to clause (iv) or (v)
above shall not be deemed to adversely affect in any material respect the
interests of the Certificateholders if the Person requesting the amendment
obtains a letter from each Rating Agency stating that the amendment would not
result in the downgrading or withdrawal of the respective ratings then assigned
to the Certificates; it being understood and agreed that any such letter in and
of itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating. The Trustee, the Depositor, the Responsible Party and
the Servicers also may at any time and from time to time amend this Agreement,
but without the consent of the Certificateholders to modify, eliminate or add to
any of its provisions to such extent as shall be necessary or helpful to (i)
maintain the qualification of each Trust REMIC under the Code, (ii) avoid or
minimize the risk of the imposition of any tax on any Trust REMIC pursuant to
the Code that would be a claim at any time prior to the final redemption of the
Certificates or (iii) comply with any other requirements of the Code; provided
that the Trustee has been provided an Opinion of Counsel, which opinion shall be
an expense of the party requesting such opinion but in any case shall not be an
expense of the Trustee or the Trust Fund, to the effect that such action is
necessary or helpful to, as applicable, (i) maintain such qualification, (ii)
avoid or minimize the risk of the imposition of such a tax or (iii) comply with
any such requirements of the Code.
This Agreement may also be amended from time to time by the
Depositor, the Servicers, the Responsible Party and the Trustee with the consent
of the Holders of Certificates evidencing Percentage Interests aggregating not
less than 66(2)/3% of each Class of Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (i), without the consent of the Holders of Certificates of such Class
evidencing, as to such Class, Percentage Interests aggregating not less than
66(2)/3%, or (iii) reduce the aforesaid percentages of Certificates the Holders
of which are required to consent to any such amendment, without the consent of
the Holders of all such Certificates then Outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless (i) it shall
have first received an Opinion of Counsel, which opinion shall not be an expense
of the Trustee or the Trust Fund, to the effect that such amendment will not
cause the imposition of any tax on any Trust REMIC or the Certificateholders or
cause any such Trust REMIC to fail to qualify as a REMIC or the grantor trust to
fail to qualify as a grantor trust at any time that any Certificates are
Outstanding and (ii) the party seeking such amendment shall have provided
written notice to the Rating Agencies (with a copy of such notice to the
Trustee) of such amendment, stating the provisions of the Agreement to be
amended.
Notwithstanding the foregoing provisions of this Section 10.01, with
respect to any amendment that significantly modifies the permitted activities of
the Trustee or the Servicers, any Certificate beneficially owned by the
Depositor shall be deemed not to be Outstanding (and shall not be considered
when determining the percentage of Certificateholders consenting or when
calculating the total number of Certificates entitled to consent) for purposes
of determining if the requisite consents of Certificateholders under this
Section 10.01 have been obtained.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section 10.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund), satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with (including the
obtaining of any required consents); and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.
Notwithstanding the foregoing, any amendment to this Agreement shall
require the prior written consent of the Swap Provider if such amendment
materially and adversely affects the rights or interests of the Swap Provider.
Section 10.02 Recordation of Agreement; Counterparts. This Agreement
is subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
applicable Servicer at the direction and expense of the Depositor, but only upon
receipt of an Opinion of Counsel to the effect that such recordation materially
and beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 10.03 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.04 Intention of Parties. It is the express intent of the
parties hereto that the conveyance (i) of the Mortgage Loans by the Depositor
and (ii) of the Trust Fund by the Depositor to the Trustee each be, and be
construed as, an absolute sale thereof. It is, further, not the intention of the
parties that such conveyances be deemed a pledge thereof. However, in the event
that, notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, as the case may be, or if for any other reason this
Agreement is held or deemed to create a security interest in either such assets,
then (i) this Agreement shall be deemed to be a security agreement within the
meaning of the Uniform Commercial Code of the State of New York and (ii) the
conveyances provided for in this Agreement shall be deemed to be an assignment
and a grant by the Depositor to the Trustee, for the benefit of the
Certificateholders, of a security interest in all of the assets transferred,
whether now owned or hereafter acquired.
The Depositor, for the benefit of the Certificateholders, shall, to
the extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the Trust Fund, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of the Agreement. The Depositor shall arrange for
filing any Uniform Commercial Code continuation statements in connection with
any security interest granted or assigned to the Trustee for the benefit of the
Certificateholders.
Section 10.05 Notices. (a) The Trustee shall promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of a Servicer, the Countrywide
Servicer or the Trustee and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Section 2.03; and
(v) The final payment to Certificateholders.
(b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies (which may be provided electronically via the Trustee's website)
of the following:
(i) Each report to Certificateholders described in Section 4.03; and
(ii) Any notice of a purchase of a Mortgage Loan pursuant to Section
2.02, 2.03 or 3.11.
All directions, demands, consents and notices hereunder shall be in
writing (unless otherwise indicated in this paragraph) and shall be deemed to
have been duly given when delivered to: (a) in the case of the Depositor or the
Underwriter, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc. or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, (1) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - SPG Finance, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; (2) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Legal
Counsel (Securities), ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; (3)
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Servicing Oversight, ▇▇▇▇ ▇-▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇; (4) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Whole Loan
Operations, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; (5) ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ - RFPG, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and (6) in
the case of a direction or demand, notification to the following email
addresses: ▇▇▇▇.▇▇▇▇▇▇▇▇@ ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇,
▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; or such
other address as may be hereafter furnished to the other parties hereto by the
Depositor in writing; (b) in the case of JPMorgan, JPMorgan Chase Bank, National
Association, in care of Chase Home Finance LLC, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ Dunks, with a copy to: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; (c) First NLC, First NLC Financial Services,
LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such
other address as may be hereafter furnished to the other parties hereto and the
Swap Provider by First NLC in writing; (d) in the case of the HomEq Servicing
Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Portfolio Management, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to
HomEq Servicing Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Legal Department, Facsimile No.
(▇▇▇) ▇▇▇-▇▇▇▇, or such other address as may be hereafter furnished to the other
parties hereto and the Swap Provider by HomEq in writing; (e) in the case of the
Trustee, to Deutsche Bank National Trust Company, ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Trust Administration MS06X2 or such
other address as the Trustee may hereafter furnish to the other parties hereto;
provided, however, all reports, statements, certifications and information
required to be provided to the Trustee pursuant to Section 8.12 for filing shall
be electronically forwarded to ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇.▇▇▇, and the Swap Provider
in writing; (f) in the case of the Swap Provider, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital
Services Inc., Transaction Management Group, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Chief Legal Officer, Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇, or
such other address as the Swap Provider may hereafter furnish to the Depositor,
the Trustee and the Servicers; and (g) in the case of each of the Rating
Agencies, the address specified therefor in the definition corresponding to the
name of such Rating Agency. Notices to Certificateholders shall be deemed given
when mailed, first class postage prepaid, to their respective addresses
appearing in the Certificate Register.
Section 10.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 10.07 Assignment; Sales; Advance Facilities. Notwithstanding
anything to the contrary contained herein, except as provided in Section 6.04,
this Agreement may not be assigned by any Servicer without the prior written
consent of the Trustee and the Depositor; provided, however, each Servicer is
hereby authorized to enter into an Advance Facility under which (l) such
Servicer sells, assigns or pledges to an Advancing Person the Servicer's rights
under this Agreement to be reimbursed for any P&I Advances or Servicing Advances
and/or (2) an Advancing Person agrees to fund some or all P&I Advances or
Servicing Advances required to be made by such Servicer pursuant to this
Agreement. No consent of the Trustee, Certificateholders or any other party is
required before a Servicer may enter into an Advance Facility. Notwithstanding
the existence of any Advance Facility under which an Advancing Person agrees to
fund P&I Advances and/or Servicing Advances on the Servicer's behalf, such
Servicer shall remain obligated pursuant to this Agreement to make P&I Advances
and Servicing Advances pursuant to and as required by this Agreement, and shall
not be relieved of such obligations by virtue of such Advance Facility.
Reimbursement amounts shall consist solely of amounts in respect of
P&I Advances and/or Servicing Advances made with respect to the Mortgage Loans
for which a Servicer would be permitted to reimburse itself in accordance with
this Agreement, assuming such Servicer had made the related P&I Advance(s)
and/or Servicing Advance(s).
The applicable Servicer shall maintain and provide to any successor
Servicer a detailed accounting on a loan-by-loan basis as to amounts advanced
by, pledged or assigned to, and reimbursed to any Advancing Person. The
successor Servicer shall be entitled to rely on any such information provided by
the predecessor Servicer, and the successor Servicer shall not be liable for any
errors in such information.
An Advancing Person who purchases or receives an assignment or
pledge of the rights to be reimbursed for P&I Advances and/or Servicing
Advances, and/or whose obligations hereunder are limited to the funding of P&I
Advances and/or Servicing Advances shall not be required to meet the criteria
for qualification of a Subservicer set forth in this Agreement.
The documentation establishing any Advance Facility shall require
that reimbursement amounts distributed with respect to each Mortgage Loan be
allocated to outstanding ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances or Servicing Advances (as the
case may be) made with respect to that Mortgage Loan on a "first-in, first out"
(FIFO) basis. Such documentation shall also require the applicable Servicer to
provide to the related Advancing Person or its designee loan-by-loan information
with respect to each such reimbursement amount distributed to such Advancing
Person or Advance Facility trustee on each Distribution Date, to enable the
Advancing Person or Advance Facility trustee to make the FIFO allocation of each
such reimbursement amount with respect to each applicable Mortgage Loan. The
applicable Servicer shall remain entitled to be reimbursed by the Advancing
Person or Advance Facility trustee for all P&I Advances and Servicing Advances
funded by such Servicer to the extent the related rights to be reimbursed
therefor have not been sold, assigned or pledged to an Advancing Person.
Any amendment to this Section 10.07 or to any other provision of
this Agreement that may be necessary or appropriate to effect the terms of an
Advance Facility as described generally in this Section 10.07, including
amendments to add provisions relating to a successor Servicer, may be entered
into by the Trustee, the Depositor, the Responsible Party and the Servicer
without the consent of any Certificateholder, notwithstanding anything to the
contrary in this Agreement, upon receipt by the Trustee of an Opinion of Counsel
that such amendment has no material adverse effect on the Certificateholders or
written confirmation from the Rating Agencies that such amendment will not
adversely affect the ratings on the Certificates. Prior to entering into an
Advance Facility, such Servicer shall notify the lender under such facility in
writing that: (a) the Advances financed by and/or pledged to the lender are
obligations owed to such Servicer on a non-recourse basis payable only from the
cash flows and proceeds received under this Agreement for reimbursement of
Advances only to the extent provided herein, and the Trustee and the Trust are
not otherwise obligated or liable to repay any Advances financed by the lender;
(b) such Servicer will be responsible for remitting to the lender the applicable
amounts collected by it as reimbursement for Advances funded by the lender,
subject to the restrictions and priorities created in this Agreement; and (c)
the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between such applicable Servicer and
the lender.
Section 10.08 Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust created hereby, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
created hereby, or otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third-party by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as herein provided, and
unless the Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 10.09 Inspection and Audit Rights. Each Servicer agrees
that, on 5 Business Days prior notice, it will permit any representative of the
Depositor or the Trustee during such Person's normal business hours, to examine
all the books of account, records, reports and other papers of such Person
relating to the Mortgage Loans, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public accountants selected by
the Depositor or the Trustee and to discuss its affairs, finances and accounts
relating to the Mortgage Loans with its officers, employees and independent
public accountants (and by this provision each Servicer hereby authorizes said
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense of a Servicer incident to the exercise by
the Depositor or the Trustee of any right under this Section 10.09 shall be
borne by such Servicer.
Section 10.10 Certificates Nonassessable and Fully Paid. It is the
intention of the Depositor that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the interests in the Trust Fund
represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.
Section 10.11 Rule of Construction. Article and section headings are
for the convenience of the reader and shall not be considered in interpreting
this Agreement or the intent of the parties hereto.
Section 10.12 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE
LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY.
Section 10.13 Rights of the Swap Provider. The Swap Provider shall
be deemed a third-party beneficiary of this Agreement to the same extent as if
it were a party hereto and shall have the right to enforce its rights under this
Agreement.
Section 10.14 Regulation AB Compliance; Intent of the Parties;
Reasonableness. The parties hereto acknowledge that interpretations of the
requirements of Regulation AB may change over time, whether due to interpretive
guidance provided by the Commission or its staff, consensus among participants
in the asset-backed securities markets, advice of counsel, or otherwise, and
agree to comply with requests made by the Depositor in good faith for delivery
of information under these provisions on the basis of evolving interpretations
of Regulation AB. In connection with the Trust, each Servicer and the Trustee
shall cooperate fully with the Depositor to deliver to the Depositor (including
its assignees or designees), any and all statements, reports, certifications,
records and any other information available to such party and reasonably
necessary in the good faith determination of the Depositor to permit the
Depositor to comply with the provisions of Regulation AB, together with such
disclosures relating to each Servicer and the Trustee, as applicable, reasonably
believed by the Depositor to be necessary in order to effect such compliance.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC., as
Depositor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Director
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as Servicer
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
HOMEQ SERVICING CORPORATION,
as Servicer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: President
FIRST NLC FINANCIAL SERVICES, LLC,
as Responsible Party
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Sr. Vice Pres.
DEUTSCHE BANK NATIONAL TRUST COMPANY,
solely as Trustee and not in its
individual capacity
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Associate
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
SCHEDULE I
Mortgage Loan Schedule
(Delivered to Trustee and not attached to the Pooling and Servicing Agreement)
SCHEDULE II
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
Mortgage Pass-Through Certificates
Series 2006-2
Representations and Warranties of
HomEq Servicing Corporation, as Servicer
----------------------------------------
HomEq hereby makes the representations and warranties set forth in
this Schedule II to the Depositor and the Trustee as of the Closing Date.
Capitalized terms used but not otherwise defined in this Schedule II shall have
the meaning ascribed thereto in the Agreement to which this Schedule II is
attached.
(1) HomEq is duly organized as a corporation and is validly existing
and in good standing under the laws of the state of New Jersey, and is
licensed and qualified to transact any and all business contemplated by
this Pooling and Servicing Agreement to be conducted by HomEq in any state
in which a Mortgaged Property securing a Mortgage Loan is located or is
otherwise not required under applicable law to effect such qualification
and, in any event, is in compliance with the doing business laws of any
such State, to the extent necessary to ensure its ability to enforce each
Mortgage Loan and to service the Mortgage Loans in accordance with the
terms of this Pooling and Servicing Agreement;
(2) HomEq has the full power and authority to service each Mortgage
Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Pooling and Servicing
Agreement and has duly authorized by all necessary action on the part of
HomEq the execution, delivery and performance of this Pooling and
Servicing Agreement; and this Pooling and Servicing Agreement, assuming
the due authorization, execution and delivery thereof by the Depositor,
the Responsible Party, the other Servicers and the Trustee, constitutes a
legal, valid and binding obligation of HomEq, enforceable against HomEq in
accordance with its terms; except to the extent that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought;
(3) The execution and delivery of this Pooling and Servicing
Agreement by HomEq, the servicing of the Mortgage Loans required to be
serviced by HomEq hereunder, the consummation by HomEq of any other of the
transactions herein contemplated, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of HomEq and
will not (A) result in a breach of any term or provision of the
organizational documents of HomEq or (B) conflict with, result in a
breach, violation or acceleration of, or result in a default under, the
terms of any other material agreement or instrument to which HomEq is a
party or by which it may be bound, or any law, statute, rule, order,
regulation, judgment or decree applicable to HomEq or its property of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over HomEq; and HomEq is not a party to, bound by, or in
breach or violation of any indenture or other agreement or instrument, or
subject to or in violation of any law, statute, rule, order, regulation,
judgment or decree of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which (w) materially and
adversely affects or, to HomEq's knowledge, would in the future materially
and adversely affect, the ability of HomEq to perform its obligations
under this Pooling and Servicing Agreement, (x) materially and adversely
affects or, to HomEq's knowledge, would in the future materially and
adversely affect, the business, operations, financial condition,
properties or assets of HomEq taken as a whole, (y) impair the ability of
the Trust to realize on the Mortgage Loans, or (z) impair the value of the
Mortgage Loans;
(4) HomEq has the facilities, procedures, and experienced personnel
necessary for the sound servicing of mortgage loans of the same type as
the Mortgage Loans;
(5) HomEq does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Pooling and Servicing Agreement;
(6) No action, suit, proceeding or investigation is pending or
threatened against HomEq, before any court, administrative agency or other
tribunal asserting the invalidity of this Pooling and Servicing Agreement,
seeking to prevent the consummation of any of the transactions
contemplated by this Pooling and Servicing Agreement or which, either in
any one instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or
assets of HomEq, or in any material impairment of the right or ability of
HomEq to carry on its business substantially as now conducted, or in any
material liability on the part of HomEq, or which would draw into question
the validity of this Pooling and Servicing Agreement or the Mortgage Loans
or of any action taken or to be taken in connection with the obligations
of HomEq contemplated herein, or which would be likely to impair
materially the ability of HomEq to perform under the terms of this Pooling
and Servicing Agreement;
(7) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by HomEq of, or compliance by HomEq with, this Pooling and
Servicing Agreement or the servicing of the Mortgage Loans as evidenced by
the consummation by HomEq of the transactions contemplated by this Pooling
and Servicing Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained prior to the
Closing Date; and
With respect to each Mortgage Loan serviced by HomEq hereunder, to
the extent HomEq serviced such Mortgage Loan and to the extent HomEq provided
monthly reports to the three credit repositories, HomEq has fully furnished, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (i.e., favorable and unfavorable) on its
borrower credit files to Equifax, Experian, and Trans Union Credit Information
Company (three of the credit repositories), on a monthly basis.
SCHEDULE III-A
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
Mortgage Pass-Through Certificates
Series 2006-2
Representations and Warranties of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ABS Capital I Inc. as to the Mortgage Loans
------------------------------------------------
The Depositor hereby makes with respect the Mortgage Loans the
following representations and warranties to the Trustee, as of the Closing Date:
(a) Immediately prior to the transfer of the Mortgage Loans by the
Depositor to the Trust on the Closing Date, the Depositor had good
title to the Mortgage Loans, free and clear of any liens, charges,
claims or encumbrances whatsoever;
SCHEDULE III-B
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
Mortgage Pass-Through Certificates
Series 2006-2
Representations and Warranties of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ABS Capital I Inc. as to certain Mortgage Loans
------------------------------------------------
With respect the Mortgage Loans for which Acoustic Home Loans, LLC
("Acoustic") is specified as the Originator on the Mortgage Loan Schedule, the
Depositor hereby makes the following representations and warranties to the
Trustee, as of the Closing Date (or such other date as may be expressly set
forth below):
(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
related Closing Date for the Mortgage Loan under the terms of the Mortgage Note,
other than payments not yet 30 days delinquent, have been made and credited. No
payment required under the Mortgage Loan is 30 days or more delinquent nor has
any payment under the Mortgage Loan been 30 days or more delinquent at any time
since the origination of the Mortgage Loan. The first Monthly Payment shall be
made with respect to the Mortgage Loan on its related 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 defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. 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 earlier, to the day which precedes by
one month the related Due Date of the first installment of principal and
interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Trustee or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Trustee or to such
other Person as the Purchaser shall designate in writing and the terms of which
are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are provided for in the ▇▇▇▇▇▇ ▇▇▇ Guides or by
▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in Section 2.10 of
the Interim Servicing Agreement. If required by the National Flood Insurance Act
of 1968, as amended, each Mortgage Loan is covered by a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration as in effect which policy conforms to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac
requirements, as well as all additional requirements set forth in Section 2.10
of the Interim Servicing Agreement. All individual insurance policies contain a
standard mortgagee clause naming the Seller and its successors and assigns as
mortgagee, and all premiums thereon have been paid. The Mortgage obligates the
Mortgagor thereunder to maintain the hazard insurance policy at the Mortgagor's
cost and expense, and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such Mortgagor's cost
and expense, and to seek reimbursement therefor from the 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, is in full force and effect, and will be in full force and effect
and inure to the benefit of the Purchaser upon the consummation of the
transactions contemplated by this Agreement. Neither the Seller nor the related
Mortgagor has 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 or entity, and no such unlawful items have been received, retained
or realized by the Seller;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to the Illinois Interest Act and prepayment penalties, have been
complied with, the consummation of the transactions contemplated hereby will not
involve the violation of any such laws or regulations, and the Seller shall
maintain in its possession, available for the Purchaser's inspection, and shall
deliver to the Purchaser upon demand, evidence of compliance with all such
requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, 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
release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate that consists of a single parcel of real property with a detached
single family residence erected thereon, or a two- to four-family dwelling, or
an individual residential condominium unit in a condominium project, or an
individual unit in a planned unit development, or an individual unit in a
residential cooperative housing corporation; provided, however, that any
condominium unit, planned unit development or residential cooperative housing
corporation shall conform with the Underwriting Guidelines. No portion of the
Mortgaged Property is used for commercial purposes, and since the date of
origination, no portion of the Mortgaged Property has been used for commercial
purposes; provided, that Mortgaged Properties which contain a home office shall
not be considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner repair,
maintenance and/or household purposes. None of the Mortgaged Properties are
Manufactured Homes, log homes, mobile homes, geodesic domes or other unique
property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the
first mortgage on the Mortgaged Property;
(B) the lien of current real property taxes and assessments
not yet due and payable;
(C) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically 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; and
(D) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(n) LTV. No Mortgage Loan has an LTV greater than 100%;
(o) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance policy is
issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first (with respect
to a First Lien Loan) or second (with respect to a Second Lien Loan) priority
lien of the Mortgage 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 (A), (B) and (C) of paragraph (j) of this
Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the related Mortgage, including
the 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 or entity, and no such unlawful items have been received,
retained or realized by the Seller;
(p) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Seller nor any of its affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(q) 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 the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(r) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(s) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Payments on the Mortgage Loan commenced no more than seventy
days after funds were disbursed in connection with the Mortgage Loan. The
Mortgage Interest Rate as well as, in the case of an Adjustable Rate Mortgage
Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on the related
Mortgage Loan Schedule. Except with respect to Interest Only Loans during the
interest only period, the Mortgage Note is payable 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 thirty
years from commencement of amortization. Unless otherwise specified on the
related Mortgage Loan Schedule, the Mortgage Loan is payable on the first day of
each month. The Mortgage Loan does not require a balloon payment on its stated
maturity date;
(t) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(u) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇
Mae and no representations have been made to a Mortgagor that are inconsistent
with the mortgage instruments used;
(v) Occupancy of the Mortgaged Property. As of the related Closing
Date 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(w) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(x) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(y) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage,
the Assignment of Mortgage and any other documents required to be delivered
under this Agreement for each Mortgage Loan have been delivered to the Trustee.
The Seller is in possession of a complete, true and accurate Mortgage File in
compliance with Exhibit A hereto, except for such documents the originals of
which have been delivered to the Trustee;
(z) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(aa) Transfer of Mortgage Loans. The Assignment of Mortgage (except
with respect to any Mortgage that has been recorded in the name of MERS or its
designee) with respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located. The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller are not subject to the bulk
transfer or similar statutory provisions in effect in any applicable
jurisdiction;
(bb) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder and such provision is enforceable;
(cc) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(dd) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable 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. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first (with respect to a First Lien Loan)
or second (with respect to a Second Lien Loan) 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 ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(ee) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property;
(ff) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller and the Interim Servicer with respect to the Mortgage Loan have been in
all respects in compliance with Accepted Servicing Practices, applicable laws
and regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, all such payments are in the possession of,
or under the control of, the Seller or the Interim Servicer and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law and the provisions of the related
Mortgage Note and Mortgage. An escrow of funds is not prohibited by applicable
law and has been established in an amount sufficient to pay for every item that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due the Seller have
been capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest
Rate adjustments have been made in strict compliance with state and federal law
and the terms of the related Mortgage and Mortgage Note on the related Interest
Rate Adjustment Date. If, pursuant to the terms of the Mortgage Note, another
index was selected for determining the Mortgage Interest Rate, the same index
was used with respect to each Mortgage Note which required a new index to be
selected, and such selection did not conflict with the terms of the related
Mortgage Note. The Seller or the Interim Servicer executed and delivered any and
all notices required under applicable law and the terms of the related Mortgage
Note and Mortgage regarding the Mortgage Interest Rate and the Monthly Payment
adjustments. Any interest required to be paid pursuant to state, federal and
local law has been properly paid and credited;
(gg) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from an adjustable rate to a fixed rate;
(hh) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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;
(ii) No Violation of Environmental Laws. There is no pending action
or proceeding directly involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue; there is no violation of
any environmental law, rule or regulation with respect to the Mortgaged
Property; and nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a prerequisite to
use and enjoyment of said property;
(jj) Servicemembers' Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Relief Act or other similar state statute;
(kk) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property 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, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(ll) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(mm) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(nn) Credit Reporting. The Seller has caused to be fully furnished,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., favorable and unfavorable)
on its borrower credit files to Equifax and Experian, on a monthly basis;
(oo) Escrow Analysis. If applicable, with respect to each Mortgage,
the Seller has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(pp) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in strict compliance with Accepted Servicing Practices;
(qq) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) all ground lease rents, other payments, or assessments that
have become due have been paid; and (7) the use of leasehold estates for
residential properties is a widely accepted practice in the jurisdiction in
which the Mortgaged Property is located;
(rr) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note is identified on the
related Mortgage Loan Schedule. With respect to Mortgage Loans originated prior
to October 1, 2002, no such Prepayment Penalty may be imposed for a term in
excess of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(ss) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law;
(tt) Single-premium credit life insurance policy. In connection with
the origination of any Mortgage Loan, no proceeds from such Mortgage Loan were
used to finance or acquire a single-premium credit life insurance policy;
(uu) Qualified Mortgage. The Mortgage Loan is a "qualified mortgage"
under Section 860G(a)(3) of the Code;
(vv) Mortgagor Selection. No Mortgagor was encouraged or required to
select a Mortgage Loan product offered by the Originator which is a higher cost
product designed for less creditworthy mortgagors, unless at the time of the
Mortgage Loan's origination, such Mortgagor did not qualify taking into account
credit history and debt-to-income ratios for a lower-cost credit product then
offered by the Originator or any Affiliate of the Originator. If, at the time of
loan application, the Mortgagor may have qualified for a lower-cost credit
product then offered by any mortgage lending Affiliate of the Originator, the
Originator referred the related Mortgagor's application to such Affiliate for
underwriting consideration;
(ww) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(xx) Mortgage Loans with Prepayment Premiums. 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, (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 Originator, as servicer, shall not
impose such prepayment premium in any instance when the mortgage debt is
accelerated as the result of the related Mortgagor's default in making the
Mortgage Loan payments;
(yy) Purchase of Insurance. No Mortgagor was required to purchase
any single premium credit insurance policy (e.g., life, disability, property,
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,
disability, property, accident, unemployment, mortgage or health insurance) in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(zz) Disclosure of Fees and Charges. All fees and charges (including
finance charges), whether or not financed, assessed, collected or to be
collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(aaa) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
SCHEDULE III-C
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
Mortgage Pass-Through Certificates
Series 2006-2
Representations and Warranties of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ABS Capital I Inc. as to certain Mortgage Loans
------------------------------------------------
With respect the Mortgage Loans for which Aames Capital Corporation
("Aames") is specified as the Originator on the Mortgage Loan Schedule, the
Depositor hereby makes the following representations and warranties to the
Trustee, as of the Servicing Transfer Date (or such other date as may be
expressly set forth below):
(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
Servicing Transfer Date for the Mortgage Loan under the terms of the Mortgage
Note have been made and credited. No payment required under the Mortgage Loan is
30 days or more delinquent nor has any payment under the Mortgage Loan been 30
days or more delinquent at any time since the origination of the Mortgage Loan;
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. 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 earlier, to the day which precedes by
one month the Due Date of the first installment of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Trustee or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the issuer of any related PMI Policy and the
title insurer, if any, to the extent required by the policy, and its terms are
reflected on the related Mortgage Loan Schedule, if applicable. No Mortgagor has
been released, in whole or in part, except in connection with an assumption
agreement, approved by the issuer of any related PMI Policy and the issuer of
the title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Trustee or to such
other Person as the Purchaser shall designate in writing and the terms of which
are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor in any state or Federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are provided for in the ▇▇▇▇▇▇ ▇▇▇ Guides or by
▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in Section 2.10 of
the Servicing Agreement. If required by the National Flood Insurance Act of
1968, as amended, each Mortgage Loan is covered by a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration is in effect which policy conforms to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac,
as well as all additional requirements set forth in Section 2.10 of the
Servicing Agreement. All individual insurance policies contain a standard
mortgagee clause naming the Seller and its successors and assigns as mortgagee,
and all premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain the hazard insurance policy at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at such Mortgagor's cost and
expense, and to seek reimbursement therefor from the 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, is in full force and effect, and will be in full force and effect
and inure to the benefit of the Purchaser upon the consummation of the
transactions contemplated by this Agreement. The 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 or entity, and no such unlawful
items have been received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to prepayment penalties, have been complied with, the consummation of
the transactions contemplated hereby will not involve the violation of any such
laws or regulations, and the Seller shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, 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
release, cancellation, subordination or rescission. 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) Location and Type of Mortgaged Property. The Mortgaged Property
is located in the state identified in the related Mortgage Loan Schedule except
that with respect to real property located in jurisdictions in which the use of
leasehold estates for residential properties is a widely-accepted practice, the
Mortgaged Property may be a leasehold estate and consists of a single parcel of
real property with a detached single family residence erected thereon, or a two-
to four-family dwelling, or an individual residential condominium unit in a
low-rise condominium project, or an individual unit in a planned unit
development; provided, however, that any condominium unit or planned unit
development shall conform with the Underwriting Guidelines. In the case of a
Manufactured Home (i) the related manufactured dwelling and the related land are
subject to a Mortgage properly filed in the appropriate public recording office
and naming Seller as mortgagee, (ii) the applicable laws of the jurisdiction in
which the related Mortgaged Property is located will deem the manufactured
dwelling located on such Mortgaged Property to be a part of the real property on
which such dwelling is located, and (iii) such Manufactured Home Mortgage Loan
is (x) a qualified mortgage under Section 860G(a)(3) of the Internal Revenue
Code of 1986, as amended and (y) secured by manufactured housing treated as a
single family residence under Section 25(e)(10) of the Code. No portion of the
Mortgaged Property is used for commercial purposes, and since the date of
origination, no portion of the Mortgaged Property has been used for commercial
purposes; provided, that Mortgaged Properties which contain a home office shall
not be considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner repair,
maintenance and/or household purposes;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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. In no event
shall any Mortgage Loan be in a lien position more junior than a second lien.
The lien of the Mortgage is subject only to:
(1) with respect to a Second Lien Loan only, the lien of the
first mortgage on the Mortgaged Property;
(2) the lien of current real property taxes and assessments
not yet due and payable;
(3) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (a) specifically 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; and
(4) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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. The Seller has reviewed
all of the documents constituting the Servicing File and has made such inquiries
as it deems necessary to make and confirm the accuracy of the representations
set forth herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(n) LTV; PMI Policies. No Mortgage Loan has an LTV greater than
100%. All provisions of any PMI Policy have been and are being complied with,
such policy is in full force and effect, and all premiums due thereunder have
been paid. No action, inaction, or event has occurred and no state of facts
exists that has, or will result in the exclusion from, denial of, or defense to
coverage. If the Mortgage Loan provides for negative amortization or for the
potential for negative amortization, the PMI Policy, if any, insures any
increase in the Stated Principal Balance from the original balance of the
Mortgage Note. Each PMI Policy provides that any premiums will be paid by the
Seller or its successor from their own funds.
(o) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy or other generally acceptable form of policy or
insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance
policy is issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the first (with
respect to a First Lien Loan) or second (with respect to a Second Lien Loan)
priority lien of the Mortgage 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 (1), (2) and (3) of
paragraph (j) of this Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the 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 or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(p) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Seller nor any of its affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(q) 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 liens) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage;
(r) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(s) Origination; Payment Terms. Either (a) the Mortgage Loan was
originated by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, a
savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or other similar institution which is supervised and examined
by a federal or state authority, or (b) the following requirements have been met
with respect to the Mortgage Loan: the Seller meets the requirements set forth
in clause (a), and (i) such Mortgage Loan was underwritten in accordance with
standards established by the Seller, using application forms and related credit
documents approved by the Seller, (ii) the Seller approved each application and
the related credit documents before a commitment by the correspondent was
issued, and no such commitment was issued until the Seller agreed to fund such
Mortgage Loan, (iii) the closing documents for such Mortgage Loan were prepared
on forms approved by the Seller, and (iv) such Mortgage Loan was actually funded
by the Seller and was purchased by the Seller at closing or soon thereafter. The
documents, instruments and agreements submitted for loan underwriting were not
falsified and contain no untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the information
and statements therein not misleading. Principal payments on the Mortgage Loan
commenced no more than sixty days after funds were disbursed in connection with
the Mortgage Loan. The Mortgage Interest Rate as well as, with respect to
Adjustable Rate Mortgage Loans, the Lifetime Rate Cap and the Periodic Cap are
as set forth on Exhibit B to the related Assignment and Conveyance. The Mortgage
Note is payable 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 thirty years from commencement of
amortization. Unless otherwise specified on the description of pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 attached as Exhibit B to the related Assignment and Conveyance, the
Mortgage Loan is payable on the first day of each month. There are no
Convertible Mortgage Loans which contain a provision allowing the Mortgagor to
convert the Mortgage Note from an adjustable interest rate Mortgage Note to a
fixed interest rate Mortgage Note;
(t) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(u) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached hereto as Exhibit I). The Mortgage Note and Mortgage
are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae and no representations have
been made to a Mortgagor that are inconsistent with the mortgage instruments
used;
(v) Occupancy of the Mortgaged Property. As of the related Servicing
Transfer Date 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(w) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in clause (j) above;
(x) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(y) Delivery of Mortgage Documents. The Mortgage Note, the Mortgage,
the Assignment of Mortgage and any other documents required to be delivered
under the Custodial Agreement for each Mortgage Loan have been delivered to the
Trustee. The Seller is in possession of a complete, true and accurate Mortgage
File in compliance with Exhibit A hereto, except for such documents the
originals of which have been delivered to the Trustee;
(z) [Reserved];
(aa) Transfer of Mortgage Loans. The Assignment of Mortgage with
respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located. The transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Seller are not subject to the bulk transfer or similar
statutory provisions in effect in any applicable jurisdiction;
(bb) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and to the best of the Seller's knowledge, such
provision is enforceable;
(cc) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(dd) Consolidation of Future Advances. Any future 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.
The lien of the Mortgage securing the consolidated principal amount is expressly
insured as having first (with respect to a First Lien Loan) or second (with
respect to a Second Lien Loan) 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 ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan;
(ee) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property and the Seller
has no knowledge of any such proceedings in the future;
(ff) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in compliance
with Accepted Servicing Practices, applicable laws and regulations, and have
been in all respects legal and proper. With respect to escrow deposits and
Escrow Payments, 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. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item that remains unpaid and has been assessed but
is not yet due and payable. No escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized under the Mortgage or
the Mortgage Note.
With respect to each Adjustable Rate Mortgage Loan, all Mortgage
Interest Rate adjustments have been made in strict compliance with state and
federal law and the terms of the related Mortgage and Mortgage Note on the
related Interest Rate Adjustment Date. If, pursuant to the terms of the Mortgage
Note for an Adjustable Rate Mortgage Loan,, another index was selected for
determining the Mortgage Interest Rate, the same index was used with respect to
each Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller
executed and delivered any and all notices required under applicable law and the
terms of the related Mortgage Note and Mortgage regarding the Mortgage Interest
Rate and, with respect to each Adjustable Rate Mortgage Loan, the Monthly
Payment adjustments. Any interest required to be paid pursuant to state, federal
and local law has been properly paid and credited;
(gg) Conversion to Fixed Interest Rate. With respect to Adjustable
Rate Mortgage Loans, the Mortgage Loan is not a Convertible Mortgage Loan;
(hh) Other Insurance Policies. 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, 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 by any officer, director, or employee
of 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;
(ii) No Violation of Environmental Laws. There is no pending action
or proceeding directly involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue; there is no violation of
any environmental law, rule or regulation with respect to the Mortgaged
Property; and nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a prerequisite to
use and enjoyment of said property;
(jj) Servicemembers' Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Relief Act or other similar state statute;
(kk) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property 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, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(ll) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File or the credit file;
(mm) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property;
(nn) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the Servicing Transfer Date (whether or not known to the
Seller on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any primary mortgage
insurance (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured) whether arising out
of actions, representations, errors, omissions, negligence, or fraud of the
Seller, the related Mortgagor or any party involved in the application for such
coverage, including the appraisal, plans and specifications and other exhibits
or documents submitted therewith to the insurer under such insurance policy, or
for any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay;
(oo) Escrow Analysis. With respect to each Mortgage, the Seller has
within the last twelve months (unless such Mortgage was originated within such
twelve month period) analyzed the required Escrow Payments for each Mortgage and
adjusted the amount of such payments so that, assuming all required payments are
timely made, any deficiency will be eliminated on or before the first
anniversary of such analysis, or any overage will be refunded to the Mortgagor,
in accordance with RESPA and any other applicable law;
(pp) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in strict compliance with Accepted Servicing Practices;
(qq) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee simple interest in
the land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's consent and
the acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the
Mortgage with substantially similar protections; (3) the terms of such lease do
not (a) allow the termination thereof upon the lessee's default without the
holder of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (b) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence, (c)
prohibit the holder of the Mortgage from being insured (or receiving proceeds of
insurance) under the hazard insurance policy or policies relating to the
Mortgaged Property or (d) permit any increase in rent other than pre-established
increases set forth in the lease; (4) the original term of such lease is not
less than 15 years; (5) the term of such lease does not terminate earlier than
five years after the maturity date of the Mortgage Note; and (6) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold estates in
transferring ownership in residential properties is a widely accepted practice;
(rr) Prepayment Penalty. Each Mortgage Loan is subject to a
prepayment penalty as provided in the related Mortgage Note except as set forth
on Exhibit B to the related Assignment and Conveyance, and (i) with respect to
Mortgage Loans originated prior to October 1, 2002, no Mortgage Loan has a
prepayment penalty period in excess of five (5) years following origination, and
(ii) with respect to Mortgage Loans originated on or after October 1, 2002, no
Mortgage Loan has a prepayment penalty period in excess of three (3) years
following origination;
(ss) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law;
(tt) Single Premium Credit Life Insurance Policy. In connection with
the origination of any Mortgage Loan, no proceeds from any Mortgage Loan were
used to finance a single premium credit life insurance policy;
(uu) Qualified Mortgage. The Mortgage Loan is a qualified mortgage
under Section 860G(a)(3) of the Code;
(vv) [Reserved];
(ww) Fair Credit Reporting Act. The Seller has, in its capacity as
servicer for each Mortgage Loan, fully furnished, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company (three of the
credit repositories), on a monthly basis. This representation and warranty is a
Deemed Material and Adverse Representation;
(xx) Mortgagor Selection. No Mortgagor was encouraged or required to
select a mortgage loan product offered by the Mortgage Loan's originator which
is a higher cost product designed for less creditworthy mortgagors, unless at
the time of the Mortgage Loan's origination, such Mortgagor did not qualify
taking into account credit history and debt-to-income ratios for a lower-cost
credit product then offered by the Mortgage Loan's originator or any affiliate
of the Mortgage Loan's originator. If, at the time of loan application, the
Mortgagor may have qualified for a lower-cost credit product then offered by any
mortgage lending affiliate of the Mortgage Loan's originator, the Mortgage
Loan's originator referred the related Mortgagor's application to such affiliate
for underwriting consideration;
(yy) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(zz) Mortgage Loans with Prepayment Premiums. 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, (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 Seller, as servicer shall not
impose such prepayment premium in any instance when the mortgage debt is
accelerated as the result of the related Mortgagor's default in making the
Mortgage Loan payments;
(aaa) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid single
premium credit life, disability, accident or health insurance policy in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(bbb) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(ccc) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
SCHEDULE IV
Mortgage Pass-Through Certificates,
Series 2006-2
Representations and Warranties of
First NLC as to the First NLC Mortgage Loans
--------------------------------------------
First NLC hereby makes the representations and warranties set forth
in this Schedule V, as to First NLC Mortgage Loans only, to the Depositor, the
applicable Servicer and the Trustee, as of March 30, 2006 (the "Securitization
Closing Date") (unless otherwise expressly indicated). Capitalized terms used
but not otherwise defined in the Agreement to which this Schedule V is attached
shall have the meanings ascribed thereto in the First NLC Purchase Agreement.
(a) Mortgage Loans as Described. The information set forth in the
related Mortgage Loan Schedule is complete, true and correct;
(b) Payments Current. Except with respect to First NLC Mortgage
Loans representing approximately 2.08% of the aggregate principal balance of
First NLC Mortgage Loans as of the Cut-off Date, as of the Servicing Transfer
Date, all payments required to be made up to the related Closing Date for the
Mortgage Loan under the terms of the Mortgage Note, other than payments not yet
30 days delinquent, have been made and credited. No payment required under the
Mortgage Loan is 30 days or more delinquent nor has any payment under the
Mortgage Loan been 30 days or more delinquent at any time since the origination
of the Mortgage Loan. The first Monthly Payment shall be made with respect to
the Mortgage Loan on its related Due Date or within the grace period, all in
accordance with the terms of the related Mortgage Note;
(c) No Outstanding Charges. Except with respect to First NLC
Mortgage Loans representing approximately 2.08% of the aggregate principal
balance of First NLC Mortgage Loans as of the Cut-off Date, as of the Servicing
Transfer Date, there are no defaults in complying with the terms of the
Mortgage, and all taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or an escrow of funds has been established
in an amount sufficient to pay for every such item which remains unpaid and
which has been assessed but is not yet due and payable. 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 earlier, to the day which precedes by one month the
related Due Date of the first installment of principal and interest;
(d) Original Terms Unmodified. As of the Servicing Transfer Date,
the terms of the Mortgage Note and Mortgage have not been impaired, waived,
altered or modified in any respect, from the date of origination except by a
written instrument which has been recorded, if necessary to protect the
interests of the Sponsor, and which has been delivered to the Trustee or to such
other Person as the Sponsor shall designate in writing, and the terms of which
are reflected in the related Mortgage Loan Schedule. The substance of any such
waiver, alteration or modification has been approved by the title insurer, if
any, to the extent required by the policy, and its terms are reflected on the
related Mortgage Loan Schedule, if applicable. No Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement, approved
by the issuer of the title insurer, to the extent required by the policy, and
which assumption agreement is part of the Mortgage Loan File delivered to the
Trustee or to such other Person as the Sponsor shall designate in writing and
the terms of which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. As of the Servicing Transfer Date, pursuant to
the terms of the Mortgage, all buildings or other improvements upon the
Mortgaged Property are insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage and such other hazards as are provided for in
the ▇▇▇▇▇▇ ▇▇▇ Guides or by ▇▇▇▇▇▇▇ Mac, as well as all additional requirements
set forth in Section 2.10 of the Interim Servicing Agreement. If required by the
National Flood Insurance Act of 1968, as amended, each Mortgage Loan is covered
by a flood insurance policy meeting the requirements of the current guidelines
of the Federal Insurance Administration as in effect which policy conforms to
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac requirements, as well as all additional requirements
set forth in Section 2.10 of the Interim Servicing Agreement. All individual
insurance policies contain a standard mortgagee clause naming the Seller and its
successors and assigns as mortgagee, and all premiums thereon have been paid.
The Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such insurance
at such Mortgagor's cost and expense, and to seek reimbursement therefor from
the 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, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Sponsor upon
the consummation of the transactions contemplated by this Agreement. The 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 or entity,
and no such unlawful items have been received, retained or realized by the
Seller;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to prepayment penalties, have been complied with, the consummation of
the transactions contemplated hereby will not involve the violation of any such
laws or regulations, and the Seller shall maintain in its possession, available
for the Sponsor's inspection, and shall deliver to the Sponsor upon demand,
evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. As of the Servicing Transfer Date,
the Mortgage has not been satisfied, canceled, 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 release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. As of the Servicing Transfer Date, no portion of
the Mortgaged Property is used for commercial purposes, and since the date of
origination, no portion of the Mortgaged Property has been used for commercial
purposes; provided, that Mortgaged Properties which contain a home office shall
not be considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner repair,
maintenance and/or household purposes. None of the Mortgaged Properties are
Manufactured Homes, log homes, mobile homes, geodesic domes or other unique
property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the
first mortgage on the Mortgaged Property;
(B) the lien of current real property taxes and assessments
not yet due and payable;
(C) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically 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; and
(D) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Sponsor;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. Immediately prior to the Closing Date, subject to the
lien of a warehouse lender that was released prior to the closing of any
Mortgage Loan sale, the Seller was the sole owner of record and holder of the
Mortgage Loan and the indebtedness evidenced by each Mortgage Note and upon the
sale of the Mortgage Loans to the Sponsor, the Seller retained the Mortgage
Files or any part thereof with respect thereto not delivered to the Trustee, the
Sponsor or the Sponsor's designee, in trust only for the purpose of servicing
and supervising the servicing of each Mortgage Loan. Immediately prior to the
Closing Date, the Mortgage Loan was not assigned or pledged, and the Seller had
good, indefeasible and marketable title thereto, and had full right to transfer
and sell the Mortgage Loan to the Sponsor free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest, and had full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to the First NLC Purchase Agreement and following the
sale of each Mortgage Loan, the Sponsor owned such Mortgage Loan free and clear
of any encumbrance, equity, participation interest, lien, pledge, charge, claim
or security interest. The Seller intended to relinquish all rights to possess,
control and monitor the Mortgage Loan. After the related Closing Date, the
Seller had no right to modify or alter the terms of the sale of the Mortgage
Loan and the Seller had no obligation or right to repurchase the Mortgage Loan
or substitute another Mortgage Loan, except as provided in this Agreement;
(n) Doing Business. As of the Closing Date, 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) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located,
and (2) either (i) organized under the laws of such state, or (ii) qualified to
do business in such state, or (iii) a federal savings and loan association, a
savings bank or a national bank having a principal office in such state, or (3)
not doing business in such state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance policy is
issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first (with respect
to a First Lien Loan) or second (with respect to a Second Lien Loan) priority
lien of the Mortgage 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 (A), (B) and (C) of paragraph (j) of this
Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the related Mortgage, including
the 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 or entity, and no such unlawful items have been received,
retained or realized by the Seller;
(q) No Defaults. Except with respect to First NLC Mortgage Loans
representing approximately 2.08% of the aggregate principal balance of First NLC
Mortgage Loans as of the Cut-off Date, as of the Servicing Transfer Date, other
than payments due but not yet 30 days or more delinquent, there is no default,
breach, violation or event which would permit 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 which would permit acceleration, and neither
the Seller nor any of its affiliates nor any of their respective predecessors,
have waived any default, breach, violation or event which would permit
acceleration;
(r) No Mechanics' Liens. As of the Servicing Transfer Date, 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 the law could give
rise to such liens) affecting the related Mortgaged Property which are or may be
liens prior to, or equal or coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 thirty years from commencement of amortization. Unless otherwise
specified on the related Mortgage Loan Schedule, the Mortgage Loan is payable on
the first day of each month. The Mortgage Loan does not require a balloon
payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇
Mae and no representations have been made to a Mortgagor that are inconsistent
with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Sponsor to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can reasonably be expected
to cause private institutional investors who invest in mortgage loans similar to
the Mortgage Loan to regard the Mortgage Loan as an unacceptable investment,
cause the Mortgage Loan to become delinquent, or adversely affect the value or
marketability of the Mortgage Loan, or cause the Mortgage Loans to prepay during
any period materially faster or slower than the mortgage loans originated by the
Seller generally;
(aa) Delivery of Mortgage Documents. As of the Servicing Transfer
Date, the Mortgage Note, the Mortgage, the Assignment of Mortgage and any other
documents required to be delivered under the Custodial Agreement for each
Mortgage Loan have been delivered to the Trustee. The Seller is in possession of
a complete, true and accurate Mortgage File in compliance with Exhibit A to the
Purchase Agreement, except for such documents the originals of which have been
delivered to the Trustee;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage with
respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located. The transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Seller are not subject to the bulk transfer or similar
statutory provisions in effect in any applicable jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable 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. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first (with respect to a First Lien Loan)
or second (with respect to a Second Lien Loan) 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 ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings. As
of the Servicing Transfer Date, there is no proceeding pending or threatened for
the total or partial condemnation of the Mortgaged Property. The Mortgaged
Property is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended and each Mortgaged Property is in good repair. There have
not been any condemnation proceedings with respect to the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. As of the Servicing Transfer Date, the origination, servicing and
collection practices used by the Seller and the Interim Servicer with respect to
the Mortgage Loan have been in all respects in compliance with Accepted
Servicing Practices, applicable laws and regulations, and have been in all
respects legal and proper. With respect to escrow deposits and Escrow Payments,
all such payments are in the possession of, or under the control of, the Seller
or the Interim Servicer and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item that remains unpaid and has been assessed but
is not yet due and payable. No escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized under the Mortgage or
the Mortgage Note. All Mortgage Interest Rate adjustments have been made in
strict compliance with state and federal law and the terms of the related
Mortgage and Mortgage Note on the related Interest Rate Adjustment Date. If,
pursuant to the terms of the Mortgage Note, another index was selected for
determining the Mortgage Interest Rate, the same index was used with respect to
each Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller or the
Interim Servicer executed and delivered any and all notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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;
(ll) No Violation of Environmental Laws. As of the Closing Date, and
to the best of the Seller's knowledge as of the Servicing Transfer Date, there
is no pending action or proceeding directly involving the Mortgaged Property in
which compliance with any environmental law, rule or regulation is an issue;
there is no violation of any environmental law, rule or regulation with respect
to the Mortgage Property; and nothing further remains to be done to satisfy in
full all requirements of each such law, rule or regulation constituting a
prerequisite to use and enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. As of the Servicing Transfer
Date, the Mortgagor has not notified the Seller, and the Seller has no knowledge
of any relief requested or allowed to the Mortgagor under the Relief Act or
other similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property 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, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required or customary in the jurisdiction in which the
Mortgaged Property is located, the original lender has filed for record a
request for notice of any action by the related senior lienholder, and the
Seller has notified the senior lienholder in writing of the existence of the
Second Lien Loan and requested notification of any action to be taken against
the Mortgagor by the senior lienholder. Either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File;
(rr) Credit Reporting. As of the Servicing Transfer Date, the Seller
has caused to be fully furnished, in accordance with the Fair Credit Reporting
Act and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian,
and Trans Union Credit Information Company (three of the credit repositories),
on a monthly basis;
(ss) Escrow Analysis. As of the Servicing Transfer Date, if
applicable, with respect to each Mortgage, the Seller has within the last twelve
months (unless such Mortgage was originated within such twelve month period)
analyzed the required Escrow Payments for each Mortgage and adjusted the amount
of such payments so that, assuming all required payments are timely made, any
deficiency will be eliminated on or before the first anniversary of such
analysis, or any overage will be refunded to the Mortgagor, in accordance with
RESPA and any other applicable law;
(tt) Prior Servicing. As of the Servicing Transfer Date , each
Mortgage Loan has been serviced in all material respects in strict compliance
with Accepted Servicing Practices;
(uu) No Default Under First Lien. As of the Servicing Transfer Date,
with respect to each Second Lien Loan, the related First Lien Loan related
thereto is in full force and effect, and there is no default, breach, violation
or event which would permit acceleration existing under such first Mortgage or
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 which would permit acceleration thereunder;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage;
(ww) No Failure to Cure Default. As of the Servicing Transfer Date,
the Seller has not received a written notice of default of any senior mortgage
loan related to the Mortgaged Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Sponsor, that Seller has full right and authority
and is not precluded by law or contract from furnishing such information to the
Sponsor and the Sponsor is not precluded from furnishing the same to any
subsequent or prospective Sponsor of such Mortgage. The Seller shall hold the
Sponsor harmless from any and all damages, losses, costs and expenses (including
attorney's fees) arising from disclosure of credit information in connection
with the Sponsor's secondary marketing operations and the purchase and sale of
mortgages or Servicing Rights thereto;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) as of the Closing Date and to the Seller's Knowledge as of the
Servicing Transfer Date, all ground lease rents, other payments, or assessments
that have become due have been paid; and (7) the use of leasehold estates for
residential properties is a widely accepted practice in the jurisdiction in
which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note is identified on the
related Mortgage Loan Schedule. With respect to Mortgage Loans originated prior
to October 1, 2002, no such Prepayment Penalty may be imposed for a term in
excess of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through July 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law;
(bbb) [Reserved];
(ccc) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" under Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Either (x) each Mortgage Loan is covered
by a paid in full, life of loan, tax service contract, and such contract is
transferable, or (y) on the related Closing Date the Sponsor shall net $75.00
per Mortgage Loan from the related Purchase Price to cover the cost of such a
tax service contract;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Sponsor) 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;
(ggg) Mortgagor Bankruptcy. As of the Servicing Transfer Date, the
Mortgagor has not filed and will not file a bankruptcy petition or has not
become the subject and will not become the subject of involuntary bankruptcy
proceedings or has not consented to or will not consent to the filing of a
bankruptcy proceeding against it or to a receiver being appointed in respect of
the related Mortgaged Property;
(hhh) No Prior Offer. As of the Closing Date, the Mortgage Loan has
not previously been offered for sale;
(iii) [Reserved];
(jjj) Mortgagor Selection. No Mortgagor was encouraged or required
to select a Mortgage Loan product offered by the Originator which is a higher
cost product designed for less creditworthy mortgagors, unless at the time of
the Mortgage Loan's origination, such Mortgagor did not qualify taking into
account credit history and debt-to-income ratios for a lower-cost credit product
then offered by the Originator or any Affiliate of the Originator. If, at the
time of loan application, the Mortgagor may have qualified for a lower-cost
credit product then offered by any mortgage lending Affiliate of the Originator,
the Originator referred the related Mortgagor's application to such Affiliate
for underwriting consideration;
(kkk) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(lll) Mortgage Loans with Prepayment Premiums. 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, (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 Originator, as servicer, shall not
impose such prepayment premium in any instance when the mortgage debt is
accelerated as the result of the related Mortgagor's default in making the
Mortgage Loan payments;
(mmm) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, unemployment, property, accident or
health insurance policy in connection with the origination of the Mortgage Loan.
No proceeds from any Mortgage Loan were used to purchase single premium credit
insurance policies as part of the origination of, or as a condition to closing,
such Mortgage Loan;
(nnn) Points and Fees. All points and fees related to each Mortgage
Loan were disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation;
(ooo) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(ppp) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
(1) For purposes of this Schedule V, the following capitalized terms
shall have the respective meanings set forth below:
(2) Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
(3) High Cost Loan: A Mortgage Loan (a) covered by the Home
Ownership and Equity Protection Act of 1994, (b) classified as a "high
cost home," "threshold," "covered," (excluding New Jersey "Covered Home
Loans" as that term is defined in clause (1) of the definition of that
term in the New Jersey Home Ownership Security Act of 2002 that were
originated between November 26, 2003 and July 7, 2004) "high risk home,"
or "predatory" loan under any other applicable federal, state or local law
(or a similarly classified loan using different terminology under a law
imposing heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points and/or fees)
or (c) categorized as High Cost pursuant to Appendix E of Standard &
Poor's Glossary. For avoidance of doubt, the parties agree that this
definition shall apply to any law regardless of whether such law is
presently, or in the future becomes, the subject of judicial review or
litigation.
(4) For the purpose of this schedule, "Servicing Transfer Date"
means, the date on which servicing of such Mortgage Loan was transferred
to the applicable Servicer as set forth on the Mortgage Loan Schedule.
SCHEDULE V
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
Mortgage Pass Through Certificates,
Series 2006-2
Representations and Warranties of JPMorgan, as Servicer
-------------------------------------------------------
JPMorgan hereby makes the representations and warranties set forth
in this Schedule VI to the Depositor and the Trustee, as of the Closing Date.
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings ascribed thereto in this Schedule V to which this Schedule V is
attached.
(1) JPMorgan is a national banking association duly organized,
validly existing and in good standing under the federal laws of the United
States of America and is duly authorized and qualified to transact any and
all business contemplated by this Pooling and Servicing Agreement to be
conducted by JPMorgan in any state in which a Mortgaged Property securing
a Mortgage Loan serviced by JPMorgan is located or is otherwise not
required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such State, to
the extent necessary to ensure its ability to enforce each Mortgage Loan
serviced by JPMorgan and to service each Mortgage Loan serviced by
JPMorgan in accordance with the terms of this Pooling and Servicing
Agreement;
(2) JPMorgan has the full power and authority to service each
Mortgage Loan serviced by JPMorgan, and to execute, deliver and perform,
and to enter into and consummate the transactions contemplated by this
Pooling and Servicing Agreement and has duly authorized by all necessary
action on the part of JPMorgan the execution, delivery and performance of
this Pooling and Servicing Agreement; and this Pooling and Servicing
Agreement, assuming the due authorization, execution and delivery thereof
by the Depositor, the Responsible Party, the other Servicer and the
Trustee, constitutes a legal, valid and binding obligation of JPMorgan,
enforceable against JPMorgan in accordance with its terms, except to the
extent that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(3) The execution and delivery of this Pooling and Servicing
Agreement by JPMorgan, the servicing of the Mortgage Loans serviced by
JPMorgan by JPMorgan hereunder, the consummation by JPMorgan of any other
of the transactions herein contemplated, and the fulfillment of or
compliance with the terms hereof are in the ordinary course of business of
JPMorgan and will not (A) result in a breach of any term or provision of
the organizational documents of JPMorgan or (B) conflict with, result in a
breach, violation or acceleration of, or result in a default under, the
terms of any other material agreement or instrument to which JPMorgan is a
party or by which it may be bound, or any statute, order or regulation
applicable to JPMorgan of any court, regulatory body, administrative
agency or governmental body having jurisdiction over JPMorgan; and
JPMorgan is not a party to, bound by, or in breach or violation of any
indenture or other agreement or instrument, or subject to or in violation
of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it,
which materially and adversely affects or, to JPMorgan's knowledge, would
in the future materially and adversely affect, (x) the ability of JPMorgan
to perform its obligations under this Pooling and Servicing Agreement or
(y) the business, operations, financial condition, properties or assets of
JPMorgan taken as a whole;
(4) JPMorgan is an approved seller/servicer for ▇▇▇▇▇▇ Mae, an
approved servicer for ▇▇▇▇▇▇▇ Mac in good standing and is a HUD approved
non supervised mortgagee;
(5) No litigation is pending against JPMorgan that would materially
and adversely affect the execution, delivery or enforceability of this
Pooling and Servicing Agreement or the ability of JPMorgan to service the
Mortgage Loans serviced by JPMorgan or to perform any of its other
obligations hereunder in accordance with the terms hereof;
(6) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by JPMorgan of, or compliance by JPMorgan with, this Pooling
and Servicing Agreement or the consummation by JPMorgan of the
transactions contemplated by this Pooling and Servicing Agreement, except
for such consents, approvals, authorizations or orders, if any, that have
been obtained prior to the Closing Date;
(7) JPMorgan has the facilities, procedures and experienced
personnel necessary for the sound servicing of mortgage loans of the same
type as the Mortgage Loans serviced by JPMorgan; and
(8) With respect to each Mortgage Loan serviced by JPMorgan, to the
extent JPMorgan serviced such Mortgage Loan serviced by JPMorgan and to
the extent JPMorgan provided monthly reports to the three credit
repositories, JPMorgan has fully furnished, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and
complete information (i.e., favorable and unfavorable) on its borrower
credit files to Equifax, Experian, and Trans Union Credit Information
Company (three of the credit repositories), on a monthly basis.
EXHIBIT A
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), AND CERTAIN OTHER
ASSETS.
AS LONG AS THE INTEREST RATE SWAP AGREEMENT IS IN EFFECT, EACH BENEFICIAL OWNER
OF THIS CERTIFICATE, OR ANY INTEREST THEREIN, SHALL BE DEEMED TO HAVE
REPRESENTED THAT EITHER (I) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR ARRANGEMENT
SUBJECT TO SECTION 406 OF ERISA, A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A
PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") MATERIALLY
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE, NOR A PERSON ACTING ON
BEHALF OF ANY SUCH PLAN OR ARRANGEMENT NOR USING THE ASSETS OF ANY SUCH PLAN OR
ARRANGEMENT OR (II) THE ACQUISITION AND HOLDING OF THIS CERTIFICATE ARE ELIGIBLE
FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER AT LEAST ONE OF PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 84-14, ▇▇▇▇ ▇▇-▇, ▇▇▇▇ ▇▇-▇, ▇▇▇▇ 95-60 OR PTCE 96-23
OR A COMPARABLE EXEMPTION AVAILABLE UNDER SIMILAR LAW.
Certificate No. : A-1-[ ]
A-2-[ ]
A-3-[ ]
A-4-[ ]
M-1-[ ]
M-2-[ ]
M-3-[ ]
M-4-[ ]
M-5-[ ]
M-6-[ ]
B-1-[ ]
B-2-[ ]
B-3-[ ]
Cut-off Date : March 1, 2006
First Distribution Date : April 25, 2006
Initial Certificate Balance
of this Certificate
("Denomination") : $[ ]
Initial Certificate Balances
of all Certificates of this
Class : [A-1] $401,660,000
[A-2] $111,040,000
[A-3] $163,635,000
[A-4] $92,765,000
[M-1] $37,857,000
[M-2] $34,869,000
[M-3] $20,921,000
[M-4] $18,431,000
[M-5] $16,936,000
[M-6] $16,438,000
[B-1] $14,944,000
[B-2] $14,446,000
[B-3] $10,460,000
CUSIP : [Class A-1] [61744C YL 4]
[Class A-2] [61744C YM 2]
[Class A-3] [61744C YN 0]
[Class A-4] [61744C YP 5]
[Class M-1] [61744C YQ 3]
[Class M-2] [61744C YR 1]
[Class M-3] [61744C YS 9]
[Class M-4] [61744C YT 7]
[Class M-5] [61744C YU 4]
[Class M-6] [61744C YV 2]
[Class B-1] [61744C YW 0]
[Class B-2] [61744C YX 8]
[Class B-3] [61744C YY 6]
ISIN : [Class A-1] [US61744CYL44]
[Class A-2] [US61744CYM27]
[Class A-3] [US61744CYN00]
[Class A-4] [US61744CYP57]
[Class M-1] [US61744CYQ31]
[Class M-2] [US61744CYR14]
[Class M-3] [US61744CYS96]
[Class M-4] [US61744CYT79]
[Class M-5] [US61744CYU43]
[Class M-6] [US61744CYV26]
[Class B-1] [US61744CYW09]
[Class B-2] [US61744CYX81]
[Class B-3] [US61744CYY64]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2
Mortgage Pass-Through Certificates, Series 2006-2
[Class A-][Class M-][Class B-]
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class.
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Trustee or any other party to the Agreement referred to below or
any of their respective affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that [_____________] is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital
I Inc., as depositor (the "Depositor"), the HomEq Servicing Corporation, as a
servicer, JPMorgan Chase Bank, National Association, as a servicer, First NLC
Financial Services, LLC, as a responsible party, and Deutsche Bank National
Trust Company, as trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually authenticated by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed.
Dated:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity, but
solely as Trustee
By:____________________________________
Authenticated:
By _____________________________________
Authorized Signatory of
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2 Mortgage Pass-Through
Certificates, of the Series specified on the face hereof (herein collectively
called the "Certificates"), and representing a beneficial ownership interest in
the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the Business Day immediately preceding such Distribution
Date, provided, however, that for any Definitive Certificates, the Record Date
shall be the last Business Day of the month next preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the parties to the Agreement with the consent of the Holders of Certificates
affected by such amendment evidencing the requisite Percentage Interest, as
provided in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the offices designated by the Trustee for such
purposes, accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee nor any
such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, HomEq or JPMorgan, individually or together, will have
the option to repurchase, in whole, from the Trust Fund all remaining Mortgage
Loans and all property acquired in respect of the Mortgage Loans at a purchase
price determined as provided in the Agreement. The obligations and
responsibilities created by the Agreement will terminate as provided in Section
9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
_____________________________________________________________________________.
______________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _____________, or, if mailed by check, to ______________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
EXHIBIT B
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE A REPRESENTATION LETTER TO THE EFFECT THAT
SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR A PLAN
SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO MATERIALLY SIMILAR
PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") OR A PERSON
INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF SUCH A PLAN. IN THE EVENT THAT
SUCH REPRESENTATION IS VIOLATED, OR ANY ATTEMPT IS MADE TO TRANSFER TO A PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF ERISA, A PLAN SUBJECT TO SECTION 4975 OF
THE CODE OR A PLAN SUBJECT TO SIMILAR LAW, OR A PERSON ACTING ON BEHALF OF ANY
SUCH PLAN OR ARRANGEMENT OR USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT,
SUCH ATTEMPTED TRANSFER OR ACQUISITION SHALL BE VOID AND OF NO EFFECT.
Certificate No. : P-1
Cut-off Date : March 1, 2006
First Distribution Date : April 25, 2006
Percentage Interest of
this Certificate
("Denomination") : [___]%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2
Mortgage Pass-Through Certificates, Series 2006-2
Class P
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class.
Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Trustee or
any other party to the Agreement referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that [_____________], is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital
I Inc., as depositor (the "Depositor"), the HomEq Servicing Corporation, as a
servicer, JPMorgan Chase Bank, National Association, as a servicer, First NLC
Financial Services, LLC, as a responsible party, and Deutsche Bank National
Trust Company, as trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
This Certificate does not have a Pass-Through Rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
offices designated by the Trustee for such purposes, or such other location
specified in the notice to Certificateholders.
No transfer of a Certificate of this Class shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and any applicable state securities
laws or is made in accordance with the Securities Act and such laws. In the
event of any such transfer, the Trustee shall require the transferor to execute
a transferor certificate (in substantially the form attached to the Pooling and
Servicing Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
Securities Act or is being made pursuant to the Securities Act, which Opinion of
Counsel shall be an expense of the transferor.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA, Section 4975 of the Code or any materially
similar provisions of applicable federal, state or local law ("Similar Law"), or
a person acting on behalf of or investing plan assets of any such plan, which
representation letter shall not be an expense of the Trustee.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually authenticated by an
authorized signatory of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity, but
solely as Trustee
By:____________________________________
Authenticated:
By _____________________________________
Authorized Signatory of
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2 Mortgage Pass-Through
Certificates, of the Series specified on the face hereof (herein collectively
called the "Certificates"), and representing a beneficial ownership interest in
the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the parties to the Agreement with the consent of the Holders of Certificates
affected by such amendment evidencing the requisite Percentage Interest, as
provided in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the offices designated by the Trustee for such
purposes, accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee, nor any
such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, HomEq or JPMorgan, individually or together, will have
the option to repurchase, in whole, from the Trust Fund all remaining Mortgage
Loans and all property acquired in respect of the Mortgage Loans at a purchase
price determined as provided in the Agreement. The obligations and
responsibilities created by the Agreement will terminate as provided in Section
9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a
like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
_____________________________________________________________________________.
______________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _____________, or, if mailed by check, to ______________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
EXHIBIT C
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN FOUR "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED (I) TO A
PERSON OTHER THAN A PERMITTED TRANSFEREE IN COMPLIANCE WITH SECTION 5.02(C) OF
THE AGREEMENT, OR (II) UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE A
REPRESENTATION LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA"), OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR
A PLAN SUBJECT TO MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE OR
LOCAL LAW ("SIMILAR LAW") OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS
OF SUCH A PLAN. IN THE EVENT THAT SUCH REPRESENTATION IS VIOLATED, OR ANY
ATTEMPT IS MADE TO TRANSFER TO A PLAN OR ARRANGEMENT SUBJECT TO SECTION 406 OF
ERISA, A PLAN SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO SIMILAR
LAW, OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR USING THE
ASSETS OF ANY SUCH PLAN OR ARRANGEMENT, SUCH ATTEMPTED TRANSFER OR ACQUISITION
SHALL BE VOID AND OF NO EFFECT.
Certificate No. : R-1
Cut-off Date : March 1, 2006
First Distribution Date : April 25, 2006
Percentage Interest of
this Certificate
("Denomination") : 100%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2
Mortgage Pass-Through Certificates, Series 2006-2
Class R
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class.
Distributions in respect of this Certificate is distributable
monthly as set forth herein. This Class R Certificate has no Certificate Balance
and is not entitled to distributions in respect of principal or interest. This
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Trustee or any other party to the Agreement
referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that [_____________] is the registered owner of the
Percentage Interest specified above of any monthly distributions due to the
Class R Certificates pursuant to a Pooling and Servicing Agreement dated as of
the Cut-off Date specified above (the "Agreement") among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS
Capital I Inc., as depositor (the "Depositor"), the HomEq Servicing Corporation,
as a servicer, JPMorgan Chase Bank, National Association, as a servicer, First
NLC Financial Services, LLC, as a responsible party, and Deutsche Bank National
Trust Company, as trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the
Trust Fund will be made only upon presentment and surrender of this Class R
Certificate at the offices designated by the Trustee for such purposes or such
other location specified in the notice to Certificateholders.
No transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan or
arrangement subject to Section 406 of ERISA, a plan or arrangement subject to
Section 4975 of the Code or a plan subject to Similar Law, or a person acting on
behalf of any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such transfer, which representation letter shall not be an
expense of the Trustee, the Servicers, the Depositor or the Trust Fund. In the
event that such representation is violated, or any attempt is made to transfer
to a plan or arrangement subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code or a plan subject to Similar Law, or a person acting on
behalf of any such plan or arrangement or using the assets of any such plan or
arrangement, such attempted transfer or acquisition shall be void and of no
effect.
Each Holder of this Class R Certificate shall be deemed by the
acceptance or acquisition an Ownership Interest in this Class R Certificate to
have agreed to be bound by the following provisions, and the rights of each
Person acquiring any Ownership Interest in this Class R Certificate are
expressly subject to the following provisions: (i) each Person holding or
acquiring any Ownership Interest in this Class R Certificate shall be a
Permitted Transferee and shall promptly notify the Trustee of any change or
impending change in its status as a Permitted Transferee, (ii) no Ownership
Interest in this Class R Certificate may be registered on the Closing Date or
thereafter transferred, and the Trustee shall not register the Transfer of this
Certificate unless, in addition to the certificates required to be delivered to
the Trustee under Section 5.02(b) of the Agreement, the Trustee shall have been
furnished with a Transfer Affidavit of the initial owner or the proposed
transferee in the form attached as Exhibit G to the Agreement, (iii) each Person
holding or acquiring any Ownership Interest in this Class R Certificate shall
agree (A) to obtain a Transfer Affidavit from any other Person to whom such
Person attempts to Transfer its Ownership Interest this Class R Certificate, (B)
to obtain a Transfer Affidavit from any Person for whom such Person is acting as
nominee, trustee or agent in connection with any Transfer of this Class R
Certificate, (C) not to cause income with respect to the Class R Certificate to
be attributable to a foreign permanent establishment or fixed base, within the
meaning of an applicable income tax treaty, of such Person or any other U.S.
Person and (D) not to Transfer the Ownership Interest in this Class R
Certificate or to cause the Transfer of the Ownership Interest in this Class R
Certificate to any other Person if it has actual knowledge that such Person is a
Non-Permitted Transferee and (iv) any attempted or purported Transfer of the
Ownership Interest in this Class R Certificate in violation of the provisions
herein shall be absolutely null and void and shall vest no rights in the
purported Transferee.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually authenticated by an
authorized signatory of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity, but
solely as Trustee
By:____________________________________
Authenticated:
By _____________________________________
Authorized Signatory of
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2 Mortgage Pass-Through
Certificates, of the Series specified on the face hereof (herein collectively
called the "Certificates"), and representing a beneficial ownership interest in
the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the parties to the Agreement with the consent of the Holders of Certificates
affected by such amendment evidencing the requisite Percentage Interest, as
provided in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the offices designated by the Trustee for such
purposes, accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee nor any
such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, HomEq or JPMorgan, individually or together, will have
the option to repurchase, in whole, from the Trust Fund all remaining Mortgage
Loans and all property acquired in respect of the Mortgage Loans at a purchase
price determined as provided in the Agreement. The obligations and
responsibilities created by the Agreement will terminate as provided in Section
9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
_____________________________________________________________________________.
______________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _____________, or, if mailed by check, to ______________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
EXHIBIT D
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN TWO "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), AND CERTAIN OTHER
ASSETS.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEROR DELIVERS TO THE TRUSTEE A TRANSFEROR LETTER IN THE FORM OF
EXHIBIT H TO THE AGREEMENT REFERRED TO HEREIN AND EITHER (I) THE TRUSTEE
RECEIVES A RULE 144A LETTER IN THE FORM OF EXHIBIT I TO THE AGREEMENT REFERRED
TO HEREIN OR (II) THE TRUSTEE RECEIVES AN OPINION OF COUNSEL, DELIVERED AT THE
EXPENSE OF THE TRANSFEROR, THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR A PLAN
SUBJECT TO SECTION 4975 OF THE CODE OR A PLAN SUBJECT TO APPLICABLE FEDERAL,
STATE OR LOCAL LAW ("SIMILAR LAW") MATERIALLY SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE OR A PERSON INVESTING ON BEHALF OF OR WITH PLAN
ASSETS OF SUCH A PLAN, OR, IF THE TRANSFEREE IS AN INSURANCE COMPANY, A
REPRESENTATION LETTER THAT IT IS USING THE ASSETS OF ITS GENERAL ACCOUNT AND
THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE ARE COVERED UNDER SECTIONS I
AND III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 OR AN OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE, TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS
CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION
WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY SIMILAR LAW AND
WILL NOT SUBJECT THE TRUSTEE, THE DEPOSITOR OR THE SERVICERS TO ANY OBLIGATION
IN ADDITION TO THOSE EXPRESSLY UNDERTAKEN IN THE AGREEMENT OR TO ANY LIABILITY.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I
OF ERISA, SECTION 4975 OF THE CODE OR SIMILAR LAW WITHOUT THE REPRESENTATION
LETTER OR OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE
SHALL BE VOID AND OF NO EFFECT.
Certificate No. : X-1
Cut-off Date : March 1, 2006
First Distribution Date : April 25, 2006
Percentage Interest of this
Certificate ("Denomination") : [___]%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2
Mortgage Pass-Through Certificates, Series 2006-2
Class X
evidencing a percentage interest in the distributions allocable to
the Certificates of the above-referenced Class.
Distributions in respect of this Certificate are distributable
monthly as set forth herein. This Certificate does not evidence an obligation
of, or an interest in, and is not guaranteed by the Depositor, the Trustee or
any other party to the Agreement referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that [_____________], is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital
I Inc., as depositor (the "Depositor"), HomEq Servicing Corporation, as a
servicer, JPMorgan Chase Bank, National Association, as a servicer, First NLC
Financial Services, LLC, as a responsible party, and Deutsche Bank National
Trust Company, as trustee ( "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
This Certificate does not have a Certificate Balance or Pass-Through
Rate and will be entitled to distributions only to the extent set forth in the
Agreement. In addition, any distribution of the proceeds of any remaining assets
of the Trust will be made only upon presentment and surrender of this
Certificate at the offices designated by the Trustee for such purposes or such
other location specified in the notice to Certificateholders.
No transfer of a Certificate of this Class shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and any applicable state securities
laws or is made in accordance with the Securities Act and such laws. In the
event of any such transfer, the Trustee shall require the transferor to execute
a transferor certificate (in substantially the form attached to the Pooling and
Servicing Agreement) and deliver either (i) a Rule 144A Letter, in either case
substantially in the form attached to the Agreement, or (ii) a written Opinion
of Counsel to the Trustee that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
Securities Act or is being made pursuant to the Securities Act, which Opinion of
Counsel shall be an expense of the transferor.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code or any materially similar provisions of applicable Federal, state or local
law ("Similar Law") or a person acting on behalf of or investing plan assets of
any such plan, which representation letter shall not be an expense of the
Trustee, or (ii) if the transferee is an insurance company, a representation
letter that it is purchasing such Certificates with the assets of its general
account and that the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60, or (iii) in the case of a Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA, or a plan or arrangement subject to Section 4975 of the Code (or
comparable provisions of any subsequent enactments) or a plan subject to Similar
Law, or a trustee of any such plan or any other person acting on behalf of any
such plan or arrangement or using such plan's or arrangement's assets, an
Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel shall
not be an expense of the Trustee, the Servicers or the Trust Fund, addressed to
the Trustee, to the effect that the purchase or holding of such Certificate will
not constitute or result in a non-exempt prohibited transaction within the
meaning of ERISA, Section 4975 of the Code or any Similar Law and will not
subject the Depositor, the Trustee or the Servicers to any obligation in
addition to those expressly undertaken in the Agreement or to any liability.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually authenticated by an
authorized signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated:
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity, but
solely as Trustee
By:____________________________________
Authenticated:
By _____________________________________
Authorized Signatory of
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2 Mortgage Pass-Through
Certificates, of the Series specified on the face hereof (herein collectively
called the "Certificates"), and representing a beneficial ownership interest in
the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified on the face hereof, to the Person in whose
name this Certificate is registered at the close of business on the applicable
Record Date in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount required to be distributed to
Holders of Certificates of the Class to which this Certificate belongs on such
Distribution Date pursuant to the Agreement. The Record Date applicable to each
Distribution Date is the last Business Day of the month next preceding the month
of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the offices designated by the Trustee for such
purposes or such other location specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the parties to the Agreement with the consent of the Holders of Certificates
affected by such amendment evidencing the requisite Percentage Interest, as
provided in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the offices designated by the Trustee for such
purposes, accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Trustee nor any
such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than or equal to 10% of the Cut-off Date
Pool Principal Balance, HomEq or JPMorgan, individually or together, will have
the option to repurchase, in whole, from the Trust Fund all remaining Mortgage
Loans and all property acquired in respect of the Mortgage Loans at a purchase
price determined as provided in the Agreement. The obligations and
responsibilities created by the Agreement will terminate as provided in Section
9.01 of the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
_____________________________________________________________________________.
______________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _____________, or, if mailed by check, to ______________________.
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________.
This information is provided by ___________________________________,
the assignee named above, or __________________________________________________,
as its agent.
EXHIBIT E
FORM OF INITIAL CERTIFICATION OF [TRUSTEE]
[date]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
JPMorgan Chase Bank, National Association
c/o Chase Home Finance LLC
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
HomEq Servicing Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Deutsche Bank National Trust Company,
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
First NLC Financial Services, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of March 1, 2006, among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as Depositor, HomEq Servicing
Corporation, as a Servicer, JPMorgan Chase Bank, National
Association, as a Servicer, and Deutsche Bank National Trust
Company, as Trustee, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust, Series
2006-2
------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), for each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan listed
in the attached schedule), it has received:
(i) the original Mortgage Note, endorsed as provided in the
following form: "Pay to the order of ________, without recourse";
and
(ii) a duly executed assignment of the Mortgage (which may be
included in a blanket assignment or assignments), except with
respect to MERS Designated Mortgage Loans.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Notwithstanding anything herein to the contrary, the Trustee has made no
determination and makes no representations as to whether (i) any endorsement is
sufficient to transfer all right, title and interest of the party so endorsing,
as Noteholder or assignee thereof, in and to that Mortgage Note or (ii) any
assignment is in recordable form or sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which the assignment
relates.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
[DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee]
By:____________________________________
Name:_______________________________
Title:______________________________
EXHIBIT F
FORM OF DOCUMENT CERTIFICATION AND EXCEPTION
REPORT OF [TRUSTEE]
[date]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
JPMorgan Chase Bank, National Association
c/o Chase Home Finance LLC
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
HomEq Servicing Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Deutsche Bank National Trust Company,
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
First NLC Financial Services, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of March 1, 2006, among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as Depositor, HomEq Servicing
Corporation, as a Servicer, JPMorgan Chase Bank, National
Association, as a Servicer, First NLC Financial Services, LLC, as
Responsible Party, and Deutsche Bank National Trust Company, as
Trustee, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust, Series 2006-2
-----------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or listed on the
attached Document Exception Report) it has received:
(i) The original Mortgage Note, endorsed in the form provided in
Section 2.01 of the Pooling and Servicing Agreement, with all intervening
endorsements showing a complete chain of endorsement from the originator
to the last endorsee.
(ii) The original recorded Mortgage.
(iii) Except with respect to MERS Designated Mortgage Loans, a duly
executed assignment of the Mortgage in the form provided in Section 2.01
of the Pooling and Servicing Agreement; or, if the Responsible Party has
certified or the Trustee otherwise knows that the related Mortgage has not
been returned from the applicable recording office, a copy of the
assignment of the Mortgage (excluding information to be provided by the
recording office).
(iv) The original or duplicate original recorded assignment or
assignments of the Mortgage showing a complete chain of assignment from
the originator to the last endorsee.
(v) The original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy
thereof certified by the title company.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) the information set forth in items (1) solely with
respect to the Mortgage Loan number, (2) and (9) of the Mortgage Loan Schedule
and items (1), (9) and (17) of the Data Tape Information accurately reflects
information set forth in the Custodial File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review of the Custodial File
specifically required in the Pooling and Servicing Agreement. The Trustee makes
no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each Mortgage
File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, or
(ii) the collectability, insurability, effectiveness or suitability of any such
Mortgage Loan. Notwithstanding anything herein to the contrary, the Trustee has
made no determination and makes no representations as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as Noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or sufficient to effect the assignment
of and transfer to the assignee thereof, under the Mortgage to which the
assignment relates.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
[DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee]
By:____________________________________
Name:_______________________________
Title:______________________________
EXHIBIT G
RESIDUAL TRANSFER AFFIDAVIT
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2,
Mortgage Pass-Through Certificates,
Series 2006-2
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
(1) The undersigned is an officer of ___________________, the
proposed Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement (the
"Agreement"), relating to the above-referenced Series, by and among ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ABS Capital I Inc., as Depositor, HomEq Servicing Corporation, as a
Servicer, JPMorgan Chase Bank, National Association, as a Servicer, and Deutsche
Bank National Trust Company, as Trustee (the "Trustee"). Capitalized terms used,
but not defined herein shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this affidavit
on behalf of the Transferee for the benefit of the Depositor and the Trustee.
(2) The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate for its own account. The Transferee has no
knowledge that any such affidavit is false.
(3) The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificate to Persons that are
Non-Permitted Transferees; (ii) such tax will be imposed on the transferor, or,
if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is a Non-Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
(4) The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is a
Non-Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
(5) The Transferee has reviewed the provisions of Section 5.02(c) of
the Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
(6) The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is a Non-Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit H to the Agreement (a "Transferor Certificate") to the
effect that, among other things, such Transferee has no actual knowledge that
the Person to which the Transfer is to be made is a Non-Permitted Transferee.
(7) The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Certificate. The Transferee has historically paid its debts as they have
come due and intends to pay its debts as they come due in the future. The
Transferee intends to pay all taxes due with respect to the Certificate as they
become due.
(8) The Transferee's taxpayer identification number is __________.
(9) The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
(10) The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.
(11) The Transferee will not cause income from the Residual
Certificate to be attributable to a foreign permanent establishment or fixed
base, within the meaning of an applicable income tax treaty, of the Transferee
or any other U.S. Person.
(12) Check the applicable paragraph:
|_| The present value of the anticipated tax liabilities
associated with holding the Certificate, as applicable, does
not exceed the sum of:
(i) the present value of any consideration given to the Transferee
to acquire such Certificate;
(ii) the present value of the expected future distributions on such
Certificate; and
(iii) the present value of the anticipated tax savings associated
with holding such Certificate as the related REMIC generates
losses.
For purposes of this calculation, (i) the Transferee is assumed to
pay tax at the highest rate currently specified in Section 11(b) of the Code
(but the tax rate in Section 55(b)(1)(B) of the Code may be used in lieu of the
highest rate specified in Section 11(b) of the Code if the Transferee has been
subject to the alternative minimum tax under Section 55 of the Code in the
preceding two years and will compute its taxable income in the current taxable
year using the alternative minimum tax rate) and (ii) present values are
computed using a discount rate equal to the short-term Federal rate prescribed
by Section 1274(d) of the Code for the month of the transfer and the compounding
period used by the Transferee.
|_| The transfer of the Certificate complies with U.S. Treasury
Regulations Sections 1.860E-1(c)(5) and (6) and, accordingly,
(i) the Transferee is an "eligible corporation," as defined in
U.S. Treasury Regulations Section 1.860E-1(c)(6)(i), as to
which income from the Certificate will only be taxed in the
United States;
(ii) at the time of the transfer, and at the close of the
Transferee's two fiscal years preceding the year of the
transfer, the Transferee had gross assets for financial
reporting purposes (excluding any obligation of a person
related to the Transferee within the meaning of U.S. Treasury
Regulations Section 1.860E-1(c)(6)(ii)) in excess of $100
million and net assets in excess of $10 million;
(iii) the Transferee will transfer the Certificate only to another
"eligible corporation," as defined in U.S. Treasury
Regulations Section 1.860E-1(c)(6)(i), in a transaction that
satisfies the requirements of Sections 1.860E-1(c)(4)(i), (ii)
and (iii) and Section 1.860E-1(c)(5) of the U.S. Treasury
Regulations; and
(iv) the Transferee determined the consideration paid to it to
acquire the Certificate based on reasonable market assumptions
(including, but not limited to, borrowing and investment
rates, prepayment and loss assumptions, expense and
reinvestment assumptions, tax rates and other factors specific
to the Transferee) that it has determined in good faith.
None of the above.
(13) The Transferee is not an employee benefit plan that is subject
to Title I of ERISA or a plan that is subject to Section 4975 of the Code or a
plan subject to any Federal, state or local law that is substantially similar to
Title I of ERISA or Section 4975 of the Code, and the Transferee is not acting
on behalf of or investing plan assets of such a plan.
* * *
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this day of , 20__.
_______________________________________
Print Name of Transferee
By:____________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named __________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ___________ of the Transferee, and acknowledged that he executed the same
as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this day of , 20__.
___________________________________
NOTARY PUBLIC
My Commission expires the __ day
of _________, 20__
EXHIBIT H
FORM OF TRANSFEROR CERTIFICATE
__________, 20__
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Deutsche Bank National Trust Company,
as Trustee
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust, Series 2006-2, Mortgage
Pass-Through Certificates, Series 2006-2, Class
----------------------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) to the extent we are disposing of a Residual Certificate, (i) we have no
knowledge the Transferee is a Non-Permitted Transferee, (ii) after conducting a
reasonable investigation of the financial condition of the Transferee, we have
no knowledge and no reason to believe that the Transferee will not pay all taxes
with respect to the Residual Certificates as they become due and (iii) we have
no reason to believe that the statements made in paragraphs 7, 10 and 11 of the
Transferee's Residual Transfer Affidavit are false.
Very truly yours,
_________________________________________
Print Name of Transferor
By:______________________________________
Authorized Officer
EXHIBIT I
FORM OF RULE 144A LETTER
____________, 20__
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Deutsche Bank National Trust Company,
as Trustee
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan, Series 2006-2, Mortgage
Pass-Through Certificates, Series 2006-2, Class
--------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either we are purchasing a Class A-1, Class ▇-▇,
▇▇▇▇▇ ▇-▇, Class A-4, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class B-1, Class B-2 or Class B-3 Certificate or we are not an
employee benefit plan that is subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or a plan or arrangement that
is subject to Section 4975 of the Internal Revenue Code of 1986, as amended, or
a plan subject to materially similar provisions of applicable federal, state or
local law, nor are we acting on behalf of any such plan or arrangement nor using
the assets of any such plan or arrangement to effect such acquisition or, with
respect to a Class X Certificate, the purchaser is an insurance company that is
purchasing this certificate with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and the purchase and holding
of such Certificates are covered under Sections I and III of PTCE 95-60, (e) we
have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, and (f) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. We are aware that the sale to us is being
made in reliance on Rule 144A. We are acquiring the Certificates for our own
account or for resale pursuant to Rule 144A and further, understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the
Securities Act.
In connection with our purchase of the Certificates, we acknowledge
and agree that (i) none of you nor any of your affiliates is acting as a
fiduciary or financial or investment adviser for us; (ii) we are not relying
(for purposes of making any investment decision or otherwise) upon any advice,
counsel or representations (whether written or oral) of any of you or your
affiliates with respect to the Certificates; (iii) none of you nor any of your
affiliates has given to us (directly or indirectly through any other person) any
assurance, guarantee or representation whatsoever as to the expected or
projected success, profitability, return, performance, result, effect,
consequence, or benefit (including legal, regulatory, tax, financial, accounting
or otherwise) of our purchase of the Certificates; (iv) we have performed our
own diligence to the extent we have deemed necessary and we have consulted with
our own legal, regulatory, tax, business, investment, financial and accounting
advisers to the extent that we have deemed necessary, and we have made our own
investment decisions based upon our own judgment and upon any advice from such
advisers as we have deemed necessary and appropriate and not upon any view
expressed by any of you or your affiliates with respect to the Certificates; (v)
none of you nor any of your affiliates will be obligated to make payments on the
Certificates in the event that the assets of the trust is insufficient to
provide for such payments; (vi) you and your affiliates may have positions and
may effect transactions in any of the Series 2006-2 securities; and (vii) we are
familiar with the Certificates and have reviewed and understand the related
pooling and servicing agreement, the prospectus supplement and prospectus
relating to Series 2006-2 and the other material transaction documents related
thereto.
ANNEX 1 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because (i) the Buyer owned
and/or invested on a discretionary basis $_____________________ (1) in
securities (except for the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A and (ii) the Buyer satisfies the criteria in the
category marked below.
-------------------------
(1) Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
____ Corporation, etc. The Buyer is a corporation (other than
a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended.
____ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth
of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached
hereto.
____ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution,
which is supervised and examined by a State or Federal
authority having supervision over any such institutions
or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth
of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached
hereto.
____ Broker dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
____ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is the
writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is subject
to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the
District of Columbia.
____ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or
any agency or instrumentality of the State or its
political subdivisions, for the benefit of its
employees.
____ ERISA Plan. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
____ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
____ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958.
____ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of
the Investment Advisors Act of 1940.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
_______________________________________
Print Name of Transferee
By:____________________________________
Name:
Title:
Date:__________________________________
ANNEX 2 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
____ The Buyer owned $ in securities (other than the excluded
securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $ in securities (other than
the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
_______________________________________
Print Name of Transferee
By:____________________________________
Name:
Title:
IF AN ADVISER:
_______________________________________
Print Name of Buyer
Date:__________________________________
EXHIBIT J
FORM OF REQUEST FOR RELEASE
(for Trustee)
To: Trustee
Re: In connection with the administration of the Mortgage Loans held by
you as the Trustee on behalf of the Certificateholders pursuant to
the Pooling and Servicing Agreement, dated as of March 1, 2006,
among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as Depositor, First NLC
Financial Services, LLC, as a Responsible Party, HomEq Servicing
Corporation, as a Servicer, JPMorgan Chase Bank, National
Association, as a Servicer, and Deutsche Bank National Trust
Company, as Trustee, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust, Series
2006-2, we request the release, and acknowledge receipt, of the
(Custodial File/[specify documents]) for the Mortgage Loan described
below, for the reason indicated.
--------------------------------------------------------------------
Mortgagor's Name, Address & Zip Code:
-------------------------------------
Mortgage Loan Number:
---------------------
Send Custodial File to:
-----------------------
Delivery Method (check one)
---------------------------
____1. Regular mail
____2. Overnight courier (Tracking information: )
If neither box 1 nor 2 is checked, regular mail shall be assumed.
Reason for Requesting Documents (check one)
____1. Mortgage Loan Paid in Full. (The Servicer hereby certifies that all
amounts received in connection therewith have been credited to its
Collection Account as provided in the Pooling and Servicing
Agreement.)
____2. Mortgage Loan Repurchase Pursuant to Subsection 2.03 of the Pooling
and Servicing Agreement. (The Servicer hereby certifies that the
repurchase price has been credited to Collection Account as provided
in the Pooling and Servicing Agreement.)
____3. Mortgage Loan Liquidated By _________________. (The Servicer hereby
certifies that all proceeds of foreclosure, insurance, condemnation
or other liquidation have been finally received and credited to its
Collection Account pursuant to the Pooling and Servicing Agreement.)
____4. Mortgage Loan in Foreclosure.
____5. Other (explain).____________________________________________________
If box 1, 2 or 3 above is checked, and if all or part of the Custodial File was
previously released to us, please release to us our previous request and receipt
on file with you, as well as any additional documents in your possession
relating to the specified Mortgage Loan.
If box 4 or 5 above is checked, upon our return of all of the above documents to
you as the Trustee, please acknowledge your receipt by signing in the space
indicated below, and returning this form if requested by us.
[SERVICER]
By:____________________________________
Name:
Title:
Date:
[ACKNOWLEDGED AND AGREED:
[___________________________],
as [__________]
By:__________________________________
Name:
Title:
Date: ]
EXHIBIT K
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Sponsor and which shall be retained by Servicer or delivered to and retained by
the Trustee:
(i) The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _____________, without recourse" and signed
(which may be by facsimile signature) in the name of the last endorsee by
an authorized officer. To the extent that there is no room on the face of
a Mortgage Note for endorsements, the endorsement may be contained on an
allonge, unless the Trustee is advised by the Responsible Party (pursuant
to the applicable Purchase Agreement) that state law does not so allow.
(ii) The original of any guaranty executed in connection with the
Mortgage Note
(iii) The original Mortgage with evidence of recording thereon or a
certified true copy of such Mortgage submitted for recording. If the
original Mortgage cannot be delivered with evidence of recording thereon
on or prior to the Closing Date because of a delay caused by the public
recording office where such Mortgage has been delivered for recordation or
because such Mortgage has been lost or because such public recording
office retains the original recorded Mortgage, the Responsible Party shall
deliver or cause to be delivered to the Trustee, as a photocopy of such
Mortgage certified by the Responsible Party to be a true and complete copy
of such Mortgage and shall forward to the Trustee such original recorded
Mortgage within 14 days following the Responsible Party's receipt of such
Mortgage from the applicable public recording office; or in the case of a
Mortgage where a public recording office retains the original recorded
Mortgage or in the case where a Mortgage is lost after recordation in a
public recording office, a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.
(iv) The originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
(v) Except with respect to each MERS Designated Mortgage Loan, the
original Assignment of Mortgage for each Mortgage Loan endorsed in blank.
(vi) The originals of all intervening assignments of Mortgage (if
any) evidencing a complete chain of assignment from the applicable
originator to the last endorsee with evidence of recording thereon or a
certified true copy of such intervening assignments of Mortgage submitted
for recording, or if any such intervening assignment has not been returned
from the applicable recording office or has been lost or if such public
recording office retains the original recorded assignments of Mortgage,
the Responsible Party shall deliver or cause to be delivered a photocopy
of such intervening assignment, certified by the Responsible Party to be a
true and complete copy of such intervening assignment and shall forward to
the Trustee such original recorded intervening assignment within 14 days
following the Responsible Party's receipt of such from the applicable
public recording office; or in the case of an intervening assignment where
a public recording office retains the original recorded intervening
assignment or in the case where an intervening assignment is lost after
recordation in a public recording office, a copy of such intervening
assignment certified by such public recording office to be a true and
complete copy of the original recorded intervening assignment.
(vii) The original mortgagee title insurance policy or attorney's
opinion of title and abstract of title, or, in the event such original
title policy is unavailable, a certified true copy of the related policy
binder or commitment for title certified to be true and complete by the
title insurance company.
(viii) The original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Mortgage (if
provided).
(ix) Residential loan application.
(x) Mortgage Loan closing statement.
(xi) Verification of employment and income, if applicable.
(xii) Verification of acceptable evidence of source and amount of
downpayment.
(xiii) Credit report on Mortgagor.
(xiv) Residential appraisal report.
(xv) Photograph of the Mortgaged Property.
(xvi) Survey of the Mortgaged Property.
(xvii) Copy of each instrument necessary to complete identification
of any exception set forth in the exception schedule in the title policy,
i.e., map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
(xviii) All required disclosure statements.
(xix) If required in an appraisal, termite report, structural
engineer's report, water potability and septic certification.
(xx) Sales contract, if applicable.
Evidence of payment of taxes and insurance, insurance claim files,
correspondence, current and historical computerized data files (which include
records of tax receipts and payment history from the date of origination), and
all other processing, underwriting and closing papers and records which are
customarily contained in a mortgage loan file and which are required to document
the Mortgage Loan or to service the Mortgage Loan.
EXHIBIT L
FORM OF CERTIFICATION
TO BE PROVIDED WITH FORM 10-K
-----------------------------
Re: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2 (the "Trust"), Mortgage
Pass-Through Certificates, Series 2006-2, issued pursuant to the
Pooling and Servicing Agreement, dated as of March 1, 2006, among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as Depositor, First NLC Financial
Services, LLC, as Responsible Party, HomEq Servicing Corporation, as
Servicer, JPMorgan Chase Bank, National Association, as Servicer,
and Deutsche Bank National Trust Company, as Trustee, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Home Equity Loan Trust, Series 2006-2
--------------------------------------------------------------------
I, [identify the certifying individual], certify that:
(1) I have reviewed this annual report on Form 10-K ("Annual
Report"), and all reports on Form 10-D (collectively with this Annual Report,
the "Reports") required to be filed in respect of period covered by this Annual
Report, of the Trust;
(2) Based on my knowledge, the Reports, taken as a whole, do 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 Annual Report;
(3) Based on my knowledge, all of the distribution, servicing and
other information required to be provided under Form 10-D for the period covered
by this Annual Report is included in the Reports;
(4) Based on my knowledge and the compliance statements required in
this Annual Report under Item 1123 of Regulation AB, and except as disclosed in
the Reports, the Servicers have fulfilled their obligations under the Pooling
and Servicing Agreement in all material respects; and
(5) All of the reports on assessment of compliance with servicing
criteria for asset-backed securities and their related attestation reports on
assessment of compliance with servicing criteria required to be included in this
Annual Report in accordance with Item 1122 of Regulation AB and Exchange Act
Rules 13a-18 and 15d-18 have been included as an exhibit to this Annual Report,
except as otherwise disclosed in this Annual Report. Any material instances of
non-compliance described in such reports have been disclosed in this Annual
Report.
In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties: the Trustee and the
Servicers.
Date: ________________________________
_________________________________________
[Signature]
[Title]
EXHIBIT M
FORM OF CERTIFICATION TO BE
PROVIDED BY THE TRUSTEE TO DEPOSITOR
------------------------------------
Re: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2 (the "Trust"), Mortgage
Pass Through Certificates, Series 2006-2, issued pursuant to the
Pooling and Servicing Agreement, dated as of March 1, 2006, among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as Depositor, First NLC Financial
Services, LLC, as Responsible Party, HomEq Servicing Corporation, as
Servicer, JPMorgan Chase Bank, National Association, as Servicer,
and Deutsche Bank National Trust Company, as Trustee, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Home Equity Loan Trust, Series 2006-2
--------------------------------------------------------------------
The Trustee hereby certifies to the Depositor, and its officers,
directors and affiliates, and with the knowledge and intent that they will rely
upon this certification, that:
(1) I have reviewed the annual report on Form 10-K for the fiscal
year [___] (the "Annual Report"), and all reports on Form 10-D required to be
filed in respect of period covered by the Annual Report (collectively with the
Annual Report, the "Reports"), of the Trust;
(2) To my knowledge, the Reports, taken as a whole, do 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
the Annual Report, it being understood that the Trustee is not responsible for
verifying the accuracy or completeness of information in the Reports (a)
provided by Persons other than the Trustee or any Subcontractor utilized by the
Trustee or (b) relating to Persons other than the Trustee or any Subcontractor
utilized by the Trustee as to which a Responsible Officer of the Trustee does
not have actual knowledge;
(3) To my knowledge, the distribution or servicing information
required to be provided to the Trustee by each Servicer under the Pooling and
Servicing Agreement for inclusion in the Reports is included in the Reports; and
(4) The report on assessment of compliance with servicing criteria
for asset-backed securities applicable to the Trustee and each Subcontractor
utilized by the Trustee and their related attestation reports on assessment of
compliance with servicing criteria applicable to it required to be included in
the Annual Report in accordance with Item 1122 of Regulation AB and Exchange Act
Rules 13a-18 and 15d-18 has been included as an exhibit to the Annual Report.
Any material instances of non-compliance are described in such report and have
been disclosed in the Annual Report.
Date: _________________________________
_______________________________________
[Signature]
[Title]
EXHIBIT N
FORM OF CERTIFICATION TO BE PROVIDED
BY THE SERVICER TO DEPOSITOR
Re: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2 (the "Trust"), Mortgage
Pass Through Certificates, Series 2006-2, issued pursuant to the
Pooling and Servicing Agreement, dated as of March 1, 2006, among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as Depositor, First NLC Financial
Services, LLC, as Responsible Party, HomEq Servicing Corporation, as
Servicer, JPMorgan Chase Bank, National Association, as Servicer,
and Deutsche Bank National Trust Company, as Trustee, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Home Equity Loan Trust, Series 2006-2
--------------------------------------------------------------------
[JPMorgan] [HomEq], certifies to the Depositor and the Trustee, and
their respective officers, directors and affiliates, and with the knowledge and
intent that they will rely upon this certification, that:
(1) [JPMorgan] [HomEq] has reviewed the servicer compliance statement of
[JPMorgan] [HomEq] and the compliance statements of each Subservicer, if
any, engaged by [JPMorgan] [HomEq] provided to the Depositor and the
Trustee for the Trust's fiscal year [___] in accordance with Item 1123 of
Regulation AB (each a "Compliance Statement"), the report on assessment of
[JPMorgan's] [HomEq's] compliance with the servicing criteria set forth in
Item 1122(d) of Regulation AB (the "Servicing Criteria") and reports on
assessment of compliance with servicing criteria for asset-backed
securities of [JPMorgan] [HomEq] and of each Subservicer or Subcontractor,
if any, engaged or utilized by [JPMorgan] [HomEq] provided to the
Depositor and the Trustee for the Trust's fiscal year [___] in accordance
with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Item 1122 of Regulation AB (each a
"Servicing Assessment"), the registered public accounting firm's
attestation report provided in accordance with Rules 13a-18 and 15d-18
under the Exchange Act and Section 1122(b) of Regulation AB related to
each Servicing Assessment (each an "Attestation Report"), and all
servicing reports, officer's certificates and other information relating
to the servicing of the Mortgage Loans by [JPMorgan] [HomEq] during 200[ ]
that were delivered or caused to be delivered by [JPMorgan] [HomEq]
pursuant to the Agreement (collectively, the "Servicing Information");
(2) Based on the [JPMorgan's] [HomEq's] knowledge, the Servicing Information,
taken as a whole, does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in
the light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Servicing
Information;
(3) Based on the [JPMorgan's] [HomEq's] knowledge, the servicing information
required to be provided to the Trustee by [JPMorgan] [HomEq] pursuant to
the Pooling and Servicing Agreement has been provided to the Trustee;
(4) Based on [JPMorgan's] [HomEq's] knowledge and the compliance review
conducted in preparing Compliance Statement of [JPMorgan] [HomEq] and, if
applicable, reviewing each Compliance Statement of each Subservicer, if
any, engaged by [JPMorgan] [HomEq], and except as disclosed in such
Compliance Statement[(s)], [JPMorgan] [HomEq] [(directly and through its
Subservicers, if any)] has fulfilled its obligations under the Pooling and
Servicing Agreement in all material respects.
(5) Each Servicing Assessment of [JPMorgan] [HomEq] and of each Subservicer or
Subcontractor, if any, engaged or utilized by [JPMorgan] [HomEq] and its
related Attestation Report required to be included in the Annual Report in
accordance with Item 1122 of Regulation AB and Exchange Act Rules 13a-18
and 15d-18 has been provided to the Depositor and the Trustee. Any
material instances of non-compliance are described in any such Servicing
Assessment or Attestation Report.
Date: ________________________________
By: ________________________________
Name: ________________________________
Title: ________________________________
EXHIBIT O
FIRST NLC PURCHASE AGREEMENT
==============================================================================
AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
Purchaser
FIRST NLC FINANCIAL SERVICES, LLC,
Seller
---------------------------
Dated as of September 29, 2005
Conventional,
Fixed and Adjustable Rate, B/C Residential Mortgage Loans
==============================================================================
TABLE OF CONTENTS
SECTION 1. DEFINITIONS.................................................
SECTION 2. AGREEMENT TO PURCHASE.......................................
SECTION 3. MORTGAGE SCHEDULES..........................................
SECTION 4. PURCHASE PRICE..............................................
SECTION 5. EXAMINATION OF MORTGAGE FILES...............................
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER.........................
SECTION 7. SERVICING OF THE MORTGAGE LOANS.............................
SECTION 8. TRANSFER OF SERVICING.......................................
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REMEDIES FOR BREACH.........................................
SECTION 10. CLOSING.....................................................
SECTION 11. CLOSING DOCUMENTS...........................................
SECTION 12. COSTS.......................................................
SECTION 13. COOPERATION OF SELLER WITH A RECONSTITUTION.................
SECTION 14. THE SELLER..................................................
SECTION 15. FINANCIAL STATEMENTS........................................
SECTION 16. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST..............
SECTION 17. NOTICES.....................................................
SECTION 18. SEVERABILITY CLAUSE.........................................
SECTION 19. COUNTERPARTS................................................
SECTION 20. GOVERNING LAW...............................................
SECTION 21. INTENTION OF THE PARTIES....................................
SECTION 22. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT....
SECTION 23. WAIVERS.....................................................
SECTION 24. EXHIBITS....................................................
SECTION 25. GENERAL INTERPRETIVE PRINCIPLES.............................
SECTION 26. REPRODUCTION OF DOCUMENTS...................................
SECTION 27. FURTHER AGREEMENTS..........................................
SECTION 28. RECORDATION OF ASSIGNMENTS OF MORTGAGE......................
SECTION 29. NO SOLICITATION.............................................
SECTION 30. WAIVER OF TRIAL BY JURY.....................................
SECTION 31. GOVERNING LAW JURISDICTION; CONSENT TO SERVICE OF PROCESS...
EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B INDEMNIFICATION AND CONTRIBUTION AGREEMENT
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT E FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
EXHIBIT H UNDERWRITING GUIDELINES
EXHIBIT I FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT J TRANSFER DATE MORTGAGE LOAN DATA
AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
--------------------------------------------------------------------
This AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND WARRANTIES
AGREEMENT (the "Agreement"), dated as of September 1, 2005, by and between
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York corporation, having an office
at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Purchaser"), and
First NLC Financial Services, LLC, a Florida limited liability company, having
an office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Purchaser and the Seller are parties to that certain
Mortgage Loan Purchase and Warranties Agreement, dated as of September 1, 2004,
as amended by Amendment No. 1, dated as of February 4, 2005 (the "Original
Purchase Agreement"), pursuant to which the Seller desires to sell, from time to
time, to the Purchaser, and the Purchaser desires to purchase, from time to
time, from the Seller, certain first and second lien, adjustable-rate and
fixed-rate B/C residential mortgage loans (the "Mortgage Loans") on a servicing
released basis as described therein, and which shall be delivered in pools of
whole loans (each, a "Mortgage Loan Package") on various dates as provided
therein (each, a "Closing Date");
WHEREAS, at the present time, the Purchaser and the Seller desire to
amend the Original Purchase Agreement to make certain modifications as set forth
herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and the
Seller agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below.
Accepted Servicing Practices: 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 and incorporating
the Delinquency Collection Policies and Procedures.
Act: The National Housing Act, as amended from time to time.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan
purchased pursuant to this Agreement.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agency Transfer: A ▇▇▇▇▇▇ ▇▇▇ Transfer or a ▇▇▇▇▇▇▇ Mac Transfer.
Agreement: This Amended and Restated Mortgage Loan Purchase and
Warranties Agreement and all amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: 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.
Assignment and Conveyance Agreement: As defined in Subsection 6.01.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Purchaser.
Balloon Mortgage Loan: Any Mortgage Loan which by its original terms
or any modifications thereof provides for amortization beyond its scheduled
maturity date.
Business Day: Any day other than (i) a Saturday or Sunday, (ii) a
day on which banking and savings and loan institutions, in the State of New York
or the State in which the Interim Servicer's servicing operations are located or
(iii) the state in which the Custodian's operations are located, are authorized
or obligated by law or executive order to be closed.
Closing Date: The date or dates on which the Purchaser from time to
time shall purchase, and the Seller from time to time shall sell, the Mortgage
Loans listed on the related Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
CLTV: As of any date and as to any Second Lien Loan, the ratio,
expressed as a percentage, of the (a) sum of (i) the outstanding principal
balance of the Second Lien Loan and (ii) the outstanding principal balance as of
such date of any mortgage loan or mortgage loans that are senior or equal in
priority to the Second Lien Loan and which are secured by the same Mortgaged
Property to (b) the Appraised Value as determined pursuant to the Underwriting
Guidelines of the related Mortgaged Property as of the origination of the Second
Lien Loan.
Code: Internal Revenue Code of 1986, as amended.
Commission: The United States Securities and Exchange Commission.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
Custodial Account: The separate trust account created and maintained
pursuant to Subsection 2.04 of the Interim Servicing Agreement (with respect to
each Mortgage Loan, as specified therein).
Custodial Agreement: The agreement(s) governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents. If more than one Custodial Agreement is in effect at
any given time, all of the individual Custodial Agreements shall collectively be
referred to as the "Custodial Agreement."
Custodian: Deutsche Bank Trust Company Americas, a New York banking
corporation, and its successors in interest or any successor to the Custodian
under the Custodial Agreement as therein provided.
Cut-off Date: The date or dates designated as such on the related
Mortgage Loan Schedule with respect to the related Mortgage Loan Package.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased or
replaced or to be replaced with a Qualified Substitute Mortgage Loan by the
Seller in accordance with the terms of this Agreement.
Delinquency Collection Policies and Procedures: The delinquency
collection policies and procedures of the Interim Servicer, a copy of which is
attached to the Interim Servicing Agreement as Exhibit 12.
Determination Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, for an interim period, as
specified therein).
Due Date: The day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Escrow Account: The separate account created and maintained pursuant
to Subsection 2.06 of the Interim Servicing Agreement (with respect to each
Mortgage Loan, as specified therein).
Escrow Payments: 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.
▇▇▇▇▇▇ ▇▇▇: The Federal National Mortgage Association, or any
successor thereto.
▇▇▇▇▇▇ Mae Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇ Mae
Servicers' Guide and all amendments or additions thereto.
▇▇▇▇▇▇ ▇▇▇ Transfer: As defined in Section 13.
FHA: 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.
First Lien Loan: A Mortgage Loan secured by a first lien Mortgage on
the related Mortgaged Property.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A fixed rate mortgage loan purchased
pursuant to this Agreement.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
▇▇▇▇▇▇▇ Mac Transfer: As defined in Section 13.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note which amount
is added to the Index in accordance with the terms of the related Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate
for such Mortgage Loan.
High Cost Loan: A Mortgage Loan (a) covered by the Home Ownership
and Equity Protection Act of 1994, (b) classified as a "high cost home,"
"threshold," "covered," (excluding New Jersey "Covered Home Loans" as that term
is defined in clause (1) of the definition of that term in the New Jersey Home
Ownership Security Act of 2002 that were originated between November 26, 2003
and July 7, 2004) "high risk home," or "predatory" loan under any other
applicable federal, state or local law (or a similarly classified loan using
different terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high interest
rates, points and/or fees) or (c) categorized as High Cost pursuant to Appendix
E of Standard & Poor's Glossary. For avoidance of doubt, the parties agree that
this definition shall apply to any law regardless of whether such law is
presently, or in the future becomes, the subject of judicial review or
litigation.
Home Loan: A Mortgage Loan categorized as Home Loan pursuant to
Appendix E of Standard & Poor's Glossary.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to Mortgage Insurance issued by the FHA. The term "HUD," for
purposes of this Agreement, is also deemed to include subdivisions thereof such
as the FHA and Government National Mortgage Association.
Index: The index indicated in the related Mortgage Note for each
Adjustable Rate Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the related
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
Interim Servicer: The servicer under the Interim Servicing
Agreement, or its successor in interest or assigns, or any successor to the
Interim Servicer under the Interim Servicing Agreement, as therein provided.
Interim Servicing Agreement: The agreement to be entered into by the
Purchaser and the Interim Servicer, providing for the Interim Servicer to
service the Mortgage Loans as specified by the Interim Servicing Agreement.
Lifetime Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum Mortgage
Interest Rate thereunder. The Mortgage Interest Rate during the terms of each
Adjustable Rate Mortgage Loan shall not at any time exceed the Mortgage Interest
Rate at the time of origination of such Adjustable Rate Mortgage Loan by more
than the amount per annum set forth on the related Mortgage Loan Schedule.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise or the sale
of the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the outstanding principal amount of the
Mortgage Loan as of the related Cut-off Date (unless otherwise indicated), to
the lesser of (a) the Appraised Value of the Mortgaged Property at origination
and (b) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the purchase price of the Mortgaged Property.
Manufactured Home: A single family residential unit that is
constructed in a factory in sections in accordance with the Federal Manufactured
Home Construction and Safety Standards adopted on July 15, 1976, by the
Department of Housing and Urban Development ("HUD Code"), as amended in 2000,
which preempts state and local building codes. Each unit is identified by the
presence of a HUD Plate/Compliance Certificate label. The sections are then
transported to the site and joined together and affixed to a pre-built permanent
foundation (which satisfies the manufacturer's requirements and all state,
county, and local building codes and regulations). The manufactured home is
built on a non-removable, permanent frame chassis that supports the complete
unit of walls, floors, and roof. The underneath part of the home may have
running gear (wheels, axles, and brakes) that enable it to be transported to the
permanent site. The wheels and hitch are removed prior to anchoring the unit to
the permanent foundation. The manufactured home must be classified as real
estate and taxed accordingly. The permanent foundation may be on land owned by
the mortgager or may be on leased land.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien, in the case of a First Lien Loan, or
a second lien, in the case of a Second Lien Loan, on the Mortgaged Property.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit A annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note with respect to each Mortgage Loan.
Mortgage Interest Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the applicable Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
Servicing Rights and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan, excluding replaced or
repurchased mortgage loans.
Mortgage Loan Documents: The documents required to be delivered to
the Custodian pursuant to Subsection 6.03 hereof with respect to any Mortgage
Loan.
Mortgage Loan Package: Each pool of Mortgage Loans, which shall be
purchased by the Purchaser from the Seller from time to time on each Closing
Date.
Mortgage Loan Schedule: The schedule of Mortgage Loans setting forth
the following information with respect to each Mortgage Loan in the related
Mortgage Loan Package: (1) the Seller's Mortgage Loan identifying number; (2)
the Mortgagor's name; (3) the street address of the Mortgaged Property including
the city, state and zip code; (4) a code indicating whether the Mortgagor is
self-employed; (5) a code indicating whether the Mortgaged Property is
owner-occupied; (6) the number and type of residential units constituting the
Mortgaged Property; (7) the original months to maturity or the remaining months
to maturity from the related Cut-off Date, in any case based on the original
amortization schedule and, if different, the maturity expressed in the same
manner but based on the actual amortization schedule; (8) with respect to each
First Lien Loan, the Loan-to-Value Ratio at origination, and with respect to
each Second Lien Loan, the CLTV at origination; (9) the Mortgage Interest Rate
as of the related Cut-off Date; (10) the date on which the Monthly Payment was
due on the Mortgage Loan and, if such date is not consistent with the Due Date
currently in effect, such Due Date; (11) the stated maturity date; (12) the
first payment date; (13) the amount of the Monthly Payment as of the related
Cut-off Date; (14) the last payment date on which a payment was actually applied
to the outstanding principal balance; (15) the original principal amount of the
Mortgage Loan; (16) the principal balance of the Mortgage Loan as of the close
of business on the related Cut-off Date, after deduction of payments of
principal due and collected on or before the related Cut-off Date; (17)
delinquency status as of the related Cut-off Date; (18) with respect to each
Adjustable Rate Mortgage Loan, the Interest Rate Adjustment Date; (19) with
respect to each Adjustable Rate Mortgage Loan, the Gross Margin; (20) with
respect to each Adjustable Rate Mortgage Loan, the Lifetime Rate Cap under the
terms of the Mortgage Note; (21) with respect to each Adjustable Rate Mortgage
Loan, a code indicating the type of Index; (22) the type of Mortgage Loan (i.e.,
Fixed or Adjustable Rate Mortgage Loan, First or Second Lien Loan); (23) a code
indicating the purpose of the loan (i.e., purchase, rate and term refinance,
equity take-out refinance); (24) a code indicating the documentation style
(i.e., full, alternative or reduced); (25) asset verification (Y/N); (26) the
loan credit classification (as described in the Underwriting Guidelines); (27)
whether such Mortgage Loan provides for a Prepayment Penalty and, if applicable,
the Prepayment Penalty period; (28) the Mortgage Interest Rate as of
origination; (29) the credit risk score (FICO score); (30) the date of
origination; (31) with respect to Adjustable Rate Mortgage Loans, the Mortgage
Interest Rate adjustment period; (32) with respect to each Adjustable Rate
Mortgage Loan, the Mortgage Interest Rate adjustment percentage; (33) with
respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest Rate floor;
(34) with respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest
Rate Cap as of the first Interest Rate Adjustment Date; (35) with respect to
each Adjustable Rate Mortgage Loan, the Periodic Rate Cap subsequent to the
first Interest Rate Adjustment Date; (36) with respect to each Adjustable Rate
Mortgage Loan, a code indicating whether the Mortgage Loan provides for negative
amortization; (37) with respect to each Adjustable Rate Mortgage Loan with
negative amortization, the negative amortization limit; (38) a code indicating
whether the Mortgage Loan is a High Cost Loan; (39) a code indicating whether
the Mortgage Loan is a Balloon Mortgage Loan; (40) the Due Date for the first
Monthly Payment; (41) the original Monthly Payment due; (42) a code indicating
the PMI Policy provider and percentage of coverage, if applicable; (43)
Appraised Value; (44) appraisal type; (45) automated valuation model (AVM); (46)
appraisal date; and (47) with respect to the related Mortgagor, the
debt-to-income ratio. With respect to the Mortgage Loans in the aggregate, the
Mortgage Loan Schedule shall set forth the following information, as of the
related Cut-off Date: (1) the number of Mortgage Loans; (2) the current
aggregate outstanding principal balance of the Mortgage Loans; (3) the weighted
average Mortgage Interest Rate of the Mortgage Loans; (4) the weighted average
maturity of the Mortgage Loans; (5) the applicable Cut-off Date; and (6) the
applicable Closing Date.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: With respect to each Mortgage Loan, the
Mortgagor's real property securing repayment of a related Mortgage Note,
consisting of an unsubordinated estate in fee simple or, with respect to real
property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely-accepted practice, a leasehold estate, in a
single parcel or multiple parcels of real property improved by a Residential
Dwelling.
Mortgagor: The obligor on a Mortgage Note.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President and
by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Seller, and delivered to the Purchaser as required
by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Seller, reasonably acceptable to the Purchaser, provided that any
Opinion of Counsel relating to (a) the qualification of any account required to
be maintained pursuant to this Agreement as an Eligible Account, (b)
qualification of the Mortgage Loans in a REMIC or (c) compliance with the REMIC
Provisions, must be (unless otherwise stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact independent of the Seller and any servicer
of the Mortgage Loans, (ii) does not have any material direct or indirect
financial interest in the Seller or any servicer of the Mortgage Loans or in an
Affiliate of either and (iii) is not connected with the Seller or any servicer
of the Mortgage Loans as an officer, employee, director or person performing
similar functions.
Periodic Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum amount by
which the Mortgage Interest Rate therein may increase or decrease on an Interest
Rate Adjustment Date above or below the Mortgage Interest Rate previously in
effect. The Periodic Rate Cap for each Adjustable Rate Mortgage Loan is the rate
set forth as such on the related Mortgage Loan Schedule.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued
by an insurer acceptable under the Underwriting Guidelines and qualified to do
business in the jurisdiction where the Mortgaged Property is located.
Preliminary Mortgage Schedule: As defined in Section 3.
Prepayment Penalty: With respect to each Mortgage Loan, the penalty
if the Mortgagor prepays such Mortgage Loan as provided in the related Mortgage
Note or Mortgage.
Principal Prepayment: Any payment or other recovery of principal on
a Mortgage Loan which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller in exchange for the Mortgage Loans purchased on such
Closing Date as calculated in Section 4 of this Agreement.
Purchase Price and Terms Agreement: Those certain agreements setting
forth the general terms and conditions of the transactions consummated herein
and identifying the Mortgage Loans to be purchased from time to time hereunder,
by and between the Seller and the Purchaser.
Purchaser: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York
corporation, and its successors in interest and assigns, or any successor to the
Purchaser under this Agreement as herein provided.
Qualified Appraiser: An 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, and whose compensation was not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfied the requirements of Title XI of
the Financial 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.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Seller for a Deleted Mortgage Loan which must, on the date of
such substitution, (i) have an outstanding principal balance, after deduction of
all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the outstanding principal balance
of the Deleted Mortgage Loan (the amount of any shortfall will be deposited in
the Custodial Account by the Seller in the month of substitution); (ii) have a
Mortgage Interest Rate not less than and not more than 1% greater than the
Mortgage Interest Rate of the Deleted Mortgage Loan; (iii) have a remaining term
to maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; (iv) be of the same type as the Deleted Mortgage Loan
(i.e., fixed rate or adjustable rate with same Mortgage Interest Rate Caps); and
(v) comply with each representation and warranty (respecting individual Mortgage
Loans) set forth in Section 9.
Rating Agency: Any of Fitch, Moody's or Standard & Poor's, or their
respective successors designated by the Purchaser.
Reconstitution: A Whole Loan Transfer or a Securitization Transfer.
Reconstitution Agreements: The agreement or agreements entered into
by the Seller and the Purchaser and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Mortgage Loans
sold hereunder, in connection with a Whole Loan Transfer, Agency Transfer or a
Securitization Transfer pursuant to Section 13, including, but not limited to, a
seller's warranties and servicing agreement with respect to a Whole Loan
Transfer, and a pooling and servicing agreement and/or seller/servicer
agreements and related custodial/trust agreement and documents with respect to a
Securitization Transfer.
Reconstitution Date: As defined in Section 13.
Regulation AB: As defined in Section 13.
Relief Act: The Servicemembers' Civil Relief Act.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter
1, Subtitle A of the Code, and related provisions and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, as specified therein).
Repurchase Price: As defined in the related Purchase Price and Terms
Agreement.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project or (iv) a one-family dwelling
in a planned unit development, none of which is a dwelling unit in a residential
cooperative housing corporation, mobile home or Manufactured Home.
RESPA: Real Estate Settlement Procedures Act, as amended from time
to time.
Second Lien Loan: A Mortgage Loan secured by a second lien Mortgage
on the related Mortgaged Property.
Securities Act: The federal Securities Act of 1933, as amended.
Securities and Exchange Act: The federal Securities Exchange Act of
1934, as amended.
Securitization Transfer: The sale or transfer of some or all of the
Mortgage Loans to a trust or other entity as part of a publicly-issued or
privately-placed, rated or unrated mortgage pass-through or other
mortgage-backed securities transaction.
Seller: As defined in the initial paragraph of the Agreement,
together with its successors in interest.
Servicing Fee: With respect to each Mortgage Loan subject to the
Interim Servicing Agreement, a fee payable monthly equal to one-twelfth of the
product of (a) the Servicing Fee Rate and (b) the outstanding principal balance
of such Mortgage Loan. Such fee shall be payable monthly and shall be pro-rated
for any portion of a month during which the Mortgage Loan is serviced by the
Interim Servicer under the Interim Servicing Agreement. The obligation of the
Purchaser to pay the Servicing Fee is limited to, and the Servicing Fee is
payable solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds, to the extent permitted by this Agreement)
of such Monthly Payment collected by the Interim Servicer, or as otherwise
provided under this Agreement.
Servicing Fee Rate: An amount per annum as set forth in the
Interim Servicing Agreement.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Interim Servicer consisting of originals of all documents in the
Mortgage File which are not delivered to the Purchaser or the Custodian and
copies of the Mortgage Loan Documents set forth in Section 2 of the Custodial
Agreement.
Servicing Rights: Any and all of the following: (a) any and all
rights to service the Mortgage Loans; (b) any payments to or monies received by
the Seller for servicing the Mortgage Loans; (c) any late fees, penalties or
similar payments with respect to the Mortgage Loans; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of the Seller
thereunder; (e) Escrow Payments or other similar payments with respect to the
Mortgage Loans and any amounts actually collected by the Seller with respect
thereto; (f) all accounts and other rights to payment related to any of the
property described in this paragraph; and (g) any and all documents, files,
records, servicing files, servicing documents, servicing records, data tapes,
computer records, or other information pertaining to the Mortgage Loans or
pertaining to the past, present or prospective servicing of the Mortgage Loans.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies Inc., and any successor thereto.
Standard & Poor's Glossary: The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
Static Pool Information: As defined in Section 13.
Successor Servicer: Any servicer of one or more Mortgage Loans
designated by the Purchaser as being entitled to the benefits of the
indemnifications set forth in Subsections 9.03 and 14.01.
Stated Principal Balance: As to each Mortgage Loan on any date of
determination, (i) the principal balance of such Mortgage Loan at the related
Cut-off Date after giving effect to payments of principal due on or before such
date, to the extent actually received, minus (ii) all amounts previously
distributed to the Purchaser with respect to the related Mortgage Loan
representing payments or recoveries of principal on such Mortgage Loan.
Underwriting Guidelines: The underwriting guidelines of the Seller,
a copy of which is attached as an exhibit to the related Assignment and
Conveyance.
Whole Loan Transfer: The sale or transfer by Purchaser of some or
all of the Mortgage Loans in a whole loan or participation format pursuant to a
Reconstitution Agreement.
SECTION 2. Agreement to Purchase.
The Seller agrees to sell from time to time, and the Purchaser
agrees to purchase from time to time, Mortgage Loans having an aggregate
principal balance on the related Cut-off Date in an amount as set forth in the
related Purchase Price and Terms Agreement, or in such other amount as agreed by
the Purchaser and the Seller as evidenced by the actual aggregate principal
balance of the Mortgage Loans accepted by the Purchaser on each Closing Date.
SECTION 3. Mortgage Schedules.
The Seller from time to time shall provide the Purchaser with
certain information constituting a preliminary listing of the Mortgage Loans to
be purchased on each Closing Date in accordance with the related Purchase Price
and Terms Agreement and this Agreement (each, a "Preliminary Mortgage
Schedule").
The Seller shall deliver the related Mortgage Loan Schedule for the
Mortgage Loans to be purchased on a particular Closing Date to the Purchaser at
least five (5) Business Days prior to the related Closing Date. The related
Mortgage Loan Schedule shall be the related Preliminary Mortgage Schedule with
those Mortgage Loans which have not been funded prior to the related Closing
Date deleted.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan shall be the percentage of
par as stated in the related Purchase Price and Terms Agreement (subject to
adjustment as provided therein), multiplied by the aggregate principal balance,
as of the related Cut-off Date, of the Mortgage Loans listed on the related
Mortgage Loan Schedule, after application of scheduled payments of principal due
on or before the related Cut-off Date, but only to the extent such payments were
actually received. The initial principal amount of the related Mortgage Loans
shall be the aggregate principal balance of the Mortgage Loans, so computed as
of the related Cut-off Date. If so provided in the related Purchase Price and
Terms Agreement, portions of the Mortgage Loans shall be priced separately.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the current principal
amount of the related Mortgage Loans as of the related Cut-off Date at the
weighted average Mortgage Interest Rate of those Mortgage Loans. The Purchase
Price plus accrued interest as set forth in the preceding paragraph shall be
paid to the Seller by wire transfer of immediately available funds to an account
designated by the Seller in writing.
The Purchaser shall be entitled to (1) all scheduled principal due
after the related Cut-off Date, (2) all other recoveries of principal collected
on or after the related Cut-off Date, and (3) all payments of interest on the
Mortgage Loans net of applicable Servicing Fees (minus that portion of any such
payment which is allocable to the period prior to the related Cut-off Date). The
outstanding principal balance of each Mortgage Loan as of the related Cut-off
Date is determined after application of payments of principal due on or before
the related Cut-off Date, to the extent actually collected, together with any
unscheduled principal prepayments collected prior to such Cut-off Date;
provided, however, that payments of scheduled principal and interest paid prior
to such Cut-off date, but to be applied on a Due Date beyond the related Cut-off
Date shall not be applied to the principal balance as of the related Cut-off
Date. Such prepaid amounts shall be the property of the Purchaser. The Seller
shall deposit any such prepaid amounts into the Custodial Account, which account
is established for the benefit of the Purchaser for subsequent remittance by the
Seller to the Purchaser.
SECTION 5. Examination of Mortgage Files.
At least ten (10) Business Days prior to the related Closing Date,
the Seller shall (a) deliver to the Purchaser or its designee in escrow, for
examination with respect to each Mortgage Loan to be purchased, the related
Mortgage File, including a copy of the Assignment of Mortgage, pertaining to
each Mortgage Loan, or (b) make the related Mortgage File available to the
Purchaser for examination at such other location as shall otherwise be
acceptable to the Purchaser. Such examination may be made by the Purchaser or
its designee at any reasonable time before or after the related Closing Date. If
the Purchaser makes such examination prior to the related Closing Date and
determines, in its sole discretion, that any Mortgage Loans are unacceptable to
the Purchaser for any reason, such Mortgage Loans shall be deleted from the
related Mortgage Loan Schedule, and may be replaced by a Qualified Substitute
Mortgage Loan (or Loans) acceptable to the Purchaser. The Purchaser may, at its
option and without notice to the Seller, purchase some or all of the Mortgage
Loans without conducting any partial or complete examination. The fact that the
Purchaser or its designee has conducted or has failed to conduct any partial or
complete examination of the Mortgage Files shall not affect the Purchaser's (or
any of its successor's) rights to demand repurchase, substitution or other
relief as provided herein.
SECTION 6. Conveyance from Seller to Purchaser.
Subsection 6.01 Conveyance of Mortgage Loans.
The Seller, simultaneously with the delivery of the Mortgage Loan
Schedule with respect to the related Mortgage Loan Package to be purchased on
each Closing Date, shall execute and deliver an Assignment and Conveyance
Agreement in the form attached hereto as Exhibit G (the "Assignment and
Conveyance Agreement"). The Seller shall cause the Servicing File retained by
the Interim Servicer pursuant to this Agreement to be appropriately identified
in the Seller's computer system and/or books and records, as appropriate, to
clearly reflect the sale of the related Mortgage Loan to the Purchaser. The
Seller shall cause the Interim Servicer to release from its custody the contents
of any Servicing File retained by it only in accordance with this Agreement or
the Interim Servicing Agreement, except when such release is required in
connection with a repurchase of any such Mortgage Loan pursuant to Subsection
9.03.
Subsection 6.02 Books and Records.
Record title to each Mortgage as of the related Closing Date shall
be in the name of the Seller, an Affiliate of the Seller, the Purchaser or one
or more designees of the Purchaser, as the Purchaser shall select.
Notwithstanding the foregoing, each Mortgage and related Mortgage Note shall be
possessed solely by the Purchaser or the appropriate designee of the Purchaser,
as the case may be. All rights arising out of the Mortgage Loans including, but
not limited to, all funds received by the Seller or the Interim Servicer after
the related Cut-off Date on or in connection with a Mortgage Loan shall be
vested in the Purchaser or one or more designees of the Purchaser; provided,
however, that all funds received on or in connection with a Mortgage Loan shall
be received and held by the Seller or the Interim Servicer in trust for the
benefit of the Purchaser or the appropriate designee of the Purchaser, as the
case may be, as the owner of the Mortgage Loans pursuant to the terms of this
Agreement.
The Seller shall be or shall cause the Interim Servicer to be
responsible for maintaining, and shall maintain, a complete set of books and
records for each Mortgage Loan which shall be marked clearly to reflect the
ownership of each Mortgage Loan by the Purchaser. In particular, the Seller
shall or shall cause the Interim Servicer to maintain in its possession,
available for inspection by the Purchaser, and shall deliver to the Purchaser
upon demand, evidence of compliance with all federal, state and local laws,
rules and regulations, and requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, including
but not limited to documentation as to the method used in determining the
applicability of the provisions of the National Flood Insurance Act of 1968, as
amended, to the Mortgaged Property, documentation evidencing insurance coverage
and periodic inspection reports, as required by the ▇▇▇▇▇▇ Mae Guides. To the
extent that original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the Seller
or the Interim Servicer may be in the form of microfilm or microfiche so long as
the Seller or the Interim Servicer complies with the requirements of the ▇▇▇▇▇▇
▇▇▇ Guides.
The sale of each Mortgage Loan shall be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
Subsection 6.03 Delivery of Mortgage Loan Documents.
The Seller shall deliver and release to the Custodian no later than
two (2) Business Days prior to the related Closing Date those Mortgage Loan
Documents set forth on Exhibit A hereto as required by the Custodial Agreement
with respect to each Mortgage Loan set forth on the related Mortgage Loan
Schedule.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement for the
related Closing Date, as evidenced by the Initial Certification of the Custodian
in the form annexed to the Custodial Agreement. The Seller shall comply with the
terms of the Custodial Agreement and the Purchaser shall pay all fees and
expenses of the Custodian.
The Seller shall or shall cause the Interim Servicer to forward to
the Custodian, or to such other Person as the Purchaser shall designate in
writing, original documents evidencing an assumption, modification,
consolidation or extension of any Mortgage Loan entered into in accordance with
this Agreement within two weeks of their execution, provided, however, that the
Seller shall provide the Custodian, or to such other Person as the Purchaser
shall designate in writing, with a certified true copy of any such document
submitted for recordation within two weeks of its execution, and shall promptly
provide the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true and
complete copy of the original within ninety days of its submission for
recordation.
In the event any document required to be delivered to the Custodian
in the Custodial Agreement, including an original or copy of any document
submitted for recordation to the appropriate public recording office, is not so
delivered to the Custodian, or to such other Person as the Purchaser shall
designate in writing, within 90 days following the related Closing Date (other
than with respect to the Assignments of Mortgage which shall be delivered to the
Custodian in blank and recorded subsequently by the Purchaser or its designee),
and in the event that the Seller does not cure such failure within 30 days of
discovery or receipt of written notification of such failure from the Purchaser,
the related Mortgage Loan shall, upon the request of the Purchaser, be
repurchased by the Seller at the price and in the manner specified in Subsection
9.03. The foregoing repurchase obligation shall not apply in the event that the
Seller cannot deliver an original document submitted for recordation to the
appropriate public recording office within the specified period due to a delay
caused by the recording office in the applicable jurisdiction; provided that the
Seller shall instead deliver a recording receipt of such recording office or, if
such recording receipt is not available, an officer's certificate of a servicing
officer of the Seller, confirming that such documents have been accepted for
recording; provided that, upon request of the Purchaser and delivery by the
Purchaser to the Seller of a schedule of the related Mortgage Loans, the Seller
shall reissue and deliver to the Purchaser or its designee said officer's
certificate.
The Seller shall pay all initial recording fees, if any, for the
assignments of mortgage and any other fees or costs in transferring all original
documents to the Custodian or, upon written request of the Purchaser, to the
Purchaser or the Purchaser's designee. The Purchaser or the Purchaser's designee
shall be responsible for recording the Assignments of Mortgage and shall be
reimbursed by the Seller for the costs associated therewith pursuant to the
preceding sentence.
Subsection 6.04 Quality Control Procedures.
The Seller shall, or shall cause the Interim Servicer or any
subservicer thereof to, have an internal quality control program that verifies,
on a regular basis, the existence and accuracy of the legal documents, credit
documents, property appraisals, and underwriting decisions. The program shall
include evaluating and monitoring the overall quality of the Seller's loan
production and the servicing activities of the Interim Servicer or any
subservicer thereof. The program is to ensure that the Mortgage Loans are
originated in accordance with the Underwriting Guidelines; guard against
dishonest, fraudulent, or negligent acts; and guard against errors and omissions
by officers, employees, or other authorized persons.
SECTION 7. Servicing of the Mortgage Loans.
The Mortgage Loans have been sold by the Seller to the Purchaser on
a servicing released basis. Subject to, and upon the terms and conditions of
this Agreement and the Interim Servicing Agreement (with respect to each
Mortgage Loan, for an interim period, as specified therein), the Seller hereby
sells, transfers, assigns, conveys and delivers to the Purchaser the Servicing
Rights.
The Purchaser shall retain the Interim Servicer as contract servicer
of the Mortgage Loans for an interim period pursuant to and in accordance with
the terms and conditions contained in the Interim Servicing Agreement (with
respect to each Mortgage Loan, for an interim period, as specified therein). The
Seller shall cause the Interim Servicer to execute the Interim Servicing
Agreement on the initial Closing Date.
Pursuant to the Interim Servicing Agreement (with respect to each
Mortgage Loan, for an interim period, as specified therein), the Interim
Servicer shall begin servicing the Mortgage Loans on behalf of the Purchaser and
shall be entitled to a Servicing Fee with respect to such Mortgage Loans until
the applicable Transfer Date. The Interim Servicer shall conduct such servicing
in accordance with the Interim Servicing Agreement.
SECTION 8. Transfer of Servicing.
On the applicable Transfer Date, the Purchaser, or its designee,
shall assume all servicing responsibilities related to, and the Seller shall
cause the Interim Servicer to cease all servicing responsibilities related to,
the related Mortgage Loans subject to such Transfer Date. The Transfer Date
shall be the date determined in accordance with Section 6.02 of the Interim
Servicing Agreement (with respect to each Mortgage Loan, for an interim period,
as specified therein).
On or prior to the applicable Transfer Date, the Seller shall, at
its sole cost and expense, take such steps as may be necessary or appropriate to
effectuate and evidence the transfer of the servicing of the related Mortgage
Loans to the Purchaser, or its designee, including but not limited to the
following:
(a) Notice to Mortgagors. The Seller shall cause the Interim
Servicer to mail to the Mortgagor of each related Mortgage Loan a letter
advising such Mortgagor of the transfer of the servicing of the related Mortgage
Loan to the Purchaser, or its designee, in accordance with the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
National Affordable Housing Act of 1990; provided, however, the content and
format of the letter shall have the prior approval of the Purchaser. The Seller
shall cause the Interim Servicer to provide the Purchaser with copies of all
such related notices no later than the Transfer Date.
(b) Notice to Taxing Authorities and Insurance Companies. The Seller
shall cause the Interim Servicer to transmit to the applicable taxing
authorities and insurance companies (including primary mortgage insurance policy
insurers, if applicable) and/or agents, notification of the transfer of the
servicing to the Purchaser, or its designee, and instructions to deliver all
notices, tax bills and insurance statements, as the case may be, to the
Purchaser from and after the Transfer Date. The Seller shall cause the Interim
Servicer to provide the Purchaser with copies of all such notices no later than
the Transfer Date.
(c) Delivery of Servicing Records. The Seller shall cause the
Interim Servicer to forward to the Purchaser, or its designee, all servicing
records and the Servicing File in the Interim Servicer's possession relating to
each related Mortgage Loan including the information enumerated in the Interim
Servicing Agreement (with respect to each such Mortgage Loan, for an interim
period, as specified therein).
(d) Escrow Payments. The Seller shall cause the Interim Servicer to
provide the Purchaser, or its designee, with immediately available funds by wire
transfer in the amount of the net Escrow Payments and suspense balances and all
loss draft balances associated with the related Mortgage Loans. The Seller shall
cause the Interim Servicer to provide the Purchaser with an accounting
statement, in electronic format acceptable to the Purchaser in its sole
discretion, of Escrow Payments and suspense balances and loss draft balances
sufficient to enable the Purchaser to reconcile the amount of such payment with
the accounts of the Mortgage Loans. Additionally, the Seller shall cause the
Interim Servicer to wire transfer to the Purchaser the amount of any agency,
trustee or prepaid Mortgage Loan payments and all other similar amounts held by
the Interim Servicer.
(e) Payoffs and Assumptions. The Seller shall cause the Interim
Servicer to provide to the Purchaser, or its designee, copies of all assumption
and payoff statements generated by the Interim Servicer on the related Mortgage
Loans from the related Cut-off Date to the Transfer Date.
(f) Mortgage Payments Received Prior to Transfer Date. Prior to the
Transfer Date all payments received by the Interim Servicer or the Seller on
each related Mortgage Loan shall be properly applied by the Seller to the
account of the particular Mortgagor.
(g) Mortgage Payments Received after Transfer Date. The amount of
any related Monthly Payments received by the Seller after the Transfer Date
shall be forwarded to the Purchaser by overnight mail on the date of receipt.
The Seller shall notify the Purchaser of the particulars of the payment, which
notification requirement shall be satisfied if the Seller forwards with its
payment sufficient information to permit appropriate processing of the payment
by the Purchaser. The Seller shall assume full responsibility for the necessary
and appropriate legal application of such Monthly Payments received by the
Seller after the Transfer Date with respect to related Mortgage Loans then in
foreclosure or bankruptcy; provided, for purposes of this Agreement, necessary
and appropriate legal application of such Monthly Payments shall include, but
not be limited to, endorsement of a Monthly Payment to the Purchaser with the
particulars of the payment such as the account number, dollar amount, date
received and any special Mortgagor application instructions and the Seller shall
cause the Interim Servicer to comply with the foregoing requirements with
respect to all Monthly Payments received by the Interim Servicer after the
Transfer Date.
(h) Misapplied Payments. Misapplied payments shall be processed as
follows:
(i) All parties shall cooperate in correcting misapplication
errors;
(ii) The party receiving notice of a misapplied payment
occurring prior to the applicable Transfer Date and discovered after the
Transfer Date shall immediately notify the other party;
(iii) If a misapplied payment which occurred prior to the
Transfer Date cannot be identified and said misapplied payment has
resulted in a shortage in a Custodial Account or Escrow Account, the
Seller shall be liable for the amount of such shortage. The Seller shall
reimburse the Purchaser for the amount of such shortage within thirty (30)
days after receipt of written demand therefor from the Purchaser;
(iv) If a misapplied payment which occurred prior to the
Transfer Date has created an improper Purchase Price as the result of an
inaccurate outstanding principal balance, a check shall be issued to the
party shorted by the improper payment application within five (5) Business
Days after notice thereof by the other party; and
(v) Any check issued under the provisions of this Section 8(h)
shall be accompanied by a statement indicating the corresponding Seller
and/or the Purchaser Mortgage Loan identification number and an
explanation of the allocation of any such payments.
(i) Books and Records. On the Transfer Date, the books, records and
accounts of the Seller with respect to the related Mortgage Loans shall be in
accordance with all applicable Purchaser requirements.
(j) Reconciliation. The Seller shall, on or before the Transfer
Date, reconcile principal balances and make any monetary adjustments required by
the Purchaser. Any such monetary adjustments will be transferred between the
Seller and the Purchaser as appropriate.
(k) IRS Forms. The Seller shall or shall cause the Interim Servicer
to file all IRS forms 1099, 1099A, 1098 or 1041 and K-1 which are required to be
filed on or before the Transfer Date in relation to the servicing and ownership
of the related Mortgage Loans. The Seller shall provide copies of such forms to
the Purchaser upon request and shall reimburse the Purchaser for any costs or
penalties incurred by the Purchaser due to the Seller's failure to comply with
this paragraph.
(l) Transfer of Data. The Seller shall or shall cause the Interim
Servicer to (x) transfer to the Purchaser's designee and (y) verify the accuracy
of the data set forth on Exhibit J hereto in connection with each Mortgage Loan.
SECTION 9. Representations, Warranties and Covenants of the Seller;
Remedies for Breach.
Subsection 9.01 Representations and Warranties Regarding the Seller.
The Seller represents, warrants and covenants to the Purchaser that
as of the date hereof and as of each Closing Date:
(a) Due Organization and Authority. The Seller is a limited
liability company, validly existing, and in good standing under the laws of its
jurisdiction of incorporation or formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and in
good standing in the states where the Mortgaged Property is located if the laws
of such state require licensing or qualification in order to conduct business of
the type conducted by the Seller. The Seller has corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder;
the execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by the
Seller and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement has been duly executed and delivered
and constitutes the valid, legal, binding and enforceable obligation of the
Seller, except as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar laws
affecting the enforcement of the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding in equity or at law.
All requisite corporate action has been taken by the Seller to make this
Agreement valid and binding upon the Seller in accordance with its terms;
(b) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller is required or, if required, such consent,
approval, authorization or order has been or will, prior to the related Closing
Date, be obtained;
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Seller's charter, by-laws
or other organizational documents or any legal restriction or any agreement or
instrument to which the Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse effect
upon any of its properties pursuant to the terms of any mortgage, contract, deed
of trust or other instrument, or impair the ability of the Purchaser to realize
on the Mortgage Loans, impair the value of the Mortgage Loans, or impair the
ability of the Purchaser to realize the full amount of any insurance benefits
accruing pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of Seller's knowledge, threatened against
the Seller, before any court, administrative agency or other tribunal asserting
the invalidity of this Agreement, seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or which, either in any one
instance or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the Seller,
or in any material impairment of the right or ability of the Seller to carry on
its business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws"); the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws, including with respect to the legitimacy of
the applicable Mortgagor and the origin of the assets used by the said Mortgagor
to purchase the property in question, and maintains, and will maintain,
sufficient information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws;
(i) Financial Statements. The Seller has delivered to the Purchaser
financial statements as to its last three complete fiscal years and, subject to
a mutually agreeable confidentiality agreement, any later quarter ended more
than 60 days prior to the execution of this Agreement. All such financial
statements fairly present the pertinent results of operations and changes in
financial position for each of such periods and the financial position at the
end of each such period of the Seller and its subsidiaries and have been
prepared in accordance with generally accepted accounting principles of the
United States consistently applied throughout the periods involved, except as
set forth in the notes thereto. In addition, the Seller has delivered
information as to its loan gain and loss experience in respect of foreclosures
and its loan delinquency experience for the immediately preceding three-year
period, in each case with respect to mortgage loans owned by it and such
mortgage loans serviced for others during such period, and all such information
so delivered shall be true and correct in all material respects. There has been
no change in the business, operations, financial condition, properties or assets
of the Seller since the date of the Seller's financial statements that would
have a material adverse effect on its ability to perform its obligations under
this Agreement. The Seller has completed any forms requested by the Purchaser in
a timely manner and in accordance with the provided instructions;;
(j) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio at
the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered with
respect to each Mortgage Loan pursuant to the Custodial Agreement, shall be
delivered to the Custodian all in compliance with the specific requirements of
the Custodial Agreement. With respect to each Mortgage Loan, the Seller will be
in possession of a complete Mortgage File in compliance with Exhibit A hereto,
except for such documents as will be delivered to the Custodian;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(m) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby (including
any Securitization Transfer or Whole Loan Transfer) contains or will contain any
untrue statement of fact or omits or will omit to state a fact necessary to make
the statements contained herein or therein not misleading;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller expects to be advised by its
independent certified public accountants that under generally accepted
accounting principles the transfer of the Mortgage Loans will be treated as a
sale on the books and records of the Seller and the Seller has determined that
the disposition of the Mortgage Loans pursuant to this Agreement will be
afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. The Seller is the owner of record of each
Mortgage and the indebtedness evidenced by each Mortgage Note, except for the
Assignments of Mortgage which have been sent for recording, and upon recordation
the Seller will be the owner of record of each Mortgage and the indebtedness
evidenced by each Mortgage Note, and upon the sale of the Mortgage Loans to the
Purchaser, the Seller will retain the Mortgage Files with respect thereto in
trust only for the purpose of servicing and supervising the servicing of each
Mortgage Loan;
(q) Reasonable Purchase Price. The consideration received by the
Seller upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans; and
(r) Credit Reporting. The Seller, as servicer, will fully furnish,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis.
Additionally, the Seller, as servicer, will transmit full-file credit reporting
data for each Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 95-19 and
that for each Mortgage Loan, the Seller, as servicer, agrees it shall report one
of the following statuses each month as follows: new origination, current,
delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off.
Subsection 9.02 Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser that, as
to each Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
(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
related Closing Date for the Mortgage Loan under the terms of the Mortgage Note,
other than payments not yet 30 days delinquent, have been made and credited. No
payment required under the Mortgage Loan is 30 days or more delinquent nor has
any payment under the Mortgage Loan been 30 days or more delinquent at any time
since the origination of the Mortgage Loan. The first Monthly Payment shall be
made with respect to the Mortgage Loan on its related 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 defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. 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 earlier, to the day which precedes by
one month the related Due Date of the first installment of principal and
interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are provided for in the ▇▇▇▇▇▇ ▇▇▇ Guides or by
▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in Section 2.10 of
the Interim Servicing Agreement. If required by the National Flood Insurance Act
of 1968, as amended, each Mortgage Loan is covered by a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration as in effect which policy conforms to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac
requirements, as well as all additional requirements set forth in Section 2.10
of the Interim Servicing Agreement. All individual insurance policies contain a
standard mortgagee clause naming the Seller and its successors and assigns as
mortgagee, and all premiums thereon have been paid. The Mortgage obligates the
Mortgagor thereunder to maintain the hazard insurance policy at the Mortgagor's
cost and expense, and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such Mortgagor's cost
and expense, and to seek reimbursement therefor from the 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, is in full force and effect, and will be in full force and effect
and inure to the benefit of the Purchaser upon the consummation of the
transactions contemplated by this Agreement. The 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 or entity, and no such unlawful
items have been received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to prepayment penalties, have been complied with, the consummation of
the transactions contemplated hereby will not involve the violation of any such
laws or regulations, and the Seller shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, 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
release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. No portion of the Mortgaged Property is used for
commercial purposes, and since the date of origination, no portion of the
Mortgaged Property has been used for commercial purposes; provided, that
Mortgaged Properties which contain a home office shall not be considered as
being used for commercial purposes as long as the Mortgaged Property has not
been altered for commercial purposes and is not storing any chemicals or raw
materials other than those commonly used for homeowner repair, maintenance
and/or household purposes. None of the Mortgaged Properties are Manufactured
Homes, log homes, mobile homes, geodesic domes or other unique property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the
first mortgage on the Mortgaged Property;
(B) the lien of current real property taxes and assessments
not yet due and payable;
(C) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically 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; and
(D) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. Subject to the lien of a warehouse lender to be
released prior to the closing of any Mortgage Loan sale, the Seller is the sole
owner of record and holder of the Mortgage Loan and the indebtedness evidenced
by each Mortgage Note and upon the sale of the Mortgage Loans to the Purchaser,
the Seller will retain the Mortgage Files or any part thereof with respect
thereto not delivered to the Custodian, the Purchaser or the Purchaser's
designee, in trust only for the purpose of servicing and supervising the
servicing of each Mortgage Loan. The Mortgage Loan is not assigned or pledged,
and the Seller has good, indefeasible and marketable title thereto, and has full
right to transfer and sell the Mortgage Loan to the Purchaser 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 and assign each
Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Seller intends to relinquish all rights to possess,
control and monitor the Mortgage Loan. After the related Closing Date, the
Seller will have no right to modify or alter the terms of the sale of the
Mortgage Loan and the Seller will have no obligation or right to repurchase the
Mortgage Loan or substitute another Mortgage Loan, except as provided in this
Agreement;
(n) 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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance policy is
issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first (with respect
to a First Lien Loan) or second (with respect to a Second Lien Loan) priority
lien of the Mortgage 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 (A), (B) and (C) of paragraph (j) of this
Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the related Mortgage, including
the 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 or entity, and no such unlawful items have been received,
retained or realized by the Seller;
(q) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Seller nor any of its affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(r) 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 the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 thirty years from commencement of amortization. Unless otherwise
specified on the related Mortgage Loan Schedule, the Mortgage Loan is payable on
the first day of each month. The Mortgage Loan does not require a balloon
payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇
Mae and no representations have been made to a Mortgagor that are inconsistent
with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can reasonably be expected
to cause private institutional investors who invest in mortgage loans similar to
the Mortgage Loan to regard the Mortgage Loan as an unacceptable investment,
cause the Mortgage Loan to become delinquent, or adversely affect the value or
marketability of the Mortgage Loan, or cause the Mortgage Loans to prepay during
any period materially faster or slower than the mortgage loans originated by the
Seller generally;
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Seller is in possession of a complete, true and
accurate Mortgage File in compliance with Exhibit A hereto, except for such
documents the originals of which have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage with
respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located. The transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Seller are not subject to the bulk transfer or similar
statutory provisions in effect in any applicable jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable 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. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first (with respect to a First Lien Loan)
or second (with respect to a Second Lien Loan) 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 ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller and the Interim Servicer with respect to the Mortgage Loan have been in
all respects in compliance with Accepted Servicing Practices, applicable laws
and regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, all such payments are in the possession of,
or under the control of, the Seller or the Interim Servicer and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law and the provisions of the related
Mortgage Note and Mortgage. An escrow of funds is not prohibited by applicable
law and has been established in an amount sufficient to pay for every item that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due the Seller have
been capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest
Rate adjustments have been made in strict compliance with state and federal law
and the terms of the related Mortgage and Mortgage Note on the related Interest
Rate Adjustment Date. If, pursuant to the terms of the Mortgage Note, another
index was selected for determining the Mortgage Interest Rate, the same index
was used with respect to each Mortgage Note which required a new index to be
selected, and such selection did not conflict with the terms of the related
Mortgage Note. The Seller or the Interim Servicer executed and delivered any and
all notices required under applicable law and the terms of the related Mortgage
Note and Mortgage regarding the Mortgage Interest Rate and the Monthly Payment
adjustments. Any interest required to be paid pursuant to state, federal and
local law has been properly paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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;
(ll) No Violation of Environmental Laws. To the best of the Seller's
knowledge, there is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule or
regulation with respect to the Mortgage Property; and nothing further remains to
be done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Relief Act or other similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property 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, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required or customary in the jurisdiction in which the
Mortgaged Property is located, the original lender has filed for record a
request for notice of any action by the related senior lienholder, and the
Seller has notified the senior lienholder in writing of the existence of the
Second Lien Loan and requested notification of any action to be taken against
the Mortgagor by the senior lienholder. Either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File;
(rr) Credit Reporting. The Seller has caused to be fully furnished,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., favorable and unfavorable)
on its borrower credit files to Equifax, Experian, and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis;
(ss) Escrow Analysis. If applicable, with respect to each Mortgage,
the Seller has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(tt) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in strict compliance with Accepted Servicing Practices;
(uu) No Default Under First Lien. With respect to each Second Lien
Loan, the related First Lien Loan related thereto is in full force and effect,
and there is no default, breach, violation or event which would permit
acceleration existing under such first Mortgage or 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 which
would permit acceleration thereunder;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage;
(ww) No Failure to Cure Default. The Seller has not received a
written notice of default of any senior mortgage loan related to the Mortgaged
Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage. The Seller
shall hold the Purchaser harmless from any and all damages, losses, costs and
expenses (including attorney's fees) arising from disclosure of credit
information in connection with the Purchaser's secondary marketing operations
and the purchase and sale of mortgages or Servicing Rights thereto;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) all ground lease rents, other payments, or assessments that
have become due have been paid; and (7) the use of leasehold estates for
residential properties is a widely accepted practice in the jurisdiction in
which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note is identified on the
related Mortgage Loan Schedule. With respect to Mortgage Loans originated prior
to October 1, 2002, no such Prepayment Penalty may be imposed for a term in
excess of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law;
(bbb) Single-premium credit life insurance policy. In connection
with the origination of any Mortgage Loan, no proceeds from such Mortgage Loan
were used to finance or acquire a single-premium credit life insurance policy;
(ccc) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" under Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Either (x) each First Lien Loan is
covered by a paid in full, life of loan, tax service contract, and such contract
is transferable, or (y) the Seller shall or shall cause its subservicer to order
and put into place such tax service contracts on or prior to the related
Transfer Date. In the event a tax service contract is not provided with respect
to each First Lien Loan prior to the related Transfer Date, the Seller shall pay
to the Purchaser on such date $75.00 per Mortgage Loan to cover the cost of such
a tax service contract.
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) 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;
(ggg) Mortgagor Bankruptcy. On or prior to the date 60 days after
the related Closing Date, the Mortgagor has not filed and will not file a
bankruptcy petition or has not become the subject and will not become the
subject of involuntary bankruptcy proceedings or has not consented to or will
not consent to the filing of a bankruptcy proceeding against it or to a receiver
being appointed in respect of the related Mortgaged Property;
(hhh) No Prior Offer. The Mortgage Loan has not previously been
offered for sale;
(iii) [Reserved];
(jjj) Mortgagor Selection. No Mortgagor was encouraged or required
to select a Mortgage Loan product offered by the Originator which is a higher
cost product designed for less creditworthy mortgagors, unless at the time of
the Mortgage Loan's origination, such Mortgagor did not qualify taking into
account credit history and debt-to-income ratios for a lower-cost credit product
then offered by the Originator or any Affiliate of the Originator. If, at the
time of loan application, the Mortgagor may have qualified for a lower-cost
credit product then offered by any mortgage lending Affiliate of the Originator,
the Originator referred the related Mortgagor's application to such Affiliate
for underwriting consideration;
(kkk) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(lll) Mortgage Loans with Prepayment Premiums. 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, (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 Originator, as servicer, shall not
impose such prepayment premium in any instance when the mortgage debt is
accelerated as the result of the related Mortgagor's default in making the
Mortgage Loan payments;
(mmm) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, accident or health insurance policy in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(nnn) Points and Fees. All points and fees related to each Mortgage
Loan were disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation.
(ooo) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(ppp) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
Subsection 9.03 Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 9.01 and 9.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or failure to examine any Mortgage
File. Upon discovery by either the Seller or the Purchaser of a breach of any of
the foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice to
the Seller of any such breach of a representation or warranty, which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Purchaser therein (or which materially and adversely affects the value of the
applicable Mortgage Loan or the interest of the Purchaser therein in the case of
a representation and warranty relating to a particular Mortgage Loan), the
Seller shall use its best efforts promptly to cure such breach in all material
respects and, if such breach cannot be cured, the Seller shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price.
Notwithstanding the above sentence, within 60 days of the earlier of either
discovery by, or notice to, the Seller of any breach of the representations or
warranties set forth in Paragraph (rr), (zz), (aaa), (bbb), (ccc), (jjj), (kkk),
(lll), (mmm), (nnn), (ooo) and (ppp) of Subsection 9.02, the Seller shall
repurchase such Mortgage Loan at the Repurchase Price. In the event that a
breach shall involve any representation or warranty set forth in Subsection
9.01, and such breach cannot be cured within 60 days of the earlier of either
discovery by or notice to the Seller of such breach, all of the Mortgage Loans
affected by such breach shall, at the Purchaser's option, be repurchased by the
Seller at the Repurchase Price. However, if the breach shall involve a
representation or warranty set forth in Subsection 9.02 (except as provided in
the second sentence of this paragraph with respect to certain breaches for which
no substitution is permitted) and the Seller discovers or receives notice of any
such breach within 120 days of the related Closing Date, the Seller shall, at
the Purchaser's option and provided that the Seller has a Qualified Substitute
Mortgage Loan, rather than repurchase the Mortgage Loan as provided above,
remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in its
place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than 120 days after the related Closing
Date. If the Seller has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan at the Repurchase Price. Any repurchase
of a Mortgage Loan or Loans pursuant to the foregoing provisions of this
Subsection 9.03 shall be accomplished by either (a) if the Interim Servicing
Agreement has been entered into and is in effect, deposit in the Custodial
Account of the amount of the Repurchase Price for distribution to the Purchaser
on the next scheduled Remittance Date, after deducting therefrom any amount
received in respect of such repurchased Mortgage Loan or Loans and being held in
the Custodial Account for future distribution or (b) if the Interim Servicing
Agreement has not been entered into or is no longer in effect, by direct
remittance of the Repurchase Price to the Purchaser or its designee in
accordance with the Purchaser's instructions.
At the time of repurchase or substitution, the Purchaser and the
Seller shall arrange for the reassignment of the Deleted Mortgage Loan to the
Seller and the delivery to the Seller of any documents held by the Custodian
relating to the Deleted Mortgage Loan. In the event of a repurchase or
substitution, the Seller shall, simultaneously with such reassignment, give
written notice to the Purchaser that such repurchase or substitution has taken
place, amend the Mortgage Loan Schedule to reflect the withdrawal of the Deleted
Mortgage Loan from this Agreement, and, in the case of substitution, identify a
Qualified Substitute Mortgage Loan and amend the related Mortgage Loan Schedule
to reflect the addition of such Qualified Substitute Mortgage Loan to this
Agreement. In connection with any such substitution, the Seller shall be deemed
to have made as to such Qualified Substitute Mortgage Loan the representations
and warranties set forth in this Agreement except that all such representations
and warranties set forth in this Agreement shall be deemed made as of the date
of such substitution. The Seller shall effect such substitution by delivering to
the Custodian or to such other party as the Purchaser may designate in writing
for such Qualified Substitute Mortgage Loan the documents required by Subsection
6.03 and the Custodial Agreement, with the Mortgage Note endorsed as required by
Subsection 6.03 and the Custodial Agreement. No substitution will be made in any
calendar month after the Determination Date for such month. The Seller shall
cause the Interim Servicer to remit directly to the Purchaser, or its designee
in accordance with the Purchaser's instructions the Monthly Payment less the
Servicing Fee due, if any, on such Qualified Substitute Mortgage Loan or Loans
in the month following the date of such substitution. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans in the month of substitution
shall be retained by the Seller. For the month of substitution, distributions to
the Purchaser shall include the Monthly Payment due on any Deleted Mortgage Loan
in the month of substitution, and the Seller shall thereafter be entitled to
retain all amounts subsequently received by the Seller in respect of such
Deleted Mortgage Loan.
For any month in which the Seller substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Seller shall determine the amount
(if any) by which the aggregate principal balance of all Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all Deleted Mortgage Loans (after application of scheduled
principal payments due in the month of substitution). The amount of such
shortfall shall be distributed by the Seller directly to the Purchaser or its
designee in accordance with the Purchaser's instructions within two (2) Business
Days of such substitution. Accordingly, on the date of such substitution, the
Seller will remit to the Purchaser from its own funds an amount equal to the
amount of such shortfalls plus one month's interest thereon at the applicable
Mortgage Interest Rate minus the related Servicing Fee.
In addition to such repurchase or substitution obligation, the
Seller shall indemnify the Purchaser and its present and former directors,
officers, employees and agents and any successor Servicer and its present and
former directors, officers, employees and agents and hold such parties harmless
against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the Seller representations and warranties contained
in this Agreement or any Reconstitution Agreement. It is understood and agreed
that the obligations of the Seller set forth in this Subsection 9.03 to cure,
substitute for or repurchase a defective Mortgage Loan and to indemnify the
Purchaser and Successor Servicer as provided in this Subsection 9.03 and in
Subsection 14.01 constitute the sole remedies of the Purchaser respecting a
breach of the foregoing representations and warranties. For purposes of this
paragraph "Purchaser" shall mean the Person then acting as the Purchaser under
this Agreement and any and all Persons who previously were "Purchasers" under
this Agreement and "Successor Servicer" shall mean any Person designated as the
Successor Servicer pursuant to this Agreement and any and all Persons who
previously were "Successor Servicers" pursuant to this Agreement.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 9.01 and
9.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Seller by the Purchaser for compliance with
this Agreement.
Subsection 9.04 Repurchase of Mortgage Loans with First Payment
Defaults. If the related Mortgagor is delinquent with respect to the Mortgage
Loan's first Monthly Payment either (i) after origination of such Mortgage Loan,
or (ii) after the related Closing Date, the Seller, at the Purchaser's option,
shall repurchase such Mortgage Loan from the Purchaser at a price equal to the
Repurchase Price. The Seller shall repurchase such delinquent Mortgage Loan
within thirty (30) days of such request.
Subsection 9.05 Premium Recapture. With respect to any Mortgage Loan
without prepayment penalties that prepays in full during the first six months
following the related Closing Date, the Seller shall pay the Purchaser, within
five (5) Business Days after such prepayment in full, an amount equal to the
excess of the Purchase Price Percentage for such Mortgage Loan over par,
multiplied by the outstanding principal balance of such Mortgage Loan as of the
related Cut-off Date. Notwithstanding the foregoing, such provision shall not
apply to Mortgage Loans containing legally enforceable prepayment penalties due
to the Purchaser but waived and not collected by the related servicer.
SECTION 10. Closing.
The closing for the purchase and sale of each Mortgage Loan Package
shall take place on the related Closing Date. At the Purchaser's option, each
Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree, or conducted in person, at such place as the parties shall
agree.
The closing for the Mortgage Loans to be purchased on each Closing
Date shall be subject to each of the following conditions:
(i) at least two Business Days prior to the related Closing Date,
the Seller shall deliver to the Purchaser a magnetic diskette, or transmit
by modem, a listing on a loan-level basis of the necessary information to
compute the Purchase Price of the Mortgage Loans delivered on such Closing
Date (including accrued interest), and prepare a Mortgage Loan Schedule;
(ii) all of the representations and warranties of the Seller under
this Agreement and of the Interim Servicer under the Interim Servicing
Agreement (with respect to each Mortgage Loan for an interim period, as
specified therein) shall be true and correct as of the related Closing
Date and no event shall have occurred which, with notice or the passage of
time, would constitute a default under this Agreement or an Event of
Default under the Interim Servicing Agreement;
(iii) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing documents as
specified in Section 11 of this Agreement, in such forms as are agreed
upon and acceptable to the Purchaser, duly executed by all signatories
other than the Purchaser as required pursuant to the terms hereof;
(iv) the Seller shall have delivered and released to the Custodian
all documents required pursuant to the Custodial Agreement; and
(v) all other terms and conditions of this Agreement and the related
Purchase Price and Terms Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the related Closing Date the Purchase Price, plus accrued interest
pursuant to Section 4 of this Agreement, by wire transfer of immediately
available funds to the account designated by the Seller.
SECTION 11. Closing Documents.
The Closing Documents for the Mortgage Loans to be purchased on each
Closing Date shall consist of fully executed originals of the following
documents:
(1) this Agreement (to be executed and delivered only
for the initial Closing Date);
(2) the Interim Servicing Agreement, dated as of the
initial Cut-off Date (to be executed and delivered only for
the initial Closing Date);
(3) with respect to the initial Closing Date, the
Custodial Agreement, dated as of the initial Cut-off Date;
(4) the related Mortgage Loan Schedule (one copy to be
attached to the Custodian's counterpart of the Custodial
Agreement in connection with the initial Closing Date, and one
copy to be attached to the related Assignment and Conveyance
as the Mortgage Loan Schedule thereto);
(5) a Custodian's Certification, as required under the
Custodial Agreement, in the form of Exhibit 2 to the Custodial
Agreement;
(6) with respect to the initial Closing Date, an
Officer's Certificate, in the form of Exhibit C hereto with
respect to each of the Seller, including all attachments
thereto; with respect to subsequent Closing Dates, an
Officer's Certificate upon request of the Purchaser;
(7) with respect to the initial Closing Date, an Opinion
of Counsel of the Seller (who may be an employee of the
Seller), in the form of Exhibit D hereto ("Opinion of Counsel
of the Seller"); with respect to subsequent Closing Dates, an
Opinion of Counsel of the Seller upon request of the
Purchaser;
(8) with respect to the initial Closing Date, an Opinion
of Counsel of the Custodian (who may be an employee of the
Custodian), in the form of an exhibit to the Custodial
Agreement(s);
(9) a Security Release Certification, in the form of
Exhibit E or F, as applicable, hereto executed by any person,
as requested by the Purchaser, if any of the Mortgage Loans
have at any time been subject to any security interest, pledge
or hypothecation for the benefit of such person;
(10) a certificate or other evidence of merger or change
of name, signed or stamped by the applicable regulatory
authority, if any of the Mortgage Loans were acquired by the
Seller by merger or acquired or originated by the Seller while
conducting business under a name other than its present name,
if applicable;
(11) Assignment and Conveyance Agreement in the form of
Exhibit G hereto, and all exhibits thereto; and
(12) with respect to the initial Closing Date, the
Underwriting Guidelines to be attached hereto as Exhibit H and
with respect to each subsequent Closing Date, the Underwriting
Guidelines to be attached to the related Assignment and
Conveyance.
The Seller shall bear the risk of loss of the closing documents
until such time as they are received by the Purchaser or its attorneys.
SECTION 12. Costs.
The Purchaser shall pay any commissions due its salesmen and the
legal fees and expenses of its attorneys and custodial fees. All other costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans and the Servicing Rights including recording fees, fees for title policy
endorsements and continuations, fees for recording Assignments of Mortgage, and
the Seller's attorney's fees, shall be paid by the Seller.
SECTION 13. Cooperation of Seller with a Reconstitution.
The Seller and the Purchaser agree that with respect to some or all
of the Mortgage Loans, after the related Closing Date, on one or more dates
(each, a "Reconstitution Date") at the Purchaser's sole option, the Purchaser
may effect a sale (each, a "Reconstitution") of some or all of the Mortgage
Loans then subject to this Agreement, without recourse, to:
(i) ▇▇▇▇▇▇ ▇▇▇ under its Cash Purchase Program or MBS Program
(Special Servicing Option) (each, a "▇▇▇▇▇▇ Mae Transfer"); or
(ii) ▇▇▇▇▇▇▇ Mac (the "▇▇▇▇▇▇▇ Mac Transfer"); or
(iii) one or more third party purchasers in one or more Whole Loan
Transfers; or
(iv) one or more trusts or other entities to be formed as part of
one or more Securitization Transfers.
The Seller agrees to execute in connection with any Agency Transfer,
any and all pool purchase contracts, and/or agreements reasonably acceptable to
the Seller among the Purchaser, the Seller, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac (as the
case may be) and any servicer in connection with a Whole Loan Transfer, a
seller's warranties and servicing agreement or a participation and servicing
agreement in form and substance reasonably acceptable to the parties, and in
connection with a Securitization Transfer, a pooling and servicing agreement in
form and substance reasonably acceptable to the parties or an Assignment and
Recognition Agreement substantially in the form attached hereto as Exhibit I
(collectively, the agreements referred to herein as designated, the
"Reconstitution Agreements"), together with an opinion of counsel with respect
to such Reconstitution Agreements..
With respect to each Whole Loan Transfer and each Securitization
Transfer entered into by the Purchaser, the Seller agrees (1) to cooperate fully
with the Purchaser and any prospective purchaser with respect to all reasonable
requests and due diligence procedures; (2) to execute, deliver and perform all
Reconstitution Agreements required by the Purchaser; (3) to restate the
representations and warranties set forth in Subsections 9.01 and 9.02 as of the
settlement or closing date in connection with such Reconstitution (each, a
"Reconstitution Date"), such restatement to be in the form of Exhibit B to
Exhibit I hereto, or make the representations and warranties set forth in the
related selling/servicing guide of the servicer or issuer, as the case may be,
or such representations or warranties as may be required by any rating agency or
prospective purchaser of the related securities or such Mortgage Loans in
connection with such Reconstitution; (4) to deliver to Purchaser and any
prospective purchaser within three (3) days after request by Purchaser or
prospective purchaser, information, in form and substance satisfactory to
Purchaser and such prospective purchaser, with respect to each originator of the
Mortgage Loans (x) reasonably requested by the Purchaser or (y) required by Item
1110 of Regulation AB under the Securities Act and the Securities Exchange Act,
as such regulation is amended from time to time (the "Regulation AB"), which as
of the date hereof requires the following information: (a) the originator's form
of organization; and (b) a description of the originator's origination program
and how long the originator has been engaged in originating residential mortgage
loans, which description must include a discussion of the originator's
experience in originating mortgage loans of the same type as the Mortgage Loans
and information regarding the size and composition of the originator's
origination portfolio as well as information that may be material, in the good
faith judgment of the Purchaser, to an analysis of the performance of the
Mortgage Loans, such as the originators' credit-granting or underwriting
criteria for mortgage loans of the same type as the Mortgage Loans; and (5) to
deliver to the Purchaser and any prospective purchaser within 3 Business Days
after request by Purchaser, static pool information, set forth in Item 1105(a)
of Regulation AB ("Static Pool Information") with respect to those mortgage
loans that were originated by the originator of the Mortgage Loans and which are
of the same type as the Mortgage Loans, which as of the date hereof requires
Static Pool Information regarding delinquencies, cumulative losses and
prepayments by vintage origination year or prior securitized pools, as
applicable. A vintage origination year represents mortgage loans originated
during the same year. Such Static Pool Information shall be for the prior five
years or for so long as the originator has been originating (in the case of data
by vintage origination year) or securitizing (in the case of data by prior
securitized pools) such mortgage loans, if originating for less than five years.
The Static Pool Information for each vintage origination year or prior
securitized pools, as applicable, shall be presented in monthly increments over
the life of the mortgage loans included in the vintage origination year or prior
securitized pool. The Seller shall provide to such servicer or issuer, as the
case may be, and any other participants or purchasers in such Reconstitution:
(i) any and all information and appropriate verification of information which
may be reasonably available to the Seller or its affiliates, whether through
letters of its auditors and counsel or otherwise, as the Purchaser or any such
other participant shall request; (ii) such additional representations,
warranties, covenants, opinions of counsel, letters from auditors, and
certificates of public officials or officers of the Seller or the Interim
Servicer as are reasonably believed necessary by the Purchaser or any such other
participant; and (iii) to execute, deliver and satisfy all conditions set forth
in any indemnity agreement required by the Purchaser or any such participant,
including, without limitation, an Indemnification and Contribution Agreement in
substantially the form attached hereto as Exhibit B. Moreover, the Seller agrees
to cooperate with all reasonable requests made by the Purchaser to effect such
Reconstitution Agreements. The Seller shall indemnify the Purchaser, each
affiliate of the Purchaser participating in the Reconstitution and each Person
who controls the Purchaser or such affiliate and their respective present and
former directors, officers, employees and agents, and hold each of them harmless
from and against any losses, damages, penalties, fines, forfeitures, legal fees
and expenses and related costs, judgments, and any other costs, fees and
expenses that each of them may sustain arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
information provided by or on behalf of the Seller regarding the Seller, the
Seller's or other originator's Static Pool Information, the Mortgage Loans or
the Underwriting Guidelines set forth in any offering document prepared in
connection with any Reconstitution. For purposes of the previous sentence,
"Purchaser" shall mean the Person then acting as the Purchaser under this
Agreement and any and all Persons who previously were "Purchasers" under this
Agreement.
In the event the Purchaser has elected to have the Seller or the
Interim Servicer hold record title to the Mortgages, prior to the Reconstitution
Date, the Seller shall prepare an assignment of mortgage in blank or to the
prospective purchaser or trustee, as applicable, from the Seller or the Interim
Servicer, as applicable, acceptable to the prospective purchaser or trustee, as
applicable, for each Mortgage Loan that is part of the Reconstitution and shall
pay all preparation and recording costs associated therewith. In connection with
the Reconstitution, the Seller shall execute or shall cause the Interim Servicer
to execute each assignment of mortgage, track such Assignments of Mortgage to
ensure they have been recorded and deliver them as required by the prospective
purchaser or trustee, as applicable, upon the Seller's receipt thereof.
Additionally, the Seller shall prepare and execute or shall cause the Interim
Servicer to execute, at the direction of the Purchaser, any note endorsement in
connection with any and all seller/servicer agreements.
All Mortgage Loans not sold or transferred pursuant to a
Reconstitution shall remain subject to this Agreement and, if the Interim
Servicing Agreement shall remain in effect with respect to the related Mortgage
Loan Package, shall continue to be serviced in accordance with the terms of this
Agreement and the Interim Servicing Agreement and with respect thereto this
Agreement shall remain in full force and effect.
SECTION 14. The Seller.
Subsection 14.01 Additional Indemnification by the Seller; Third
Party Claims.
(a) The Seller shall indemnify the Purchaser and its present and
former directors, officers, employees and agents and any Successor Servicer and
its present and former directors, officers, employees and agents, and hold such
parties harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, legal fees and expenses (including legal fees and expenses incurred
in connection with the enforcement of the Seller's indemnification obligation
under this Subsection 14.01) and related costs, judgments, and any other costs,
fees and expenses that such parties may sustain in any way related to the
failure of the Seller to perform its duties and the Interim Servicer to service
the Mortgage Loans in strict compliance with the terms of this Agreement or any
Reconstitution Agreement entered into pursuant to Section 13 or any breach of
any of Seller's representations, warranties and covenants set forth in this
Agreement (provided that such costs shall not include any lost profits). For
purposes of this paragraph "Purchaser" shall mean the Person then acting as the
Purchaser under this Agreement and any and all Persons who previously were
"Purchasers" under this Agreement and "Successor Servicer" shall mean any Person
designated as the Successor Servicer pursuant to this Agreement and any and all
Persons who previously were "Successor Servicers" pursuant to this Agreement.
(b) Promptly after receipt by an indemnified party under this
Subsection 14.01 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Subsection 14.01, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may have to
any indemnified party under this Subsection 14.01, except to the extent that it
has been prejudiced in any material respect, or from any liability which it may
have, otherwise than under this Subsection 14.01. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided that if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party or parties shall have reasonably concluded that there may
be legal defenses available to it or them and/or other indemnified parties which
are different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate counsel
to assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party for
expenses incurred by the indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with one local counsel, if applicable)), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii).
Subsection 14.02 Merger or Consolidation of the Seller.
The Seller will keep in full effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Seller shall be a party, or any Person succeeding to the business of the
Seller, shall be the successor of the Seller hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall have a net worth of at least $25,000,000.
SECTION 15. Financial Statements.
The Seller understands that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser shall make available to
prospective purchasers audited financial statements of the Seller for the most
recently completed three fiscal years respecting which such statements are
available, as well as a Consolidated Statement of Condition of the Seller at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Seller shall also make available any comparable interim
statements to the extent any such statements have been prepared by the Seller
(and are available upon request to members or stockholders of the Seller or the
public at large). The Seller, if it has not already done so, agrees to furnish
promptly to the Purchaser copies of the statements specified above. The Seller
shall also make available information on its servicing performance with respect
to loans serviced for others, including delinquency ratios.
The Seller also agrees to allow reasonable access to a knowledgeable
financial or accounting officer for the purpose of answering questions asked by
any prospective purchaser regarding recent developments affecting the Seller or
the financial statements of the Seller.
SECTION 16. Mandatory Delivery; Grant of Security Interest.
The sale and delivery on the related Closing Date of the Mortgage
Loans described on the related Mortgage Loan Schedule is mandatory from and
after the date of the execution of the related Purchase Price and Terms
Agreement, it being specifically understood and agreed that each Mortgage Loan
is unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser (including damages to prospective purchasers of the
Mortgage Loans) in the event of the Seller's failure to deliver (i) each of the
related Mortgage Loans or (ii) one or more Qualified Substitute Mortgage Loans
or (iii) one or more Mortgage Loans otherwise acceptable to the Purchaser on or
before the related Closing Date. The Seller hereby grants to the Purchaser a
lien on and a continuing security interest in each Mortgage Loan and each
document and instrument evidencing each such Mortgage Loan to secure the
performance by the Seller of its obligations under the related Purchase Price
and Terms Agreement, and the Seller agrees that it shall hold such Mortgage
Loans in custody for the Purchaser subject to the Purchaser's (a) right to
reject any Mortgage Loan (or Qualified Substitute Mortgage Loan) under the terms
of this Agreement and to require another Mortgage Loan (or Qualified Substitute
Mortgage Loan) to be substituted therefor, and (b) obligation to pay the
Purchase Price for the Mortgage Loans. All rights and remedies of the Purchaser
under this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
SECTION 17. 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 the address as follows:
(i) if to the Seller:
First NLC Financial Services, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(ii) if to the Purchaser:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loan Operations Manager
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 18. Severability Clause.
Any part, provision representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
SECTION 19. 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 20. Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Purchaser in the State of New York and
shall be deemed to have been made in the State of New York. The Agreement 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 the substantive laws of the State of New York (without regard to
conflicts of laws principles), except to the extent preempted by Federal law.
SECTION 21. Intention of the Parties.
It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to treat
the transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. Moreover, the arrangement
under which the Mortgage Loans are held shall be consistent with classification
of such arrangement as a grantor trust in the event it is not found to represent
direct ownership of the Mortgage Loans. The Purchaser shall have the right to
review the Mortgage Loans and the related Mortgage Loan Files to determine the
characteristics of the Mortgage Loans which shall affect the Federal income tax
consequences of owning the Mortgage Loans and the Seller shall cooperate with
all reasonable requests made by the Purchaser in the course of such review.
SECTION 22. Successors and Assigns; Assignment of Purchase
Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller and the Purchaser and the respective permitted
successors and assigns of the Seller and the successors and assigns of the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Seller to a third party without the prior written consent of the Purchaser,
which consent may be withheld by the Purchaser in its sole discretion. This
Agreement may be assigned, pledged or hypothecated by the Purchaser in whole or
in part, and with respect to one or more of the Mortgage Loans, without the
consent of the Seller. There shall be no limitation on the number of assignments
or transfers allowable by the Purchaser with respect to the Mortgage Loans and
this Agreement. In the event the Purchaser assigns this Agreement, and the
assignee assumes any of the Purchaser's obligations hereunder, the Seller
acknowledges and agrees to look solely to such assignee, and not to the
Purchaser, for performance of the obligations so assumed and the Purchaser shall
be relieved from any liability to the Seller with respect thereto.
SECTION 23. 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 24. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a
part hereof and are an integral part of this Agreement.
SECTION 25. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 26. Reproduction of Documents.
This Agreement and all documents relating thereto, 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 27. Further Agreements.
The Seller and the Purchaser 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 this
Agreement.
SECTION 28. Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments
of Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or their comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Seller's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
SECTION 29. No Solicitation.
From and after the related Closing Date, the Seller agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Seller's behalf,
to personally, by telephone or mail (via electronic means or otherwise), solicit
a Mortgagor under any Mortgage Loan for the purpose of refinancing a Mortgage
Loan, in whole or in part, without the prior written consent of the Purchaser.
Notwithstanding the foregoing, it is understood and agreed that the Seller, or
any of its respective affiliates:
(i) may advertise its availability for handling refinancings of
mortgages in its portfolio, including the promotion of terms it has
available for such refinancings, through the sending of letters or
promotional material, so long as it does not specifically target
Mortgagors and so long as such promotional material either is sent to the
mortgagors for all of the mortgages in the servicing portfolio of the
Seller and any of its affiliates (those it owns as well as those serviced
for others); and
(ii) may provide pay-off information and otherwise cooperate with
individual mortgagors who contact it about prepaying their mortgages by
advising them of refinancing terms and streamlined origination
arrangements that are available.
Promotions undertaken by the Seller or by any affiliate of the
Seller which are directed to the general public at large (including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements), shall not constitute
solicitation under this Section 29.
SECTION 30. Waiver of Trial by Jury.
THE SELLER AND THE PURCHASER EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 31. Governing Law Jurisdiction; Consent to Service of Process. THIS
AGREEMENT SHALL BE DEEMED IN EFFECT WHEN A FULLY EXECUTED COUNTERPART THEREOF IS
RECEIVED BY THE PURCHASER IN THE STATE OF NEW YORK AND SHALL BE DEEMED TO HAVE
BEEN MADE IN THE STATE OF NEW YORK. THIS AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS CHOICE OF
LAW RULES AND PRINCIPLES. EACH OF THE PURCHASER AND THE SELLER IRREVOCABLY (I)
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
NEW YORK FOR THE PURPOSE OF ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT;
(II) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM IN ANY ACTION OR PROCEEDING IN ANY SUCH COURT; (III) AGREES
THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW; AND (IV) CONSENTS TO SERVICE OF PROCESS
UPON IT BY MAILING A COPY THEREOF BY CERTIFIED MAIL ADDRESSED TO IT AS PROVIDED
FOR NOTICES HEREUNDER.
[Signature Page Follows]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
(Purchaser)
By:____________________________________
Name:__________________________________
Title:_________________________________
FIRST NLC FINANCIAL SERVICES, LLC
(Seller)
By:____________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT A
CONTENTS OF EACH MORTGAGE FILE
------------------------------
With respect to each Mortgage Loan, the Mortgage File shall include each
of the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be delivered to the Custodian, or
to such other Person as the Purchaser shall designate in writing, pursuant to
Section 6 of the Amended and Restated Mortgage Loan Purchase and Warranties
Agreement to which this Exhibit is attached (the "Agreement"):
(a) the original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________, without recourse" and signed in
the name of the last endorsee (the "Last Endorsee") by an authorized
officer. To the extent that there is no room on the face of the Mortgage
Notes for endorsements, the endorsement may be contained on an allonge, if
state law so allows and the Custodian is so advised by the Seller that
state law so allows. If the Mortgage Loan was acquired by the Seller in a
merger, the endorsement must be by "[Last Endorsee], successor by merger
to [name of predecessor]". If the Mortgage Loan was acquired or originated
by the Last Endorsee while doing business under another name, the
endorsement must be by "[Last Endorsee], formerly known as [previous
name]";
(b) the original of any guarantee executed in connection with the
Mortgage Note;
(c) the original Mortgage with evidence of recording thereon. If in
connection with any Mortgage Loan, the Seller cannot deliver or cause to
be delivered the original Mortgage with evidence of recording thereon on
or prior to the Closing Date because of a delay caused by the public
recording office where such Mortgage has been delivered for recordation or
because such Mortgage has been lost or because such public recording
office retains the original recorded Mortgage, the Seller shall deliver or
cause to be delivered to the Custodian, a photocopy of such Mortgage,
together with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Seller (or certified by the title
company, escrow agent, or closing attorney) stating that such Mortgage has
been dispatched to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage
certified by such public recording office to be a true and complete copy
of the original recorded Mortgage will be promptly delivered to the
Custodian upon receipt thereof by the Seller; or (ii) in the case of a
Mortgage where a public recording office retains the original recorded
Mortgage or in the case where a Mortgage is lost after recordation in a
public recording office, a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage;
(d) the originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon;
(e) the original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording. The Assignment of Mortgage
must be duly recorded only if recordation is either necessary under
applicable law or commonly required by private institutional mortgage
investors in the area where the Mortgaged Property is located or on
direction of the Purchaser as provided in this Agreement. If the
Assignment of Mortgage is to be recorded, the Mortgage shall be assigned
to the Purchaser. If the Assignment of Mortgage is not to be recorded, the
Assignment of Mortgage shall be delivered in blank. If the Mortgage Loan
was acquired by the Seller in a merger, the Assignment of Mortgage must be
made by "[Seller], successor by merger to [name of predecessor]". If the
Mortgage Loan was acquired or originated by the Seller while doing
business under another name, the Assignment of Mortgage must be by
"[Seller], formerly known as [previous name]";
(f) the originals of all intervening assignments of mortgage (if
any) evidencing a complete chain of assignment from the Seller to the Last
Endorsee with evidence of recording thereon, or if any such intervening
assignment has not been returned from the applicable recording office or
has been lost or if such public recording office retains the original
recorded assignments of mortgage, the Seller shall deliver or cause to be
delivered to the Custodian, a photocopy of such intervening assignment,
together with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Seller (or certified by the title
company, escrow agent, or closing attorney) stating that such intervening
assignment of mortgage has been dispatched to the appropriate public
recording office for recordation and that such original recorded
intervening assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public recording
office to be a true and complete copy of the original recorded intervening
assignment of mortgage will be promptly delivered to the Custodian upon
receipt thereof by the Seller; or (ii) in the case of an intervening
assignment where a public recording office retains the original recorded
intervening assignment or in the case where an intervening assignment is
lost after recordation in a public recording office, a copy of such
intervening assignment certified by such public recording office to be a
true and complete copy of the original recorded intervening assignment;
(g) the original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy of
the related policy binder or commitment for title certified to be true and
complete by the title insurance company;
(h) the original or, if unavailable, a copy of any security
agreement, chattel mortgage or equivalent document executed in connection
with the Mortgage; and
(i) if any of the above documents has been executed by a person
holding a power of attorney, an original or photocopy of such power
certified by the Seller to be a true and correct copy of the original.
In the event an Officer's Certificate of the Seller is delivered to
the Purchaser because of a delay caused by the public recording office in
returning any recorded document, the Seller shall deliver to the Purchaser,
within 90 days of the related Closing Date, an Officer's Certificate which shall
(i) identify the recorded document, (ii) state that the recorded document has
not been delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will be
delivered to the Custodian; provided, however, that any recorded document shall
in no event be delivered later than one year following the related Closing Date.
An extension of the date specified in clause (iv) above may be requested from
the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT B
FORM OF INDEMNIFICATION
AND
CONTRIBUTION AGREEMENT
----------------------
THIS INDEMNIFICATION AND CONTRIBUTION AGREEMENT dated _________,
200_ ("Agreement") among [______________], a [______________] (the
"Depositor"), [______________], a [______________] (the "Underwriter"), and
[______________], a [______________] (the "Indemnifying Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Indemnifying Party and the Depositor are parties to
the Pooling and Servicing Agreement (as defined herein);
WHEREAS, the Indemnifying Party originated or acquired the Mortgage
Loans and subsequently sold the Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. (the "Purchaser"), an affiliate of the Depositor, in anticipation
of the securitization transaction;
WHEREAS, the Indemnifying Party also stands to receive substantial
financial benefits in its capacity as servicer under the Pooling and Servicing
Agreement;
WHEREAS, as an inducement to the Depositor to enter into the Pooling
and Servicing Agreement and the Underwriter to enter into the Underwriting
Agreement (as defined herein), the Indemnifying Party wishes to provide for
indemnification and contribution on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the foregoing and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
1933 Act: The Securities Act of 1933, as amended.
1934 Act: The Securities Exchange Act of 1934, as amended.
Agreement: This Indemnification and Contribution Agreement, as
the same may be amended in accordance with the terms hereof.
Indemnified Parties: As defined in Section 3.1.
Indemnifying Party Information: All information in the Prospectus
Supplement or any amendment or supplement thereto (i) contained under the
headings "Summary--Relevant Parties--Responsible Party [and Servicer,"] "The
Mortgage Loan Pool--Underwriting Guidelines" [and "The Servicer"] and (ii)
regarding the Mortgage Loans, the related mortgagors and/or the related
Mortgaged Properties (but in the case of this clause (ii), only to the extent
any untrue statement or omission arose from or is based upon errors or
omissions in the information concerning the Mortgage Loans, the related
mortgagors and/or the related Mortgaged Properties, as applicable, provided
to the Depositor or any affiliate by or on behalf of the Indemnifying Party),
as well as all static pool information regarding mortgage loans originated or
acquired by the Seller [and included in the Prospectus Supplement or any
amendment or supplement thereto] [incorporated by reference from the Seller's
website at _________].
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Pooling and Servicing Agreement: The Pooling and Servicing
Agreement, dated as of ___________, 200_, among the Depositor, the
Indemnifying Party, as responsible party and servicer, and [______________].
Private Placement Memorandum: The private placement memorandum,
dated ___________, 200_, relating to the offering of the Privately Offered
Certificates.
Privately Offered Certificates: [______________], Mortgage
Pass-Through Certificates, Series [_______], Class [__] issued pursuant to
the Pooling and Servicing Agreement.
Prospectus Supplement: The preliminary prospectus supplement, dated
___________, 200_, together with the final prospectus supplement, dated
___________, 200_, relating to the offering of the Publicly Offered
Certificates.
Publicly Offered Certificates: [______________], Mortgage
Pass-Through Certificates, Series [_______], Class [__], Class [__],
Class [__], Class [__], Class [__], Class [__] and Class [__] issued pursuant
to the Pooling and Servicing Agreement.
Underwriting Agreement: The Underwriting Agreement, dated
___________, 200_, among the Depositor and the Underwriter, relating to the
sale of the Publicly Offered Certificates.
1.2 Other Terms. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Pooling and Servicing
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Each party hereto represents that:
(a) it has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement;
(b) this Agreement has been duly authorized, executed and delivered
by such party; and
(c) assuming the due authorization, execution and delivery by each
other party hereto, this Agreement constitutes the legal, valid and binding
obligation of such party.
ARTICLE III
INDEMNIFICATION
3.1 Indemnification by the Indemnifying Party of the Depositor and
the Underwriter. (a) The Indemnifying Party shall indemnify and hold harmless
the Depositor and the Underwriter and their respective affiliates, and their
respective present and former directors, officers, employees, agents and each
Person, if any, that controls the Depositor, the Underwriter or such affiliate,
within the meaning of either the 1933 Act or the 1934 Act (collectively, the
"Indemnified Parties"), against any and all losses, claims, damages, penalties,
fines, forfeitures or liabilities, joint or several, to which each such
Indemnified Party may become subject, under the 1933 Act, the 1934 Act or
otherwise, to the extent that such losses, claims, damages, penalties, fines,
forfeitures or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus Supplement, the Private Placement Memorandum or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission
relates to information set forth in the Indemnifying Party Information, and the
Indemnifying Party shall in each case reimburse each Indemnified Party for any
legal or other costs, fees, or expenses reasonably incurred and as incurred by
such Indemnified Party in connection with investigating or defending any such
loss, claim, damage, penalty, fine, forfeiture, liability or action. The
Indemnifying Party's liability under this Section 3.1 shall be in addition to
any other liability that the Indemnifying Party may otherwise have.
(b) If the indemnification provided for in this Section 3.1 shall
for any reason be unavailable to an Indemnified Party under this Section 3.1
(other than due to indemnification not being applicable under Section 3.1(a)),
then the party which would otherwise be obligated to indemnify with respect
thereto, on the one hand, and the parties which would otherwise be entitled to
be indemnified, on the other hand, shall contribute to the aggregate losses,
liabilities, claims, damages, penalty, fine, forfeiture, costs, fees and
expenses of the nature contemplated herein and incurred by the parties hereto in
such proportions that are appropriate to reflect the relative fault of the
Depositor or the Underwriter, on the one hand, and the Indemnifying Party, on
the other hand, in connection with the applicable misstatements or omissions as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, no Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
Person that was not guilty of such fraudulent misrepresentation. For purposes of
this Section 3.1, each director of a party to this Agreement and each Person, if
any, that controls a party to this Agreement within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such party.
3.2 Notification; Procedural Matters. Promptly after receipt by an
Indemnified Party under Section 3.1 of notice of any claim or the commencement
of any action, such Indemnified Party shall, if a claim in respect thereof is to
be made against the Indemnifying Party (or if a claim for contribution is to be
made against another party) under Section 3.1, notify the Indemnifying Party (or
other contributing party) in writing of the claim or the commencement of such
action; provided, however, that the failure to notify the Indemnifying Party (or
other contributing party) shall not relieve it from any liability which it may
have under Section 3.1 except to the extent it has been materially prejudiced by
such failure; and provided, further, however, that the failure to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
any Indemnified Party (or to the party requesting contribution) otherwise than
under Section 3.1. In case any such action is brought against any Indemnified
Party and it notifies the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that, by written notice delivered to the Indemnified Party promptly after
receiving the aforesaid notice from such Indemnified Party, the Indemnifying
Party elects to assume the defense thereof, it may participate with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that if
the defendants in any such action include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party or parties shall reasonably have
concluded that there may be legal defenses available to it or them and/or other
Indemnified Parties that are different from or additional to those available to
the Indemnifying Party, or if the use of counsel chosen by the Indemnifying
Party to represent the Indemnified Parties would present such counsel with a
conflict of interest, the Indemnified Party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party or
parties. Upon receipt of notice from the Indemnifying Party to such Indemnified
Party of its election so to assume the defense of such action and approval by
the Indemnified Party of such counsel, the Indemnifying Party shall not be
liable to such Indemnified Party under this paragraph for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel (plus any local counsel) in connection with the assertion of legal
defenses in accordance with the proviso to the immediately preceding sentence,
(ii) the Indemnifying Party shall not have employed counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party within
a reasonable time after notice of commencement of the action or (iii) the
Indemnifying Party shall have authorized the employment of counsel for the
Indemnified Party at the expense of the Indemnifying Party. No party shall be
liable for contribution with respect to any action or claim settled without its
consent, which consent shall not be unreasonably withheld. In no event shall the
Indemnifying Party be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from its own counsel for all
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
ARTICLE IV
GENERAL
4.1 Survival. This Agreement and the obligations of the parties
hereunder shall survive the purchase and sale of the Publicly Offered
Certificates and Privately Offered Certificates.
4.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, each Indemnified Party and their respective
successors and assigns, and no other Person shall have any right or obligation
hereunder.
4.3 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to principles of conflict of laws.
4.4 Miscellaneous. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by a writing signed by the
party against which 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.
4.5 Notices. All communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered to:
In the case of the Depositor:
[--------------]
[--------------]
[--------------]
Attention:
Telephone:
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loans Operations Manager
Telephone:
In the case of the Underwriter:
[--------------]
[--------------]
[--------------]
Attention:
Telephone:
In the case of the Indemnifying Party:
[--------------]
[--------------]
[--------------]
Attention:
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized officers as of the date first above written.
[DEPOSITOR]
By:____________________________________
Name:
Title:
[UNDERWRITER]
By:____________________________________
Name:
Title:
[INDEMNIFYING PARTY]
By:____________________________________
Name:
Title:
EXHIBIT C
SELLER'S OFFICER'S CERTIFICATE
------------------------------
______I, ____________________, hereby certify that I am the duly
elected [Vice] President of ________________[COMPANY], a [state] [federally]
chartered institution organized under the laws of the [state of ____________]
[United States] (the "Company") and further as follows:
(i)___Attached hereto as Exhibit 1 is a true, correct and complete
copy of the charter of the Company which is in full force and effect on
the date hereof and which has been in effect without amendment, waiver,
rescission or modification since ___________.
(ii) Attached hereto as Exhibit 2 is a true, correct and complete
copy of the bylaws of the Company which are in effect on the date hereof
and which have been in effect without amendment, waiver, rescission or
modification since ___________.
(iii) Attached hereto as Exhibit 3 is an original certificate of
good standing of the Company issued within ten days of the date hereof,
and no event has occurred since the date thereof which would impair such
standing.
(iv) Attached hereto as Exhibit 4 is a true, correct and complete
copy of the corporate resolutions of the Board of Directors of the Company
authorizing the Company to execute and deliver (a) the Amended and
Restated Mortgage Loan Purchase and Warranties Agreement, dated as of
September 29, 2005 (the "Purchase Agreement"), by and between ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage Capital Inc. (the "Purchaser") and the Company, (b) the
Interim Servicing Agreement, dated as of September 1, 2004, by and between
the Seller and the Purchaser, [and to endorse the Mortgage Notes and
execute the Assignments of Mortgages by original [or facsimile]
signature], and such resolutions are in effect on the date hereof and have
been in effect without amendment, waiver, rescission or modification since
____________.
(v) Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Company of or compliance by the Company
with the Purchase Agreement, [the sale of the mortgage loans] or the
consummation of the transactions contemplated by the agreements; or (ii)
any required consent, approval, authorization or order has been obtained
by the Company.
(vi) Neither the consummation of the transactions contemplated by,
nor the fulfillment of the terms of the Purchase Agreement conflicts or
will conflict with or results or will result in a breach of or constitutes
or will constitute a default under the charter or by-laws of the Company
or, to the best of my knowledge, the terms of any indenture or other
agreement or instrument to which the Company is a party or by which it is
bound or to which it is subject, or any statute or order, rule,
regulations, writ, injunction or decree of any court, governmental
authority or regulatory body to which the Company is subject or by which
it is bound.
(vii) To the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the Company
which, in my judgment, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Company or in any
material impairment of the right or ability of the Company to carry on its
business substantially as now conducted or in any material liability on
the part of the Company or which would draw into question the validity of
the Purchase Agreement, or the mortgage loans or of any action taken or to
be taken in connection with the transactions contemplated hereby, or which
would be likely to impair materially the ability of the Company to perform
under the terms of the Purchase Agreement.
(viii) Each person listed on Exhibit 5 attached hereto who, as an
officer or representative of the Company, signed (a) the Purchase
Agreement, and (b) any other document delivered or on the date hereof in
connection with any purchase described in the agreements set forth above
was, at the respective times of such signing and delivery, and is now, a
duly elected or appointed, qualified and acting officer or representative
of the Company, who holds the office set forth opposite his or her name on
Exhibit 5, and the signatures of such persons appearing on such documents
are their genuine signatures.
(ix) The Company is duly authorized to engage in the transactions
described and contemplated in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated:____________________ By:___________________________
Name:_________________________
[Seal] Title: [Vice] President
I, ________________________, an [Assistant] Secretary of
______________[COMPANY], hereby certify that ____________ is the duly elected,
qualified and acting [Vice] President of the Company and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:____________________ By:___________________________
Name:_________________________
Title: [Assistant] Secretary
EXHIBIT 5 to
Company's Officer's Certificate
NAME TITLE SIGNATURE
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EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER
----------------------------------------
(date)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
You have requested [our] [my] opinion, as [Assistant] General
Counsel to ___________________ (the "Company"), with respect to certain matters
in connection with the sale by the Company of the Mortgage Loans pursuant to
that certain Amended and Restated Mortgage Loan Purchase and Warranties
Agreement by and between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
(the "Purchaser"), dated as of September 29, 2005 (the "Purchase Agreement") and
that certain Amended and Restated Interim Servicing Agreement (the "Interim
Servicing Agreement", and collectively with the Purchase Agreement, the
"Agreements"). Capitalized terms not otherwise defined herein have the meanings
set forth in the Purchase Agreement.
[We] [I] have examined the following documents:
(i) the Purchase Agreement;
(ii) the Interim Servicing Agreement;
(iii) the form of Assignment of Mortgage;
(iv) the form of endorsement of the Mortgage Notes; and
(v) such other documents, records and papers as we have
deemed necessary and relevant as a basis for this
opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Company contained in
the Purchase Agreement. [We] [I] have assumed the authenticity of all documents
submitted to [us] [me] as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is [our] [my] opinion that:
(i) The Company is a [type of entity] duly organized,
validly existing and in good standing under the laws of the
[United States] and is qualified to transact business in,
and is in good standing under, the laws of [the state of
incorporation].
(ii) The Company has the power to engage in the
transactions contemplated by the Agreements and all
requisite power, authority and legal right to execute and
deliver the Agreements and to perform and observe the terms
and conditions of the Agreements.
(iii) The Agreements have been duly authorized, executed and
delivered by the Company, and are the legal, valid and
binding agreement enforceable in accordance with its terms
against the Company, subject to bankruptcy laws and other
similar laws of general application affecting rights of
creditors and subject to the application of the rules of
equity, including those respecting the availability of
specific performance, none of which will materially
interfere with the realization of the benefits provided
thereunder or with the Purchaser's ownership of the Mortgage
Loans.
(iv) The Company has been duly authorized to allow any of
its officers to execute any and all documents by original
signature in order to complete the transactions contemplated
by the Agreements.
(v) The Company has been duly authorized to allow any of
its officers to execute by original [or facsimile] signature
the endorsements to the Mortgage Notes and the Assignments
of Mortgages, and the original [or facsimile] signature of
the officer at the Company executing the endorsements to the
Mortgage Notes and the Assignments of Mortgages represents
the legal and valid signature of said officer of the
Company.
(vi) Either (i) no consent, approval, authorization or
order of any court or governmental agency or body is
required for the execution, delivery and performance by the
Company of or compliance by the Company with the Agreements
and the sale of the Mortgage Loans by the Company or the
consummation of the transactions contemplated by the
Agreements or (ii) any required consent, approval,
authorization or order has been obtained by the Company.
(vii) Neither the consummation of the transactions
contemplated by, nor the fulfillment of the terms of, the
Agreements conflict or will conflict with or results or will
result in a breach of or constitute or will constitute a
default under the charter or by-laws of the Company or, to
the best of my knowledge, the material terms of any
indenture or other agreement or instrument to which the
Company is a party or by which it is bound or to which it is
subject, or violates any statute or order, rule,
regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which the
Company is subject or by which it is bound.
(viii) There is no action, suit, proceeding or investigation
pending or, to the best of [our] [my] knowledge, threatened
against the Company which, in [our] [my] judgment, either in
any one instance or in the aggregate, may result in any
material adverse change in the business, operations,
financial condition, properties or assets of the Company or
in any material impairment of the right or ability of the
Company to carry on its business substantially as now
conducted or in any material liability on the part of the
Company or which would draw into question the validity of
the Agreements or the Mortgage Loans or of any action taken
or to be taken in connection with the transactions
contemplated thereby, or which would be likely to impair
materially the ability of the Company to perform under the
terms of the Agreements.
(ix) The sale of each Mortgage Note and Mortgage as and in
the manner contemplated by the Agreements is sufficient to
fully transfer to the Purchaser all right, title and
interest of the Company thereto as noteholder and mortgagee.
(x) The Mortgages have been duly assigned and the Mortgage
Notes have been duly endorsed as provided in the Custodial
Agreement. The Assignments of Mortgage are in recordable
form, except for the insertion of the name of the assignee,
and upon the name of the assignee being inserted, are
acceptable for recording under the laws of the state where
each related Mortgaged Property is located. The endorsement
of the Mortgage Notes, the delivery to the Purchaser, or its
designee, of the Assignments of Mortgage, and the delivery
of the original endorsed Mortgage Notes to the Purchaser, or
its designee, are sufficient to permit the Purchaser to
avail itself of all protection available under applicable
law against the claims of any present or future creditors of
the Company, and are sufficient to prevent any other sale,
transfer, assignment, pledge or hypothecation of the
Mortgages and the Mortgage Notes by the Company from being
enforceable.
Except as otherwise set forth in the Agreements, I assume no
obligation to revise this opinion or alter its conclusions to update or support
this letter to reflect any facts or circumstances that may hereafter develop.
This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you initially and directly resell the Mortgage Loans may
rely on this opinion as if it were addressed to them as of the date of this
opinion.
Very truly yours,
-----------------------------
[Name]
[Assistant] General Counsel
EXHIBIT E
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
___________________, 200__
[Federal Home Loan Bank of
______(the "Association")]
___________________________
___________________________
___________________________
Attention: ___________________________
Re: Notice of Sale and Release of Collateral
----------------------------------------
Dear Sirs:
This letter serves as notice that ________________________ [COMPANY]
a [type of entity], organized pursuant to the laws of [the State of
incorporation] (the "Company") has committed to sell certain mortgage loans to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. under a Amended and Restated Mortgage Loan
Purchase and Warranties Agreement. The Company warrants that the mortgage loans
to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. are in addition to and beyond
any collateral required to secure advances made by the Association to the
Company.
The Company acknowledges that the mortgage loans to be sold to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. shall not be used as additional or
substitute collateral for advances made by the Association. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. understands that the balance of the Company's mortgage
loan portfolio may be used as collateral or additional collateral for advances
made by the Association, and confirms that it has no interest therein.
Execution of this letter by the Association shall constitute a full
and complete release of any security interest, claim, or lien which the
Association may have against the mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc.
Very truly yours,
___________________________
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
Acknowledged and approved:
[FEDERAL HOME LOAN BANK OF]
___________________________
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
EXHIBIT F
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
I. Release of Security Interest
----------------------------
The financial institution named below hereby relinquishes any and
all right, title, interest, lien or claim of any kind it may have in all
mortgage loans described on the attached Schedule A (the "Mortgage Loans"), to
be purchased by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. from the company named on
the next page (the "Company") pursuant to that certain Amended and Restated
Mortgage Loan Purchase and Warranties Agreement, dated as of September 29, 2005,
and certifies that all notes, mortgages, assignments and other documents in its
possession relating to such Mortgage Loans have been delivered and released to
the Company or its designees, as of the date and time of the sale of such
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. Such release shall be
effective automatically without any further action by any party upon payment in
one or more installments, in immediately available funds, of $_____________, in
accordance with the wire instructions set forth below.
Name, Address and Wire Instructions of Financial Institution
________________________________
(Name)
________________________________
(Address)
________________________________
________________________________
________________________________
By:_____________________________
II. Certification of Release
------------------------
The Company named below hereby certifies to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. the security interests in
the Mortgage Loans released by the above-named financial institution comprise
all security interests relating to or affecting any and all such Mortgage Loans.
The Company warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
_____________________________
By:__________________________
Title:_______________________
Date:________________________
EXHIBIT G
FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
-------------------------------------------
On this ___ day of ____________, ________, _______________
("Seller"), as the Seller under (i) that certain Purchase Price and Terms
Agreement, dated as of _________, ____ (the "PPTA"), and (ii) that certain
Amended and Restated Mortgage Loan Purchase and Warranties Agreement, dated as
of September 29, 2005 (the "Purchase Agreement"), does hereby sell, transfer,
assign, set over and convey to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital, Inc.
("Purchaser") as the Purchaser under the Agreements (as defined below) without
recourse, but subject to the terms of the Agreements, all right, title and
interest of, in and to the Mortgage Loans listed on the Mortgage Loan Schedule
attached hereto as Exhibit A (the "Mortgage Loans"), together with the Mortgage
Files and the related Servicing Rights and all rights and obligations arising
under the documents contained therein. Each Mortgage Loan subject to the
Agreements was underwritten in accordance with, and conforms to, the
Underwriting Guidelines attached hereto as Exhibit C. Pursuant to Section 6 of
the Purchase Agreement, the Seller has delivered to the Custodian the documents
for each Mortgage Loan to be purchased as set forth in the Purchase Agreement.
The ownership of each Mortgage Note, Mortgage and the contents of the Mortgage
File and Servicing File is vested in the Purchaser and the ownership of all
records and documents with respect to the related Mortgage Loan prepared by or
which come into the possession of the Seller shall immediately vest in the
Purchaser and shall be retained and maintained, in trust, by the Seller at the
will of the Purchaser in a custodial capacity only. The PPTA and the Purchase
Agreement shall collectively be referred to as the "Agreements" herein.
The Mortgage Loan Package characteristics of the Mortgage Loans
subject hereto are set forth on Exhibit B hereto.
In accordance with Section 6 of the Purchase Agreement, the
Purchaser accepts the Mortgage Loans listed on Exhibit A attached hereto.
Notwithstanding the foregoing the Purchaser does not waive any rights or
remedies it may have under the Agreements.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
________________________
By: ______________________________
Name: ________________________
Title: _______________________
Accepted and Agreed:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:____________________________________
Name:
Title:
EXHIBIT A
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
THE MORTGAGE LOANS
------------------
EXHIBIT B
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE POOL CHARACTERISTICS OF
--------------------------------------------------------------------------
EACH MORTGAGE LOAN PACKAGE
--------------------------
Pool Characteristics of the Mortgage Loan Package as delivered on the related
Closing Date:
No Mortgage Loan has: (1) an outstanding principal balance less than $_____; (2)
an origination date earlier than __ months prior to the related Cut-off Date;
(3) a CLTV of greater than ____%; (4) a FICO Score of less than ___; or (5) a
debt-to-income ratio of more than ___%. Each Mortgage Loan has a Mortgage
Interest Rate of at least ___% per annum and an outstanding principal balance of
less than $______. Each Adjustable Rate Mortgage Loan has an Index of [______].
EXHIBIT C
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
UNDERWRITING GUIDELINES
-----------------------
EXHIBIT H
UNDERWRITING GUIDELINES
-----------------------
EXHIBIT I
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated [____________ __,
20__] ("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"),
[____________________] ("Assignee") and [SELLER] (the "Company"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and
other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
Assignment and Conveyance
-------------------------
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Amended and
Restated Mortgage Loan Purchase Agreement (the "Purchase Agreement"), dated as
of September 29, 2005, between the Assignor, as purchaser (the "Purchaser"), and
the Company, as seller, solely insofar as the Purchase Agreement relates to the
Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder (i) any and all right, title and interest in, to and under
and any obligations of the Assignor with respect to any mortgage loans subject
to the Purchase Agreement which are not the Mortgage Loans set forth on the
Mortgage Loan Schedule and are not the subject of this Agreement or (ii) the
rights of the Purchaser under Subsections 9.04 and 9.05 of the Purchase
Agreement.
Recognition of the Company
--------------------------
2. From and after the date hereof (the "Securitization Closing
Date"), the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Purchase Agreement
(solely to the extent set forth herein) and this Agreement to
[__________________] (the "Trust") created pursuant to a Pooling and Servicing
Agreement, dated as of [______], 200_ (the "Pooling Agreement"), among the
Assignee, the Assignor, [___________________], as trustee (including its
successors in interest and any successor trustees under the Pooling Agreement,
the "Trustee"), [____________________], as servicer (including its successors in
interest and any successor servicer under the Pooling Agreement, the
"Servicer"). The Company hereby acknowledges and agrees that from and after the
date hereof (i) the Trust will be the owner of the Mortgage Loans, (ii) the
Company shall look solely to the Trust for performance of any obligations of the
Assignor insofar as they relate to the Mortgage Loans, (iii) the Trust
(including the Trustee and the Servicer acting on the Trust's behalf) shall have
all the rights and remedies available to the Assignor, insofar as they relate to
the Mortgage Loans, under the Purchase Agreement, including, without limitation,
the enforcement of the document delivery requirements set forth in Section 6 of
the Purchase Agreement, and shall be entitled to enforce all of the obligations
of the Company thereunder insofar as they relate to the Mortgage Loans, and (iv)
all references to the Purchaser, the Custodian or the Bailee under the Purchase
Agreement insofar as they relate to the Mortgage Loans, shall be deemed to refer
to the Trust (including the Trustee and the Servicer acting on the Trust's
behalf). Neither the Company nor the Assignor shall amend or agree to amend,
modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreement which amendment, modification, waiver or other alteration
would in any way affect the Mortgage Loans or the Company's performance under
the Purchase Agreement with respect to the Mortgage Loans without the prior
written consent of the Trustee.
Representations and Warranties of the Company
---------------------------------------------
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation;
(b) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement and has full power and
authority to perform its obligations under the Purchase Agreement.
The execution by the Company of this Agreement is in the ordinary
course of the Company's business and will not conflict with, or
result in a breach of, any of the terms, conditions or provisions of
the Company's charter or bylaws or any legal restriction, or any
material agreement or instrument to which the Company is now a party
or by which it is bound, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Company or
its property is subject. The execution, delivery and performance by
the Company of this Agreement have been duly authorized by all
necessary corporate action on part of the Company. This Agreement
has been duly executed and delivered by the Company, and, upon the
due authorization, execution and delivery by the Assignor and the
Assignee, will constitute the valid and legally binding obligation
of the Company, enforceable against the Company in accordance with
its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and by
general principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
(c) No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required to
be obtained or made by the Company in connection with the execution,
delivery or performance by the Company of this Agreement; and
(d) There is no action, suit, proceeding or investigation pending or
threatened against the Company, before any court, administrative
agency or other tribunal, which would draw into question the
validity of this Agreement or the Purchase Agreement, or which,
either in any one instance or in the aggregate, would result in any
material adverse change in the ability of the Company to perform its
obligations under this Agreement or the Purchase Agreement, and the
Company is solvent.
4. Pursuant to Section 13 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor, the Assignee
and the Trust, that the representations and warranties set forth on Exhibit B
hereto are true and correct as of the date hereof as if such representations and
warranties were made on the date hereof unless otherwise specifically stated in
such representations and warranties.
Remedies for Breach of Representations and Warranties
-----------------------------------------------------
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicer acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Sections 3 and 4
hereof shall be as set forth in Subsection 9.03 of the Purchase Agreement as if
they were set forth herein (including without limitation the repurchase and
indemnity obligations set forth therein).
Miscellaneous
-------------
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicer acting on the Trust's behalf). Any entity into which Assignor,
Assignee or Company may be merged or consolidated shall, without the requirement
for any further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
9. Each of this Agreement and the Purchase Agreement shall survive
the conveyance of the Mortgage Loans and the assignment of the Purchase
Agreement (to the extent assigned hereunder) by Assignor to Assignee and by
Assignee to the Trust and nothing contained herein shall supersede or amend the
terms of the Purchase Agreement.
10. 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.
11. In the event that any provision of this Agreement conflicts with
any provision of the Purchase Agreement with respect to the Mortgage Loans, the
terms of this Agreement shall control.
12. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the Purchase Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
[SELLER]
By: __________________________________
Name:_______________________________
Its:________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: __________________________________
Name:_______________________________
Its:________________________________
[__________________________]
By: __________________________________
Name:_______________________________
Its:________________________________
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
Mortgage Loan Schedule
EXHIBIT B TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Representations and Warranties as to the Seller and the Mortgage Loans
I. Representations and Warranties Regarding the Seller
The Seller hereby represents and warrants to the Purchaser that as
of the closing date for the securitization (the "Securitization Closing Date")
or such other date specified herein:
(a) Due Organization and Authority. The Seller is a limited
liability company, validly existing, and in good standing under the laws of its
jurisdiction of incorporation or formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and in
good standing in the states where the Mortgaged Property is located if the laws
of such state require licensing or qualification in order to conduct business of
the type conducted by the Seller. The Seller has corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder;
the execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by the
Seller and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement has been duly executed and delivered
and constitutes the valid, legal, binding and enforceable obligation of the
Seller, except as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar laws
affecting the enforcement of the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding in equity or at law.
All requisite corporate action has been taken by the Seller to make this
Agreement valid and binding upon the Seller in accordance with its terms;
(b) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller is required or, if required, such consent,
approval, authorization or order has been or will, prior to the related Closing
Date, be obtained;
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Seller's charter, by-laws
or other organizational documents or any legal restriction or any agreement or
instrument to which the Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse effect
upon any of its properties pursuant to the terms of any mortgage, contract, deed
of trust or other instrument, or impair the ability of the Purchaser to realize
on the Mortgage Loans, impair the value of the Mortgage Loans, or impair the
ability of the Purchaser to realize the full amount of any insurance benefits
accruing pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of Seller's knowledge, threatened against
the Seller, before any court, administrative agency or other tribunal asserting
the invalidity of this Agreement, seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or which, either in any one
instance or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the Seller,
or in any material impairment of the right or ability of the Seller to carry on
its business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws"); the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws, including with respect to the legitimacy of
the applicable Mortgagor and the origin of the assets used by the said Mortgagor
to purchase the property in question, and maintains, and will maintain,
sufficient information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws;
(i) Financial Statements. The Seller has delivered to the Purchaser
financial statements as to its last three complete fiscal years and any later
quarter ended more than 60 days prior to the execution of this Agreement. All
such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial
position at the end of each such period of the Seller and its subsidiaries and
have been prepared in accordance with generally accepted accounting principles
of the United States consistently applied throughout the periods involved,
except as set forth in the notes thereto. In addition, the Seller has delivered
information as to its loan gain and loss experience in respect of foreclosures
and its loan delinquency experience for the immediately preceding three-year
period, in each case with respect to mortgage loans owned by it and such
mortgage loans serviced for others during such period, and all such information
so delivered shall be true and correct in all material respects. There has been
no change in the business, operations, financial condition, properties or assets
of the Seller since the date of the Seller's financial statements that would
have a material adverse effect on its ability to perform its obligations under
this Agreement. The Seller has completed any forms requested by the Purchaser in
a timely manner and in accordance with the provided instructions;
(j) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio at
the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered with
respect to each Mortgage Loan pursuant to the Custodial Agreement, shall be
delivered to the Custodian all in compliance with the specific requirements of
the Custodial Agreement. With respect to each Mortgage Loan, the Seller will be
in possession of a complete Mortgage File in compliance with Exhibit A to the
Purchase Agreement, except for such documents as will be delivered to the
Custodian;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(m) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby (including
any Securitization Transfer or Whole Loan Transfer) contains or will contain any
untrue statement of fact or omits or will omit to state a fact necessary to make
the statements contained herein or therein not misleading;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller expects to be advised by its
independent certified public accountants that under generally accepted
accounting principles the transfer of the Mortgage Loans will be treated as a
sale on the books and records of the Seller and the Seller has determined that
the disposition of the Mortgage Loans pursuant to this Agreement will be
afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. Immediately prior to each related Closing Date,
the Seller was the owner of record of each Mortgage and the indebtedness
evidenced by each Mortgage Note, except for the Assignments of Mortgage which
have been sent for recording, and upon recordation the Seller will be the owner
of record of each Mortgage and the indebtedness evidenced by each Mortgage Note,
and upon the sale of the Mortgage Loans to the Purchaser, the Seller will retain
the Mortgage Files with respect thereto in trust only for the purpose of
servicing and supervising the servicing of each Mortgage Loan;
(q) Reasonable Purchase Price. The consideration received by the
Seller upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans; and
(r) Credit Reporting. As of the date on which the Seller transferred
servicing of the Mortgage Loan to the Purchaser or its designee (the "Servicing
Transfer Date") the Seller, as servicer, will fully furnish, in accordance with
the Fair Credit Reporting Act and its implementing regulations, accurate and
complete information (e.g., favorable and unfavorable) on its borrower credit
files to Equifax, Experian and Trans Union Credit Information Company (three of
the credit repositories), on a monthly basis. Additionally, on the Servicing
Transfer Date, the Seller, as servicer, will transmit full-file credit reporting
data for each Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 95-19 and
that for each Mortgage Loan, the Seller, as servicer, agrees it shall report one
of the following statuses each month as follows: new origination, current,
delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off.
II. Representations and Warranties Regarding Individual Mortgage Loans
The Seller hereby represents and warrants to the Purchaser that as
of the closing date for the securitization (the "Securitization Closing Date")
or such other date specified herein:
(a) Mortgage Loans as Described. The information set forth in the
related Mortgage Loan Schedule is complete, true and correct;
(b) Payments Current. As of the Servicing Transfer Date, all
payments required to be made up to the related Closing Date for the Mortgage
Loan under the terms of the Mortgage Note, other than payments not yet 30 days
delinquent, have been made and credited. No payment required under the Mortgage
Loan is 30 days or more delinquent nor has any payment under the Mortgage Loan
been 30 days or more delinquent at any time since the origination of the
Mortgage Loan. The first Monthly Payment shall be made with respect to the
Mortgage Loan on its related Due Date or within the grace period, all in
accordance with the terms of the related Mortgage Note;
(c) No Outstanding Charges. As of the Servicing Transfer Date, there
are no defaults in complying with the terms of the Mortgage, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. 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 earlier, to the day which precedes by one month the related Due
Date of the first installment of principal and interest;
(d) Original Terms Unmodified. As of the Servicing Transfer Date,
the terms of the Mortgage Note and Mortgage have not been impaired, waived,
altered or modified in any respect, from the date of origination except by a
written instrument which has been recorded, if necessary to protect the
interests of the Purchaser, and which has been delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing, and the terms of
which are reflected in the related Mortgage Loan Schedule. The substance of any
such waiver, alteration or modification has been approved by the title insurer,
if any, to the extent required by the policy, and its terms are reflected on the
related Mortgage Loan Schedule, if applicable. No Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement, approved
by the issuer of the title insurer, to the extent required by the policy, and
which assumption agreement is part of the Mortgage Loan File delivered to the
Custodian or to such other Person as the Purchaser shall designate in writing
and the terms of which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. As of the Servicing Transfer Date, pursuant to
the terms of the Mortgage, all buildings or other improvements upon the
Mortgaged Property are insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage and such other hazards as are provided for in
the ▇▇▇▇▇▇ ▇▇▇ Guides or by ▇▇▇▇▇▇▇ Mac, as well as all additional requirements
set forth in Section 2.10 of the Interim Servicing Agreement. If required by the
National Flood Insurance Act of 1968, as amended, each Mortgage Loan is covered
by a flood insurance policy meeting the requirements of the current guidelines
of the Federal Insurance Administration as in effect which policy conforms to
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac requirements, as well as all additional requirements
set forth in Section 2.10 of the Interim Servicing Agreement. All individual
insurance policies contain a standard mortgagee clause naming the Seller and its
successors and assigns as mortgagee, and all premiums thereon have been paid.
The Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such insurance
at such Mortgagor's cost and expense, and to seek reimbursement therefor from
the 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, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser upon
the consummation of the transactions contemplated by this Agreement. The 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 or entity,
and no such unlawful items have been received, retained or realized by the
Seller;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to prepayment penalties, have been complied with, the consummation of
the transactions contemplated hereby will not involve the violation of any such
laws or regulations, and the Seller shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. As of the Servicing Transfer Date,
the Mortgage has not been satisfied, canceled, 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 release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. As of the Servicing Transfer Date , no portion of
the Mortgaged Property is used for commercial purposes, and since the date of
origination, no portion of the Mortgaged Property has been used for commercial
purposes; provided, that Mortgaged Properties which contain a home office shall
not be considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner repair,
maintenance and/or household purposes. None of the Mortgaged Properties are
Manufactured Homes, log homes, mobile homes, geodesic domes or other unique
property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the
first mortgage on the Mortgaged Property;
(B) the lien of current real property taxes and assessments
not yet due and payable;
(C) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically 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; and
(D) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. As of the Closing Date, subject to the lien of a
warehouse lender to be released prior to the closing of any Mortgage Loan sale,
the Seller is the sole owner of record and holder of the Mortgage Loan and the
indebtedness evidenced by each Mortgage Note and upon the sale of the Mortgage
Loans to the Purchaser, the Seller will retain the Mortgage Files or any part
thereof with respect thereto not delivered to the Custodian, the Purchaser or
the Purchaser's designee, in trust only for the purpose of servicing and
supervising the servicing of each Mortgage Loan. The Mortgage Loan is not
assigned or pledged, and the Seller has good, indefeasible and marketable title
thereto, and has full right to transfer and sell the Mortgage Loan to the
Purchaser 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 and assign each Mortgage Loan pursuant to this Agreement
and following the sale of each Mortgage Loan, the Purchaser will own such
Mortgage Loan free and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest. The Seller intends to
relinquish all rights to possess, control and monitor the Mortgage Loan. After
the related Closing Date, the Seller will have no right to modify or alter the
terms of the sale of the Mortgage Loan and the Seller will have no obligation or
right to repurchase the Mortgage Loan or substitute another Mortgage Loan,
except as provided in this Agreement;
(n) Doing Business. As of the Closing Date, 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) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located,
and (2) either (i) organized under the laws of such state, or (ii) qualified to
do business in such state, or (iii) a federal savings and loan association, a
savings bank or a national bank having a principal office in such state, or (3)
not doing business in such state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance policy is
issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first (with respect
to a First Lien Loan) or second (with respect to a Second Lien Loan) priority
lien of the Mortgage 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 (A), (B) and (C) of paragraph (j) of this
Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the related Mortgage, including
the 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 or entity, and no such unlawful items have been received,
retained or realized by the Seller;
(q) No Defaults. As of the Servicing Transfer Date, other than
payments due but not yet 30 days or more delinquent, there is no default,
breach, violation or event which would permit 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 which would permit acceleration, and neither
the Seller nor any of its affiliates nor any of their respective predecessors,
have waived any default, breach, violation or event which would permit
acceleration;
(r) No Mechanics' Liens. As of the Servicing Transfer Date, 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 the law could give
rise to such liens) affecting the related Mortgaged Property which are or may be
liens prior to, or equal or coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 thirty years from commencement of amortization. Unless otherwise
specified on the related Mortgage Loan Schedule, the Mortgage Loan is payable on
the first day of each month. The Mortgage Loan does not require a balloon
payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇
Mae and no representations have been made to a Mortgagor that are inconsistent
with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can reasonably be expected
to cause private institutional investors who invest in mortgage loans similar to
the Mortgage Loan to regard the Mortgage Loan as an unacceptable investment,
cause the Mortgage Loan to become delinquent, or adversely affect the value or
marketability of the Mortgage Loan, or cause the Mortgage Loans to prepay during
any period materially faster or slower than the mortgage loans originated by the
Seller generally;
(aa) Delivery of Mortgage Documents. As of the Servicing Transfer
Date, the Mortgage Note, the Mortgage, the Assignment of Mortgage and any other
documents required to be delivered under the Custodial Agreement for each
Mortgage Loan have been delivered to the Custodian. The Seller is in possession
of a complete, true and accurate Mortgage File in compliance with Exhibit A to
the Purchase Agreement, except for such documents the originals of which have
been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage with
respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located. The transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Seller are not subject to the bulk transfer or similar
statutory provisions in effect in any applicable jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable 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. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first (with respect to a First Lien Loan)
or second (with respect to a Second Lien Loan) 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 ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings. As
of the Servicing Transfer Date, there is no proceeding pending or threatened for
the total or partial condemnation of the Mortgaged Property. The Mortgaged
Property is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended and each Mortgaged Property is in good repair. There have
not been any condemnation proceedings with respect to the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. As of the Servicing Transfer Date, the origination, servicing and
collection practices used by the Seller and the Interim Servicer with respect to
the Mortgage Loan have been in all respects in compliance with Accepted
Servicing Practices, applicable laws and regulations, and have been in all
respects legal and proper. With respect to escrow deposits and Escrow Payments,
all such payments are in the possession of, or under the control of, the Seller
or the Interim Servicer and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item that remains unpaid and has been assessed but
is not yet due and payable. No escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized under the Mortgage or
the Mortgage Note. All Mortgage Interest Rate adjustments have been made in
strict compliance with state and federal law and the terms of the related
Mortgage and Mortgage Note on the related Interest Rate Adjustment Date. If,
pursuant to the terms of the Mortgage Note, another index was selected for
determining the Mortgage Interest Rate, the same index was used with respect to
each Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller or the
Interim Servicer executed and delivered any and all notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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;
(ll) No Violation of Environmental Laws. As of the Closing Date, and
to the best of the Seller's knowledge as of the Servicing Transfer Date, there
is no pending action or proceeding directly involving the Mortgaged Property in
which compliance with any environmental law, rule or regulation is an issue;
there is no violation of any environmental law, rule or regulation with respect
to the Mortgage Property; and nothing further remains to be done to satisfy in
full all requirements of each such law, rule or regulation constituting a
prerequisite to use and enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. As of the Servicing Transfer
Date, the Mortgagor has not notified the Seller, and the Seller has no knowledge
of any relief requested or allowed to the Mortgagor under the Relief Act or
other similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property 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, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required or customary in the jurisdiction in which the
Mortgaged Property is located, the original lender has filed for record a
request for notice of any action by the related senior lienholder, and the
Seller has notified the senior lienholder in writing of the existence of the
Second Lien Loan and requested notification of any action to be taken against
the Mortgagor by the senior lienholder. Either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File;
(rr) Credit Reporting. As of the Servicing Transfer Date, the Seller
has caused to be fully furnished, in accordance with the Fair Credit Reporting
Act and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian,
and Trans Union Credit Information Company (three of the credit repositories),
on a monthly basis;
(ss) Escrow Analysis. As of the Servicing Transfer Date, if
applicable, with respect to each Mortgage, the Seller has within the last twelve
months (unless such Mortgage was originated within such twelve month period)
analyzed the required Escrow Payments for each Mortgage and adjusted the amount
of such payments so that, assuming all required payments are timely made, any
deficiency will be eliminated on or before the first anniversary of such
analysis, or any overage will be refunded to the Mortgagor, in accordance with
RESPA and any other applicable law;
(tt) Prior Servicing. As of the Servicing Transfer Date , each
Mortgage Loan has been serviced in all material respects in strict compliance
with Accepted Servicing Practices;
(uu) No Default Under First Lien. As of the Servicing Transfer Date,
with respect to each Second Lien Loan, the related First Lien Loan related
thereto is in full force and effect, and there is no default, breach, violation
or event which would permit acceleration existing under such first Mortgage or
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 which would permit acceleration thereunder;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage;
(ww) No Failure to Cure Default. As of the Servicing Transfer Date,
the Seller has not received a written notice of default of any senior mortgage
loan related to the Mortgaged Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage. The Seller
shall hold the Purchaser harmless from any and all damages, losses, costs and
expenses (including attorney's fees) arising from disclosure of credit
information in connection with the Purchaser's secondary marketing operations
and the purchase and sale of mortgages or Servicing Rights thereto;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) as of the Servicing Transfer Date, all ground lease rents,
other payments, or assessments that have become due have been paid; and (7) the
use of leasehold estates for residential properties is a widely accepted
practice in the jurisdiction in which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note is identified on the
related Mortgage Loan Schedule. With respect to Mortgage Loans originated prior
to October 1, 2002, no such Prepayment Penalty may be imposed for a term in
excess of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law;
(bbb) Single-premium credit life insurance policy. In connection
with the origination of any Mortgage Loan, no proceeds from such Mortgage Loan
were used to finance or acquire a single-premium credit life insurance policy;
(ccc) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" under Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Either (x) each Mortgage Loan is covered
by a paid in full, life of loan, tax service contract, and such contract is
transferable, or (y) on the related Closing Date the Purchaser shall net $75.00
per Mortgage Loan from the related Purchase Price to cover the cost of such a
tax service contract;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) 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;
(ggg) Mortgagor Bankruptcy. As of the Servicing Transfer Date, the
Mortgagor has not filed and will not file a bankruptcy petition or has not
become the subject and will not become the subject of involuntary bankruptcy
proceedings or has not consented to or will not consent to the filing of a
bankruptcy proceeding against it or to a receiver being appointed in respect of
the related Mortgaged Property;
(hhh) No Prior Offer. As of the Closing Date, the Mortgage Loan has
not previously been offered for sale;
(iii) [Reserved];
(jjj) Mortgagor Selection. No Mortgagor was encouraged or required
to select a Mortgage Loan product offered by the Originator which is a higher
cost product designed for less creditworthy mortgagors, unless at the time of
the Mortgage Loan's origination, such Mortgagor did not qualify taking into
account credit history and debt-to-income ratios for a lower-cost credit product
then offered by the Originator or any Affiliate of the Originator. If, at the
time of loan application, the Mortgagor may have qualified for a lower-cost
credit product then offered by any mortgage lending Affiliate of the Originator,
the Originator referred the related Mortgagor's application to such Affiliate
for underwriting consideration;
(kkk) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(lll) Mortgage Loans with Prepayment Premiums. 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, (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 Originator, as servicer, shall not
impose such prepayment premium in any instance when the mortgage debt is
accelerated as the result of the related Mortgagor's default in making the
Mortgage Loan payments;
(mmm) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, accident or health insurance policy in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(nnn) Points and Fees. All points and fees related to each Mortgage
Loan were disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation;
(ooo) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(ppp) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
EXHIBIT J
TRANSFER DATE MORTGAGE LOAN DATA
EXHIBIT P
MERITAGE AGREEMENTS
ASSIGNMENT AND RECOGNITION AGREEMENT
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated March 30, 2005
("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ABS Capital I Inc. ("Assignee") and Meritage Mortgage Corporation (the
"Company"):
In consideration of the mutual promises and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Assignment and Conveyance
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Amended and
Restated Mortgage Loan Purchase and Warranties Agreement, dated as of June 1,
2005 (the "A&R Purchase Agreement") and that certain Second Amended and Restated
Mortgage Loan Purchase and Warranties Agreement, dated as of November 1, 2005
(together with the A&R Purchase Agreement, the "Purchase Agreements"), each
between the Assignor, as purchaser (the "Purchaser"), and the Company, as
seller, solely insofar as the Purchase Agreement relates to the Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder (i) any and all right, title and interest in, to and under
and any obligations of the Assignor with respect to any mortgage loans subject
to the Purchase Agreements which are not the Mortgage Loans set forth on the
Mortgage Loan Schedule and are not the subject of this Agreement or (ii) the
rights of the Purchaser under Section 9.04 of the applicable Purchase Agreement.
Recognition of the Company
2. From and after the date hereof (the "Securitization Closing
Date"), the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under Purchase Agreements
(solely to the extent set forth herein) and this Agreement to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Home Equity Loan Trust 2006-2 (the "Trust") created pursuant to a Pooling and
Servicing Agreement, dated as of March 1, 2006 (the "Pooling Agreement"), among
the Assignee, First NLC Financial Services, LLC, Deutsche Bank National Trust
Company, as trustee (including its successors in interest and any successor
trustees under the Pooling Agreement, the "Trustee"), JPMorgan Chase Bank,
National Association ("JPMorgan"), and HomEq Servicing Corporation (together
with JPMorgan, including their successors in interest and any successor servicer
under the Pooling Agreement, the "Servicers"). The Company hereby acknowledges
and agrees that from and after the date hereof (i) the Trust will be the owner
of the Mortgage Loans, (ii) the Company shall look solely to the Trust for
performance of any obligations of the Assignor insofar as they relate to the
Mortgage Loans, (iii) the Trust (including the Trustee and the Servicers acting
on the Trust's behalf) shall have all the rights and remedies available to the
Assignor, insofar as they relate to the Mortgage Loans, under the applicable
Purchase Agreement, including, without limitation, the enforcement of the
document delivery requirements set forth in Section 6 of the applicable Purchase
Agreement, and shall be entitled to enforce all of the obligations of the
Company thereunder insofar as they relate to the Mortgage Loans, and (iv) all
references to the Purchaser, the Custodian or the Bailee under the applicable
Purchase Agreement insofar as they relate to the Mortgage Loans, shall be deemed
to refer to the Trust (including the Trustee and the Servicers acting on the
Trust's behalf). Neither the Company nor the Assignor shall amend or agree to
amend, modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreements which amendment, modification, waiver or other alteration
would in any way affect the Mortgage Loans or the Company's performance under
the Purchase Agreements with respect to the Mortgage Loans without the prior
written consent of the Trustee.
Representations and Warranties of the Company
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement and has full power and
authority to perform its obligations under the Purchase Agreements. The
execution by the Company of this Agreement is in the ordinary course of
the Company's business and will not conflict with, or result in a breach
of, any of the terms, conditions or provisions of the Company's charter or
bylaws or any legal restriction, or any material agreement or instrument
to which the Company is now a party or by which it is bound, or result in
the violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject. The execution, delivery and
performance by the Company of this Agreement have been duly authorized by
all necessary corporate action on part of the Company. This Agreement has
been duly executed and delivered by the Company, and, upon the due
authorization, execution and delivery by the Assignor and the Assignee,
will constitute the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms except as
enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity
regardless of whether enforceability is considered in a proceeding in
equity or at law;
(c) No Consent Required. No consent, approval, authorization or
order was required for the transactions contemplated by this Agreement
from any court, governmental agency or body, or federal or state
regulatory authority having jurisdiction over the Seller or, if required,
such consent, approval, authorization or order have been obtained, prior
to the related Closing Date for the sale of the Mortgage Loans from the
Seller to the Purchaser (the "Closing Date");
(d) There is no action, suit, proceeding or investigation pending or
threatened against the Company, before any court, administrative agency or
other tribunal, which would draw into question the validity of this
Agreement or the Purchase Agreements, or which, either in any one instance
or in the aggregate, would result in any material adverse change in the
ability of the Company to perform its obligations under this Agreement or
the Purchase Agreements, and the Company is solvent.
4. Pursuant to Section 13 of each Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor, the Assignee
and the Trust, that the representations and warranties set forth on Exhibit B
hereto are true and correct as of the date hereof as if such representations and
warranties were made on the date hereof unless otherwise specifically stated in
such representations and warranties.
Remedies for Breach of Representations and Warranties
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicers acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Sections 3 and 4
hereof shall be as set forth in Subsection 9.03 of each Purchase Agreement as if
they were set forth herein (including without limitation the repurchase and
indemnity obligations set forth therein).
Miscellaneous
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicers acting on the Trust's behalf). Any entity into which Assignor,
Assignee or Company may be merged or consolidated shall, without the requirement
for any further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
9. Each of this Agreement and the Purchase Agreements shall survive
the conveyance of the Mortgage Loans and the assignment of the Purchase
Agreements (to the extent assigned hereunder) by Assignor to Assignee and by
Assignee to the Trust and nothing contained herein shall supersede or amend the
terms of the Purchase Agreements.
10. 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.
11. In the event that any provision of this Agreement conflicts with
any provision of the Purchase Agreements with respect to the Mortgage Loans, the
terms of this Agreement shall control.
12. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the applicable Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
MERITAGE MORTGAGE CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Senior Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Managing Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Executive Director
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Mortgage Loan Schedule
(Delivered to the Trustee on the Closing Date)
EXHIBIT B TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Representations and Warranties as to the Seller and the Mortgage Loans
I. Representations and Warranties Regarding the Seller
The Seller hereby represents and warrants to the Purchaser that as
of the closing date for the securitization (the "Securitization Closing Date")
or such other date specified herein:
(a) Due Organization and Authority. The Seller is a corporation,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation or formation and has all licenses necessary to carry on its
business as now being conducted and is licensed or is exempt from such licensing
requirement, qualified and in good standing in the states where the Mortgaged
Property is located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Seller. The Seller has
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement has
been duly executed and delivered and constitutes the valid, legal, binding and
enforceable obligation of the Seller, except as enforceability may be limited by
(i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding in equity or at law. All requisite corporate action has been
taken by the Seller to make this Agreement valid and binding upon the Seller in
accordance with its terms;
(b) No Consent Required. No consent, approval, authorization or
order was required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller or, if required, such consent, approval,
authorization or order have been obtained, prior to the related Closing Date;
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Seller's charter, by-laws
or other organizational documents or any legal restriction or any agreement or
instrument to which the Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse effect
upon any of its properties pursuant to the terms of any mortgage, contract, deed
of trust or other instrument, or impair the ability of the Purchaser to realize
on the Mortgage Loans, impair the value of the Mortgage Loans, or impair the
ability of the Purchaser to realize the full amount of any insurance benefits
accruing pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws"); the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws;
(i) Financial Statements. To the extent that such statements are
available, the Seller has delivered to the Purchaser financial statements as to
its last three complete fiscal years and any later quarter ended more than 60
days prior to the execution of this Agreement. All such financial statements
fairly present the pertinent results of operations and changes in financial
position for each of such periods and the financial position at the end of each
such period of the Seller, its parent company and its subsidiaries and have been
prepared in accordance with generally accepted accounting principles of the
United States consistently applied throughout the periods involved, except as
set forth in the notes thereto. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. In
addition, the Seller has delivered information obtained from ABS Net as to its
loan gain and loss experience in respect of foreclosures and its loan
delinquency experience with respect to mortgage loans sold to others during the
immediately preceding three-year period, and, to the Seller's knowledge, all
such information so delivered shall be true and correct in all material
respects. The Seller has completed any forms requested by the Purchaser in a
timely manner and in accordance with the provided instructions;
(j) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio as
of the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage (except with respect to MERS Designated Mortgage Loans),
and any other documents required to be delivered with respect to each Mortgage
Loan pursuant to the Custodial Agreement, have been delivered to the Custodian
all in compliance with the specific requirements of the Custodial Agreement;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(m) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished pursuant to this Agreement or any Reconstitution Agreement or in
connection with the transactions contemplated hereby (including any
Securitization Transfer or Whole Loan Transfer) contained any untrue statement
of fact or omitted to state a fact necessary to make the statements contained
herein or therein not misleading;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller expects to be advised by its
independent certified public accountants that under generally accepted
accounting principles the transfer of the Mortgage Loans will be treated as a
sale on the books and records of the Seller and the Seller has determined that
the disposition of the Mortgage Loans pursuant to this Agreement will be
afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. Immediately prior to each related Closing Date,
the Seller was the owner of record of each Mortgage and the indebtedness
evidenced by each Mortgage Note, except for the Assignments of Mortgage which
have been sent for recording, and upon recordation the Seller will be the owner
of record of each Mortgage and the indebtedness evidenced by each Mortgage Note,
and upon the sale of the Mortgage Loans to the Purchaser, the Seller will retain
the Mortgage Files with respect thereto in trust only for the purpose of
servicing and supervising the servicing of each Mortgage Loan; and
(q) Credit Reporting. As of the date on which the Seller transferred servicing
of the Mortgage Loan to the Purchaser or its designee (the "Servicing Transfer
Date") the Seller, as servicer, will fully furnish, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company (three of the
credit repositories), on a monthly basis. Additionally, on the related Servicing
Transfer Date, the Seller, as servicer, will transmit full-file credit reporting
data for each Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 95-19 and
that for each Mortgage Loan, the Seller, as servicer, agrees it shall report one
of the following statuses each month as follows: new origination, current,
delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off.
II. Representations and Warranties Regarding Individual Mortgage Loans
The Seller hereby represents and warrants to the Purchaser that as
of the closing date for the securitization (the "Securitization Closing Date")
or such other date specified herein:
(a) Mortgage Loans as Described. The information set forth in the
related Mortgage Loan Schedule is complete, true and correct;
(b) Payments Current. As of the related Servicing Transfer Date, all
payments required to be made up to the related Closing Date for the Mortgage
Loan under the terms of the Mortgage Note, other than payments not yet 30 days
delinquent, have been made and credited. No payment required under the Mortgage
Loan is 30 days or more delinquent nor has any payment under the Mortgage Loan
been 30 days or more delinquent at any time since the origination of the
Mortgage Loan. The first Monthly Payment shall be made with respect to the
Mortgage Loan on its related Due Date, all in accordance with the terms of the
related Mortgage Note;
(c) No Outstanding Charges. As of the related Servicing Transfer
Date, there are no defaults in complying with the terms of the Mortgage, and all
taxes, governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid. 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 earlier, to the day which precedes by one month the
related Due Date of the first installment of principal and interest;
(d) Original Terms Unmodified. As of the related Servicing Transfer
Date, the terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified in any respect, from the date of origination except
by a written instrument which has been recorded, if necessary to protect the
interests of the Purchaser, and which has been delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing, and the terms of
which are reflected in the related Mortgage Loan Schedule. The substance of any
such waiver, alteration or modification has been approved by the title insurer,
if any, to the extent required by the policy, and its terms are reflected on the
related Mortgage Loan Schedule, if applicable. No Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement, approved
by the issuer of the title insurer, to the extent required by the policy, and
which assumption agreement is part of the Mortgage Loan File delivered to the
Custodian or to such other Person as the Purchaser shall designate in writing
and the terms of which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. As of the related Servicing Transfer Date,
pursuant to the terms of the Mortgage, all buildings or other improvements upon
the Mortgaged Property are insured by a generally acceptable insurer against
loss by fire, hazards of extended coverage and such other hazards as are
provided by for in the ▇▇▇▇▇▇ Mae Guides or by ▇▇▇▇▇▇▇ Mac, as well as all
additional requirements set forth in Section 2.10 of the Interim Servicing
Agreement. If required by the National Flood Insurance Act of 1968, as amended,
each Mortgage Loan is covered by a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
as in effect which policy conforms to ▇▇▇▇▇▇▇ Mac requirements, as well as all
additional requirements set forth in Section 2.10 of the Interim Servicing
Agreement. All individual insurance policies contain a standard mortgagee clause
naming the Seller and its successors and assigns as mortgagee, and all premiums
thereon have been paid. The Mortgage obligates the Mortgagor thereunder to
maintain the hazard insurance policy at the Mortgagor's cost and expense, and on
the Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor's cost and expense, and to
seek reimbursement therefor from the 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,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Purchaser upon the consummation of the transactions
contemplated by the applicable Purchase Agreement. The 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 or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. Any and all applicable
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, disclosure and all predatory and abusive
lending laws applicable to the Mortgage Loan, including, without limitation, any
provisions relating to prepayment penalties, have been complied with, the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations, and the Seller shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to the
Purchaser upon demand, evidence of compliance with all such requirements.
Notwithstanding the foregoing, the Seller shall not be responsible for a breach
of a federal, state or local law, other than those governing the origination of
the Mortgage Loan in effect at the time of the Mortgage Loan was originated,
following the related Servicing Transfer Date;
(h) No Satisfaction of Mortgage. As of the related Servicing
Transfer Date, the Mortgage has not been satisfied, canceled, 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 release, cancellation, subordination or
rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. As of the related Servicing Transfer Date, no
portion of the Mortgaged Property is used for commercial purposes, and since the
date of origination, no portion of the Mortgaged Property has been used for
commercial purposes; provided, that Mortgaged Properties which contain a home
office shall not be considered as being used for commercial purposes as long as
the Mortgaged Property has not been altered for commercial purposes and is not
storing any chemicals or raw materials other than those commonly used for
homeowner repair, maintenance and/or household purposes. None of the Mortgaged
Properties are Manufactured Homes, log homes, mobile homes, geodesic domes or
other unique property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the
first mortgage on the Mortgaged Property;
(B) The lien of current real property taxes and assessments
not yet due and payable as of the related Servicing Transfer Date;
(C) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically 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; and
(D) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. Immediately prior to the related Closing Date, the
Seller was the sole owner of record and holder of the Mortgage Loan and the
indebtedness evidenced by each Mortgage Note and upon the sale of the Mortgage
Loans to the Purchaser, the Seller retained the Mortgage Files or any part
thereof with respect thereto not delivered to the Custodian, the Purchaser or
the Purchaser's designee, in trust only for the purpose of servicing and
supervising the servicing of each Mortgage Loan. The Mortgage Loan was not
assigned or pledged, and the Seller had good, indefeasible and marketable title
thereto, and had full right to transfer and sell the Mortgage Loan to the
Purchaser free and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest, and had full right and
authority subject to no interest or participation of, or agreement with, any
other party, to sell and assign each Mortgage Loan pursuant to the applicable
Purchase Agreement and following the sale of each Mortgage Loan, the Purchaser
owned such Mortgage Loan free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest. The
Seller intended to relinquish all rights to possess, control and monitor the
Mortgage Loan. After the related Closing Date, the Seller had no right to modify
or alter the terms of the sale of the Mortgage Loan and the Seller had no
obligation or right to repurchase the Mortgage Loan or substitute another
Mortgage Loan, except as provided in the applicable Purchase Agreement;
(n) Doing Business. As of the related Closing Date, 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) (1) in compliance with any and all
applicable licensing requirements of the laws of the state wherein the Mortgaged
Property is located, and (2) either (i) organized under the laws of such state,
or (ii) qualified to do business in such state, or (iii) a federal savings and
loan association, a savings bank or a national bank having a principal office in
such state, or (3) not doing business in such state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or if the related Mortgaged Property is located in the state
of Iowa an attorney's opinion, or other generally acceptable form of policy or
insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance
policy is issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the first (with
respect to a First Lien Loan) or second (with respect to a Second Lien Loan)
priority lien of the Mortgage 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 (A), (B) and (C) of
paragraph (j) of this Subsection 9.02, 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 Seller, its successor 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 the applicable Purchase
Agreement. No claims have been made under such lender's title insurance policy,
and no prior holder of the related Mortgage, including the 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 or entity,
and no such unlawful items have been received, retained or realized by the
Seller;
(q) No Defaults. As of the related Servicing Transfer Date, other
than payments due but not yet 30 days or more delinquent, there is no default,
breach, violation or event which would permit 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 which would permit acceleration, and neither
the Seller nor any of its affiliates nor any of their respective predecessors,
have waived any default, breach, violation or event which would permit
acceleration;
(r) No Mechanics' Liens. As of the related Servicing Transfer Date,
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 the law could
give rise to such liens) affecting the related Mortgaged Property which are or
may be liens prior to, or equal or coordinate with, the lien of the related
Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 (except for interest only
Mortgage Loans), over an original term of not more than thirty years from
commencement of amortization. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgage Loan is payable on the first day of each month.
Unless stated otherwise on the related Mortgage Loan Schedule, the Mortgage Loan
does not require a balloon payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on legally enforceable forms acceptable in
the secondary mortgage market
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date, the Mortgaged Property was 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) [Reserved];
(aa) Delivery of Mortgage Documents. As of the related Servicing
Transfer Date, the Mortgage Note, the Mortgage, the Assignment of Mortgage and
any other documents required to be delivered under the Custodial Agreement for
each Mortgage Loan have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage (except
with respect to any Mortgage that has been recorded in the name of MERS or its
designee) with respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located. The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller are not subject to the bulk
transfer or similar statutory provisions in effect in any applicable
jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. The Mortgage Loan is fully
funded, and there is no requirement to make any future advances to the related
Mortgagor;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings. As
of the related Servicing Transfer Date, there is no proceeding pending or
threatened for the total or partial condemnation of the Mortgaged Property. The
Mortgaged Property is undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty so as to affect adversely the value
of the Mortgaged Property as security for the Mortgage Loan or the use for which
the premises were intended and each Mortgaged Property is in good repair. Since
the origination of the Mortgage Loan, there have not been any condemnation
proceedings with respect to the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. As of the related Servicing Transfer Date, the origination,
servicing and collection practices used by the Seller and the Interim Servicer
with respect to the Mortgage Loan have been in all respects in compliance with
Accepted Servicing Practices, applicable laws and regulations, and have been in
all respects legal and proper. With respect to escrow deposits and Escrow
Payments, all such payments are in the possession of, or under the control of,
the Seller or the Interim Servicer and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
made. All Escrow Payments have been collected in full compliance with state and
federal law and the provisions of the related Mortgage Note and Mortgage. An
escrow of funds is not prohibited by applicable law and has been established in
an amount sufficient to pay for every item that remains unpaid and has been
assessed but is not yet due and payable. No escrow deposits or Escrow Payments
or other charges or payments due the Seller have been capitalized under the
Mortgage or the Mortgage Note. All Mortgage Interest Rate adjustments have been
made in strict compliance with state and federal law and the terms of the
related Mortgage and Mortgage Note on the related Interest Rate Adjustment Date.
If, pursuant to the terms of the Mortgage Note, another index was selected for
determining the Mortgage Interest Rate, the same index was used with respect to
each Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller or the
Interim Servicer executed and delivered any and all notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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, except as
disclosed in the related Mortgage Loan File;
(ll) No Violation of Environmental Laws. As of the related Closing
Date, and to the best of the Seller's knowledge as of the related Servicing
Transfer Date, there is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule or
regulation with respect to the Mortgage Property; and nothing further remains to
be done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. As of the related Servicing
Transfer Date, the Mortgagor has not notified the Seller, and the Seller has no
knowledge of any relief requested or allowed to the Mortgagor under the
Servicemembers' Civil Relief Act or other similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, acceptable to the Seller, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required or customary in the jurisdiction in which the
Mortgaged Property is located, the original lender has filed for record a
request for notice of any action by the related senior lienholder, and the
Seller has notified the senior lienholder in writing of the existence of the
Second Lien Loan and requested notification of any action to be taken against
the Mortgagor by the senior lienholder. Either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File;
(rr) Credit Reporting. As of the related Servicing Transfer Date,
the Seller has caused to be fully furnished, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on its borrower credit files to
Equifax, Experian, and Trans Union Credit Information Company (three of the
credit repositories), on a monthly basis;
(ss) Escrow Analysis. As of the related Servicing Transfer Date, if
applicable, with respect to each Mortgage, the Seller has within the last twelve
months (unless such Mortgage was originated within such twelve month period)
analyzed the required Escrow Payments for each Mortgage and adjusted the amount
of such payments so that, assuming all required payments are timely made, any
deficiency will be eliminated on or before the first anniversary of such
analysis, or any overage will be refunded to the Mortgagor, in accordance with
RESPA and any other applicable law;
(tt) Prior Servicing. As of the related Servicing Transfer Date,
each Mortgage Loan has been serviced in all material respects in strict
compliance with Accepted Servicing Practices;
(uu) No Default Under First Lien. As of the related Servicing
Transfer Date, with respect to each Second Lien Loan, the related First Lien
Loan related thereto is in full force and effect, and there is no default,
breach, violation or event which would permit acceleration existing under such
first Mortgage or 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 which would permit acceleration thereunder;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage;
(ww) No Failure to Cure Default. As of the related Servicing
Transfer Date, the Seller has not received a written notice of default of any
senior mortgage loan related to the Mortgaged Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, the Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage. The Seller
shall hold the Purchaser harmless from any and all damages, losses, costs and
expenses (including attorney's fees) arising from disclosure of credit
information in connection with the Purchaser's secondary marketing operations
and the purchase and sale of mortgages or Servicing Rights thereto;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) as of the related Servicing Transfer Date, all ground lease
rents, other payments, or assessments that have become due have been paid; and
(7) the use of leasehold estates for residential properties is a widely accepted
practice in the jurisdiction in which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note and any addendums or
riders thereto executed by the related Mortgagor, is identified on the related
Mortgage Loan Schedule. With respect to Mortgage Loans originated prior to
October 1, 2002, no such Prepayment Penalty may be imposed for a term in excess
of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law. Notwithstanding the first sentence of this clause (aaa), if a Mortgage Loan
is not considered a High Cost Loan on the related Closing Date because a related
law is not being enforced or is not effective on the related Closing Date due to
judicial or administrative review or litigation and such Mortgage Loan becomes a
High Cost Loan at a later date as a result of such law becoming enforceable or
effective, such Mortgage Loan shall be subject to the automatic repurchase
provisions of Subsection 9.03 within the timeframes set forth therein;
(bbb) Single-premium credit life insurance policy. In connection
with the origination of any Mortgage Loan, no proceeds from such Mortgage Loan
were used to finance or acquire a single-premium credit life insurance policy;
(ccc) Qualified Mortgage. Each Mortgage Loan is an obligation which
is principally secured by an interest in real property within the meaning of
Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real Estate
Tax Service, and such contract is transferable;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) 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;
(ggg) Mortgagor Bankruptcy. As of the related Servicing Transfer
Date, the Mortgagor has not filed a bankruptcy petition and has not become the
subject of involuntary bankruptcy proceedings and has not consented to the
filing of a bankruptcy proceeding against it or to a receiver being appointed in
respect of the related Mortgaged Property;
(hhh) No Prior Offer. As of the related Closing Date, the Mortgage
Loan has not previously been offered for sale unless (i) notice of such Mortgage
Loan resale has been provided to the Purchaser in writing prior to the
commencement of the Purchaser's due diligence and (ii) the Mortgage Loan was
originated without exception pursuant to the Underwriting Guidelines.
(iii) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(jjj) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, unemployment, property, accident or
health insurance policy in connection with the origination of the Mortgage Loan.
No proceeds from any Mortgage Loan were used to purchase single premium credit
insurance policies as part of the origination of, or as a condition to closing,
such Mortgage Loan;
(kkk) Points and Fees. All points and fees related to each Mortgage
Loan were disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation. Except in the case of a Mortgage Loan in
an original principal amount of less than $60,000 which would have resulted in
an unprofitable origination, no Mortgagor was charged "points and fees" (whether
or not financed) in an amount greater than 7% of the principal amount of such
Mortgage Loan;
(lll) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(mmm) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
================================================================================
AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
Purchaser
MERITAGE MORTGAGE CORPORATION,
Seller
------------------------------------------------
Dated as of June 1, 2005
Conventional,
Fixed and Adjustable Rate, B/C Residential Mortgage Loans
================================================================================
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS..................................................
SECTION 2. AGREEMENT TO PURCHASE........................................
SECTION 3. MORTGAGE SCHEDULES...........................................
SECTION 4. PURCHASE PRICE...............................................
SECTION 5. EXAMINATION OF MORTGAGE FILES................................
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER..........................
SECTION 7. SERVICING OF THE MORTGAGE LOANS..............................
SECTION 8. TRANSFER OF SERVICING........................................
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REMEDIES FOR BREACH..........................................
SECTION 10. CLOSING......................................................
SECTION 11. CLOSING DOCUMENTS............................................
SECTION 12. COSTS........................................................
SECTION 13. COOPERATION OF SELLER WITH A RECONSTITUTION..................
SECTION 14. THE SELLER...................................................
SECTION 15. FINANCIAL STATEMENTS.........................................
SECTION 16. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST...............
SECTION 17. NOTICES......................................................
SECTION 18. SEVERABILITY CLAUSE..........................................
SECTION 19. COUNTERPARTS.................................................
SECTION 20. GOVERNING LAW................................................
SECTION 21. INTENTION OF THE PARTIES.....................................
SECTION 22. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT.....
SECTION 23. WAIVERS......................................................
SECTION 24. EXHIBITS.....................................................
SECTION 25. GENERAL INTERPRETIVE PRINCIPLES..............................
SECTION 26. REPRODUCTION OF DOCUMENTS....................................
SECTION 27. FURTHER AGREEMENTS...........................................
SECTION 28. RECORDATION OF ASSIGNMENTS OF MORTGAGE.......................
SECTION 29. NO SOLICITATION..............................................
SECTION 30. WAIVER OF TRIAL BY JURY......................................
SECTION 31. GOVERNING LAW JURISDICTION; CONSENT TO SERVICE OF PROCESS....
EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B INDEMNIFICATION AND CONTRIBUTION AGREEMENT
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT E FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
EXHIBIT H UNDERWRITING GUIDELINES
EXHIBIT I FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
--------------------------------------------------------------------
This AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND WARRANTIES
AGREEMENT (the "Agreement"), dated as of June 1, 2005, by and between ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York corporation, having an office at ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Purchaser"), and Meritage
Mortgage Corporation, an Oregon corporation, having an office at ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Purchaser and the Seller are parties to that certain
Mortgage Loan Purchase and Warranties Agreement, dated as of August 1, 2004, as
amended by Amendment No. 1, dated as of March 29, 2005 (the "Original Purchase
Agreement"), pursuant to which the Seller desires to sell, from time to time, to
the Purchaser, and the Purchaser desires to purchase, from time to time, from
the Seller, certain first and second lien, adjustable-rate and fixed-rate B/C
residential mortgage loans (the "Mortgage Loans") on a servicing released basis
as described herein, and which shall be delivered in pools of whole loans (each,
a "Mortgage Loan Package") on various dates as provided herein (each, a "Closing
Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust
or other security instrument creating a first or second lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule for
the related Mortgage Loan Package;
WHEREAS, the Purchaser and the Seller wish to prescribe the manner
of the conveyance, servicing by the Interim Servicer and control of the Mortgage
Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the
Seller, the Purchaser desires to sell some or all of the Mortgage Loans to one
or more purchasers as a whole loan transfer or a public or private, rated or
unrated mortgage pass-through transaction;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and the
Seller agree as follows:
SECTION 1 Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below.
Accepted Servicing Practices: 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 and incorporating
the Delinquency Collection Policies and Procedures.
Act: The National Housing Act, as amended from time to time.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan
purchased pursuant to this Agreement.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purpose of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agency Transfer: A ▇▇▇▇▇▇▇ Mac Transfer.
Agreement: This Amended and Restated Mortgage Loan Purchase and
Warranties Agreement and all amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: With respect to any Mortgaged Property, the lesser
of (i) the value thereof as determined by an appraisal made for the originator
of the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser, and (ii) the purchase price paid for the related Mortgaged Property
by the Mortgagor with the proceeds of the Mortgage Loan.
Assignment and Conveyance Agreement: As defined in Subsection 6.01.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Purchaser.
Balloon Mortgage Loan: Any Mortgage Loan which by its original terms
or any modifications thereof provides for amortization beyond its scheduled
maturity date.
Business Day: Any day other than (i) a Saturday or Sunday, (ii) a
day on which banking and savings and loan institutions, in the State of New York
or the state in which the Interim Servicer's servicing operations are located or
(iii) the state in which the Custodian's operations are located, are authorized
or obligated by law or executive order to be closed.
Closing Date: The date or dates on which the Purchaser from time to
time shall purchase, and the Seller from time to time shall sell, the Mortgage
Loans listed on the related Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
CLTV: As of any date and as to any Second Lien Loan, the ratio,
expressed as a percentage, of the (a) sum of (i) the outstanding principal
balance of the Second Lien Loan and (ii) the outstanding principal balance as of
such date of any mortgage loan or mortgage loans that are senior or equal in
priority to the Second Lien Loan and which are secured by the same Mortgaged
Property to (b) the Appraised Value as determined pursuant to the Underwriting
Guidelines of the related Mortgaged Property as of the origination of the Second
Lien Loan.
Code: Internal Revenue Code of 1986, as amended.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
Custodial Account: The separate trust account created and maintained
pursuant to Subsection 2.04 of the Interim Servicing Agreement (with respect to
each Mortgage Loan, as specified therein).
Custodial Agreement: The agreement(s) governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents. If more than one Custodial Agreement is in effect at
any given time, all of the individual Custodial Agreements shall collectively be
referred to as the "Custodial Agreement."
Custodian: Deutsche Bank Trust Company Americas, a New York banking
corporation, and its successors in interest or any successor to the Custodian
under the Custodial Agreement as therein provided.
Cut-off Date: The date or dates designated as such on the related
Mortgage Loan Schedule with respect to the related Mortgage Loan Package.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased or
replaced or to be replaced with a Qualified Substitute Mortgage Loan by the
Seller in accordance with the terms of this Agreement.
Delinquency Collection Policies and Procedures: The delinquency
collection policies and procedures of the Interim Servicer, a copy of which is
attached to the Interim Servicing Agreement as Exhibit 11.
Determination Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, for an interim period, as
specified therein).
Due Date: The day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Escrow Account: The separate account created and maintained pursuant
to Subsection 2.06 of the Interim Servicing Agreement (with respect to each
Mortgage Loan, as specified therein).
Escrow Payments: 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.
▇▇▇▇▇▇ ▇▇▇: The Federal National Mortgage Association, or any
successor thereto.
▇▇▇▇▇▇ Mae Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇ Mae
Servicers' Guide and all amendments or additions thereto.
FHA: 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.
First Lien Loan: A Mortgage Loan secured by a first lien Mortgage on
the related Mortgaged Property.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A fixed rate mortgage loan purchased
pursuant to this Agreement.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
▇▇▇▇▇▇▇ Mac Transfer: As defined in Section 13.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note which amount
is added to the Index in accordance with the terms of the related Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate
for such Mortgage Loan.
High Cost Loan: A Mortgage Loan (a) covered by the Home Ownership
and Equity Protection Act of 1994, (b) classified as a "high cost home,"
"threshold," "covered," (excluding New Jersey "Covered Home Loans" as that term
is defined in clause (1) of the definition of that term in the New Jersey Home
Ownership Security Act of 2002), "high risk home," "predatory" or similar loan
under any other applicable state, federal or local law (or a similarly
classified loan using different terminology under a law imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage loans
having high interest rates, points and/or fees) or (c) categorized as High Cost
pursuant to Appendix E of Standard & Poor's Glossary. For avoidance of doubt,
the parties agree that this definition shall apply to any law in effect at the
time of origination of any related Mortgage Loan.
Home Loan: A Mortgage Loan categorized as Home Loan pursuant to
Appendix E of Standard & Poor's Glossary.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to Mortgage Insurance issued by the FHA. The term "HUD," for
purposes of this Agreement, is also deemed to include subdivisions thereof such
as the FHA and Government National Mortgage Association.
Index: The index indicated in the related Mortgage Note for each
Adjustable Rate Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the related
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
Interim Funder: With respect to each MERS Designated Mortgage Loan,
the Person named on the MERS System as the interim funder pursuant to the MERS
Procedures Manual.
Interim Servicer: The servicer under the Interim Servicing
Agreement, or its successor in interest or assigns, or any successor to the
Interim Servicer under the Interim Servicing Agreement, as therein provided.
Interim Servicing Agreement: The agreement to be entered into by the
Purchaser and the Interim Servicer, providing for the Interim Servicer to
service the Mortgage Loans as specified by the Interim Servicing Agreement.
Investor: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the investor pursuant to the MERS Procedures
Manual.
Lifetime Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum Mortgage
Interest Rate thereunder. The Mortgage Interest Rate during the terms of each
Adjustable Rate Mortgage Loan shall not at any time exceed the Mortgage Interest
Rate at the time of origination of such Adjustable Rate Mortgage Loan by more
than the amount per annum set forth on the related Mortgage Loan Schedule.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise or the sale
of the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the outstanding principal amount of the
Mortgage Loan as of the related Cut-off Date (unless otherwise indicated), to
the lesser of (a) the Appraised Value of the Mortgaged Property at origination
and (b) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the purchase price of the Mortgaged Property.
Manufactured Home: A single family residential unit that is
constructed in a factory in sections in accordance with the Federal Manufactured
Home Construction and Safety Standards adopted on July 15, 1976, by the
Department of Housing and Urban Development ("HUD Code"), as amended in 2000,
which preempts state and local building codes. Each unit is identified by the
presence of a HUD Plate/Compliance Certificate label. The sections are then
transported to the site and joined together and affixed to a pre-built permanent
foundation (which satisfies the manufacturer's requirements and all state,
county, and local building codes and regulations). The manufactured home is
built on a non-removable, permanent frame chassis that supports the complete
unit of walls, floors, and roof. The underneath part of the home may have
running gear (wheels, axles, and brakes) that enable it to be transported to the
permanent site. The wheels and hitch are removed prior to anchoring the unit to
the permanent foundation. The manufactured home must be classified as real
estate and taxed accordingly. The permanent foundation may be on land owned by
the mortgager or may be on leased land.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, and its successors in interest.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Seller has designated or will designate MERS as, and has taken or will take such
action as is necessary to cause MERS to be, the mortgagee of record, as nominee
for the Seller, in accordance with MERS Procedure Manual and (b) the Seller has
designated or will designate the Purchaser as the Investor on the MERS System.
MERS Procedure Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS Designated
Mortgage Loans and other information.
MERS System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien, in the case of a First Lien Loan, or
a second lien, in the case of a Second Lien Loan, on the Mortgaged Property.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit A annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note with respect to each Mortgage Loan.
Mortgage Interest Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the applicable Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
Servicing Rights and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan, excluding replaced or
repurchased mortgage loans.
Mortgage Loan Documents: The documents required to be delivered to
the Custodian pursuant to Subsection 6.03 hereof with respect to any Mortgage
Loan.
Mortgage Loan Package: Each pool of Mortgage Loans, which shall be
purchased by the Purchaser from the Seller from time to time on each Closing
Date.
Mortgage Loan Schedule: The schedule of Mortgage Loans setting forth
the following information with respect to each Mortgage Loan in the related
Mortgage Loan Package: (1) the Seller's Mortgage Loan identifying number; (2)
the Mortgagor's name; (3) the street address of the Mortgaged Property including
the city, state and zip code; (4) a code indicating whether the Mortgagor is
self-employed; (5) a code indicating whether the Mortgaged Property is
owner-occupied; (6) the number and type of residential units constituting the
Mortgaged Property; (7) the original months to maturity or the remaining months
to maturity from the related Cut-off Date, in any case based on the original
amortization schedule and, if different, the maturity expressed in the same
manner but based on the actual amortization schedule; (8) with respect to each
First Lien Loan, the Loan-to-Value Ratio at origination, and with respect to
each Second Lien Loan, the CLTV at origination; (9) the Mortgage Interest Rate
as of the related Cut-off Date; (10) the date on which the Monthly Payment was
due on the Mortgage Loan and, if such date is not consistent with the Due Date
currently in effect, such Due Date; (11) the stated maturity date; (12) the
first payment date; (13) the amount of the Monthly Payment as of the related
Cut-off Date; (14) the last payment date on which a payment was actually applied
to the outstanding principal balance; (15) the original principal amount of the
Mortgage Loan; (16) the principal balance of the Mortgage Loan as of the close
of business on the related Cut-off Date, after deduction of payments of
principal due and collected on or before the related Cut-off Date; (17)
delinquency status as of the related Cut-off Date; (18) with respect to each
Adjustable Rate Mortgage Loan, the Interest Rate Adjustment Date; (19) with
respect to each Adjustable Rate Mortgage Loan, the Gross Margin; (20) with
respect to each Adjustable Rate Mortgage Loan, the Lifetime Rate Cap under the
terms of the Mortgage Note; (21) with respect to each Adjustable Rate Mortgage
Loan, a code indicating the type of Index; (22) the type of Mortgage Loan (i.e.,
Fixed or Adjustable Rate Mortgage Loan, First or Second Lien Loan); (23) a code
indicating the purpose of the loan (i.e., purchase, rate and term refinance,
equity take-out refinance); (24) a code indicating the documentation style
(i.e., full, alternative or reduced); (25) asset verification (Y/N); (26) the
loan credit classification (as described in the Underwriting Guidelines); (27)
whether such Mortgage Loan provides for a Prepayment Penalty and, if applicable,
the Prepayment Penalty period; (28) the Mortgage Interest Rate as of
origination; (29) the credit risk score (FICO score); (30) the date of
origination; (31) with respect to Adjustable Rate Mortgage Loans, the Mortgage
Interest Rate adjustment period; (32) with respect to each Adjustable Rate
Mortgage Loan, the Mortgage Interest Rate adjustment percentage; (33) with
respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest Rate floor;
(34) with respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest
Rate Cap as of the first Interest Rate Adjustment Date; (35) with respect to
each Adjustable Rate Mortgage Loan, the Periodic Rate Cap subsequent to the
first Interest Rate Adjustment Date; (36) with respect to each Adjustable Rate
Mortgage Loan, a code indicating whether the Mortgage Loan provides for negative
amortization; (37) with respect to each Adjustable Rate Mortgage Loan with
negative amortization, the negative amortization limit; (38) a code indicating
whether the Mortgage Loan is a High Cost Loan; (39) a code indicating whether
the Mortgage Loan is a Balloon Mortgage Loan; (40) the Due Date for the first
Monthly Payment; (41) the original Monthly Payment due; (42) a code indicating
the PMI Policy provider and percentage of coverage, if applicable; (43)
Appraised Value; (44) appraisal type; (45) automated valuation model (AVM) if
applicable; (46) appraisal date; (47) with respect to the related Mortgagor, the
debt-to-income ratio; (48) the MERS Identification Number, if applicable; (49) a
field indicating whether such Mortgage Loan is a Home Loan and (50) a field
indicating whether such Mortgage Loan is a leasehold estate. With respect to the
Mortgage Loans in the aggregate, the Mortgage Loan Schedule shall set forth the
following information, as of the related Cut-off Date: (1) the number of
Mortgage Loans; (2) the current aggregate outstanding principal balance of the
Mortgage Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage
Loans; (4) the weighted average maturity of the Mortgage Loans; (5) the
applicable Cut-off Date; and (6) the applicable Closing Date.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: With respect to each Mortgage Loan, the
Mortgagor's real property securing repayment of a related Mortgage Note,
consisting of an unsubordinated estate in fee simple or, with respect to real
property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely-accepted practice, a leasehold estate, in a
single parcel or multiple parcels of real property improved by a Residential
Dwelling.
Mortgagor: The obligor on a Mortgage Note.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President or an
Officer and by the Treasurer or the Secretary or one of the Assistant Treasurers
or Assistant Secretaries of the Seller, and delivered to the Purchaser as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Seller, reasonably acceptable to the Purchaser, provided that any
Opinion of Counsel relating to (a) the qualification of any account required to
be maintained pursuant to this Agreement as an Eligible Account, (b)
qualification of the Mortgage Loans in a REMIC or (c) compliance with the REMIC
Provisions, must be (unless otherwise stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact independent of the Seller and any servicer
of the Mortgage Loans, (ii) does not have any material direct or indirect
financial interest in the Seller or any servicer of the Mortgage Loans or in an
Affiliate of either and (iii) is not connected with the Seller or any servicer
of the Mortgage Loans as an officer, employee, director or person performing
similar functions.
Periodic Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum amount by
which the Mortgage Interest Rate therein may increase or decrease on an Interest
Rate Adjustment Date above or below the Mortgage Interest Rate previously in
effect. The Periodic Rate Cap for each Adjustable Rate Mortgage Loan is the rate
set forth as such on the related Mortgage Loan Schedule.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued
by an insurer acceptable under the Underwriting Guidelines and qualified to do
business in the jurisdiction where the Mortgaged Property is located.
Preliminary Mortgage Schedule: As defined in Section 3.
Prepayment Penalty: With respect to each Mortgage Loan, the penalty
if the Mortgagor prepays such Mortgage Loan as provided in the related Mortgage
Note or Mortgage.
Principal Prepayment: Any payment or other recovery of principal on
a Mortgage Loan which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller in exchange for the Mortgage Loans purchased on such
Closing Date as calculated in Section 4 of this Agreement.
Purchase Price and Terms Agreement: Those certain agreements setting
forth the general terms and conditions of the transactions consummated herein
and identifying the Mortgage Loans to be purchased from time to time hereunder,
by and between the Seller and the Purchaser.
Purchaser: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York
corporation, and its successors in interest and assigns, or any successor to the
Purchaser under this Agreement as herein provided.
Qualified Appraiser: An appraiser, acceptable by the Seller, who had
no interest, direct or indirect, in the Mortgaged Property or in any loan made
on the security thereof, and whose compensation was not affected by the approval
or disapproval of the Mortgage Loan, and such appraiser and the appraisal made
by such appraiser both satisfied the requirements of Title XI of the Financial
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.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Seller for a Deleted Mortgage Loan which must, on the date of
such substitution, (i) have an outstanding principal balance, after deduction of
all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the outstanding principal balance
of the Deleted Mortgage Loan (the amount of any shortfall will be deposited in
the Custodial Account by the Seller in the month of substitution); (ii) have a
Mortgage Interest Rate not less than and not more than 1% greater than the
Mortgage Interest Rate of the Deleted Mortgage Loan; (iii) have a remaining term
to maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; (iv) be of the same type as the Deleted Mortgage Loan
(i.e., fixed rate or adjustable rate with same Mortgage Interest Rate Caps); and
(v) comply with each representation and warranty (respecting individual Mortgage
Loans) set forth in Section 9.
Rating Agency: Any of Fitch, Moody's or Standard & Poor's, or their
respective successors designated by the Purchaser.
Reconstitution: A Whole Loan Transfer or a Securitization Transfer.
Reconstitution Agreements: The agreement or agreements entered into
by the Seller and the Purchaser and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Mortgage Loans
sold hereunder, in connection with a Whole Loan Transfer, Agency Transfer or a
Securitization Transfer pursuant to Section 13, including, but not limited to, a
seller's warranties and servicing agreement with respect to a Whole Loan
Transfer, and a pooling and servicing agreement and/or seller/servicer
agreements and related custodial/trust agreement and documents with respect to a
Securitization Transfer.
Reconstitution Date: As defined in Section 13.
Relief Act: The Servicemembers' Civil Relief Act.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter
1, Subtitle A of the Code, and related provisions and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, as specified therein).
Repurchase Price: As defined in the related Purchase Price and Terms
Agreement.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project or (iv) a one-family dwelling
in a planned unit development, none of which is a dwelling unit in a residential
cooperative housing corporation, mobile home or Manufactured Home.
RESPA: Real Estate Settlement Procedures Act, as amended from time
to time.
Second Lien Loan: A Mortgage Loan secured by a second lien Mortgage
on the related Mortgaged Property.
Securitization Transfer: The sale or transfer of some or all of the
Mortgage Loans to a trust or other entity as part of a publicly-issued or
privately-placed, rated or unrated mortgage pass-through or other
mortgage-backed securities transaction.
Seller: As defined in the initial paragraph of the Agreement,
together with its successors in interest.
Servicing Fee: An amount equal to twenty seven ($27) dollars per
Mortgage Loan per month. Such fee shall be payable monthly and shall be
pro-rated for any portion of a month during which the Mortgage Loan is serviced
by the Interim Servicer under the Interim Servicing Agreement, provided the
Transfer Date is greater than 30 days following the related Closing Date.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Interim Servicer consisting of originals of all documents in the
Mortgage File which are not delivered to the Purchaser or the Custodian and
copies of the Mortgage Loan Documents set forth in Section 2 of the Custodial
Agreement.
Servicing Rights: Any and all of the following: (a) any and all
rights to service the Mortgage Loans; (b) any payments to or monies received by
the Seller for servicing the Mortgage Loans; (c) any late fees, penalties or
similar payments with respect to the Mortgage Loans; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of the Seller
thereunder; (e) Escrow Payments or other similar payments with respect to the
Mortgage Loans and any amounts actually collected by the Seller with respect
thereto; (f) all accounts and other rights to payment related to any of the
property described in this paragraph; and (g) any and all documents, files,
records, servicing files, servicing documents, servicing records, data tapes,
computer records, or other information pertaining to the Mortgage Loans or
pertaining to the past, present or prospective servicing of the Mortgage Loans.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies Inc., and any successor thereto.
Standard & Poor's Glossary: With respect to any Mortgage Loan, the
Standard & Poor's LEVELS(R) Glossary, as may be in effect at the time of
origination of such Mortgage Loan.
Subservicer: Any subservicer which is subservicing any of the
Mortgage Loans pursuant to a Subservicing Agreement. Any subservicer, and any
such subservicer's successors in interest and assigns, shall meet the
qualifications set forth in Subsection 7.02 and be acceptable to the Purchaser
in its sole discretion.
Subservicing Agreement: An agreement, acceptable to the Purchaser in
its sole discretion, between the Interim Servicer and a Subservicer for the
servicing of the related Mortgage Loans.
Successor Servicer: Any servicer of one or more Mortgage Loans
designated by the Purchaser as being entitled to the benefits of the
indemnifications set forth in Subsections 9.03 and 14.01.
Stated Principal Balance: As to each Mortgage Loan on any date of
determination, (i) the principal balance of such Mortgage Loan at the related
Cut-off Date after giving effect to payments of principal due on or before such
date, to the extent actually received, minus (ii) all amounts previously
distributed to the Purchaser with respect to the related Mortgage Loan
representing payments or recoveries of principal on such Mortgage Loan.
Transfer Date:__The date on which the Purchaser, or its designee,
shall receive the transfer of servicing responsibilities and begin to perform
the servicing of the Mortgage Loans with respect to the related Mortgage Loan
Package, and the Seller shall cease all servicing responsibilities. Such date
shall occur on the day indicated by the Purchaser to the Seller in accordance
with the Interim Servicing Agreement, which date shall not be more than 30 days
following the related Closing Date, unless otherwise agreed upon by the parties
hereto.
Underwriting Guidelines: The underwriting guidelines of the Seller,
a copy of which is attached as an exhibit to the related Assignment and
Conveyance.
Whole Loan Transfer: The sale or transfer by Purchaser of some or
all of the Mortgage Loans in a whole loan or participation format pursuant to a
Reconstitution Agreement.
SECTION 2 Agreement to Purchase.
The Seller agrees to sell from time to time, and the Purchaser
agrees to purchase from time to time, Mortgage Loans having an aggregate
principal balance on the related Cut-off Date in an amount as set forth in the
related Purchase Price and Terms Agreement, or in such other amount as agreed by
the Purchaser and the Seller as evidenced by the actual aggregate principal
balance of the Mortgage Loans accepted by the Purchaser on each Closing Date.
SECTION 3 Mortgage Schedules.
The Seller from time to time shall provide the Purchaser with
certain information constituting a preliminary listing of the Mortgage Loans to
be purchased on each Closing Date in accordance with the related Purchase Price
and Terms Agreement and this Agreement (each, a "Preliminary Mortgage
Schedule").
The Seller shall deliver the related Mortgage Loan Schedule for the
Mortgage Loans to be purchased on a particular Closing Date to the Purchaser at
least five (5) Business Days prior to the related Closing Date. The related
Mortgage Loan Schedule shall be the related Preliminary Mortgage Schedule with
those Mortgage Loans which have not been funded prior to the related Closing
Date deleted.
SECTION 4 Purchase Price.
The Purchase Price for each Mortgage Loan shall be the percentage of
par as stated in the related Purchase Price and Terms Agreement (subject to
adjustment as provided therein), multiplied by the aggregate principal balance,
as of the related Cut-off Date, of the Mortgage Loans listed on the related
Mortgage Loan Schedule, after application of scheduled payments of principal due
on or before the related Cut-off Date, but only to the extent such payments were
actually received. The initial principal amount of the related Mortgage Loans
shall be the aggregate principal balance of the Mortgage Loans, so computed as
of the related Cut-off Date. If so provided in the related Purchase Price and
Terms Agreement, portions of the Mortgage Loans shall be priced separately.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the current principal
amount of the related Mortgage Loans as of the related Cut-off Date at the
weighted average Mortgage Interest Rate of those Mortgage Loans. The Purchase
Price plus accrued interest as set forth in the preceding paragraph shall be
paid to the Seller by wire transfer of immediately available funds to an account
designated by the Seller in writing.
The Purchaser shall be entitled to (1) all principal received after
the related Cut-off Date, (2) all other recoveries of principal collected on or
after the related Cut-off Date, and (3) all payments of interest on the Mortgage
Loans net of applicable Servicing Fees, if any.
SECTION 5 Examination of Mortgage Files.
At least ten (10) Business Days prior to the related Closing Date,
the Seller shall (a) deliver to the Purchaser or its designee in escrow, for
examination with respect to each Mortgage Loan to be purchased, the related
Mortgage File, including a copy of the Assignment of Mortgage (except with
respect to MERS Designated Loans), pertaining to each Mortgage Loan, or (b) make
the related Mortgage File available to the Purchaser for examination at such
other location as shall otherwise be acceptable to the Purchaser. Such
examination may be made by the Purchaser or its designee at any reasonable time
before or after the related Closing Date. If the Purchaser makes such
examination prior to the related Closing Date and determines, in its sole
discretion, that any Mortgage Loans are unacceptable to the Purchaser for any
reason, such Mortgage Loans shall be deleted from the related Mortgage Loan
Schedule, and may be replaced by a Qualified Substitute Mortgage Loan (or Loans)
acceptable to the Purchaser. The Purchaser may, at its option and without notice
to the Seller, purchase some or all of the Mortgage Loans without conducting any
partial or complete examination. The fact that the Purchaser or its designee has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the Purchaser's (or any of its successor's)
rights to demand repurchase, substitution or other relief as provided herein.
SECTION 6 Conveyance from Seller to Purchaser.
Subsection 6.01 Conveyance of Mortgage Loans.
The Seller, simultaneously with the delivery of the Mortgage Loan
Schedule with respect to the related Mortgage Loan Package to be purchased on
each Closing Date, shall execute and deliver an Assignment and Conveyance
Agreement in the form attached hereto as Exhibit G (the "Assignment and
Conveyance Agreement"). The Seller shall cause the Servicing File retained by
the Interim Servicer pursuant to this Agreement to be appropriately identified
in the Seller's computer system and/or books and records, as appropriate, to
clearly reflect the sale of the related Mortgage Loan to the Purchaser. The
Seller shall cause the Interim Servicer to release from its custody the contents
of any Servicing File retained by it only in accordance with this Agreement or
the Interim Servicing Agreement, except when such release is required in
connection with a repurchase of any such Mortgage Loan pursuant to Subsection
9.03.
Subsection 6.02 Books and Records.
Record title to each Mortgage as of the related Closing Date shall
be in the name of the Seller, an Affiliate of the Seller, the Purchaser or one
or more designees of the Purchaser, as the Purchaser shall select.
Notwithstanding the foregoing, each Mortgage and related Mortgage Note shall be
possessed solely by the Purchaser or the appropriate designee of the Purchaser,
as the case may be. All rights arising out of the Mortgage Loans including, but
not limited to, all funds received by the Seller or the Interim Servicer after
the related Cut-off Date on or in connection with a Mortgage Loan shall be
vested in the Purchaser or one or more designees of the Purchaser; provided,
however, that all funds received on or in connection with a Mortgage Loan shall
be received and held by the Seller or the Interim Servicer in trust for the
benefit of the Purchaser or the appropriate designee of the Purchaser, as the
case may be, as the owner of the Mortgage Loans pursuant to the terms of this
Agreement.
The Seller shall be or shall cause the Interim Servicer to be
responsible for maintaining, and shall maintain, a complete set of books and
records for each Mortgage Loan which shall be marked clearly to reflect the
ownership of each Mortgage Loan by the Purchaser. In particular, the Seller
shall or shall cause the Interim Servicer to maintain in its possession,
available for inspection by the Purchaser, and shall deliver to the Purchaser
upon demand, evidence of compliance with all federal, state and local laws,
rules and regulations, and requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, including
but not limited to documentation as to the method used in determining the
applicability of the provisions of the National Flood Insurance Act of 1968, as
amended, to the Mortgaged Property, documentation evidencing insurance coverage
and periodic inspection reports, as required by the ▇▇▇▇▇▇ Mae Guides. To the
extent that original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the Seller
or the Interim Servicer may be in the form of microfilm or microfiche so long as
the Seller or the Interim Servicer complies with the requirements of the ▇▇▇▇▇▇
▇▇▇ Guides.
The sale of each Mortgage Loan shall be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
Subsection 6.03 Delivery of Mortgage Loan Documents.
The Seller shall deliver and release to the Custodian no later than
two (2) Business Days prior to the related Closing Date those Mortgage Loan
Documents set forth on Exhibit A hereto as required by the Custodial Agreement
with respect to each Mortgage Loan set forth on the related Mortgage Loan
Schedule.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement for the
related Closing Date, as evidenced by the Initial Certification of the Custodian
in the form annexed to the Custodial Agreement. The Seller shall comply with the
terms of the Custodial Agreement and the Purchaser shall pay all fees and
expenses of the Custodian.
The Seller shall or shall cause the Interim Servicer to forward to
the Custodian, or to such other Person as the Purchaser shall designate in
writing, original documents evidencing an assumption, modification,
consolidation or extension of any Mortgage Loan entered into in accordance with
this Agreement within two weeks of their execution, provided, however, that the
Seller shall provide the Custodian, or to such other Person as the Purchaser
shall designate in writing, with a certified true copy of any such document
submitted for recordation within two weeks of its execution, and shall promptly
provide the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true and
complete copy of the original within ninety days of its submission for
recordation.
In the event any document required to be delivered to the Custodian
in the Custodial Agreement, including an original or copy of any document
submitted for recordation to the appropriate public recording office, is not so
delivered to the Custodian, or to such other Person as the Purchaser shall
designate in writing, within 120 days (or 180 days in connection with public
recording offices located in New York, New Jersey and Pennsylvania), following
the related Closing Date (other than with respect to the Assignments of Mortgage
which shall be delivered to the Custodian in blank and recorded subsequently by
the Purchaser or its designee), and in the event that the Seller does not cure
such failure within 30 days of discovery or receipt of written notification of
such failure from the Purchaser, the related Mortgage Loan shall, upon the
request of the Purchaser, be repurchased by the Seller at the price and in the
manner specified in Subsection 9.03. The foregoing repurchase obligation shall
not apply in the event that the Seller cannot deliver an original document
submitted for recordation to the appropriate public recording office within the
specified period due to a delay caused by the recording office in the applicable
jurisdiction; provided that the Seller shall instead deliver a recording receipt
of such recording office or, if such recording receipt is not available, an
officer's certificate of a servicing officer of the Seller, confirming that such
documents have been accepted for recording; provided that, upon request of the
Purchaser and delivery by the Purchaser to the Seller of a schedule of the
related Mortgage Loans, the Seller shall reissue and deliver to the Purchaser or
its designee said officer's certificate.
The Seller shall pay all initial recording fees (except with respect
to MERS Designated Loans), if any, for the assignments of mortgage and any other
fees or costs in transferring all original documents to the Custodian or, upon
written request of the Purchaser, to the Purchaser or the Purchaser's designee.
The Purchaser or the Purchaser's designee shall be responsible for recording the
Assignments of Mortgage and shall be reimbursed by the Seller for the costs
associated therewith pursuant to the preceding sentence.
Subsection 6.04 Quality Control Procedures.
The Seller shall, or shall cause the Interim Servicer to, have an
internal quality control program that verifies, on a regular basis, the
existence and accuracy of the legal documents, credit documents, property
appraisals, and underwriting decisions. The program shall include evaluating and
monitoring the overall quality of the Seller's loan production and the servicing
activities of the Interim Servicer. The program is to ensure that the Mortgage
Loans are originated in accordance with the Underwriting Guidelines; guard
against dishonest, fraudulent, or negligent acts; and guard against errors and
omissions by officers, employees, or other authorized persons.
Subsection 6.05 MERS Designated Loan.
With respect to each MERS Designated Mortgage Loan, the Seller
shall, on or prior to the related Closing Date, designate the Purchaser as the
Investor and the Custodian as Custodian, and no Person shall be listed as
Interim Funder on the MERS System. In addition on or prior to the related
Closing Date, Seller shall provide the Custodian and the Purchaser with a MERS
report listing the Purchaser as the Investor and the Custodian as Custodian, and
no Person as Interim Funder with respect to each MERS Designated Mortgage Loan.
SECTION 7 Servicing of the Mortgage Loans.
Subsection 7.01 Servicing of the Mortgage Loans; Interim Servicer
The Mortgage Loans have been sold by the Seller to the Purchaser on
a servicing released basis. Subject to, and upon the terms and conditions of
this Agreement and the Interim Servicing Agreement (with respect to each
Mortgage Loan, for an interim period, as specified therein), the Seller hereby
sells, transfers, assigns, conveys and delivers to the Purchaser the Servicing
Rights.
The Purchaser shall retain the Interim Servicer as contract servicer
of the Mortgage Loans for an interim period pursuant to and in accordance with
the terms and conditions contained in the Interim Servicing Agreement (with
respect to each Mortgage Loan, for an interim period, as specified therein). The
Seller shall cause the Interim Servicer to execute the Interim Servicing
Agreement on the initial Closing Date.
Pursuant to the Interim Servicing Agreement (with respect to each
Mortgage Loan, for an interim period, as specified therein), the Interim
Servicer shall begin servicing the Mortgage Loans on behalf of the Purchaser and
shall be entitled to a Servicing Fee, if any, with respect to such Mortgage
Loans until the applicable Transfer Date. The Interim Servicer shall conduct
such servicing in accordance with the Interim Servicing Agreement.
Subsection 7.02 Subservicing
The Mortgage Loans may be subserviced by a Subservicer on behalf of
the Seller in accordance with the servicing provisions of the Interim Servicing
Agreement, provided that (i) the Subservicer is a ▇▇▇▇▇▇▇ Mac seller/servicer in
good standing, and no event has occurred, including but not limited to, a change
in insurance coverage, which would make it unable to comply with the eligibility
requirements for seller/servicers imposed by ▇▇▇▇▇▇▇ Mac, or which would require
notification to ▇▇▇▇▇▇▇ Mac and (ii) the Purchaser approves any Subservicer in
writing. The Interim Servicer may perform any of its servicing responsibilities
under the Interim Servicing Agreement or may cause the Subservicer to perform
any such servicing responsibilities on its behalf, but the use by the Interim
Servicer of a Subservicer shall not release the Interim Servicer from any of its
obligations under the Interim Servicing Agreement and the Interim Servicer shall
remain responsible under the Interim Servicing Agreement for all acts and
omissions of a Subservicer as fully as if such acts and omissions were those of
the Interim Servicer. The Interim Servicer shall pay all fees and expenses of
any Subservicer engaged by the Interim Servicer from its own funds.
SECTION 8 Transfer of Servicing.
On the applicable Transfer Date, the Purchaser, or its designee,
shall assume all servicing responsibilities related to, and the Seller shall
cause the Interim Servicer to cease all servicing responsibilities related to,
the related Mortgage Loans subject to such Transfer Date. The Transfer Date
shall be the date set forth in the related Purchase Price and Terms Agreement.
On or prior to the applicable Transfer Date, the Seller shall, at
its sole cost and expense, take such steps as may be necessary or appropriate to
effectuate and evidence the transfer of the servicing of the related Mortgage
Loans to the Purchaser, or its designee, including but not limited to the
following:
(a) Notice to Mortgagors. The Seller shall cause the Interim
Servicer to mail to the Mortgagor of each related Mortgage Loan a letter
advising such Mortgagor of the transfer of the servicing of the related Mortgage
Loan to the Purchaser, or its designee, in accordance with the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
National Affordable Housing Act of 1990; provided, however, the content and
format of the letter shall have the prior approval of the Purchaser. The Seller
shall cause the Interim Servicer to provide the Purchaser with copies of all
such related notices.
(b) Notice to Taxing Authorities and Insurance Companies. The Seller
shall cause the Interim Servicer to transmit to the applicable taxing
authorities and insurance companies (including primary mortgage insurance policy
insurers, if applicable) and/or agents, notification of the transfer of the
servicing to the Purchaser, or its designee, and instructions to deliver all
notices, tax bills and insurance statements, as the case may be, to the
Purchaser from and after the Transfer Date. The Seller shall cause the Interim
Servicer to provide the Purchaser with copies of all such notices no later than
the Transfer Date.
(c) Delivery of Servicing Records. The Seller shall cause the
Interim Servicer to forward to the Purchaser, or its designee, all servicing
records and the Servicing File in the Interim Servicer's possession relating to
each related Mortgage Loan including the information enumerated in the Interim
Servicing Agreement (with respect to each such Mortgage Loan, for an interim
period, as specified therein).
(d) Escrow Payments. The Seller shall cause the Interim Servicer to
provide the Purchaser, or its designee, with immediately available funds by wire
transfer in the amount of the net Escrow Payments and suspense balances and all
loss draft balances associated with the related Mortgage Loans. The Seller shall
cause the Interim Servicer to provide the Purchaser with an accounting
statement, in electronic format acceptable to the Purchaser in its sole
discretion, of Escrow Payments and suspense balances and loss draft balances
sufficient to enable the Purchaser to reconcile the amount of such payment with
the accounts of the Mortgage Loans. Additionally, the Seller shall cause the
Interim Servicer to wire transfer to the Purchaser the amount of any agency,
trustee or prepaid Mortgage Loan payments and all other similar amounts held by
the Interim Servicer.
(e) Payoffs and Assumptions. The Seller shall cause the Interim
Servicer to provide to the Purchaser, or its designee, copies of all assumption
and payoff statements generated by the Interim Servicer on the related Mortgage
Loans from the related Cut-off Date to the Transfer Date.
(f) Mortgage Payments Received Prior to Transfer Date. Prior to the
Transfer Date all payments received by the Interim Servicer or the Seller on
each related Mortgage Loan shall be properly applied by the Seller to the
account of the particular Mortgagor.
(g) Mortgage Payments Received after Transfer Date. The amount of
any related Monthly Payments received by the Seller after the Transfer Date
shall be forwarded to the Purchaser by overnight mail on the date of receipt.
The Seller shall notify the Purchaser of the particulars of the payment, which
notification requirement shall be satisfied if the Seller forwards with its
payment sufficient information to permit appropriate processing of the payment
by the Purchaser. Any Monthly Payments received by the Seller sixty one (61) or
more days after the Transfer Date will be returned to the related Mortgagor with
instructions to remit to the Purchaser or its servicer. The Seller shall assume
responsibility for notifying the Successor Servicer of the necessary and
appropriate legal application of such Monthly Payments received by the Seller
after the Transfer Date with respect to related Mortgage Loans then known by the
Seller as being in foreclosure or bankruptcy; provided, for purposes of this
Agreement, necessary and appropriate legal application of such Monthly Payments
shall include, but not be limited to, endorsement of a Monthly Payment to the
Purchaser with the particulars of the payment such as the account number, dollar
amount, date received and any special Mortgagor application instructions and the
Seller shall cause the Interim Servicer to comply with the foregoing
requirements with respect to all Monthly Payments received by the Interim
Servicer after the Transfer Date.
(h) Misapplied Payments. Misapplied payments shall be processed as
follows:
(i) All parties shall cooperate in correcting misapplication errors;
(ii) The party receiving notice of a misapplied payment occurring
prior to the applicable Transfer Date and discovered after the Transfer
Date shall immediately notify the other party;
(iii) If a misapplied payment which occurred prior to the Transfer
Date cannot be identified and said misapplied payment has resulted in a
shortage in a Custodial Account or Escrow Account, the Seller shall be
liable for the amount of such shortage. The Seller shall reimburse the
Purchaser for the amount of such shortage within thirty (30) days after
receipt of written demand therefor from the Purchaser;
(iv) If a misapplied payment which occurred prior to the Transfer
Date has created an improper Purchase Price as the result of an inaccurate
outstanding principal balance, a check shall be issued to the party
shorted by the improper payment application within five (5) Business Days
after notice thereof by the other party; and
(v) Any check issued under the provisions of this Section 8(h) shall
be accompanied by a statement indicating the corresponding Seller and/or
the Purchaser Mortgage Loan identification number and an explanation of
the allocation of any such payments.
(i) Books and Records. On the Transfer Date, the books, records and
accounts of the Seller with respect to the related Mortgage Loans shall be in
accordance with all applicable Purchaser requirements.
(j) Reconciliation. The Seller shall, on or before the Transfer
Date, reconcile principal balances and make any monetary adjustments required by
the Purchaser. Any such monetary adjustments will be transferred between the
Seller and the Purchaser as appropriate.
(k) IRS Forms. The Seller shall or shall cause the Interim Servicer
to file all IRS forms 1099, 1099A, 1098 or 1041 and K-1 which are required to be
filed on or before the Transfer Date in relation to the servicing and ownership
of the related Mortgage Loans. The Seller shall provide copies of such forms to
the Purchaser upon request and shall reimburse the Purchaser for any costs or
penalties incurred by the Purchaser due to the Seller's failure to comply with
this paragraph.
SECTION 9. Representations, Warranties and Covenants of the Seller;
Remedies for Breach.
Subsection 9.01 Representations and Warranties Regarding the Seller.
The Seller represents, warrants and covenants to the Purchaser that
as of the date hereof and as of each Closing Date:
(a) Due Organization and Authority. The Seller is a corporation,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation or formation and has all licenses necessary to carry on its
business as now being conducted and is licensed or is exempt from such licensing
requirements, qualified and in good standing in the states where the Mortgaged
Property is located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Seller. The Seller has
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement has
been duly executed and delivered and constitutes the valid, legal, binding and
enforceable obligation of the Seller, except as enforceability may be limited by
(i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding in equity or at law. All requisite corporate action has been
taken by the Seller to make this Agreement valid and binding upon the Seller in
accordance with its terms;
(b) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller is required or, if required, such consent,
approval, authorization or order has been or will, prior to the related Closing
Date, be obtained;
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Seller's charter, by-laws
or other organizational documents or any legal restriction or any agreement or
instrument to which the Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse effect
upon any of its properties pursuant to the terms of any mortgage, contract, deed
of trust or other instrument, or impair the ability of the Purchaser to realize
on the Mortgage Loans, impair the value of the Mortgage Loans, or impair the
ability of the Purchaser to realize the full amount of any insurance benefits
accruing pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws"); the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws;
(i) Financial Statements. To the extent that such statements are
available, the Seller has delivered to the Purchaser financial statements as to
its last three complete fiscal years and any later quarter ended more than 60
days prior to the execution of this Agreement. All such financial statements
fairly present the pertinent results of operations and changes in financial
position for each of such periods and the financial position at the end of each
such period of the Seller, its parent company and its subsidiaries and have been
prepared in accordance with generally accepted accounting principles of the
United States consistently applied throughout the periods involved, except as
set forth in the notes thereto. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. In
addition, the Seller has delivered information obtained from ABS Net as to its
loan gain and loss experience in respect of foreclosures and its loan
delinquency experience with respect to mortgage loans sold to others during the
immediately preceding three-year period, and, to the Seller's knowledge, all
such information so delivered shall be true and correct in all material
respects. The Seller has completed any forms requested by the Purchaser in a
timely manner and in accordance with the provided instructions;
(j) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio at
the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage (except with respect to MERS Designated Mortgage Loans),
and any other documents required to be delivered with respect to each Mortgage
Loan pursuant to the Custodial Agreement, shall be delivered to the Custodian
all in compliance with the specific requirements of the Custodial Agreement.
With respect to each Mortgage Loan, the Seller will be in possession of a
complete Mortgage File in compliance with Exhibit A hereto, except for such
documents as will be delivered to the Custodian;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(m) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby (including
any Securitization Transfer or Whole Loan Transfer) contains or will contain any
untrue statement of fact or omits or will omit to state a fact necessary to make
the statements contained herein or therein not misleading;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller expects to be advised by its
independent certified public accountants that under generally accepted
accounting principles the transfer of the Mortgage Loans will be treated as a
sale on the books and records of the Seller and the Seller has determined that
the disposition of the Mortgage Loans pursuant to this Agreement will be
afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. Immediately prior to each related Closing Date,
the Seller is the owner of record of each Mortgage and the indebtedness
evidenced by each Mortgage Note, except for the Assignments of Mortgage which
have been sent for recording, and upon recordation the Seller will be the owner
of record of each Mortgage and the indebtedness evidenced by each Mortgage Note,
and upon the sale of the Mortgage Loans to the Purchaser, the Seller will retain
the Mortgage Files with respect thereto in trust only for the purpose of
servicing and supervising the servicing of each Mortgage Loan;
(q) Reasonable Purchase Price. The consideration received by the
Seller upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans; and
(r) Credit Reporting. The Seller, as servicer, will fully furnish,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis.
Additionally, the Seller, as servicer, will transmit full-file credit reporting
data for each Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 95-19 and
that for each Mortgage Loan, the Seller, as servicer, agrees it shall report one
of the following statuses each month as follows: new origination, current,
delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off.
Subsection 9.02 Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser that, as
to each Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
(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
related Closing Date for the Mortgage Loan under the terms of the Mortgage Note,
other than payments not yet 30 days delinquent, have been made and credited. No
payment required under the Mortgage Loan is 30 days or more delinquent nor has
any payment under the Mortgage Loan been 30 days or more delinquent at any time
since the origination of the Mortgage Loan. The first Monthly Payment shall be
made with respect to the Mortgage Loan on its related Due Date, all in
accordance with the terms of the related Mortgage Note;
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid. 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 earlier, to
the day which precedes by one month the related Due Date of the first
installment of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are provided by for in the ▇▇▇▇▇▇ Mae Guides or by
▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in Section 2.10 of
the Interim Servicing Agreement. If required by the National Flood Insurance Act
of 1968, as amended, each Mortgage Loan is covered by a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration as in effect which policy conforms to ▇▇▇▇▇▇▇ Mac requirements,
as well as all additional requirements set forth in Section 2.10 of the Interim
Servicing Agreement. All individual insurance policies contain a standard
mortgagee clause naming the Seller and its successors and assigns as mortgagee,
and all premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain the hazard insurance policy at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at such Mortgagor's cost and
expense, and to seek reimbursement therefor from the 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, is in full force and effect, and will be in full force and effect
and inure to the benefit of the Purchaser upon the consummation of the
transactions contemplated by this Agreement. The 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 or entity, and no such unlawful
items have been received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. Any and all applicable
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, disclosure and all predatory and abusive
lending laws applicable to the Mortgage Loan, including, without limitation, any
provisions relating to prepayment penalties, have been complied with, the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations, and the Seller shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to the
Purchaser upon demand, evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, 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
release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. No portion of the Mortgaged Property is used for
commercial purposes, and since the date of origination, no portion of the
Mortgaged Property has been used for commercial purposes; provided, that
Mortgaged Properties which contain a home office shall not be considered as
being used for commercial purposes as long as the Mortgaged Property has not
been altered for commercial purposes and is not storing any chemicals or raw
materials other than those commonly used for homeowner repair, maintenance
and/or household purposes. None of the Mortgaged Properties are Manufactured
Homes, log homes, mobile homes, geodesic domes or other unique property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the first
mortgage on the Mortgaged Property;
(B) the lien of current real property taxes and assessments not yet
due and payable;
(C) 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 the lender's title insurance policy delivered
to the originator of the Mortgage Loan and (A) specifically 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; and
(D) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. The Seller is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and upon
the sale of the Mortgage Loans to the Purchaser, the Seller will retain the
Mortgage Files or any part thereof with respect thereto not delivered to the
Custodian, the Purchaser or the Purchaser's designee, in trust only for the
purpose of servicing and supervising the servicing of each Mortgage Loan. The
Mortgage Loan is not assigned or pledged, and the Seller has good, indefeasible
and marketable title thereto, and has full right to transfer and sell the
Mortgage Loan to the Purchaser 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 and assign each Mortgage Loan pursuant
to this Agreement and following the sale of each Mortgage Loan, the Purchaser
will own such Mortgage Loan free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest. The
Seller intends to relinquish all rights to possess, control and monitor the
Mortgage Loan. After the related Closing Date, the Seller will have no right to
modify or alter the terms of the sale of the Mortgage Loan and the Seller will
have no obligation or right to repurchase the Mortgage Loan or substitute
another Mortgage Loan, except as provided in this Agreement;
(n) 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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or if the related Mortgaged Property is located in the state
of Iowa an attorney's opinion, or other generally acceptable form of policy or
insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance
policy is issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the first (with
respect to a First Lien Loan) or second (with respect to a Second Lien Loan)
priority lien of the Mortgage 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 (A), (B) and (C) of
paragraph (j) of this Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the 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 or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(q) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Seller nor any of its affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(r) 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 the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 (except for interest only
Mortgage Loans), over an original term of not more than thirty years from
commencement of amortization. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgage Loan is payable on the first day of each month.
Unless stated otherwise on the related Mortgage Loan Schedule, the Mortgage Loan
does not require a balloon payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on legally enforceable forms acceptable in
the secondary mortgage market;
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) [Reserved];
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Seller is in possession of a complete, true and
accurate Mortgage File in compliance with Exhibit A hereto, except for such
documents the originals of which have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage (except
with respect to any Mortgage that has been recorded in the name of MERS or its
designee) with respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located. The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller are not subject to the bulk
transfer or similar statutory provisions in effect in any applicable
jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. The Mortgage Loan is fully
funded, and there is no requirement to make any future advances to the related
Mortgagor;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. Since the origination of the
Mortgage Loan, there have not been any condemnation proceedings with respect to
the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller and the Interim Servicer with respect to the Mortgage Loan have been in
all respects in compliance with Accepted Servicing Practices, applicable laws
and regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, all such payments are in the possession of,
or under the control of, the Seller or the Interim Servicer and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law and the provisions of the related
Mortgage Note and Mortgage. An escrow of funds is not prohibited by applicable
law and has been established in an amount sufficient to pay for every item that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due the Seller have
been capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest
Rate adjustments have been made in strict compliance with state and federal law
and the terms of the related Mortgage and Mortgage Note on the related Interest
Rate Adjustment Date. If, pursuant to the terms of the Mortgage Note, another
index was selected for determining the Mortgage Interest Rate, the same index
was used with respect to each Mortgage Note which required a new index to be
selected, and such selection did not conflict with the terms of the related
Mortgage Note. The Seller or the Interim Servicer executed and delivered any and
all notices required under applicable law and the terms of the related Mortgage
Note and Mortgage regarding the Mortgage Interest Rate and the Monthly Payment
adjustments. Any interest required to be paid pursuant to state, federal and
local law has been properly paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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, except as
disclosed in the related Mortgage Loan File;
(ll) No Violation of Environmental Laws. There is no pending action
or proceeding directly involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue; there is no violation of
any environmental law, rule or regulation with respect to the Mortgage Property;
and nothing further remains to be done to satisfy in full all requirements of
each such law, rule or regulation constituting a prerequisite to use and
enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Servicemembers' Civil Relief Act or other
similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, acceptable to the Seller, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required or customary in the jurisdiction in which the
Mortgaged Property is located, the original lender has filed for record a
request for notice of any action by the related senior lienholder, and the
Seller has notified the senior lienholder in writing of the existence of the
Second Lien Loan and requested notification of any action to be taken against
the Mortgagor by the senior lienholder. Either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File;
(rr) Credit Reporting. The Seller has caused to be fully furnished,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., favorable and unfavorable)
on its borrower credit files to Equifax, Experian, and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis;
(ss) Escrow Analysis. If applicable, with respect to each Mortgage,
the Seller has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(tt) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in strict compliance with Accepted Servicing Practices;
(uu) No Default Under First Lien. With respect to each Second Lien
Loan, the related First Lien Loan related thereto is in full force and effect,
and there is no default, breach, violation or event which would permit
acceleration existing under such first Mortgage or 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 which
would permit acceleration thereunder;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage;
(ww) No Failure to Cure Default. The Seller has not received a
written notice of default of any senior mortgage loan related to the Mortgaged
Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage. The Seller
shall hold the Purchaser harmless from any and all damages, losses, costs and
expenses (including attorney's fees) arising from disclosure of credit
information in connection with the Purchaser's secondary marketing operations
and the purchase and sale of mortgages or Servicing Rights thereto;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) all ground lease rents, other payments, or assessments that
have become due have been paid; and (7) the use of leasehold estates for
residential properties is a widely accepted practice in the jurisdiction in
which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note and any addendums or
riders thereto executed by the related Mortgagor, is identified on the related
Mortgage Loan Schedule. With respect to Mortgage Loans originated prior to
October 1, 2002, no such Prepayment Penalty may be imposed for a term in excess
of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law. Notwithstanding the first sentence of this clause (aaa), if a Mortgage Loan
is not considered a High Cost Loan on the related Closing Date because a related
law is not being enforced or is not effective on the related Closing Date due to
judicial or administrative review or litigation and such Mortgage Loan becomes a
High Cost Loan at a later date as a result of such law becoming enforceable or
effective, such Mortgage Loan shall be subject to the automatic repurchase
provisions of Subsection 9.03 within the timeframes set forth therein;
(bbb) Single-premium credit life insurance policy. In connection
with the origination of any Mortgage Loan, no proceeds from such Mortgage Loan
were used to finance or acquire a single-premium credit life insurance policy;
(ccc) Qualified Mortgage. Each Mortgage Loan is an obligation which
is principally secured by an interest in real property within the meaning of
Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real Estate
Tax Service, and such contract is transferable;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) 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;
(ggg) Mortgagor Bankruptcy. The Mortgagor has not filed a bankruptcy
petition and has not become the subject of involuntary bankruptcy proceedings
and has not consented to the filing of a bankruptcy proceeding against it or to
a receiver being appointed in respect of the related Mortgaged Property;
(hhh) No Prior Offer. The Mortgage Loan has not previously been
offered for sale unless (i) notice of such Mortgage Loan resale has been
provided to the Purchaser in writing prior to the commencement of the
Purchaser's due diligence and (ii) the Mortgage Loan was originated without
exception pursuant to the Underwriting Guidelines;
(iii) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(jjj) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, accident or health insurance policy in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(kkk) Points and Fees. All points and fees related to each Mortgage
Loan were disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation. Except in the case of a Mortgage Loan in
an original principal amount of less than $60,000 which would have resulted in
an unprofitable origination, no Mortgagor was charged "points and fees" (whether
or not financed) in an amount greater than 7% of the principal amount of such
Mortgage Loan;
(lll) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(mmm) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
Subsection 9.03 Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 9.01 and 9.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or failure to examine any Mortgage
File. Upon discovery by either the Seller or the Purchaser of a breach of any of
the foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice to
the Seller of any such breach of a representation or warranty, which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Purchaser therein (or which materially and adversely affects the value of the
applicable Mortgage Loan or the interest of the Purchaser therein in the case of
a representation and warranty relating to a particular Mortgage Loan), the
Seller shall use its best efforts promptly to cure such breach in all material
respects and, if such breach cannot be cured, the Seller shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price.
Notwithstanding the above sentence, within 60 days of the earlier of either
discovery by, or notice to, the Seller of any breach of the representations or
warranties set forth in ▇▇▇▇▇▇▇▇▇ (▇▇), (▇▇), (▇▇▇), (▇▇▇), (▇▇▇), (▇▇▇), (▇▇▇),
(kkk), (lll) and (mmm) of Subsection 9.02, the Seller shall repurchase such
Mortgage Loan at the Repurchase Price. In the event that a breach shall involve
any representation or warranty set forth in Subsection 9.01, and such breach
cannot be cured within 60 days of the earlier of either discovery by or notice
to the Seller of such breach, all of the Mortgage Loans affected by such breach
shall, at the Purchaser's option, be repurchased by the Seller at the Repurchase
Price. However, if the breach shall involve a representation or warranty set
forth in Subsection 9.02 (except as provided in the second sentence of this
paragraph with respect to certain breaches for which no substitution is
permitted) and the Seller discovers or receives notice of any such breach within
120 days of the related Closing Date, the Seller shall, at the Purchaser's
option and provided that the Seller has a Qualified Substitute Mortgage Loan,
rather than repurchase the Mortgage Loan as provided above, remove such Mortgage
Loan (a "Deleted Mortgage Loan") and substitute in its place a Qualified
Substitute Mortgage Loan or Loans, provided that any such substitution shall be
effected not later than 120 days after the related Closing Date. If the Seller
has no Qualified Substitute Mortgage Loan, it shall repurchase the deficient
Mortgage Loan at the Repurchase Price. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Subsection 9.03 shall be
accomplished by either (a) if the Interim Servicing Agreement has been entered
into and is in effect, deposit in the Custodial Account of the amount of the
Repurchase Price for distribution to the Purchaser on the next scheduled
Remittance Date, after deducting therefrom any amount received in respect of
such repurchased Mortgage Loan or Loans and being held in the Custodial Account
for future distribution or (b) if the Interim Servicing Agreement has not been
entered into or is no longer in effect, by direct remittance of the Repurchase
Price to the Purchaser or its designee in accordance with the Purchaser's
instructions.
Three (3) days prior to the repurchase of any Mortgage Loan as set
forth above, the Purchaser, the Seller and an independent third party bailee
shall arrange for the reassignment of the repurchased Mortgage Loan and the
related Servicing Rights to the Seller and the delivery to such independent
third party bailee, pursuant to a bailee agreement mutually acceptable to the
Purchaser, related Seller and such independent third party bailee, the Mortgage
Loan Documents held by the Purchaser or its designee relating to the repurchased
Mortgage Loan. Within three (3) Business Days of repurchase, but in no instance
later than the related Transfer Date, all Mortgage Files shall be released to
Meritage Mortgage Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn:
Capital Markets. Upon such repurchase, the related Mortgage Loan Schedule shall
be amended to reflect the withdrawal of the repurchased Mortgage Loan from this
Agreement.
At the time of repurchase or substitution, the Purchaser and the
Seller shall arrange for the reassignment of the Deleted Mortgage Loan to the
Seller and the delivery to the Seller of any documents held by the Custodian
relating to the Deleted Mortgage Loan. In the event of a repurchase or
substitution, the Seller shall, simultaneously with such reassignment, give
written notice to the Purchaser that such repurchase or substitution has taken
place, amend the Mortgage Loan Schedule to reflect the withdrawal of the Deleted
Mortgage Loan from this Agreement, and, in the case of substitution, identify a
Qualified Substitute Mortgage Loan and amend the related Mortgage Loan Schedule
to reflect the addition of such Qualified Substitute Mortgage Loan to this
Agreement. In connection with any such substitution, the Seller shall be deemed
to have made as to such Qualified Substitute Mortgage Loan the representations
and warranties set forth in this Agreement except that all such representations
and warranties set forth in this Agreement shall be deemed made as of the date
of such substitution. The Seller shall effect such substitution by delivering to
the Custodian or to such other party as the Purchaser may designate in writing
for such Qualified Substitute Mortgage Loan the documents required by Subsection
6.03 and the Custodial Agreement, with the Mortgage Note endorsed as required by
Subsection 6.03 and the Custodial Agreement. No substitution will be made in any
calendar month after the Determination Date for such month. The Seller shall
cause the Interim Servicer to remit directly to the Purchaser, or its designee
in accordance with the Purchaser's instructions the Monthly Payment less the
Servicing Fee due, if any, on such Qualified Substitute Mortgage Loan or Loans
in the month following the date of such substitution. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans in the month of substitution
shall be retained by the Seller. For the month of substitution, distributions to
the Purchaser shall include the Monthly Payment due on any Deleted Mortgage Loan
in the month of substitution, and the Seller shall thereafter be entitled to
retain all amounts subsequently received by the Seller in respect of such
Deleted Mortgage Loan.
For any month in which the Seller substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Seller shall determine the amount
(if any) by which the aggregate principal balance of all Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all Deleted Mortgage Loans (after application of scheduled
principal payments due in the month of substitution). The amount of such
shortfall shall be distributed by the Seller directly to the Purchaser or its
designee in accordance with the Purchaser's instructions within two (2) Business
Days of such substitution.
In addition to such repurchase or substitution obligation, the
Seller shall indemnify the Purchaser and its present and former directors,
officers, employees and agents and any successor Servicer and its present and
former directors, officers, employees and agents and hold such parties harmless
against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the Seller representations and warranties contained
in this Agreement or any Reconstitution Agreement. It is understood and agreed
that the obligations of the Seller set forth in this Subsection 9.03 to cure,
substitute for or repurchase a defective Mortgage Loan and to indemnify the
Purchaser and Successor Servicer as provided in this Subsection 9.03 and in
Subsection 14.01 constitute the sole remedies of the Purchaser respecting a
breach of the foregoing representations and warranties. For purposes of this
paragraph "Purchaser" shall mean the Person then acting as the Purchaser under
this Agreement and any and all Persons who previously were "Purchasers" under
this Agreement and "Successor Servicer" shall mean any Person designated as the
Successor Servicer pursuant to this Agreement and any and all Persons who
previously were "Successor Servicers" pursuant to this Agreement.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 9.01 and
9.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Seller by the Purchaser for compliance with
this Agreement.
Subsection 9.04 Repurchase of Mortgage Loans with First Payment
Defaults. With respect to any Mortgage Loan, in the event that the first
scheduled payment of principal and interest due either (i) after origination of
such Mortgage Loan, or (ii) after the related Closing Date is not paid by the
related Mortgagor to the Purchaser within thirty (30) days of such Due Date, the
Seller, at the Purchaser's option, shall repurchase such Mortgage Loan from the
Purchaser at a price equal to the related Purchase Price Percentage multiplied
by the then outstanding principal balance of such Mortgage Loan, plus accrued
and unpaid interest thereon from the date to which interest was last paid
through the day prior to the repurchase date at the applicable Mortgage Interest
Rate, plus any outstanding advances owed to any servicer in connection with such
Mortgage Loan. Notwithstanding the foregoing, the Purchaser's right to request a
repurchase hereunder shall not commence until the date which is sixty (60) days
following the related Due Date (the "Breach Date"). The Purchaser shall have
ninety (90) days following the related Breach Date to notify the Seller and
request a repurchase and the Seller shall repurchase such Mortgage Loan within
thirty (30) days of receipt of such notice, provided notification is in
accordance with Section 17. Notwithstanding the foregoing, the Purchaser
reserves the right to request a repurchase following such sixty (60) day
timeframe in the event of a NSF return.
Subsection 9.05 Premium Recapture. With respect to any Mortgage Loan
without prepayment penalties that prepays in full during the first six months
following the related Closing Date, and with respect to any Mortgage Loan that
is repurchased pursuant to Subsection 9.03, the Seller shall pay the Purchaser,
within three (3) Business Days after such prepayment in full or repurchase, an
amount equal to the excess of the Purchase Price Percentage for such Mortgage
Loan over par, multiplied by the outstanding principal balance of such Mortgage
Loan as of the related Cut-off Date.
SECTION 10. Closing.
The closing for the purchase and sale of each Mortgage Loan Package
shall take place on the related Closing Date. At both the Purchaser's and
Seller's option, each Closing shall be either: by telephone, confirmed by letter
or wire as the parties shall agree, or conducted in person, at such place as the
parties shall agree.
The closing for the Mortgage Loans to be purchased on each Closing
Date shall be subject to each of the following conditions:
(i) at least two Business Days prior to the related Closing Date,
the Seller shall deliver to the Purchaser in a mutually acceptable
electronic format a listing on a loan-level basis of the necessary
information to compute the Purchase Price of the Mortgage Loans delivered
on such Closing Date (including accrued interest), and prepare a Mortgage
Loan Schedule;
(ii) all of the representations and warranties of the Seller under
this Agreement and of the Interim Servicer under the Interim Servicing
Agreement (with respect to each Mortgage Loan for an interim period, as
specified therein) shall be true and correct as of the related Closing
Date and no event shall have occurred which, with notice or the passage of
time, would constitute a default under this Agreement or an Event of
Default under the Interim Servicing Agreement;
(iii) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing documents as
specified in Section 11 of this Agreement, in such forms as are agreed
upon and acceptable to the Purchaser, duly executed by all signatories
other than the Purchaser as required pursuant to the terms hereof;
(iv) the Seller shall have delivered and released to the Custodian
all documents required pursuant to the Custodial Agreement; and
(v) all other terms and conditions of this Agreement and the related
Purchase Price and Terms Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the related Closing Date the Purchase Price, plus accrued interest
pursuant to Section 4 of this Agreement, by wire transfer of immediately
available funds to the account designated by the Seller.
SECTION 11. Closing Documents.
The Closing Documents for the Mortgage Loans to be purchased on each
Closing Date shall consist of fully executed originals of the following
documents:
(1) this Agreement (to be executed and delivered only
for the initial Closing Date);
(2) the Interim Servicing Agreement, dated as of the
initial Cut-off Date (to be executed and delivered only for
the initial Closing Date);
(3) with respect to the initial Closing Date, the
Custodial Agreement, dated as of the initial Cut-off Date;
(4) the related Mortgage Loan Schedule (one copy to be
attached to the Custodian's counterpart of the Custodial
Agreement in connection with the initial Closing Date, and one
copy to be attached to the related Assignment and Conveyance
as the Mortgage Loan Schedule thereto);
(5) a Custodian's Certification, as required under the
Custodial Agreement, in the form of Exhibit 2 to the Custodial
Agreement;
(6) with respect to the initial Closing Date, an
Officer's Certificate, in the form of Exhibit C hereto with
respect to each of the Seller, including all attachments
thereto; with respect to subsequent Closing Dates, an
Officer's Certificate upon request of the Purchaser;
(7) with respect to the initial Closing Date, an Opinion
of Counsel of the Seller (who may be an employee of the
Seller), substantially in the form of Exhibit D hereto
("Opinion of Counsel of the Seller"); with respect to
subsequent Closing Dates, an Opinion of Counsel of the Seller
upon request of the Purchaser;
(8) with respect to the initial Closing Date, an Opinion
of Counsel of the Custodian (who may be an employee of the
Custodian), substantially in the form of an exhibit to the
Custodial Agreement(s);
(9) a Security Release Certification, in the form of
Exhibit E or F, as applicable, hereto executed by any person,
as requested by the Purchaser, if any of the Mortgage Loans
have at any time been subject to any security interest, pledge
or hypothecation for the benefit of such person;
(10) a certificate or other evidence of merger or change
of name, signed or stamped by the applicable regulatory
authority, if any of the Mortgage Loans were acquired by the
Seller by merger or acquired or originated by the Seller while
conducting business under a name other than its present name,
if applicable;
(11) Assignment and Conveyance Agreement in the form of
Exhibit G hereto, and all exhibits thereto;
(12) with respect to the initial Closing Date, the
Underwriting Guidelines to be attached hereto as Exhibit H and
with respect to each subsequent Closing Date, the Underwriting
Guidelines to be attached to the related Assignment and
Conveyance; and
(13) a MERS Report reflecting the Purchaser as Investor,
the Custodian as custodian and no Person as Interim Funder for
each MERS Designated Mortgage Loan.
The Seller shall bear the risk of loss of the closing documents
until such time as they are received by the Purchaser or its attorneys.
SECTION 12. Costs.
The Purchaser shall pay any commissions due its salesmen and the
legal fees and expenses of its attorneys and custodial fees. All other costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans and the Servicing Rights including recording fees, fees for title policy
endorsements and continuations, fees for recording Assignments of Mortgage, and
the Seller's attorney's fees, shall be paid by the Seller.
SECTION 13. Cooperation of Seller with a Reconstitution.
The Seller and the Purchaser agree that with respect to some or all
of the Mortgage Loans, after the related Closing Date, on one or more dates
(each, a "Reconstitution Date") at the Purchaser's sole option, the Purchaser
may effect a sale (each, a "Reconstitution") of some or all of the Mortgage
Loans then subject to this Agreement, without recourse, to:
(i) ▇▇▇▇▇▇▇ Mac (the "▇▇▇▇▇▇▇ Mac Transfer"); or
(ii) one or more third party purchasers in one or more Whole Loan
Transfers; or
(iii) one or more trusts or other entities to be formed as part of
one or more Securitization Transfers, provided that the servicing shall be
transferred from the Seller to the successor servicer of Purchaser's
choice prior to the creation of any REMICs.
For up to six (6) transfers, the Seller agrees to execute in
connection with any Agency Transfer, any and all pool purchase contracts, and/or
agreements reasonably acceptable to the Seller among the Purchaser, the Seller
or ▇▇▇▇▇▇▇ Mac (as the case may be) and any servicer in connection with a Whole
Loan Transfer, a seller's warranties and servicing agreement or a participation
and servicing agreement in form and substance reasonably acceptable to the
parties, and in connection with a Securitization Transfer, a pooling and
servicing agreement in form and substance reasonably acceptable to the parties
or an Assignment and Recognition Agreement substantially in the form attached
hereto as Exhibit I (collectively, the agreements referred to herein as
designated, the "Reconstitution Agreements"), together with an opinion of
counsel with respect to such Reconstitution Agreements; provided, however, as to
each Mortgage Loan to the extent that any facts or circumstances which did not
exist on the applicable Closing Date hereunder would render any representation
and warranty materially false with respect to such Mortgage Loan if made as of
the date of such required restatement, in such event, the Seller shall be
permitted to take an exception to the representation and warranty with respect
to such changed fact or circumstance with respect to such Mortgage Loan as of
the date of such required restatement; provided, further, that the Seller shall
be required to notify the Purchaser and any Successor Servicer promptly and no
later than the date of such required restatement of any such facts or
circumstances.
With respect to each Whole Loan Transfer and each Securitization
Transfer entered into by the Purchaser, the Seller agrees (1) to cooperate
reasonably with the Purchaser and any prospective purchaser with respect to all
reasonable requests and due diligence procedures; (2) to execute, deliver and
perform all Reconstitution Agreements required by the Purchaser; and (3) to
restate the representations and warranties set forth in Subsections 9.01 and
9.02 as of the settlement or closing date in connection with such Reconstitution
(each, a "Reconstitution Date"), such restatement to be in the form of Exhibit B
to Exhibit I hereto, or make the representations and warranties set forth in the
related selling/servicing guide of the servicer or issuer, as the case may be,
or such representations or warranties as may be required by any rating agency or
prospective purchaser of the related securities or such Mortgage Loans in
connection with such Reconstitution. The Seller shall provide to such servicer
or issuer, as the case may be, and any other participants or purchasers in such
Reconstitution: (i) any and all information and appropriate verification of
information which may be reasonably available to the Seller or its affiliates,
whether through letters of its auditors and counsel or otherwise, as the
Purchaser or any such other participant shall request; (ii) such additional
representations, warranties, covenants, opinions of counsel, letters from
auditors, and certificates of public officials or officers of the Seller or the
Interim Servicer as are reasonably believed necessary by the Purchaser or any
such other participant; and (iii) to execute, deliver and satisfy all conditions
set forth in any indemnity agreement required by the Purchaser or any such
participant, including, without limitation, an Indemnification and Contribution
Agreement in substantially the form attached hereto as Exhibit B. Moreover, the
Seller agrees to cooperate with all reasonable requests made by the Purchaser to
effect such Reconstitution Agreements. The Seller shall indemnify the Purchaser,
each affiliate of the Purchaser participating in the Reconstitution and each
Person who controls the Purchaser or such affiliate and their respective present
and former directors, officers, employees and agents, and hold each of them
harmless from and against any losses, damages, penalties, fines, forfeitures,
legal fees and expenses and related costs, judgments, and any other costs, fees
and expenses that each of them may sustain arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
information provided by or on behalf of the Seller regarding the Seller, the
Mortgage Loans or the Underwriting Guidelines set forth in any offering document
prepared in connection with any Reconstitution. For purposes of the previous
sentence, "Purchaser" shall mean the Person then acting as the Purchaser under
this Agreement and any and all Persons who previously were "Purchasers" under
this Agreement.
In the event the Purchaser has elected to have the Seller or the
Interim Servicer hold record title to the Mortgages, prior to the Reconstitution
Date, the Seller shall prepare an assignment of mortgage in blank or to the
prospective purchaser or trustee, as applicable, from the Seller or the Interim
Servicer, as applicable, acceptable to the prospective purchaser or trustee, as
applicable, for each Mortgage Loan that is part of the Reconstitution and shall
pay all preparation and recording costs associated therewith. In connection with
the Reconstitution, the Seller shall execute or shall cause the Interim Servicer
to execute each assignment of mortgage, track such Assignments of Mortgage to
ensure they have been recorded and deliver them as required by the prospective
purchaser or trustee, as applicable, upon the Seller's receipt thereof.
Additionally, the Seller shall prepare and execute or shall cause the Interim
Servicer to execute, at the direction of the Purchaser, any note endorsement in
connection with any and all seller/servicer agreements.
All Mortgage Loans not sold or transferred pursuant to a
Reconstitution shall remain subject to this Agreement and, if the Interim
Servicing Agreement shall remain in effect with respect to the related Mortgage
Loan Package, shall continue to be serviced in accordance with the terms of this
Agreement and the Interim Servicing Agreement and with respect thereto this
Agreement shall remain in full force and effect.
SECTION 14. The Seller.
Subsection 14.01 Additional Indemnification by the Seller; Third
Party Claims.
(a) The Seller shall indemnify the Purchaser and its present and
former directors, officers, employees and agents and any Successor Servicer and
its present and former directors, officers, employees and agents, and hold such
parties harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, legal fees and expenses (including legal fees and expenses incurred
in connection with the enforcement of the Seller's indemnification obligation
under this Subsection 14.01) and related costs, judgments, and any other costs,
fees and expenses that such parties may sustain in any way related to the
failure of the Seller to perform its duties and the Interim Servicer to service
the Mortgage Loans in strict compliance with the terms of this Agreement or any
Reconstitution Agreement entered into pursuant to Section 13 or any breach of
any of Seller's representations, warranties and covenants set forth in this
Agreement (provided that such costs shall not include any lost profits). For
purposes of this paragraph "Purchaser" shall mean the Person then acting as the
Purchaser under this Agreement and any and all Persons who previously were
"Purchasers" under this Agreement and "Successor Servicer" shall mean any Person
designated as the Successor Servicer pursuant to this Agreement and any and all
Persons who previously were "Successor Servicers" pursuant to this Agreement.
(b) Promptly after receipt by an indemnified party under this
Subsection 14.01 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Subsection 14.01, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may have to
any indemnified party under this Subsection 14.01, except to the extent that it
has been prejudiced in any material respect, or from any liability which it may
have, otherwise than under this Subsection 14.01. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided that if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party or parties shall have reasonably concluded that there may
be legal defenses available to it or them and/or other indemnified parties which
are different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate counsel
to assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party for
expenses incurred by the indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with one local counsel, if applicable)), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii).
Subsection 14.02 Merger or Consolidation of the Seller.
The Seller will keep in full effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Seller shall be a party, or any Person succeeding to the business of the
Seller, shall be the successor of the Seller hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall have a net worth of at least $25,000,000.
SECTION 15. Financial Statements.
The Seller understands that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser shall make available to
prospective purchasers audited financial statements of the Seller for the most
recently completed three fiscal years respecting which such statements are
available, as well as a Consolidated Statement of Condition of the Seller at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Seller shall also make available any comparable interim
statements to the extent any such statements have been prepared by the Seller
(and are available upon request to members or stockholders of the Seller or the
public at large). The Seller, if it has not already done so, agrees to furnish
promptly to the Purchaser copies of the statements specified above. The Seller
shall also make available information obtained from ABS Net as to its servicing
performance with respect to loans serviced for others, including delinquency
ratios.
The Seller also agrees to allow reasonable access to a knowledgeable
financial or accounting officer for the purpose of answering questions asked by
any prospective purchaser regarding recent developments affecting the Seller or
the financial statements of the Seller.
SECTION 16. Mandatory Delivery; Grant of Security Interest.
The sale and delivery of the Mortgage Loans described on the related
Mortgage Loan Schedule is mandatory from and after the related Closing Date, it
being specifically understood and agreed that each Mortgage Loan is unique and
identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser (including damages to prospective purchasers of the Mortgage
Loans) in the event of the Seller's failure to deliver (i) each of the related
Mortgage Loans or (ii) one or more Qualified Substitute Mortgage Loans or (iii)
one or more Mortgage Loans otherwise acceptable to the Purchaser on or before
the related Closing Date. The Seller hereby grants to the Purchaser a lien on
and a continuing security interest in each Mortgage Loan and each document and
instrument evidencing each such Mortgage Loan to secure the performance by the
Seller of its obligations hereunder, and the Seller agrees that it shall hold
such Mortgage Loans in custody for the Purchaser subject to the Purchaser's (a)
right to reject any Mortgage Loan (or Qualified Substitute Mortgage Loan) under
the terms of this Agreement and to require another Mortgage Loan (or Qualified
Substitute Mortgage Loan) to be substituted therefor, and (b) obligation to pay
the Purchase Price for the Mortgage Loans. All rights and remedies of the
Purchaser under this Agreement are distinct from, and cumulative with, any other
rights or remedies under this Agreement or afforded by law or equity and all
such rights and remedies may be exercised concurrently, independently or
successively.]
SECTION 17. 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 the address as follows:
(i) if to the Seller:
Meritage Mortgage Corporation
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
with copies to:
RBMG, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Director of Loan Administration
CC Chief Legal Counsel
For issues of repurchases an additional copy to:
Meritage Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Capital Markets
(ii) if to the Purchaser:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loan Operations Manager
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 18. Severability Clause.
Any part, provision representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
SECTION 19. 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 20. Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Purchaser in the State of New York and
shall be deemed to have been made in the State of New York. The Agreement 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 the substantive laws of the State of New York (without regard to
conflicts of laws principles), except to the extent preempted by Federal law.
SECTION 21. Intention of the Parties.
It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to treat
the transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. Moreover, the arrangement
under which the Mortgage Loans are held shall be consistent with classification
of such arrangement as a grantor trust in the event it is not found to represent
direct ownership of the Mortgage Loans. The Purchaser shall have the right to
review the Mortgage Loans and the related Mortgage Loan Files to determine the
characteristics of the Mortgage Loans which shall affect the Federal income tax
consequences of owning the Mortgage Loans and the Seller shall cooperate with
all reasonable requests made by the Purchaser in the course of such review.
SECTION 22. Successors and Assigns; Assignment of Purchase
Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller and the Purchaser and the respective permitted
successors and assigns of the Seller and the successors and assigns of the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Seller to a third party without the prior written consent of the Purchaser,
which consent may be withheld by the Purchaser in its sole discretion. This
Agreement may be assigned, pledged or hypothecated by the Purchaser in whole or
in part, and with respect to one or more of the Mortgage Loans, without the
consent of the Seller. There shall be no limitation on the number of assignments
or transfers allowable by the Purchaser with respect to the Mortgage Loans and
this Agreement. In the event the Purchaser assigns this Agreement, and the
assignee assumes any of the Purchaser's obligations hereunder, the Seller
acknowledges and agrees to look solely to such assignee, and not to the
Purchaser, for performance of the obligations so assumed and the Purchaser shall
be relieved from any liability to the Seller with respect thereto.
SECTION 23. 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 24. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a
part hereof and are an integral part of this Agreement.
SECTION 25. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 26. Reproduction of Documents.
This Agreement and all documents relating thereto, 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 27. Further Agreements.
The Seller and the Purchaser 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 this
Agreement.
SECTION 28. Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments
of Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or their comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Seller's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
SECTION 29. No Solicitation.
From and after the related Closing Date, the Seller agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Seller's behalf,
to personally, by telephone or mail (via electronic means or otherwise), solicit
a Mortgagor under any Mortgage Loan for the purpose of refinancing a Mortgage
Loan, in whole or in part, without the prior written consent of the Purchaser.
Notwithstanding the foregoing, it is understood and agreed that the Seller, or
any of its respective affiliates:
(i) may advertise its availability for handling refinancings of
mortgages in its portfolio, including the promotion of terms it has
available for such refinancings, through the sending of letters or
promotional material, so long as it does not specifically target
Mortgagors and so long as such promotional material either is sent to the
mortgagors for all of the mortgages in the servicing portfolio of the
Seller and any of its affiliates (those it owns as well as those serviced
for others); and
(ii) may provide pay-off information and otherwise cooperate with
individual mortgagors who contact it about prepaying their mortgages by
advising them of refinancing terms and streamlined origination
arrangements that are available.
Promotions undertaken by the Seller or by any affiliate of the
Seller which are directed to the general public at large (including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio, internet website and television advertisements), shall not
constitute solicitation under this Section 29.
SECTION 30. Waiver of Trial by Jury.
THE SELLER AND THE PURCHASER EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 31. Governing Law Jurisdiction; Consent to Service of
Process.
THIS AGREEMENT SHALL BE DEEMED IN EFFECT WHEN A FULLY EXECUTED
COUNTERPART THEREOF IS RECEIVED BY THE PURCHASER IN THE STATE OF NEW YORK AND
SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK. THIS AGREEMENT SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
TO ITS CHOICE OF LAW RULES AND PRINCIPLES. EACH OF THE PURCHASER AND THE SELLER
IRREVOCABLY (I) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT; (II) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE DEFENSE OF AN INCONVENIENT FORUM IN ANY ACTION OR PROCEEDING IN ANY SUCH
COURT; (III) AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING IN ANY
SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW; AND (IV) CONSENTS
TO SERVICE OF PROCESS UPON IT BY MAILING A COPY THEREOF BY CERTIFIED MAIL
ADDRESSED TO IT AS PROVIDED FOR NOTICES HEREUNDER.
[Signature Page Follows]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
(Purchaser)
By:____________________________________
Name:__________________________________
Title:_________________________________
MERITAGE MORTGAGE CORPORATION
(Seller)
By:____________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT A
CONTENTS OF EACH MORTGAGE FILE
------------------------------
With respect to each Mortgage Loan, the Mortgage File shall include each
of the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be delivered to the Custodian, or
to such other Person as the Purchaser shall designate in writing, pursuant to
Section 6 of the Amended and Restated Mortgage Loan Purchase and Warranties
Agreement to which this Exhibit is attached (the "Agreement"):
(a) the original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________, without recourse" and signed in
the name of the last endorsee (the "Last Endorsee") by an authorized
officer. To the extent that there is no room on the face of the Mortgage
Notes for endorsements, the endorsement may be contained on an allonge, if
state law so allows and the Custodian is so advised by the Seller that
state law so allows. If the Mortgage Loan was acquired by the Seller in a
merger, the endorsement must be by "[Last Endorsee], successor by merger
to [name of predecessor]". If the Mortgage Loan was acquired or originated
by the Last Endorsee while doing business under another name, the
endorsement must be by "[Last Endorsee], formerly known as [previous
name]";
(b) the original of any guarantee executed in connection with the
Mortgage Note;
(c) the original Mortgage with evidence of recording thereon. If in
connection with any Mortgage Loan, the Seller cannot deliver or cause to
be delivered the original Mortgage with evidence of recording thereon on
or prior to the Closing Date because of a delay caused by the public
recording office where such Mortgage has been delivered for recordation or
because such Mortgage has been lost or because such public recording
office retains the original recorded Mortgage, the Seller shall deliver or
cause to be delivered to the Custodian, a photocopy of such Mortgage,
together with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Seller (or certified by the title
company, escrow agent, or closing attorney) stating that such Mortgage has
been dispatched to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage
certified by such public recording office to be a true and complete copy
of the original recorded Mortgage will be promptly delivered to the
Custodian upon receipt thereof by the Seller; or (ii) in the case of a
Mortgage where a public recording office retains the original recorded
Mortgage or in the case where a Mortgage is lost after recordation in a
public recording office, a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage;
(d) the originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon;
(e) the original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording (except with respect to MERS
Designated Loans). The Assignment of Mortgage must be duly recorded only
if recordation is either necessary under applicable law or commonly
required by private institutional mortgage investors in the area where the
Mortgaged Property is located or on direction of the Purchaser as provided
in this Agreement. If the Assignment of Mortgage is to be recorded, the
Mortgage shall be assigned to the Purchaser. If the Assignment of Mortgage
is not to be recorded, the Assignment of Mortgage shall be delivered in
blank. If the Mortgage Loan was acquired by the Seller in a merger, the
Assignment of Mortgage must be made by "[Seller], successor by merger to
[name of predecessor]". If the Mortgage Loan was acquired or originated by
the Seller while doing business under another name, the Assignment of
Mortgage must be by "[Seller], formerly known as [previous name]";
(f) the originals of all intervening assignments of mortgage (if
any) evidencing a complete chain of assignment from the Seller to the Last
Endorsee (or, in the case of a MERS Designated Loan, MERS) with evidence
of recording thereon, or if any such intervening assignment has not been
returned from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of
mortgage, the Seller shall deliver or cause to be delivered to the
Custodian, a photocopy of such intervening assignment, together with (i)
in the case of a delay caused by the public recording office, an Officer's
Certificate of the Seller (or certified by the title company, escrow
agent, or closing attorney) stating that such intervening assignment of
mortgage has been dispatched to the appropriate public recording office
for recordation and that such original recorded intervening assignment of
mortgage or a copy of such intervening assignment of mortgage certified by
the appropriate public recording office to be a true and complete copy of
the original recorded intervening assignment of mortgage will be promptly
delivered to the Custodian upon receipt thereof by the Seller; or (ii) in
the case of an intervening assignment where a public recording office
retains the original recorded intervening assignment or in the case where
an intervening assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original recorded
intervening assignment;
(g) the original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy of
the related policy binder or commitment for title certified to be true and
complete by the title insurance company;
(h) the original or, if unavailable, a copy of any security
agreement, chattel mortgage or equivalent document executed in connection
with the Mortgage; and
(i) if any of the above documents has been executed by a person
holding a power of attorney, an original or photocopy of such power
certified by the Seller to be a true and correct copy of the original.
In the event an Officer's Certificate of the Seller is delivered to
the Purchaser because of a delay caused by the public recording office in
returning any recorded document, the Seller shall deliver to the Purchaser,
within 120 days of the related Closing Date (or 180 days of the related Closing
Date as specified in Subsection 6.03 of the Agreement), an Officer's Certificate
which shall (i) identify the recorded document, (ii) state that the recorded
document has not been delivered to the Custodian due solely to a delay caused by
the public recording office, (iii) state the amount of time generally required
by the applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will be
delivered to the Custodian; provided, however, that any recorded document shall
in no event be delivered later than one year following the related Closing Date.
An extension of the date specified in clause (iv) above may be requested from
the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT B
FORM OF INDEMNIFICATION
AND
CONTRIBUTION AGREEMENT
----------------------
THIS INDEMNIFICATION AND CONTRIBUTION AGREEMENT dated _________,
200_ ("Agreement") among [______________], a [______________] (the
"Depositor"), [______________], a [______________] (the "Underwriter"), and
[______________], a [______________] (the "Indemnifying Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Indemnifying Party and the Depositor are parties to
the Pooling and Servicing Agreement (as defined herein);
WHEREAS, the Indemnifying Party originated or acquired the Mortgage
Loans and subsequently sold the Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. (the "Purchaser"), an affiliate of the Depositor, in anticipation
of the securitization transaction;
WHEREAS, the Indemnifying Party also stands to receive substantial
financial benefits in its capacity as servicer under the Pooling and Servicing
Agreement;
WHEREAS, as an inducement to the Depositor to enter into the Pooling
and Servicing Agreement and the Underwriter to enter into the Underwriting
Agreement (as defined herein), the Indemnifying Party wishes to provide for
indemnification and contribution on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the foregoing and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
1933 Act: The Securities Act of 1933, as amended.
1934 Act: The Securities Exchange Act of 1934, as amended.
Agreement: This Indemnification and Contribution Agreement, as
the same may be amended in accordance with the terms hereof.
Indemnified Parties: As defined in Section 3.1.
Indemnifying Party Information: All information in the Prospectus
Supplement or any amendment or supplement thereto (i) contained under the
headings "Summary--Relevant Parties--Responsible Party [and Servicer,"] "The
Mortgage Loan Pool--Underwriting Guidelines" [and "The Servicer"] and (ii)
regarding the Mortgage Loans, the related mortgagors and/or the related
Mortgaged Properties (but in the case of this clause (ii), only to the extent
any untrue statement or omission arose from or is based upon errors or omissions
in the information concerning the Mortgage Loans, the related mortgagors and/or
the related Mortgaged Properties, as applicable, provided to the Depositor or
any affiliate by or on behalf of the Indemnifying Party).
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Pooling and Servicing Agreement: The Pooling and Servicing
Agreement, dated as of ___________, 200_, among the Depositor, the
Indemnifying Party, as responsible party and servicer, and [______________].
Private Placement Memorandum: The private placement memorandum,
dated ___________, 200_, relating to the offering of the Privately Offered
Certificates.
Privately Offered Certificates: [______________], Mortgage
Pass-Through Certificates, Series [_______], Class [__] issued pursuant to
the Pooling and Servicing Agreement.
Prospectus Supplement: The preliminary prospectus supplement, dated
___________, 200_, together with the final prospectus supplement, dated
___________, 200_, relating to the offering of the Publicly Offered
Certificates.
Publicly Offered Certificates: [______________], Mortgage
Pass-Through Certificates, Series [_______], Class [__], Class [__],
Class [__], Class [__], Class [__], Class [__] and Class [__] issued pursuant
to the Pooling and Servicing Agreement.
Underwriting Agreement: The Underwriting Agreement, dated
___________, 200_, among the Depositor and the Underwriter, relating to the
sale of the Publicly Offered Certificates.
1.2 Other Terms. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Pooling and Servicing
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Each party hereto represents that:
(a) it has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement;
(b) this Agreement has been duly authorized, executed and delivered
by such party; and
(c) assuming the due authorization, execution and delivery by each
other party hereto, this Agreement constitutes the legal, valid and binding
obligation of such party.
ARTICLE III
INDEMNIFICATION
3.1 Indemnification by the Indemnifying Party of the Depositor and
the Underwriter. (a) The Indemnifying Party shall indemnify and hold harmless
the Depositor and the Underwriter and their respective affiliates, and their
respective present and former directors, officers, employees, agents and each
Person, if any, that controls the Depositor, the Underwriter or such affiliate,
within the meaning of either the 1933 Act or the 1934 Act (collectively, the
"Indemnified Parties"), against any and all losses, claims, damages, penalties,
fines, forfeitures or liabilities, joint or several, to which each such
Indemnified Party may become subject, under the 1933 Act, the 1934 Act or
otherwise, to the extent that such losses, claims, damages, penalties, fines,
forfeitures or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus Supplement, the Private Placement Memorandum or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission
relates to information set forth in the Indemnifying Party Information, and the
Indemnifying Party shall in each case reimburse each Indemnified Party for any
legal or other costs, fees, or expenses reasonably incurred and as incurred by
such Indemnified Party in connection with investigating or defending any such
loss, claim, damage, penalty, fine, forfeiture, liability or action. The
Indemnifying Party's liability under this Section 3.1 shall be in addition to
any other liability that the Indemnifying Party may otherwise have.
(b) If the indemnification provided for in this Section 3.1 shall
for any reason be unavailable to an Indemnified Party under this Section 3.1
(other than due to indemnification not being applicable under Section 3.1(a)),
then the party which would otherwise be obligated to indemnify with respect
thereto, on the one hand, and the parties which would otherwise be entitled to
be indemnified, on the other hand, shall contribute to the aggregate losses,
liabilities, claims, damages, penalty, fine, forfeiture, costs, fees and
expenses of the nature contemplated herein and incurred by the parties hereto in
such proportions that are appropriate to reflect the relative fault of the
Depositor or the Underwriter, on the one hand, and the Indemnifying Party, on
the other hand, in connection with the applicable misstatements or omissions as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, no Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
Person that was not guilty of such fraudulent misrepresentation. For purposes of
this Section 3.1, each director of a party to this Agreement and each Person, if
any, that controls a party to this Agreement within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such party.
3.2 Notification; Procedural Matters. Promptly after receipt by an
Indemnified Party under Section 3.1 of notice of any claim or the commencement
of any action, such Indemnified Party shall, if a claim in respect thereof is to
be made against the Indemnifying Party (or if a claim for contribution is to be
made against another party) under Section 3.1, notify the Indemnifying Party (or
other contributing party) in writing of the claim or the commencement of such
action; provided, however, that the failure to notify the Indemnifying Party (or
other contributing party) shall not relieve it from any liability which it may
have under Section 3.1 except to the extent it has been materially prejudiced by
such failure; and provided, further, however, that the failure to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
any Indemnified Party (or to the party requesting contribution) otherwise than
under Section 3.1. In case any such action is brought against any Indemnified
Party and it notifies the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that, by written notice delivered to the Indemnified Party promptly after
receiving the aforesaid notice from such Indemnified Party, the Indemnifying
Party elects to assume the defense thereof, it may participate with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that if
the defendants in any such action include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party or parties shall reasonably have
concluded that there may be legal defenses available to it or them and/or other
Indemnified Parties that are different from or additional to those available to
the Indemnifying Party, or if the use of counsel chosen by the Indemnifying
Party to represent the Indemnified Parties would present such counsel with a
conflict of interest, the Indemnified Party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party or
parties. Upon receipt of notice from the Indemnifying Party to such Indemnified
Party of its election so to assume the defense of such action and approval by
the Indemnified Party of such counsel, the Indemnifying Party shall not be
liable to such Indemnified Party under this paragraph for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel (plus any local counsel) in connection with the assertion of legal
defenses in accordance with the proviso to the immediately preceding sentence,
(ii) the Indemnifying Party shall not have employed counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party within
a reasonable time after notice of commencement of the action or (iii) the
Indemnifying Party shall have authorized the employment of counsel for the
Indemnified Party at the expense of the Indemnifying Party. No party shall be
liable for contribution with respect to any action or claim settled without its
consent, which consent shall not be unreasonably withheld. In no event shall the
Indemnifying Party be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from its own counsel for all
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
ARTICLE IV
GENERAL
4.1 Survival. This Agreement and the obligations of the parties
hereunder shall survive the purchase and sale of the Publicly Offered
Certificates and Privately Offered Certificates.
4.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, each Indemnified Party and their respective
successors and assigns, and no other Person shall have any right or obligation
hereunder.
4.3 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to principles of conflict of laws.
4.4 Miscellaneous. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by a writing signed by the
party against which 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.
4.5 Notices. All communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered to:
In the case of the Depositor:
[--------------]
[--------------]
[--------------]
Attention:
Telephone:
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loans Operations Manager
Telephone:
In the case of the Underwriter:
[--------------]
[--------------]
[--------------]
Attention:
Telephone:
In the case of the Indemnifying Party:
[--------------]
[--------------]
[--------------]
Attention:
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized officers as of the date first above written.
[DEPOSITOR]
By:____________________________________
Name:
Title:
[UNDERWRITER]
By:____________________________________
Name:
Title:
[INDEMNIFYING PARTY]
By:____________________________________
Name:
Title:
EXHIBIT C
SELLER'S OFFICER'S CERTIFICATE
------------------------------
I, ____________________, hereby certify that I am the duly elected
Officer of ________________[COMPANY], a [state] [federally] chartered
institution organized under the laws of the [state of ____________] [United
States] (the "Company") and further as follows:
(i) Attached hereto as Exhibit 1 is a true, correct and
complete copy of the charter of the Company which is in full force
and effect on the date hereof and which has been in effect without
amendment, waiver, rescission or modification since ___________.
(ii) Attached hereto as Exhibit 2 is a true, correct and
complete copy of the bylaws of the Company which are in effect on
the date hereof and which have been in effect without amendment,
waiver, rescission or modification since ___________.
(iii) Attached hereto as Exhibit 3 is an original certificate
of good standing of the Company issued within ten days of the date
hereof, and no event has occurred since the date thereof which would
impair such standing.
(iv) Attached hereto as Exhibit 4 is a true, correct and
complete copy of the corporate resolutions of the Board of Directors
of the Company authorizing the Company to execute and deliver (a)
the Amended and Restated Mortgage Loan Purchase and Warranties
Agreement, dated as of _______ __, 200_ (the "Purchase Agreement"),
by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. (the
"Purchaser") and the Company and (b) the Custodial Agreement, dated
as of _______ __, 200_ (the "Custodial Agreement"), by and among the
Purchaser, the Company, ________________________ (the "Interim
Servicer") and [CUSTODIAN] (the "Custodian"), [and to endorse the
Mortgage Notes and execute the Assignments of Mortgages by original
[or facsimile] signature], and such resolutions are in effect on the
date hereof and have been in effect without amendment, waiver,
rescission or modification since ____________.
(v) Either (i) no consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by the Company of or compliance
by the Company with the Purchase Agreement, [the sale of the
mortgage loans] or the consummation of the transactions contemplated
by the agreements; or (ii) any required consent, approval,
authorization or order has been obtained by the Company.
(vi) Neither the consummation of the transactions contemplated
by, nor the fulfillment of the terms of the Purchase Agreement
conflicts or will conflict with or results or will result in a
breach of or constitutes or will constitute a default under the
charter or by-laws of the Company or, to the best of my knowledge,
the terms of any indenture or other agreement or instrument to which
the Company is a party or by which it is bound or to which it is
subject, or any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or
regulatory body to which the Company is subject or by which it is
bound.
(vii) To the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the
Company which, in my judgment, either in any one instance or in the
aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of
the Company or in any material impairment of the right or ability of
the Company to carry on its business substantially as now conducted
or in any material liability on the part of the Company or which
would draw into question the validity of the Purchase Agreement, or
the mortgage loans or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which would
be likely to impair materially the ability of the Company to perform
under the terms of the Purchase Agreement.
(viii) Each person listed on Exhibit 5 attached hereto who, as
an officer or representative of the Company, signed (a) the Purchase
Agreement, and (b) any other document delivered or on the date
hereof in connection with any purchase described in the agreements
set forth above was, at the respective times of such signing and
delivery, and is now, a duly elected or appointed, qualified and
acting officer or representative of the Company, who holds the
office set forth opposite his or her name on Exhibit 5, and the
signatures of such persons appearing on such documents are their
genuine signatures.
(ix) The Company is duly authorized to engage in the
transactions described and contemplated in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated:____________________ By:___________________________
Name:_________________________
[Seal] Title: Officer
I, ________________________, an [Assistant] Secretary of
______________[COMPANY], hereby certify that ____________ is the duly elected,
qualified and acting Officer of the Company and that the signature appearing
above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:____________________ By:___________________________
Name:_________________________
Title: [Assistant] Secretary
EXHIBIT 5 to
Company's Officer's Certificate
NAME TITLE SIGNATURE
---- ----- ---------
------------------------ -------------------------- -------------------------
------------------------ -------------------------- -------------------------
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EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER
----------------------------------------
(date)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
You have requested [our] [my] opinion, as [Assistant] General
Counsel to ___________________ (the "Company"), with respect to certain matters
in connection with the sale by the Company of the Mortgage Loans pursuant to
that certain Amended and Restated Mortgage Loan Purchase and Warranties
Agreement by and between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
(the "Purchaser"), dated as of _________ __, 200_ (the "Purchase Agreement")
which sale is in the form of whole loans, delivered pursuant to a Custodial
Agreement dated as of _____ __, ____ among the Purchaser, the Company,
________________________ (the "Interim Servicer") and
______________________[CUSTODIAN] (the "Custodial Agreement", and collectively
with the Purchase Agreement, the "Agreements"). Capitalized terms not otherwise
defined herein have the meanings set forth in the Purchase Agreement.
[We] [I] have examined the following documents:
(i) the Purchase Agreement;
(ii) the Custodial Agreement;
(iii) the form of Assignment of Mortgage;
(iv) the form of endorsement of the Mortgage Notes; and
(v) such other documents, records and papers as we have deemed necessary
and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Company contained in
the Purchase Agreement. [We] [I] have assumed the authenticity of all documents
submitted to [us] [me] as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is [our] [my] opinion that:
(i) The Company is a [type of entity] duly organized, validly
existing and in good standing under the laws of the [United
States] and is qualified to transact business in, and is in
good standing under, the laws of [the state of incorporation].
(ii) The Company has the power to engage in the transactions
contemplated by the Agreements and all requisite power,
authority and legal right to execute and deliver the
Agreements and to perform and observe the terms and conditions
of the Agreements.
(iii) The Agreements have been duly authorized, executed and
delivered by the Company, and are the legal, valid and binding
agreement enforceable in accordance with its terms against the
Company, subject to bankruptcy laws and other similar laws of
general application affecting rights of creditors and subject
to the application of the rules of equity, including those
respecting the availability of specific performance, none of
which will materially interfere with the realization of the
benefits provided thereunder or with the Purchaser's ownership
of the Mortgage Loans.
(iv) The Company has been duly authorized to allow any of its
officers to execute any and all documents by original
signature in order to complete the transactions contemplated
by the Agreements.
(v) The Company has been duly authorized to allow any of its
officers to execute by original [or facsimile] signature the
endorsements to the Mortgage Notes and the Assignments of
Mortgages, and the original [or facsimile] signature of the
officer at the Company executing the endorsements to the
Mortgage Notes and the Assignments of Mortgages represents the
legal and valid signature of said officer of the Company.
(vi) Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Company of or
compliance by the Company with the Agreements and the sale of
the Mortgage Loans by the Company or the consummation of the
transactions contemplated by the Agreements or (ii) any
required consent, approval, authorization or order has been
obtained by the Company.
(vii) Neither the consummation of the transactions contemplated by,
nor the fulfillment of the terms of, the Agreements conflict
or will conflict with or results or will result in a breach of
or constitute or will constitute a default under the charter
or by-laws of the Company or, to the best of my knowledge, the
material terms of any indenture or other agreement or
instrument to which the Company is a party or by which it is
bound or to which it is subject, or violates any statute or
order, rule, regulations, writ, injunction or decree of any
court, governmental authority or regulatory body to which the
Company is subject or by which it is bound.
(viii)There is no action, suit, proceeding or investigation pending
or, to the best of [our] [my] knowledge, threatened against
the Company which, in [our] [my] judgment, either in any one
instance or in the aggregate, may result in any material
adverse change in the business, operations, financial
condition, properties or assets of the Company or in any
material impairment of the right or ability of the Company to
carry on its business substantially as now conducted or in any
material liability on the part of the Company or which would
draw into question the validity of the Agreements or the
Mortgage Loans or of any action taken or to be taken in
connection with the transactions contemplated thereby, or
which would be likely to impair materially the ability of the
Company to perform under the terms of the Agreements.
(ix) The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Agreements is sufficient to fully
transfer to the Purchaser all right, title and interest of the
Company thereto as noteholder and mortgagee.
(x) The Mortgages have been duly assigned and the Mortgage Notes
have been duly endorsed as provided in the Custodial
Agreement. The Assignments of Mortgage are in recordable form,
except for the insertion of the name of the assignee, and upon
the name of the assignee being inserted, are acceptable for
recording under the laws of the state where each related
Mortgaged Property is located. The endorsement of the Mortgage
Notes, the delivery to the Purchaser, or its designee, of the
Assignments of Mortgage, and the delivery of the original
endorsed Mortgage Notes to the Purchaser, or its designee, are
sufficient to permit the Purchaser to avail itself of all
protection available under applicable law against the claims
of any present or future creditors of the Company, and are
sufficient to prevent any other sale, transfer, assignment,
pledge or hypothecation of the Mortgages and the Mortgage
Notes by the Company from being enforceable.
Except as otherwise set forth in the Agreements, I assume no
obligation to revise this opinion or alter its conclusions to update or support
this letter to reflect any facts or circumstances that may hereafter develop.
This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you initially and directly resell the Mortgage Loans may
rely on this opinion as if it were addressed to them as of the date of this
opinion.
Very truly yours,
-----------------------------
[Name]
[Assistant] General Counsel
EXHIBIT E
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
___________________, 200__
[Federal Home Loan Bank of
______(the "Association")]
__________________________
__________________________
Attention: ___________________________
___________________________
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that ________________________[COMPANY]
a [type of entity], organized pursuant to the laws of [the State of
incorporation] (the "Company") has committed to sell certain mortgage loans to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. under a Amended and Restated Mortgage Loan
Purchase and Warranties Agreement. The Company warrants that the mortgage loans
to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. are in addition to and beyond
any collateral required to secure advances made by the Association to the
Company.
The Company acknowledges that the mortgage loans to be sold to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. shall not be used as additional or
substitute collateral for advances made by the Association. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. understands that the balance of the Company's mortgage
loan portfolio may be used as collateral or additional collateral for advances
made by the Association, and confirms that it has no interest therein.
Execution of this letter by the Association shall constitute a full
and complete release of any security interest, claim, or lien which the
Association may have against the mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc.
Very truly yours,
_____________________________
By:___________________________
Name:_________________________
Title:________________________
Date:_________________________
Acknowledged and approved:
[FEDERAL HOME LOAN BANK OF]
______________________________
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
EXHIBIT F
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
I. Release of Security Interest
The financial institution named below hereby relinquishes any and
all right, title, interest, lien or claim of any kind it may have in all
mortgage loans described on the attached Schedule A (the "Mortgage Loans"), to
be purchased by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. from the company named on
the next page (the "Company") pursuant to that certain Amended and Restated
Mortgage Loan Purchase and Warranties Agreement, dated as of ______ __, 200_,
and certifies that all notes, mortgages, assignments and other documents in its
possession relating to such Mortgage Loans have been delivered and released to
the Company or its designees, as of the date and time of the sale of such
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. Such release shall be
effective automatically without any further action by any party upon payment in
one or more installments, in immediately available funds, of $_____________, in
accordance with the wire instructions set forth below.
Name, Address and Wire Instructions of Financial Institution
________________________________
(Name)
________________________________
(Address)
________________________________
________________________________
________________________________
By:_____________________________
II. Certification of Release
The Company named below hereby certifies to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. the security interests in
the Mortgage Loans released by the above-named financial institution comprise
all security interests relating to or affecting any and all such Mortgage Loans.
The Company warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
_____________________________
By:__________________________
Title:_______________________
Date:________________________
EXHIBIT G
FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
-------------------------------------------
On this ___ day of ____________, ________, _______________
("Seller"), as the Seller under (i) that certain Purchase Price and Terms
Agreement, dated as of _________, ____ (the "PPTA"), and (ii) that certain
Amended and Restated Mortgage Loan Purchase and Warrants Agreement, dated as of
_________, ____ (the "Purchase Agreement"), does hereby sell, transfer, assign,
set over and convey to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital, Inc. ("Purchaser") as
the Purchaser under the Agreements (as defined below) without recourse, but
subject to the terms of the Agreements, all right, title and interest of, in and
to the Mortgage Loans listed on the Mortgage Loan Schedule attached hereto as
Exhibit A (the "Mortgage Loans"), together with the Mortgage Files and the
related Servicing Rights and all rights and obligations arising under the
documents contained therein. Each Mortgage Loan subject to the Agreements was
underwritten in accordance with, and conforms to, the Underwriting Guidelines
attached hereto as Exhibit C. Pursuant to Section 6 of the Purchase Agreement,
the Seller has delivered to the Custodian the documents for each Mortgage Loan
to be purchased as set forth in the Purchase Agreement. The ownership of each
Mortgage Note, Mortgage and the contents of the Mortgage File and Servicing File
is vested in the Purchaser and the ownership of all records and documents with
respect to the related Mortgage Loan prepared by or which come into the
possession of the Seller shall immediately vest in the Purchaser and shall be
retained and maintained, in trust, by the Seller at the will of the Purchaser in
a custodial capacity only. The PPTA and the Purchase Agreement shall
collectively be referred to as the "Agreements" herein.
The Mortgage Loan Package characteristics of the Mortgage Loans
subject hereto are set forth on Exhibit B hereto.
In accordance with Section 6 of the Purchase Agreement, the
Purchaser accepts the Mortgage Loans listed on Exhibit A attached hereto.
Notwithstanding the foregoing the Purchaser does not waive any rights or
remedies it may have under the Agreements.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
_________________________________
By:______________________________
Name:_________________________
Title:________________________
Accepted and Agreed:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:_________________________________
Name:
Title:
EXHIBIT A
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
THE MORTGAGE LOANS
------------------
EXHIBIT B
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE POOL
CHARACTERISTICS OF EACH MORTGAGE LOAN PACKAGE
Pool Characteristics of the Mortgage Loan Package as delivered on the related
Closing Date:
No Mortgage Loan has: (1) an outstanding principal balance less than $_____; (2)
an origination date earlier than __ months prior to the related Cut-off Date;
(3) a CLTV of greater than ____%; (4) a FICO Score of less than ___; or (5) a
debt-to-income ratio of more than ___%. Each Mortgage Loan has a Mortgage
Interest Rate of at least ___% per annum and an outstanding principal balance of
less than $______. Each Adjustable Rate Mortgage Loan has an Index of [______].
EXHIBIT H
UNDERWRITING GUIDELINES
-----------------------
Exhibit I
EXHIBIT I
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated [____________ __,
20__] ("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"),
[____________________] ("Assignee") and [SELLER] (the "Company"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and
other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
Assignment and Conveyance
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Mortgage Loan
Purchase Agreement (the "Purchase Agreement"), dated as of [DATE], between the
Assignor, as purchaser (the "Purchaser"), and the Company, as seller, solely
insofar as the Purchase Agreement relates to the Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder (i) any and all right, title and interest in, to and under
and any obligations of the Assignor with respect to any mortgage loans subject
to the Purchase Agreement which are not the Mortgage Loans set forth on the
Mortgage Loan Schedule and are not the subject of this Agreement or (ii) the
rights of the Purchaser under Section 9.04 of the Purchase Agreement.
Recognition of the Company
2. From and after the date hereof (the "Securitization Closing
Date"), the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Purchase Agreement
(solely to the extent set forth herein) and this Agreement to
[__________________] (the "Trust") created pursuant to a Pooling and Servicing
Agreement, dated as of [______], 200_ (the "Pooling Agreement"), among the
Assignee, the Assignor, [___________________], as trustee (including its
successors in interest and any successor trustees under the Pooling Agreement,
the "Trustee"), [____________________], as servicer (including its successors in
interest and any successor servicer under the Pooling Agreement, the
"Servicer"). The Company hereby acknowledges and agrees that from and after the
date hereof (i) the Trust will be the owner of the Mortgage Loans, (ii) the
Company shall look solely to the Trust for performance of any obligations of the
Assignor insofar as they relate to the Mortgage Loans, (iii) the Trust
(including the Trustee and the Servicer acting on the Trust's behalf) shall have
all the rights and remedies available to the Assignor, insofar as they relate to
the Mortgage Loans, under the Purchase Agreement, including, without limitation,
the enforcement of the document delivery requirements set forth in Section 6 of
the Purchase Agreement, and shall be entitled to enforce all of the obligations
of the Company thereunder insofar as they relate to the Mortgage Loans, and (iv)
all references to the Purchaser, the Custodian or the Bailee under the Purchase
Agreement insofar as they relate to the Mortgage Loans, shall be deemed to refer
to the Trust (including the Trustee and the Servicer acting on the Trust's
behalf). Neither the Company nor the Assignor shall amend or agree to amend,
modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreement which amendment, modification, waiver or other alteration
would in any way affect the Mortgage Loans or the Company's performance under
the Purchase Agreement with respect to the Mortgage Loans without the prior
written consent of the Trustee.
Representations and Warranties of the Company
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation;
(b) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement and has full power and
authority to perform its obligations under the Purchase Agreement.
The execution by the Company of this Agreement is in the ordinary
course of the Company's business and will not conflict with, or
result in a breach of, any of the terms, conditions or provisions of
the Company's charter or bylaws or any legal restriction, or any
material agreement or instrument to which the Company is now a party
or by which it is bound, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Company or
its property is subject. The execution, delivery and performance by
the Company of this Agreement have been duly authorized by all
necessary corporate action on part of the Company. This Agreement
has been duly executed and delivered by the Company, and, upon the
due authorization, execution and delivery by the Assignor and the
Assignee, will constitute the valid and legally binding obligation
of the Company, enforceable against the Company in accordance with
its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and by
general principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
(c) No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required to
be obtained or made by the Company in connection with the execution,
delivery or performance by the Company of this Agreement; and
(d) There is no action, suit, proceeding or investigation pending or
threatened against the Company, before any court, administrative
agency or other tribunal, which would draw into question the
validity of this Agreement or the Purchase Agreement, or which,
either in any one instance or in the aggregate, would result in any
material adverse change in the ability of the Company to perform its
obligations under this Agreement or the Purchase Agreement, and the
Company is solvent.
4. Pursuant to Section 13 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor, the Assignee
and the Trust, that the representations and warranties set forth on Exhibit B
hereto are true and correct as of the date hereof as if such representations and
warranties were made on the date hereof unless otherwise specifically stated in
such representations and warranties.
Remedies for Breach of Representations and Warranties
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicer acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Sections 3 and 4
hereof shall be as set forth in Subsection 9.03 of the Purchase Agreement as if
they were set forth herein (including without limitation the repurchase and
indemnity obligations set forth therein).
Miscellaneous
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicer acting on the Trust's behalf). Any entity into which Assignor,
Assignee or Company may be merged or consolidated shall, without the requirement
for any further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
9. Each of this Agreement and the Purchase Agreement shall survive
the conveyance of the Mortgage Loans and the assignment of the Purchase
Agreement (to the extent assigned hereunder) by Assignor to Assignee and by
Assignee to the Trust and nothing contained herein shall supersede or amend the
terms of the Purchase Agreement.
10. 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.
11. In the event that any provision of this Agreement conflicts with
any provision of the Purchase Agreement with respect to the Mortgage Loans, the
terms of this Agreement shall control.
12. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the Purchase Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
[SELLER]
By: __________________________________
Name:_______________________________
Its:________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: __________________________________
Name:_______________________________
Its:________________________________
[__________________________]
By: __________________________________
Name:_______________________________
Its:________________________________
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Mortgage Loan Schedule
EXHIBIT B TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Representations and Warranties as to the Seller and the Mortgage Loans
I. Representations and Warranties Regarding the Seller
The Seller hereby represents and warrants to the Purchaser that as
of the closing date for the securitization (the "Securitization Closing Date")
or such other date specified herein:
(a) Due Organization and Authority. The Seller is a corporation,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation or formation and has all licenses necessary to carry on its
business as now being conducted and is licensed or is exempt from such licensing
requirement, qualified and in good standing in the states where the Mortgaged
Property is located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Seller. The Seller has
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement has
been duly executed and delivered and constitutes the valid, legal, binding and
enforceable obligation of the Seller, except as enforceability may be limited by
(i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding in equity or at law. All requisite corporate action has been
taken by the Seller to make this Agreement valid and binding upon the Seller in
accordance with its terms;
(b) No Consent Required. No consent, approval, authorization or
order was required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller or, if required, such consent, approval,
authorization or order have been obtained, prior to the Closing Date for the
sale of the Mortgage Loans from the Seller to the Purchaser (the "Closing
Date");
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Seller's charter, by-laws
or other organizational documents or any legal restriction or any agreement or
instrument to which the Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse effect
upon any of its properties pursuant to the terms of any mortgage, contract, deed
of trust or other instrument, or impair the ability of the Purchaser to realize
on the Mortgage Loans, impair the value of the Mortgage Loans, or impair the
ability of the Purchaser to realize the full amount of any insurance benefits
accruing pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws"); the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws;
(i) Financial Statements. To the extent that such statements are
available, the Seller has delivered to the Purchaser financial statements as to
its last three complete fiscal years and any later quarter ended more than 60
days prior to the execution of this Agreement. All such financial statements
fairly present the pertinent results of operations and changes in financial
position for each of such periods and the financial position at the end of each
such period of the Seller, its parent company and its subsidiaries and have been
prepared in accordance with generally accepted accounting principles of the
United States consistently applied throughout the periods involved, except as
set forth in the notes thereto. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. In
addition, the Seller has delivered information obtained from ABS Net as to its
loan gain and loss experience in respect of foreclosures and its loan
delinquency experience with respect to mortgage loans sold to others during the
immediately preceding three-year period, and, to the Seller's knowledge, all
such information so delivered shall be true and correct in all material
respects. The Seller has completed any forms requested by the Purchaser in a
timely manner and in accordance with the provided instructions;
(j) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio as
of the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage (except with respect to MERS Designated Mortgage Loans),
and any other documents required to be delivered with respect to each Mortgage
Loan pursuant to the Custodial Agreement, have been delivered to the Custodian
all in compliance with the specific requirements of the Custodial Agreement;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(m) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished pursuant to this Agreement or any Reconstitution Agreement or in
connection with the transactions contemplated hereby (including any
Securitization Transfer or Whole Loan Transfer) contained any untrue statement
of fact or omitted to state a fact necessary to make the statements contained
herein or therein not misleading;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller expects to be advised by its
independent certified public accountants that under generally accepted
accounting principles the transfer of the Mortgage Loans will be treated as a
sale on the books and records of the Seller and the Seller has determined that
the disposition of the Mortgage Loans pursuant to this Agreement will be
afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. Immediately prior to each related Closing Date,
the Seller was the owner of record of each Mortgage and the indebtedness
evidenced by each Mortgage Note, except for the Assignments of Mortgage which
have been sent for recording, and upon recordation the Seller will be the owner
of record of each Mortgage and the indebtedness evidenced by each Mortgage Note,
and upon the sale of the Mortgage Loans to the Purchaser, the Seller will retain
the Mortgage Files with respect thereto in trust only for the purpose of
servicing and supervising the servicing of each Mortgage Loan; and
(q) Credit Reporting. As of the date on which the Seller transferred
servicing of the Mortgage Loan to the Purchaser or its designee (the "Servicing
Transfer Date") the Seller, as servicer, will fully furnish, in accordance with
the Fair Credit Reporting Act and its implementing regulations, accurate and
complete information (e.g., favorable and unfavorable) on its borrower credit
files to Equifax, Experian and Trans Union Credit Information Company (three of
the credit repositories), on a monthly basis. Additionally, on the Servicing
Transfer Date, the Seller, as servicer, will transmit full-file credit reporting
data for each Mortgage Loan pursuant to ▇▇▇▇▇▇ Mae Guide Announcement 95-19 and
that for each Mortgage Loan, the Seller, as servicer, agrees it shall report one
of the following statuses each month as follows: new origination, current,
delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off.
II. Representations and Warranties Regarding Individual Mortgage Loans
The Seller hereby represents and warrants to the Purchaser that as
of the closing date for the securitization (the "Securitization Closing Date")
or such other date specified herein:
(a) Mortgage Loans as Described. The information set forth in the
related Mortgage Loan Schedule is complete, true and correct;
(b) Payments Current. As of the Servicing Transfer Date, all
payments required to be made up to the related Closing Date for the Mortgage
Loan under the terms of the Mortgage Note, other than payments not yet 30 days
delinquent, have been made and credited. No payment required under the Mortgage
Loan is 30 days or more delinquent nor has any payment under the Mortgage Loan
been 30 days or more delinquent at any time since the origination of the
Mortgage Loan. The first Monthly Payment shall be made with respect to the
Mortgage Loan on its related Due Date, all in accordance with the terms of the
related Mortgage Note;
(c) No Outstanding Charges. As of the Servicing Transfer Date, there
are no defaults in complying with the terms of the Mortgage, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid. 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 earlier, to the day which precedes by one month the
related Due Date of the first installment of principal and interest;
(d) Original Terms Unmodified. As of the Closing Date, and to the
Seller's knowledge as of the Servicing Transfer Date, the terms of the Mortgage
Note and Mortgage have not been impaired, waived, altered or modified in any
respect, from the date of origination except by a written instrument which has
been recorded, if necessary to protect the interests of the Purchaser, and which
has been delivered to the Custodian or to such other Person as the Purchaser
shall designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. As of the Servicing Transfer Date, pursuant to
the terms of the Mortgage, all buildings or other improvements upon the
Mortgaged Property are insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage and such other hazards as are provided by for
in the ▇▇▇▇▇▇ ▇▇▇ Guides or by ▇▇▇▇▇▇▇ Mac, as well as all additional
requirements set forth in Section 2.10 of the Interim Servicing Agreement. If
required by the National Flood Insurance Act of 1968, as amended, each Mortgage
Loan is covered by a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration as in effect which
policy conforms to ▇▇▇▇▇▇▇ Mac requirements, as well as all additional
requirements set forth in Section 2.10 of the Interim Servicing Agreement. All
individual insurance policies contain a standard mortgagee clause naming the
Seller and its successors and assigns as mortgagee, and all premiums thereon
have been paid. The Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the 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,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Purchaser upon the consummation of the transactions
contemplated by this Agreement. The 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 or entity, and no such unlawful items have been
received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. Any and all applicable
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, disclosure and all predatory and abusive
lending laws applicable to the Mortgage Loan, including, without limitation, any
provisions relating to prepayment penalties, have been complied with, the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations, and the Seller shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to the
Purchaser upon demand, evidence of compliance with all such requirements.
Notwithstanding the foregoing, the Seller shall not be responsible for a breach
of a federal, state or local law, other than those governing the origination of
the Mortgage Loan in effect at the time of the Mortgage Loan was originated,
following the Servicing Transfer Date;
(h) No Satisfaction of Mortgage. As of the Servicing Transfer Date,
the Mortgage has not been satisfied, canceled, 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 release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. As of the Servicing Transfer Date, no portion of
the Mortgaged Property is used for commercial purposes, and since the date of
origination, no portion of the Mortgaged Property has been used for commercial
purposes; provided, that Mortgaged Properties which contain a home office shall
not be considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner repair,
maintenance and/or household purposes. None of the Mortgaged Properties are
Manufactured Homes, log homes, mobile homes, geodesic domes or other unique
property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the
first mortgage on the Mortgaged Property;
(B) The lien of current real property taxes and assessments
not yet due and payable as of the Servicing Transfer Date;
(C) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically 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; and
(D) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. As of the Closing Date, the Seller is the sole owner
of record and holder of the Mortgage Loan and the indebtedness evidenced by each
Mortgage Note and upon the sale of the Mortgage Loans to the Purchaser, the
Seller will retain the Mortgage Files or any part thereof with respect thereto
not delivered to the Custodian, the Purchaser or the Purchaser's designee, in
trust only for the purpose of servicing and supervising the servicing of each
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Seller has
good, indefeasible and marketable title thereto, and has full right to transfer
and sell the Mortgage Loan to the Purchaser 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 and assign each
Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Seller intends to relinquish all rights to possess,
control and monitor the Mortgage Loan. After the related Closing Date, the
Seller will have no right to modify or alter the terms of the sale of the
Mortgage Loan and the Seller will have no obligation or right to repurchase the
Mortgage Loan or substitute another Mortgage Loan, except as provided in this
Agreement;
(n) Doing Business. As of the Closing Date, 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) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located,
and (2) either (i) organized under the laws of such state, or (ii) qualified to
do business in such state, or (iii) a federal savings and loan association, a
savings bank or a national bank having a principal office in such state, or (3)
not doing business in such state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or if the related Mortgaged Property is located in the state
of Iowa an attorney's opinion, or other generally acceptable form of policy or
insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance
policy is issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the first (with
respect to a First Lien Loan) or second (with respect to a Second Lien Loan)
priority lien of the Mortgage 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 (A), (B) and (C) of
paragraph (j) of this Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the 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 or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(q) No Defaults. As of the Servicing Transfer Date, other than
payments due but not yet 30 days or more delinquent, there is no default,
breach, violation or event which would permit 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 which would permit acceleration, and neither
the Seller nor any of its affiliates nor any of their respective predecessors,
have waived any default, breach, violation or event which would permit
acceleration;
(r) No Mechanics' Liens. As of the Servicing Transfer Date, 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 the law could give
rise to such liens) affecting the related Mortgaged Property which are or may be
liens prior to, or equal or coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 (except for interest only
Mortgage Loans), over an original term of not more than thirty years from
commencement of amortization. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgage Loan is payable on the first day of each month.
Unless stated otherwise on the related Mortgage Loan Schedule, the Mortgage Loan
does not require a balloon payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on legally enforceable forms acceptable in
the secondary mortgage market
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date the Mortgaged Property was 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) [Reserved];
(aa) Delivery of Mortgage Documents. As of the Servicing Transfer
Date, the Mortgage Note, the Mortgage, the Assignment of Mortgage and any other
documents required to be delivered under the Custodial Agreement for each
Mortgage Loan have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage (except
with respect to any Mortgage that has been recorded in the name of MERS or its
designee) with respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located. The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller are not subject to the bulk
transfer or similar statutory provisions in effect in any applicable
jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. The Mortgage Loan is fully
funded, and there is no requirement to make any future advances to the related
Mortgagor;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings. As
of the Servicing Transfer Date, there is no proceeding pending or threatened for
the total or partial condemnation of the Mortgaged Property. The Mortgaged
Property is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended and each Mortgaged Property is in good repair. Since the
origination of the Mortgage Loan, there have not been any condemnation
proceedings with respect to the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. As of the Servicing Transfer Date, the origination, servicing and
collection practices used by the Seller and the Interim Servicer with respect to
the Mortgage Loan have been in all respects in compliance with Accepted
Servicing Practices, applicable laws and regulations, and have been in all
respects legal and proper. With respect to escrow deposits and Escrow Payments,
all such payments are in the possession of, or under the control of, the Seller
or the Interim Servicer and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item that remains unpaid and has been assessed but
is not yet due and payable. No escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized under the Mortgage or
the Mortgage Note. All Mortgage Interest Rate adjustments have been made in
strict compliance with state and federal law and the terms of the related
Mortgage and Mortgage Note on the related Interest Rate Adjustment Date. If,
pursuant to the terms of the Mortgage Note, another index was selected for
determining the Mortgage Interest Rate, the same index was used with respect to
each Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller or the
Interim Servicer executed and delivered any and all notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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, except as
disclosed in the related Mortgage Loan File;
(ll) No Violation of Environmental Laws. As of the Servicing
Transfer Date, there is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule or
regulation with respect to the Mortgage Property; and nothing further remains to
be done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. As of the Servicing Transfer
Date, the Mortgagor has not notified the Seller, and the Seller has no knowledge
of any relief requested or allowed to the Mortgagor under the Servicemembers'
Civil Relief Act or other similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, acceptable to the Seller, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required or customary in the jurisdiction in which the
Mortgaged Property is located, the original lender has filed for record a
request for notice of any action by the related senior lienholder, and the
Seller has notified the senior lienholder in writing of the existence of the
Second Lien Loan and requested notification of any action to be taken against
the Mortgagor by the senior lienholder. Either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File;
(rr) Credit Reporting. As of the Servicing Transfer Date, the Seller
has caused to be fully furnished, in accordance with the Fair Credit Reporting
Act and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian,
and Trans Union Credit Information Company (three of the credit repositories),
on a monthly basis;
(ss) Escrow Analysis. As of the Servicing Transfer Date, if
applicable, with respect to each Mortgage, the Seller has within the last twelve
months (unless such Mortgage was originated within such twelve month period)
analyzed the required Escrow Payments for each Mortgage and adjusted the amount
of such payments so that, assuming all required payments are timely made, any
deficiency will be eliminated on or before the first anniversary of such
analysis, or any overage will be refunded to the Mortgagor, in accordance with
RESPA and any other applicable law;
(tt) Prior Servicing. As of the Servicing Transfer Date, each
Mortgage Loan has been serviced in all material respects in strict compliance
with Accepted Servicing Practices;
(uu) No Default Under First Lien. As of the Servicing Transfer Date,
with respect to each Second Lien Loan, the related First Lien Loan related
thereto is in full force and effect, and there is no default, breach, violation
or event which would permit acceleration existing under such first Mortgage or
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 which would permit acceleration thereunder;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage;
(ww) No Failure to Cure Default. As of the Servicing Transfer Date,
the Seller has not received a written notice of default of any senior mortgage
loan related to the Mortgaged Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage. The Seller
shall hold the Purchaser harmless from any and all damages, losses, costs and
expenses (including attorney's fees) arising from disclosure of credit
information in connection with the Purchaser's secondary marketing operations
and the purchase and sale of mortgages or Servicing Rights thereto;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) as of the Servicing Transfer Date, all ground lease rents,
other payments, or assessments that have become due have been paid; and (7) the
use of leasehold estates for residential properties is a widely accepted
practice in the jurisdiction in which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note and any addendums or
riders thereto executed by the related Mortgagor, is identified on the related
Mortgage Loan Schedule. With respect to Mortgage Loans originated prior to
October 1, 2002, no such Prepayment Penalty may be imposed for a term in excess
of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law. Notwithstanding the first sentence of this clause (aaa), if a Mortgage Loan
is not considered a High Cost Loan on the related Closing Date because a related
law is not being enforced or is not effective on the related Closing Date due to
judicial or administrative review or litigation and such Mortgage Loan becomes a
High Cost Loan at a later date as a result of such law becoming enforceable or
effective, such Mortgage Loan shall be subject to the automatic repurchase
provisions of Subsection 9.03 within the timeframes set forth therein;
(bbb) Single-premium credit life insurance policy. In connection
with the origination of any Mortgage Loan, no proceeds from such Mortgage Loan
were used to finance or acquire a single-premium credit life insurance policy;
(ccc) Qualified Mortgage. Each Mortgage Loan is an obligation which
is principally secured by an interest in real property within the meaning of
Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real Estate
Tax Service, and such contract is transferable;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) 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;
(ggg) Mortgagor Bankruptcy. As of the Servicing Transfer Date, the
Mortgagor has not filed a bankruptcy petition and has not become the subject of
involuntary bankruptcy proceedings and has not consented to the filing of a
bankruptcy proceeding against it or to a receiver being appointed in respect of
the related Mortgaged Property;
(hhh) No Prior Offer. As of the Closing Date, the Mortgage Loan has
not previously been offered for sale unless (i) notice of such Mortgage Loan
resale has been provided to the Purchaser in writing prior to the commencement
of the Purchaser's due diligence and (ii) the Mortgage Loan was originated
without exception pursuant to the Underwriting Guidelines.
(iii) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(jjj) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, accident or health insurance policy in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(kkk) Points and Fees. All points and fees related to each Mortgage
Loan were disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation. Except in the case of a Mortgage Loan in
an original principal amount of less than $60,000 which would have resulted in
an unprofitable origination, no Mortgagor was charged "points and fees" (whether
or not financed) in an amount greater than 7% of the principal amount of such
Mortgage Loan;
(lll) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(mmm) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction."
insert-p3.txt
================================================================================
SECOND AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
Purchaser
MERITAGE MORTGAGE CORPORATION,
Seller
------------------------------------------------
Dated as of November 1, 2005
Conventional,
Fixed and Adjustable Rate, B/C Residential Mortgage Loans
==============================================================================
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS..................................................
SECTION 2. AGREEMENT TO PURCHASE........................................
SECTION 3. MORTGAGE SCHEDULES...........................................
SECTION 4. PURCHASE PRICE...............................................
SECTION 5. EXAMINATION OF MORTGAGE FILES................................
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER..........................
SECTION 7. SERVICING OF THE MORTGAGE LOANS..............................
SECTION 8. TRANSFER OF SERVICING........................................
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REMEDIES FOR BREACH..........................................
SECTION 10. CLOSING......................................................
SECTION 11. CLOSING DOCUMENTS............................................
SECTION 12. COSTS........................................................
SECTION 13. COOPERATION OF SELLER WITH A RECONSTITUTION..................
SECTION 14. THE SELLER...................................................
SECTION 15. FINANCIAL STATEMENTS.........................................
SECTION 16. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST...............
SECTION 17. NOTICES......................................................
SECTION 18. SEVERABILITY CLAUSE..........................................
SECTION 19. COUNTERPARTS.................................................
SECTION 20. GOVERNING LAW................................................
SECTION 21. INTENTION OF THE PARTIES.....................................
SECTION 22. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT.....
SECTION 23. WAIVERS......................................................
SECTION 24. EXHIBITS.....................................................
SECTION 25. GENERAL INTERPRETIVE PRINCIPLES..............................
SECTION 26. REPRODUCTION OF DOCUMENTS....................................
SECTION 27. FURTHER AGREEMENTS...........................................
SECTION 28. RECORDATION OF ASSIGNMENTS OF MORTGAGE.......................
SECTION 29. NO SOLICITATION..............................................
SECTION 30. WAIVER OF TRIAL BY JURY......................................
SECTION 31. GOVERNING LAW JURISDICTION; CONSENT TO SERVICE OF PROCESS....
SECTION 32. COMPLIANCE WITH REGULATION AB................................
EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B INDEMNIFICATION AND CONTRIBUTION AGREEMENT
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT E FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
EXHIBIT H UNDERWRITING GUIDELINES
EXHIBIT I FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
SECOND AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
---------------------------------------------------------------------------
This SECOND AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND
WARRANTIES AGREEMENT (the "Agreement"), dated as of November 1, 2005, by and
between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York corporation, having an
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Purchaser"),
and Meritage Mortgage Corporation, an Oregon corporation, having an office at
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Purchaser and the Seller are parties to that certain
Mortgage Loan Purchase and Warranties Agreement, dated as of August 1, 2004, as
amended by Amendment No. 1, dated as of March 29, 2005, as amended by the
Amended and Restated Mortgage Loan Purchase and Warranties Agreement, dated as
of June 1, 2005 (the "Original Purchase Agreement"), pursuant to which the
Seller desires to sell, from time to time, to the Purchaser, and the Purchaser
desires to purchase, from time to time, from the Seller, certain first and
second lien, adjustable-rate and fixed-rate B/C residential mortgage loans (the
"Mortgage Loans") on a servicing released basis as described herein, and which
shall be delivered in pools of whole loans (each, a "Mortgage Loan Package") on
various dates as provided herein (each, a "Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust
or other security instrument creating a first or second lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule for
the related Mortgage Loan Package;
WHEREAS, the Purchaser and the Seller wish to prescribe the manner
of the conveyance, servicing by the Interim Servicer and control of the Mortgage
Loans;
WHEREAS, following its purchase of the Mortgage Loans from the
Seller, the Purchaser desires to sell some or all of the Mortgage Loans to one
or more purchasers as a whole loan transfer or a public or private, rated or
unrated mortgage pass-through transaction; and
WHEREAS, at the present time, the Purchaser and the Seller desire to
amend the Original Purchase Agreement to make certain modifications as set forth
herein with respect to all Mortgage Loans acquired pursuant to this Agreement or
the Original Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and the
Seller agree as follows:
SECTION 1 Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below.
Accepted Servicing Practices: 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 and incorporating
the Delinquency Collection Policies and Procedures.
Act: The National Housing Act, as amended from time to time.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan
purchased pursuant to this Agreement.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purpose of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agency Transfer: A ▇▇▇▇▇▇▇ Mac Transfer.
Agreement: This Second Amended and Restated Mortgage Loan Purchase
and Warranties Agreement and all amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: With respect to any Mortgaged Property, the lesser
of (i) the value thereof as determined by an appraisal made for the originator
of the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser, and (ii) the purchase price paid for the related Mortgaged Property
by the Mortgagor with the proceeds of the Mortgage Loan.
Assignment and Conveyance Agreement: As defined in Subsection 6.01.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Purchaser.
Balloon Mortgage Loan: Any Mortgage Loan which by its original
terms or any modifications thereof provides for amortization beyond its
scheduled maturity date.
Business Day: Any day other than (i) a Saturday or Sunday, (ii) a
day on which banking and savings and loan institutions, in the State of New York
or the state in which the Interim Servicer's servicing operations are located or
(iii) the state in which the Custodian's operations are located, are authorized
or obligated by law or executive order to be closed.
Closing Date: The date or dates on which the Purchaser from time to
time shall purchase, and the Seller from time to time shall sell, the Mortgage
Loans listed on the related Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
CLTV: As of any date and as to any Second Lien Loan, the ratio,
expressed as a percentage, of the (a) sum of (i) the outstanding principal
balance of the Second Lien Loan and (ii) the outstanding principal balance as of
such date of any mortgage loan or mortgage loans that are senior or equal in
priority to the Second Lien Loan and which are secured by the same Mortgaged
Property to (b) the Appraised Value as determined pursuant to the Underwriting
Guidelines of the related Mortgaged Property as of the origination of the Second
Lien Loan.
Code: Internal Revenue Code of 1986, as amended.
Commission: The United States Securities and Exchange Commission.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
Custodial Account: The separate trust account created and maintained
pursuant to Subsection 2.04 of the Interim Servicing Agreement (with respect to
each Mortgage Loan, as specified therein).
Custodial Agreement: The agreement(s) governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents. If more than one Custodial Agreement is in effect at
any given time, all of the individual Custodial Agreements shall collectively be
referred to as the "Custodial Agreement."
Custodian: Deutsche Bank Trust Company Americas, a New York banking
corporation, and its successors in interest or any successor to the Custodian
under the Custodial Agreement as therein provided.
Cut-off Date: The date or dates designated as such on the related
Mortgage Loan Schedule with respect to the related Mortgage Loan Package.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased or
replaced or to be replaced with a Qualified Substitute Mortgage Loan by the
Seller in accordance with the terms of this Agreement.
Delinquency Collection Policies and Procedures: The delinquency
collection policies and procedures of the Interim Servicer, a copy of which is
attached to the Interim Servicing Agreement as Exhibit 11.
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
Determination Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, for an interim period,
as specified therein).
Due Date: The day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Escrow Account: The separate account created and maintained pursuant
to Subsection 2.06 of the Interim Servicing Agreement (with respect to each
Mortgage Loan, as specified therein).
Escrow Payments: 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.
Exchange Act: The Securities Exchange Act of 1934, as amended.
▇▇▇▇▇▇ ▇▇▇: The Federal National Mortgage Association, or any
successor thereto.
▇▇▇▇▇▇ Mae Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇ Mae
Servicers' Guide and all amendments or additions thereto.
FHA: 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.
First Lien Loan: A Mortgage Loan secured by a first lien Mortgage on
the related Mortgaged Property.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A fixed rate mortgage loan purchased
pursuant to this Agreement.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
▇▇▇▇▇▇▇ Mac Transfer: As defined in Section 13.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note which amount
is added to the Index in accordance with the terms of the related Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate
for such Mortgage Loan.
High Cost Loan: A Mortgage Loan (a) covered by the Home Ownership
and Equity Protection Act of 1994, (b) classified as a "high cost home,"
"threshold," "covered," (excluding New Jersey "Covered Home Loans" as that term
is defined in clause (1) of the definition of that term in the New Jersey Home
Ownership Security Act of 2002), "high risk home," "predatory" or similar loan
under any other applicable state, federal or local law (or a similarly
classified loan using different terminology under a law imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage loans
having high interest rates, points and/or fees) or (c) categorized as High Cost
pursuant to Appendix E of Standard & Poor's Glossary. For avoidance of doubt,
the parties agree that this definition shall apply to any law in effect at the
time of origination of any related Mortgage Loan.
Home Loan: A Mortgage Loan categorized as Home Loan pursuant to
Appendix E of Standard & Poor's Glossary.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to Mortgage Insurance issued by the FHA. The term "HUD," for
purposes of this Agreement, is also deemed to include subdivisions thereof such
as the FHA and Government National Mortgage Association.
Index: The index indicated in the related Mortgage Note for each
Adjustable Rate Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the related
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
Interim Funder: With respect to each MERS Designated Mortgage Loan,
the Person named on the MERS System as the interim funder pursuant to the MERS
Procedures Manual.
Interim Servicer: The servicer under the Interim Servicing
Agreement, or its successor in interest or assigns, or any successor to the
Interim Servicer under the Interim Servicing Agreement, as therein provided.
Interim Servicing Agreement: The agreement to be entered into by the
Purchaser and the Interim Servicer, providing for the Interim Servicer to
service the Mortgage Loans as specified by the Interim Servicing Agreement.
Investor: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the investor pursuant to the MERS Procedures
Manual.
Lifetime Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum Mortgage
Interest Rate thereunder. The Mortgage Interest Rate during the terms of each
Adjustable Rate Mortgage Loan shall not at any time exceed the Mortgage Interest
Rate at the time of origination of such Adjustable Rate Mortgage Loan by more
than the amount per annum set forth on the related Mortgage Loan Schedule.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise or the sale
of the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the outstanding principal amount of the
Mortgage Loan as of the related Cut-off Date (unless otherwise indicated), to
the lesser of (a) the Appraised Value of the Mortgaged Property at origination
and (b) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the purchase price of the Mortgaged Property.
Manufactured Home: A single family residential unit that is
constructed in a factory in sections in accordance with the Federal Manufactured
Home Construction and Safety Standards adopted on July 15, 1976, by the
Department of Housing and Urban Development ("HUD Code"), as amended in 2000,
which preempts state and local building codes. Each unit is identified by the
presence of a HUD Plate/Compliance Certificate label. The sections are then
transported to the site and joined together and affixed to a pre-built permanent
foundation (which satisfies the manufacturer's requirements and all state,
county, and local building codes and regulations). The manufactured home is
built on a non-removable, permanent frame chassis that supports the complete
unit of walls, floors, and roof. The underneath part of the home may have
running gear (wheels, axles, and brakes) that enable it to be transported to the
permanent site. The wheels and hitch are removed prior to anchoring the unit to
the permanent foundation. The manufactured home must be classified as real
estate and taxed accordingly. The permanent foundation may be on land owned by
the mortgager or may be on leased land.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, and its successors in interest.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Seller has designated or will designate MERS as, and has taken or will take such
action as is necessary to cause MERS to be, the mortgagee of record, as nominee
for the Seller, in accordance with MERS Procedure Manual and (b) the Seller has
designated or will designate the Purchaser as the Investor on the MERS System.
MERS Procedure Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS Designated
Mortgage Loans and other information.
MERS System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien, in the case of a First Lien Loan, or
a second lien, in the case of a Second Lien Loan, on the Mortgaged Property.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit A annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note with respect to each Mortgage Loan.
Mortgage Interest Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the applicable Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
Servicing Rights and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan, excluding replaced or
repurchased mortgage loans.
Mortgage Loan Documents: The documents required to be delivered to
the Custodian pursuant to Subsection 6.03 hereof with respect to any Mortgage
Loan.
Mortgage Loan Package: Each pool of Mortgage Loans, which shall be
purchased by the Purchaser from the Seller from time to time on each Closing
Date.
Mortgage Loan Schedule: The schedule of Mortgage Loans setting forth
the following information with respect to each Mortgage Loan in the related
Mortgage Loan Package: (1) the Seller's Mortgage Loan identifying number; (2)
the Mortgagor's name; (3) the street address of the Mortgaged Property including
the city, state and zip code; (4) a code indicating whether the Mortgagor is
self-employed; (5) a code indicating whether the Mortgaged Property is
owner-occupied; (6) the number and type of residential units constituting the
Mortgaged Property; (7) the original months to maturity or the remaining months
to maturity from the related Cut-off Date, in any case based on the original
amortization schedule and, if different, the maturity expressed in the same
manner but based on the actual amortization schedule; (8) with respect to each
First Lien Loan, the Loan-to-Value Ratio at origination, and with respect to
each Second Lien Loan, the CLTV at origination; (9) the Mortgage Interest Rate
as of the related Cut-off Date; (10) the date on which the Monthly Payment was
due on the Mortgage Loan and, if such date is not consistent with the Due Date
currently in effect, such Due Date; (11) the stated maturity date; (12) the
first payment date; (13) the amount of the Monthly Payment as of the related
Cut-off Date; (14) the last payment date on which a payment was actually applied
to the outstanding principal balance; (15) the original principal amount of the
Mortgage Loan; (16) the principal balance of the Mortgage Loan as of the close
of business on the related Cut-off Date, after deduction of payments of
principal due and collected on or before the related Cut-off Date; (17)
delinquency status as of the related Cut-off Date; (18) with respect to each
Adjustable Rate Mortgage Loan, the Interest Rate Adjustment Date; (19) with
respect to each Adjustable Rate Mortgage Loan, the Gross Margin; (20) with
respect to each Adjustable Rate Mortgage Loan, the Lifetime Rate Cap under the
terms of the Mortgage Note; (21) with respect to each Adjustable Rate Mortgage
Loan, a code indicating the type of Index; (22) the type of Mortgage Loan (i.e.,
Fixed or Adjustable Rate Mortgage Loan, First or Second Lien Loan); (23) a code
indicating the purpose of the loan (i.e., purchase, rate and term refinance,
equity take-out refinance); (24) a code indicating the documentation style
(i.e., full, alternative or reduced); (25) asset verification (Y/N); (26) the
loan credit classification (as described in the Underwriting Guidelines); (27)
whether such Mortgage Loan provides for a Prepayment Penalty and, if applicable,
the Prepayment Penalty period; (28) the Mortgage Interest Rate as of
origination; (29) the credit risk score (FICO score); (30) the date of
origination; (31) with respect to Adjustable Rate Mortgage Loans, the Mortgage
Interest Rate adjustment period; (32) with respect to each Adjustable Rate
Mortgage Loan, the Mortgage Interest Rate adjustment percentage; (33) with
respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest Rate floor;
(34) with respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest
Rate Cap as of the first Interest Rate Adjustment Date; (35) with respect to
each Adjustable Rate Mortgage Loan, the Periodic Rate Cap subsequent to the
first Interest Rate Adjustment Date; (36) with respect to each Adjustable Rate
Mortgage Loan, a code indicating whether the Mortgage Loan provides for negative
amortization; (37) with respect to each Adjustable Rate Mortgage Loan with
negative amortization, the negative amortization limit; (38) a code indicating
whether the Mortgage Loan is a High Cost Loan; (39) a code indicating whether
the Mortgage Loan is a Balloon Mortgage Loan; (40) the Due Date for the first
Monthly Payment; (41) the original Monthly Payment due; (42) a code indicating
the PMI Policy provider and percentage of coverage, if applicable; (43)
Appraised Value; (44) appraisal type; (45) automated valuation model (AVM) if
applicable; (46) appraisal date; (47) with respect to the related Mortgagor, the
debt-to-income ratio; (48) the MERS Identification Number, if applicable; (49) a
field indicating whether such Mortgage Loan is a Home Loan and (50) a field
indicating whether such Mortgage Loan is a leasehold estate. With respect to the
Mortgage Loans in the aggregate, the Mortgage Loan Schedule shall set forth the
following information, as of the related Cut-off Date: (1) the number of
Mortgage Loans; (2) the current aggregate outstanding principal balance of the
Mortgage Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage
Loans; (4) the weighted average maturity of the Mortgage Loans; (5) the
applicable Cut-off Date; and (6) the applicable Closing Date.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: With respect to each Mortgage Loan, the
Mortgagor's real property securing repayment of a related Mortgage Note,
consisting of an unsubordinated estate in fee simple or, with respect to real
property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely-accepted practice, a leasehold estate, in a
single parcel or multiple parcels of real property improved by a Residential
Dwelling.
Mortgagor: The obligor on a Mortgage Note.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President or an
Officer and by the Treasurer or the Secretary or one of the Assistant Treasurers
or Assistant Secretaries of the Seller, and delivered to the Purchaser as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Seller, reasonably acceptable to the Purchaser, provided that any
Opinion of Counsel relating to (a) the qualification of any account required to
be maintained pursuant to this Agreement as an Eligible Account, (b)
qualification of the Mortgage Loans in a REMIC or (c) compliance with the REMIC
Provisions, must be (unless otherwise stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact independent of the Seller and any servicer
of the Mortgage Loans, (ii) does not have any material direct or indirect
financial interest in the Seller or any servicer of the Mortgage Loans or in an
Affiliate of either and (iii) is not connected with the Seller or any servicer
of the Mortgage Loans as an officer, employee, director or person performing
similar functions.
Periodic Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum amount by
which the Mortgage Interest Rate therein may increase or decrease on an Interest
Rate Adjustment Date above or below the Mortgage Interest Rate previously in
effect. The Periodic Rate Cap for each Adjustable Rate Mortgage Loan is the rate
set forth as such on the related Mortgage Loan Schedule.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued
by an insurer acceptable under the Underwriting Guidelines and qualified to do
business in the jurisdiction where the Mortgaged Property is located.
Preliminary Mortgage Schedule: As defined in Section 3.
Prepayment Penalty: With respect to each Mortgage Loan, the penalty
if the Mortgagor prepays such Mortgage Loan as provided in the related Mortgage
Note or Mortgage.
Principal Prepayment: Any payment or other recovery of principal on
a Mortgage Loan which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller in exchange for the Mortgage Loans purchased on such
Closing Date as calculated in Section 4 of this Agreement.
Purchase Price and Terms Agreement: Those certain agreements setting
forth the general terms and conditions of the transactions consummated herein
and identifying the Mortgage Loans to be purchased from time to time hereunder,
by and between the Seller and the Purchaser.
Purchaser: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York
corporation, and its successors in interest and assigns, or any successor to the
Purchaser under this Agreement as herein provided.
Qualified Appraiser: An appraiser, acceptable by the Seller, who had
no interest, direct or indirect, in the Mortgaged Property or in any loan made
on the security thereof, and whose compensation was not affected by the approval
or disapproval of the Mortgage Loan, and such appraiser and the appraisal made
by such appraiser both satisfied the requirements of Title XI of the Financial
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.
Qualified Correspondent: Any Person from which the Seller purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Seller and
such Person that contemplated that such Person would underwrite mortgage loans
from time to time, for sale to the Seller, in accordance with underwriting
guidelines designated by the Seller ("Designated Guidelines") or guidelines that
do not vary materially from such Designated Guidelines; (ii) such Mortgage Loans
were in fact underwritten as described in clause (i) above and were acquired by
the Seller within 180 days after origination; (iii) either (x) the Designated
Guidelines were, at the time such Mortgage Loans were originated, used by the
Seller in origination of mortgage loans of the same type as the Mortgage Loans
for the Seller's own account or (y) the Designated Guidelines were, at the time
such Mortgage Loans were underwritten, designated by the Seller on a consistent
basis for use by lenders in originating mortgage loans to be purchased by the
Seller; and (iv) the Seller employed, at the time such Mortgage Loans were
acquired by the Seller, pre-purchase or post-purchase quality assurance
procedures (which may involve, among other things, review of a sample of
mortgage loans purchased during a particular time period or through particular
channels) designed to ensure that Persons from which it purchased mortgage loans
properly applied the underwriting criteria designated by the Seller.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Seller for a Deleted Mortgage Loan which must, on the date of
such substitution, (i) have an outstanding principal balance, after deduction of
all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the outstanding principal balance
of the Deleted Mortgage Loan (the amount of any shortfall will be deposited in
the Custodial Account by the Seller in the month of substitution); (ii) have a
Mortgage Interest Rate not less than and not more than 1% greater than the
Mortgage Interest Rate of the Deleted Mortgage Loan; (iii) have a remaining term
to maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; (iv) be of the same type as the Deleted Mortgage Loan
(i.e., fixed rate or adjustable rate with same Mortgage Interest Rate Caps); and
(v) comply with each representation and warranty (respecting individual Mortgage
Loans) set forth in Section 9.
Rating Agency: Any of Fitch, ▇▇▇▇▇'▇ or Standard & Poor's, or their
respective successors designated by the Purchaser.
Reconstitution: Any Securitization Transaction or Whole Loan
Transfer
Reconstitution Agreements: The agreement or agreements entered into
by the Seller and the Purchaser and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Mortgage Loans
sold hereunder, in connection with a Whole Loan Transfer, Agency Transfer or a
Securitization Transaction pursuant to Section 13, including, but not limited
to, a seller's warranties and servicing agreement with respect to a Whole Loan
Transfer, and a pooling and servicing agreement and/or seller/servicer
agreements and related custodial/trust agreement and documents with respect to a
Securitization Transaction.
Reconstitution Date: As defined in Section 13.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have been
provided by the Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or
by the staff of the Commission, or as may be provided by the Commission or its
staff from time to time.
Relief Act: The Servicemembers' Civil Relief Act.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter
1, Subtitle A of the Code, and related provisions and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, as specified therein).
Repurchase Price: As defined in the related Purchase Price and Terms
Agreement.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project or (iv) a one-family dwelling
in a planned unit development, none of which is a dwelling unit in a residential
cooperative housing corporation, mobile home or Manufactured Home.
RESPA: Real Estate Settlement Procedures Act, as amended from time
to time.
Second Lien Loan: A Mortgage Loan secured by a second lien Mortgage
on the related Mortgaged Property.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction. Any transaction involving either (1) a
sale or other transfer of some or all of the Mortgage Loans directly or
indirectly to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or (2)
an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to one
or more portfolios of residential mortgage loans consisting, in whole or in
part, of some or all of the Mortgage Loans.
Seller: As defined in the initial paragraph of the Agreement,
together with its successors in interest.
Seller Information: As defined in Subsection 32.04(a).
Servicing Fee: An amount equal to twenty seven ($27) dollars per
Mortgage Loan per month. Such fee shall be payable monthly and shall be
pro-rated for any portion of a month during which the Mortgage Loan is serviced
by the Interim Servicer under the Interim Servicing Agreement, provided the
Transfer Date is greater than 30 days following the related Closing Date.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Interim Servicer consisting of originals of all documents in the
Mortgage File which are not delivered to the Purchaser or the Custodian and
copies of the Mortgage Loan Documents set forth in Section 2 of the Custodial
Agreement.
Servicing Rights: Any and all of the following: (a) any and all
rights to service the Mortgage Loans; (b) any payments to or monies received by
the Seller for servicing the Mortgage Loans; (c) any late fees, penalties or
similar payments with respect to the Mortgage Loans; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of the Seller
thereunder; (e) Escrow Payments or other similar payments with respect to the
Mortgage Loans and any amounts actually collected by the Seller with respect
thereto; (f) all accounts and other rights to payment related to any of the
property described in this paragraph; and (g) any and all documents, files,
records, servicing files, servicing documents, servicing records, data tapes,
computer records, or other information pertaining to the Mortgage Loans or
pertaining to the past, present or prospective servicing of the Mortgage Loans.
Sponsor: The sponsor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies Inc., and any successor thereto.
Standard & Poor's Glossary: With respect to any Mortgage Loan, the
Standard & Poor's LEVELS(R) Glossary, as may be in effect at the time of
origination of such Mortgage Loan.
Static Pool Information: Static pool information as described in
Item 1105(a)(1)-(3) and 1105(c) of Regulation AB.
Subservicer: Any subservicer which is subservicing any of the
Mortgage Loans pursuant to a Subservicing Agreement. Any subservicer, and any
such subservicer's successors in interest and assigns, shall meet the
qualifications set forth in Subsection 7.02 and be acceptable to the Purchaser
in its sole discretion.
Subservicing Agreement: An agreement, acceptable to the Purchaser in
its sole discretion, between the Interim Servicer and a Subservicer for the
servicing of the related Mortgage Loans.
Successor Servicer: Any servicer of one or more Mortgage Loans
designated by the Purchaser as being entitled to the benefits of the
indemnifications set forth in Subsections 9.03 and 14.01.
Stated Principal Balance: As to each Mortgage Loan on any date of
determination, (i) the principal balance of such Mortgage Loan at the related
Cut-off Date after giving effect to payments of principal due on or before such
date, to the extent actually received, minus (ii) all amounts previously
distributed to the Purchaser with respect to the related Mortgage Loan
representing payments or recoveries of principal on such Mortgage Loan.
Third-Party Originator: Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller.
Transfer Date:__The date on which the Purchaser, or its designee,
shall receive the transfer of servicing responsibilities and begin to perform
the servicing of the Mortgage Loans with respect to the related Mortgage Loan
Package, and the Seller shall cease all servicing responsibilities. Such date
shall occur on the day indicated by the Purchaser to the Seller in accordance
with the Interim Servicing Agreement, which date shall not be more than 30 days
following the related Closing Date, unless otherwise agreed upon by the parties
hereto.
Underwriting Guidelines: The underwriting guidelines of the Seller,
a copy of which is attached as an exhibit to the related Assignment and
Conveyance.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Securitization Transaction.
SECTION 2 Agreement to Purchase.
The Seller agrees to sell from time to time, and the Purchaser
agrees to purchase from time to time, Mortgage Loans having an aggregate
principal balance on the related Cut-off Date in an amount as set forth in the
related Purchase Price and Terms Agreement, or in such other amount as agreed by
the Purchaser and the Seller as evidenced by the actual aggregate principal
balance of the Mortgage Loans accepted by the Purchaser on each Closing Date.
SECTION 3 Mortgage Schedules.
The Seller from time to time shall provide the Purchaser with
certain information constituting a preliminary listing of the Mortgage Loans to
be purchased on each Closing Date in accordance with the related Purchase Price
and Terms Agreement and this Agreement (each, a "Preliminary Mortgage
Schedule").
The Seller shall deliver the related Mortgage Loan Schedule for the
Mortgage Loans to be purchased on a particular Closing Date to the Purchaser at
least five (5) Business Days prior to the related Closing Date. The related
Mortgage Loan Schedule shall be the related Preliminary Mortgage Schedule with
those Mortgage Loans which have not been funded prior to the related Closing
Date deleted.
SECTION 4 Purchase Price.
The Purchase Price for each Mortgage Loan shall be the percentage of
par as stated in the related Purchase Price and Terms Agreement (subject to
adjustment as provided therein), multiplied by the aggregate principal balance,
as of the related Cut-off Date, of the Mortgage Loans listed on the related
Mortgage Loan Schedule, after application of scheduled payments of principal due
on or before the related Cut-off Date, but only to the extent such payments were
actually received. The initial principal amount of the related Mortgage Loans
shall be the aggregate principal balance of the Mortgage Loans, so computed as
of the related Cut-off Date. If so provided in the related Purchase Price and
Terms Agreement, portions of the Mortgage Loans shall be priced separately.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the current principal
amount of the related Mortgage Loans as of the related Cut-off Date at the
weighted average Mortgage Interest Rate of those Mortgage Loans. The Purchase
Price plus accrued interest as set forth in the preceding paragraph shall be
paid to the Seller by wire transfer of immediately available funds to an account
designated by the Seller in writing.
The Purchaser shall be entitled to (1) all principal received after
the related Cut-off Date, (2) all other recoveries of principal collected on or
after the related Cut-off Date, and (3) all payments of interest on the Mortgage
Loans net of applicable Servicing Fees, if any.
SECTION 5 Examination of Mortgage Files.
At least ten (10) Business Days prior to the related Closing Date,
the Seller shall (a) deliver to the Purchaser or its designee in escrow, for
examination with respect to each Mortgage Loan to be purchased, the related
Mortgage File, including a copy of the Assignment of Mortgage (except with
respect to MERS Designated Loans), pertaining to each Mortgage Loan, or (b) make
the related Mortgage File available to the Purchaser for examination at such
other location as shall otherwise be acceptable to the Purchaser. Such
examination may be made by the Purchaser or its designee at any reasonable time
before or after the related Closing Date. If the Purchaser makes such
examination prior to the related Closing Date and determines, in its sole
discretion, that any Mortgage Loans are unacceptable to the Purchaser for any
reason, such Mortgage Loans shall be deleted from the related Mortgage Loan
Schedule, and may be replaced by a Qualified Substitute Mortgage Loan (or Loans)
acceptable to the Purchaser. The Purchaser may, at its option and without notice
to the Seller, purchase some or all of the Mortgage Loans without conducting any
partial or complete examination. The fact that the Purchaser or its designee has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the Purchaser's (or any of its successor's)
rights to demand repurchase, substitution or other relief as provided herein.
SECTION 6 Conveyance from Seller to Purchaser.
Subsection 6.01 Conveyance of Mortgage Loans.
The Seller, simultaneously with the delivery of the Mortgage Loan
Schedule with respect to the related Mortgage Loan Package to be purchased on
each Closing Date, shall execute and deliver an Assignment and Conveyance
Agreement in the form attached hereto as Exhibit G (the "Assignment and
Conveyance Agreement"). The Seller shall cause the Servicing File retained by
the Interim Servicer pursuant to this Agreement to be appropriately identified
in the Seller's computer system and/or books and records, as appropriate, to
clearly reflect the sale of the related Mortgage Loan to the Purchaser. The
Seller shall cause the Interim Servicer to release from its custody the contents
of any Servicing File retained by it only in accordance with this Agreement or
the Interim Servicing Agreement, except when such release is required in
connection with a repurchase of any such Mortgage Loan pursuant to Subsection
9.03.
Subsection 6.02 Books and Records.
Record title to each Mortgage as of the related Closing Date shall
be in the name of the Seller, an Affiliate of the Seller, the Purchaser or one
or more designees of the Purchaser, as the Purchaser shall select.
Notwithstanding the foregoing, each Mortgage and related Mortgage Note shall be
possessed solely by the Purchaser or the appropriate designee of the Purchaser,
as the case may be. All rights arising out of the Mortgage Loans including, but
not limited to, all funds received by the Seller or the Interim Servicer after
the related Cut-off Date on or in connection with a Mortgage Loan shall be
vested in the Purchaser or one or more designees of the Purchaser; provided,
however, that all funds received on or in connection with a Mortgage Loan shall
be received and held by the Seller or the Interim Servicer in trust for the
benefit of the Purchaser or the appropriate designee of the Purchaser, as the
case may be, as the owner of the Mortgage Loans pursuant to the terms of this
Agreement.
The Seller shall be or shall cause the Interim Servicer to be
responsible for maintaining, and shall maintain, a complete set of books and
records for each Mortgage Loan which shall be marked clearly to reflect the
ownership of each Mortgage Loan by the Purchaser. In particular, the Seller
shall or shall cause the Interim Servicer to maintain in its possession,
available for inspection by the Purchaser, and shall deliver to the Purchaser
upon demand, evidence of compliance with all federal, state and local laws,
rules and regulations, and requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, including
but not limited to documentation as to the method used in determining the
applicability of the provisions of the National Flood Insurance Act of 1968, as
amended, to the Mortgaged Property, documentation evidencing insurance coverage
and periodic inspection reports, as required by the ▇▇▇▇▇▇ Mae Guides. To the
extent that original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the Seller
or the Interim Servicer may be in the form of microfilm or microfiche so long as
the Seller or the Interim Servicer complies with the requirements of the ▇▇▇▇▇▇
▇▇▇ Guides.
The sale of each Mortgage Loan shall be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
Subsection 6.03 Delivery of Mortgage Loan Documents.
The Seller shall deliver and release to the Custodian no later than
two (2) Business Days prior to the related Closing Date those Mortgage Loan
Documents set forth on Exhibit A hereto as required by the Custodial Agreement
with respect to each Mortgage Loan set forth on the related Mortgage Loan
Schedule.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement for the
related Closing Date, as evidenced by the Initial Certification of the Custodian
in the form annexed to the Custodial Agreement. The Seller shall comply with the
terms of the Custodial Agreement and the Purchaser shall pay all fees and
expenses of the Custodian.
The Seller shall or shall cause the Interim Servicer to forward to
the Custodian, or to such other Person as the Purchaser shall designate in
writing, original documents evidencing an assumption, modification,
consolidation or extension of any Mortgage Loan entered into in accordance with
this Agreement within two weeks of their execution, provided, however, that the
Seller shall provide the Custodian, or to such other Person as the Purchaser
shall designate in writing, with a certified true copy of any such document
submitted for recordation within two weeks of its execution, and shall promptly
provide the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true and
complete copy of the original within ninety days of its submission for
recordation.
In the event any document required to be delivered to the Custodian
in the Custodial Agreement, including an original or copy of any document
submitted for recordation to the appropriate public recording office, is not so
delivered to the Custodian, or to such other Person as the Purchaser shall
designate in writing, within 120 days (or 180 days in connection with public
recording offices located in New York, New Jersey and Pennsylvania), following
the related Closing Date (other than with respect to the Assignments of Mortgage
which shall be delivered to the Custodian in blank and recorded subsequently by
the Purchaser or its designee), and in the event that the Seller does not cure
such failure within 30 days of discovery or receipt of written notification of
such failure from the Purchaser, the related Mortgage Loan shall, upon the
request of the Purchaser, be repurchased by the Seller at the price and in the
manner specified in Subsection 9.03. The foregoing repurchase obligation shall
not apply in the event that the Seller cannot deliver an original document
submitted for recordation to the appropriate public recording office within the
specified period due to a delay caused by the recording office in the applicable
jurisdiction; provided that the Seller shall instead deliver a recording receipt
of such recording office or, if such recording receipt is not available, an
officer's certificate of a servicing officer of the Seller, confirming that such
documents have been accepted for recording; provided that, upon request of the
Purchaser and delivery by the Purchaser to the Seller of a schedule of the
related Mortgage Loans, the Seller shall reissue and deliver to the Purchaser or
its designee said officer's certificate.
The Seller shall pay all initial recording fees (except with respect
to MERS Designated Loans), if any, for the assignments of mortgage and any other
fees or costs in transferring all original documents to the Custodian or, upon
written request of the Purchaser, to the Purchaser or the Purchaser's designee.
The Purchaser or the Purchaser's designee shall be responsible for recording the
Assignments of Mortgage and shall be reimbursed by the Seller for the costs
associated therewith pursuant to the preceding sentence.
Subsection 6.04 Quality Control Procedures.
The Seller shall, or shall cause the Interim Servicer to, have an
internal quality control program that verifies, on a regular basis, the
existence and accuracy of the legal documents, credit documents, property
appraisals, and underwriting decisions. The program shall include evaluating and
monitoring the overall quality of the Seller's loan production and the servicing
activities of the Interim Servicer. The program is to ensure that the Mortgage
Loans are originated in accordance with the Underwriting Guidelines; guard
against dishonest, fraudulent, or negligent acts; and guard against errors and
omissions by officers, employees, or other authorized persons.
Subsection 6.05 MERS Designated Loan.
With respect to each MERS Designated Mortgage Loan, the Seller
shall, on or prior to the related Closing Date, designate the Purchaser as the
Investor and the Custodian as Custodian, and no Person shall be listed as
Interim Funder on the MERS System. In addition on or prior to the related
Closing Date, Seller shall provide the Custodian and the Purchaser with a MERS
report listing the Purchaser as the Investor and the Custodian as Custodian, and
no Person as Interim Funder with respect to each MERS Designated Mortgage Loan.
SECTION 7 Servicing of the Mortgage Loans.
Subsection 7.01 Servicing of the Mortgage Loans; Interim Servicer
The Mortgage Loans have been sold by the Seller to the Purchaser on
a servicing released basis. Subject to, and upon the terms and conditions of
this Agreement and the Interim Servicing Agreement (with respect to each
Mortgage Loan, for an interim period, as specified therein), the Seller hereby
sells, transfers, assigns, conveys and delivers to the Purchaser the Servicing
Rights.
The Purchaser shall retain the Interim Servicer as contract servicer
of the Mortgage Loans for an interim period pursuant to and in accordance with
the terms and conditions contained in the Interim Servicing Agreement (with
respect to each Mortgage Loan, for an interim period, as specified therein). The
Seller shall cause the Interim Servicer to execute the Interim Servicing
Agreement on the initial Closing Date.
Pursuant to the Interim Servicing Agreement (with respect to each
Mortgage Loan, for an interim period, as specified therein), the Interim
Servicer shall begin servicing the Mortgage Loans on behalf of the Purchaser and
shall be entitled to a Servicing Fee, if any, with respect to such Mortgage
Loans until the applicable Transfer Date. The Interim Servicer shall conduct
such servicing in accordance with the Interim Servicing Agreement.
Subsection 7.02 Subservicing
The Mortgage Loans may be subserviced by a Subservicer on behalf of
the Seller in accordance with the servicing provisions of the Interim Servicing
Agreement, provided that (i) the Subservicer is a ▇▇▇▇▇▇▇ Mac seller/servicer in
good standing, and no event has occurred, including but not limited to, a change
in insurance coverage, which would make it unable to comply with the eligibility
requirements for seller/servicers imposed by ▇▇▇▇▇▇▇ Mac, or which would require
notification to ▇▇▇▇▇▇▇ Mac and (ii) the Purchaser approves any Subservicer in
writing. The Interim Servicer may perform any of its servicing responsibilities
under the Interim Servicing Agreement or may cause the Subservicer to perform
any such servicing responsibilities on its behalf, but the use by the Interim
Servicer of a Subservicer shall not release the Interim Servicer from any of its
obligations under the Interim Servicing Agreement and the Interim Servicer shall
remain responsible under the Interim Servicing Agreement for all acts and
omissions of a Subservicer as fully as if such acts and omissions were those of
the Interim Servicer. The Interim Servicer shall pay all fees and expenses of
any Subservicer engaged by the Interim Servicer from its own funds.
SECTION 8 Transfer of Servicing.
On the applicable Transfer Date, the Purchaser, or its designee,
shall assume all servicing responsibilities related to, and the Seller shall
cause the Interim Servicer to cease all servicing responsibilities related to,
the related Mortgage Loans subject to such Transfer Date. The Transfer Date
shall be the date set forth in the related Purchase Price and Terms Agreement.
On or prior to the applicable Transfer Date, the Seller shall, at
its sole cost and expense, take such steps as may be necessary or appropriate to
effectuate and evidence the transfer of the servicing of the related Mortgage
Loans to the Purchaser, or its designee, including but not limited to the
following:
(a) Notice to Mortgagors. The Seller shall cause the Interim
Servicer to mail to the Mortgagor of each related Mortgage Loan a letter
advising such Mortgagor of the transfer of the servicing of the related Mortgage
Loan to the Purchaser, or its designee, in accordance with the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
National Affordable Housing Act of 1990; provided, however, the content and
format of the letter shall have the prior approval of the Purchaser. The Seller
shall cause the Interim Servicer to provide the Purchaser with copies of all
such related notices.
(b) Notice to Taxing Authorities and Insurance Companies. The Seller
shall cause the Interim Servicer to transmit to the applicable taxing
authorities and insurance companies (including primary mortgage insurance policy
insurers, if applicable) and/or agents, notification of the transfer of the
servicing to the Purchaser, or its designee, and instructions to deliver all
notices, tax bills and insurance statements, as the case may be, to the
Purchaser from and after the Transfer Date. The Seller shall cause the Interim
Servicer to provide the Purchaser with copies of all such notices no later than
the Transfer Date.
(c) Delivery of Servicing Records. The Seller shall cause the
Interim Servicer to forward to the Purchaser, or its designee, all servicing
records and the Servicing File in the Interim Servicer's possession relating to
each related Mortgage Loan including the information enumerated in the Interim
Servicing Agreement (with respect to each such Mortgage Loan, for an interim
period, as specified therein).
(d) Escrow Payments. The Seller shall cause the Interim Servicer to
provide the Purchaser, or its designee, with immediately available funds by wire
transfer in the amount of the net Escrow Payments and suspense balances and all
loss draft balances associated with the related Mortgage Loans. The Seller shall
cause the Interim Servicer to provide the Purchaser with an accounting
statement, in electronic format acceptable to the Purchaser in its sole
discretion, of Escrow Payments and suspense balances and loss draft balances
sufficient to enable the Purchaser to reconcile the amount of such payment with
the accounts of the Mortgage Loans. Additionally, the Seller shall cause the
Interim Servicer to wire transfer to the Purchaser the amount of any agency,
trustee or prepaid Mortgage Loan payments and all other similar amounts held by
the Interim Servicer.
(e) Payoffs and Assumptions. The Seller shall cause the Interim
Servicer to provide to the Purchaser, or its designee, copies of all assumption
and payoff statements generated by the Interim Servicer on the related Mortgage
Loans from the related Cut-off Date to the Transfer Date.
(f) Mortgage Payments Received Prior to Transfer Date. Prior to the
Transfer Date all payments received by the Interim Servicer or the Seller on
each related Mortgage Loan shall be properly applied by the Seller to the
account of the particular Mortgagor.
(g) Mortgage Payments Received after Transfer Date. The amount of
any related Monthly Payments received by the Seller after the Transfer Date
shall be forwarded to the Purchaser by overnight mail on the date of receipt.
The Seller shall notify the Purchaser of the particulars of the payment, which
notification requirement shall be satisfied if the Seller forwards with its
payment sufficient information to permit appropriate processing of the payment
by the Purchaser. Any Monthly Payments received by the Seller sixty one (61) or
more days after the Transfer Date will be returned to the related Mortgagor with
instructions to remit to the Purchaser or its servicer. The Seller shall assume
responsibility for notifying the Successor Servicer of the necessary and
appropriate legal application of such Monthly Payments received by the Seller
after the Transfer Date with respect to related Mortgage Loans then known by the
Seller as being in foreclosure or bankruptcy; provided, for purposes of this
Agreement, necessary and appropriate legal application of such Monthly Payments
shall include, but not be limited to, endorsement of a Monthly Payment to the
Purchaser with the particulars of the payment such as the account number, dollar
amount, date received and any special Mortgagor application instructions and the
Seller shall cause the Interim Servicer to comply with the foregoing
requirements with respect to all Monthly Payments received by the Interim
Servicer after the Transfer Date.
(h) Misapplied Payments. Misapplied payments shall be processed as
follows:
(i) All parties shall cooperate in correcting misapplication errors;
(ii) The party receiving notice of a misapplied payment occurring
prior to the applicable Transfer Date and discovered after the Transfer
Date shall immediately notify the other party;
(iii) If a misapplied payment which occurred prior to the Transfer
Date cannot be identified and said misapplied payment has resulted in a
shortage in a Custodial Account or Escrow Account, the Seller shall be
liable for the amount of such shortage. The Seller shall reimburse the
Purchaser for the amount of such shortage within thirty (30) days after
receipt of written demand therefor from the Purchaser;
(iv) If a misapplied payment which occurred prior to the Transfer
Date has created an improper Purchase Price as the result of an inaccurate
outstanding principal balance, a check shall be issued to the party
shorted by the improper payment application within five (5) Business Days
after notice thereof by the other party; and
(v) Any check issued under the provisions of this Section 8(h) shall
be accompanied by a statement indicating the corresponding Seller and/or
the Purchaser Mortgage Loan identification number and an explanation of
the allocation of any such payments.
(i) Books and Records. On the Transfer Date, the books, records and
accounts of the Seller with respect to the related Mortgage Loans shall be in
accordance with all applicable Purchaser requirements.
(j) Reconciliation. The Seller shall, on or before the Transfer
Date, reconcile principal balances and make any monetary adjustments required by
the Purchaser. Any such monetary adjustments will be transferred between the
Seller and the Purchaser as appropriate.
(k) IRS Forms. The Seller shall or shall cause the Interim Servicer
to file all IRS forms 1099, 1099A, 1098 or 1041 and K-1 which are required to be
filed on or before the Transfer Date in relation to the servicing and ownership
of the related Mortgage Loans. The Seller shall provide copies of such forms to
the Purchaser upon request and shall reimburse the Purchaser for any costs or
penalties incurred by the Purchaser due to the Seller's failure to comply with
this paragraph.
SECTION 9. Representations, Warranties and Covenants of the Seller;
Remedies for Breach.
Subsection 9.01 Representations and Warranties Regarding the Seller.
The Seller represents, warrants and covenants to the Purchaser that
as of the date hereof and as of each Closing Date:
(a) Due Organization and Authority. The Seller is a corporation,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation or formation and has all licenses necessary to carry on its
business as now being conducted and is licensed or is exempt from such licensing
requirements, qualified and in good standing in the states where the Mortgaged
Property is located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Seller. The Seller has
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement has
been duly executed and delivered and constitutes the valid, legal, binding and
enforceable obligation of the Seller, except as enforceability may be limited by
(i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding in equity or at law. All requisite corporate action has been
taken by the Seller to make this Agreement valid and binding upon the Seller in
accordance with its terms;
(b) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller is required or, if required, such consent,
approval, authorization or order has been or will, prior to the related Closing
Date, be obtained;
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Seller's charter, by-laws
or other organizational documents or any legal restriction or any agreement or
instrument to which the Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse effect
upon any of its properties pursuant to the terms of any mortgage, contract, deed
of trust or other instrument, or impair the ability of the Purchaser to realize
on the Mortgage Loans, impair the value of the Mortgage Loans, or impair the
ability of the Purchaser to realize the full amount of any insurance benefits
accruing pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws"); the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws;
(i) Financial Statements. To the extent that such statements are
available, the Seller has delivered to the Purchaser financial statements as to
its last three complete fiscal years and any later quarter ended more than 60
days prior to the execution of this Agreement. All such financial statements
fairly present the pertinent results of operations and changes in financial
position for each of such periods and the financial position at the end of each
such period of the Seller, its parent company and its subsidiaries and have been
prepared in accordance with generally accepted accounting principles of the
United States consistently applied throughout the periods involved, except as
set forth in the notes thereto. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. In
addition, the Seller has delivered information obtained from ABS Net as to its
loan gain and loss experience in respect of foreclosures and its loan
delinquency experience with respect to mortgage loans sold to others during the
immediately preceding three-year period, and, to the Seller's knowledge, all
such information so delivered shall be true and correct in all material
respects. The Seller has completed any forms requested by the Purchaser in a
timely manner and in accordance with the provided instructions;
(j) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio at
the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage (except with respect to MERS Designated Mortgage Loans),
and any other documents required to be delivered with respect to each Mortgage
Loan pursuant to the Custodial Agreement, shall be delivered to the Custodian
all in compliance with the specific requirements of the Custodial Agreement.
With respect to each Mortgage Loan, the Seller will be in possession of a
complete Mortgage File in compliance with Exhibit A hereto, except for such
documents as will be delivered to the Custodian;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(m) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby (including
any Securitization Transaction or Whole Loan Transfer) contains or will contain
any untrue statement of fact or omits or will omit to state a fact necessary to
make the statements contained herein or therein not misleading;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller expects to be advised by its
independent certified public accountants that under generally accepted
accounting principles the transfer of the Mortgage Loans will be treated as a
sale on the books and records of the Seller and the Seller has determined that
the disposition of the Mortgage Loans pursuant to this Agreement will be
afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. Immediately prior to each related Closing Date,
the Seller is the owner of record of each Mortgage and the indebtedness
evidenced by each Mortgage Note, except for the Assignments of Mortgage which
have been sent for recording, and upon recordation the Seller will be the owner
of record of each Mortgage and the indebtedness evidenced by each Mortgage Note,
and upon the sale of the Mortgage Loans to the Purchaser, the Seller will retain
the Mortgage Files with respect thereto in trust only for the purpose of
servicing and supervising the servicing of each Mortgage Loan;
(q) Reasonable Purchase Price. The consideration received by the
Seller upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans; and
(r) Credit Reporting. The Seller, as servicer, will fully furnish,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis.
Additionally, the Seller, as servicer, will transmit full-file credit reporting
data for each Mortgage Loan pursuant to ▇▇▇▇▇▇ Mae Guide Announcement 95-19 and
that for each Mortgage Loan, the Seller, as servicer, agrees it shall report one
of the following statuses each month as follows: new origination, current,
delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off.
Subsection 9.02 Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser that, as
to each Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
(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
related Closing Date for the Mortgage Loan under the terms of the Mortgage Note,
other than payments not yet 30 days delinquent, have been made and credited. No
payment required under the Mortgage Loan is 30 days or more delinquent nor has
any payment under the Mortgage Loan been 30 days or more delinquent at any time
since the origination of the Mortgage Loan. The first Monthly Payment shall be
made with respect to the Mortgage Loan on its related Due Date, all in
accordance with the terms of the related Mortgage Note;
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid. 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 earlier, to
the day which precedes by one month the related Due Date of the first
installment of principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are provided by for in the ▇▇▇▇▇▇ ▇▇▇ Guides or by
▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in Section 2.10 of
the Interim Servicing Agreement. If required by the National Flood Insurance Act
of 1968, as amended, each Mortgage Loan is covered by a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration as in effect which policy conforms to ▇▇▇▇▇▇▇ Mac requirements,
as well as all additional requirements set forth in Section 2.10 of the Interim
Servicing Agreement. All individual insurance policies contain a standard
mortgagee clause naming the Seller and its successors and assigns as mortgagee,
and all premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain the hazard insurance policy at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at such Mortgagor's cost and
expense, and to seek reimbursement therefor from the 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, is in full force and effect, and will be in full force and effect
and inure to the benefit of the Purchaser upon the consummation of the
transactions contemplated by this Agreement. The 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 or entity, and no such unlawful
items have been received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. Any and all applicable
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, disclosure and all predatory and abusive
lending laws applicable to the Mortgage Loan, including, without limitation, any
provisions relating to prepayment penalties, have been complied with, the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations, and the Seller shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to the
Purchaser upon demand, evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, 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
release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. No portion of the Mortgaged Property is used for
commercial purposes, and since the date of origination, no portion of the
Mortgaged Property has been used for commercial purposes; provided, that
Mortgaged Properties which contain a home office shall not be considered as
being used for commercial purposes as long as the Mortgaged Property has not
been altered for commercial purposes and is not storing any chemicals or raw
materials other than those commonly used for homeowner repair, maintenance
and/or household purposes. None of the Mortgaged Properties are Manufactured
Homes, log homes, mobile homes, geodesic domes or other unique property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the
first mortgage on the Mortgaged Property;
(B) the lien of current real property taxes and assessments
not yet due and payable;
(C) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically 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; and
(D) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. The Seller is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and upon
the sale of the Mortgage Loans to the Purchaser, the Seller will retain the
Mortgage Files or any part thereof with respect thereto not delivered to the
Custodian, the Purchaser or the Purchaser's designee, in trust only for the
purpose of servicing and supervising the servicing of each Mortgage Loan. The
Mortgage Loan is not assigned or pledged, and the Seller has good, indefeasible
and marketable title thereto, and has full right to transfer and sell the
Mortgage Loan to the Purchaser 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 and assign each Mortgage Loan pursuant
to this Agreement and following the sale of each Mortgage Loan, the Purchaser
will own such Mortgage Loan free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest. The
Seller intends to relinquish all rights to possess, control and monitor the
Mortgage Loan. After the related Closing Date, the Seller will have no right to
modify or alter the terms of the sale of the Mortgage Loan and the Seller will
have no obligation or right to repurchase the Mortgage Loan or substitute
another Mortgage Loan, except as provided in this Agreement;
(n) 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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or if the related Mortgaged Property is located in the state
of Iowa an attorney's opinion, or other generally acceptable form of policy or
insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance
policy is issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the first (with
respect to a First Lien Loan) or second (with respect to a Second Lien Loan)
priority lien of the Mortgage 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 (A), (B) and (C) of
paragraph (j) of this Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the 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 or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(q) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Seller nor any of its affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(r) 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 the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 (except for interest only
Mortgage Loans), over an original term of not more than thirty years from
commencement of amortization. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgage Loan is payable on the first day of each month.
Unless stated otherwise on the related Mortgage Loan Schedule, the Mortgage Loan
does not require a balloon payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on legally enforceable forms acceptable in
the secondary mortgage market;
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) [Reserved];
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Seller is in possession of a complete, true and
accurate Mortgage File in compliance with Exhibit A hereto, except for such
documents the originals of which have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage (except
with respect to any Mortgage that has been recorded in the name of MERS or its
designee) with respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located. The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller are not subject to the bulk
transfer or similar statutory provisions in effect in any applicable
jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. The Mortgage Loan is fully
funded, and there is no requirement to make any future advances to the related
Mortgagor;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. Since the origination of the
Mortgage Loan, there have not been any condemnation proceedings with respect to
the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller and the Interim Servicer with respect to the Mortgage Loan have been in
all respects in compliance with Accepted Servicing Practices, applicable laws
and regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, all such payments are in the possession of,
or under the control of, the Seller or the Interim Servicer and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been collected in
full compliance with state and federal law and the provisions of the related
Mortgage Note and Mortgage. An escrow of funds is not prohibited by applicable
law and has been established in an amount sufficient to pay for every item that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due the Seller have
been capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest
Rate adjustments have been made in strict compliance with state and federal law
and the terms of the related Mortgage and Mortgage Note on the related Interest
Rate Adjustment Date. If, pursuant to the terms of the Mortgage Note, another
index was selected for determining the Mortgage Interest Rate, the same index
was used with respect to each Mortgage Note which required a new index to be
selected, and such selection did not conflict with the terms of the related
Mortgage Note. The Seller or the Interim Servicer executed and delivered any and
all notices required under applicable law and the terms of the related Mortgage
Note and Mortgage regarding the Mortgage Interest Rate and the Monthly Payment
adjustments. Any interest required to be paid pursuant to state, federal and
local law has been properly paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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, except as
disclosed in the related Mortgage Loan File;
(ll) No Violation of Environmental Laws. There is no pending action
or proceeding directly involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue; there is no violation of
any environmental law, rule or regulation with respect to the Mortgage Property;
and nothing further remains to be done to satisfy in full all requirements of
each such law, rule or regulation constituting a prerequisite to use and
enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Servicemembers' Civil Relief Act or other
similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, acceptable to the Seller, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required or customary in the jurisdiction in which the
Mortgaged Property is located, the original lender has filed for record a
request for notice of any action by the related senior lienholder, and the
Seller has notified the senior lienholder in writing of the existence of the
Second Lien Loan and requested notification of any action to be taken against
the Mortgagor by the senior lienholder. Either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File;
(rr) Credit Reporting. The Seller has caused to be fully furnished,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., favorable and unfavorable)
on its borrower credit files to Equifax, Experian, and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis;
(ss) Escrow Analysis. If applicable, with respect to each Mortgage,
the Seller has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(tt) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in strict compliance with Accepted Servicing Practices;
(uu) No Default Under First Lien. With respect to each Second Lien
Loan, the related First Lien Loan related thereto is in full force and effect,
and there is no default, breach, violation or event which would permit
acceleration existing under such first Mortgage or 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 which
would permit acceleration thereunder;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage;
(ww) No Failure to Cure Default. The Seller has not received a
written notice of default of any senior mortgage loan related to the Mortgaged
Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage. The Seller
shall hold the Purchaser harmless from any and all damages, losses, costs and
expenses (including attorney's fees) arising from disclosure of credit
information in connection with the Purchaser's secondary marketing operations
and the purchase and sale of mortgages or Servicing Rights thereto;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) all ground lease rents, other payments, or assessments that
have become due have been paid; and (7) the use of leasehold estates for
residential properties is a widely accepted practice in the jurisdiction in
which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note and any addendums or
riders thereto executed by the related Mortgagor, is identified on the related
Mortgage Loan Schedule. With respect to Mortgage Loans originated prior to
October 1, 2002, no such Prepayment Penalty may be imposed for a term in excess
of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law. Notwithstanding the first sentence of this clause (aaa), if a Mortgage Loan
is not considered a High Cost Loan on the related Closing Date because a related
law is not being enforced or is not effective on the related Closing Date due to
judicial or administrative review or litigation and such Mortgage Loan becomes a
High Cost Loan at a later date as a result of such law becoming enforceable or
effective, such Mortgage Loan shall be subject to the automatic repurchase
provisions of Subsection 9.03 within the timeframes set forth therein;
(bbb) Single-premium credit life insurance policy. In connection
with the origination of any Mortgage Loan, no proceeds from such Mortgage Loan
were used to finance or acquire a single-premium credit life insurance policy;
(ccc) Qualified Mortgage. Each Mortgage Loan is an obligation which
is principally secured by an interest in real property within the meaning of
Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real Estate
Tax Service, and such contract is transferable;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) 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;
(ggg) Mortgagor Bankruptcy. The Mortgagor has not filed a bankruptcy
petition and has not become the subject of involuntary bankruptcy proceedings
and has not consented to the filing of a bankruptcy proceeding against it or to
a receiver being appointed in respect of the related Mortgaged Property;
(hhh) No Prior Offer. The Mortgage Loan has not previously been
offered for sale unless (i) notice of such Mortgage Loan resale has been
provided to the Purchaser in writing prior to the commencement of the
Purchaser's due diligence and (ii) the Mortgage Loan was originated without
exception pursuant to the Underwriting Guidelines;
(iii) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(jjj) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, accident or health insurance policy in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(kkk) Points and Fees. All points and fees related to each Mortgage
Loan were disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation. Except in the case of a Mortgage Loan in
an original principal amount of less than $60,000 which would have resulted in
an unprofitable origination, no Mortgagor was charged "points and fees" (whether
or not financed) in an amount greater than 7% of the principal amount of such
Mortgage Loan;
(lll) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(mmm) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
Subsection 9.03 Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 9.01 and 9.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or failure to examine any Mortgage
File. Upon discovery by either the Seller or the Purchaser of a breach of any of
the foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice to
the Seller of any such breach of a representation or warranty, which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Purchaser therein (or which materially and adversely affects the value of the
applicable Mortgage Loan or the interest of the Purchaser therein in the case of
a representation and warranty relating to a particular Mortgage Loan), the
Seller shall use its best efforts promptly to cure such breach in all material
respects and, if such breach cannot be cured, the Seller shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price.
Notwithstanding the above sentence, within 60 days of the earlier of either
discovery by, or notice to, the Seller of any breach of the representations or
warranties set forth in ▇▇▇▇▇▇▇▇▇ (▇▇), (▇▇), (▇▇▇), (▇▇▇), (▇▇▇), (▇▇▇), (▇▇▇),
(kkk), (lll) and (mmm) of Subsection 9.02, the Seller shall repurchase such
Mortgage Loan at the Repurchase Price. In the event that a breach shall involve
any representation or warranty set forth in Subsection 9.01, and such breach
cannot be cured within 60 days of the earlier of either discovery by or notice
to the Seller of such breach, all of the Mortgage Loans affected by such breach
shall, at the Purchaser's option, be repurchased by the Seller at the Repurchase
Price. However, if the breach shall involve a representation or warranty set
forth in Subsection 9.02 (except as provided in the second sentence of this
paragraph with respect to certain breaches for which no substitution is
permitted) and the Seller discovers or receives notice of any such breach within
120 days of the related Closing Date, the Seller shall, at the Purchaser's
option and provided that the Seller has a Qualified Substitute Mortgage Loan,
rather than repurchase the Mortgage Loan as provided above, remove such Mortgage
Loan (a "Deleted Mortgage Loan") and substitute in its place a Qualified
Substitute Mortgage Loan or Loans, provided that any such substitution shall be
effected not later than 120 days after the related Closing Date. If the Seller
has no Qualified Substitute Mortgage Loan, it shall repurchase the deficient
Mortgage Loan at the Repurchase Price. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Subsection 9.03 shall be
accomplished by either (a) if the Interim Servicing Agreement has been entered
into and is in effect, deposit in the Custodial Account of the amount of the
Repurchase Price for distribution to the Purchaser on the next scheduled
Remittance Date, after deducting therefrom any amount received in respect of
such repurchased Mortgage Loan or Loans and being held in the Custodial Account
for future distribution or (b) if the Interim Servicing Agreement has not been
entered into or is no longer in effect, by direct remittance of the Repurchase
Price to the Purchaser or its designee in accordance with the Purchaser's
instructions.
Three (3) days prior to the repurchase of any Mortgage Loan as set
forth above, the Purchaser, the Seller and an independent third party bailee
shall arrange for the reassignment of the repurchased Mortgage Loan and the
related Servicing Rights to the Seller and the delivery to such independent
third party bailee, pursuant to a bailee agreement mutually acceptable to the
Purchaser, related Seller and such independent third party bailee, the Mortgage
Loan Documents held by the Purchaser or its designee relating to the repurchased
Mortgage Loan. Within three (3) Business Days of repurchase, but in no instance
later than the related Transfer Date, all Mortgage Files shall be released to
Meritage Mortgage Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn:
Capital Markets. Upon such repurchase, the related Mortgage Loan Schedule shall
be amended to reflect the withdrawal of the repurchased Mortgage Loan from this
Agreement.
At the time of repurchase or substitution, the Purchaser and the
Seller shall arrange for the reassignment of the Deleted Mortgage Loan to the
Seller and the delivery to the Seller of any documents held by the Custodian
relating to the Deleted Mortgage Loan. In the event of a repurchase or
substitution, the Seller shall, simultaneously with such reassignment, give
written notice to the Purchaser that such repurchase or substitution has taken
place, amend the Mortgage Loan Schedule to reflect the withdrawal of the Deleted
Mortgage Loan from this Agreement, and, in the case of substitution, identify a
Qualified Substitute Mortgage Loan and amend the related Mortgage Loan Schedule
to reflect the addition of such Qualified Substitute Mortgage Loan to this
Agreement. In connection with any such substitution, the Seller shall be deemed
to have made as to such Qualified Substitute Mortgage Loan the representations
and warranties set forth in this Agreement except that all such representations
and warranties set forth in this Agreement shall be deemed made as of the date
of such substitution. The Seller shall effect such substitution by delivering to
the Custodian or to such other party as the Purchaser may designate in writing
for such Qualified Substitute Mortgage Loan the documents required by Subsection
6.03 and the Custodial Agreement, with the Mortgage Note endorsed as required by
Subsection 6.03 and the Custodial Agreement. No substitution will be made in any
calendar month after the Determination Date for such month. The Seller shall
cause the Interim Servicer to remit directly to the Purchaser, or its designee
in accordance with the Purchaser's instructions the Monthly Payment less the
Servicing Fee due, if any, on such Qualified Substitute Mortgage Loan or Loans
in the month following the date of such substitution. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans in the month of substitution
shall be retained by the Seller. For the month of substitution, distributions to
the Purchaser shall include the Monthly Payment due on any Deleted Mortgage Loan
in the month of substitution, and the Seller shall thereafter be entitled to
retain all amounts subsequently received by the Seller in respect of such
Deleted Mortgage Loan.
For any month in which the Seller substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Seller shall determine the amount
(if any) by which the aggregate principal balance of all Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all Deleted Mortgage Loans (after application of scheduled
principal payments due in the month of substitution). The amount of such
shortfall shall be distributed by the Seller directly to the Purchaser or its
designee in accordance with the Purchaser's instructions within two (2) Business
Days of such substitution.
In addition to such repurchase or substitution obligation, the
Seller shall indemnify the Purchaser and its present and former directors,
officers, employees and agents and any successor Servicer and its present and
former directors, officers, employees and agents and hold such parties harmless
against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the Seller representations and warranties contained
in this Agreement or any Reconstitution Agreement. It is understood and agreed
that the obligations of the Seller set forth in this Subsection 9.03 to cure,
substitute for or repurchase a defective Mortgage Loan and to indemnify the
Purchaser and Successor Servicer as provided in this Subsection 9.03 and in
Subsection 14.01 constitute the sole remedies of the Purchaser respecting a
breach of the foregoing representations and warranties. For purposes of this
paragraph "Purchaser" shall mean the Person then acting as the Purchaser under
this Agreement and any and all Persons who previously were "Purchasers" under
this Agreement and "Successor Servicer" shall mean any Person designated as the
Successor Servicer pursuant to this Agreement and any and all Persons who
previously were "Successor Servicers" pursuant to this Agreement.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 9.01 and
9.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Seller by the Purchaser for compliance with
this Agreement.
Subsection 9.04 Repurchase of Mortgage Loans with First Payment
Defaults. With respect to any Mortgage Loan, in the event that the first
scheduled payment of principal and interest due either (i) after origination of
such Mortgage Loan, or (ii) after the related Closing Date is not paid by the
related Mortgagor to the Purchaser within thirty (30) days of such Due Date, the
Seller, at the Purchaser's option, shall repurchase such Mortgage Loan from the
Purchaser at a price equal to the related Purchase Price Percentage multiplied
by the then outstanding principal balance of such Mortgage Loan, plus accrued
and unpaid interest thereon from the date to which interest was last paid
through the day prior to the repurchase date at the applicable Mortgage Interest
Rate, plus any outstanding advances owed to any servicer in connection with such
Mortgage Loan. Notwithstanding the foregoing, the Purchaser's right to request a
repurchase hereunder shall not commence until the date which is sixty (60) days
following the related Due Date (the "Breach Date"). The Purchaser shall have
ninety (90) days following the related Breach Date to notify the Seller and
request a repurchase and the Seller shall repurchase such Mortgage Loan within
thirty (30) days of receipt of such notice, provided notification is in
accordance with Section 17. Notwithstanding the foregoing, the Purchaser
reserves the right to request a repurchase following such sixty (60) day
timeframe in the event of a NSF return.
Subsection 9.05 Premium Recapture. With respect to any Mortgage Loan
without prepayment penalties that prepays in full during the first six months
following the related Closing Date, and with respect to any Mortgage Loan that
is repurchased pursuant to Subsection 9.03, the Seller shall pay the Purchaser,
within three (3) Business Days after such prepayment in full or repurchase, an
amount equal to the excess of the Purchase Price Percentage for such Mortgage
Loan over par, multiplied by the outstanding principal balance of such Mortgage
Loan as of the related Cut-off Date.
SECTION 10. Closing.
The closing for the purchase and sale of each Mortgage Loan Package
shall take place on the related Closing Date. At both the Purchaser's and
Seller's option, each Closing shall be either: by telephone, confirmed by letter
or wire as the parties shall agree, or conducted in person, at such place as the
parties shall agree.
The closing for the Mortgage Loans to be purchased on each Closing
Date shall be subject to each of the following conditions:
(i) at least two Business Days prior to the related Closing Date,
the Seller shall deliver to the Purchaser in a mutually acceptable
electronic format a listing on a loan-level basis of the necessary
information to compute the Purchase Price of the Mortgage Loans delivered
on such Closing Date (including accrued interest), and prepare a Mortgage
Loan Schedule;
(ii) all of the representations and warranties of the Seller under
this Agreement and of the Interim Servicer under the Interim Servicing
Agreement (with respect to each Mortgage Loan for an interim period, as
specified therein) shall be true and correct as of the related Closing
Date and no event shall have occurred which, with notice or the passage of
time, would constitute a default under this Agreement or an Event of
Default under the Interim Servicing Agreement;
(iii) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing documents as
specified in Section 11 of this Agreement, in such forms as are agreed
upon and acceptable to the Purchaser, duly executed by all signatories
other than the Purchaser as required pursuant to the terms hereof;
(iv) the Seller shall have delivered and released to the Custodian
all documents required pursuant to the Custodial Agreement; and
(v) all other terms and conditions of this Agreement and the related
Purchase Price and Terms Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the related Closing Date the Purchase Price, plus accrued interest
pursuant to Section 4 of this Agreement, by wire transfer of immediately
available funds to the account designated by the Seller.
SECTION 11. Closing Documents.
The Closing Documents for the Mortgage Loans to be purchased on each
Closing Date shall consist of fully executed originals of the following
documents:
(1) this Agreement (to be executed and delivered only
for the initial Closing Date);
(2) the Interim Servicing Agreement, dated as of the
initial Cut-off Date (to be executed and delivered only for
the initial Closing Date);
(3) with respect to the initial Closing Date, the
Custodial Agreement, dated as of the initial Cut-off Date;
(4) the related Mortgage Loan Schedule (one copy to be
attached to the Custodian's counterpart of the Custodial
Agreement in connection with the initial Closing Date, and one
copy to be attached to the related Assignment and Conveyance
as the Mortgage Loan Schedule thereto);
(5) a Custodian's Certification, as required under the
Custodial Agreement, in the form of Exhibit 2 to the Custodial
Agreement;
(6) with respect to the initial Closing Date, an
Officer's Certificate, in the form of Exhibit C hereto with
respect to each of the Seller, including all attachments
thereto; with respect to subsequent Closing Dates, an
Officer's Certificate upon request of the Purchaser;
(7) with respect to the initial Closing Date, an Opinion
of Counsel of the Seller (who may be an employee of the
Seller), substantially in the form of Exhibit D hereto
("Opinion of Counsel of the Seller"); with respect to
subsequent Closing Dates, an Opinion of Counsel of the Seller
upon request of the Purchaser;
(8) with respect to the initial Closing Date, an Opinion
of Counsel of the Custodian (who may be an employee of the
Custodian), substantially in the form of an exhibit to the
Custodial Agreement(s);
(9) a Security Release Certification, in the form of
Exhibit E or F, as applicable, hereto executed by any person,
as requested by the Purchaser, if any of the Mortgage Loans
have at any time been subject to any security interest, pledge
or hypothecation for the benefit of such person;
(10) a certificate or other evidence of merger or change
of name, signed or stamped by the applicable regulatory
authority, if any of the Mortgage Loans were acquired by the
Seller by merger or acquired or originated by the Seller while
conducting business under a name other than its present name,
if applicable;
(11) Assignment and Conveyance Agreement in the form of
Exhibit G hereto, and all exhibits thereto;
(12) with respect to the initial Closing Date, the
Underwriting Guidelines to be attached hereto as Exhibit H and
with respect to each subsequent Closing Date, the Underwriting
Guidelines to be attached to the related Assignment and
Conveyance; and
(13) a MERS Report reflecting the Purchaser as Investor,
the Custodian as custodian and no Person as Interim Funder for
each MERS Designated Mortgage Loan.
The Seller shall bear the risk of loss of the closing documents
until such time as they are received by the Purchaser or its attorneys.
SECTION 12. Costs.
The Purchaser shall pay any commissions due its salesmen and the
legal fees and expenses of its attorneys and custodial fees. All other costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans and the Servicing Rights including recording fees, fees for title policy
endorsements and continuations, fees for recording Assignments of Mortgage, and
the Seller's attorney's fees, shall be paid by the Seller.
SECTION 13. Cooperation of Seller with a Reconstitution.
The Seller and the Purchaser agree that with respect to some or all
of the Mortgage Loans, after the related Closing Date, on one or more dates
(each, a "Reconstitution Date") at the Purchaser's sole option, the Purchaser
may effect a sale (each, a "Reconstitution") of some or all of the Mortgage
Loans then subject to this Agreement, without recourse, to:
(i) ▇▇▇▇▇▇▇ Mac (the "▇▇▇▇▇▇▇ Mac Transfer"); or
(ii) one or more third party purchasers in one or more Whole Loan
Transfers; or
(iii) one or more trusts or other entities to be formed as part of
one or more Securitization Transaction, provided that the servicing shall
be transferred from the Seller to the successor servicer of Purchaser's
choice prior to the creation of any REMICs.
For up to six (6) transfers, the Seller agrees to execute in
connection with any Agency Transfer, any and all pool purchase contracts, and/or
agreements reasonably acceptable to the Seller among the Purchaser, the Seller
or ▇▇▇▇▇▇▇ Mac (as the case may be) and any servicer in connection with a Whole
Loan Transfer, a seller's warranties and servicing agreement or a participation
and servicing agreement in form and substance reasonably acceptable to the
parties, and in connection with a Securitization Transaction, a pooling and
servicing agreement in form and substance reasonably acceptable to the parties
or an Assignment and Recognition Agreement substantially in the form attached
hereto as Exhibit I (collectively, the agreements referred to herein as
designated, the "Reconstitution Agreements"), together with an opinion of
counsel with respect to such Reconstitution Agreements; provided, however, as to
each Mortgage Loan to the extent that any facts or circumstances which did not
exist on the applicable Closing Date hereunder would render any representation
and warranty materially false with respect to such Mortgage Loan if made as of
the date of such required restatement, in such event, the Seller shall be
permitted to take an exception to the representation and warranty with respect
to such changed fact or circumstance with respect to such Mortgage Loan as of
the date of such required restatement; provided, further, that the Seller shall
be required to notify the Purchaser and any Successor Servicer promptly and no
later than the date of such required restatement of any such facts or
circumstances.
With respect to each Whole Loan Transfer and each Securitization
Transaction entered into by the Purchaser, the Seller agrees (1) to cooperate
reasonably with the Purchaser and any prospective purchaser with respect to all
reasonable requests and due diligence procedures; (2) to execute, deliver and
perform all Reconstitution Agreements required by the Purchaser; and (3) to
restate the representations and warranties set forth in Subsections 9.01 and
9.02 as of the settlement or closing date in connection with such Reconstitution
(each, a "Reconstitution Date"), such restatement to be in the form of Exhibit B
to Exhibit I hereto, or make the representations and warranties set forth in the
related selling/servicing guide of the servicer or issuer, as the case may be,
or such representations or warranties as may be required by any rating agency or
prospective purchaser of the related securities or such Mortgage Loans in
connection with such Reconstitution. The Seller shall provide to such servicer
or issuer, as the case may be, and any other participants or purchasers in such
Reconstitution: (i) any and all information and appropriate verification of
information which may be reasonably available to the Seller or its affiliates,
whether through letters of its auditors and counsel or otherwise, as the
Purchaser or any such other participant shall request; (ii) such additional
representations, warranties, covenants, opinions of counsel, letters from
auditors, and certificates of public officials or officers of the Seller or the
Interim Servicer as are reasonably believed necessary by the Purchaser or any
such other participant; and (iii) to execute, deliver and satisfy all conditions
set forth in any indemnity agreement required by the Purchaser or any such
participant, including, without limitation, an Indemnification and Contribution
Agreement in substantially the form attached hereto as Exhibit B. Moreover, the
Seller agrees to cooperate with all reasonable requests made by the Purchaser to
effect such Reconstitution Agreements. The Seller shall indemnify the Purchaser,
each affiliate of the Purchaser participating in the Reconstitution and each
Person who controls the Purchaser or such affiliate and their respective present
and former directors, officers, employees and agents, and hold each of them
harmless from and against any losses, damages, penalties, fines, forfeitures,
legal fees and expenses and related costs, judgments, and any other costs, fees
and expenses that each of them may sustain arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
information provided by or on behalf of the Seller regarding the Seller, the
Mortgage Loans or the Underwriting Guidelines set forth in any offering document
prepared in connection with any Reconstitution. For purposes of the previous
sentence, "Purchaser" shall mean the Person then acting as the Purchaser under
this Agreement and any and all Persons who previously were "Purchasers" under
this Agreement.
In the event the Purchaser has elected to have the Seller or the
Interim Servicer hold record title to the Mortgages, prior to the Reconstitution
Date, the Seller shall prepare an assignment of mortgage in blank or to the
prospective purchaser or trustee, as applicable, from the Seller or the Interim
Servicer, as applicable, acceptable to the prospective purchaser or trustee, as
applicable, for each Mortgage Loan that is part of the Reconstitution and shall
pay all preparation and recording costs associated therewith. In connection with
the Reconstitution, the Seller shall execute or shall cause the Interim Servicer
to execute each assignment of mortgage, track such Assignments of Mortgage to
ensure they have been recorded and deliver them as required by the prospective
purchaser or trustee, as applicable, upon the Seller's receipt thereof.
Additionally, the Seller shall prepare and execute or shall cause the Interim
Servicer to execute, at the direction of the Purchaser, any note endorsement in
connection with any and all seller/servicer agreements.
All Mortgage Loans not sold or transferred pursuant to a
Reconstitution shall remain subject to this Agreement and, if the Interim
Servicing Agreement shall remain in effect with respect to the related Mortgage
Loan Package, shall continue to be serviced in accordance with the terms of this
Agreement and the Interim Servicing Agreement and with respect thereto this
Agreement shall remain in full force and effect.
SECTION 14. The Seller.
Subsection 14.01 Additional Indemnification by the Seller; Third
Party Claims.
(a) The Seller shall indemnify the Purchaser and its present and
former directors, officers, employees and agents and any Successor Servicer and
its present and former directors, officers, employees and agents, and hold such
parties harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, legal fees and expenses (including legal fees and expenses incurred
in connection with the enforcement of the Seller's indemnification obligation
under this Subsection 14.01) and related costs, judgments, and any other costs,
fees and expenses that such parties may sustain in any way related to the
failure of the Seller to perform its duties and the Interim Servicer to service
the Mortgage Loans in strict compliance with the terms of this Agreement or any
Reconstitution Agreement entered into pursuant to Section 13 or any breach of
any of Seller's representations, warranties and covenants set forth in this
Agreement (provided that such costs shall not include any lost profits). For
purposes of this paragraph "Purchaser" shall mean the Person then acting as the
Purchaser under this Agreement and any and all Persons who previously were
"Purchasers" under this Agreement and "Successor Servicer" shall mean any Person
designated as the Successor Servicer pursuant to this Agreement and any and all
Persons who previously were "Successor Servicers" pursuant to this Agreement.
(b) Promptly after receipt by an indemnified party under this
Subsection 14.01 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Subsection 14.01, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may have to
any indemnified party under this Subsection 14.01, except to the extent that it
has been prejudiced in any material respect, or from any liability which it may
have, otherwise than under this Subsection 14.01. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided that if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party or parties shall have reasonably concluded that there may
be legal defenses available to it or them and/or other indemnified parties which
are different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate counsel
to assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party for
expenses incurred by the indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with one local counsel, if applicable)), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii).
Subsection 14.02 Merger or Consolidation of the Seller.
The Seller will keep in full effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Seller shall be a party, or any Person succeeding to the business of the
Seller, shall be the successor of the Seller hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall have a net worth of at least $25,000,000.
SECTION 15. Financial Statements.
The Seller understands that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser shall make available to
prospective purchasers audited financial statements of the Seller for the most
recently completed three fiscal years respecting which such statements are
available, as well as a Consolidated Statement of Condition of the Seller at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Seller shall also make available any comparable interim
statements to the extent any such statements have been prepared by the Seller
(and are available upon request to members or stockholders of the Seller or the
public at large). The Seller, if it has not already done so, agrees to furnish
promptly to the Purchaser copies of the statements specified above. The Seller
shall also make available information obtained from ABS Net as to its servicing
performance with respect to loans serviced for others, including delinquency
ratios.
The Seller also agrees to allow reasonable access to a knowledgeable
financial or accounting officer for the purpose of answering questions asked by
any prospective purchaser regarding recent developments affecting the Seller or
the financial statements of the Seller.
SECTION 16. Mandatory Delivery; Grant of Security Interest.
The sale and delivery of the Mortgage Loans described on the related
Mortgage Loan Schedule is mandatory from and after the related Closing Date, it
being specifically understood and agreed that each Mortgage Loan is unique and
identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser (including damages to prospective purchasers of the Mortgage
Loans) in the event of the Seller's failure to deliver (i) each of the related
Mortgage Loans or (ii) one or more Qualified Substitute Mortgage Loans or (iii)
one or more Mortgage Loans otherwise acceptable to the Purchaser on or before
the related Closing Date. The Seller hereby grants to the Purchaser a lien on
and a continuing security interest in each Mortgage Loan and each document and
instrument evidencing each such Mortgage Loan to secure the performance by the
Seller of its obligations hereunder, and the Seller agrees that it shall hold
such Mortgage Loans in custody for the Purchaser subject to the Purchaser's (a)
right to reject any Mortgage Loan (or Qualified Substitute Mortgage Loan) under
the terms of this Agreement and to require another Mortgage Loan (or Qualified
Substitute Mortgage Loan) to be substituted therefor, and (b) obligation to pay
the Purchase Price for the Mortgage Loans. All rights and remedies of the
Purchaser under this Agreement are distinct from, and cumulative with, any other
rights or remedies under this Agreement or afforded by law or equity and all
such rights and remedies may be exercised concurrently, independently or
successively.]
SECTION 17. 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 the address as follows:
(i) if to the Seller:
Meritage Mortgage Corporation
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
with copies to:
RBMG, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Director of Loan Administration
CC Chief Legal Counsel
For issues of repurchases an additional copy to:
Meritage Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Capital Markets
(ii) if to the Purchaser:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loan Operations Manager
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 18. Severability Clause.
Any part, provision representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
SECTION 19. 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 20. Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Purchaser in the State of New York and
shall be deemed to have been made in the State of New York. The Agreement 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 the substantive laws of the State of New York (without regard to
conflicts of laws principles), except to the extent preempted by Federal law.
SECTION 21. Intention of the Parties.
It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to treat
the transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. Moreover, the arrangement
under which the Mortgage Loans are held shall be consistent with classification
of such arrangement as a grantor trust in the event it is not found to represent
direct ownership of the Mortgage Loans. The Purchaser shall have the right to
review the Mortgage Loans and the related Mortgage Loan Files to determine the
characteristics of the Mortgage Loans which shall affect the Federal income tax
consequences of owning the Mortgage Loans and the Seller shall cooperate with
all reasonable requests made by the Purchaser in the course of such review.
SECTION 22. Successors and Assigns; Assignment of Purchase
Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller and the Purchaser and the respective permitted
successors and assigns of the Seller and the successors and assigns of the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Seller to a third party without the prior written consent of the Purchaser,
which consent may be withheld by the Purchaser in its sole discretion. This
Agreement may be assigned, pledged or hypothecated by the Purchaser in whole or
in part, and with respect to one or more of the Mortgage Loans, without the
consent of the Seller. There shall be no limitation on the number of assignments
or transfers allowable by the Purchaser with respect to the Mortgage Loans and
this Agreement. In the event the Purchaser assigns this Agreement, and the
assignee assumes any of the Purchaser's obligations hereunder, the Seller
acknowledges and agrees to look solely to such assignee, and not to the
Purchaser, for performance of the obligations so assumed and the Purchaser shall
be relieved from any liability to the Seller with respect thereto.
SECTION 23. 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 24. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a
part hereof and are an integral part of this Agreement.
SECTION 25. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 26. Reproduction of Documents.
This Agreement and all documents relating thereto, 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 27. Further Agreements.
The Seller and the Purchaser 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 this
Agreement.
SECTION 28. Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments
of Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or their comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Seller's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
SECTION 29. No Solicitation.
From and after the related Closing Date, the Seller agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Seller's behalf,
to personally, by telephone or mail (via electronic means or otherwise), solicit
a Mortgagor under any Mortgage Loan for the purpose of refinancing a Mortgage
Loan, in whole or in part, without the prior written consent of the Purchaser.
Notwithstanding the foregoing, it is understood and agreed that the Seller, or
any of its respective affiliates:
(i) may advertise its availability for handling refinancings of
mortgages in its portfolio, including the promotion of terms it has
available for such refinancings, through the sending of letters or
promotional material, so long as it does not specifically target
Mortgagors and so long as such promotional material either is sent to the
mortgagors for all of the mortgages in the servicing portfolio of the
Seller and any of its affiliates (those it owns as well as those serviced
for others); and
(ii) may provide pay-off information and otherwise cooperate with
individual mortgagors who contact it about prepaying their mortgages by
advising them of refinancing terms and streamlined origination
arrangements that are available.
Promotions undertaken by the Seller or by any affiliate of the
Seller which are directed to the general public at large (including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio, internet website and television advertisements), shall not
constitute solicitation under this Section 29.
SECTION 30. Waiver of Trial by Jury.
THE SELLER AND THE PURCHASER EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 31. Governing Law Jurisdiction; Consent to Service of
Process.
THIS AGREEMENT SHALL BE DEEMED IN EFFECT WHEN A FULLY EXECUTED
COUNTERPART THEREOF IS RECEIVED BY THE PURCHASER IN THE STATE OF NEW YORK AND
SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK. THIS AGREEMENT SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
TO ITS CHOICE OF LAW RULES AND PRINCIPLES. EACH OF THE PURCHASER AND THE SELLER
IRREVOCABLY (I) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT; (II) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE DEFENSE OF AN INCONVENIENT FORUM IN ANY ACTION OR PROCEEDING IN ANY SUCH
COURT; (III) AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING IN ANY
SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW; AND (IV) CONSENTS
TO SERVICE OF PROCESS UPON IT BY MAILING A COPY THEREOF BY CERTIFIED MAIL
ADDRESSED TO IT AS PROVIDED FOR NOTICES HEREUNDER.
SECTION 32. COMPLIANCE WITH REGULATION AB
Subsection 32.01 Intent of the Parties; Reasonableness.
The Purchaser and the Seller acknowledge and agree that the purpose
of Section 32 of this Agreement is to facilitate compliance by the Purchaser and
any Depositor with the provisions of Regulation AB and related rules and
regulations of the Commission. Neither the Purchaser nor any Depositor shall
exercise its right to request delivery of information or other performance under
these provisions other than in good faith, or for purposes other than compliance
with the Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder. The Seller acknowledges that interpretations of the
requirements of Regulation AB may change over time, whether due to interpretive
guidance provided by the Commission or its staff, consensus among participants
in the asset-backed securities markets, advice of counsel, or otherwise, and
agrees to comply with reasonable requests made by the Purchaser or any Depositor
in good faith for delivery of information under these provisions on the basis of
evolving interpretations of Regulation AB. In connection with any Securitization
Transaction, the Seller shall cooperate fully with the Purchaser to deliver to
the Purchaser (including any of its assignees or designees) and any Depositor,
any and all statements, reports, certifications, records and any other
information necessary in the reasonable good faith determination of the
Purchaser or any Depositor to permit the Purchaser or such Depositor to comply
with the provisions of Regulation AB, together with such disclosures relating to
the Seller, any Third-Party Originator and the Mortgage Loans, or the servicing
of the Mortgage Loans, reasonably believed by the Purchaser or any Depositor to
be necessary in order to effect such compliance.
With respect to those Mortgage Loans that were originated by Seller
(including as an acquirer of Mortgage Loans from a Qualified Correspondent) and
sold to the Purchaser pursuant to this Agreement, the Purchaser shall, to the
extent consistent with then-current industry practice, cause the servicer (or
another party) to be obligated to provide information, in the form customarily
provided by such servicer or other party (which need not be customized for the
Seller) with respect to the Mortgage Loans reasonably necessary for the Seller
to comply with its obligations under Regulation AB, including, without
limitation, providing to the Seller Static Pool Information, as set forth in
Item 1105(a)(2) and (3) of Regulation AB.
Subsection 32.02 Additional Representations and Warranties of the
Seller.
(a) Seller shall be deemed to represent to the Purchaser and to any
Depositor, as of the date on which information is first provided to the
Purchaser or any Depositor under Subsection 32.03 that, except as disclosed in
writing to the Purchaser or such Depositor prior to such date: (i) the Seller is
not aware and has not received notice that any default, early amortization or
other performance triggering event has occurred as to any other securitization
due to any act or failure to act of the Seller; (ii) the Interim Servicer has
not been terminated as servicer in a residential mortgage loan securitization,
either due to a servicing default or to application of a servicing performance
test or trigger; (iii) no material noncompliance with the applicable servicing
criteria with respect to other securitizations of residential mortgage loans
involving the Interim Servicer as servicer has been disclosed or reported by the
Seller; (iv) no material changes to the Interim Servicer's policies or
procedures with respect to the servicing function it will perform under the
Interim Servicing Agreement and any Reconstitution Agreement for mortgage loans
of a type similar to the Mortgage Loans have occurred during the three-year
period immediately preceding the related Securitization Transaction; (v) there
are no aspects of the Interim Servicer's financial condition that could have a
material adverse effect on the performance by the Interim Servicer of its
servicing obligations under the Interim Servicing Agreement or any
Reconstitution Agreement; (vi) there are no material legal or governmental
proceedings pending (or known to be contemplated) against the Seller, Interim
Servicer, any Subservicer or any Third-Party Originator; and (vii) there are no
affiliations, relationships or transactions relating to the Seller, Interim
Servicer, any Subservicer or any Third-Party Originator with respect to any
Securitization Transaction and any party thereto identified by the related
Depositor of a type described in Item 1119 of Regulation AB.
(b) If so requested by the Purchaser or any Depositor on any date
following the date on which information is first provided to the Purchaser or
any Depositor under Subsection 32.03, the Seller shall, within five Business
Days following such request, confirm in writing the accuracy of the
representations and warranties set forth in paragraph (a) of this Section or, if
any such representation and warranty is not accurate as of the date of such
request, provide reasonably adequate disclosure of the pertinent facts, in
writing, to the requesting party.
Subsection 32.03 Information to Be Provided by the Seller.
In connection with any Securitization Transaction the Seller shall
(i) within five Business Days following request by the Purchaser or any
Depositor, provide to the Purchaser and such Depositor (or, as applicable, cause
each Third-Party Originator to provide), in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor, the information and
materials specified in paragraphs (a) and (b) of this Section, and (ii) as
promptly as practicable following notice to or discovery by the Seller, provide
to the Purchaser and any Depositor (in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor) the information
specified in paragraph (d) of this Section.
(a) If so requested by the Purchaser or any Depositor, the Seller
shall provide such information regarding (i) the Seller, as originator of the
Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent), or (ii) each Third-Party Originator, as is requested for the
purpose of compliance with Items 1103(a)(1), 1105, 1110, 1117 and 1119 of
Regulation AB. Such information shall include, at a minimum:
(i) the originator's form of organization;
(ii) a description of the originator's origination program and
how long the originator has been engaged in originating residential
mortgage loans, which description shall include a discussion of the
originator's experience in originating mortgage loans of a similar
type as the Mortgage Loans; information regarding the size and
composition of the originator's origination portfolio; and
information that may be material, in the reasonable good faith
judgment of the Purchaser or any Depositor, to an analysis of the
performance of the Mortgage Loans, including the originators'
credit-granting or underwriting criteria for mortgage loans of
similar type(s) as the Mortgage Loans and such other information as
the Purchaser or any Depositor may reasonably request for the
purpose of compliance with Item 1110(b)(2) of Regulation AB;
(iii) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against the Seller
and each Third-Party Originator; and
(iv) a description of any affiliation or relationship between
the Seller, each Third-Party Originator and any of the following
parties to a Securitization Transaction, as such parties are
identified to the Seller by the Purchaser or any Depositor in
writing in advance of such Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(b) If so reasonably requested by the Purchaser or any Depositor,
the Seller shall provide (or, as applicable, cause each Third-Party Originator
to provide) Static Pool Information with respect to the mortgage loans (of a
similar type as the Mortgage Loans, as reasonably identified by the Purchaser as
provided below) originated by (i) the Seller, if the Seller is an originator of
Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent), and/or (ii) each Third-Party Originator. Such Static Pool
Information shall be prepared in form and substance reasonably satisfactory to
the Purchaser by the Seller (or Third-Party Originator) on the basis of its
reasonable, good faith interpretation of the requirements of Item 1105(a)(1)-(3)
of Regulation AB. To the extent that there is reasonably available to the Seller
(or Third-Party Originator) Static Pool Information with respect to more than
one mortgage loan type, the Purchaser or any Depositor shall be entitled to
specify whether some or all of such information shall be provided pursuant to
this paragraph. Such Static Pool Information for each vintage origination year
or prior securitized pool, as applicable, shall be presented in increments no
less frequently than quarterly over the life of the mortgage loans included in
the vintage origination year or prior securitized pool. The most recent periodic
increment must be as of a date no later than 135 days prior to the date of the
prospectus or other offering document in which the Static Pool Information is to
be included or incorporated by reference. The Static Pool Information shall be
provided in an electronic format that provides a permanent record of the
information provided, such as a portable document format (pdf) file, or other
such electronic format reasonably required by the Purchaser or the Depositor, as
applicable.
Promptly following notice or discovery of a material error in Static
Pool Information provided pursuant to the immediately preceding paragraph
(including an omission to include therein information required to be provided
pursuant to such paragraph), the Seller shall provide corrected Static Pool
Information to the Purchaser or any Depositor, as applicable, in the same format
in which Static Pool Information was previously provided to such party by the
Seller.
If so requested by the Purchaser or any Depositor, the Seller shall
provide (or, as applicable, cause each Third-Party Originator to provide), at
the expense of the requesting party (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement), such agreed-upon
procedures letters of certified public accountants reasonably acceptable to the
Purchaser or Depositor, as applicable, pertaining to Static Pool Information
relating to prior securitized pools for securitizations closed on or after
January 1, 2006 or, in the case of Static Pool Information with respect to the
Seller's or Third-Party Originator's originations or purchases, to calendar
months commencing January 1, 2006, as the Purchaser or such Depositor shall
reasonably request. Such statements and letters shall be addressed to and be for
the benefit of such parties as the Purchaser or such Depositor shall designate,
which may include, by way of example, any Sponsor, any Depositor and any broker
dealer acting as underwriter, placement agent or initial purchaser with respect
to a Securitization Transaction. Any such statement or letter may take the form
of a standard, generally applicable document accompanied by a reliance letter
authorizing reliance by the addressees designated by the Purchaser or such
Depositor.
(c) [Reserved].
(d) If so requested by the Purchaser or any Depositor for the
purpose of satisfying its reporting obligation under the Exchange Act with
respect to any class of asset-backed securities, the Seller shall (or shall
cause each Third-Party Originator to) (i) notify the Purchaser and any Depositor
in writing of (A) any material litigation or governmental proceedings pending
against the Seller or any Third-Party Originator and (B) any affiliations or
relationships that develop following the closing date of a Securitization
Transaction between the Seller or any Third-Party Originator and any of the
parties specified in clause (vi) of paragraph (a) of this Section (and any other
parties identified in writing by the requesting party) with respect to such
Securitization Transaction, and (ii) provide to the Purchaser and any Depositor
a description of such proceedings, affiliations or relationships.
Subsection 32.04 Indemnification; Remedies.
(a) The Seller shall indemnify the Purchaser, each affiliate of the
Purchaser, and each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person responsible for the
preparation, execution or filing of any report required to be filed with the
Commission with respect to such Securitization Transaction, or for execution of
a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange
Act with respect to such Securitization Transaction; each broker dealer acting
as underwriter, placement agent or initial purchaser, each Person who controls
any of such parties or the Depositor (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the respective present
and former directors, officers, employees and agents of each of the foregoing
and of the Depositor, and shall hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon:
. (i)(A) any untrue statement of a material fact contained or
alleged to be contained in any information, report, certification,
accountants' letter or other material provided under this Section 32 by or
on behalf of the Seller, or provided under this Section 32 by or on behalf
of any Third-Party Originator (collectively, the "Seller Information"), or
(B) the omission or alleged omission to state in the Seller Information a
material fact required to be stated in the Seller Information or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, by way of
clarification, that clause (B) of this paragraph shall be construed solely
by reference to the Seller Information and not to any other information
communicated in connection with a sale or purchase of securities, without
regard to whether the Seller Information or any portion thereof is
presented together with or separately from such other information;
(ii) any failure by the Seller or any Third-Party Originator to
deliver any information, report, certification, accountants' letter or
other material when and as required under this Section 32; or
(iii) any breach by the Seller of a representation or warranty set
forth in Subsection 32.02(a) or in a writing furnished pursuant to
Subsection 32.02(b) and made as of a date prior to the closing date of the
related Securitization Transaction, to the extent that such breach is not
cured by such closing date, or any breach by the Seller of a
representation or warranty in a writing furnished pursuant to Subsection
32.02(b) to the extent made as of a date subsequent to such closing date.
In the case of any failure of performance described in clause (a)(ii) of
this Section, the Seller shall promptly reimburse the Purchaser, any Depositor,
as applicable, and each Person responsible for the preparation, execution or
filing of any report required to be filed with the Commission with respect to
such Securitization Transaction, or for execution of a certification pursuant to
Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by the Seller or any Third-Party
Originator.
(b) Any failure by the Seller or any Third-Party Originator to
deliver any information, report, certification, accountants' letter or other
material when and as required under this Section 32, or any breach by the Seller
of a representation or warranty set forth in Subsection 32.02(a) or in a writing
furnished pursuant to Subsection 32.02(b) and made as of a date prior to the
closing date of the related Securitization Transaction, to the extent that such
breach is not cured by such closing date, or any breach by the Seller of a
representation or warranty in a writing furnished pursuant to Subsection
32.02(b) to the extent made as of a date subsequent to such closing date, shall
immediately and automatically, without notice or grace period, constitute an
Event of Default with respect to the Seller under this Agreement and any
applicable Reconstitution Agreement, and shall entitle the Purchaser or
Depositor, as applicable, in its sole discretion to terminate the rights and
obligations of the Interim Servicer as servicer under the Interim Servicing
Agreement and/or any applicable Reconstitution Agreement without payment
(notwithstanding anything in this Agreement or any applicable Reconstitution
Agreement to the contrary) of any compensation to the Interim Servicer; provided
that to the extent that any provision of this Agreement and/or any applicable
Reconstitution Agreement expressly provides for the survival of certain rights
or obligations following termination of the Interim Servicer as servicer, such
provision shall be given effect.
[Signature Page Follows]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
(Purchaser)
By:____________________________________
Name:__________________________________
Title:_________________________________
MERITAGE MORTGAGE CORPORATION
(Seller)
By:____________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT A
CONTENTS OF EACH MORTGAGE FILE
------------------------------
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and any prospective Purchaser, and which shall be delivered to the
Custodian, or to such other Person as the Purchaser shall designate in writing,
pursuant to Section 6 of the Second Amended and Restated Mortgage Loan Purchase
and Warranties Agreement to which this Exhibit is attached (the "Agreement"):
(a) the original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________, without recourse" and signed in
the name of the last endorsee (the "Last Endorsee") by an authorized
officer. To the extent that there is no room on the face of the Mortgage
Notes for endorsements, the endorsement may be contained on an allonge, if
state law so allows and the Custodian is so advised by the Seller that
state law so allows. If the Mortgage Loan was acquired by the Seller in a
merger, the endorsement must be by "[Last Endorsee], successor by merger
to [name of predecessor]". If the Mortgage Loan was acquired or originated
by the Last Endorsee while doing business under another name, the
endorsement must be by "[Last Endorsee], formerly known as [previous
name]";
(b) the original of any guarantee executed in connection with the
Mortgage Note;
(c) the original Mortgage with evidence of recording thereon. If in
connection with any Mortgage Loan, the Seller cannot deliver or cause to
be delivered the original Mortgage with evidence of recording thereon on
or prior to the Closing Date because of a delay caused by the public
recording office where such Mortgage has been delivered for recordation or
because such Mortgage has been lost or because such public recording
office retains the original recorded Mortgage, the Seller shall deliver or
cause to be delivered to the Custodian, a photocopy of such Mortgage,
together with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Seller (or certified by the title
company, escrow agent, or closing attorney) stating that such Mortgage has
been dispatched to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage
certified by such public recording office to be a true and complete copy
of the original recorded Mortgage will be promptly delivered to the
Custodian upon receipt thereof by the Seller; or (ii) in the case of a
Mortgage where a public recording office retains the original recorded
Mortgage or in the case where a Mortgage is lost after recordation in a
public recording office, a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage;
(d) the originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon;
(e) the original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording (except with respect to MERS
Designated Loans). The Assignment of Mortgage must be duly recorded only
if recordation is either necessary under applicable law or commonly
required by private institutional mortgage investors in the area where the
Mortgaged Property is located or on direction of the Purchaser as provided
in this Agreement. If the Assignment of Mortgage is to be recorded, the
Mortgage shall be assigned to the Purchaser. If the Assignment of Mortgage
is not to be recorded, the Assignment of Mortgage shall be delivered in
blank. If the Mortgage Loan was acquired by the Seller in a merger, the
Assignment of Mortgage must be made by "[Seller], successor by merger to
[name of predecessor]". If the Mortgage Loan was acquired or originated by
the Seller while doing business under another name, the Assignment of
Mortgage must be by "[Seller], formerly known as [previous name]";
(f) the originals of all intervening assignments of mortgage (if
any) evidencing a complete chain of assignment from the Seller to the Last
Endorsee (or, in the case of a MERS Designated Loan, MERS) with evidence
of recording thereon, or if any such intervening assignment has not been
returned from the applicable recording office or has been lost or if such
public recording office retains the original recorded assignments of
mortgage, the Seller shall deliver or cause to be delivered to the
Custodian, a photocopy of such intervening assignment, together with (i)
in the case of a delay caused by the public recording office, an Officer's
Certificate of the Seller (or certified by the title company, escrow
agent, or closing attorney) stating that such intervening assignment of
mortgage has been dispatched to the appropriate public recording office
for recordation and that such original recorded intervening assignment of
mortgage or a copy of such intervening assignment of mortgage certified by
the appropriate public recording office to be a true and complete copy of
the original recorded intervening assignment of mortgage will be promptly
delivered to the Custodian upon receipt thereof by the Seller; or (ii) in
the case of an intervening assignment where a public recording office
retains the original recorded intervening assignment or in the case where
an intervening assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original recorded
intervening assignment;
(g) the original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy of
the related policy binder or commitment for title certified to be true and
complete by the title insurance company;
(h) the original or, if unavailable, a copy of any security
agreement, chattel mortgage or equivalent document executed in connection
with the Mortgage; and
(i) if any of the above documents has been executed by a person
holding a power of attorney, an original or photocopy of such power
certified by the Seller to be a true and correct copy of the original.
In the event an Officer's Certificate of the Seller is delivered to
the Purchaser because of a delay caused by the public recording office in
returning any recorded document, the Seller shall deliver to the Purchaser,
within 120 days of the related Closing Date (or 180 days of the related Closing
Date as specified in Subsection 6.03 of the Agreement), an Officer's Certificate
which shall (i) identify the recorded document, (ii) state that the recorded
document has not been delivered to the Custodian due solely to a delay caused by
the public recording office, (iii) state the amount of time generally required
by the applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will be
delivered to the Custodian; provided, however, that any recorded document shall
in no event be delivered later than one year following the related Closing Date.
An extension of the date specified in clause (iv) above may be requested from
the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT B
FORM OF INDEMNIFICATION
AND
CONTRIBUTION AGREEMENT
THIS INDEMNIFICATION AND CONTRIBUTION AGREEMENT dated _________,
200_ ("Agreement") among [______________], a [______________] (the
"Depositor"), [______________], a [______________] (the "Underwriter"), and
[______________], a [______________] (the "Indemnifying Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Indemnifying Party and the Depositor are parties to
the Pooling and Servicing Agreement (as defined herein);
WHEREAS, the Indemnifying Party originated or acquired the Mortgage
Loans and subsequently sold the Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. (the "Purchaser"), an affiliate of the Depositor, in anticipation
of the securitization transaction;
WHEREAS, the Indemnifying Party also stands to receive substantial
financial benefits in its capacity as servicer under the Pooling and Servicing
Agreement;
WHEREAS, as an inducement to the Depositor to enter into the Pooling
and Servicing Agreement and the Underwriter to enter into the Underwriting
Agreement (as defined herein), the Indemnifying Party wishes to provide for
indemnification and contribution on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the foregoing and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
1933 Act: The Securities Act of 1933, as amended.
1934 Act: The Securities Exchange Act of 1934, as amended.
Agreement: This Indemnification and Contribution Agreement, as
the same may be amended in accordance with the terms hereof.
Indemnified Parties: As defined in Section 3.1.
Indemnifying Party Information: All information in the Prospectus
Supplement or any amendment or supplement thereto (i) contained under the
headings "Summary--Relevant Parties--Responsible Party [and Servicer,"] "The
Mortgage Loan Pool--Underwriting Guidelines" [and "The Servicer"], and (ii)
regarding the Mortgage Loans, the related mortgagors and/or the related
Mortgaged Properties (but in the case of this clause (ii), only to the extent
any untrue statement or omission arose from or is based upon errors or
omissions in the information concerning the Mortgage Loans, the related
mortgagors and/or the related Mortgaged Properties, as applicable, provided
to the Depositor or any affiliate by or on behalf of the Indemnifying Party)
[as well as static pool information regarding mortgage loans originated or
acquired by the Seller [and included in the Prospectus Supplement or any
amendment or supplement thereto] [incorporated by reference from the website
located at ______________].
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Pooling and Servicing Agreement: The Pooling and Servicing
Agreement, dated as of ___________, 200_, among the Depositor, the
Indemnifying Party, as responsible party and servicer, and [______________].
Private Placement Memorandum: The private placement memorandum,
dated ___________, 200_, relating to the offering of the Privately Offered
Certificates.
Privately Offered Certificates: [______________], Mortgage
Pass-Through Certificates, Series [_______], Class [__] issued pursuant to
the Pooling and Servicing Agreement.
Prospectus Supplement: The preliminary prospectus supplement, dated
___________, 200_, together with the final prospectus supplement, dated
___________, 200_, relating to the offering of the Publicly Offered
Certificates.
Publicly Offered Certificates: [______________], Mortgage
Pass-Through Certificates, Series [_______], Class [__], Class [__],
Class [__], Class [__], Class [__], Class [__] and Class [__] issued pursuant
to the Pooling and Servicing Agreement.
Underwriting Agreement: The Underwriting Agreement, dated
___________, 200_, among the Depositor and the Underwriter, relating to the
sale of the Publicly Offered Certificates.
1.2 Other Terms. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Pooling and Servicing
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Each party hereto represents that:
(a) it has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement;
(b) this Agreement has been duly authorized, executed and delivered
by such party; and
(c) assuming the due authorization, execution and delivery by each
other party hereto, this Agreement constitutes the legal, valid and binding
obligation of such party.
ARTICLE III
INDEMNIFICATION
3.1 Indemnification by the Indemnifying Party of the Depositor and
the Underwriter. (a) The Indemnifying Party shall indemnify and hold harmless
the Depositor and the Underwriter and their respective affiliates, and their
respective present and former directors, officers, employees, agents and each
Person, if any, that controls the Depositor, the Underwriter or such affiliate,
within the meaning of either the 1933 Act or the 1934 Act (collectively, the
"Indemnified Parties"), against any and all losses, claims, damages, penalties,
fines, forfeitures or liabilities, joint or several, to which each such
Indemnified Party may become subject, under the 1933 Act, the 1934 Act or
otherwise, to the extent that such losses, claims, damages, penalties, fines,
forfeitures or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus Supplement, the Private Placement Memorandum or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission
relates to information set forth in the Indemnifying Party Information, and the
Indemnifying Party shall in each case reimburse each Indemnified Party for any
legal or other costs, fees, or expenses reasonably incurred and as incurred by
such Indemnified Party in connection with investigating or defending any such
loss, claim, damage, penalty, fine, forfeiture, liability or action. The
Indemnifying Party's liability under this Section 3.1 shall be in addition to
any other liability that the Indemnifying Party may otherwise have.
(b) If the indemnification provided for in this Section 3.1 shall
for any reason be unavailable to an Indemnified Party under this Section 3.1
(other than due to indemnification not being applicable under Section 3.1(a)),
then the party which would otherwise be obligated to indemnify with respect
thereto, on the one hand, and the parties which would otherwise be entitled to
be indemnified, on the other hand, shall contribute to the aggregate losses,
liabilities, claims, damages, penalty, fine, forfeiture, costs, fees and
expenses of the nature contemplated herein and incurred by the parties hereto in
such proportions that are appropriate to reflect the relative fault of the
Depositor or the Underwriter, on the one hand, and the Indemnifying Party, on
the other hand, in connection with the applicable misstatements or omissions as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, no Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
Person that was not guilty of such fraudulent misrepresentation. For purposes of
this Section 3.1, each director of a party to this Agreement and each Person, if
any, that controls a party to this Agreement within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such party.
3.2 Notification; Procedural Matters. Promptly after receipt by an
Indemnified Party under Section 3.1 of notice of any claim or the commencement
of any action, such Indemnified Party shall, if a claim in respect thereof is to
be made against the Indemnifying Party (or if a claim for contribution is to be
made against another party) under Section 3.1, notify the Indemnifying Party (or
other contributing party) in writing of the claim or the commencement of such
action; provided, however, that the failure to notify the Indemnifying Party (or
other contributing party) shall not relieve it from any liability which it may
have under Section 3.1 except to the extent it has been materially prejudiced by
such failure; and provided, further, however, that the failure to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
any Indemnified Party (or to the party requesting contribution) otherwise than
under Section 3.1. In case any such action is brought against any Indemnified
Party and it notifies the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that, by written notice delivered to the Indemnified Party promptly after
receiving the aforesaid notice from such Indemnified Party, the Indemnifying
Party elects to assume the defense thereof, it may participate with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that if
the defendants in any such action include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party or parties shall reasonably have
concluded that there may be legal defenses available to it or them and/or other
Indemnified Parties that are different from or additional to those available to
the Indemnifying Party, or if the use of counsel chosen by the Indemnifying
Party to represent the Indemnified Parties would present such counsel with a
conflict of interest, the Indemnified Party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party or
parties. Upon receipt of notice from the Indemnifying Party to such Indemnified
Party of its election so to assume the defense of such action and approval by
the Indemnified Party of such counsel, the Indemnifying Party shall not be
liable to such Indemnified Party under this paragraph for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel (plus any local counsel) in connection with the assertion of legal
defenses in accordance with the proviso to the immediately preceding sentence,
(ii) the Indemnifying Party shall not have employed counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party within
a reasonable time after notice of commencement of the action or (iii) the
Indemnifying Party shall have authorized the employment of counsel for the
Indemnified Party at the expense of the Indemnifying Party. No party shall be
liable for contribution with respect to any action or claim settled without its
consent, which consent shall not be unreasonably withheld. In no event shall the
Indemnifying Party be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from its own counsel for all
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
ARTICLE IV
GENERAL
4.1 Survival. This Agreement and the obligations of the parties
hereunder shall survive the purchase and sale of the Publicly Offered
Certificates and Privately Offered Certificates.
4.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, each Indemnified Party and their respective
successors and assigns, and no other Person shall have any right or obligation
hereunder.
4.3 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to principles of conflict of laws.
4.4 Miscellaneous. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by a writing signed by the
party against which 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.
4.5 Notices. All communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered to:
In the case of the Depositor:
[--------------]
[--------------]
[--------------]
Attention:
Telephone:
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loans Operations Manager
Telephone:
In the case of the Underwriter:
[--------------]
[--------------]
[--------------]
Attention:
Telephone:
In the case of the Indemnifying Party:
[--------------]
[--------------]
[--------------]
Attention:
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized officers as of the date first above written.
[DEPOSITOR]
By:____________________________________
Name:
Title:
[UNDERWRITER]
By:____________________________________
Name:
Title:
[INDEMNIFYING PARTY]
By:____________________________________
Name:
Title:
EXHIBIT C
SELLER'S OFFICER'S CERTIFICATE
------------------------------
I, ____________________, hereby certify that I am the duly elected
Officer of ________________[COMPANY], a [state] [federally] chartered
institution organized under the laws of the [state of ____________] [United
States] (the "Company") and further as follows:
(i) Attached hereto as Exhibit 1 is a true, correct and
complete copy of the charter of the Company which is in full force
and effect on the date hereof and which has been in effect without
amendment, waiver, rescission or modification since ___________.
(ii) Attached hereto as Exhibit 2 is a true, correct and
complete copy of the bylaws of the Company which are in effect on
the date hereof and which have been in effect without amendment,
waiver, rescission or modification since ___________.
(iii) Attached hereto as Exhibit 3 is an original certificate
of good standing of the Company issued within ten days of the date
hereof, and no event has occurred since the date thereof which would
impair such standing.
(iv) Attached hereto as Exhibit 4 is a true, correct and
complete copy of the corporate resolutions of the Board of Directors
of the Company authorizing the Company to execute and deliver (a)
the Second Amended and Restated Mortgage Loan Purchase and
Warranties Agreement, dated as of November 1, 2005 (the "Purchase
Agreement"), by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
(the "Purchaser") and the Company and (b) the Custodial Agreement,
dated as of _______ __, 200_ (the "Custodial Agreement"), by and
among the Purchaser, the Company, ________________________ (the
"Interim Servicer") and [CUSTODIAN] (the "Custodian"), [and to
endorse the Mortgage Notes and execute the Assignments of Mortgages
by original [or facsimile] signature], and such resolutions are in
effect on the date hereof and have been in effect without amendment,
waiver, rescission or modification since ____________.
(v) Either (i) no consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by the Company of or compliance
by the Company with the Purchase Agreement, [the sale of the
mortgage loans] or the consummation of the transactions contemplated
by the agreements; or (ii) any required consent, approval,
authorization or order has been obtained by the Company.
(vi) Neither the consummation of the transactions contemplated
by, nor the fulfillment of the terms of the Purchase Agreement
conflicts or will conflict with or results or will result in a
breach of or constitutes or will constitute a default under the
charter or by-laws of the Company or, to the best of my knowledge,
the terms of any indenture or other agreement or instrument to which
the Company is a party or by which it is bound or to which it is
subject, or any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or
regulatory body to which the Company is subject or by which it is
bound.
(vii) To the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the
Company which, in my judgment, either in any one instance or in the
aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of
the Company or in any material impairment of the right or ability of
the Company to carry on its business substantially as now conducted
or in any material liability on the part of the Company or which
would draw into question the validity of the Purchase Agreement, or
the mortgage loans or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which would
be likely to impair materially the ability of the Company to perform
under the terms of the Purchase Agreement.
(viii) Each person listed on Exhibit 5 attached hereto who, as
an officer or representative of the Company, signed (a) the Purchase
Agreement, and (b) any other document delivered or on the date
hereof in connection with any purchase described in the agreements
set forth above was, at the respective times of such signing and
delivery, and is now, a duly elected or appointed, qualified and
acting officer or representative of the Company, who holds the
office set forth opposite his or her name on Exhibit 5, and the
signatures of such persons appearing on such documents are their
genuine signatures.
(ix) The Company is duly authorized to engage in the
transactions described and contemplated in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated:____________________ By:___________________________
Name:_________________________
[Seal] Title: Officer
I, ________________________, an [Assistant] Secretary of
______________[COMPANY], hereby certify that ____________ is the duly elected,
qualified and acting Officer of the Company and that the signature appearing
above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:____________________ By:___________________________
Name:_________________________
Title: [Assistant] Secretary
EXHIBIT 5 to
Company's Officer's Certificate
NAME TITLE SIGNATURE
---- ----- ---------
------------------------ ------------------------ ------------------------
------------------------ ------------------------ ------------------------
------------------------ ------------------------ ------------------------
------------------------ ------------------------ ------------------------
EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER
----------------------------------------
(date)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
You have requested [our] [my] opinion, as [Assistant] General
Counsel to ___________________ (the "Company"), with respect to certain matters
in connection with the sale by the Company of the Mortgage Loans pursuant to
that certain Second Amended and Restated Mortgage Loan Purchase and Warranties
Agreement by and between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
(the "Purchaser"), dated as of November 1, 2005 (the "Purchase Agreement") which
sale is in the form of whole loans, delivered pursuant to a Custodial Agreement
dated as of _____ __, ____ among the Purchaser, the Company,
________________________ (the "Interim Servicer") and
______________________[CUSTODIAN] (the "Custodial Agreement", and collectively
with the Purchase Agreement, the "Agreements"). Capitalized terms not otherwise
defined herein have the meanings set forth in the Purchase Agreement.
[We] [I] have examined the following documents:
(i) the Purchase Agreement;
(ii) the Custodial Agreement;
(iii) the form of Assignment of Mortgage;
(iv) the form of endorsement of the Mortgage Notes; and
(v) such other documents, records and papers as we have deemed necessary
and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Company contained in
the Purchase Agreement. [We] [I] have assumed the authenticity of all documents
submitted to [us] [me] as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is [our] [my] opinion that:
(i) The Company is a [type of entity] duly organized, validly existing
and in good standing under the laws of the [United States] and is
qualified to transact business in, and is in good standing under,
the laws of [the state of incorporation].
(ii) The Company has the power to engage in the transactions contemplated
by the Agreements and all requisite power, authority and legal right
to execute and deliver the Agreements and to perform and observe the
terms and conditions of the Agreements.
(iii) The Agreements have been duly authorized, executed and delivered by
the Company, and are the legal, valid and binding agreement
enforceable in accordance with its terms against the Company,
subject to bankruptcy laws and other similar laws of general
application affecting rights of creditors and subject to the
application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially
interfere with the realization of the benefits provided thereunder
or with the Purchaser's ownership of the Mortgage Loans.
(iv) The Company has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to
complete the transactions contemplated by the Agreements.
(v) The Company has been duly authorized to allow any of its officers to
execute by original [or facsimile] signature the endorsements to the
Mortgage Notes and the Assignments of Mortgages, and the original
[or facsimile] signature of the officer at the Company executing the
endorsements to the Mortgage Notes and the Assignments of Mortgages
represents the legal and valid signature of said officer of the
Company.
(vi) Either (i) no consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by the Company of or compliance by the
Company with the Agreements and the sale of the Mortgage Loans by
the Company or the consummation of the transactions contemplated by
the Agreements or (ii) any required consent, approval, authorization
or order has been obtained by the Company.
(vii) Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of, the Agreements conflict or will
conflict with or results or will result in a breach of or constitute
or will constitute a default under the charter or by-laws of the
Company or, to the best of my knowledge, the material terms of any
indenture or other agreement or instrument to which the Company is a
party or by which it is bound or to which it is subject, or violates
any statute or order, rule, regulations, writ, injunction or decree
of any court, governmental authority or regulatory body to which the
Company is subject or by which it is bound.
(viii) There is no action, suit, proceeding or investigation pending or,
to the best of [our] [my] knowledge, threatened against the Company
which, in [our] [my] judgment, either in any one instance or in the
aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of
the Company or in any material impairment of the right or ability of
the Company to carry on its business substantially as now conducted
or in any material liability on the part of the Company or which
would draw into question the validity of the Agreements or the
Mortgage Loans or of any action taken or to be taken in connection
with the transactions contemplated thereby, or which would be likely
to impair materially the ability of the Company to perform under the
terms of the Agreements.
(ix) The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Agreements is sufficient to fully transfer to
the Purchaser all right, title and interest of the Company thereto
as noteholder and mortgagee.
(x) The Mortgages have been duly assigned and the Mortgage Notes have
been duly endorsed as provided in the Custodial Agreement. The
Assignments of Mortgage are in recordable form, except for the
insertion of the name of the assignee, and upon the name of the
assignee being inserted, are acceptable for recording under the laws
of the state where each related Mortgaged Property is located. The
endorsement of the Mortgage Notes, the delivery to the Purchaser, or
its designee, of the Assignments of Mortgage, and the delivery of
the original endorsed Mortgage Notes to the Purchaser, or its
designee, are sufficient to permit the Purchaser to avail itself of
all protection available under applicable law against the claims of
any present or future creditors of the Company, and are sufficient
to prevent any other sale, transfer, assignment, pledge or
hypothecation of the Mortgages and the Mortgage Notes by the Company
from being enforceable.
Except as otherwise set forth in the Agreements, I assume no
obligation to revise this opinion or alter its conclusions to update or support
this letter to reflect any facts or circumstances that may hereafter develop.
This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you initially and directly resell the Mortgage Loans may
rely on this opinion as if it were addressed to them as of the date of this
opinion.
Very truly yours,
_______________________________
[Name]
[Assistant] General Counsel
EXHIBIT E
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
___________________, 200__
[Federal Home Loan Bank of
______(the "Association")]
__________________________
__________________________
Attention: ___________________________
___________________________
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that
________________________[COMPANY] a [type of entity], organized pursuant to the
laws of [the State of incorporation] (the "Company") has committed to sell
certain mortgage loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. under a Second
Amended and Restated Mortgage Loan Purchase and Warranties Agreement. The
Company warrants that the mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. are in addition to and beyond any collateral required to secure
advances made by the Association to the Company.
The Company acknowledges that the mortgage loans to be sold to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. shall not be used as additional or
substitute collateral for advances made by the Association. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. understands that the balance of the Company's mortgage
loan portfolio may be used as collateral or additional collateral for advances
made by the Association, and confirms that it has no interest therein.
Execution of this letter by the Association shall constitute a full
and complete release of any security interest, claim, or lien which the
Association may have against the mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc.
Very truly yours,
_____________________________
By:__________________________
Name:________________________
Title:_______________________
Date:________________________
Acknowledged and approved:
[FEDERAL HOME LOAN BANK OF]
__________________________________
By:_______________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
EXHIBIT F
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
I. Release of Security Interest
The financial institution named below hereby relinquishes any and
all right, title, interest, lien or claim of any kind it may have in all
mortgage loans described on the attached Schedule A (the "Mortgage Loans"), to
be purchased by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. from the company named on
the next page (the "Company") pursuant to that certain Second Amended and
Restated Mortgage Loan Purchase and Warranties Agreement, dated as of November
1, 2005, and certifies that all notes, mortgages, assignments and other
documents in its possession relating to such Mortgage Loans have been delivered
and released to the Company or its designees, as of the date and time of the
sale of such Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. Such release
shall be effective automatically without any further action by any party upon
payment in one or more installments, in immediately available funds, of
$_____________, in accordance with the wire instructions set forth below.
Name, Address and Wire Instructions of Financial Institution
________________________________
(Name)
________________________________
(Address)
________________________________
________________________________
________________________________
By:_____________________________
II. Certification of Release
The Company named below hereby certifies to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. the security interests in
the Mortgage Loans released by the above-named financial institution comprise
all security interests relating to or affecting any and all such Mortgage Loans.
The Company warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
_______________________________
By:____________________________
Title:_________________________
Date:__________________________
EXHIBIT G
FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
-------------------------------------------
On this ___ day of ____________, ________, _______________
("Seller"), as the Seller under (i) that certain Purchase Price and Terms
Agreement, dated as of _________, ____ (the "PPTA"), and (ii) that certain
Second Amended and Restated Mortgage Loan Purchase and Warranties Agreement,
dated as of November 1, 2005 (the "Purchase Agreement"), does hereby sell,
transfer, assign, set over and convey to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital, Inc.
("Purchaser") as the Purchaser under the Agreements (as defined below) without
recourse, but subject to the terms of the Agreements, all right, title and
interest of, in and to the Mortgage Loans listed on the Mortgage Loan Schedule
attached hereto as Exhibit A (the "Mortgage Loans"), together with the Mortgage
Files and the related Servicing Rights and all rights and obligations arising
under the documents contained therein. Each Mortgage Loan subject to the
Agreements was underwritten in accordance with, and conforms to, the
Underwriting Guidelines attached hereto as Exhibit C. Pursuant to Section 6 of
the Purchase Agreement, the Seller has delivered to the Custodian the documents
for each Mortgage Loan to be purchased as set forth in the Purchase Agreement.
The ownership of each Mortgage Note, Mortgage and the contents of the Mortgage
File and Servicing File is vested in the Purchaser and the ownership of all
records and documents with respect to the related Mortgage Loan prepared by or
which come into the possession of the Seller shall immediately vest in the
Purchaser and shall be retained and maintained, in trust, by the Seller at the
will of the Purchaser in a custodial capacity only. The PPTA and the Purchase
Agreement shall collectively be referred to as the "Agreements" herein.
The Mortgage Loan Package characteristics of the Mortgage Loans
subject hereto are set forth on Exhibit B hereto.
In accordance with Section 6 of the Purchase Agreement, the
Purchaser accepts the Mortgage Loans listed on Exhibit A attached hereto.
Notwithstanding the foregoing the Purchaser does not waive any rights or
remedies it may have under the Agreements.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
_______________________________________
By:____________________________________
Name:_______________________________
Title:______________________________
Accepted and Agreed:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:__________________________________
Name:
Title:
EXHIBIT A
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
THE MORTGAGE LOANS
------------------
EXHIBIT B
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE POOL CHARACTERISTICS OF
EACH MORTGAGE LOAN PACKAGE
Pool Characteristics of the Mortgage Loan Package as delivered on the related
Closing Date:
No Mortgage Loan has: (1) an outstanding principal balance less than $_____; (2)
an origination date earlier than __ months prior to the related Cut-off Date;
(3) a CLTV of greater than ____%; (4) a FICO Score of less than ___; or (5) a
debt-to-income ratio of more than ___%. Each Mortgage Loan has a Mortgage
Interest Rate of at least ___% per annum and an outstanding principal balance of
less than $______. Each Adjustable Rate Mortgage Loan has an Index of [______].
EXHIBIT H
UNDERWRITING GUIDELINES
-----------------------
Exhibit I
EXHIBIT I
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated [____________ __,
20__] ("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"),
[____________________] ("Assignee") and [SELLER] (the "Company"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and
other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
Assignment and Conveyance
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Mortgage Loan
Purchase Agreement (the "Purchase Agreement"), dated as of [DATE], between the
Assignor, as purchaser (the "Purchaser"), and the Company, as seller, solely
insofar as the Purchase Agreement relates to the Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder (i) any and all right, title and interest in, to and under
and any obligations of the Assignor with respect to any mortgage loans subject
to the Purchase Agreement which are not the Mortgage Loans set forth on the
Mortgage Loan Schedule and are not the subject of this Agreement or (ii) the
rights of the Purchaser under Section 9.04 of the Purchase Agreement.
Recognition of the Company
2. From and after the date hereof (the "Securitization Closing
Date"), the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Purchase Agreement
(solely to the extent set forth herein) and this Agreement to
[__________________] (the "Trust") created pursuant to a Pooling and Servicing
Agreement, dated as of [______], 200_ (the "Pooling Agreement"), among the
Assignee, the Assignor, [___________________], as trustee (including its
successors in interest and any successor trustees under the Pooling Agreement,
the "Trustee"), [____________________], as servicer (including its successors in
interest and any successor servicer under the Pooling Agreement, the
"Servicer"). The Company hereby acknowledges and agrees that from and after the
date hereof (i) the Trust will be the owner of the Mortgage Loans, (ii) the
Company shall look solely to the Trust for performance of any obligations of the
Assignor insofar as they relate to the Mortgage Loans, (iii) the Trust
(including the Trustee and the Servicer acting on the Trust's behalf) shall have
all the rights and remedies available to the Assignor, insofar as they relate to
the Mortgage Loans, under the Purchase Agreement, including, without limitation,
the enforcement of the document delivery requirements set forth in Section 6 of
the Purchase Agreement, and shall be entitled to enforce all of the obligations
of the Company thereunder insofar as they relate to the Mortgage Loans, and (iv)
all references to the Purchaser, the Custodian or the Bailee under the Purchase
Agreement insofar as they relate to the Mortgage Loans, shall be deemed to refer
to the Trust (including the Trustee and the Servicer acting on the Trust's
behalf). Neither the Company nor the Assignor shall amend or agree to amend,
modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreement which amendment, modification, waiver or other alteration
would in any way affect the Mortgage Loans or the Company's performance under
the Purchase Agreement with respect to the Mortgage Loans without the prior
written consent of the Trustee.
Representations and Warranties of the Company
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation;
(b) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement and has full power and
authority to perform its obligations under the Purchase Agreement.
The execution by the Company of this Agreement is in the ordinary
course of the Company's business and will not conflict with, or
result in a breach of, any of the terms, conditions or provisions of
the Company's charter or bylaws or any legal restriction, or any
material agreement or instrument to which the Company is now a party
or by which it is bound, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Company or
its property is subject. The execution, delivery and performance by
the Company of this Agreement have been duly authorized by all
necessary corporate action on part of the Company. This Agreement
has been duly executed and delivered by the Company, and, upon the
due authorization, execution and delivery by the Assignor and the
Assignee, will constitute the valid and legally binding obligation
of the Company, enforceable against the Company in accordance with
its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and by
general principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
(c) No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required to
be obtained or made by the Company in connection with the execution,
delivery or performance by the Company of this Agreement; and
(d) There is no action, suit, proceeding or investigation pending or
threatened against the Company, before any court, administrative
agency or other tribunal, which would draw into question the
validity of this Agreement or the Purchase Agreement, or which,
either in any one instance or in the aggregate, would result in any
material adverse change in the ability of the Company to perform its
obligations under this Agreement or the Purchase Agreement, and the
Company is solvent.
4. Pursuant to Section 13 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor, the Assignee
and the Trust, that the representations and warranties set forth on Exhibit B
hereto are true and correct as of the date hereof as if such representations and
warranties were made on the date hereof unless otherwise specifically stated in
such representations and warranties.
Remedies for Breach of Representations and Warranties
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicer acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Sections 3 and 4
hereof shall be as set forth in Subsection 9.03 of the Purchase Agreement as if
they were set forth herein (including without limitation the repurchase and
indemnity obligations set forth therein).
Miscellaneous
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicer acting on the Trust's behalf). Any entity into which Assignor,
Assignee or Company may be merged or consolidated shall, without the requirement
for any further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
9. Each of this Agreement and the Purchase Agreement shall survive
the conveyance of the Mortgage Loans and the assignment of the Purchase
Agreement (to the extent assigned hereunder) by Assignor to Assignee and by
Assignee to the Trust and nothing contained herein shall supersede or amend the
terms of the Purchase Agreement.
10. 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.
11. In the event that any provision of this Agreement conflicts with
any provision of the Purchase Agreement with respect to the Mortgage Loans, the
terms of this Agreement shall control.
12. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the Purchase Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
[SELLER]
By: __________________________________
Name:_______________________________
Its:________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: __________________________________
Name:_______________________________
Its:________________________________
[___________________________]
By: __________________________________
Name:_______________________________
Its:________________________________
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Mortgage Loan Schedule
EXHIBIT B TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Representations and Warranties as to the Seller and the Mortgage Loans
I. Representations and Warranties Regarding the Seller
The Seller hereby represents and warrants to the Purchaser that as
of the closing date for the securitization (the "Securitization Closing Date")
or such other date specified herein:
(a) Due Organization and Authority. The Seller is a corporation,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation or formation and has all licenses necessary to carry on its
business as now being conducted and is licensed or is exempt from such licensing
requirement, qualified and in good standing in the states where the Mortgaged
Property is located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Seller. The Seller has
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement has
been duly executed and delivered and constitutes the valid, legal, binding and
enforceable obligation of the Seller, except as enforceability may be limited by
(i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding in equity or at law. All requisite corporate action has been
taken by the Seller to make this Agreement valid and binding upon the Seller in
accordance with its terms;
(b) No Consent Required. No consent, approval, authorization or
order was required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller or, if required, such consent, approval,
authorization or order have been obtained, prior to the Closing Date for the
sale of the Mortgage Loans from the Seller to the Purchaser (the "Closing
Date");
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Seller's charter, by-laws
or other organizational documents or any legal restriction or any agreement or
instrument to which the Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse effect
upon any of its properties pursuant to the terms of any mortgage, contract, deed
of trust or other instrument, or impair the ability of the Purchaser to realize
on the Mortgage Loans, impair the value of the Mortgage Loans, or impair the
ability of the Purchaser to realize the full amount of any insurance benefits
accruing pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws"); the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws;
(i) Financial Statements. To the extent that such statements are
available, the Seller has delivered to the Purchaser financial statements as to
its last three complete fiscal years and any later quarter ended more than 60
days prior to the execution of this Agreement. All such financial statements
fairly present the pertinent results of operations and changes in financial
position for each of such periods and the financial position at the end of each
such period of the Seller, its parent company and its subsidiaries and have been
prepared in accordance with generally accepted accounting principles of the
United States consistently applied throughout the periods involved, except as
set forth in the notes thereto. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. In
addition, the Seller has delivered information obtained from ABS Net as to its
loan gain and loss experience in respect of foreclosures and its loan
delinquency experience with respect to mortgage loans sold to others during the
immediately preceding three-year period, and, to the Seller's knowledge, all
such information so delivered shall be true and correct in all material
respects. The Seller has completed any forms requested by the Purchaser in a
timely manner and in accordance with the provided instructions;
(j) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio as
of the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage (except with respect to MERS Designated Mortgage Loans),
and any other documents required to be delivered with respect to each Mortgage
Loan pursuant to the Custodial Agreement, have been delivered to the Custodian
all in compliance with the specific requirements of the Custodial Agreement;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(m) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished pursuant to this Agreement or any Reconstitution Agreement or in
connection with the transactions contemplated hereby (including any
Securitization Transaction or Whole Loan Transfer) contained any untrue
statement of fact or omitted to state a fact necessary to make the statements
contained herein or therein not misleading;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller expects to be advised by its
independent certified public accountants that under generally accepted
accounting principles the transfer of the Mortgage Loans will be treated as a
sale on the books and records of the Seller and the Seller has determined that
the disposition of the Mortgage Loans pursuant to this Agreement will be
afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. Immediately prior to each related Closing Date,
the Seller was the owner of record of each Mortgage and the indebtedness
evidenced by each Mortgage Note, except for the Assignments of Mortgage which
have been sent for recording, and upon recordation the Seller will be the owner
of record of each Mortgage and the indebtedness evidenced by each Mortgage Note,
and upon the sale of the Mortgage Loans to the Purchaser, the Seller will retain
the Mortgage Files with respect thereto in trust only for the purpose of
servicing and supervising the servicing of each Mortgage Loan; and
(q) Credit Reporting. As of the date on which the Seller transferred
servicing of the Mortgage Loan to the Purchaser or its designee (the "Servicing
Transfer Date") the Seller, as servicer, will fully furnish, in accordance with
the Fair Credit Reporting Act and its implementing regulations, accurate and
complete information (e.g., favorable and unfavorable) on its borrower credit
files to Equifax, Experian and Trans Union Credit Information Company (three of
the credit repositories), on a monthly basis. Additionally, on the Servicing
Transfer Date, the Seller, as servicer, will transmit full-file credit reporting
data for each Mortgage Loan pursuant to ▇▇▇▇▇▇ Mae Guide Announcement 95-19 and
that for each Mortgage Loan, the Seller, as servicer, agrees it shall report one
of the following statuses each month as follows: new origination, current,
delinquent (30-, 60-, 90-days, etc.), foreclosed, or charged-off.
II. Representations and Warranties Regarding Individual Mortgage Loans
The Seller hereby represents and warrants to the Purchaser that as
of the closing date for the securitization (the "Securitization Closing Date")
or such other date specified herein:
(a) Mortgage Loans as Described. The information set forth in the
related Mortgage Loan Schedule is complete, true and correct;
(b) Payments Current. As of the Servicing Transfer Date, all
payments required to be made up to the related Closing Date for the Mortgage
Loan under the terms of the Mortgage Note, other than payments not yet 30 days
delinquent, have been made and credited. No payment required under the Mortgage
Loan is 30 days or more delinquent nor has any payment under the Mortgage Loan
been 30 days or more delinquent at any time since the origination of the
Mortgage Loan. The first Monthly Payment shall be made with respect to the
Mortgage Loan on its related Due Date, all in accordance with the terms of the
related Mortgage Note;
(c) No Outstanding Charges. As of the Servicing Transfer Date, there
are no defaults in complying with the terms of the Mortgage, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid. 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 earlier, to the day which precedes by one month the
related Due Date of the first installment of principal and interest;
(d) Original Terms Unmodified. As of the Closing Date, and to the
Seller's knowledge as of the Servicing Transfer Date, the terms of the Mortgage
Note and Mortgage have not been impaired, waived, altered or modified in any
respect, from the date of origination except by a written instrument which has
been recorded, if necessary to protect the interests of the Purchaser, and which
has been delivered to the Custodian or to such other Person as the Purchaser
shall designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. As of the Servicing Transfer Date, pursuant to
the terms of the Mortgage, all buildings or other improvements upon the
Mortgaged Property are insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage and such other hazards as are provided by for
in the ▇▇▇▇▇▇ ▇▇▇ Guides or by ▇▇▇▇▇▇▇ Mac, as well as all additional
requirements set forth in Section 2.10 of the Interim Servicing Agreement. If
required by the National Flood Insurance Act of 1968, as amended, each Mortgage
Loan is covered by a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration as in effect which
policy conforms to ▇▇▇▇▇▇▇ Mac requirements, as well as all additional
requirements set forth in Section 2.10 of the Interim Servicing Agreement. All
individual insurance policies contain a standard mortgagee clause naming the
Seller and its successors and assigns as mortgagee, and all premiums thereon
have been paid. The Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the 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,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Purchaser upon the consummation of the transactions
contemplated by this Agreement. The 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 or entity, and no such unlawful items have been
received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. Any and all applicable
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, disclosure and all predatory and abusive
lending laws applicable to the Mortgage Loan, including, without limitation, any
provisions relating to prepayment penalties, have been complied with, the
consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations, and the Seller shall maintain in its
possession, available for the Purchaser's inspection, and shall deliver to the
Purchaser upon demand, evidence of compliance with all such requirements.
Notwithstanding the foregoing, the Seller shall not be responsible for a breach
of a federal, state or local law, other than those governing the origination of
the Mortgage Loan in effect at the time of the Mortgage Loan was originated,
following the Servicing Transfer Date;
(h) No Satisfaction of Mortgage. As of the Servicing Transfer Date,
the Mortgage has not been satisfied, canceled, 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 release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. As of the Servicing Transfer Date, no portion of
the Mortgaged Property is used for commercial purposes, and since the date of
origination, no portion of the Mortgaged Property has been used for commercial
purposes; provided, that Mortgaged Properties which contain a home office shall
not be considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner repair,
maintenance and/or household purposes. None of the Mortgaged Properties are
Manufactured Homes, log homes, mobile homes, geodesic domes or other unique
property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien (with respect to a First Lien Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged Property,
including all buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the first
mortgage on the Mortgaged Property;
(B) The lien of current real property taxes and assessments not yet
due and payable as of the Servicing Transfer Date;
(C) 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 the lender's title insurance policy delivered
to the originator of the Mortgage Loan and (A) specifically 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; and
(D) 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,
subsisting, enforceable and perfected first lien (with respect to a First Lien
Loan) or second lien (with respect to a Second Lien Loan) and first priority
(with respect to a First Lien Loan) or second priority (with respect to a Second
Lien Loan) security interest on the property described therein and the Seller
has full right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. As of the Closing Date, the Seller is the sole owner
of record and holder of the Mortgage Loan and the indebtedness evidenced by each
Mortgage Note and upon the sale of the Mortgage Loans to the Purchaser, the
Seller will retain the Mortgage Files or any part thereof with respect thereto
not delivered to the Custodian, the Purchaser or the Purchaser's designee, in
trust only for the purpose of servicing and supervising the servicing of each
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Seller has
good, indefeasible and marketable title thereto, and has full right to transfer
and sell the Mortgage Loan to the Purchaser 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 and assign each
Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Seller intends to relinquish all rights to possess,
control and monitor the Mortgage Loan. After the related Closing Date, the
Seller will have no right to modify or alter the terms of the sale of the
Mortgage Loan and the Seller will have no obligation or right to repurchase the
Mortgage Loan or substitute another Mortgage Loan, except as provided in this
Agreement;
(n) Doing Business. As of the Closing Date, 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) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located,
and (2) either (i) organized under the laws of such state, or (ii) qualified to
do business in such state, or (iii) a federal savings and loan association, a
savings bank or a national bank having a principal office in such state, or (3)
not doing business in such state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or if the related Mortgaged Property is located in the state
of Iowa an attorney's opinion, or other generally acceptable form of policy or
insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance
policy is issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the first (with
respect to a First Lien Loan) or second (with respect to a Second Lien Loan)
priority lien of the Mortgage 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 (A), (B) and (C) of
paragraph (j) of this Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have
been made under such lender's title insurance policy, and no prior holder of the
related Mortgage, including the 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 or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(q) No Defaults. As of the Servicing Transfer Date, other than
payments due but not yet 30 days or more delinquent, there is no default,
breach, violation or event which would permit 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 which would permit acceleration, and neither
the Seller nor any of its affiliates nor any of their respective predecessors,
have waived any default, breach, violation or event which would permit
acceleration;
(r) No Mechanics' Liens. As of the Servicing Transfer Date, 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 the law could give
rise to such liens) affecting the related Mortgaged Property which are or may be
liens prior to, or equal or coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 (except for interest only
Mortgage Loans), over an original term of not more than thirty years from
commencement of amortization. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgage Loan is payable on the first day of each month.
Unless stated otherwise on the related Mortgage Loan Schedule, the Mortgage Loan
does not require a balloon payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on legally enforceable forms acceptable in
the secondary mortgage market
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date the Mortgaged Property was 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) [Reserved];
(aa) Delivery of Mortgage Documents. As of the Servicing Transfer
Date, the Mortgage Note, the Mortgage, the Assignment of Mortgage and any other
documents required to be delivered under the Custodial Agreement for each
Mortgage Loan have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage (except
with respect to any Mortgage that has been recorded in the name of MERS or its
designee) with respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located. The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller are not subject to the bulk
transfer or similar statutory provisions in effect in any applicable
jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. The Mortgage Loan is fully
funded, and there is no requirement to make any future advances to the related
Mortgagor;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings. As
of the Servicing Transfer Date, there is no proceeding pending or threatened for
the total or partial condemnation of the Mortgaged Property. The Mortgaged
Property is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended and each Mortgaged Property is in good repair. Since the
origination of the Mortgage Loan, there have not been any condemnation
proceedings with respect to the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. As of the Servicing Transfer Date, the origination, servicing and
collection practices used by the Seller and the Interim Servicer with respect to
the Mortgage Loan have been in all respects in compliance with Accepted
Servicing Practices, applicable laws and regulations, and have been in all
respects legal and proper. With respect to escrow deposits and Escrow Payments,
all such payments are in the possession of, or under the control of, the Seller
or the Interim Servicer and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item that remains unpaid and has been assessed but
is not yet due and payable. No escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized under the Mortgage or
the Mortgage Note. All Mortgage Interest Rate adjustments have been made in
strict compliance with state and federal law and the terms of the related
Mortgage and Mortgage Note on the related Interest Rate Adjustment Date. If,
pursuant to the terms of the Mortgage Note, another index was selected for
determining the Mortgage Interest Rate, the same index was used with respect to
each Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller or the
Interim Servicer executed and delivered any and all notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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, except as
disclosed in the related Mortgage Loan File;
(ll) No Violation of Environmental Laws. As of the Servicing
Transfer Date, there is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule or
regulation with respect to the Mortgage Property; and nothing further remains to
be done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. As of the Servicing Transfer
Date, the Mortgagor has not notified the Seller, and the Seller has no knowledge
of any relief requested or allowed to the Mortgagor under the Servicemembers'
Civil Relief Act or other similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, acceptable to the Seller, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required or customary in the jurisdiction in which the
Mortgaged Property is located, the original lender has filed for record a
request for notice of any action by the related senior lienholder, and the
Seller has notified the senior lienholder in writing of the existence of the
Second Lien Loan and requested notification of any action to be taken against
the Mortgagor by the senior lienholder. Either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File;
(rr) Credit Reporting. As of the Servicing Transfer Date, the Seller
has caused to be fully furnished, in accordance with the Fair Credit Reporting
Act and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian,
and Trans Union Credit Information Company (three of the credit repositories),
on a monthly basis;
(ss) Escrow Analysis. As of the Servicing Transfer Date, if
applicable, with respect to each Mortgage, the Seller has within the last twelve
months (unless such Mortgage was originated within such twelve month period)
analyzed the required Escrow Payments for each Mortgage and adjusted the amount
of such payments so that, assuming all required payments are timely made, any
deficiency will be eliminated on or before the first anniversary of such
analysis, or any overage will be refunded to the Mortgagor, in accordance with
RESPA and any other applicable law;
(tt) Prior Servicing. As of the Servicing Transfer Date, each
Mortgage Loan has been serviced in all material respects in strict compliance
with Accepted Servicing Practices;
(uu) No Default Under First Lien. As of the Servicing Transfer Date,
with respect to each Second Lien Loan, the related First Lien Loan related
thereto is in full force and effect, and there is no default, breach, violation
or event which would permit acceleration existing under such first Mortgage or
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 which would permit acceleration thereunder;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage;
(ww) No Failure to Cure Default. As of the Servicing Transfer Date,
the Seller has not received a written notice of default of any senior mortgage
loan related to the Mortgaged Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage. The Seller
shall hold the Purchaser harmless from any and all damages, losses, costs and
expenses (including attorney's fees) arising from disclosure of credit
information in connection with the Purchaser's secondary marketing operations
and the purchase and sale of mortgages or Servicing Rights thereto;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) as of the Servicing Transfer Date, all ground lease rents,
other payments, or assessments that have become due have been paid; and (7) the
use of leasehold estates for residential properties is a widely accepted
practice in the jurisdiction in which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note and any addendums or
riders thereto executed by the related Mortgagor, is identified on the related
Mortgage Loan Schedule. With respect to Mortgage Loans originated prior to
October 1, 2002, no such Prepayment Penalty may be imposed for a term in excess
of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law. Notwithstanding the first sentence of this clause (aaa), if a Mortgage Loan
is not considered a High Cost Loan on the related Closing Date because a related
law is not being enforced or is not effective on the related Closing Date due to
judicial or administrative review or litigation and such Mortgage Loan becomes a
High Cost Loan at a later date as a result of such law becoming enforceable or
effective, such Mortgage Loan shall be subject to the automatic repurchase
provisions of Subsection 9.03 within the timeframes set forth therein;
(bbb) Single-premium credit life insurance policy. In connection
with the origination of any Mortgage Loan, no proceeds from such Mortgage Loan
were used to finance or acquire a single-premium credit life insurance policy;
(ccc) Qualified Mortgage. Each Mortgage Loan is an obligation which
is principally secured by an interest in real property within the meaning of
Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real Estate
Tax Service, and such contract is transferable;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) 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;
(ggg) Mortgagor Bankruptcy. As of the Servicing Transfer Date, the
Mortgagor has not filed a bankruptcy petition and has not become the subject of
involuntary bankruptcy proceedings and has not consented to the filing of a
bankruptcy proceeding against it or to a receiver being appointed in respect of
the related Mortgaged Property;
(hhh) No Prior Offer. As of the Closing Date, the Mortgage Loan has
not previously been offered for sale unless (i) notice of such Mortgage Loan
resale has been provided to the Purchaser in writing prior to the commencement
of the Purchaser's due diligence and (ii) the Mortgage Loan was originated
without exception pursuant to the Underwriting Guidelines.
(iii) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(jjj) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, accident or health insurance policy in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(kkk) Points and Fees. All points and fees related to each Mortgage
Loan were disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation. Except in the case of a Mortgage Loan in
an original principal amount of less than $60,000 which would have resulted in
an unprofitable origination, no Mortgagor was charged "points and fees" (whether
or not financed) in an amount greater than 7% of the principal amount of such
Mortgage Loan;
(lll) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(mmm) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction."
EXHIBIT Q
AIG AGREEMENTS
================================================================================
THIRD AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND
WARRANTIES AGREEMENT
------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
Purchaser
WILMINGTON FINANCE INC.,
Seller
AIG FEDERAL SAVINGS BANK (through its Wilmington Finance division),
Seller
------------------
Dated as of December 1, 2005
Conventional,
Fixed and Adjustable Rate, Subprime Residential Mortgage Loans
================================================================================
TABLE OF CONTENTS
SECTION 1. DEFINITIONS..................................................
SECTION 2. AGREEMENT TO PURCHASE........................................
SECTION 3. MORTGAGE SCHEDULES...........................................
SECTION 4. PURCHASE PRICE...............................................
SECTION 5. EXAMINATION OF MORTGAGE FILES................................
SECTION 6. CONVEYANCE FROM SELLERS TO PURCHASER.........................
SECTION 7. SERVICING OF THE MORTGAGE LOANS..............................
SECTION 8. TRANSFER OF SERVICING........................................
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS;
REMEDIES FOR BREACH..........................................
SECTION 10. CLOSING......................................................
SECTION 11. CLOSING DOCUMENTS............................................
SECTION 12. COSTS........................................................
SECTION 13. COOPERATION OF SELLER WITH A RECONSTITUTION..................
SECTION 14. THE SELLERS..................................................
SECTION 15. FINANCIAL STATEMENTS.........................................
SECTION 16. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST...............
SECTION 17. NOTICES......................................................
SECTION 18. SEVERABILITY CLAUSE..........................................
SECTION 19. COUNTERPARTS.................................................
SECTION 20. GOVERNING LAW................................................
SECTION 21. INTENTION OF THE PARTIES.....................................
SECTION 22. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT.....
SECTION 23. WAIVERS......................................................
SECTION 24. EXHIBITS.....................................................
SECTION 25. GENERAL INTERPRETIVE PRINCIPLES..............................
SECTION 26. REPRODUCTION OF DOCUMENTS....................................
SECTION 27. FURTHER AGREEMENTS...........................................
SECTION 28. RECORDATION OF ASSIGNMENTS OF MORTGAGE.......................
SECTION 29. NO SOLICITATION..............................................
SECTION 30. WAIVER OF TRIAL BY JURY......................................
SECTION 31. GOVERNING LAW JURISDICTION; CONSENT TO SERVICE OF PROCESS....
SECTION 32. OBLIGATIONS JOINT AND SEVERAL................................
SECTION 33. COMPLIANCE WITH REGULATION AB................................
EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B [RESERVED]
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D [RESERVED]
EXHIBIT E FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
EXHIBIT H UNDERWRITING GUIDELINES
EXHIBIT I FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
THIRD AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND
WARRANTIES AGREEMENT
This THIRD AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND
WARRANTIES AGREEMENT (the "Agreement"), dated as of December 1, 2005, by and
among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York corporation, having an
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Purchaser"),
WILMINGTON FINANCE INC., a Delaware corporation, having an office at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and AIG FEDERAL
SAVINGS BANK (through its Wilmington Finance division), a federally chartered
savings bank, having an office at having an office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇ Meeting, Pennsylvania 19462 (each a "Seller" and, together, the
"Sellers").
W I T N E S S E T H:
WHEREAS, the Purchaser and the Sellers are parties to that certain
Second Amended and Restated Mortgage Loan Purchase and Warranties Agreement,
dated as of December 1, 2005 (the "Original Purchase Agreement"), pursuant to
which the Sellers desire to sell, from time to time, to the Purchaser on a
nonexclusive basis, and the Purchaser desires to purchase, from time to time,
from the Sellers, without recourse to the Sellers but subject to the terms of
this Agreement, certain first and second lien, adjustable-rate and fixed-rate
subprime residential mortgage loans (the "Mortgage Loans") on a servicing
released basis as described herein, and which shall be delivered in pools of
whole loans (each, a "Mortgage Loan Package") on various dates as provided
herein (each, a "Closing Date");
WHEREAS, at the present time, the Purchaser and each of the Sellers
desire to amend and restate the Original Purchase Agreement to make certain
modifications as set forth herein, and upon the execution and delivery of this
Agreement by the Purchaser and each of the Sellers this Agreement shall
supercede the Original Purchase Agreement and supplant the Original Purchase
Agreement effective as of the date hereof;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and each
of the Sellers agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below.
Accepted Servicing Practices: 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.
Act: The National Housing Act, as amended from time to time.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan
purchased pursuant to this Agreement.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agency Transfer: A ▇▇▇▇▇▇ Mae Transfer or a ▇▇▇▇▇▇▇ Mac Transfer.
Agreement: This Third Amended and Restated Mortgage Loan Purchase
and Warranties Agreement and all amendments hereof and supplements hereto.
AIG: As defined in Section 7.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: 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.
Assignment and Conveyance Agreement: As defined in Subsection 6.01.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Purchaser.
Balloon Mortgage Loan: Any Mortgage Loan (a) that requires only
payments of interest until the stated maturity date of the Mortgage Loan or (b)
for which Monthly Payments of principal (not including the payment due on its
stated maturity date) are based on an amortization schedule that would be
insufficient to fully amortize the principal thereof by the stated maturity date
of the Mortgage Loan.
Business Day: Any day other than (i) a Saturday or Sunday, (ii) a
day on which banking and savings and loan institutions, in the State of New York
or the State in which either Seller's servicing operations are located or (iii)
the state in which the Custodian's operations are located, are authorized or
obligated by law or executive order to be closed.
Closing Date: The date or dates on which the Purchaser from time to
time shall purchase, and the Sellers from time to time shall sell, the Mortgage
Loans listed on the related Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
CLTV: As of any date and as to any Second Lien Loan, the ratio,
expressed as a percentage, of the (a) sum of (i) the outstanding principal
balance of the Second Lien Loan and (ii) the outstanding principal balance as of
such date of any mortgage loan or mortgage loans that are senior or equal in
priority to the Second Lien Loan and which are secured by the same Mortgaged
Property to (b) the Appraised Value as determined pursuant to the Underwriting
Guidelines of the related Mortgaged Property as of the origination of the Second
Lien Loan.
Code: Internal Revenue Code of 1986, as amended.
Commission: The United States Securities and Exchange Commission.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
Custodial Agreement: The agreement(s) governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents. If more than one Custodial Agreement is in effect at
any given time, all of the individual Custodial Agreements shall collectively be
referred to as the "Custodial Agreement."
Custodian: Deutsche Bank Trust Company Americas, a New York banking
corporation, and its successors in interest or any successor to the Custodian
under the Custodial Agreement as therein provided.
Cut-off Date: The date or dates designated as such on the related
Mortgage Loan Schedule with respect to the related Mortgage Loan Package.
Deemed Material and Adverse Representation: Each representation and
warranty identified as such in Subsection 9.02 of this Agreement.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased or
replaced or to be replaced with a Qualified Substitute Mortgage Loan by the
applicable Seller in accordance with the terms of this Agreement.
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
Determination Date: The second Business Day of the month in which
the related Remittance Date occurs.
Due Date: The day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Eligible Account: Any of (i) an account maintained with a federal or
state chartered depository institution or trust company the short-term unsecured
debt obligations of which (or, in the case of a depository institution or trust
company that is a subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated A-1 by Standard & Poor's or
Prime-1 by Moody's (or a comparable rating if another Rating Agency is specified
by the Purchaser by written notice to the Sellers) at the time any amounts are
held on deposit therein, (ii) an account or accounts the deposits in which are
fully insured by the FDIC, or (iii) a trust account or accounts maintained with
a federal or state chartered depository institution or trust company acting in
its fiduciary capacity.
Escrow Payments: 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.
Exchange Act: The Securities Exchange Act of 1934, as amended.
▇▇▇▇▇▇ Mae: The Federal National Mortgage Association, or any
successor thereto.
▇▇▇▇▇▇ ▇▇▇ Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇ ▇▇▇
Servicers' Guide and all amendments or additions thereto.
▇▇▇▇▇▇ Mae Transfer: As defined in Section 13.
FHA: 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.
First Lien Loan: A Mortgage Loan secured by a first lien Mortgage on
the related Mortgaged Property.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A fixed rate mortgage loan purchased
pursuant to this Agreement.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
▇▇▇▇▇▇▇ Mac Transfer: As defined in Section 13.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note which amount
is added to the Index in accordance with the terms of the related Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate
for such Mortgage Loan.
High Cost Loan: A Mortgage Loan (a) covered by the Home Ownership
and Equity Protection Act of 1994, (b) classified as a "high cost home,"
"threshold," "covered," (excluding New Jersey "Covered Home Loans" as that term
is defined in clause (1) of the definition of that term in the New Jersey Home
Ownership Security Act of 2002 that were originated between November 26, 2003
and July 7, 2004) "high risk home," or "predatory" loan under any other
applicable federal, state or local law (or a similarly classified loan using
different terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high interest
rates, points and/or fees) or (c) categorized as High Cost pursuant to Appendix
E of Standard & Poor's Glossary. For avoidance of doubt, the parties agree that
this definition shall apply to any law regardless of whether such law is
presently, or in the future becomes, the subject of judicial review or
litigation.
Home Loan: A Mortgage Loan categorized as Home Loan pursuant to
Appendix E of Standard & Poor's Glossary.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to Mortgage Insurance issued by the FHA. The term "HUD," for
purposes of this Agreement, is also deemed to include subdivisions thereof such
as the FHA and Government National Mortgage Association.
Index: The index indicated in the related Mortgage Note for each
Adjustable Rate Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the related
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
Lifetime Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum Mortgage
Interest Rate thereunder. The Mortgage Interest Rate during the terms of each
Adjustable Rate Mortgage Loan shall not at any time exceed the Mortgage Interest
Rate at the time of origination of such Adjustable Rate Mortgage Loan by more
than the amount per annum set forth on the related Mortgage Loan Schedule.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise or the sale
of the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan Performance Information: As defined in Subsection 34.03(e).
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the outstanding principal amount of the
Mortgage Loan as of the related Cut-off Date (unless otherwise indicated), to
the lesser of (a) the Appraised Value of the Mortgaged Property at origination
and (b) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, the purchase price of the Mortgaged Property.
Manufactured Home: A single family residential unit that is
constructed in a factory in sections in accordance with the Federal Manufactured
Home Construction and Safety Standards adopted on July 15, 1976, by the
Department of Housing and Urban Development ("HUD Code"), as amended in 2000,
which preempts state and local building codes. Each unit is identified by the
presence of a HUD Plate/Compliance Certificate label. The sections are then
transported to the site and joined together and affixed to a pre-built permanent
foundation (which satisfies the manufacturer's requirements and all state,
county, and local building codes and regulations). The manufactured home is
built on a non-removable, permanent frame chassis that supports the complete
unit of walls, floors, and roof. The underneath part of the home may have
running gear (wheels, axles, and brakes) that enable it to be transported to the
permanent site. The wheels and hitch are removed prior to anchoring the unit to
the permanent foundation. The manufactured home must be classified as real
estate and taxed accordingly. The permanent foundation may be on land owned by
the mortgager or may be on leased land.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien, in the case of a First Lien Loan, or
a second lien, in the case of a Second Lien Loan, on the Mortgaged Property.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit A annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note with respect to each Mortgage Loan.
Mortgage Interest Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the applicable Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
Servicing Rights and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan, excluding replaced or
repurchased mortgage loans.
Mortgage Loan Documents: The documents required to be delivered to
the Custodian pursuant to Subsection 6.03 hereof with respect to any Mortgage
Loan.
Mortgage Loan Package: Each pool of Mortgage Loans, which shall be
purchased by the Purchaser from the Sellers from time to time on each Closing
Date.
Mortgage Loan Schedule: The schedule of Mortgage Loans setting forth
the following information with respect to each Mortgage Loan in the related
Mortgage Loan Package: (1) the applicable Seller's Mortgage Loan identifying
number; (2) the Mortgagor's name; (3) the street address of the Mortgaged
Property including the city, state and zip code; (4) a code indicating whether
the Mortgagor is self-employed; (5) a code indicating whether the Mortgaged
Property is owner-occupied; (6) the number and type of residential units
constituting the Mortgaged Property; (7) the original months to maturity or the
remaining months to maturity from the related Cut-off Date, in any case based on
the original amortization schedule and, if different, the maturity expressed in
the same manner but based on the actual amortization schedule; (8) with respect
to each First Lien Loan, the Loan-to-Value Ratio at origination, and with
respect to each Second Lien Loan, the CLTV at origination; (9) the Mortgage
Interest Rate as of the related Cut-off Date; (10) the date on which the Monthly
Payment was due on the Mortgage Loan and, if such date is not consistent with
the Due Date currently in effect, such Due Date; (11) the stated maturity date;
(12) the first payment date; (13) the amount of the Monthly Payment as of the
related Cut-off Date; (14) the last payment date on which a payment was actually
applied to the outstanding principal balance; (15) the original principal amount
of the Mortgage Loan; (16) the principal balance of the Mortgage Loan as of the
close of business on the related Cut-off Date, after deduction of payments of
principal due and collected on or before the related Cut-off Date; (17)
delinquency status as of the related Cut-off Date; (18) with respect to each
Adjustable Rate Mortgage Loan, the Interest Rate Adjustment Date; (19) with
respect to each Adjustable Rate Mortgage Loan, the Gross Margin; (20) with
respect to each Adjustable Rate Mortgage Loan, the Lifetime Rate Cap under the
terms of the Mortgage Note; (21) with respect to each Adjustable Rate Mortgage
Loan, a code indicating the type of Index; (22) the type of Mortgage Loan (i.e.,
Fixed or Adjustable Rate Mortgage Loan, First or Second Lien Loan); (23) a code
indicating the purpose of the loan (i.e., purchase, rate and term refinance,
equity take-out refinance); (24) a code indicating the documentation style
(i.e., full, alternative or reduced); (25) asset verification (Y/N); (26) the
loan credit classification (as described in the Underwriting Guidelines); (27)
whether such Mortgage Loan provides for a Prepayment Penalty and, if applicable,
the Prepayment Penalty period; (28) the Mortgage Interest Rate as of
origination; (29) the credit risk score (FICO score); (30) the date of
origination; (31) with respect to Adjustable Rate Mortgage Loans, the Mortgage
Interest Rate adjustment period; (32) with respect to each Adjustable Rate
Mortgage Loan, the Mortgage Interest Rate adjustment percentage; (33) with
respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest Rate floor;
(34) with respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest
Rate Cap as of the first Interest Rate Adjustment Date; (35) with respect to
each Adjustable Rate Mortgage Loan, the Periodic Rate Cap subsequent to the
first Interest Rate Adjustment Date; (36) with respect to each Adjustable Rate
Mortgage Loan, a code indicating whether the Mortgage Loan provides for negative
amortization; (37) with respect to each Adjustable Rate Mortgage Loan with
negative amortization, the negative amortization limit; (38) a code indicating
whether the Mortgage Loan is a Home Loan; (39) a code indicating whether the
Mortgage Loan is a Balloon Mortgage Loan; (40) the Due Date for the first
Monthly Payment; (41) the original Monthly Payment due; (42) a code indicating
the PMI Policy provider and percentage of coverage, if applicable; (43)
Appraised Value; (44) appraisal type; (45) automated valuation model (AVM); (46)
appraisal date; and (47) with respect to the related Mortgagor, the
debt-to-income ratio. With respect to the Mortgage Loans in the aggregate, the
Mortgage Loan Schedule shall set forth the following information, as of the
related Cut-off Date: (1) the number of Mortgage Loans; (2) the current
aggregate outstanding principal balance of the Mortgage Loans; (3) the weighted
average Mortgage Interest Rate of the Mortgage Loans; (4) the weighted average
maturity of the Mortgage Loans; (5) the applicable Cut-off Date; and (6) the
applicable Closing Date.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: With respect to each Mortgage Loan, the
Mortgagor's real property securing repayment of a related Mortgage Note,
consisting of an unsubordinated estate in fee simple or, with respect to real
property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely-accepted practice, a leasehold estate, in a
single parcel or multiple parcels of real property improved by a Residential
Dwelling.
Mortgagor: The obligor on a Mortgage Note.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President and
by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of each Seller, and delivered to the Purchaser as required
by this Agreement.
Periodic Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum amount by
which the Mortgage Interest Rate therein may increase or decrease on an Interest
Rate Adjustment Date above or below the Mortgage Interest Rate previously in
effect. The Periodic Rate Cap for each Adjustable Rate Mortgage Loan is the rate
set forth as such on the related Mortgage Loan Schedule.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued
by an insurer acceptable under the Underwriting Guidelines and qualified to do
business in the jurisdiction where the Mortgaged Property is located.
Preliminary Mortgage Schedule: As defined in Section 3.
Prepayment Penalty: With respect to each Mortgage Loan, the penalty
if the Mortgagor prepays such Mortgage Loan as provided in the related Mortgage
Note or Mortgage.
Principal Prepayment: Any payment or other recovery of principal on
a Mortgage Loan which is received in advance of its scheduled Due Date,
including any Prepayment Penalty or premium thereon, and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Sellers in exchange for the Mortgage Loans purchased on such
Closing Date as calculated in Section 4 of this Agreement.
Purchase Price and Terms Agreement: Those certain agreements setting
forth the general terms and conditions of the transactions consummated herein
and identifying the Mortgage Loans to be purchased from time to time hereunder,
by and among the Sellers and the Purchaser.
Purchaser: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York
corporation, and its successors in interest and assigns, or any successor to the
Purchaser under this Agreement as herein provided.
Qualified Appraiser: An appraiser, accepted by the Sellers, who had
no interest, direct or indirect, in the Mortgaged Property or in any loan made
on the security thereof, and whose compensation was not affected by the approval
or disapproval of the Mortgage Loan, and such appraiser and the appraisal made
by such appraiser both satisfied the requirements of Title XI of the Financial
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.
Qualified Correspondent: Any Person from which the Sellers purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Sellers and
such Person that contemplated that such Person would underwrite mortgage loans
from time to time, for sale to the Sellers, in accordance with underwriting
guidelines designated by the Sellers ("Designated Guidelines") or guidelines
that do not vary materially from such Designated Guidelines; (ii) such Mortgage
Loans were in fact underwritten as described in clause (i) above and were
acquired by the Sellers within 180 days after origination; (iii) either (x) the
Designated Guidelines were, at the time such Mortgage Loans were originated,
used by the Sellers in origination of mortgage loans of the same type as the
Mortgage Loans for the Sellers' own accounts or (y) the Designated Guidelines
were, at the time such Mortgage Loans were underwritten, designated by the
Sellers on a consistent basis for use by lenders in originating mortgage loans
to be purchased by the Sellers; and (iv) the Sellers employed, at the time such
Mortgage Loans were acquired by the Sellers, pre-purchase or post-purchase
quality assurance procedures (which may involve, among other things, review of a
sample of mortgage loans purchased during a particular time period or through
particular channels) designed to ensure that Persons from which it purchased
mortgage loans properly applied the underwriting criteria designated by the
Sellers.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the applicable Seller for a Deleted Mortgage Loan which must, on
the date of such substitution, (i) have an outstanding principal balance, after
deduction of all scheduled payments due in the month of substitution (or in the
case of a substitution of more than one mortgage loan for a Deleted Mortgage
Loan, an aggregate principal balance), not in excess of the outstanding
principal balance of the Deleted Mortgage Loan (the amount of any shortfall will
be remitted to the Purchaser by the applicable Seller in accordance with the
terms of this Agreement in the month of substitution); (ii) have a Mortgage
Interest Rate not less than and not more than 1% greater than the Mortgage
Interest Rate of the Deleted Mortgage Loan; (iii) have a remaining term to
maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; (iv) be of the same type as the Deleted Mortgage Loan
(i.e., fixed rate or adjustable rate with same Mortgage Interest Rate Caps); and
(v) comply with each representation and warranty (respecting individual Mortgage
Loans) set forth in Section 9.
Rating Agency: Any of Fitch, ▇▇▇▇▇'▇ or Standard & Poor's, or their
respective successors designated by the Purchaser.
Reconstitution: A Whole Loan Transfer or a Securitization
Transaction.
Reconstitution Agreement: As defined in Section 13.
Reconstitution Date: As defined in Section 13.
Relief Act: The Servicemembers' Civil Relief Act.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have been
provided by the Commission in the adopting release (Asset-Backed Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or
by the staff of the Commission, or as may be provided by the Commission or its
staff from time to time.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter
1, Subtitle A of the Code, and related provisions and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The fifth Business Day of any month, beginning with
the first Remittance Date after the related Closing Date.
Repurchase Price: As defined in the related Purchase Price and Terms
Agreement.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project or (iv) a one-family dwelling
in a planned unit development, none of which is a dwelling unit in a residential
cooperative housing corporation, mobile home or Manufactured Home.
RESPA: Real Estate Settlement Procedures Act, as amended from time
to time.
Second Lien Loan: A Mortgage Loan secured by a second lien Mortgage
on the related Mortgaged Property.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) a
sale or other transfer of some or all of the Mortgage Loans directly or
indirectly to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or (2)
an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to one
or more portfolios of residential mortgage loans consisting, in whole or in
part, of some or all of the Mortgage Loans.
Seller: As defined in the initial paragraph of the Agreement,
together with its successors in interest.
Sellers: As defined in the initial paragraph of the Agreement.
Seller Information: As defined in Subsection 33.04(a).
Servicing File: With respect to each Mortgage Loan, the file
retained by the applicable Seller consisting of originals of all documents in
the Mortgage File which are not delivered to the Purchaser or the Custodian and
copies of the Mortgage Loan Documents set forth in Section 2 of the Custodial
Agreement.
Servicing Representations and Warranties: The representations and
warranties set forth in Subsection 9.02(a), (f), (h), (ii), (ll), (mm) and (qq).
Servicing Rights: Any and all of the following: (a) any and all
rights to service the Mortgage Loans; (b) any payments to or monies received by
the Sellers for servicing the Mortgage Loans; (c) any late fees, penalties or
similar payments with respect to the Mortgage Loans; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of the Sellers
thereunder; (e) Escrow Payments or other similar payments with respect to the
Mortgage Loans and any amounts actually collected by the Sellers with respect
thereto; (f) all accounts and other rights to payment related to any of the
property described in this paragraph; and (g) any and all documents, files,
records, servicing files, servicing documents, servicing records, data tapes,
computer records, or other information pertaining to the Mortgage Loans or
pertaining to the past, present or prospective servicing of the Mortgage Loans.
Sponsor: The sponsor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies Inc., and any successor thereto.
Standard & Poor's Glossary: The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
Static Pool Information: Static pool information as described in
Item 1105(a)(1)-(3) and 1105(c) of Regulation AB.
Successor Servicer: Any servicer of one or more Mortgage Loans
designated by the Purchaser as being entitled to the benefits of the
indemnifications set forth in Subsections 9.03 and 14.01.
Stated Principal Balance: As to each Mortgage Loan on any date of
determination, (i) the principal balance of such Mortgage Loan at the related
Cut-off Date after giving effect to payments of principal due on or before such
date, to the extent actually received, minus (ii) all amounts previously
distributed to the Purchaser with respect to the related Mortgage Loan
representing payments or recoveries of principal on such Mortgage Loan.
Third-Party Originator: Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Sellers.
Transfer Date: The date on which the Purchaser, or its designee,
shall receive the transfer of servicing responsibilities and begin to perform
the servicing of the Mortgage Loans with respect to the related Mortgage Loan
Package, and the Sellers shall cease all servicing responsibilities. Such date
shall occur on the day indicated by the Purchaser to the Sellers in the related
Purchase Price and Terms Agreement.
Underwriting Guidelines: The underwriting guidelines of the Sellers,
a copy of which is attached as an exhibit to the related Assignment and
Conveyance.
WFI: As defined in Section 7.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Securitization Transaction.
SECTION 2. Agreement to Purchase.
The Sellers agree to sell from time to time on a nonexclusive basis,
and the Purchaser agrees to purchase from time to time without recourse to the
Sellers but subject to the representations and warranties and terms contained in
this Agreement, Mortgage Loans having an aggregate principal balance on the
related Cut-off Date in an amount as set forth in the related Purchase Price and
Terms Agreement, or in such other amount as agreed by the Purchaser and the
Sellers as evidenced by the actual aggregate principal balance of the Mortgage
Loans accepted by the Purchaser on each Closing Date.
SECTION 3. Mortgage Schedules.
The Sellers from time to time shall provide the Purchaser with
certain information constituting a preliminary listing of the Mortgage Loans to
be purchased on each Closing Date in accordance with the related Purchase Price
and Terms Agreement and this Agreement (each, a "Preliminary Mortgage
Schedule").
The applicable Seller shall deliver the related Mortgage Loan
Schedule for the Mortgage Loans to be purchased on a particular Closing Date to
the Purchaser at least five (5) Business Days prior to the related Closing Date.
The related Mortgage Loan Schedule shall be the related Preliminary Mortgage
Schedule with those Mortgage Loans which have not been funded prior to the
related Closing Date deleted.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan shall be the percentage of
par as stated in the related Purchase Price and Terms Agreement (subject to
adjustment as provided therein), multiplied by the aggregate principal balance,
as of the related Cut-off Date, of the Mortgage Loans listed on the related
Mortgage Loan Schedule, after application of scheduled payments of principal due
on or before the related Cut-off Date, but only to the extent such payments were
actually received. The initial principal amount of the related Mortgage Loans
shall be the aggregate principal balance of the Mortgage Loans, so computed as
of the related Cut-off Date. If so provided in the related Purchase Price and
Terms Agreement, portions of the Mortgage Loans shall be priced separately.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Sellers, at closing, accrued interest on the current principal
amount of the related Mortgage Loans as of the related Cut-off Date at the
weighted average Mortgage Interest Rate of those Mortgage Loans. The Purchase
Price plus accrued interest as set forth in the preceding paragraph shall be
paid to the Sellers by wire transfer of immediately available funds to an
account designated by the Sellers in writing.
The Purchaser shall be entitled to (1) all scheduled principal due
after the related Cut-off Date, (2) all other recoveries of principal collected
on or after the related Cut-off Date, and (3) all payments of interest on the
Mortgage Loans (minus that portion of any such payment which is allocable to the
period prior to the related Cut-off Date). The outstanding principal balance of
each Mortgage Loan as of the related Cut-off Date is determined after
application of payments of principal due on or before the related Cut-off Date,
to the extent actually collected, together with any unscheduled principal
prepayments collected prior to such Cut-off Date; provided, however, that
payments of scheduled principal and interest paid prior to such Cut-off date,
but to be applied on a Due Date beyond the related Cut-off Date shall not be
applied to the principal balance as of the related Cut-off Date. Such prepaid
amounts shall be the property of the Purchaser and shall be remitted by the
Sellers to the Purchaser on the next Remittance Date.
SECTION 5. Examination of Mortgage Files.
At least ten (10) Business Days prior to the related Closing Date,
the Sellers shall (a) deliver to the Purchaser or its designee in escrow, for
examination with respect to each Mortgage Loan to be purchased, the related
Mortgage File, including a copy of the Assignment of Mortgage, pertaining to
each Mortgage Loan, or (b) make the related Mortgage File available to the
Purchaser for examination at the Sellers' place of business in Plymouth Meeting,
Pennsylvania. Such examination may be made by the Purchaser or its designee at
any reasonable time before or after the related Closing Date. If the Purchaser
makes such examination prior to the related Closing Date and reasonably
determines, in good faith, that any Mortgage Loans are unacceptable to the
Purchaser for any reason, such Mortgage Loans shall be deleted from the related
Mortgage Loan Schedule, and may be replaced, at the applicable Seller's option,
by a Qualified Substitute Mortgage Loan (or Loans) acceptable to the Purchaser.
The Purchaser may, at its option and without notice to the Sellers, purchase
some or all of the Mortgage Loans without conducting any partial or complete
examination. The fact that the Purchaser or its designee has conducted or has
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect the Purchaser's (or any of its successor's) rights to demand
repurchase, substitution or other relief as provided herein.
SECTION 6. Conveyance from Sellers to Purchaser.
Subsection 6.01 Conveyance of Mortgage Loans.
The Sellers shall execute and deliver an Assignment and Conveyance
Agreement in the form attached hereto as Exhibit G (the "Assignment and
Conveyance Agreement"). The Sellers shall cause the Servicing File retained by
the Sellers pursuant to this Agreement to be appropriately identified in the
Sellers' computer system and/or books and records, as appropriate, to clearly
reflect the sale of the related Mortgage Loan to the Purchaser. The Sellers
shall release from their custody the contents of any Servicing File retained by
it only in accordance with this Agreement.
Subsection 6.02 Books and Records.
Record title to each Mortgage as of the related Closing Date shall
be in the name of the applicable Seller, an Affiliate of the applicable Seller,
the Purchaser or one or more designees of the Purchaser, as the Purchaser shall
select. Notwithstanding the foregoing, each Mortgage and related Mortgage Note
shall be possessed solely by the Purchaser or the appropriate designee of the
Purchaser, as the case may be. All rights arising out of the Mortgage Loans
including, but not limited to, all funds received by the Sellers after the
related Cut-off Date on or in connection with a Mortgage Loan shall be vested in
the Purchaser or one or more designees of the Purchaser; provided, however, that
all funds received on or in connection with a Mortgage Loan shall be received
and held by the Sellers in trust for the benefit of the Purchaser or the
appropriate designee of the Purchaser, as the case may be, as the owner of the
Mortgage Loans pursuant to the terms of this Agreement.
The Sellers shall be responsible for maintaining, and shall
maintain, a complete set of books and records for each Mortgage Loan which shall
be marked clearly to reflect the ownership of each Mortgage Loan by the
Purchaser. In particular, the Sellers shall maintain in their possession,
available for inspection by the Purchaser, and shall deliver to the Purchaser
upon demand, evidence of compliance with all federal, state and local laws,
rules and regulations, and requirements of prudent mortgage lenders who
originate mortgage loans similar to the Mortgage Loans in the jurisdiction where
the Mortgaged Property is located, including but not limited to documentation as
to the method used in determining the applicability of the provisions of the
National Flood Insurance Act of 1968, as amended, to the Mortgaged Property and
documentation evidencing insurance coverage. To the extent that original
documents are not required for purposes of realization of Liquidation Proceeds
or Insurance Proceeds, documents maintained by the Sellers may be in the form of
microfilm or microfiche so long as the Sellers comply with the requirements of
the ▇▇▇▇▇▇ ▇▇▇ Guides or prudent mortgage lenders who originate mortgage loans
similar to the Mortgage Loans in the jurisdiction where the Mortgaged Property
is located.
The sale of each Mortgage Loan shall be reflected on the applicable
Seller's balance sheet and other financial statements as a sale of assets by the
applicable Seller.
Subsection 6.03 Delivery of Mortgage Loan Documents.
The Sellers shall deliver and release to the Custodian no later than
two (2) Business Days prior to the related Closing Date those Mortgage Loan
Documents set forth on Exhibit A hereto as required by the Custodial Agreement
with respect to each Mortgage Loan set forth on the related Mortgage Loan
Schedule.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement for the
related Closing Date, as evidenced by the Initial Certification of the Custodian
in the form annexed to the Custodial Agreement. The Sellers shall comply with
the terms of the Custodial Agreement and the Purchaser shall pay all fees and
expenses of the Custodian.
The Sellers shall forward to the Custodian, or after the related
Closing Date, to such other Person as the Purchaser shall designate in writing,
original documents evidencing an assumption, modification, consolidation or
extension of any Mortgage Loan entered into in accordance with this Agreement
within two weeks of their execution, provided, however, that the Sellers shall
provide the Custodian, or to such other Person as the Purchaser shall designate
in writing, with a certified true copy of any such document submitted for
recordation within two weeks of its execution, and shall promptly provide the
original of any document submitted for recordation or a copy of such document
certified by the appropriate public recording office or title closing agent to
be a true and complete copy of the original within ninety days of its submission
for recordation.
In the event any document required to be delivered to the Custodian
in the Custodial Agreement, including an original or copy of any document
submitted for recordation to the appropriate public recording office, is not so
delivered to the Custodian, or to such other Person as the Purchaser shall
designate in writing, within 90 days following the related Closing Date (other
than with respect to the Assignments of Mortgage which shall be delivered to the
Custodian in blank and recorded subsequently by the Purchaser or its designee),
and in the event that the applicable Seller does not cure such failure within 30
days of discovery or receipt of written notification of such failure from the
Purchaser, the related Mortgage Loan shall, upon the request of the Purchaser,
be repurchased by such Seller at the price and in the manner specified in
Subsection 9.03. The foregoing repurchase obligation shall not apply in the
event that such Seller cannot deliver an original document submitted for
recordation to the appropriate public recording office within the specified
period due to a delay caused by the recording office in the applicable
jurisdiction; provided that such Seller shall instead deliver a recording
receipt of such recording office or, if such recording receipt is not available,
an officer's certificate of a servicing officer of such Seller, confirming that
such documents have been accepted for recording; provided that, upon request of
the Purchaser and delivery by the Purchaser to the Seller of a schedule of the
related Mortgage Loans, such Seller shall reissue and deliver to the Purchaser
or its designee said officer's certificate.
The Sellers shall pay all initial recording fees, if any, for the
assignments of mortgage and any other fees or costs in transferring all original
documents to the Custodian or, upon written request of the Purchaser, to the
Purchaser or the Purchaser's designee. The Purchaser or the Purchaser's designee
shall be responsible for recording the Assignments of Mortgage and shall be
reimbursed by the Sellers for the costs associated therewith pursuant to the
preceding sentence.
Subsection 6.04 Quality Control Procedures.
The Sellers shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the legal documents,
credit documents, property appraisals, and underwriting decisions. The program
shall include evaluating and monitoring the overall quality of the Sellers' loan
production and servicing activities. The program is to ensure that the Mortgage
Loans are originated in accordance with the Underwriting Guidelines; guard
against dishonest, fraudulent, or negligent acts; and guard against errors and
omissions by officers, employees, or other authorized persons.
SECTION 7. Servicing of the Mortgage Loans.
The Mortgage Loans have been sold by the Sellers to the Purchaser on
a servicing released basis. Subject to, and upon the terms and conditions of
this Agreement, the Sellers hereby sell, transfer, assign, convey and deliver to
the Purchaser the Servicing Rights.
The Purchaser shall retain the Sellers as contract servicers of the
Mortgage Loans for an interim period pursuant to and in accordance with the
terms and conditions set forth in this section provided that if the related
Transfer Date has not occurred on or prior to the date which is 60 days after
the related Closing Date, the Purchaser and the Sellers hereby agree to
negotiate in good faith and enter into a more detailed interim servicing
agreement mutually acceptable to the parties. The Sellers shall service the
Mortgage Loans on an "actual/actual" basis and otherwise in accordance with the
Accepted Servicing Practices and the following provisions of this section. The
Sellers shall not be entitled to a servicing fee in connection with the
servicing of any Mortgage Loan hereunder.
In servicing the Mortgage Loans, the Sellers shall comply with all
applicable laws, rules and regulations with respect thereto. The Sellers shall
take no action with respect to any Mortgage Loan, including entering into any
litigation, or any agreement with the related Mortgagor, without the prior
written consent of the Purchaser. The Sellers shall promptly notify the
Purchaser in writing of any action which should be taken with respect to any
Mortgage Loan in accordance with Accepted Servicing Practices. The Sellers shall
take no action, and shall not refrain from taking action, which, in either case,
(a) would impair the ability of the Purchaser to realize on or enforce the
Mortgage Note or the lien of the Mortgage or any other document related thereto
or (b) would jeopardize the rights or remedies available to the Purchaser with
respect to any Mortgage Loan or otherwise impair the ability of the Purchaser to
realize on the Mortgaged Property with respect to such Mortgage Loan.
The Sellers shall be obligated to make all advances on the Mortgage
Loans with respect to taxes and insurance premiums due and owing (the "T&I
Servicing Advances"). Any other servicing advances in excess of $500 shall be
made with the prior written consent of the Purchaser. The Sellers shall be
required to notify the Purchaser in writing of all advances in excess of $500
required to be made in order to further protect and preserve the Purchaser's
interest in the Mortgage Loans and the underlying Mortgaged Property (the "Other
Servicing Advances," together with the T&I Servicing Advances, the "Servicing
Advances"), and shall make such Other Servicing Advances in a timely fashion
unless otherwise instructed by the Purchaser. The Sellers shall be entitled to
reimbursement for all Servicing Advances from the Purchaser within 15 Business
Days following the Transfer Date.
The Sellers shall segregate and hold all funds collected and
received pursuant to the Mortgage Loans, including Escrow Payments, separate and
apart from any of their own funds and general assets in one or more Eligible
Accounts.
The Sellers shall remit to the Purchaser on each Remittance Date all
amounts received from any source with respect to the Mortgage Loans. On or prior
to each Remittance Date the Sellers shall deliver to the Purchaser a remittance
advice in electronic format acceptable to the Purchaser as to the accompanying
remittance and the period ending on the related Determination Date and shall
additionally specify the number of days which each Mortgage Loan is delinquent,
and shall contain an explanation of all Servicing Advances made, the status of
all Mortgage Loans in foreclosure or otherwise the subject of litigation, and
the status of all other collection efforts with respect to each Mortgage Loan.
Wilmington Finance Inc. ("WFI"), jointly and severally, and AIG
Federal Savings Bank (through its Wilmington Finance division) ("AIG"),
severally but not jointly, shall each indemnify and hold harmless the Purchaser
from and against any and all losses, claims or causes of actions resulting from
the breach by WFI or AIG of any of their covenants set forth herein.
SECTION 8. Transfer of Servicing.
On the applicable Transfer Date, the Purchaser, or its designee,
shall assume all servicing responsibilities related to, and the Sellers shall
cease all servicing responsibilities related to, the related Mortgage Loans
subject to such Transfer Date. The Transfer Date shall be the date determined in
accordance with Section 7 herein.
On or prior to the applicable Transfer Date, the Sellers shall, at
their sole cost and expense, take such steps as may be necessary or appropriate
to effectuate and evidence the transfer of the servicing of the related Mortgage
Loans to the Purchaser, or its designee, including but not limited to the
following:
(a) Notice to Mortgagors. The Sellers shall mail to the Mortgagor of
each related Mortgage Loan a letter advising such Mortgagor of the transfer of
the servicing of the related Mortgage Loan to the Purchaser, or its designee, in
accordance with the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ National Affordable Housing Act of 1990;
provided, however, the content and format of the letter shall have the prior
approval of the Purchaser. The Sellers shall provide the Purchaser with copies
of all such related notices no later than the Transfer Date.
(b) Notice to Insurance Companies. The Sellers shall transmit to the
applicable insurance companies (including primary mortgage insurance policy
insurers, if applicable) and/or agents, notification of the transfer of the
servicing to the Purchaser, or its designee, and instructions to deliver all
notices, tax bills and insurance statements, as the case may be, to the
Purchaser from and after the Transfer Date. The Sellers shall provide the
Purchaser with copies of all such notices no later than the Transfer Date.
(c) Delivery of Servicing Records. The Sellers shall forward to the
Purchaser, or its designee, all servicing records and the Servicing File in the
Sellers' possession relating to each related Mortgage Loan.
(d) Escrow Payments. The Sellers shall provide the Purchaser, or its
designee, with immediately available funds by wire transfer in the amount of the
net Escrow Payments and suspense balances and all loss draft balances associated
with the related Mortgage Loans. The Sellers shall provide the Purchaser with an
accounting statement, in electronic format acceptable to the Purchaser in its
sole discretion, of Escrow Payments and suspense balances and loss draft
balances sufficient to enable the Purchaser to reconcile the amount of such
payment with the accounts of the Mortgage Loans. Additionally, the Sellers shall
wire transfer to the Purchaser the amount of any agency, trustee or prepaid
Mortgage Loan payments and all other similar amounts held by the Sellers.
(e) Payoffs and Assumptions. The Sellers shall provide to the
Purchaser, or its designee, copies of all assumption and payoff statements
generated by the Sellers on the related Mortgage Loans from the related Cut-off
Date to the Transfer Date.
(f) Mortgage Payments Received Prior to Transfer Date. Prior to the
Transfer Date all payments received by the Sellers on each related Mortgage Loan
shall be properly applied by the Sellers to the account of the particular
Mortgagor.
(g) Mortgage Payments Received after Transfer Date. The amount of
any related Monthly Payments received by the Sellers after the Transfer Date
shall be forwarded to the Purchaser by overnight mail on the Business Day
following the date of receipt. The Sellers shall notify the Purchaser of the
particulars of the payment, which notification requirement shall be satisfied if
the Sellers forward with their payment sufficient information to permit
appropriate processing of the payment by the Purchaser. The Sellers shall assume
full responsibility for the necessary and appropriate legal application of such
Monthly Payments received by the Sellers after the Transfer Date with respect to
related Mortgage Loans then in foreclosure or bankruptcy; provided, for purposes
of this Agreement, necessary and appropriate legal application of such Monthly
Payments shall include, but not be limited to, endorsement of a Monthly Payment
to the Purchaser with the particulars of the payment such as the account number,
dollar amount, date received and any special Mortgagor application instructions
and the Sellers shall comply with the foregoing requirements with respect to all
Monthly Payments received by the Sellers after the Transfer Date.
(h) Misapplied Payments. Misapplied payments shall be processed as
follows:
(i) All parties shall cooperate in correcting misapplication errors;
(ii) The party receiving notice of a misapplied payment occurring
prior to the applicable Transfer Date and discovered after the Transfer
Date shall immediately notify the other party;
(iii) If a misapplied payment which occurred prior to the Transfer
Date cannot be identified and said misapplied payment has resulted in a
shortage, the Sellers shall be liable for the amount of such shortage. The
Sellers shall reimburse the Purchaser for the amount of such shortage
within thirty (30) days after receipt of written demand therefor from the
Purchaser;
(iv) If a misapplied payment which occurred prior to the Transfer
Date has created an improper Purchase Price as the result of an inaccurate
outstanding principal balance, a check shall be issued to the party
shorted by the improper payment application within seven (7) Business Days
after notice thereof by the other party; and
(v) Any check issued under the provisions of this Section 8(h) shall
be accompanied by a statement indicating the corresponding Seller and/or
the Purchaser Mortgage Loan identification number and an explanation of
the allocation of any such payments.
(i) Books and Records. On the Transfer Date, the books, records and
accounts of the Sellers with respect to the related Mortgage Loans shall be in
accordance with all applicable Purchaser requirements.
(j) Reconciliation. The Sellers shall, on or before the Transfer
Date, reconcile principal balances and make any monetary adjustments required by
the Purchaser. Any such monetary adjustments will be transferred between the
Sellers and the Purchaser as appropriate.
(k) IRS Forms. The Sellers shall file all IRS forms 1099, 1099A,
1098 or 1041 and K-1 which are required to be filed on or before the Transfer
Date in relation to the servicing and ownership of the related Mortgage Loans.
The Sellers shall provide copies of such forms to the Purchaser upon request and
shall reimburse the Purchaser for any costs or penalties incurred by the
Purchaser due to either Seller's failure to comply with this paragraph.
SECTION 9. Representations, Warranties and Covenants of the Sellers;
Remedies for Breach.
Subsection 9.01 Representations and Warranties Regarding the Seller.
Each Seller represents, warrants and covenants to the Purchaser that
as of the date hereof and as of each Closing Date:
(a) Due Organization and Authority. Wilmington Finance Inc. is a
Delaware corporation, validly existing, and in good standing under the laws of
its jurisdiction of incorporation. AIG Federal Savings Bank (through its
Wilmington Finance division) is a federally chartered savings bank, validly
existing, and in good standing under the laws of its jurisdiction of formation.
The Seller has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in the states where
the Mortgaged Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the Seller.
The Seller has power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement has
been duly executed and delivered and constitutes the valid, legal, binding and
enforceable obligation of the Seller, except as enforceability may be limited by
(i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding in equity or at law. All requisite action has been taken by the
Seller to make this Agreement valid and binding upon the Seller in accordance
with its terms;
(b) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller is required or, if required, such consent,
approval, authorization or order has been or will, prior to the related Closing
Date, be obtained;
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will conflict with or result in a breach
of any of the terms, conditions or provisions of the Seller's charter, by-laws
or other organizational documents or any legal restriction or any agreement or
instrument to which the Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Seller or its property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that would have an adverse effect
upon any of its properties pursuant to the terms of any mortgage, contract, deed
of trust or other instrument, or impair the ability of the Purchaser to realize
on the Mortgage Loans, impair the value of the Mortgage Loans, or impair the
ability of the Purchaser to realize the full amount of any insurance benefits
accruing pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws"); the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws, including with respect to the legitimacy of
the applicable Mortgagor and the origin of the assets used by the said Mortgagor
to purchase the property in question, and maintains, and will maintain,
sufficient information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws;
(i) Financial Statements. The Seller has delivered to the Purchaser
financial statements as to its last three complete fiscal years and any later
quarter ended more than 60 days prior to the execution of this Agreement. All
such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial
position at the end of each such period of the Seller and its subsidiaries and
have been prepared in accordance with generally accepted accounting principles
of the United States consistently applied throughout the periods involved,
except as set forth in the notes thereto. There has been no change in the
business, operations, financial condition, properties or assets of the Seller
since the date of the Seller's financial statements that would have a material
adverse effect on its ability to perform its obligations under this Agreement.
The Seller has completed any forms reasonably requested by the Purchaser in a
timely manner and in accordance with the provided instructions;
(j) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio at
the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered with
respect to each Mortgage Loan pursuant to the Custodial Agreement, shall be
delivered to the Custodian all in compliance with the specific requirements of
the Custodial Agreement. With respect to each Mortgage Loan, the Seller will be
in possession of a complete Mortgage File in compliance with Exhibit A hereto,
except for such documents as will be delivered to the Custodian;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(m) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished by or on behalf of the Seller pursuant to this
Agreement or any Reconstitution Agreement or in connection with the transactions
contemplated hereby (including any Securitization Transaction or Whole Loan
Transfer) contains or (up to the applicable Transfer Date) will contain any
untrue statement of fact or omits or will omit to state a fact necessary to make
the statements contained herein or therein not misleading;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller expects to be advised by its
independent certified public accountants that under generally accepted
accounting principles the transfer of the Mortgage Loans will be treated as a
sale on the books and records of the Seller and the Seller has determined that
the disposition of the Mortgage Loans to the Purchaser pursuant to this
Agreement will be afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. The Seller is the owner of record of each
Mortgage and the indebtedness evidenced by each Mortgage Note, except for the
Assignments of Mortgage which have been sent for recording, and upon recordation
the Seller will be the owner of record of each Mortgage and the indebtedness
evidenced by each Mortgage Note, and upon the sale of the Mortgage Loans to the
Purchaser, the Seller will retain the Mortgage Files with respect thereto in
trust only for the purpose of servicing and supervising the servicing of each
Mortgage Loan; and
(q) Reasonable Purchase Price. The consideration received by the
Seller upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans.
Subsection 9.02 Representations and Warranties Regarding Individual
Mortgage Loans.
Each Seller hereby represents and warrants to the Purchaser that, as
to each Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
(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
related Closing Date for the Mortgage Loan under the terms of the Mortgage Note,
other than payments not yet 30 days delinquent, have been made and credited. No
payment required under the Mortgage Loan is 30 days or more delinquent nor has
any payment under the Mortgage Loan been 30 days or more delinquent at any time
since the origination of the Mortgage Loan. The first Monthly Payment shall be
made with respect to the Mortgage Loan on its related Due Date or within thirty
(30) days thereafter, all in accordance with the terms of the related Mortgage
Note;
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. 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 earlier, to the day which precedes by
one month the related Due Date of the first installment of principal and
interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are provided for in the ▇▇▇▇▇▇ Mae Guides or by
▇▇▇▇▇▇▇ Mac or those of prudent mortgage lenders who originate mortgage loans
similar to the Mortgage Loans in the jurisdiction where the related Mortgaged
Property is located. If required by the National Flood Insurance Act of 1968, as
amended, each Mortgage Loan is covered by a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
as in effect which policy conforms to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac requirements or
those of prudent mortgage lenders who originate mortgage loans similar to the
Mortgage Loans in the jurisdiction where the related Mortgaged Property is
located. All individual insurance policies contain a standard mortgagee clause
naming the Seller and its successors and assigns as mortgagee, and all premiums
thereon have been paid. The Mortgage obligates the Mortgagor thereunder to
maintain the hazard insurance policy at the Mortgagor's cost and expense, and on
the Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor's cost and expense, and to
seek reimbursement therefor from the 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,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Purchaser upon the consummation of the transactions
contemplated by this Agreement. Neither the Seller nor the related Mortgagor has
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 or entity, and no such unlawful items have been received, retained or
realized by the Seller;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to the Illinois Interest Act and prepayment penalties, have been
complied with, the consummation of the transactions contemplated hereby will not
involve the violation of any such laws or regulations, and the Seller shall
maintain in its possession, available for the Purchaser's inspection, and shall
deliver to the Purchaser upon demand, evidence of compliance with all such
requirements. This representation and warranty is a Deemed Material and Adverse
Representation;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, 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
release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. No portion of the Mortgaged Property is used for
commercial purposes, and since the date of origination, no portion of the
Mortgaged Property has been used for commercial purposes; provided, that
Mortgaged Properties which contain a home office shall not be considered as
being used for commercial purposes as long as the Mortgaged Property has not
been altered for commercial purposes and is not storing any chemicals or raw
materials other than those commonly used for homeowner repair, maintenance
and/or household purposes. None of the Mortgaged Properties are Manufactured
Homes, log homes, mobile homes, geodesic domes or other unique property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law) and
perfected, first lien (with respect to a First Lien Loan) or second lien (with
respect to a Second Lien Loan) on the Mortgaged Property, including all
buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of the
first mortgage on the Mortgaged Property;
(B) the lien of current real property taxes and assessments
not yet due and payable;
(C) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically 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; and
(D) 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,
subsisting, enforceable, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law), and perfected first lien (with respect to a First Lien Loan) or second
lien (with respect to a Second Lien Loan) and first priority (with respect to a
First Lien Loan) or second priority (with respect to a Second Lien Loan)
security interest on the property described therein and the Seller has full
right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties) except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law). 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 other 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 the Seller in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Seller has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage other than any amounts
placed in a tax or insurance escrow account pursuant to the Mortgage;
(m) Ownership. The Seller is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and upon
the sale of the Mortgage Loans to the Purchaser, the Seller will retain the
Mortgage Files or any part thereof with respect thereto not delivered to the
Custodian, the Purchaser or the Purchaser's designee, in trust only for the
purpose of servicing and supervising the servicing of each Mortgage Loan. The
Mortgage Loan is not assigned or pledged, and the Seller has good, indefeasible
and marketable title thereto, and has full right to transfer and sell the
Mortgage Loan to the Purchaser 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 and assign each Mortgage Loan pursuant
to this Agreement except for any warehouse liens that will be released
simultaneously with the sale of the Mortgage Loan to the Purchaser, and
following the sale of each Mortgage Loan, the Purchaser will own such Mortgage
Loan free and clear of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest. The Seller intends to relinquish all
rights to possess, control and monitor the Mortgage Loan. After the related
Closing Date, the Seller will have no right to modify or alter the terms of the
sale of the Mortgage Loan and the Seller will have no obligation or right to
repurchase the Mortgage Loan or substitute another Mortgage Loan, except as
provided in this Agreement;
(n) 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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance policy is
issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first (with respect
to a First Lien Loan) or second (with respect to a Second Lien Loan) priority
lien of the Mortgage 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 (A), (B) and (C) of paragraph (j) of this
Subsection 9.02, 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 Seller, its successor 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 Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the related Mortgage, including
the 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 or entity, and no such unlawful items have been received,
retained or realized by the Seller;
(q) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Seller nor any of its affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(r) 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 the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Propert, except for deminimis encroachments acceptable to a
prudent mortgage lender that originates mortgage loans similar to the Mortgage
Loan in the jurisdiction where the Mortgaged Property is located that will have
no adverse affect on the value of the property, provided that any such
encroaching improvements are stated in the applicable title insurance policy and
affirmatively insured over. No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 thirty years from commencement of amortization. Unless otherwise
specified on the related Mortgage Loan Schedule, the Mortgage Loan is payable on
the first day of each month. The Mortgage Loan does not require a balloon
payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇
Mae and no representations have been made to a Mortgagor that are inconsistent
with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can reasonably be expected
to cause prudent private institutional investors who invest in mortgage loans
similar to the Mortgage Loan to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, or cause the Mortgage Loans to prepay
during any period materially faster or slower than the mortgage loans originated
by the Seller generally;
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Seller is in possession of a complete, true and
accurate Mortgage File in compliance with Exhibit A hereto, except for such
documents the originals of which have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage with
respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located. The transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Seller are not subject to the bulk transfer or similar
statutory provisions in effect in any applicable jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable 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. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first (with respect to a First Lien Loan)
or second (with respect to a Second Lien Loan) 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 ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in compliance
with Accepted Servicing Practices, applicable laws and regulations, and have
been in all respects legal and proper. With respect to escrow deposits and
Escrow Payments, 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. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item that remains unpaid and has been assessed but
is not yet due and payable. No escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized under the Mortgage or
the Mortgage Note. All Mortgage Interest Rate adjustments have been made in
strict compliance with state and federal law and the terms of the related
Mortgage and Mortgage Note on the related Interest Rate Adjustment Date. If,
pursuant to the terms of the Mortgage Note, another index was selected for
determining the Mortgage Interest Rate, the same index was used with respect to
each Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller
executed and delivered any and all notices required under applicable law and the
terms of the related Mortgage Note and Mortgage regarding the Mortgage Interest
Rate and the Monthly Payment adjustments. Any interest required to be paid
pursuant to state, federal and local law has been properly paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 by any officer,
director, or employee of 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;
(ll) No Violation of Environmental Laws. There is no pending action
or proceeding directly involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue; there is no violation of
any environmental law, rule or regulation with respect to the Mortgage Property;
and nothing further remains to be done to satisfy in full all requirements of
each such law, rule or regulation constituting a prerequisite to use and
enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Relief Act or other similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, accepted by the Seller, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, if applicable to the Seller, where required or customary in
the jurisdiction in which the Mortgaged Property is located, the original lender
has filed for record a request for notice of any action by the related senior
lienholder, and the Seller has notified the senior lienholder in writing of the
existence of the Second Lien Loan and requested notification of any action to be
taken against the Mortgagor by the senior lienholder. Either (a) no consent for
the Second Lien Loan is required by the holder of the related first lien or (b)
such consent has been obtained and is contained in the Mortgage File. This
representation and warranty is a Deemed Material and Adverse Representation;
(rr) [Reserved];
(ss) Escrow Analysis. If applicable, with respect to each Mortgage,
the Seller has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(tt) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in strict compliance with Accepted Servicing Practices;
(uu) No Default Under First Lien. With respect to each Second Lien
Loan, the related First Lien Loan related thereto is in full force and effect,
and there is no default, breach, violation or event which would permit
acceleration existing under such first Mortgage or 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 which
would permit acceleration thereunder. This representation and warranty is a
Deemed Material and Adverse Representation;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage.
This representation and warranty is a Deemed Material and Adverse
Representation;
(ww) No Failure to Cure Default. The Seller has not received a
written notice of default of any senior mortgage loan related to the Mortgaged
Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) all ground lease rents, other payments, or assessments that
have become due have been paid; and (7) the use of leasehold estates for
residential properties is a widely accepted practice in the jurisdiction in
which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
Prepayment Penalty as provided in the related Mortgage Note is identified on the
related Mortgage Loan Schedule. 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 for the benefit of the Purchaser, and each Prepayment
Penalty is permitted pursuant to applicable federal, state and local law. Each
such Prepayment Penalty is in an amount not more than the maximum amount
permitted under applicable law and no such Prepayment Penalty may be imposed for
a term in excess of five (5) years with respect to Mortgage Loans originated
prior to October, 1, 2002. With respect to Mortgage Loans originated on or after
October 1, 2002, the duration of the Prepayment Penalty period shall not exceed
three (3) years from the date of the Mortgage Note (except as set forth on the
related Mortgage Loan Schedule) unless the Mortgage Loan was modified to reduce
the Prepayment Penalty period to no more than three (3) years from the date of
the related Mortgage Note and the Mortgagor was notified in writing of such
reduction in Prepayment Penalty period. This representation and warranty is a
Deemed Material and Adverse Representation;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law. This representation and warranty is a Deemed Material and Adverse
Representation;
(bbb) [Reserved];
(ccc) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" under Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Either (x) each Mortgage Loan is covered
by a paid in full, life of loan, tax service contract, and such contract is
transferable, or (y) on the related Closing Date the Purchaser shall net $75.00
per Mortgage Loan from the related Purchase Price to cover the cost of such a
tax service contract;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded, or has been
sent for recording, and all subsequent assignments of the original Mortgage
(other than the assignment to the Purchaser) 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;
(ggg) Mortgagor Bankruptcy. On or prior to the related Closing Date,
the Mortgagor has not filed and will not file a bankruptcy petition or has not
become the subject and will not become the subject of involuntary bankruptcy
proceedings or has not consented to or will not consent to the filing of a
bankruptcy proceeding against it or to a receiver being appointed in respect of
the related Mortgaged Property;
(hhh) No Prior Offer. The Mortgage Loan has not previously been
offered for sale to and been rejected by another investor for material reasons
of credit compliance or valuation;
(iii) [Reserved];
(jjj) Mortgagor Selection. No Mortgagor was encouraged or required
to select a Mortgage Loan product offered by the Originator which is a higher
cost product designed for less creditworthy mortgagors, unless at the time of
the Mortgage Loan's origination, such Mortgagor did not qualify taking into
account credit history and debt-to-income ratios for a lower-cost credit product
then offered by the Originator or any Affiliate of the Originator. If, at the
time of loan application, the Mortgagor may have qualified for a lower-cost
credit product then offered by any mortgage lending Affiliate of the Originator,
the Originator referred the related Mortgagor's application to such Affiliate
for underwriting consideration. This representation and warranty is a Deemed
Material and Adverse Representation;
(kkk) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan. This representation and warranty is a Deemed Material and Adverse
Representation;
(lll) Mortgage Loans with Prepayment Premiums. 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) Seller has
non-prepayment programs available to Mortgagors, (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 Originator, as servicer, shall not impose such
prepayment premium in any instance when the mortgage debt is accelerated as the
result of the related Mortgagor's default in making the Mortgage Loan payments.
This representation and warranty is a Deemed Material and Adverse
Representation;
(mmm) Purchase of Insurance. No Mortgagor was required to purchase
any single premium credit insurance policy (e.g., life, mortgage, disability,
property, 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, property, accident, unemployment, mortgage or health
insurance) in connection with the origination of the Mortgage Loan. No proceeds
from any Mortgage Loan were used to purchase single premium credit insurance
policies as part of the origination of, or as a condition to closing, such
Mortgage Loan. This representation and warranty is a Deemed Material and Adverse
Representation;
(nnn) [Reserved];
(ooo) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation. This representation and
warranty is a Deemed Material and Adverse Representation;
(ppp) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction;
(qqq) No Negative Amortization of Related First Lien Loan. With
respect to each Second Lien Loan, the related First Lien Loan does not permit
negative amortization. This representation and warranty is a Deemed Material and
Adverse Representation; and
(rrr) Principal Residence. With respect to each Second Lien Loan,
the related Mortgaged Property was the Mortgagor's principal residence at the
time of the origination of such Second Lien Loan. This representation and
warranty is a Deemed Material and Adverse Representation.
Subsection 9.03 Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 9.01 and 9.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or failure to examine any Mortgage
File. Upon discovery by either Seller or by the Purchaser of a breach of any of
the foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other; however, in any event, such
notice by Purchaser must be made to the applicable Seller within sixty (60) days
of the Purchaser's discovery of such breach. In the event that the Purchaser
does not deliver such notice within the sixty (60) day timeframe then the
Purchaser shall forfeit its right to require such Seller to repurchase the
applicable Mortgage Loan.
Within 60 days of the earlier of either discovery by or notice to
the applicable Seller of any such breach of a representation or warranty, which
materially and adversely affects the value of the Mortgage Loans or the interest
of the Purchaser therein (or which materially and adversely affects the value of
the applicable Mortgage Loan or the interest of the Purchaser therein in the
case of a representation and warranty relating to a particular Mortgage Loan),
such Seller shall use its best efforts promptly to cure such breach in all
material respects and, if such breach cannot be cured, such Seller shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price.
Notwithstanding the above sentence, (i) within sixty (60) days after the earlier
of either discovery by, or notice to, the applicable Seller of any breach of the
representation and warranty set forth in clause (ccc) of Subsection 9.02, such
Seller shall repurchase such Mortgage Loan at the Repurchase Price and (ii) any
breach of a Deemed Material and Adverse Representation shall automatically be
deemed to materially and adversely affect the value of the Mortgage Loans and
the interest of the Purchaser therein. In the event that a breach shall involve
any representation or warranty set forth in Subsection 9.01, and such breach
cannot be cured within 60 days of the earlier of either discovery by or notice
to the applicable Seller of such breach, all of the Mortgage Loans affected by
such breach shall, at the Purchaser's option, be repurchased by such Seller at
the Repurchase Price. However, if the breach shall involve a representation or
warranty set forth in Subsection 9.02 (except as provided in the second sentence
of this paragraph with respect to certain breaches for which no substitution is
permitted) and the applicable Seller discovers or receives notice of any such
breach within 120 days of the related Closing Date, such Seller shall, at such
Seller's option and provided that such Seller has a Qualified Substitute
Mortgage Loan, rather than repurchase the Mortgage Loan as provided above,
remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in its
place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than 120 days after the related Closing
Date. If such Seller has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan at the Repurchase Price. Any repurchase
of a Mortgage Loan or Loans pursuant to the foregoing provisions of this
Subsection 9.03 shall be accomplished by direct remittance of the Repurchase
Price to the Purchaser or its designee in accordance with the Purchaser's
instructions.
At the time of repurchase or substitution, the Purchaser and the
applicable Seller shall arrange for the reassignment of the Deleted Mortgage
Loan to such Seller and the Purchaser shall reassign the Mortgage Loan affected
and any right it may have in the relevant Mortgaged Property to such Seller free
and clear of all liens, encumbrances, claims, or interest of any person or
entity claiming by, through, or under the Purchaser without recourse and shall
execute and deliver to such Seller in recordable form an assignment of the
Purchaser's beneficial interest in the affected Mortgage, as well as other
documents necessary to reflect the reassignment of any title protection and
insurance policies, and the delivery to such Seller of any documents held by the
Custodian relating to the Deleted Mortgage Loan. In the event of a repurchase or
substitution, the applicable Seller shall, simultaneously with such
reassignment, give written notice to the Purchaser that such repurchase or
substitution has taken place, amend the Mortgage Loan Schedule to reflect the
withdrawal of the Deleted Mortgage Loan from this Agreement, and, in the case of
substitution, identify a Qualified Substitute Mortgage Loan and amend the
related Mortgage Loan Schedule to reflect the addition of such Qualified
Substitute Mortgage Loan to this Agreement. In connection with any such
substitution, the applicable Seller shall be deemed to have made as to such
Qualified Substitute Mortgage Loan the representations and warranties set forth
in this Agreement except that all such representations and warranties set forth
in this Agreement shall be deemed made as of the date of such substitution. The
applicable Seller shall effect such substitution by delivering to the Custodian
or to such other party as the Purchaser may designate in writing for such
Qualified Substitute Mortgage Loan the documents required by Subsection 6.03 and
the Custodial Agreement, with the Mortgage Note endorsed as required by
Subsection 6.03 and the Custodial Agreement. No substitution will be made in any
calendar month after the Determination Date for such month. The applicable
Seller shall remit directly to the Purchaser, or its designee in accordance with
the Purchaser's instructions the Monthly Payment due, if any, on such Qualified
Substitute Mortgage Loan or Loans in the month following the date of such
substitution. Monthly Payments due with respect to Qualified Substitute Mortgage
Loans in the month of substitution shall be retained by the applicable Seller.
For the month of substitution, distributions to the Purchaser shall include the
Monthly Payment due on any Deleted Mortgage Loan in the month of substitution,
and the applicable Seller shall thereafter be entitled to retain all amounts
subsequently received by such Seller in respect of such Deleted Mortgage Loan.
For any month in which either Seller substitutes a Qualified
Substitute Mortgage Loan for a Deleted Mortgage Loan, such Seller shall
determine the amount (if any) by which the aggregate principal balance of all
Qualified Substitute Mortgage Loans as of the date of substitution is less than
the aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the applicable Seller
directly to the Purchaser or its designee in accordance with the Purchaser's
instructions within two (2) Business Days of such substitution.
As to each Mortgage Loan, on and after the date servicing is
transferred from the Sellers to the Purchaser and until such time as the
servicing for such Mortgage Loan in reassigned to Sellers, the Purchaser or its
designee shall service such Mortgage Loan in conformance and accordance with the
servicing practices that Purchaser or its designee would follow in servicing
residential mortgage loans held for its own account, giving due consideration to
those mortgage servicing practices of prudent mortgage lending institutions that
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
In addition to such repurchase or substitution obligation, WFI,
jointly and severally, and AIG, severally but not jointly, shall each indemnify
the Purchaser and its present and former directors, officers, employees and
agents and any Successor Servicer and its present and former directors,
officers, employees and agents and hold such parties harmless against any
losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of WFI's or AIG's representations and warranties contained in this
Agreement or any Reconstitution Agreement. It is understood and agreed that the
obligations of the Sellers set forth in this Subsection 9.03 to cure, substitute
for or repurchase a defective Mortgage Loan and to indemnify the Purchaser and
Successor Servicer as provided in this Subsection 9.03 and in Subsection 14.01
constitute the sole remedies of the Purchaser respecting a breach of the
foregoing representations and warranties. For purposes of this paragraph
"Purchaser" shall mean the Person then acting as the Purchaser under this
Agreement and any and all Persons who previously were "Purchasers" under this
Agreement and "Successor Servicer" shall mean any Person designated as the
Successor Servicer pursuant to this Agreement and any and all Persons who
previously were "Successor Servicers" pursuant to this Agreement.
Any cause of action against either Seller relating to or arising out
of the breach of any representations and warranties made in Subsections 9.01 and
9.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by either Seller to the Purchaser, (ii) failure
by the applicable Seller to cure such breach or repurchase such Mortgage Loan as
specified above, and (iii) demand upon the applicable Seller by the Purchaser
for compliance with this Agreement.
Notwithstanding the above, in no event shall the indemnifying party
be liable to the indemnified party for any punitive, special, incidental,
indirect or consequential damages, including but not limited to, lost profits.
Subsection 9.04 Repurchase of Mortgage Loans with First Payment
Defaults. With respect to any Mortgage Loan, in the event that the first
scheduled payment of principal and interest due either (i) after origination of
such Mortgage Loan is not paid by the related Mortgagor to the then current
mortgagee, or (ii) after the related Closing Date is not paid by the related
Mortgagor to the Purchaser within thirty (30) days of such related Due Date, the
Seller, at the Purchaser's option, shall repurchase such Mortgage Loan from the
Purchaser at a price equal to the related Purchase Price Percentage multiplied
by the then outstanding principal balance of such Mortgage Loan, plus accrued
and unpaid interest thereon from the date to which interest was last paid
through the day prior to the repurchase date at the applicable Mortgage Interest
Rate, plus any outstanding advances owed to any servicer in connection with such
Mortgage Loan. Notwithstanding the foregoing, with respect to the first
scheduled payment of principal and interest due following the related Closing
Date, such payment shall not be considered a "First Payment Default" for
purposes of this provision until the payment has not been received by the
Purchaser within forty-five (45) days of the related Due Date. The Purchaser
shall have ninety (90) days following such forty-five (45) day period to notify
the Seller and request a repurchase and the Seller shall repurchase such
delinquent Mortgage Loan within thirty (30) days of receipt of such notice.
Notwithstanding the foregoing, the Purchaser reserves the right to request a
repurchase following such ninety (90) day timeframe in the event of a NSF return
of the related first payment.
Subsection 9.05 [Reserved].
Subsection 9.06 Premium Recapture. With respect to any Mortgage Loan
without prepayment penalties that prepays in full during the first six months
following the related Closing Date, the applicable Seller shall pay the
Purchaser, within seven (7) Business Days after Purchaser notifies such Seller
in writing (with backup documentation) of such prepayment, such prepayment in
full, an amount equal to the excess of the Purchase Price Percentage for such
Mortgage Loan over par, multiplied by the outstanding principal balance of such
Mortgage Loan as of the related Cut-off Date.
SECTION 10. Closing.
The closing for the purchase and sale of each Mortgage Loan Package
shall take place on the related Closing Date. At the Purchaser's option, each
Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree, or conducted in person, at such place as the parties shall
agree.
The closing for the Mortgage Loans to be purchased on each Closing
Date shall be subject to each of the following conditions:
(i) at least two Business Days prior to the related Closing Date,
the Sellers shall deliver to the Purchaser a magnetic diskette, or
transmit by modem, a listing on a loan-level basis of the necessary
information to compute the Purchase Price of the Mortgage Loans delivered
on such Closing Date (including accrued interest), and prepare a Mortgage
Loan Schedule;
(ii) all of the representations and warranties of the Sellers under
this Agreement shall be true and correct as of the related Closing Date
and no event shall have occurred which, with notice or the passage of
time, would constitute a default under this Agreement;
(iii) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing documents as
specified in Section 11 of this Agreement, in such forms as are agreed
upon and acceptable to the Purchaser, duly executed by all signatories
other than the Purchaser as required pursuant to the terms hereof;
(iv) the Sellers shall have delivered and released to the Custodian
all documents required pursuant to the Custodial Agreement; and
(v) all other terms and conditions of this Agreement and the related
Purchase Price and Terms Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Sellers on the related Closing Date the Purchase Price, plus accrued interest
pursuant to Section 4 of this Agreement, by wire transfer of immediately
available funds to the account designated by the Sellers.
SECTION 11. Closing Documents.
The Closing Documents for the Mortgage Loans to be purchased on each
Closing Date shall consist of fully executed originals of the following
documents:
(1) this Agreement (to be executed and delivered only
for the initial Closing Date);
(2) with respect to the initial Closing Date, the
Custodial Agreement, dated as of the initial Cut-off Date;
(3) the related Mortgage Loan Schedule (one copy to be
attached to the Custodian's counterpart of the Custodial
Agreement in connection with the initial Closing Date, and one
copy to be attached to the related Assignment and Conveyance
as the Mortgage Loan Schedule thereto);
(4) a Custodian's Certification, as required under the
Custodial Agreement, in the form of Exhibit 2 to the Custodial
Agreement;
(5) with respect to the initial Closing Date, an
Officer's Certificate, in the form of Exhibit C hereto with
respect to each of the Sellers, including all attachments
thereto; with respect to subsequent Closing Dates, an
Officer's Certificate upon request of the Purchaser;
(6) with respect to the initial Closing Date, an Opinion
of Counsel of the Custodian (who may be an employee of the
Custodian), in the form of an exhibit to the Custodial
Agreement(s);
(7) a Security Release Certification, in the form of
Exhibit E or F, as applicable, hereto executed by any person,
as requested by the Purchaser, if any of the Mortgage Loans
have at any time been subject to any security interest, pledge
or hypothecation for the benefit of such person;
(8) a certificate or other evidence of merger or change
of name, signed or stamped by the applicable regulatory
authority, if any of the Mortgage Loans were acquired by
either Seller by merger or acquired or originated by either
Seller while conducting business under a name other than its
present name, if applicable;
(9) Assignment and Conveyance Agreement in the form of
Exhibit G hereto, and all exhibits thereto; and
(10) with respect to the initial Closing Date, the
Underwriting Guidelines to be attached hereto as Exhibit H and
with respect to each subsequent Closing Date, the Underwriting
Guidelines to be attached to the related Assignment and
Conveyance.
The Sellers shall bear the risk of loss of the closing documents
until such time as they are received by the Purchaser or its attorneys.
SECTION 12. Costs.
The Purchaser shall pay any commissions due its salesmen and the
legal fees and expenses of its attorneys and custodial fees. All other costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans and the Servicing Rights including recording fees, fees for title policy
endorsements and continuations, fees for recording Assignments of Mortgage, and
the Sellers' attorney's fees, shall be paid by the Sellers.
SECTION 13. Cooperation of Seller with a Reconstitution.
The Sellers and the Purchaser agree that with respect to some or all
of the Mortgage Loans, after the related Closing Date, on one or more dates
(each, a "Reconstitution Date") at the Purchaser's sole option, the Purchaser
may effect a sale (each, a "Reconstitution") of some or all of the Mortgage
Loans then subject to this Agreement, without recourse, to:
(i) ▇▇▇▇▇▇ ▇▇▇ under its Cash Purchase Program or MBS Program
(Special Servicing Option) (each, a "▇▇▇▇▇▇ Mae Transfer"); or
(ii) ▇▇▇▇▇▇▇ Mac (the "▇▇▇▇▇▇▇ Mac Transfer"); or
(iii) one or more third party purchasers in one or more Whole Loan
Transfers; or
(iv) one or more trusts or other entities to be formed as part of
one or more Securitization Transactions.
The Sellers agree to execute in connection with any Agency Transfer,
any and all pool purchase contracts, and/or agreements reasonably acceptable to
the Sellers among the Purchaser, the Sellers and any servicer in connection with
a Whole Loan Transfer, a sellers' warranties and servicing agreement or a
participation and servicing agreement in form and substance reasonably
acceptable to the parties, and in connection with a Securitization Transaction,
an Assignment and Recognition Agreement substantially in the form attached
hereto as Exhibit I (each, a "Reconstitution Agreement"). Notwithstanding
anything contained in this Agreement to the contrary, under no circumstances and
in no event shall either Seller be required to service any Mortgage Loans
subject to a Securitization Transaction on or after the applicable
Reconstitution Date.
With respect to each Whole Loan Transfer and each Securitization
Transaction entered into by the Purchaser, the Sellers agree (1) to reasonably
cooperate with the Purchaser and any prospective purchaser with respect to all
reasonable requests and due diligence procedures; (2) to execute, deliver and
perform a Reconstitution Agreement as required by the Purchaser; (3) to restate
the representations and warranties set forth in Subsection 9.01 of this
Agreement as of the applicable Reconstitution Date and restate the
representations and warranties set forth in Subsection 9.02 of this Agreement as
of the applicable Closing Date; provided, however, that the Sellers shall
restate the Servicing Representations and Warranties set forth in Subsection
9.02 of this Agreement as of the applicable Transfer Date. The Sellers shall
provide to such servicer or issuer, as the case may be, and any other
participants or purchasers in such Reconstitution: (i) any and all reasonable
information and appropriate verification of information which may be reasonably
available to the Sellers or their affiliates, whether through letters of its
auditors and counsel or otherwise, as the Purchaser or any such other
participant shall request; (ii) such additional representations, warranties,
covenants, opinions of counsel, letters from auditors, and certificates of
public officials or officers of the Sellers as are reasonably believed necessary
by the Purchaser or any such other participant; and (iii) to execute, deliver
and satisfy all conditions set forth in any indemnity agreement reasonably
required by the Purchaser or any such participant. Moreover, the Sellers agree
to cooperate with all reasonable requests made by the Purchaser to effect such
Reconstitution Agreement. The Sellers shall indemnify the Purchaser, each
affiliate of the Purchaser participating in the Reconstitution, each underwriter
or placement agent participating in the Reconstitution and each Person who
controls the Purchaser, such affiliate, underwriter or placement agent and their
respective present and former directors, officers, employees and agents, and
hold each of them harmless from and against any losses, damages, penalties,
fines, forfeitures, legal fees and expenses and related costs, judgments, and
any other costs, fees and expenses that each of them may sustain arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in the information provided by or on behalf of either Seller
regarding either Seller, the Mortgage Loans or the Underwriting Guidelines set
forth in any offering document (including, without limitation, structural term
sheets, collateral term sheets and computational materials) prepared in
connection with any Reconstitution. For purposes of the previous sentence,
"Purchaser" shall mean the Person then acting as the Purchaser under this
Agreement and any and all Persons who previously were "Purchasers" under this
Agreement.
In the event the Purchaser has elected to have the Sellers hold
record title to the Mortgages, prior to the Reconstitution Date, the Sellers
shall prepare an assignment of mortgage in blank from the Sellers, acceptable to
the prospective purchaser or trustee, as applicable, for each Mortgage Loan that
is part of the Reconstitution and shall pay all preparation and recording costs
associated therewith. In connection with the Reconstitution, the Sellers shall
execute each assignment of mortgage.
All Mortgage Loans not sold or transferred pursuant to a
Reconstitution shall remain subject to this Agreement and with respect thereto
this Agreement shall remain in full force and effect.
SECTION 14. The Sellers.
Subsection 14.01 Additional Indemnification by the Sellers; Third
Party Claims.
(a) WFI, jointly and severally, and AIG, severally but not jointly,
shall each indemnify the Purchaser and its present and former directors,
officers, employees and agents and any Successor Servicer and its present and
former directors, officers, employees and agents, and hold such parties harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
legal fees and expenses (including legal fees and expenses incurred in
connection with the enforcement of WFI's or AIG's indemnification obligations
under this Subsection 14.01) and related costs, judgments, and any other costs,
fees and expenses that such parties may sustain in any way related to the
failure of WFI or AIG, as the case may be, to perform its duties and to service
the Mortgage Loans in strict compliance with the terms of this Agreement or any
Reconstitution Agreement entered into pursuant to Section 13 or any breach of
WFI's or AIG's representations, warranties and covenants set forth in this
Agreement. For purposes of this paragraph "Purchaser" shall mean the Person then
acting as the Purchaser under this Agreement and any and all Persons who
previously were "Purchasers" under this Agreement and "Successor Servicer" shall
mean any Person designated as the Successor Servicer pursuant to this Agreement
and any and all Persons who previously were "Successor Servicers" pursuant to
this Agreement.
(b) Promptly after receipt by an indemnified party under this
Subsection 14.01 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Subsection 14.01, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may have to
any indemnified party under this Subsection 14.01, except to the extent that it
has been prejudiced in any material respect, or from any liability which it may
have, otherwise than under this Subsection 14.01. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided that if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party or parties shall have reasonably concluded that there may
be legal defenses available to it or them and/or other indemnified parties which
are different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate counsel
to assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party for
expenses incurred by the indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with one local counsel, if applicable)), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii).
Subsection 14.02 Merger or Consolidation of the Sellers.
The Sellers will keep in full effect their existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which either Seller may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which either Seller shall be a party, or any Person succeeding to the business
of either Seller, shall be the successor of such Seller hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person shall have a net worth of at
least $25,000,000.
SECTION 15. Financial Statements.
The Sellers understand that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser shall make available to
prospective purchasers audited financial statements of the Sellers for the most
recently completed three fiscal years respecting which such statements are
available, as well as a Consolidated Statement of Condition of the Sellers at
the end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Sellers shall also make available any comparable interim
statements to the extent any such statements have been prepared by the Sellers
(and are available upon request to members or stockholders of the Sellers or the
public at large). The Sellers, if they have not already done so, agree to
furnish promptly to the Purchaser copies of the statements specified above.
The Sellers also agree to allow reasonable access to a knowledgeable
financial or accounting officer for the purpose of answering questions asked by
any prospective purchaser regarding recent developments affecting the Sellers or
the financial statements of the Sellers.
SECTION 16. Mandatory Delivery; Grant of Security Interest.
The sale and delivery on the related Closing Date of the Mortgage
Loans described on the related Mortgage Loan Schedule is mandatory from and
after the date of the execution of the related Purchase Price and Terms
Agreement, it being specifically understood and agreed that each Mortgage Loan
is unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser (including damages to prospective purchasers of the
Mortgage Loans) in the event of either Seller's failure to deliver (i) each of
the related Mortgage Loans or (ii) one or more Qualified Substitute Mortgage
Loans or (iii) one or more Mortgage Loans otherwise acceptable to the Purchaser
on or before the related Closing Date. The Sellers hereby grant to the Purchaser
a lien on and a continuing security interest in each Mortgage Loan and each
document and instrument evidencing each such Mortgage Loan to secure the
performance by the Sellers of their obligations under the related Purchase Price
and Terms Agreement, and the Sellers agree that they shall hold such Mortgage
Loans in custody for the Purchaser subject to the Purchaser's (a) right to
reject any Mortgage Loan (or Qualified Substitute Mortgage Loan) under the terms
of this Agreement and to require another Mortgage Loan (or Qualified Substitute
Mortgage Loan) to be substituted therefor, and (b) obligation to pay the
Purchase Price for the Mortgage Loans. All rights and remedies of the Purchaser
under this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
SECTION 17. 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 the address as follows:
(i) if to either Seller:
Wilmington Finance Inc.
AIG Federal Savings Bank (through its Wilmington Finance
division)
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ Meeting, Pennsylvania 19462
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
(ii) if to the Purchaser:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
1221 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ - Whole Loan Operations Manager
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - RFPG ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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 18. Severability Clause.
Any part, provision representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
SECTION 19. 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 20. Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Purchaser in the State of New York and
shall be deemed to have been made in the State of New York. The Agreement 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 the substantive laws of the State of New York (without regard to
conflicts of laws principles), except to the extent preempted by Federal law.
SECTION 21. Intention of the Parties.
It is the intention of the parties that the Purchaser is purchasing,
and the Sellers are selling the Mortgage Loans and not a debt instrument of
either Seller or another security. Accordingly, the parties hereto each intend
to treat the transaction for Federal income tax purposes as a sale by the
Sellers, and a purchase by the Purchaser, of the Mortgage Loans. Moreover, the
arrangement under which the Mortgage Loans are held shall be consistent with
classification of such arrangement as a grantor trust in the event it is not
found to represent direct ownership of the Mortgage Loans. The Purchaser shall
have the right to review the Mortgage Loans and the related Mortgage Loan Files
to determine the characteristics of the Mortgage Loans which shall affect the
Federal income tax consequences of owning the Mortgage Loans and the Sellers
shall cooperate with all reasonable requests made by the Purchaser in the course
of such review.
SECTION 22. Successors and Assigns; Assignment of Purchase
Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Sellers and the Purchaser and the respective permitted
successors and assigns of each Seller and the successors and assigns of the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Sellers to a third party without the prior written consent of the Purchaser,
which consent may be withheld by the Purchaser in its sole discretion. This
Agreement may be assigned, pledged or hypothecated by the Purchaser in whole or
in part, and with respect to one or more of the Mortgage Loans, without the
consent of the Sellers. There shall be no limitation on the number of
assignments or transfers allowable by the Purchaser with respect to the Mortgage
Loans and this Agreement. In the event the Purchaser assigns this Agreement, and
the assignee assumes any of the Purchaser's obligations hereunder, the Sellers
acknowledge and agree to look solely to such assignee, and not to the Purchaser,
for performance of the obligations so assumed and the Purchaser shall be
relieved from any liability to the Sellers with respect thereto.
SECTION 23. 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 24. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a
part hereof and are an integral part of this Agreement.
SECTION 25. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 26. Reproduction of Documents.
This Agreement and all documents relating thereto, 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 27. Further Agreements.
The Sellers and the Purchaser 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 this
Agreement.
SECTION 28. Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments
of Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or their comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Sellers' expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
SECTION 29. No Solicitation.
From and after the related Closing Date, the Sellers agree that they
will not take any action or permit or cause any action to be taken by any of
their agents or affiliates, or by any independent contractors on either Seller's
behalf, to personally, by telephone or mail (via electronic means or otherwise),
solicit a Mortgagor under any Mortgage Loan for the purpose of refinancing a
Mortgage Loan, in whole or in part, without the prior written consent of the
Purchaser. Notwithstanding the foregoing, it is understood and agreed that the
Sellers, or any of their respective affiliates:
(i) may advertise its availability for handling refinancings of
mortgages in their portfolio, including the promotion of terms it has
available for such refinancings, through the sending of letters or
promotional material, so long as it does not specifically target
Mortgagors and so long as such promotional material either is sent to the
mortgagors for all of the mortgages in the servicing portfolio of the
Sellers and any of their affiliates (those it owns as well as those
serviced for others); and
(ii) may provide pay-off information and otherwise cooperate with
individual mortgagors who contact them about prepaying their mortgages by
advising them of refinancing terms and streamlined origination
arrangements that are available.
Promotions undertaken by the Sellers or by any affiliate of either
Seller which are directed to the general public at large (including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements), shall not constitute
solicitation under this Section 29.
SECTION 30. Waiver of Trial by Jury.
THE SELLERS AND THE PURCHASER EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 31. Governing Law Jurisdiction; Consent to Service of
Process.THIS AGREEMENT SHALL BE DEEMED IN EFFECT WHEN A FULLY EXECUTED
COUNTERPART THEREOF IS RECEIVED BY THE PURCHASER IN THE STATE OF NEW YORK AND
SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK. THIS AGREEMENT SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
TO ITS CHOICE OF LAW RULES AND PRINCIPLES. EACH OF THE PURCHASER AND THE SELLERS
IRREVOCABLY (I) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT; (II) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE DEFENSE OF AN INCONVENIENT FORUM IN ANY ACTION OR PROCEEDING IN ANY SUCH
COURT; (III) AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING IN ANY
SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW; AND (IV) CONSENTS
TO SERVICE OF PROCESS UPON IT BY MAILING A COPY THEREOF BY CERTIFIED MAIL
ADDRESSED TO IT AS PROVIDED FOR NOTICES HEREUNDER.
SECTION 32. Obligations Joint and Several.OBLIGATIONS OF SELLERS.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, (A) WFI HEREBY
AGREES TO BE JOINTLY AND SEVERALLY LIABLE FOR ALL REPRESENTATIONS, WARRANTIES,
COVENANTS, OBLIGATIONS AND INDEMNITIES OF THE SELLERS HEREUNDER, AND (B)
PURCHASER ACKNOWLEDGES AND AGREES THAT AIG SHALL ONLY BE LIABLE FOR ITS OWN
BREACHES, ACTS OR OMISSIONS HEREUNDER AND IN NO EVENT OR UNDER ANY CIRCUMSTANCE
SHALL AIG BE LIABLE (WHETHER JOINTLY AND SEVERALLY OR OTHERWISE) FOR THE
BREACHES, ACTS OR OMISSIONS OF WFI, INCLUDING, WITHOUT LIMITATION, BREACHES OF
REPRESENTATIONS, WARRANTIES, COVENANTS, OBLIGATIONS OR INDEMNITIES OF WFI
HEREUNDER.
SECTION 33. Compliance With Regulation AB.Subsection 33.01 Intent of
the Parties; Reasonableness.
The Purchaser and each Seller acknowledges and agrees that the
purpose of Section 33 of this Agreement is to facilitate compliance by the
Purchaser and any Depositor with the provisions of Regulation AB and related
rules and regulations of the Commission. Although Regulation AB is applicable by
its terms only to offerings of asset-backed securities that are registered under
the Securities Act, each Seller acknowledges that investors in privately offered
securities may require that the Purchaser or any Depositor provide comparable
disclosure in unregistered offerings. References in this Agreement to compliance
with Regulation AB include provision of comparable disclosure in private
offerings.
Neither the Purchaser nor any Depositor shall exercise its right to
request delivery of information or other performance under these provisions
other than in good faith, or for purposes other than compliance with the
Securities Act, the Exchange Act and the rules and regulations of the Commission
thereunder (or the provision in a private offering of disclosure comparable to
that required under the Securities Act). Each Seller acknowledges that
interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with requests made by the Purchaser
or any Depositor in good faith for delivery of information under these
provisions on the basis of evolving interpretations of Regulation AB. In
connection with any Securitization Transaction, the Sellers shall cooperate
fully with the Purchaser to deliver to the Purchaser (including any of its
assignees or designees) and any Depositor, any and all statements, reports,
certifications, records and any other information necessary in the good faith
determination of the Purchaser or any Depositor to permit the Purchaser or such
Depositor to comply with the provisions of Regulation AB, together with such
disclosures relating to the Sellers, any Third-Party Originator and the Mortgage
Loans, reasonably believed by the Purchaser or any Depositor to be necessary in
order to effect such compliance.
The Purchaser (including any of its assignees or designees) shall
cooperate with the Sellers by providing timely notice of requests for
information under these provisions and by reasonably limiting such requests to
information required, in the Purchaser's reasonable judgment, to comply with
Regulation AB.
Subsection 33.02 Additional Representations and Warranties of the
Sellers.
(a) Each Seller, as to itself, shall be deemed to represent to the
Purchaser and to any Depositor, as of the date on which information is first
provided to the Purchaser or any Depositor under Subsection 33.03 that, except
as disclosed in writing to the Purchaser or such Depositor prior to such date:
(i) there are no material legal or governmental proceedings pending (or known to
be contemplated) against the Seller or any Third-Party Originator; and (ii)
there are no affiliations, relationships or transactions relating to the Seller
or any Third-Party Originator with respect to any Securitization Transaction and
any party thereto identified by the related Depositor of a type described in
Item 1119 of Regulation AB.
(b) If so requested by the Purchaser or any Depositor on any date
following the date on which information is first provided to the Purchaser or
any Depositor under Subsection 33.03, each Seller shall, within five Business
Days following such request, confirm in writing the accuracy of the
representations and warranties set forth in paragraph (a) of this Section or, if
any such representation and warranty is not accurate as of the date of such
request, provide reasonably adequate disclosure of the pertinent facts, in
writing, to the requesting party.
Subsection 33.03 Information to Be Provided by each Seller.
In connection with any Securitization Transaction the Sellers shall
(i) within five Business Days following request by the Purchaser or any
Depositor, provide to the Purchaser and such Depositor (or, as applicable, cause
each Third-Party Originator to provide), in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor, the information and
materials specified in paragraphs (a) and (b) of this Section, and (ii) as
promptly as practicable following notice to or discovery by any Seller, provide
to the Purchaser and any Depositor (in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor) the information
specified in paragraph (d) of this Section.
(a) If so requested by the Purchaser or any Depositor, the Sellers
shall provide such information regarding (i) each Seller, as originator of the
Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent), or (ii) each Third-Party Originator, as is requested for the
purpose of compliance with Items 1103(a)(1), 1105 (subject to paragraph (b)
below), 1110, 1117 and 1119 of Regulation AB. Such information shall include, at
a minimum:
(A) the originator's form of organization;
(B) a description of the originator's origination program and
how long the originator has been engaged in originating residential
mortgage loans, which description shall include a discussion of the
originator's experience in originating mortgage loans of a similar
type as the Mortgage Loans; information regarding the size and
composition of the originator's origination portfolio; and
information that may be material, in the good faith judgment of the
Purchaser or any Depositor, to an analysis of the performance of the
Mortgage Loans, including the originators' credit-granting or
underwriting criteria for mortgage loans of similar type(s) as the
Mortgage Loans and such other information as the Purchaser or any
Depositor may reasonably request for the purpose of compliance with
Item 1110(b)(2) of Regulation AB;
(C) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against each
Seller and each Third-Party Originator; and
(D) a description of any affiliation or relationship between
each Seller, each Third-Party Originator and any of the following
parties to a Securitization Transaction, as such parties are
identified to the Sellers by the Purchaser or any Depositor in
writing in advance of such Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(b) If so requested by the Purchaser or any Depositor, the Sellers
shall provide (or, as applicable, cause each Third-Party Originator to provide)
Static Pool Information with respect to the mortgage loans (of a similar type as
the Mortgage Loans, as reasonably identified by the Purchaser as provided below)
originated by (i) the Sellers, if any Seller is an originator of Mortgage Loans
(including as an acquirer of Mortgage Loans from a Qualified Correspondent),
and/or (ii) each Third-Party Originator. Such Static Pool Information shall be
prepared in form and substance reasonably satisfactory to the Purchaser by each
Seller (or Third-Party Originator) on the basis of its reasonable, good faith
interpretation of the requirements of Item 1105(a)(1)-(3) of Regulation AB. To
the extent that there is reasonably available to the Sellers (or Third-Party
Originator) Static Pool Information with respect to more than one mortgage loan
type, the Purchaser or any Depositor shall be entitled to specify whether some
or all of such information shall be provided pursuant to this paragraph. Such
Static Pool Information for each vintage origination year or prior securitized
pool, as applicable, shall be presented in increments no less frequently than
quarterly over the life of the mortgage loans included in the vintage
origination year or prior securitized pool. The most recent periodic increment
must be as of a date no later than 135 days prior to the date of the prospectus
or other offering document in which the Static Pool Information is to be
included or incorporated by reference. The Static Pool Information shall be
provided in an electronic format that provides a permanent record of the
information provided, such as a portable document format (pdf) file, or other
such electronic format reasonably required by the Purchaser or the Depositor, as
applicable. The Sellers and the Purchaser agree that either (i) the Sellers
shall provide all Static Pool Information, as described above, or (ii) solely
with respect to the period of time prior to January 1, 2006, the Sellers shall
represent and warrant that they are unable without unreasonable effort or
expense to provide Static Pool Information and indemnify the Purchaser for such
assessment. Notwithstanding anything in this Agreement to the contrary, the
parties hereto agree that the Purchaser or any Depositor shall not be
requesting, and the Sellers shall not be required to provide, Static Pool
Information from the Sellers until such time that the Purchaser is informed by
the Sellers that it is able to comply with the obligations set forth above.
Promptly following notice or discovery of a material error in Static
Pool Information provided pursuant to the immediately preceding paragraph
(including an omission to include therein information required to be provided
pursuant to such paragraph), each Seller shall provide corrected Static Pool
Information to the Purchaser or any Depositor, as applicable, in the same format
in which Static Pool Information was previously provided to such party by the
Sellers.
If so requested by the Purchaser or any Depositor, each Seller shall
provide (or, as applicable, cause each Third-Party Originator to provide), at
the expense of the requesting party (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement), such agreed-upon
procedures letters of certified public accountants reasonably acceptable to the
Purchaser or Depositor, as applicable, pertaining to Static Pool Information
relating to prior securitized pools for securitizations closed on or after
January 1, 2006 or, in the case of Static Pool Information with respect to such
Seller's or Third-Party Originator's originations or purchases, to calendar
months commencing January 1, 2006, as the Purchaser or such Depositor shall
reasonably request. Such letters shall be addressed to and be for the benefit of
such parties as the Purchaser or such Depositor shall designate, which may
include, by way of example, any Sponsor, any Depositor and any broker dealer
acting as underwriter, placement agent or initial purchaser with respect to a
Securitization Transaction. Any such statement or letter may take the form of a
standard, generally applicable document accompanied by a reliance letter
authorizing reliance by the addressees designated by the Purchaser or such
Depositor.
(c) [Reserved].
(d) If so requested by the Purchaser or any Depositor for the
purpose of satisfying its reporting obligation under the Exchange Act with
respect to any class of asset-backed securities, each Seller shall (or shall
cause each Third-Party Originator to) (i) notify the Purchaser and any Depositor
in writing of (A) any material litigation or governmental proceedings pending
against such Seller or any Third-Party Originator (to the extent permitted by
applicable law) and (B) any affiliations or relationships that develop following
the closing date of a Securitization Transaction between such Seller or any
Third-Party Originator and any of the parties specified in clause (D) of
paragraph (a) of this Section (and any other parties identified in writing by
the requesting party) with respect to such Securitization Transaction, and (ii)
provide to the Purchaser and any Depositor a description of such proceedings,
affiliations or relationships.
(e) With respect to those Mortgage Loans that were sold to the
Purchaser pursuant to this Agreement, the Purchaser shall cause the servicer (or
another party) to be obligated to provide information, on a monthly basis and in
the form customarily provided by such servicer or other party (which need not be
customized for the Sellers) with respect to the Mortgage Loans reasonably
necessary for the Sellers to comply with their contractual and other obligations
under Regulation AB reasonably related to information reasonably requested from
the Sellers for purposes of compliance with Regulation AB, including, without
limitation, providing to the Sellers Static Pool Information, as set forth in
Item 1105(a)(2) and (3) of Regulation AB (such information provided by the
servicer or such other party, the "Loan Performance Information").
Subsection 33.04 Indemnification; Remedies.
(a) Each Seller shall indemnify the Purchaser, each affiliate of the
Purchaser, and each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person responsible for the
preparation, execution or filing of any report required to be filed with the
Commission with respect to such Securitization Transaction, or for execution of
a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange
Act with respect to such Securitization Transaction; each broker dealer acting
as underwriter, placement agent or initial purchaser, each Person who controls
any of such parties or the Depositor (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the respective present
and former directors, officers, employees and agents of each of the foregoing
and of the Depositor, and shall hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon:
(i)(A) any untrue statement of a material fact contained or alleged
to be contained in any information, report, certification, accountants'
letter or other material provided in written or electronic form under this
Section 33 by or on behalf of any Seller, or provided under this Section
33 by or on behalf of any Third-Party Originator (collectively, the
"Seller Information"), or (B) the omission or alleged omission to state in
the Seller Information a material fact required to be stated in the Seller
Information or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, by way of clarification, that clause (B) of this paragraph shall
be construed solely by reference to the Seller Information and not to any
other information communicated in connection with a sale or purchase of
securities, without regard to whether the Seller Information or any
portion thereof is presented together with or separately from such other
information;
(ii) any failure by any Seller or any Third-Party Originator to
deliver any information, report, certification, accountants' letter or
other material when and as required under this Section 33; or
(iii) any breach by any Seller of a representation or warranty set
forth in Subsection 33.02(a) or in a writing furnished pursuant to
Subsection 33.02(b) and made as of a date prior to the closing date of the
related Securitization Transaction, to the extent that such breach is not
cured by such closing date, or any breach by any Seller of a
representation or warranty in a writing furnished pursuant to Subsection
33.02(b) to the extent made as of a date subsequent to such closing date.
In the case of any failure of performance described in clause
(a)(ii) of this Section, the Sellers shall promptly reimburse the Purchaser, any
Depositor, as applicable, and each Person responsible for the preparation,
execution or filing of any report required to be filed with the Commission with
respect to such Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect
to such Securitization Transaction, for all costs reasonably incurred by each
such party in order to obtain the information, report, certification,
accountants' letter or other material not delivered as required by any Seller or
any Third-Party Originator.
(b) [Reserved].
(c) The Purchaser shall indemnify the Sellers, each affiliate of the
Sellers and the respective present and former directors, officers, employees and
agents of each of the foregoing, and shall hold each of them harmless from and
against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses
that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or alleged
to be contained in the Loan Performance Information or (B) the omission or
alleged omission to state in the Loan Performance Information a material
fact required to be stated in the Loan Performance Information or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, by way
of clarification, that clause (B) of this paragraph shall be construed
solely by reference to the Loan Performance Information and not to any
other information communicated in connection with a sale or purchase of
securities, without regard to whether the Loan Performance Information or
any portion thereof is presented together with or separately from such
other information; or
(ii) any failure by the Purchaser or by the related servicer to
deliver any Loan Performance Information as required under Subsection
34.03(e).
[Signature Page Follows]
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
(Purchaser)
By:____________________________________
Name:__________________________________
Title:_________________________________
WILMINGTON FINANCE INC.
(Seller)
By:____________________________________
Name:__________________________________
Title:_________________________________
AIG FEDERAL SAVINGS BANK (through its
Wilmington Finance division)
(Seller)
By:____________________________________
Name:__________________________________
Title:_________________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT A
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each
of the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be delivered to the Custodian, or
to such other Person as the Purchaser shall designate in writing, pursuant to
Section 6 of the Third Amended and Restated Mortgage Loan Purchase and
Warranties Agreement to which this Exhibit is attached (the "Agreement"):
(a) the original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________, without recourse" and signed in
the name of the last endorsee (the "Last Endorsee") by an authorized
officer. To the extent that there is no room on the face of the Mortgage
Notes for endorsements, the endorsement may be contained on an allonge, if
state law so allows and the Custodian is so advised by the Sellers that
state law so allows. If the Mortgage Loan was acquired by either Seller in
a merger, the endorsement must be by "[Last Endorsee], successor by merger
to [name of predecessor]". If the Mortgage Loan was acquired or originated
by the Last Endorsee while doing business under another name, the
endorsement must be by "[Last Endorsee], formerly known as [previous
name]";
(b) the original of any guarantee executed in connection with the
Mortgage Note;
(c) the original Mortgage with evidence of recording thereon. If in
connection with any Mortgage Loan, the applicable Seller cannot deliver or
cause to be delivered the original Mortgage with evidence of recording
thereon on or prior to the Closing Date because of a delay caused by the
public recording office where such Mortgage has been delivered for
recordation or because such Mortgage has been lost or because such public
recording office retains the original recorded Mortgage, such Seller shall
deliver or cause to be delivered to the Custodian, a photocopy of such
Mortgage, together with (i) in the case of a delay caused by the public
recording office, an Officer's Certificate of such Seller (or certified by
the title company, escrow agent, or closing attorney) stating that such
Mortgage has been dispatched to the appropriate public recording office
for recordation and that the original recorded Mortgage or a copy of such
Mortgage certified by such public recording office to be a true and
complete copy of the original recorded Mortgage will be promptly delivered
to the Custodian upon receipt thereof by such Seller; or (ii) in the case
of a Mortgage where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost after
recordation in a public recording office, a copy of such Mortgage
certified by such public recording office to be a true and complete copy
of the original recorded Mortgage;
(d) the originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon;
(e) the original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording. The Assignment of Mortgage
must be duly recorded only if recordation is either necessary under
applicable law or commonly required by private institutional mortgage
investors in the area where the Mortgaged Property is located or on
direction of the Purchaser as provided in this Agreement. If the
Assignment of Mortgage is to be recorded, the Mortgage shall be assigned
to the Purchaser. If the Assignment of Mortgage is not to be recorded, the
Assignment of Mortgage shall be delivered in blank. If the Mortgage Loan
was acquired by either Seller in a merger, the Assignment of Mortgage must
be made by "[Seller], successor by merger to [name of predecessor]". If
the Mortgage Loan was acquired or originated by either Seller while doing
business under another name, the Assignment of Mortgage must be by
"[Seller], formerly known as [previous name]";
(f) the originals of all intervening assignments of mortgage (if
any) evidencing a complete chain of assignment from the applicable Seller
to the Last Endorsee with evidence of recording thereon, or if any such
intervening assignment has not been returned from the applicable recording
office or has been lost or if such public recording office retains the
original recorded assignments of mortgage, such Seller shall deliver or
cause to be delivered to the Custodian, a photocopy of such intervening
assignment, together with (i) in the case of a delay caused by the public
recording office, an Officer's Certificate of such Seller (or certified by
the title company, escrow agent, or closing attorney) stating that such
intervening assignment of mortgage has been dispatched to the appropriate
public recording office for recordation and that such original recorded
intervening assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public recording
office to be a true and complete copy of the original recorded intervening
assignment of mortgage will be promptly delivered to the Custodian upon
receipt thereof by the applicable Seller; or (ii) in the case of an
intervening assignment where a public recording office retains the
original recorded intervening assignment or in the case where an
intervening assignment is lost after recordation in a public recording
office, a copy of such intervening assignment certified by such public
recording office to be a true and complete copy of the original recorded
intervening assignment;
(g) the original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy of
the related policy binder or commitment for title certified to be true and
complete by the title insurance company;
(h) the original or, if unavailable, a copy of any security
agreement, chattel mortgage or equivalent document executed in connection
with the Mortgage; and
(i) if any of the above documents has been executed by a person
holding a power of attorney, an original or photocopy of such power
certified by the applicable Seller to be a true and correct copy of the
original.
In the event an Officer's Certificate of either Seller is delivered
to the Purchaser because of a delay caused by the public recording office in
returning any recorded document, such Seller shall deliver to the Purchaser,
within 90 days of the related Closing Date, an Officer's Certificate which shall
(i) identify the recorded document, (ii) state that the recorded document has
not been delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will be
delivered to the Custodian; provided, however, that any recorded document shall
in no event be delivered later than one year following the related Closing Date.
An extension of the date specified in clause (iv) above may be requested from
the Purchaser, which consent shall not be unreasonably withheld.
EXHIBIT B
[RESERVED]
EXHIBIT C
SELLER'S OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly elected
[Vice] President of ________________ [COMPANY], a [state] [federally] chartered
institution organized under the laws of the [state of ____________] [United
States] (the "Company") and further as follows:
(i) Attached hereto as Exhibit 1 is a true, correct and
complete copy of the charter of the Company which is in full force
and effect on the date hereof and which has been in effect without
amendment, waiver, rescission or modification since ___________.
(ii) Attached hereto as Exhibit 2 is a true, correct and
complete copy of the bylaws of the Company which are in effect on
the date hereof and which have been in effect without amendment,
waiver, rescission or modification since ___________.
(iii) Attached hereto as Exhibit 3 is an original certificate
of good standing of the Company issued within ten days of the date
hereof, and no event has occurred since the date thereof which would
impair such standing.
(iv) Attached hereto as Exhibit 4 is a true, correct and
complete copy of the corporate resolutions of the Board of Directors
of the Company authorizing the Company to execute and deliver the
Third Amended and Restated Mortgage Loan Purchase and Warranties
Agreement, dated as of December 1, 2005 (the "Purchase Agreement"),
by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. (the
"Purchaser") and the Company, [and to endorse the Mortgage Notes and
execute the Assignments of Mortgages by original [or facsimile]
signature], and such resolutions are in effect on the date hereof
and have been in effect without amendment, waiver, rescission or
modification since ____________.
(v) Either (i) no consent, approval, authorization or order of
any court or governmental agency or body is required for the
execution, delivery and performance by the Company of or compliance
by the Company with the Purchase Agreement, [the sale of the
mortgage loans] or the consummation of the transactions contemplated
by the agreements; or (ii) any required consent, approval,
authorization or order has been obtained by the Company.
(vi) Neither the consummation of the transactions contemplated
by, nor the fulfillment of the terms of the Purchase Agreement
conflicts or will conflict with or results or will result in a
breach of or constitutes or will constitute a default under the
charter or by-laws of the Company or, to the best of my knowledge,
the terms of any indenture or other agreement or instrument to which
the Company is a party or by which it is bound or to which it is
subject, or any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or
regulatory body to which the Company is subject or by which it is
bound.
(vii) To the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the
Company which, in my judgment, either in any one instance or in the
aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of
the Company or in any material impairment of the right or ability of
the Company to carry on its business substantially as now conducted
or in any material liability on the part of the Company or which
would draw into question the validity of the Purchase Agreement, or
the mortgage loans or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which would
be likely to impair materially the ability of the Company to perform
under the terms of the Purchase Agreement.
(viii) Each person listed on Exhibit 5 attached hereto who, as
an officer or representative of the Company, signed (a) the Purchase
Agreement, and (b) any other document delivered or on the date
hereof in connection with any purchase described in the agreements
set forth above was, at the respective times of such signing and
delivery, and is now, a duly elected or appointed, qualified and
acting officer or representative of the Company, who holds the
office set forth opposite his or her name on Exhibit 5, and the
signatures of such persons appearing on such documents are their
genuine signatures.
(ix) The Company is duly authorized to engage in the
transactions described and contemplated in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated:____________________ By:___________________________
Name:_________________________
[Seal] Title: [Vice] President
I, ________________________, an [Assistant] Secretary of
______________ [COMPANY], hereby certify that ____________ is the duly elected,
qualified and acting [Vice] President of the Company and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:____________________ By:___________________________
Name:_________________________
Title: [Assistant] Secretary
EXHIBIT 5 to
Company's Officer's Certificate
NAME TITLE SIGNATURE
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EXHIBIT D
[RESERVED]
EXHIBIT E
FORM OF SECURITY RELEASE CERTIFICATION
___________________, 200__
[Federal Home Loan Bank of
______ (the "Association")]
___________________________
___________________________
___________________________
Attention: ___________________________
___________________________
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that ________________________ [COMPANY]
a [type of entity], organized pursuant to the laws of [the State of
incorporation] (the "Company") has committed to sell certain mortgage loans to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. under the Third Amended and Restated
Mortgage Loan Purchase and Warranties Agreement. The Company warrants that the
mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. are in
addition to and beyond any collateral required to secure advances made by the
Association to the Company.
The Company acknowledges that the mortgage loans to be sold to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. shall not be used as additional or
substitute collateral for advances made by the Association. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. understands that the balance of the Company's mortgage
loan portfolio may be used as collateral or additional collateral for advances
made by the Association, and confirms that it has no interest therein.
Execution of this letter by the Association shall constitute a full
and complete release of any security interest, claim, or lien which the
Association may have against the mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc.
Very truly yours,
____________________________
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
Acknowledged and approved:
[FEDERAL HOME LOAN BANK OF]
__________________________
By:_______________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
EXHIBIT F
FORM OF SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
The financial institution named below hereby relinquishes any and
all right, title, interest, lien or claim of any kind it may have in all
mortgage loans described on the attached Schedule A (the "Mortgage Loans"), to
be purchased by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. from the company named on
the next page (the "Company") pursuant to that certain Third Amended and
Restated Mortgage Loan Purchase and Warranties Agreement, dated as of December
1, 2005, and certifies that all notes, mortgages, assignments and other
documents in its possession relating to such Mortgage Loans have been delivered
and released to the Company or its designees, as of the date and time of the
sale of such Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. Such release
shall be effective automatically without any further action by any party upon
payment in one or more installments, in immediately available funds, of
$_____________, in accordance with the wire instructions set forth below.
Name, Address and Wire Instructions of Financial Institution
________________________________
(Name)
________________________________
(Address)
________________________________
________________________________
________________________________
By:_____________________________
II. Certification of Release
The Company named below hereby certifies to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. the security interests in
the Mortgage Loans released by the above-named financial institution comprise
all security interests relating to or affecting any and all such Mortgage Loans.
The Company warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
_______________________________
By:____________________________
Title:_________________________
Date:__________________________
EXHIBIT G
FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
On this ___ day of ____________, ________, Wilmington Finance Inc.
and AIG Federal Savings Bank (through its Wilmington Finance division)
("Sellers"), as the Sellers under (i) that certain Purchase Price and Terms
Agreement, dated as of ________, 200_ (the "PPTA"), and (ii) that certain Third
Amended and Restated Mortgage Loan Purchase and Warranties Agreement, dated as
of December 1, 2005 (the "Purchase Agreement"), do hereby sell, transfer,
assign, set over and convey to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital, Inc.
("Purchaser") as the Purchaser under the Agreements (as defined below) without
recourse, but subject to the terms of the Agreements, all right, title and
interest of, in and to the Mortgage Loans listed on the Mortgage Loan Schedule
attached hereto as Exhibit A (the "Mortgage Loans"), together with the Mortgage
Files and the related Servicing Rights and all rights and obligations arising
under the documents contained therein. Each Mortgage Loan subject to the
Agreements was underwritten in accordance with, and conforms to, the
Underwriting Guidelines attached hereto as Exhibit C. Pursuant to Section 6 of
the Purchase Agreement, the Sellers have delivered to the Custodian the
documents for each Mortgage Loan to be purchased as set forth in the Purchase
Agreement. The ownership of each Mortgage Note, Mortgage and the contents of the
Mortgage File and Servicing File is vested in the Purchaser and the ownership of
all records and documents with respect to the related Mortgage Loan prepared by
or which come into the possession of the Sellers shall immediately vest in the
Purchaser and shall be retained and maintained, in trust, by the Sellers at the
will of the Purchaser in a custodial capacity only. The PPTA and the Purchase
Agreement shall collectively be referred to as the "Agreements" herein.
The Mortgage Loan Package characteristics of the Mortgage Loans
subject hereto are set forth on Exhibit B hereto.
In accordance with Section 6 of the Purchase Agreement, the
Purchaser accepts the Mortgage Loans listed on Exhibit A attached hereto.
Notwithstanding the foregoing the Purchaser does not waive any rights or
remedies it may have under the Agreements.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
WILMINGTON FINANCE INC.
By: __________________________________
Name: _____________________________
Title: ____________________________
AIG FEDERAL SAVINGS BANK (through its
Wilmington Finance division)
By: __________________________________
Name: _____________________________
Title: ____________________________
Accepted and Agreed:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:______________________________
Name:
Title:
EXHIBIT A
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
THE MORTGAGE LOANS
EXHIBIT B
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE POOL CHARACTERISTICS OF
EACH MORTGAGE LOAN PACKAGE
Pool Characteristics of the Mortgage Loan Package as delivered on the related
Closing Date:
No Mortgage Loan has: (1) an outstanding principal balance less than $_____; (2)
an origination date earlier than __ months prior to the related Cut-off Date;
(3) a CLTV of greater than ____%; (4) a FICO Score of less than ___; or (5) a
debt-to-income ratio of more than ___%. Each Mortgage Loan has a Mortgage
Interest Rate of at least ___% per annum and an outstanding principal balance of
less than $______. Each Adjustable Rate Mortgage Loan has an Index of [______].
EXHIBIT C
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
UNDERWRITING GUIDELINES
EXHIBIT H
UNDERWRITING GUIDELINES
Exhibit J
EXHIBIT I
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated [____________ __,
20__] ("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"),
[____________________] ("Assignee") and [SELLERS] (the "Company"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and
other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
Assignment and Conveyance
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Third Amended
and Restated Mortgage Loan Purchase and Warranties Agreement (the "Purchase
Agreement"), dated as of December 1, 2005, between the Assignor, as purchaser
(the "Purchaser"), and the Company, as seller, solely insofar as the Purchase
Agreement relates to the Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder (i) any and all right, title and interest in, to and under
and any obligations of the Assignor with respect to any mortgage loans subject
to the Purchase Agreement which are not the Mortgage Loans set forth on the
Mortgage Loan Schedule and are not the subject of this Agreement or (ii) the
rights of the Purchaser under Section 9.04 of the Purchase Agreement.
Recognition of the Company
2. From and after the date hereof (the "Securitization Closing
Date"), the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Purchase Agreement
(solely to the extent set forth herein) and this Agreement to
[__________________] (the "Trust") created pursuant to a Pooling and Servicing
Agreement, dated as of [______], 200_ (the "Pooling Agreement"), among the
Assignee, the Assignor, [___________________], as trustee (including its
successors in interest and any successor trustees under the Pooling Agreement,
the "Trustee"), [____________________], as servicer (including its successors in
interest and any successor servicer under the Pooling Agreement, the
"Servicer"). The Company hereby acknowledges and agrees that from and after the
date hereof (i) the Trust will be the owner of the Mortgage Loans, (ii) the
Company shall look solely to the Trust for performance of any obligations of the
Assignor insofar as they relate to the Mortgage Loans, (iii) the Trust
(including the Trustee and the Servicer acting on the Trust's behalf) shall have
all the rights and remedies available to the Assignor, insofar as they relate to
the Mortgage Loans, under the Purchase Agreement, including, without limitation,
the enforcement of the document delivery requirements set forth in Section 6 of
the Purchase Agreement, and shall be entitled to enforce all of the obligations
of the Company thereunder insofar as they relate to the Mortgage Loans, and (iv)
all references to the Purchaser, the Custodian or the Bailee under the Purchase
Agreement insofar as they relate to the Mortgage Loans, shall be deemed to refer
to the Trust (including the Trustee and the Servicer acting on the Trust's
behalf). Neither the Company nor the Assignor shall amend or agree to amend,
modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreement which amendment, modification, waiver or other alteration
would in any way affect the Mortgage Loans or the Company's performance under
the Purchase Agreement with respect to the Mortgage Loans without the prior
written consent of the Trustee.
Representations and Warranties of the Company
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation;
(b) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement and has full power and
authority to perform its obligations under the Purchase Agreement.
The execution by the Company of this Agreement is in the ordinary
course of the Company's business and will not conflict with, or
result in a breach of, any of the terms, conditions or provisions of
the Company's charter or bylaws or any legal restriction, or any
material agreement or instrument to which the Company is now a party
or by which it is bound, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Company or
its property is subject. The execution, delivery and performance by
the Company of this Agreement have been duly authorized by all
necessary corporate action on part of the Company. This Agreement
has been duly executed and delivered by the Company, and, upon the
due authorization, execution and delivery by the Assignor and the
Assignee, will constitute the valid and legally binding obligation
of the Company, enforceable against the Company in accordance with
its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and by
general principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
(c) No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required to
be obtained or made by the Company in connection with the execution,
delivery or performance by the Company of this Agreement; and
(d) There is no action, suit, proceeding or investigation pending or
threatened against the Company, before any court, administrative
agency or other tribunal, which would draw into question the
validity of this Agreement or the Purchase Agreement, or which,
either in any one instance or in the aggregate, would result in any
material adverse change in the ability of the Company to perform its
obligations under this Agreement or the Purchase Agreement, and the
Company is solvent.
4. Pursuant to Section 13 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor, the Assignee
and the Trust, that the representations and warranties set forth on Exhibit B
hereto are true and correct as of the applicable Closing Date; provided,
however, that the Seller shall restate the representations and warranties set
forth on Exhibit B that match the Servicing Representations and Warranties as
set forth in Subsection 9.02 of the Purchase Agreement as of the applicable
Transfer Date unless otherwise specifically stated in such representations and
warranties.
Remedies for Breach of Representations and Warranties
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicer acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Sections 3 and 4
hereof shall be as set forth in Subsection 9.03 of the Purchase Agreement as if
they were set forth herein (including without limitation the repurchase and
indemnity obligations set forth therein).
Miscellaneous
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicer acting on the Trust's behalf). Any entity into which Assignor,
Assignee or Company may be merged or consolidated shall, without the requirement
for any further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
9. Each of this Agreement and the Purchase Agreement shall survive
the conveyance of the Mortgage Loans and the assignment of the Purchase
Agreement (to the extent assigned hereunder) by Assignor to Assignee and by
Assignee to the Trust and nothing contained herein shall supersede or amend the
terms of the Purchase Agreement.
10. 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.
11. In the event that any provision of this Agreement conflicts with
any provision of the Purchase Agreement with respect to the Mortgage Loans, the
terms of this Agreement shall control.
12. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the Purchase Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
WILMINGTON FINANCE INC.
By: __________________________________
Name:_______________________________
Its:________________________________
AIG FEDERAL SAVINGS BANK (through its
Wilmington Finance division)
By: __________________________________
Name:_______________________________
Its:________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: __________________________________
Name:_______________________________
Its:________________________________
[________________________]
By: __________________________________
Name:_______________________________
Its:________________________________
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
Mortgage Loan Schedule
EXHIBIT B TO ASSIGNMENT AND RECOGNITION AGREEMENT
Representations and Warranties
Regarding Individual Mortgage Loans
ASSIGNMENT AND RECOGNITION AGREEMENT
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated March 30, 2006
("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ABS Capital I Inc. ("Assignee") and AIG Federal Savings Bank (the
"Company"):
In consideration of the mutual promises and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Assignment and Conveyance
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Amended and
Restated Mortgage Loan Purchase and Warranties Agreement, dated as of June 1,
2005 (the "A&R Purchase Agreement"), and that certain Second Amended and
Restated Mortgage Loan Purchase and Warranties Agreement, dated as of December
1, 2005 (together with the A&R Purchase Agreement, the "Purchase Agreements"),
each between the Assignor, as purchaser (the "Purchaser"), and the Company, as
sellers, solely insofar as the Purchase Agreements relate to the Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder (i) any and all right, title and interest in, to and under
and any obligations of the Assignor with respect to any mortgage loans subject
to the Purchase Agreements which are not the Mortgage Loans set forth on the
Mortgage Loan Schedule and are not the subject of this Agreement or (ii) the
rights of the Purchaser under Section 9.04 of the applicable Purchase Agreement.
Recognition of the Company, as seller
2. From and after the date hereof (the "Securitization Closing
Date"),the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Purchase Agreements
(solely to the extent set forth herein) and this Agreement to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Home Equity Loan Trust 2006-2 (the "Trust") created pursuant to a Pooling and
Servicing Agreement, dated as of March 1, 2006 (the "Pooling Agreement"), among
the Assignee, First NLC Financial Services, LLC, Deutsche Bank National Trust
Company, as trustee (including its successors in interest and any successor
trustees under the Pooling Agreement, the "Trustee"), JPMorgan Chase Bank,
National Association ("JPMorgan"), HomEq Servicing Corporation (together with
JPMorgan, including their successors in interest and any successor servicer
under the Pooling Agreement, the "Servicers"). The Company hereby acknowledges
and agrees that from and after the date hereof (i) the Trust will be the owner
of the Mortgage Loans, (ii) the Company shall look solely to the Trust for
performance of any obligations of the Assignor insofar as they relate to the
Mortgage Loans, (iii) the Trust (including the Trustee and the Servicers acting
on the Trust's behalf) shall have all the rights and remedies available to the
Assignor, insofar as they relate to the Mortgage Loans, under the Purchase
Agreements, including, without limitation, the enforcement of the document
delivery requirements set forth in Section 6 of the applicable Purchase
Agreement, and shall be entitled to enforce all of the obligations of the
Company thereunder insofar as they relate to the Mortgage Loans, and (iv) all
references to the Purchaser, the Custodian or the Bailee under the Purchase
Agreements insofar as they relate to the Mortgage Loans, shall be deemed to
refer to the Trust (including the Trustee and the Servicers acting on the
Trust's behalf). Neither the Company nor the Assignor shall amend or agree to
amend, modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreements which amendment, modification, waiver or other alteration
would in any way affect the Mortgage Loans or the Company's performance under
the Purchase Agreements with respect to the Mortgage Loans without the prior
written consent of the Trustee.
Representations and Warranties of the Company, as seller
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation;
(b) The Company has full power and authority to execute, deliver
and perform its obligations under this Agreement and has full
power and authority to perform its obligations under the
Purchase Agreements. The execution by the Company of this
Agreement is in the ordinary course of the Company's business
and will not conflict with, or result in a breach of, any of
the terms, conditions or provisions of the Company's charter
or bylaws or any legal restriction, or any material agreement
or instrument to which the Company is now a party or by which
it is bound, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Company or
its property is subject. The execution, delivery and
performance by the Company of this Agreement have been duly
authorized by all necessary corporate action on part of the
Company. This Agreement has been duly executed and delivered
by the Company, and, upon the due authorization, execution and
delivery by the Assignor and the Assignee, will constitute the
valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms
except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally, and by general principles of equity regardless of
whether enforceability is considered in a proceeding in equity
or at law;
(c) No consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity is required to be obtained or made by the Company in
connection with the execution, delivery or performance by the
Company of this Agreement; and
(d) There is no action, suit, proceeding or investigation pending
or threatened against the Company, before any court,
administrative agency or other tribunal, which would draw into
question the validity of this Agreement or the Purchase
Agreements, or which, either in any one instance or in the
aggregate, would result in any material adverse change in the
ability of the Company to perform its obligations under this
Agreement or the Purchase Agreements, and the Company is
solvent.
4. Pursuant to Section 13 of the applicable Purchase Agreement, the
Company hereby represents and warrants, for the benefit of the Assignor, the
Assignee and the Trust, that with respect to the Mortgage Loans sold by it under
the applicable Purchase Agreement, the representations and warranties set forth
on Exhibit B hereto are true and correct as of the applicable Closing Date;
provided, however, that the Company shall restate the representations and
warranties set forth on Exhibit B that match the Servicing Representations and
Warranties as set forth in Subsection 9.02 of the applicable Purchase Agreement
as of the applicable Transfer Date unless otherwise specifically stated in such
representations and warranties.
Remedies for Breach of Representations and Warranties
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicers acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Sections 3 and 4
hereof shall be as set forth in Subsection 9.03 of the applicable Purchase
Agreement as if they were set forth herein (including without limitation the
repurchase and indemnity obligations set forth therein).
Miscellaneous
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicers acting on the Trust's behalf). Any entity into which Assignor,
Assignee or the Company may be merged or consolidated shall, without the
requirement for any further writing, be deemed Assignor, Assignee or the
Company, respectively, hereunder.
9. Each of this Agreement and the Purchase Agreements shall survive
the conveyance of the Mortgage Loans and the assignment of the Purchase
Agreements (to the extent assigned hereunder) by Assignor to Assignee and by
Assignee to the Trust and nothing contained herein shall supersede or amend the
terms of the Purchase Agreements.
10. 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.
11. In the event that any provision of this Agreement conflicts with
any provision of the Purchase Agreements with respect to the Mortgage Loans, the
terms of this Agreement shall control.
12. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the applicable Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
AIG FEDERAL SAVINGS BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: SVP & COO
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Managing Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Executive Director
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
Mortgage Loan Schedule
(Delivered to the Trustee on the Closing Date)
EXHIBIT B TO ASSIGNMENT AND RECOGNITION AGREEMENT
Representations and Warranties
Regarding Individual Mortgage Loans
The Company hereby represents and warrants to the Purchaser that, as
to each Mortgage Loan sold by it under the Purchase Agreements, as of the
related Closing Date (or such other date as specified below) for such Mortgage
Loan:
(a) Mortgage Loans as Described. As of the Transfer Date, the
information set forth in the related Mortgage Loan Schedule is complete, true
and correct;
(b) Payments Current. Except with respect to Mortgage Loans
representing approximately [____]% of the aggregate principal balance of the
Mortgage Loans as of March 1, 2006, all payments required to be made up to the
related Closing Date for the Mortgage Loan under the terms of the Mortgage Note,
other than payments not yet 30 days delinquent, have been made and credited. No
payment required under the Mortgage Loan is 30 days or more delinquent nor has
any payment under the Mortgage Loan been 30 days or more delinquent at any time
since the origination of the Mortgage Loan. The first Monthly Payment shall be
made with respect to the Mortgage Loan on its related Due Date or within thirty
(30) days thereafter, all in accordance with the terms of the related Mortgage
Note;
(c) No Outstanding Charges. Except with respect to Mortgage Loans
representing approximately [____]% of the aggregate principal balance of the
Mortgage Loans as of March 1, 2006, there are no defaults in complying with the
terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. The
Company 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 earlier, to the day which precedes by
one month the related Due Date of the first installment of principal and
interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(f) Hazard Insurance. As of the Transfer Date, pursuant to the terms
of the Mortgage, all buildings or other improvements upon the Mortgaged Property
are insured by a generally acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are provided for in the ▇▇▇▇▇▇ Mae
Guides or by ▇▇▇▇▇▇▇ Mac or those of prudent mortgage lenders who originate
mortgage loans similar to the Mortgage Loans in the jurisdiction where the
related Mortgaged Property is located. If required by the National Flood
Insurance Act of 1968, as amended, each Mortgage Loan is covered by a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration as in effect which policy conforms to ▇▇▇▇▇▇
Mae and ▇▇▇▇▇▇▇ Mac requirements or those of prudent mortgage lenders who
originate mortgage loans similar to the Mortgage Loans in the jurisdiction where
the related Mortgaged Property is located. All individual insurance policies
contain a standard mortgagee clause naming the Company and its successors and
assigns as mortgagee, and all premiums thereon have been paid. The Mortgage
obligates the Mortgagor thereunder to maintain the hazard insurance policy at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance at
such Mortgagor's cost and expense, and to seek reimbursement therefor from the
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, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser upon
the consummation of the transactions contemplated by the applicable Purchase
Agreement. Neither the Company nor the related Mortgagor has 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 or entity, and no
such unlawful items have been received, retained or realized by the Company;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to the Illinois Interest Act and prepayment penalties, have been
complied with, the consummation of the transactions contemplated hereby will not
involve the violation of any such laws or regulations, and the Company shall
maintain in its possession, available for the Purchaser's inspection, and shall
deliver to the Purchaser upon demand, evidence of compliance with all such
requirements;
(h) No Satisfaction of Mortgage. As of the Transfer Date, the
Mortgage has not been satisfied, canceled, 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 release, cancellation, subordination or rescission. The
Company 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 Company waived any default resulting from any action or
inaction by the Mortgagor;
(i) Type of Mortgaged Property. The Mortgaged Property is a fee
simple estate, or a leasehold estate located in a jurisdiction in which the use
of a leasehold estate for residential properties is a widely-accepted practice,
that consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development, or an individual unit in a residential cooperative
housing corporation; provided, however, that any condominium unit, planned unit
development or residential cooperative housing corporation shall conform with
the Underwriting Guidelines. No portion of the Mortgaged Property is used for
commercial purposes, and since the date of origination, no portion of the
Mortgaged Property has been used for commercial purposes; provided, that
Mortgaged Properties which contain a home office shall not be considered as
being used for commercial purposes as long as the Mortgaged Property has not
been altered for commercial purposes and is not storing any chemicals or raw
materials other than those commonly used for homeowner repair, maintenance
and/or household purposes. None of the Mortgaged Properties are Manufactured
Homes, log homes, mobile homes, geodesic domes or other unique property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law) and
perfected, first lien (with respect to a First Lien Loan) or second lien (with
respect to a Second Lien Loan) on the Mortgaged Property, including all
buildings and improvements 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:
(A) with respect to a Second Lien Loan only, the lien of
the first mortgage on the Mortgaged Property;
(B) the lien of current real property taxes and
assessments not yet due and payable;
(C) 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 the
lender's title insurance policy delivered to the originator of
the Mortgage Loan and (A) specifically 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; and
(D) 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, subsisting, enforceable, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law), and perfected first lien (with respect to a First Lien Loan) or second
lien (with respect to a Second Lien Loan) and first priority (with respect to a
First Lien Loan) or second priority (with respect to a Second Lien Loan)
security interest on the property described therein and the Company has full
right to sell and assign the same to the Purchaser;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties) except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law). 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 other 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 the Company in connection with the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan. 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 or in the application for any insurance in
relation to such Mortgage Loan. The Company has reviewed all of the documents
constituting the Servicing File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage other than any amounts
placed in a tax or insurance escrow account pursuant to the Mortgage;
(m) Ownership. Immediately prior to the related Closing Date, the
Company was the sole owner of record and holder of the Mortgage Loan and the
indebtedness evidenced by each Mortgage Note and upon the sale of the Mortgage
Loans to the Purchaser, the Company retained the Mortgage Files or any part
thereof with respect thereto not delivered to the Custodian, the Purchaser or
the Purchaser's designee, in trust only for the purpose of servicing and
supervising the servicing of each Mortgage Loan. Immediately prior to the
related Closing Date, the Mortgage Loan was not assigned or pledged, and the
Company had good, indefeasible and marketable title thereto, and had full right
to transfer and sell the Mortgage Loan to the Purchaser 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 and assign each
Mortgage Loan pursuant to the applicable Purchase Agreement except for any
warehouse liens that will be released simultaneously with the sale of the
Mortgage Loan to the Purchaser, and following the sale of each Mortgage Loan,
the Purchaser owned such Mortgage Loan free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest. The Company intended to relinquish all rights to possess, control and
monitor the Mortgage Loan. After the related Closing Date, the Company had no
right to modify or alter the terms of the sale of the Mortgage Loan and the
Company had no obligation or right to repurchase the Mortgage Loan or substitute
another Mortgage Loan, except as provided in the applicable Purchase Agreement;
(n) 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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance policy is
issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the Company, its successors and assigns, as to the first (with respect
to a First Lien Loan) or second (with respect to a Second Lien Loan) priority
lien of the Mortgage 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 (A), (B) and (C) of paragraph (j) of this
Subsection 9.02, 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 Company, its successor 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 the applicable Purchase Agreement. No claims have been made
under such lender's title insurance policy, and no prior holder of the related
Mortgage, including the Company, 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 or entity, and no such unlawful
items have been received, retained or realized by the Company;
(q) No Defaults. Except with respect to Mortgage Loans representing
approximately [____]% of the aggregate principal balance of the Mortgage Loans
as of March 1, 2006, other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Company nor any of its affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(r) 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 the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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, except for deminimis encroachments acceptable to a
prudent mortgage lender that originates mortgage loans similar to the Mortgage
Loan in the jurisdiction where the Mortgaged Property is located that will have
no adverse affect on the value of the property, provided that any such
encroaching improvements are stated in the applicable title insurance policy and
affirmatively insured over. No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Lifetime Rate Cap and the Periodic Cap are as set forth on
the related Mortgage Loan Schedule. The Mortgage Note is payable 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 thirty years from commencement of amortization. Unless otherwise
specified on the related Mortgage Loan Schedule, the Mortgage Loan is payable on
the first day of each month. The Mortgage Loan does not require a balloon
payment on its stated maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each related Assignment and Conveyance Agreement).
The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇
Mae and no representations have been made to a Mortgagor that are inconsistent
with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date, 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 and fire underwriting certificates, have been made or obtained from
the appropriate authorities. Unless otherwise specified on the related Mortgage
Loan Schedule, the Mortgagor represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can reasonably be expected
to cause prudent private institutional investors who invest in mortgage loans
similar to the Mortgage Loan to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, or cause the Mortgage Loans to prepay
during any period materially faster or slower than the mortgage loans originated
by the Company generally;
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Company is in possession of a complete, true and
accurate Mortgage File in compliance with Exhibit A hereto, except for such
documents the originals of which have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Originator's Underwriting
Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage with
respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located. The transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Company are not subject to the bulk transfer or similar
statutory provisions in effect in any applicable jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 mortgagee thereunder, and such provision is enforceable;
(ee) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Company, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable 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. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first (with respect to a First Lien Loan)
or second (with respect to a Second Lien Loan) 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 ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. As of the Transfer Date, the origination, servicing and collection
practices used by the Company with respect to the Mortgage Loan have been in all
respects in compliance with Accepted Servicing Practices, applicable laws and
regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, all such payments are in the possession of,
or under the control of, the Company and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof have
not been made. All Escrow Payments have been collected in full compliance with
state and federal law and the provisions of the related Mortgage Note and
Mortgage. An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
Escrow Payments or other charges or payments due the Company have been
capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law and
the terms of the related Mortgage and Mortgage Note on the related Interest Rate
Adjustment Date. If, pursuant to the terms of the Mortgage Note, another index
was selected for determining the Mortgage Interest Rate, the same index was used
with respect to each Mortgage Note which required a new index to be selected,
and such selection did not conflict with the terms of the related Mortgage Note.
The Company executed and delivered any and all notices required under applicable
law and the terms of the related Mortgage Note and Mortgage regarding the
Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(jj) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from and adjustable rate to a fixed rate;
(kk) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, PMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), 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 Company or by any
officer, director, or employee of the Company or any designee of the Company or
any corporation in which the Company or any officer, director, or employee had a
financial interest at the time of placement of such insurance;
(ll) No Violation of Environmental Laws. As of the Transfer Date,
there is no pending action or proceeding directly involving the Mortgaged
Property in which compliance with any environmental law, rule or regulation is
an issue; there is no violation of any environmental law, rule or regulation
with respect to the Mortgage Property; and nothing further remains to be done to
satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(mm) Servicemembers' Civil Relief Act. As of the Transfer Date, the
Mortgagor has not notified the Company, and the Company has no knowledge of any
relief requested or allowed to the Mortgagor under the Relief Act or other
similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, accepted by the Company, who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by,
and the Company has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Company shall maintain such statement in the Mortgage
File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Request for Notice; No Consent Required. As of the Transfer
Date, with respect to any Second Lien Loan, if applicable to the Company, where
required or customary in the jurisdiction in which the Mortgaged Property is
located, the original lender has filed for record a request for notice of any
action by the related senior lienholder, and the Company has notified the senior
lienholder in writing of the existence of the Second Lien Loan and requested
notification of any action to be taken against the Mortgagor by the senior
lienholder. Either (a) no consent for the Second Lien Loan is required by the
holder of the related first lien or (b) such consent has been obtained and is
contained in the Mortgage File;
(rr) [Reserved];
(ss) Escrow Analysis. If applicable, with respect to each Mortgage,
the Company has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(tt) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in strict compliance with Accepted Servicing Practices;
(uu) No Default Under First Lien. With respect to each Second Lien
Loan, the related First Lien Loan related thereto is in full force and effect,
and there is no default, breach, violation or event which would permit
acceleration existing under such first Mortgage or 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 which
would permit acceleration thereunder;
(vv) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the mortgagee under the Mortgage Loan and
allows such mortgagee to cure any default under the related first lien Mortgage;
(ww) No Failure to Cure Default. The Company has not received a
written notice of default of any senior mortgage loan related to the Mortgaged
Property which has not been cured;
(xx) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Company to the Purchaser, that the Company has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage;
(yy) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the mortgagee's interests in the event of a property
condemnation; (6) all ground lease rents, other payments, or assessments that
have become due have been paid; and (7) the use of leasehold estates for
residential properties is a widely accepted practice in the jurisdiction in
which the Mortgaged Property is located;
(zz) Prepayment Penalty. Each Mortgage Loan that is subject to a
prepayment penalty as provided in the related Mortgage Note is identified on the
related Mortgage Loan Schedule. With respect to Mortgage Loans originated prior
to October 1, 2002, no such Prepayment Penalty may be imposed for a term in
excess of five (5) years following origination. With respect to Mortgage Loans
originated on or after October 1, 2002, no such Prepayment Penalty may be
imposed for a term in excess of three (3) years following origination;
(aaa) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law;
(bbb) Single-premium Credit Life Insurance Policy. In connection
with the origination of any Mortgage Loan, no proceeds from such Mortgage Loan
were used to finance or acquire a single-premium credit life insurance policy;
(ccc) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" under Section 860G(a)(3) of the Code;
(ddd) Tax Service Contract. Either (x) each Mortgage Loan is covered
by a paid in full, life of loan, tax service contract, and such contract is
transferable, or (y) on the related Closing Date the Purchaser shall net $75.00
per Mortgage Loan from the related Purchase Price to cover the cost of such a
tax service contract;
(eee) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(fff) Recordation. Each original Mortgage was recorded, or has been
sent for recording, and all subsequent assignments of the original Mortgage
(other than the assignment to the Purchaser) have been recorded in the
appropriate jurisdictions wherein such recordation is necessary to perfect the
lien thereof as against creditors of the Company, or is in the process of being
recorded;
(ggg) Mortgagor Bankruptcy. On or prior to the related Closing Date,
the Mortgagor has not filed and will not file a bankruptcy petition or has not
become the subject and will not become the subject of involuntary bankruptcy
proceedings or has not consented to or will not consent to the filing of a
bankruptcy proceeding against it or to a receiver being appointed in respect of
the related Mortgaged Property;
(hhh) No Prior Offer. The Mortgage Loan has not previously been
offered for sale to and been rejected by another investor for material reasons
of credit compliance or valuation;
(iii) [Reserved];
(jjj) Mortgagor Selection. No Mortgagor was encouraged or required
to select a Mortgage Loan product offered by the Originator which is a higher
cost product designed for less creditworthy mortgagors, unless at the time of
the Mortgage Loan's origination, such Mortgagor did not qualify taking into
account credit history and debt to income ratios for a lower cost credit product
then offered by the Originator or any Affiliate of the Originator. If, at the
time of loan application, the Mortgagor may have qualified for a lower cost
credit product then offered by any mortgage lending Affiliate of the Originator,
the Originator referred the related Mortgagor's application to such Affiliate
for underwriting consideration;
(kkk) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs objective mathematical
principles which relate the related Mortgagor's income, assets and liabilities
to the proposed payment and such underwriting methodology does not rely on the
extent of the related Mortgagor's equity in the collateral as the principal
determining factor in approving such credit extension. Such underwriting
methodology confirmed that at the time of origination (application/approval) the
related Mortgagor had a reasonable ability to make timely payments on the
Mortgage Loan;
(lll) Mortgage Loans with Prepayment Premiums. 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) the Company has
non-prepayment programs available to Mortgagors, (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 Originator, as servicer, shall not impose such
prepayment premium in any instance when the mortgage debt is accelerated as the
result of the related Mortgagor's default in making the Mortgage Loan payments;
(mmm) Purchase of Insurance. No Mortgagor was required to purchase
any single premium credit insurance policy (e.g., life, disability, property,
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,
disability, property, accident, unemployment, mortgage or health insurance) in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(nnn) [Reserved];
(ooo) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(ppp) No Arbitration. No Mortgage Loan originated on or after July
1, 2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
EXHIBIT R
ACCREDITED AGREEMENTS
ASSIGNMENT AND RECOGNITION AGREEMENT
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated March 30, 2006
("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc. ("Assignee") and Accredited Home Lenders,
Inc. (the "Company"):
For and in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Assignment and Conveyance
-------------------------
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Fourth Amended
and Restated Mortgage Loan Purchase and Warranties Agreement, dated as of August
1, 2005 (the "Fourth A&R Purchase Agreement") and that certain Fifth Amended and
Restated Mortgage Loan Purchase and Warranties Agreement, dated as of December
1, 2005 (together with the Fourth A&R Purchase Agreement, the "Purchase
Agreements"), each between the Assignor, as purchaser (the "Purchaser"), and the
Company, as seller, solely insofar as the Purchase Agreement relates to the
Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder any and all right, title and interest in, to and under and
any obligations of the Assignor with respect to any mortgage loans subject to
the Purchase Agreements which are not the Mortgage Loans set forth on the
Mortgage Loan Schedule and are not the subject of this Agreement.
Recognition of the Company
--------------------------
2. From and after the date hereof (the "Securitization Closing
Date"), the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Purchase Agreements
(solely to the extent set forth herein) and this Agreement to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Home Equity Loan Trust 2006-2 (the "Trust") created pursuant to a Pooling and
Servicing Agreement, dated as of March 1, 2006 (the "Pooling Agreement"), among
the Assignee, First NLC Financial Services, LLC, Deutsche Bank National Trust
Company, as trustee (including its successors in interest and any successor
trustees under the Pooling Agreement, the "Trustee"), JPMorgan Chase Bank,
National Association ("JPMorgan") and HomEq Servicing Corporation (together with
JPMorgan, including their successors in interest and any successor servicer
under the Pooling Agreement, the "Servicers"). The Company hereby acknowledges
and agrees that from and after the date hereof (i) the Trust will be the owner
of the Mortgage Loans, (ii) the Company shall look solely to the Trust for
performance of any obligations of the Assignor insofar as they relate to the
Mortgage Loans, (iii) the Trust (including the Trustee and the Servicer acting
on the Trust's behalf) shall have all the rights and remedies available to the
Assignor, insofar as they relate to the Mortgage Loans, under the applicable
Purchase Agreement, including, without limitation, the enforcement of the
document delivery requirements set forth in Section 6 of the applicable Purchase
Agreement, and shall be entitled to enforce all of the obligations of the
Company thereunder insofar as they relate to the Mortgage Loans, and (iv) all
references to the Purchaser or the Custodian under the applicable Purchase
Agreement insofar as they relate to the Mortgage Loans shall be deemed to refer
to the Trust (including the Trustee and the Servicer acting on the Trust's
behalf). Neither the Company nor the Assignor shall amend or agree to amend,
modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreements which amendment, modification, waiver or other alteration
would in any way affect the Mortgage Loans or the Company's performance under
the Purchase Agreements with respect to the Mortgage Loans without the prior
written consent of the Trustee.
Representations and Warranties of the Company
---------------------------------------------
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement and has full power and
authority to perform its obligations under the Purchase Agreements. The
execution by the Company of this Agreement is in the ordinary course of
the Company's business and will not conflict with, or result in a breach
of, any of the terms, conditions or provisions of the Company's charter or
bylaws or any legal restriction, or any material agreement or instrument
to which the Company is now a party or by which it is bound, or result in
the violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject. The execution, delivery and
performance by the Company of this Agreement have been duly authorized by
all necessary corporate action on part of the Company. This Agreement has
been duly executed and delivered by the Company, and, upon the due
authorization, execution and delivery by the Assignor and the Assignee,
will constitute the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms except as
enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity
regardless of whether enforceability is considered in a proceeding in
equity or at law;
(c) No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required to be
obtained or made by the Company in connection with the execution, delivery
or performance by the Company of this Agreement, or if required, such
approval has been obtained prior to the date hereof; and
(d) Except as previously identified by the Company to the Assignor
in writing, there is no action, suit, proceeding or investigation pending
or threatened against the Company, before any court, administrative agency
or other tribunal, which would draw into question the validity of this
Agreement or the Purchase Agreement, or which, either in any one instance
or in the aggregate, would result in any material adverse change in the
ability of the Company to perform its obligations under this Agreement or
the Purchase Agreements, and the Company is solvent.
4. Pursuant to Section 13 of each Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor, the Assignee
and the Trust, that the representations and warranties set forth on Exhibit B
hereto are true and correct as of the date hereof as if such representations and
warranties were made on the date hereof unless otherwise specifically stated in
such representations and warranties.
Remedies for Breach of Representations and Warranties
-----------------------------------------------------
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicers acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Sections 3 and 4
hereof shall be as set forth in Subsection 9.03 of each Purchase Agreement as if
they were set forth herein (including without limitation the repurchase and
indemnity obligations set forth therein).
Miscellaneous
-------------
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicer acting on the Trust's behalf). Any entity into which Assignor,
Assignee or Company may be merged or consolidated shall, without the requirement
for any further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
9. Each of this Agreement and the Purchase Agreements shall survive
the conveyance of the Mortgage Loans and the assignment of the Purchase
Agreements (to the extent assigned hereunder) by Assignor to Assignee and by
Assignee to the Trust and nothing contained herein shall supersede or amend the
terms of the Purchase Agreements.
10. 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.
11. In the event that any provision of this Agreement conflicts with
any provision of the Purchase Agreements with respect to the Mortgage Loans, the
terms of this Agreement shall control.
12. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the applicable Purchase Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
ACCREDITED HOME LENDERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Senior Secondary Markets
Counsel, AVP & Ass't Sec'y
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Managing Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Executive Director
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Mortgage Loan Schedule
(Delivered to the Trustee on the Closing Date)
Exhibit B
Representations and Warranties Regarding Individual Mortgage Loans.
-------------------------------------------------------------------
The Seller hereby represents and warrants to the Purchaser that, as
to each Mortgage Loan, as of the closing date for the securitization (the
"Securitization Closing Date") (unless otherwise expressly indicated) for such
Mortgage Loan. Capitalized terms used but not otherwise defined in this Exhibit
B shall have the meanings ascribed thereto in the applicable Purchase Agreement:
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule as prepared by the Purchaser (the "Information") is
complete, true and correct as of the date on which the Seller transferred
servicing of the Mortgage Loan to the Purchaser or its designee (the "Servicing
Transfer Date") or, if earlier, the cut-off date for the securitization (the
"Securitization Cut-off Date"), and such Information was provided to the
Purchaser by the Seller;
(b) Payments Current. Except with respect to Mortgage Loans
representing approximately [____]% of the aggregate principal balance of the
Mortgage Loans as of March 1, 2006, all payments required to be made up to the
Servicing Transfer Closing Date for the Mortgage Loan under the terms of the
Mortgage Note, other than payments not yet 30 days delinquent, have been made
and credited. As of the Servicing Transfer Date, no payment required under the
Mortgage Loan is 30 days or more delinquent nor has any payment under the
Mortgage Loan been 30 days or more delinquent at any time since the origination
of the Mortgage Loan;
(c) No Outstanding Charges. Except with respect to Mortgage Loans
representing approximately [___]% of the aggregate principal balance of the
Mortgage Loans as of March 1, 2006, as of the Closing Date, and to the Seller's
knowledge as of the Securitization Closing Date, there are no defaults in
complying with the terms of the Mortgage, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have been paid,
or an escrow of funds has been established in an amount sufficient to pay for
every such item which remains unpaid and which has been assessed but is not yet
due and payable. 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 earlier, to
the day which precedes by one month the Due Date of the first installment of
principal and interest;
(d) Original Terms Unmodified. As of the Servicing Transfer Date,
the terms of the Mortgage Note and Mortgage have not been impaired, waived,
altered or modified in any respect, from the date of origination except by a
written instrument which has been recorded, if necessary to protect the
interests of the Purchaser, and which has been delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing, and the terms of
which are reflected in the Mortgage Loan Schedule. The substance of any such
waiver, alteration or modification has been approved by the title insurer, if
any, to the extent required by the policy, and its terms are reflected on the
Mortgage Loan Schedule, if applicable. As of the Servicing Transfer Date, no
Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement, approved by the issuer of the title insurer, to the extent
required by the policy, and which assumption agreement is part of the Mortgage
Loan File delivered to the Custodian or to such other Person as the Purchaser
shall designate in writing and the terms of which are reflected in the Mortgage
Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor in any state or Federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was funded;
(f) Hazard Insurance. As of the Servicing Transfer Date, pursuant to
the terms of the Mortgage, all buildings or other improvements upon the
Mortgaged Property are insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage and such other hazards as are customary in
the area where the Mortgaged Property is located pursuant to insurance policies
conforming to the requirements of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac, as well as all
additional requirements set forth in Section 2.10 of the Interim Servicing
Agreement. As of the Servicing Transfer Date, if required by the National Flood
Insurance Act of 1968, as amended, each Mortgage Loan is covered by a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect which policy conforms to ▇▇▇▇▇▇
Mae and ▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in Section
2.10 of the Interim Servicing Agreement. All individual insurance policies
contain a standard mortgagee clause naming the Seller and its successors and
assigns as mortgagee, and as of the Servicing Transfer Date, all premiums
thereon have been paid. The Mortgage obligates the Mortgagor thereunder to
maintain the hazard insurance policy at the Mortgagor's cost and expense, and on
the Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor's cost and expense, and to
seek reimbursement therefor from the 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,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Purchaser upon the consummation of the purchase of the
Mortgage Loan as contemplated by this Agreement. The 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 or entity, and no
such unlawful items have been received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to prepayment penalties, have been complied with, the consummation of
the transactions contemplated hereby will not involve the violation of any such
laws or regulations, and the Seller shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements. Notwithstanding the
foregoing, the Seller shall not be responsible for a breach of a federal, state
or local law, other than those governing the origination of the Mortgage Loan,
following the Servicing Transfer Date;
(h) No Satisfaction of Mortgage. As of the Servicing Transfer Date,
the Mortgage has not been satisfied, canceled, 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 release, cancellation, subordination or rescission. 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) Location and Type of Mortgaged Property. The Mortgaged Property
is a fee simple property located in the state identified in the Mortgage Loan
Schedule, except that with respect to real property located in jurisdictions in
which the use of leasehold estates for residential properties is a
widely-accepted practice, the Mortgaged Property may be a leasehold estate, and
consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development and that no residence or dwelling is a mobile home,
provided, however, that any condominium unit or planned unit development shall
not fall within any of the "Ineligible Projects" of part VIII, Section 102 of
the ▇▇▇▇▇▇ Mae Selling Guide and shall conform with the Underwriting Guidelines.
In the case of any Mortgaged Properties that are manufactured homes (a
"Manufactured Home Mortgage Loans"), (i) such Manufactured Home Mortgage Loan
conforms with the applicable ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac requirements regarding
mortgage loans related to manufactured dwellings, (ii) the related manufactured
dwelling is permanently affixed to the land, (iii) the related manufactured
dwelling and the related land are subject to a Mortgage properly filed in the
appropriate public recording office and naming Seller as mortgagee, (iv) the
applicable laws of the jurisdiction in which the related Mortgaged Property is
located will deem the manufactured dwelling located on such Mortgaged Property
to be a part of the real property on which such dwelling is located, and (v)
such Manufactured Home Mortgage Loan is (x) a qualified mortgage under Section
860G(a)(3) of the Internal Revenue Code of 1986, as amended and (y) secured by
manufactured housing treated as a single family residence under Section
25(e)(10) of the Code. As of the date of origination, no portion of the
Mortgaged Property was used for commercial purposes, and to the Seller's
knowledge since the Closing Date, no portion of the Mortgaged Property has been
used for commercial purposes; provided, that Mortgaged Properties which contain
a home office shall not be considered as being used for commercial purposes as
long as the Mortgaged Property has not been altered for commercial purposes and
is not storing any chemicals or raw materials other than those commonly used for
homeowner repair, maintenance and/or household purposes;
(j) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien on the Mortgaged Property, including all
buildings and improvements 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:
(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 prudent mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (a) specifically 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; and
(iii) 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,
subsisting, enforceable and perfected first lien and first priority security
interest on the property described therein and the Seller has full right to sell
and assign the same to the Purchaser. As used in this Subsection 9.02,
"enforceable" shall be deemed to be subject to bankruptcy laws and general
principles of equity;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other such related parties. As of the Closing
Date, and to Seller's knowledge, as of the Securitization Closing Date, no
fraud, error, omission, misrepresentation or similar occurrence with respect to
the origination of 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.
The Seller has reviewed all of the documents constituting the Servicing File and
has made such inquiries as it deems necessary to make and confirm the accuracy
of the representations set forth herein;
(l) Full Disbursement of Proceeds. Except to the extent the Mortgage
Loan is subject to completion escrows which have been disclosed to and
acknowledged by the Purchaser and which meet the requirements of the
Underwriting Guidelines, and as to which a completed ▇▇▇▇▇▇ ▇▇▇ form 442 has
been delivered to the Purchaser within sixty (60) days after the Closing Date,
the Mortgage Loan has been closed and the proceeds of the Mortgage Loan have
been fully disbursed and there is no requirement for future advances 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 were paid, and the Mortgagor is
not entitled to any refund of any amounts paid or due under the Mortgage Note or
Mortgage;
(m) Ownership. As of the Closing Date, the Seller was the sole owner
of record and holder of the Mortgage Loan and the indebtedness evidenced by each
Mortgage Note and upon the sale of the Mortgage Loans to the Purchaser, the
Seller will retain the Mortgage Files or any part thereof with respect thereto
not delivered to the Custodian, the Purchaser or the Purchaser's designee, in
trust only for the purpose of servicing and supervising the servicing of each
Mortgage Loan. As of the Closing Date, upon payment of the Purchase Price, the
Mortgage Loan was not assigned or pledged, and the Seller had good, indefeasible
and marketable title thereto, and has full right to transfer and sell the
Mortgage Loan to the Purchaser free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest, and
had full right and authority subject to no interest or participation of, or
agreement with, any other party, to sell and assign each Mortgage Loan pursuant
to the applicable Purchase Agreement and following the sale of each Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. As of the Closing Date, the Seller intended to relinquish all
rights to possess, control and monitor the Mortgage Loan. After the Closing
Date, the Seller will have no right to modify or alter the terms of the sale of
the Mortgage Loan and the Seller will have no obligation or right to repurchase
the Mortgage Loan or substitute another Mortgage Loan, except as provided in
this Agreement;
(n) Doing Business. As of the Closing Date, 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) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located,
and (2) either (i) organized under the laws of such state, or (ii) qualified to
do business in such state, or (iii) a federal savings and loan association, a
savings bank or a national bank having a principal office in such state, or (3)
not doing business in such state;
(o) LTV. No Mortgage Loan had an LTV at origination greater than
100%.
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance policy is
issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first priority lien
of the Mortgage 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) and (ii) of paragraph (j) of this Subsection
9.02, 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 Seller, its successor 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 purchase of the
Mortgage Loan as contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder of the related
Mortgage, including the 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 or entity, and no such unlawful
items have been received, retained or realized by the Seller;
(q) No Defaults. Except with respect to Mortgage Loans representing
approximately [____]% of the aggregate principal balance of the Mortgage Loans
as of March 1, 2006, other than payments due but not yet 30 days or more
delinquent, as of the Closing Date and to the Seller's knowledge as of the
Securitization Closing Date, there is no default, breach, violation or event
which would permit 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 which would permit acceleration, and neither the Seller nor any of its
affiliates nor any of their respective predecessors, have waived any default,
breach, violation or event which would permit acceleration;
(r) No Mechanics' Liens. Except as insured against by the related
title insurance, as of the Closing Date and to the Seller's knowledge as of the
Securitization Closing Date, 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 liens) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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. As of the Closing Date, and to the Seller's knowledge as
of the Securitization Closing Date, no improvement located on or being part of
the Mortgaged Property is in violation of any applicable zoning law or
regulation;
(t) Origination; Payment Terms. Either (a) the Mortgage Loan was
originated by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, a
savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or other similar institution which is supervised and examined
by a federal or state authority, or (b) the following requirements have been met
with respect to the Mortgage Loan: the Seller meets the requirements set forth
in clause (a), and (i) such Mortgage Loan was underwritten in accordance with
standards established by the Seller, using application forms and related credit
documents approved by the Seller, (ii) the Seller approved each application and
the related credit documents before a commitment by the correspondent was
issued, and no such commitment was issued until the Seller agreed to fund such
Mortgage Loan, (iii) the closing documents for such Mortgage Loan were prepared
on forms approved by the Seller, and (iv) such Mortgage Loan was actually funded
by the Seller and was purchased by the Seller at closing or soon thereafter. The
documents, instruments and agreements submitted for loan underwriting were not
falsified and contain no untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the information
and statements therein not misleading. Principal payments on the Mortgage Loan
are required to commence no more than sixty days after funds were disbursed in
connection with the Mortgage Loan. The Mortgage Interest Rate as well as the
Lifetime Rate Cap and the Periodic Cap, are as set forth on the Mortgage Loan
Schedule. Except with respect to a "balloon" Mortgage Loan, the Mortgage Note is
payable 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 thirty years from commencement of
amortization. Unless otherwise specified on the Mortgage Loan Schedule, the
Mortgage Loan is payable on the first day of each month. There are no
Convertible Mortgage Loans which contain a provision allowing the Mortgagor to
convert the Mortgage Note from an adjustable interest rate Mortgage Note to a
fixed interest rate Mortgage Note;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to each Purchase Agreement as Exhibit G). The Mortgage
Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae and the
Seller has not made any representations to a Mortgagor that are inconsistent
with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the Closing Date, and
to the Seller's knowledge as of the Securitization Closing Date, the Mortgaged
Property is capable of being lawfully occupied under applicable law. As of the
Closing Date, and to the Seller's knowledge as of the Securitization Closing
Date, 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 and fire underwriting certificates, have been made or
obtained from the appropriate authorities;
(x) No Additional Collateral. As of the Servicing Transfer Date, the
Mortgage Note is not and has not been secured by any collateral except the lien
of the corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage referred to in clause (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and, as of the Servicing Transfer Date, and
to the Seller's knowledge as of the Securitization Closing Date, so serves and
is named in the Mortgage, and no fees or expenses are or will become payable by
the Purchaser to the trustee under the deed of trust, except in connection with
a trustee's sale after default by the Mortgagor;
(z) Acceptable Investment. The Seller has no knowledge of any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor, the Mortgage File or the Mortgagor's credit standing,
other than the subprime nature of such credit standing, that can reasonably be
expected to cause private institutional investors who invest in mortgage loans
similar to the Mortgage Loan, to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan, or cause the Mortgage Loans to
prepay during any period materially faster or slower than the mortgage loans
originated by the Seller generally;
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Seller is in possession of a complete, true and
accurate Mortgage File in compliance with Exhibit A to the applicable Purchase
Agreement, except for such documents the originals of which have been delivered
to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Seller's Underwriting Guidelines;
(cc) Transfer of Mortgage Loans. The Assignment of Mortgage with
respect to each Mortgage Loan is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located. The transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Seller are not subject to the bulk transfer or similar
statutory provisions in effect in any applicable jurisdiction;
(dd) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, the
Mortgage contains an enforceable provision (subject to applicable law) 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 mortgagee thereunder, and such provision is
enforceable;
(ee) [Reserved];
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. Any future 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.
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 ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings. As
of the Closing Date, and to the Seller's knowledge as of the Securitization
Closing Date, there is no proceeding pending or threatened for the total or
partial condemnation of the Mortgaged Property. As of the Closing Date, and to
the Seller's knowledge as of the Securitization Closing Date, the Mortgaged
Property is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended and each Mortgaged Property is in good repair. As of the
Closing Date, there have not been any condemnation proceedings with respect to
the Mortgaged Property and the Seller has no knowledge of any such proceedings
in the future;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in compliance
with Accepted Servicing Practices, applicable laws and regulations, and have
been in all respects legal and proper. With respect to escrow deposits and
Escrow Payments, all such payments are in the possession of, or under the
control of, the Seller through the Servicing Transfer Date, and, as of such
date, there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. As of the Servicing
Transfer Date, all Escrow Payments collected by the Seller have been collected
in full compliance with state and federal law and the provisions of the related
Mortgage Note and Mortgage. An escrow of funds is not prohibited by applicable
law and, as of the Servicing Transfer Date, all escrows that have been
established have been established in an amount sufficient to pay for every item
that remains unpaid and has been assessed but is not yet due and payable. As of
the Servicing Transfer Date, no escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized by the Seller under the
Mortgage or the Mortgage Note. All Mortgage Interest Rate adjustments have been
made in strict compliance with state and federal law and the terms of the
related Mortgage and Mortgage Note on the related Interest Rate Adjustment Date.
If, pursuant to the terms of the Mortgage Note, another index was selected for
determining the Mortgage Interest Rate, the same index was used with respect to
each Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller
executed and delivered any and all notices required under applicable law and the
terms of the related Mortgage Note and Mortgage regarding the Mortgage Interest
Rate and the Monthly Payment adjustments. As of the Servicing Transfer Date, any
interest required to be paid pursuant to state, federal and local law has been
properly paid and credited;
(jj) Conversion to Fixed Interest Rate. With respect to Adjustable
Rate Mortgage Loans, the Mortgage Loan is not a Convertible Mortgage Loan;
(kk) Other Insurance Policies. As of the Servicing Transfer Date, 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, special hazard insurance 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 by any officer,
director, or employee of 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;
(ll) No Violation of Environmental Laws. As of the Closing Date, and
to the Seller's knowledge as of the Securitization Closing Date, there is no
pending action or proceeding directly involving the Mortgaged Property in which
compliance with any environmental law, rule or regulation is an issue. As of the
Closing Date, to the Seller's knowledge, based upon customary and prudent
residential mortgage industry underwriting standards, and to Seller's knowledge
as of the Securitization Closing Date, there is no violation of any
environmental law, rule or regulation with respect to the Mortgage Property, and
nothing further remains to be done to satisfy in full all requirements of each
such law, rule or regulation constituting a prerequisite to use and enjoyment of
said property;
(mm) Servicemembers' Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Servicemembers' Civil Relief Act or any
similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property 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, and whose compensation was not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfied
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed one or more statements to
the effect that the Mortgagor has received all disclosure materials required by,
and the Seller has complied with, all applicable law with respect to the making
of the Mortgage Loans. The Seller shall maintain such statement(s) in the
Mortgage File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Value of Mortgaged Property. The Seller has no knowledge of any
circumstances existing that could reasonably be expected to adversely affect the
value or the marketability of any Mortgaged Property or Mortgage Loan or to
cause the Mortgage Loans to prepay during any period materially faster or slower
than similar mortgage loans held by the Seller generally secured by properties
in the same geographic area as the related Mortgaged Property;
(rr) No Defense to Insurance Coverage. As of the Servicing Transfer
Date, no action has been taken or failed to be taken, no event has occurred and
no state of facts exists or has existed on or prior to the Closing Date (whether
or not known to the Seller on or prior to such date) which has resulted or will
result in an exclusion from, denial of, or defense to coverage under any primary
mortgage insurance (including, without limitation, any exclusions, denials or
defenses which would limit or reduce the availability of the timely payment of
the full amount of the loss otherwise due thereunder to the insured) whether
arising out of actions, representations, errors, omissions, negligence, or fraud
of the Seller, the related Mortgagor or any party involved in the application
for such coverage, including the appraisal, plans and specifications and other
exhibits or documents submitted therewith to the insurer under such insurance
policy, or for any other reason under such coverage, but not including the
failure of such insurer to pay by reason of such insurer's breach of such
insurance policy or such insurer's financial inability to pay;
(ss) Escrow Analysis. With respect to each Mortgage, the Seller has
within the last twelve months (unless such Mortgage was originated within such
twelve month period) analyzed the required Escrow Payments for each Mortgage and
adjusted the amount of such payments so that, assuming all required payments are
timely made, any deficiency will be eliminated on or before the first
anniversary of such analysis, or any overage will be refunded to the Mortgagor,
in accordance with RESPA and any other applicable law;
(tt) Prior Servicing. As of the Servicing Transfer Date, each
Mortgage Loan has been serviced by the Seller in all material respects in strict
compliance with Accepted Servicing Practices;
(uu) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage. The Seller
shall hold the Purchaser harmless from any and all damages, losses, costs and
expenses (including attorney's fees) arising from disclosure of credit
information in connection with the Purchaser's secondary marketing operations
and the purchase and sale of mortgages or Servicing Rights thereto;
(vv) Leaseholds. As of the Closing Date and to Seller's knowledge as
of the Securitization Closing Date, if the Mortgage Loan is secured by a
long-term residential lease, (1) the lessor under the lease holds a fee simple
interest in the land; (2) the terms of such lease expressly permit the
mortgaging of the leasehold estate, the collateral assignment of the lease
without the lessor's consent (or such consent has been obtained) and the
acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the
Mortgage with substantially similar protections; (3) the terms of such lease do
not (a) allow the termination thereof upon the lessee's default without the
holder of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (b) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence, (c)
prohibit the holder of the Mortgage from being insured (or receiving proceeds of
insurance) under the hazard insurance policy or policies relating to the
Mortgaged Property or (d) permit any increase in rent other than pre-established
increases set forth in the lease; (4) the original term of such lease is not
less than 15 years; (5) the term of such lease does not terminate earlier than
five years after the maturity date of the Mortgage Note; and (6) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold estates in
transferring ownership in residential properties is a widely accepted practice;
(ww) Prepayment Penalty. (i) Each Mortgage Loan is subject to a
prepayment penalty as provided in the related Mortgage Note, except as set forth
on the Mortgage Loan Schedule, and (ii) no such prepayment penalty may be
imposed for a term in excess of five (5) years from the date of origination;
(xx) Predatory Lending Regulations. None of the Mortgage Loans (a)
is covered by the Home Ownership and Equity Protection Act of 1994 or (b) is
classified as a "high cost home," "threshold," "covered" (excluding a "covered
home loan" as defined in clause (1) of the definition of such term under the New
Jersey Home Ownership Security Act of 2002), "high risk home", "predatory" or
similar loan under any other applicable federal, state or local law (including
without limitation any regulation or ordinance) (or a similarly classified loan
using different terminology under a law imposing heightened regulatory scrutiny
or additional legal liability for residential mortgage loans having high
interest rates, points and/or fees) or (c) is a Mortgage Loan categorized as
"High Cost" or "Covered" pursuant to Appendix E of the Standard & Poor's
Glossary, and no Mortgage Loan originated on or after October 1, 2002 through
March 6, 2003 is governed by the Georgia Fair Lending Act;
(yy) Single-premium credit life insurance policy. In connection with
the origination of any Mortgage Loan, no proceeds from any Mortgage Loan were
used to finance a single-premium credit life insurance policy;
(zz) Compliance with Anti-Money Laundering Laws. The Seller has
complied with all applicable anti-money laundering laws and regulations,
including without limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws");
(aaa) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code;
(bbb) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real Estate
Tax Service, and such contract is transferable;
(ccc) Fair Credit Reporting Act. Accredited has, in its capacity as
servicer for each Mortgage Loan, fully furnished, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company (three of the
credit repositories), on a monthly basis;
(ddd) Mortgagor Selection. No Mortgagor was encouraged or required
to select a mortgage loan product offered by the Mortgage Loan's originator
which is a higher cost product designed for less creditworthy mortgagors, unless
at the time of the Mortgage Loan's origination, such Mortgagor did not qualify
taking into account credit history and debt to income ratios for a lower cost
credit product then offered by the Mortgage Loan's originator or any affiliate
of the Mortgage Loan's originator. If, at the time of loan application, the
Mortgagor may have qualified for a lower cost credit product then offered by any
mortgage lending affiliate of the Mortgage Loan's originator, the Mortgage
Loan's originator referred the related Mortgagor's application to such affiliate
for underwriting consideration;
(eee) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs, in part, objective
mathematical principles which relate the related Mortgagor's income, assets and
liabilities to the proposed payment and such underwriting methodology does not
rely on the extent of the related Mortgagor's equity in the collateral as the
principal determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of origination
(application/approval) the related Mortgagor had a reasonable ability to make
timely payments on the Mortgage Loan, relying on the Mortgagor's representation
of the Mortgagor's income in the case of loan programs which did not require
verification of the Mortgagor's income;
(fff) Mortgage Loans with Prepayment Premiums. With respect to any
Mortgage Loan that contains a provision permitting imposition of a premium upon
a prepayment prior to maturity: (i) a mortgage loan without such a premium was
available to the Mortgagor at an interest rate and/or fee structure higher than
that of the Mortgage Loan, (ii) prior to the Mortgage Loan's funding, the
related Mortgagor had the option of obtaining the Mortgage Loan without a
requirement for payment of such a premium, and (iii) the prepayment premium is
disclosed to the related Mortgagor in the Mortgage Loan documents pursuant to
applicable state and federal law;
(ggg) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident, health insurance product or debt
cancellation agreement as a condition of obtaining the extension of credit. No
Mortgagor obtained a prepaid single premium credit life, disability, accident or
health insurance policy in connection with the origination of the Mortgage Loan.
No proceeds from any 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;
(hhh) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(iii) No Arbitration. No Mortgage Loan originated on or after August
1, 2004, requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
==============================================================================
FIFTH AMENDED AND RESTATED MORTGAGE LOAN
PURCHASE AND WARRANTIES AGREEMENT
------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
Purchaser
ACCREDITED HOME LENDERS, INC.,
Seller
------------------------
Dated as of December 1, 2005
Conventional,
Fixed and Adjustable Rate, B/C Residential Mortgage Loans
==============================================================================
TABLE OF CONTENTS
SECTION 1. DEFINITIONS.................................................
SECTION 2. AGREEMENT TO PURCHASE.......................................
SECTION 3. MORTGAGE SCHEDULES..........................................
SECTION 4. PURCHASE PRICE..............................................
SECTION 5. EXAMINATION OF MORTGAGE FILES...............................
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER.........................
Subsection 6.01 Conveyance of Mortgage Loans; Possession of
Servicing Files.......................................
Subsection 6.02 Books and Records.....................................
Subsection 6.03 Delivery of Mortgage Loan Documents...................
Subsection 6.04 Quality Control Procedures............................
SECTION 7. SERVICING OF THE MORTGAGE LOANS.............................
SECTION 8. TRANSFER OF SERVICING.......................................
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REMEDIES FOR BREACH.........................................
Subsection 9.01 Representations and Warranties Regarding the
Seller................................................
Subsection 9.02 Representations and Warranties Regarding
Individual Mortgage Loans.............................
Subsection 9.03 Remedies for Breach of Representations and
Warranties............................................
Subsection 9.04 [RESERVED]............................................
Subsection 9.05 Mortgage Loans with First Payment Defaults;
Repurchase............................................
Subsection 9.06 Repurchase of Certain Mortgage Loans That Prepay
in Full...............................................
SECTION 10. CLOSING.....................................................
SECTION 11. CLOSING DOCUMENTS...........................................
SECTION 12. COSTS.......................................................
SECTION 13. COOPERATION OF SELLER WITH A RECONSTITUTION.................
SECTION 14. THE SELLER..................................................
Subsection 14.01 Additional Indemnification by the Seller; Third
Party Claims..........................................
Subsection 14.02 Merger or Consolidation of the Seller.................
SECTION 15. FINANCIAL STATEMENTS........................................
SECTION 16. MANDATORY DELIVERY..........................................
SECTION 17. NOTICES.....................................................
SECTION 18. SEVERABILITY CLAUSE.........................................
SECTION 19. COUNTERPARTS................................................
SECTION 20. GOVERNING LAW...............................................
SECTION 21. INTENTION OF THE PARTIES....................................
SECTION 22. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT....
SECTION 23. WAIVERS.....................................................
SECTION 24. EXHIBITS....................................................
SECTION 25. GENERAL INTERPRETIVE PRINCIPLES.............................
SECTION 26. REPRODUCTION OF DOCUMENTS...................................
SECTION 27. FURTHER AGREEMENTS..........................................
SECTION 28. RECORDATION OF ASSIGNMENTS OF MORTGAGE......................
SECTION 29. NO SOLICITATION.............................................
SECTION 30. WAIVER OF TRIAL BY JURY.....................................
SECTION 31. SUBMISSION TO JURISDICTION; WAIVERS.........................
SECTION 32. CONFIDENTIALITY.............................................
SECTION 33 COMPLIANCE WITH REGULATION AB...............................
Subsection 33.01 Intent of the Parties; Reasonableness.................
Subsection 33.02 Additional Representations and Warranties of the
Seller................................................
Subsection 33.03 Information To Be Provided by the Seller..............
Subsection 33.04 Indemnification.......................................
EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B [RESERVED]
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT E FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G UNDERWRITING GUIDELINES
EXHIBIT H FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
EXHIBIT I FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT J FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
FIFTH AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
--------------------------------------------------------------------------
This FIFTH AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND
WARRANTIES AGREEMENT (the "Agreement"), dated as of December 1, 2005, by and
between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York corporation, having an
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Purchaser"),
and Accredited Home Lenders, Inc., a California corporation, having an office at
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Purchaser and the Seller are parties to that certain
Fourth Amended and Restated Mortgage Loan Purchase and Warranties Agreement,
dated as of August 1, 2005, (the "Original Purchase Agreement"), pursuant to
which the Seller may sell, from time to time, to the Purchaser, and the
Purchaser may purchase, from time to time, from the Seller, certain conventional
adjustable and fixed rate B/C, residential first mortgage loans (the "Mortgage
Loans") on a servicing released basis as described therein, and which shall be
delivered in pools of whole loans (each, a "Mortgage Loan Package") on various
dates as provided therein (each, a "Closing Date"); and
WHEREAS, at the present time, the Purchaser and the Seller desire to
amend the Original Purchase Agreement to make certain modifications as set forth
herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and the
Seller agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below. Other capitalized terms used in
this Agreement and not defined herein shall have the respective meanings set
forth in the Interim Servicing Agreement.
Accepted Servicing Practices: 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 and incorporating
the Delinquency Collection Policies and Procedures.
Act: The National Housing Act, as amended from time to time.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan
purchased pursuant to this Agreement.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agency Transfer: A ▇▇▇▇▇▇ ▇▇▇ Transfer or a ▇▇▇▇▇▇▇ Mac Transfer.
Agreement: This Fifth Amended and Restated Mortgage Loan Purchase
and Warranties Agreement and all amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor
thereto.
Ancillary Income: All late charges, assumption fees, escrow account
benefits, reinstatement fees and similar types of fees arising from or in
connection with any Mortgage, to the extent not otherwise payable to the
Mortgagor under applicable law or pursuant to the terms of the related Mortgage
Note.
Appraised Value: 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.
Appropriate Federal Banking Agency: Appropriate Federal Banking
Agency shall have the meaning ascribed to it by Section 1813(q) of Title 12 of
the United States Code, as amended from time to time.
Assignment and Conveyance Agreement: As defined in Subsection 6.01.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions in (a) the State of New
York, (b) the state in which the Seller's servicing operations are located or
(c) the State in which the Custodian's operations are located, are authorized or
obligated by law or executive order to be closed.
Closing Date: The date or dates on which the Purchaser from time to
time shall purchase, and the Seller from time to time shall sell, the Mortgage
Loans listed on the related Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
Code: Internal Revenue Code of 1986, as amended.
Commission: The United States Securities and Exchange Commission.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Convertible Mortgage Loan: Any individual Adjustable Rate Mortgage
Loan purchased pursuant to this Agreement which contains a provision whereby the
Mortgagor is permitted to convert the Adjustable Rate Mortgage Loan to a fixed
rate Mortgage Loan in accordance with the terms of the related Mortgage Note.
Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
Custodial Account: The separate trust account created and maintained
pursuant to Section 2.04 of the Interim Servicing Agreement (with respect to
each Mortgage Loan, as specified therein).
Custodial Agreement: The Custodial Agreement, dated as of the date
hereof, among the Seller, the Purchaser and the Custodian, which governs the
retention of the originals of each Mortgage Note, Mortgage, Assignment of
Mortgage and other Mortgage Loan Documents.
Custodian: Deutsche Bank Trust Company Americas, or its successor in
interest or permitted assigns, or any successor to the Custodian under the
Custodial Agreement as therein provided.
Cut-off Date: The date or dates designated as such on the related
Mortgage Loan Schedule with respect to the related Mortgage Loan Package.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased or
replaced or to be replaced with a Qualified Substitute Mortgage Loan by the
Seller in accordance with the terms of this Agreement.
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
Determination Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, for an interim period, as
specified therein).
Due Date: The day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date and any Mortgage
Loan, the period commencing on the day immediately succeeding the Due Date for
such Mortgage Loan occurring in the month preceding the month of the Remittance
Date and ending on the next Due Date.
Equity Take-out Refinanced Mortgage Loan: A Mortgage Loan used to
refinance an existing mortgage loan, the proceeds of which were in excess of the
outstanding principal balance of the existing mortgage loan.
Escrow Account: The separate account created and maintained pursuant
to Section 2.06 of the Interim Servicing Agreement (with respect to each
Mortgage Loan, as specified therein).
Escrow Payments: 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.
Exchange Act: The Securities Exchange Act of 1934, as amended.
▇▇▇▇▇▇ ▇▇▇: The Federal National Mortgage Association, or any
successor thereto.
▇▇▇▇▇▇ Mae Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇
Mae Servicers' Guide and all amendments or additions thereto.
▇▇▇▇▇▇ ▇▇▇ Transfer: As defined in Section 13 hereof.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHA: 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: A corporation or institution approved as a
mortgagee by the FHA under the Act, and applicable HUD regulations, and eligible
to own and service mortgage loans such as the FHA mortgage loans.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A fixed rate mortgage loan purchased
pursuant to this Agreement.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
▇▇▇▇▇▇▇ Mac Transfer: As defined in Section 13 hereof.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note which amount
is added to the Index in accordance with the terms of the related Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate
for such Mortgage Loan.
High Cost Loan: A Mortgage Loan classified as (a) a "high cost" loan
under the Home Ownership and Equity Protection Act of 1994 or (b) a "high cost
home," "threshold," "covered," "high risk home," "predatory" or similar loan
under any other applicable state, federal or local law (or a similarly
classified loan using different terminology under a law imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage loans
having high interest rates, points and/or fees) or (c) a Mortgage Loan
categorized as High Cost pursuant to Appendix E of Standard & Poor's Glossary.
For avoidance of doubt, the parties agree that this definition shall apply to
any law regardless of whether such law is presently, or in the future becomes,
the subject of judicial review or litigation.
Home Loan: A Mortgage Loan categorized as Home Loan pursuant to
Appendix E of Standard & Poor's Glossary.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and Government National Mortgage Association.
Index: The index indicated in the related Mortgage Note for each
Adjustable Rate Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Insured Depository Institution: Insured Depository Institution shall
have the meaning ascribed to such term by Section 1813(c)(2) of Title 12 of the
United States Code, as amended from time to time.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the related
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
Interim Funder: With respect to each MERS Designated Mortgage Loan,
the Person named on the MERS(R) System as the interim funder pursuant to the
MERS Procedures Manual.
Interim Servicing Agreement: The Interim Servicing Agreement,
between Purchaser and Seller, as servicer, dated as of August 1, 2002, as
amended by Amendment No. 1, dated as of January 15, 2004, which agreement
provides for the Seller to service the Mortgage Loans for an interim period.
Investor: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS(R) System as the investor pursuant to the MERS
Procedures Manual.
Lifetime Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum Mortgage
Interest Rate thereunder. The Mortgage Interest Rate during the terms of each
Adjustable Rate Mortgage Loan shall not at any time exceed the Mortgage Interest
Rate at the time of origination of such Adjustable Rate Mortgage Loan by more
than the Lifetime Rate Cap set forth as an amount per annum on the related
Mortgage Loan Schedule.
Limited Documentation Program: The guidelines under which the Seller
generally originates Mortgage Loans principally on the basis of the
Loan-to-Value Ratio of the related Mortgage Loan and the creditworthiness of the
Mortgagor.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise or the sale
of the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the outstanding principal amount of the
Mortgage Loan as of the related Cut-off Date (unless otherwise indicated), to
the lesser of (a) the Appraised Value of the Mortgaged Property at origination
and (b) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, or was made within 12 months following such acquisition, the
purchase price of the Mortgaged Property.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, and its successors in interest.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Seller has designated or will designate MERS as, and has taken or will take such
action as is necessary to cause MERS to be, the mortgagee of record, as nominee
for the Seller, in accordance with MERS Procedure Manual, (b) the Seller has
designated or will designate the Purchaser as the Investor on the MERS(R)
System, and (c) the Seller has designated or will designate the Custodian as the
Custodian on the MERS(R) System.
MERS Procedure Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS Designated
Mortgage Loans and other information.
MERS(R) System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor
thereto.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note; except that with respect to
real property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely-accepted practice, the mortgage, deed of
trust or other instrument securing the Mortgage Note may secure and create a
first lien upon a leasehold estate of the Mortgagor.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit A annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note with respect to each Mortgage Loan.
Mortgage Interest Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the applicable Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
Servicing Rights and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan, excluding replaced or
repurchased mortgage loans.
Mortgage Loan Documents: The documents required to be delivered to
the Custodian pursuant to Section 6.03 hereof with respect to any Mortgage Loan.
Mortgage Loan Package: Each pool of Mortgage Loans, which shall be
purchased by the Purchaser from the Seller from time to time on each Closing
Date.
Mortgage Loan Schedule: The schedule attached to the Purchase Price
and Terms Agreement as the "Points Schedule" together with the schedule of
Mortgage Loans setting forth the following information with respect to each
Mortgage Loan in the related Mortgage Loan Package: (1) the Seller's Mortgage
Loan identifying number; (2) the Mortgagor's name; (3) the street address of the
Mortgaged Property including the city, state and zip code; (4) a code indicating
whether the Mortgagor is self-employed; (5) a code indicating whether the
Mortgaged Property is owner-occupied; (6) the number and type of residential
units constituting the Mortgaged Property; (7) the original months to maturity
or the remaining months to maturity from the related Cut-off Date, in any case
based on the original amortization schedule and, if different, the maturity
expressed in the same manner but based on the actual amortization schedule; (8)
with respect to each First Lien Loan, the Loan-to-Value Ratio at origination,
and with respect to each Second Lien Loan, the CLTV at origination; (9) the
Mortgage Interest Rate as of the related Cut-off Date; (10) the date on which
the Monthly Payment was due on the Mortgage Loan and, if such date is not
consistent with the Due Date currently in effect, such Due Date; (11) the stated
maturity date; (12) the first payment date; (13) the amount of the Monthly
Payment as of the related Cut-off Date; (14) the last payment date on which a
payment was actually applied to the outstanding principal balance; (15) the
original principal amount of the Mortgage Loan; (16) the principal balance of
the Mortgage Loan as of the close of business on the related Cut-off Date, after
deduction of payments of principal due and collected on or before the related
Cut-off Date; (17) delinquency status as of the related Cut-off Date; (18) with
respect to each Adjustable Rate Mortgage Loan, the Interest Rate Adjustment
Date; (19) with respect to each Adjustable Rate Mortgage Loan, the Gross Margin;
(20) with respect to each Adjustable Rate Mortgage Loan, the Lifetime Rate Cap
under the terms of the Mortgage Note; (21) with respect to each Adjustable Rate
Mortgage Loan, a code indicating the type of Index; (22) the type of Mortgage
Loan (i.e., Fixed or Adjustable Rate Mortgage Loan, First or Second Lien Loan);
(23) a code indicating the purpose of the loan (i.e., purchase, rate and term
refinance, equity take-out refinance); (24) a code indicating the documentation
style (i.e., full, alternative or reduced); (25) asset verification (Y/N); (26)
the loan credit classification (as described in the Underwriting Guidelines);
(27) whether such Mortgage Loan provides for a Prepayment Penalty and, if
applicable, the Prepayment Penalty period; (28) the Mortgage Interest Rate as of
origination; (29) the credit risk score (FICO score); (30) the date of
origination; (31) with respect to Adjustable Rate Mortgage Loans, the Mortgage
Interest Rate adjustment period; (32) with respect to each Adjustable Rate
Mortgage Loan, the Mortgage Interest Rate adjustment percentage; (33) with
respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest Rate floor;
(34) with respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest
Rate Cap as of the first Interest Rate Adjustment Date; (35) with respect to
each Adjustable Rate Mortgage Loan, the Periodic Rate Cap subsequent to the
first Interest Rate Adjustment Date; (36) with respect to each Adjustable Rate
Mortgage Loan, a code indicating whether the Mortgage Loan provides for negative
amortization; (37) with respect to each Adjustable Rate Mortgage Loan with
negative amortization, the negative amortization limit; (38) a code indicating
whether the Mortgage Loan is a Home Loan; (39) a code indicating whether the
Mortgage Loan is a Balloon Mortgage Loan; (40) the Due Date for the first
Monthly Payment; (41) the original Monthly Payment due; (42) a code indicating
the PMI Policy provider and percentage of coverage, if applicable; (43)
Appraised Value; (44) appraisal type; (45) automated valuation model (AVM); (46)
appraisal date; (47) with respect to the related Mortgagor, the debt-to-income
ratio; and (48) the MERS Identification Number, if applicable. With respect to
the Mortgage Loans in the aggregate, the Mortgage Loan Schedule shall set forth
the following information, as of the related Cut-off Date: (1) the number of
Mortgage Loans; (2) the current aggregate outstanding principal balance of the
Mortgage Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage
Loans; (4) the weighted average maturity of the Mortgage Loans; (5) the
applicable Cut-off Date; and (6) the applicable Closing Date.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property (or leasehold estate, if
applicable) securing repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Non-Convertible Mortgage Loan: Any individual Adjustable Rate
Mortgage Loan purchased pursuant to this Agreement which does not contain a
provision pursuant to which the Mortgagor may convert the Adjustable Rate
Mortgage Loan to a Fixed Rate Mortgage Loan.
Nonrecoverable Advance: Any advance previously made or proposed to
be made in respect of a Mortgage Loan which, in the good faith judgment of the
Seller, will not or, in the case of a proposed advance, would not, be ultimately
recoverable from related Insurance Proceeds, Liquidation Proceeds or otherwise.
The determination by the Seller that it has made a Nonrecoverable Advance or
that any proposed advance of principal and interest, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by an Officers' Certificate delivered
to the Purchaser.
OCC: Office of the Comptroller of the Currency, and any successor
thereto.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President
(including Assistant Vice Presidents) and by the Treasurer or the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Seller, and
delivered to the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Seller, reasonably acceptable to the Purchaser, provided that any
Opinion of Counsel relating to (a) the qualification of any account required to
be maintained pursuant to this Agreement as an Eligible Account, (b)
qualification of the Mortgage Loans in a REMIC or (c) compliance with the REMIC
Provisions, must be (unless otherwise stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact independent of the Seller and any servicer
of the Mortgage Loans, (ii) does not have any material direct or indirect
financial interest in the Seller or any servicer of the Mortgage Loans or in an
Affiliate of either and (iii) is not connected with the Seller or any servicer
of the Mortgage Loans as an officer, employee, director or person performing
similar functions.
OTS: Office of Thrift Supervision, and any successor thereto.
Periodic Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum amount by
which the Mortgage Interest Rate therein may increase or decrease on an Interest
Rate Adjustment Date above or below the Mortgage Interest Rate previously in
effect. The Periodic Rate Cap for each Adjustable Rate Mortgage Loan is the rate
set forth as such on the related Mortgage Loan Schedule.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
Preliminary Mortgage Schedule: As defined in Section 3.
Principal Prepayment: Any payment or other recovery of principal on
a Mortgage Loan which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon and which is not accompanied
by an amount of interest representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller in exchange for the Mortgage Loans purchased on such
Closing Date as calculated in Section 4 of this Agreement.
Purchase Price Percentage: As defined in the related Purchase Price
and Terms Agreement.
Purchase Price and Terms Agreement: Those certain agreements setting
forth the general terms and conditions of the transactions consummated herein
and identifying the Mortgage Loans to be purchased from time to time hereunder,
by and between the Seller and the Purchaser.
Purchaser: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., or its successor
in interest or assigns or any successor to the Purchaser under this Agreement
as herein provided.
Qualified Appraiser: An 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, and whose compensation was not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfied the requirements of Title XI of
the Financial 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.
Qualified Correspondent: Any Person from which the Seller purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Seller and
such Person that contemplated that such Person would underwrite mortgage loans
from time to time, for sale to the Seller, in accordance with underwriting
guidelines designated by the Seller ("Designated Guidelines") or guidelines that
do not vary materially from such Designated Guidelines; (ii) such Mortgage Loans
were in fact underwritten as described in clause (i) above and were acquired by
the Seller within 180 days after origination; (iii) either (x) the Designated
Guidelines were, at the time such Mortgage Loans were originated, used by the
Seller in origination of mortgage loans of the same type as the Mortgage Loans
for the Seller's own account or (y) the Designated Guidelines were, at the time
such Mortgage Loans were underwritten, designated by the Seller on a consistent
basis for use by lenders in originating mortgage loans to be purchased by the
Seller; and (iv) the Seller employed, at the time such Mortgage Loans were
acquired by the Seller, pre~purchase or post~purchase quality assurance
procedures (which may involve, among other things, review of a sample of
mortgage loans purchased during a particular time period or through particular
channels) designed to ensure that Persons from which it purchased mortgage loans
properly applied the underwriting criteria designated by the Seller.
Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by ▇▇▇▇▇▇
Mae and ▇▇▇▇▇▇▇ Mac and whose claims paying ability is rated in the highest
rating category by any of the Rating Agencies with respect to primary mortgage
insurance and in the two highest rating categories by Best's with respect to
hazard and flood insurance (or such other rating as may be required by a Rating
Agency in connection with a Securitization Transaction in order to achieve the
desired ratings for the securities to be issued in connection with such
Securitization Transaction).
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Seller for a Deleted Mortgage Loan which must, on the date of
such substitution, (i) have an outstanding principal balance, after deduction of
all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the outstanding principal balance
of the Deleted Mortgage Loan (the amount of any shortfall will be deposited in
the Custodial Account by the Seller in the month of substitution); (ii) have a
Mortgage Interest Rate not less than and not more than 1% greater than the
Mortgage Interest Rate of the Deleted Mortgage Loan; (iii) have a remaining term
to maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; (iv) be of the same type as the Deleted Mortgage Loan
(i.e., fixed rate or adjustable rate with same Periodic Rate Cap, Index and lien
priority); and (v) comply with each representation and warranty (respecting
individual Mortgage Loans) set forth in Section 9 hereof.
Rating Agency: Any of Fitch, Moody's or Standard & Poor's, or their
respective successors designated by the Purchaser.
Reconstitution: Any Securitization Transaction or Whole Loan
Transfer.
Reconstitution Agreements: The agreement or agreements entered into
by the Seller and the Purchaser and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Mortgage Loans
sold hereunder, in connection with a Whole Loan Transfer, Agency Transfer or a
Securitization Transaction pursuant to Section 13, including, but not limited
to, a seller's warranties and servicing agreement with respect to a Whole Loan
Transfer, and a trust and servicing agreement, pooling and servicing agreement
and/or seller/servicer agreements and related custodial/trust agreement and
documents with respect to a Securitization Transaction.
Reconstitution Date: As defined in Section 13.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ▇▇.▇▇. 229.1100 229.1123, as such may be amended from
time to time, and subject to such clarification and interpretation as have
been provided by the Commission in the adopting release (Asset Backed
Securities, Securities Act Release No. 33 8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, and any other comparable state statute.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter
1, Subtitle A of the Code, and related provisions and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, as specified therein).
Repurchase Price: As defined in the related Purchase Price and
Terms Agreement.
RESPA: Real Estate Settlement Procedures Act, as amended from
time to time.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) a
sale or other transfer of some or all of the Mortgage Loans directly or
indirectly to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage backed securities or (2)
an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to one
or more portfolios of residential mortgage loans consisting, in whole or in
part, of some or all of the Mortgage Loans.
Seller: Accredited Home Lenders, Inc., its successors in interest
and assigns.
Seller Information: As defined in Subsection 33.04(a).
Servicing Fee: With respect to each Mortgage Loan subject to the
Interim Servicing Agreement, a fee payable monthly equal to one-twelfth of the
product of (a) the Servicing Fee Rate and (b) the outstanding principal balance
of such Mortgage Loan. Such fee shall be payable monthly and shall be pro-rated
for any portion of a month during which the Mortgage Loan is serviced by the
Seller under the Interim Servicing Agreement. The obligation of the Purchaser to
pay the Servicing Fee is limited to, and the Servicing Fee is payable solely
from, the interest portion (including recoveries with respect to interest from
Liquidation Proceeds, to the extent permitted by this Agreement) of such Monthly
Payment collected by the Seller, or as otherwise provided under this Agreement.
Servicing Fee Rate: 50 basis points (0.50%) per annum.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Seller consisting of originals of all documents in the Mortgage
File which are not delivered to the Purchaser or the Custodian and copies of the
Mortgage Loan Documents set forth in Section 2 of the Custodial Agreement.
Servicing Rights: Any and all of the following: (a) any and all
rights to service the Mortgage Loans; (b) any payments to or monies received by
the Seller for servicing the Mortgage Loans; (c) any late fees, penalties or
similar payments with respect to the Mortgage Loans; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of the Seller
thereunder; (e) Escrow Payments or other similar payments with respect to the
Mortgage Loans and any amounts actually collected by the Seller with respect
thereto; (f) all accounts and other rights to payment related to any of the
property described in this paragraph; and (g) any and all documents, files,
records, servicing files, servicing documents, servicing records, data tapes,
computer records, or other information pertaining to the Mortgage Loans or
pertaining to the past, present or prospective servicing of the Mortgage Loans.
Sponsor: The sponsor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Standard & Poor's: Standard & Poor's Ratings Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies Inc., and any successor thereto.
Standard & Poor's Glossary: The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
Stated Principal Balance: As to each Mortgage Loan on any date of
determination, (i) the principal balance of such Mortgage Loan at the related
Cut-off Date after giving effect to payments of principal due on or before such
date, to the extent actually received, minus (ii) all amounts previously
distributed to the Purchaser with respect to the related Mortgage Loan
representing payments or recoveries of principal on such Mortgage Loan.
Static Pool Information: Static pool information as described in
Item 1105(a)(1)~(3) and 1105(c) of Regulation AB.
Successor Servicer: Any servicer of one or more Mortgage Loans
designated by the Purchaser as being entitled to the benefits of the
indemnifications set forth in Subsections 9.03 and 14.01.
Third-Party Originator: Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller.
Transfer Date:__The date on which the Purchaser, or its designee,
shall receive the transfer of servicing responsibilities and begin to perform
the servicing of the Mortgage Loans with respect to the related Mortgage Loan
Package, and the Seller shall cease all servicing responsibilities. Such date
shall occur on the day indicated by the Purchaser to the Seller in accordance
with the Interim Servicing Agreement.
Underwriting Guidelines: The underwriting guidelines of the Seller
(which take into account the exception policies set forth therein), a copy of
which is attached hereto as Exhibit G and a then-current copy of which shall be
attached as an exhibit to the related Assignment and Conveyance.
Well Capitalized: Well Capitalized shall mean, with respect to any
Insured Depository Institution, the maintenance by such Insured Depository
Institution of capital ratios at or above the required minimum levels for such
capital category under the regulations promulgated pursuant to Section 1831(o)
of the United States Code, as amended from time to time, by the Appropriate
Federal Banking Agency for such institution, as such regulation may be amended
from time to time.
Whole Loan Agreement: Any Reconstitution Agreement in respect of
a Whole Loan Transfer.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Securitization Transaction.
SECTION 2. Agreement to Purchase.
The Seller agrees to sell from time to time, and the Purchaser
agrees to purchase from time to time, Mortgage Loans having an aggregate
principal balance on the related Cut-off Date in an amount as set forth in the
related Purchase Price and Terms Agreement, or in such other amount as agreed by
the Purchaser and the Seller as evidenced by the actual aggregate principal
balance of the Mortgage Loans accepted by the Purchaser on each Closing Date.
SECTION 3. Mortgage Schedules.
The Seller from time to time shall provide the Purchaser with
certain information constituting a preliminary listing of the Mortgage Loans to
be purchased on each Closing Date in accordance with the related Purchase Price
and Terms Agreement and this Agreement (each, a "Preliminary Mortgage
Schedule").
The Seller is obligated to deliver those Mortgage Loans funded by
the Seller pursuant to the original terms of the Seller's commitment to the
mortgagor. The Seller shall deliver the related Mortgage Loan Schedule for the
Mortgage Loans to be purchased on a particular Closing Date to the Purchaser at
least two (2) Business Days prior to the related Closing Date. The related
Mortgage Loan Schedule shall be the related Preliminary Mortgage Schedule with
those Mortgage Loans which are not being purchased by the Purchaser deleted.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan shall be the percentage of
par as stated in the related Purchase Price and Terms Agreement (subject to
adjustment as provided therein), multiplied by the aggregate principal balance,
as of the related Cut-off Date, of the Mortgage Loans, after application of
scheduled payments of principal due on or before the related Cut-off Date, to
the extent such payments were actually received. The initial principal amount of
the Mortgage Loans shall be the aggregate principal balance of the Mortgage
Loans, so computed as of the related Cut-off Date. If so provided in the related
Purchase Price and Terms Agreement, portions of the Mortgage Loans shall be
priced separately.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the current principal
amount of the related Mortgage Loans as of the related Cut-off Date at the
weighted average Mortgage Interest Rate of those Mortgage Loans. The Purchase
Price plus accrued interest as set forth in the preceding paragraph shall be
paid to the Seller by wire transfer of immediately available funds to an account
designated by the Seller in writing.
The Purchaser shall be entitled to (l) all scheduled principal due
after the related Cut-off Date, (2) all other recoveries of principal collected
on or after the related Cut-off Date, and (3) all payments of interest on the
Mortgage Loans net of applicable Servicing Fees (minus that portion of any such
payment which is allocable to the period prior to the related Cut-off Date). The
outstanding principal balance of each Mortgage Loan as of the related Cut-off
Date is determined after application of payments of principal due on or before
the related Cut-off Date, to the extent actually collected, together with any
unscheduled principal prepayments collected prior to such Cut-off Date;
provided, however, that payments of scheduled principal and interest paid prior
to such Cut-off date, but to be applied on a Due Date beyond the related Cut-off
Date shall not be applied to the principal balance as of the related Cut-off
Date. Such prepaid amounts shall be the property of the Purchaser. The Seller
shall deposit any such prepaid amounts into the Custodial Account, which account
is established for the benefit of the Purchaser for subsequent remittance by the
Seller to the Purchaser.
SECTION 5. Examination of Mortgage Files.
At least five (5) Business Days prior to the related Closing Date,
the Seller shall (a) deliver to the Purchaser or its designee in escrow, for
examination with respect to each Mortgage Loan to be purchased, the related
Mortgage File, including a copy of the Assignment of Mortgage pertaining to each
Mortgage Loan (except with respect to each MERS Designated Mortgage Loan), or
(b) make the related Mortgage File available to the Purchaser for examination at
such other location as shall otherwise be acceptable to the Purchaser. Such
examination may be made by the Purchaser or its designee at any reasonable time
before or after the related Closing Date. If the Purchaser makes such
examination prior to the related Closing Date and determines, in its sole
discretion, that any Mortgage Loans are unacceptable to the Purchaser for any
reason, such Mortgage Loans shall be deleted from the related Mortgage Loan
Schedule, and may be replaced by a Qualified Substitute Mortgage Loan (or Loans)
acceptable to the Purchaser. The Purchaser may, at its option and without notice
to the Seller, purchase some or all of the Mortgage Loans without conducting any
partial or complete examination. The fact that the Purchaser or its designee has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the Purchaser's (or any of its successor's)
rights to demand repurchase, substitution or other relief as provided herein;
provided, however, that the Purchaser may not demand repurchase, substitution or
other relief on the basis that a Mortgage Loan examined by the Purchaser or its
designee prior to purchase does not comply with the Underwriting Guidelines
provided by the Seller to the Purchaser prior to such examination and attached
as an exhibit hereto.
SECTION 6. Conveyance from Seller to Purchaser.
Subsection 6.01 Conveyance of Mortgage Loans; Possession of
Servicing Files.
The Seller, simultaneously with the delivery of the Mortgage Loan
Schedule with respect to the related Mortgage Loan Package to be purchased on
each Closing Date, shall execute and deliver an Assignment and Conveyance
Agreement in the form attached hereto as Exhibit H (the "Assignment and
Conveyance Agreement"). The Seller shall cause the Servicing File retained by it
pursuant to this Agreement to be appropriately identified in its computer system
and/or books and records, as appropriate, to clearly reflect the sale of the
related Mortgage Loan to the Purchaser. The Seller shall release from its
custody the contents of any Servicing File retained by it only in accordance
with this Agreement or the Interim Servicing Agreement, except when such release
is required in connection with a repurchase of any such Mortgage Loan pursuant
to Subsection 9.03.
Subsection 6.02 Books and Records.
Record title to each Mortgage as of the related Closing Date shall
be in the name of the Seller. Notwithstanding the foregoing, each Mortgage and
related Mortgage Note shall be possessed solely by the Purchaser or the
appropriate designee of the Purchaser, as the case may be. All rights arising
out of the Mortgage Loans including, but not limited to, all funds received by
the Seller after the related Cut-off Date on or in connection with a Mortgage
Loan shall be vested in the Purchaser or one or more designees of the Purchaser;
provided, however, that all funds received on or in connection with a Mortgage
Loan shall be received and held by the Seller in trust for the benefit of the
Purchaser or the appropriate designee of the Purchaser, as the case may be, as
the owner of the Mortgage Loans pursuant to the terms of this Agreement.
The sale of each Mortgage Loan shall be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
The Seller shall be responsible for maintaining, and shall maintain,
a complete set of books and records for each Mortgage Loan which shall be marked
clearly to reflect the ownership of each Mortgage Loan by the Purchaser. In
particular, the Seller shall maintain in its possession, available for
inspection by the Purchaser, and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, and applicable requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, including
but not limited to documentation as to the method used in determining the
applicability of the provisions of the National Flood Insurance Act of 1968, as
amended, to the Mortgaged Property, documentation evidencing insurance coverage
and periodic inspection reports, as required by the ▇▇▇▇▇▇ Mae Guides, if
applicable. To the extent that original documents are not required for purposes
of realization of Liquidation Proceeds or Insurance Proceeds, documents
maintained by the Seller may be in the form of microfilm or microfiche so long
as the Seller complies with the requirements of the ▇▇▇▇▇▇ ▇▇▇ Guides, if
applicable.
Subsection 6.03 Delivery of Mortgage Loan Documents.
The Seller shall deliver and release to the Custodian no later than
three (3) Business Days prior to the related Closing Date those Mortgage Loan
Documents set forth on Exhibit A hereto as required by the Custodial Agreement
with respect to each Mortgage Loan set forth on the related Mortgage Loan
Schedule.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement for the
related Closing Date, as evidenced by the Initial Certification of the Custodian
in the form annexed to the Custodial Agreement. The Seller shall comply with the
terms of the Custodial Agreement and the Purchaser shall pay all fees and
expenses of the Custodian.
The Seller shall forward to the Custodian, or to such other Person
as the Purchaser shall designate in writing, original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with this Agreement within two weeks of their
execution, provided, however, that the Seller shall provide the Custodian, or to
such other Person as the Purchaser shall designate in writing, with a certified
true copy of any such document submitted for recordation within two weeks of its
execution, and shall promptly provide the original of any document submitted for
recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within ninety
days of its submission for recordation.
In the event any document required to be delivered to the Custodian
in the Custodial Agreement, including an original or copy of any document
submitted for recordation to the appropriate public recording office, is not so
delivered to the Custodian, or to such other Person as the Purchaser shall
designate in writing, within 90 days following the related Closing Date (other
than with respect to the Assignments of Mortgage which shall be delivered to the
Custodian in blank and recorded subsequently by the Purchaser or its designee),
and in the event that the Seller does not cure such failure within 30 days of
discovery or receipt of written notification of such failure from the Purchaser,
the related Mortgage Loan shall, upon the request of the Purchaser, be
repurchased by the Seller at the price and in the manner specified in Subsection
9.03. The foregoing repurchase obligation shall not apply in the event that the
Seller cannot deliver an original document submitted for recordation to the
appropriate public recording office within the specified period due to a delay
caused by the recording office in the applicable jurisdiction; provided that the
Seller shall instead deliver a recording receipt of such recording office or, if
such recording receipt is not available, an officer's certificate of a servicing
officer of the Seller, confirming that such documents have been accepted for
recording; provided that, upon request of the Purchaser and delivery by the
Purchaser to the Seller of a schedule of the related Mortgage Loans, the Seller
shall reissue and deliver to the Purchaser or its designee said officer's
certificate.
The Seller shall pay all initial recording fees, if any, for the
assignments of mortgage and any other fees or costs in transferring all original
documents to the Custodian or, upon written request of the Purchaser, to the
Purchaser or the Purchaser's designee. The Purchaser or the Purchaser's designee
shall be responsible for recording the Assignments of Mortgage and shall be
reimbursed by the Seller for the costs associated therewith pursuant to the
preceding sentence.
Subsection 6.04 Quality Control Procedures.
The Seller shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the legal documents,
credit documents, property appraisals, and underwriting decisions. The program
shall include evaluating and monitoring the overall quality of the Seller's loan
production and the servicing activities of the Seller. The program is to ensure
that the Mortgage Loans are originated and serviced in accordance with Accepted
Servicing Standards and the Underwriting Guidelines; guard against dishonest,
fraudulent, or negligent acts; and guard against errors and omissions by
officers, employees, or other authorized persons.
SECTION 7. Servicing of the Mortgage Loans.
The Mortgage Loans have been sold by the Seller to the Purchaser on
a servicing released basis. Subject to, and upon the terms and conditions of
this Agreement and the Interim Servicing Agreement (with respect to each
Mortgage Loan, for an interim period, as specified therein), the Seller hereby
sells, transfers, assigns, conveys and delivers to the Purchaser the Servicing
Rights.
The Purchaser shall retain the Seller as contract servicer of the
Mortgage Loans for an interim period pursuant to and in accordance with the
terms and conditions contained in the Interim Servicing Agreement (with respect
to each Mortgage Loan, for an interim period, as specified therein). The
Purchaser and Seller shall execute the Interim Servicing Agreement on the
Closing Date. Pursuant to the Interim Servicing Agreement, the Seller shall
begin servicing the Mortgage Loans on behalf of the Purchaser and shall be
entitled to a Servicing Fee with respect to each Mortgage Loan from the related
Closing Date until the termination of the Interim Servicing Agreement with
respect to such Mortgage Loan as set forth therein.
SECTION 8. Transfer of Servicing.
On the applicable Transfer Date, the Purchaser, or its designee,
shall assume all servicing responsibilities related to, and the Seller shall
cease all servicing responsibilities related to the related Mortgage Loans. The
Transfer Date shall be the date determined in accordance with Section 6.03 of
the Interim Servicing Agreement (with respect to each Mortgage Loan, for an
interim period, as specified therein).
On or prior to the applicable Transfer Date, or as otherwise
specified below, the Seller shall, at its sole cost and expense, take such steps
as may be necessary or appropriate to effectuate and evidence the transfer of
the servicing of the related Mortgage Loans to the Purchaser, or its designee,
including but not limited to the following:
(a) Notice to Mortgagors. The Seller shall mail to the Mortgagor of
each related Mortgage Loan a letter advising such Mortgagor of the transfer of
the servicing of the related Mortgage Loan to the Purchaser, or its designee, in
accordance with the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ National Affordable Housing Act of 1990;
provided, however, the content and format of the letter shall have the prior
approval of the Purchaser. The Seller shall provide the Purchaser with copies of
all such related notices within five (5) Business Days following the Transfer
Date;
(b) Notice to Taxing Authorities and Insurance Companies. The Seller
shall transmit to the applicable taxing authorities and insurance companies
(including primary mortgage insurance policy insurers, if applicable) and/or
agents, notification of the transfer of the servicing to the Purchaser, or its
designee, and instructions to deliver all notices, tax bills and insurance
statements, as the case may be, to the Purchaser from and after the Transfer
Date. The Seller shall provide the Purchaser with copies of all such notices
within five (5) Business Days following the Transfer Date;
(c) Delivery of Servicing Records. The Seller shall forward to the
Purchaser, or its designee, all servicing records and the Servicing File in the
Seller's possession relating to each related Mortgage Loan including the
information enumerated in the Interim Servicing Agreement (with respect to each
such Mortgage Loan, for an interim period, as specified therein);
(d) Escrow Payments. The Seller shall provide the Purchaser, or its
designee, with immediately available funds by wire transfer in the amount of the
net Escrow Payments and suspense balances and all loss draft balances associated
with the related Mortgage Loans. The Seller shall provide the Purchaser with an
accounting statement of Escrow Payments and suspense balances and loss draft
balances sufficient to enable the Purchaser to reconcile the amount of such
payment with the accounts of the Mortgage Loans. Additionally, the Seller shall
wire transfer to the Purchaser the amount of any agency, trustee or prepaid
Mortgage Loan payments and all other similar amounts held by the Seller;
(e) Payoffs and Assumptions. The Seller shall provide to the
Purchaser, or its designee, copies of all assumption and payoff statements
generated by the Seller on the related Mortgage Loans from the related Cut-off
Date to the Transfer Date;
(f) Mortgage Payments Received Prior to Transfer Date. Prior to the
Transfer Date all payments received by the Seller on each related Mortgage Loan
shall be properly applied by the Seller to the account of the particular
Mortgagor;
(g) Mortgage Payments Received After Transfer Date. The amount of
any related Monthly Payments received by the Seller after the Transfer Date
shall be forwarded to the Purchaser by overnight mail within one (1) Business
Day following the date of receipt. The Seller shall notify the Purchaser of the
particulars of the payment, which notification requirement shall be satisfied if
the Seller forwards with its payment sufficient information to permit
appropriate processing of the payment by the Purchaser. The Seller shall assume
full responsibility for the necessary and appropriate legal application of such
Monthly Payments received by the Seller after the Transfer Date with respect to
related Mortgage Loans then in foreclosure or bankruptcy; provided, for purposes
of this Agreement, necessary and appropriate legal application of such Monthly
Payments shall include, but not be limited to, endorsement of a Monthly Payment
to the Purchaser with the particulars of the payment such as the account number,
dollar amount, date received and any special Mortgagor application instructions
and the Seller shall comply with the foregoing requirements with respect to all
Monthly Payments received by the it after the Transfer Date;
(h) Misapplied Payments. Misapplied payments shall be processed as
follows:
(i) All parties shall cooperate in correcting misapplication
errors;
(ii) The party receiving notice of a misapplied payment
occurring prior to the applicable Transfer Date and discovered after
the Transfer Date shall immediately notify the other party;
(iii) If a misapplied payment which occurred prior to the
Transfer Date cannot be identified and said misapplied payment has
resulted in a shortage in a Custodial Account or Escrow Account, the
Seller shall be liable for the amount of such shortage. The Seller
shall reimburse the Purchaser for the amount of such shortage within
thirty (30) days after receipt of written demand therefor from the
Purchaser;
(iv) If a misapplied payment which occurred prior to the
Transfer Date has created an improper Purchase Price as the result
of an inaccurate outstanding principal balance, a check shall be
issued to the party shorted by the improper payment application
within five (5) Business Days after notice thereof by the other
party; and
(v) Any check issued under the provisions of this Section 8(h)
shall be accompanied by a statement indicating the corresponding
Seller and/or the Purchaser Mortgage Loan identification number and
an explanation of the allocation of any such payments;
(i) Books and Records. On the Transfer Date, the books, records and
accounts of the Seller with respect to the related Mortgage Loans shall be in
accordance with all applicable Purchaser requirements as set forth in this
Agreement;
(j) Reconciliation. The Seller shall, on or before the Transfer
Date, reconcile principal balances and make any monetary adjustments required by
the Purchaser. Any such monetary adjustments will be transferred between the
Seller and the Purchaser as appropriate;
(k) IRS Forms. The Seller shall file all IRS forms 1099, 1099A, 1098
or 1041 and K-1 which are required to be filed on or before the Transfer Date in
relation to the servicing and ownership of the related Mortgage Loans. The
Seller shall provide copies of such forms to the Purchaser upon request and
shall reimburse the Purchaser for any costs or penalties incurred by the
Purchaser due to the Seller's failure to comply with this paragraph; and
(l) MERS. With respect to each MERS Designated Mortgage Loan, the
Seller shall, on or before the Transfer Date, designate, as directed by the
Purchaser, the Purchaser, or its designee, as the Servicer on the MERS(R)
System. In addition, the Seller shall promptly take all other actions reasonably
requested by Purchaser with respect to MERS Designated Mortgage Loans and the
MERS(R) System to effectuate and evidence the transfer of servicing in
accordance with the terms of this Agreement and the Interim Servicing Agreement.
SECTION 9. Representations, Warranties and Covenants of the Seller;
Remedies for Breach.
Subsection 9.01. Representations and Warranties Regarding the
Seller.
The Seller represents, warrants and covenants to the Purchaser that
as of the date hereof and as of each Closing Date:
(a) Due Organization and Authority. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
California and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in each state wherein
it owns or leases any material properties or where a Mortgaged Property is
located, if the laws of such state require licensing or qualification in order
to conduct business of the type conducted by the Seller, and in any event the
Seller is in compliance with the laws of any such state to the extent necessary
to ensure the enforceability of the related Mortgage Loan and the servicing of
such Mortgage Loan in accordance with the terms of this Agreement and the
Interim Servicing Agreement; the Seller has the full corporate power, authority
and legal right to hold, transfer and convey the Mortgage Loans and to execute
and deliver this Agreement and to perform its obligations hereunder and
thereunder; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Seller and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized; this Agreement and all agreements
contemplated hereby have been duly executed and delivered and constitute the
valid, legal, binding and enforceable obligations of the Seller, regardless of
whether such enforcement is sought in a proceeding in equity or at law, but
subject to bankruptcy laws and general principles of equity; and all requisite
corporate or other action has been taken by the Seller to make this Agreement
and all agreements contemplated hereby valid and binding upon the Seller in
accordance with their terms;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby and thereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement, will conflict with
or result in a breach of any of the terms, conditions or provisions of the
Seller's charter, by-laws or other organizational documents or any legal
restriction or any agreement or instrument to which the Seller is now a party or
by which it is bound, or constitute a default or result in an acceleration under
any of the foregoing, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Seller or its property is subject, or
result in the creation or imposition of any lien, charge or encumbrance that
would have an adverse effect upon any of its properties pursuant to the terms of
any mortgage, contract, deed of trust or other instrument, or impair the ability
of the Purchaser to realize on the Mortgage Loans, impair the value of the
Mortgage Loans, or impair the ability of the Purchaser to realize the full
amount of any insurance benefits accruing pursuant to this Agreement;
(d) Ability to Service. Seller has the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Seller is duly qualified, licensed,
registered and otherwise authorized under all applicable federal, state and
local laws, and regulations, if applicable, meets the minimum capital
requirements set forth by HUD, the OTS, the OCC or the FDIC, if applicable, and
is in good standing to enforce, originate, sell mortgage loans to, and service
mortgage loans in each jurisdiction wherein the Mortgaged Properties are
located;
(e) Reasonable Servicing Fee. The Seller acknowledges and agrees
that the Servicing Fee, represents reasonable compensation for performing such
services and that the entire Servicing Fee shall be treated by the Seller, for
accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement and the Interim
Servicing Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) No Litigation Pending. Except as previously identified by the
Seller to the Purchaser in writing, there is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(h) No Consent Required. No consent, approval, authorization or
order of, or registration or filing with, or notice to any court or governmental
agency or body including HUD, the FHA or the Department of Veterans Affairs is
required for the execution, delivery and performance by the Seller of or
compliance by the Seller with this Agreement or the Mortgage Loans, the delivery
of a portion of the Mortgage Files to the Custodian or the sale of the Mortgage
Loans or the consummation of the transactions contemplated by this Agreement, or
if required, such approval has been or will be obtained prior to the date
required by federal, state or local law;
(i) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio at
the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not intentionally
made in a manner so as to affect adversely the interests of the Purchaser;
(j) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered with
respect to each Mortgage Loan pursuant to the Custodial Agreement, shall be
delivered to the Custodian all in compliance with the specific requirements of
the Custodial Agreement. With respect to each Mortgage Loan, the Seller will be
in possession of a complete Mortgage File in compliance with Exhibit A hereto,
except for such documents as will be delivered to the Custodian;
(k) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(l) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby (including
any Securitization Transaction or Whole Loan Transfer) contains or will contain
any untrue statement of material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not
misleading;
(m) Financial Statements. The Seller has delivered to the Purchaser
financial statements as to its last three complete fiscal years and any later
quarter ended more than 60 days prior to the execution of this Agreement. All
such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial
position at the end of each such period of the Seller and its subsidiaries and
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto. In addition, the Seller has delivered information as to its loan
gain and loss experience in respect of foreclosures and its loan delinquency
experience for the immediately preceding three-year period, in each case with
respect to mortgage loans owned by it and such mortgage loans serviced for
others during such period, and all such information so delivered shall be true
and correct in all material respects. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. The
Seller has completed any forms requested by the Purchaser in a timely manner and
in accordance with the provided instructions;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller intends to reflect the transfer of
the Mortgage Loans as a sale on the books and records of the Seller and the
Seller has determined that the disposition of the Mortgage Loans pursuant to
this Agreement will be afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. The Seller is the owner of record of each
Mortgage and the indebtedness evidenced by each Mortgage Note, and upon the sale
of the Mortgage Loans to the Purchaser, the Seller will retain the Mortgage
Files with respect thereto in trust only for the purpose of servicing and
supervising the servicing of each Mortgage Loan; and
(q) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon Seller's underwriting guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated.
Subsection 9.02. Representations and Warranties Regarding
Individual Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser that, as
to each Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
(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
related Closing Date for the Mortgage Loan under the terms of the Mortgage Note,
other than payments not yet 30 days delinquent, have been made and credited. No
payment required under the Mortgage Loan is 30 days or more delinquent nor has
any payment under the Mortgage Loan been 30 days or more delinquent at any time
since the origination of the Mortgage Loan;
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. 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 earlier, to the day which precedes by
one month the related Due Date of the first installment of principal and
interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor in any state or Federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was funded;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located pursuant to insurance policies conforming to the requirements of
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in
Section 2.10 of the Interim Servicing Agreement. If required by the National
Flood Insurance Act of 1968, as amended, each Mortgage Loan is covered by a
flood insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect which policy conforms to ▇▇▇▇▇▇
Mae and ▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in Section
2.10 of the Interim Servicing Agreement. All individual insurance policies
contain a standard mortgagee clause naming the Seller and its successors and
assigns as mortgagee, and all premiums thereon have been paid. The Mortgage
obligates the Mortgagor thereunder to maintain the hazard insurance policy at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance at
such Mortgagor's cost and expense, and to seek reimbursement therefor from the
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, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser upon
the consummation of the purchase of the Mortgage Loan as contemplated by this
Agreement. The 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 or entity, and no such unlawful items have been
received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to prepayment penalties, have been complied with, the consummation of
the transactions contemplated hereby will not involve the violation of any such
laws or regulations, and the Seller shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, 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
release, cancellation, subordination or rescission. 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) Location and Type of Mortgaged Property. The Mortgaged Property
is a fee simple property located in the state identified in the related Mortgage
Loan Schedule, except that with respect to real property located in
jurisdictions in which the use of leasehold estates for residential properties
is a widely-accepted practice, the Mortgaged Property may be a leasehold estate,
and consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development and that no residence or dwelling is a mobile home;
provided, however, that any condominium unit or planned unit development shall
not fall within any of the "Ineligible Projects" of part XII, Section 102 of the
▇▇▇▇▇▇ Mae Selling Guide and shall conform with the Underwriting Guidelines. In
the case of any Mortgaged Properties that are manufactured homes (a
"Manufactured Home Mortgage Loans"), (i) such Manufactured Home Mortgage Loan
conforms with the applicable ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac requirements regarding
mortgage loans related to manufactured dwellings, (ii) the related manufactured
dwelling is permanently affixed to the land, (iii) the related manufactured
dwelling and the related land are subject to a Mortgage properly filed in the
appropriate public recording office and naming Seller as mortgagee, (iv) the
applicable laws of the jurisdiction in which the related Mortgaged Property is
located will deem the manufactured dwelling located on such Mortgaged Property
to be a part of the real property on which such dwelling is located, and (v)
such Manufactured Home Mortgage Loan is (x) a qualified mortgage under Section
860G(a)(3) of the Internal Revenue Code of 1986, as amended, and (y) secured by
manufactured housing treated as a single family residence under Section
25(e)(10) of the Code. As of the date of origination, no portion of the
Mortgaged Property was used for commercial purposes, and since the date of
origination, no portion of the Mortgaged Property has been used for commercial
purposes; provided, that Mortgaged Properties which contain a home office shall
not be considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner repair,
maintenance and/or household purposes;
(j) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien on the Mortgaged Property, including all
buildings and improvements 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:
(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 prudent mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (a) specifically 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; and
(iii) 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,
subsisting, enforceable and perfected first lien and first priority security
interest on the property described therein and the Seller has full right to sell
and assign the same to the Purchaser. As used in this Subsection 9.02,
"enforceable" shall be deemed to be subject to bankruptcy laws and general
principles of equity;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other such related parties. No fraud, error,
omission, misrepresentation, or similar occurrence with respect to the
origination of 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.
The Seller has reviewed all of the documents constituting the Servicing File and
has made such inquiries as it deems necessary to make and confirm the accuracy
of the representations set forth herein;
(l) Full Disbursement of Proceeds. Except to the extent the Mortgage
Loan is subject to completion escrows which have been disclosed to and
acknowledged by the Purchaser and which meet the requirements of the
Underwriting Guidelines, and as to which a completed ▇▇▇▇▇▇ ▇▇▇ form 442 has
been delivered to the Purchaser within sixty (60) days after the related Closing
Date, the Mortgage Loan has been closed and the proceeds of the Mortgage Loan
have been fully disbursed and there is no requirement for future advances
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 were paid, and the Mortgagor
is not entitled to any refund of any amounts paid or due under the Mortgage Note
or Mortgage;
(m) Ownership. The Seller is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and upon
the sale of the Mortgage Loans to the Purchaser, the Seller will retain the
Mortgage Files or any part thereof with respect thereto not delivered to the
Custodian, the Purchaser or the Purchaser's designee, in trust only for the
purpose of servicing and supervising the servicing of each Mortgage Loan. Upon
payment of the Purchase Price, the Mortgage Loan is not assigned or pledged, and
the Seller has good, indefeasible and marketable title thereto, and has full
right to transfer and sell the Mortgage Loan to the Purchaser 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 and assign each
Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Seller intends to relinquish all rights to possess,
control and monitor the Mortgage Loan. After the related Closing Date, the
Seller will have no right to modify or alter the terms of the sale of the
Mortgage Loan and the Seller will have no obligation or right to repurchase the
Mortgage Loan or substitute another Mortgage Loan, except as provided in this
Agreement;
(n) 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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(o) LTV. No Mortgage Loan had an LTV at origination greater than
100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance policy is
issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first priority lien
of the Mortgage 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) and (ii) of paragraph (j) of this Subsection
9.02, 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 Seller, its successor 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 purchase of the
Mortgage Loan as contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder of the related
Mortgage, including the 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 or entity, and no such unlawful
items have been received, retained or realized by the Seller;
(q) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Seller nor any of its affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(r) No Mechanics' Liens. Except as insured against by the related
title insurance, 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
the law could give rise to such liens) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. Either (a) the Mortgage Loan was
originated by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, a
savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or other similar institution which is supervised and examined
by a federal or state authority, or (b) the following requirements have been met
with respect to the Mortgage Loan: the Seller meets the requirements set forth
in clause (a), and (i) such Mortgage Loan was underwritten in accordance with
standards established by the Seller, using application forms and related credit
documents approved by the Seller, (ii) the Seller approved each application and
the related credit documents before a commitment by the correspondent was
issued, and no such commitment was issued until the Seller agreed to fund such
Mortgage Loan, (iii) the closing documents for such Mortgage Loan were prepared
on forms approved by the Seller, and (iv) such Mortgage Loan was actually funded
by the Seller and was purchased by the Seller at closing or soon thereafter. The
documents, instruments and agreements submitted for loan underwriting were not
falsified and contain no untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the information
and statements therein not misleading. Principal payments on the Mortgage Loan
are required to commence no more than sixty days after funds were disbursed in
connection with the Mortgage Loan. The Mortgage Interest Rate as well as the
Lifetime Rate Cap and the Periodic Cap, are as set forth on the related Mortgage
Loan Schedule. Except with respect to a "balloon" Mortgage Loan, the Mortgage
Note is payable 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 thirty years from commencement of
amortization. Unless otherwise specified on the related Mortgage Loan Schedule,
the Mortgage Loan is payable on the first day of each month. There are no
Convertible Mortgage Loans which contain a provision allowing the Mortgagor to
convert the Mortgage Note from an adjustable interest rate Mortgage Note to a
fixed interest rate Mortgage Note;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines.
The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇
Mae and the Seller has not made any representations to a Mortgagor that are
inconsistent with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date the Mortgaged Property is capable of being 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 and fire underwriting certificates, have been made or
obtained from the appropriate authorities;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. The Seller has no knowledge of any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor, the Mortgage File or the Mortgagor's credit standing,
other than the subprime nature of such credit standing, that can reasonably be
expected to cause private institutional investors who invest in mortgage loans
similar to the Mortgage Loan, to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan, or cause the Mortgage Loans to
prepay during any period materially faster or slower than the mortgage loans
originated by the Seller generally;
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Seller is in possession of a complete, true and
accurate Mortgage File in compliance with Exhibit A hereto, except for such
documents the originals of which have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Seller's Underwriting Guidelines;
(cc) Transfer of Mortgage Loans. Except with respect to MERS
Designated Mortgage Loans, the Assignment of Mortgage with respect to each
Mortgage Loan is in recordable form and is acceptable for recording under the
laws of the jurisdiction in which the Mortgaged Property is located. The
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller are not subject to the bulk transfer or similar statutory provisions
in effect in any applicable jurisdiction;
(dd) Due-on-Sale. With respect to each Fixed Rate Mortgage Loan, the
Mortgage contains an enforceable provision (subject to applicable law) 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 mortgagee thereunder, and such provision is
enforceable;
(ee) [Reserved];
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. Any future 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.
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 ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property and the Seller
has no knowledge of any such proceedings in the future;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in compliance
with Accepted Servicing Practices, applicable laws and regulations, and have
been in all respects legal and proper. With respect to escrow deposits and
Escrow Payments, 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. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and, if requested by the Mortgagor,
has been established in an amount sufficient to pay for every item that remains
unpaid and has been assessed but is not yet due and payable. No escrow deposits
or Escrow Payments or other charges or payments due the Seller have been
capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law and
the terms of the related Mortgage and Mortgage Note on the related Interest Rate
Adjustment Date. If, pursuant to the terms of the Mortgage Note, another index
was selected for determining the Mortgage Interest Rate, the same index was used
with respect to each Mortgage Note which required a new index to be selected,
and such selection did not conflict with the terms of the related Mortgage Note.
The Seller executed and delivered any and all notices required under applicable
law and the terms of the related Mortgage Note and Mortgage regarding the
Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(jj) Conversion to Fixed Interest Rate. With respect to Adjustable
Rate Mortgage Loans, the Mortgage Loan is not a Convertible Mortgage Loan;
(kk) Other Insurance Policies. 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, special hazard insurance 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 by any officer, director, or employee of 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;
(ll) No Violation of Environmental Laws. There is no pending action
or proceeding directly involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue. To the best of Seller's
knowledge, based upon customary and prudent residential mortgage industry
underwriting standards, there is no violation of any environmental law, rule or
regulation with respect to the Mortgage Property, and nothing further remains to
be done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(mm) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Relief Act or any similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property 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, and whose compensation was not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfied
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed one or more
statements to the effect that the Mortgagor has received all disclosure
materials required by, and the Seller has complied with, all applicable law with
respect to the making of the Mortgage Loans. The Seller shall maintain such
statement(s) in the Mortgage File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Value of Mortgaged Property. The Seller has no knowledge of any
circumstances existing that could reasonably be expected to adversely affect the
value or the marketability of any Mortgaged Property or Mortgage Loan or to
cause the Mortgage Loans to prepay during any period materially faster or slower
than similar mortgage loans held by the Seller generally secured by properties
in the same geographic area as the related Mortgaged Property;
(rr) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the related Closing Date (whether or not known to the
Seller on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any primary mortgage
insurance (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured) whether arising out
of actions, representations, errors, omissions, negligence, or fraud of the
Seller, the related Mortgagor or any party involved in the application for such
coverage, including the appraisal, plans and specifications and other exhibits
or documents submitted therewith to the insurer under such insurance policy, or
for any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay;
(ss) Escrow Analysis. With respect to each Mortgage, the Seller has
within the last twelve months (unless such Mortgage was originated within such
twelve month period) analyzed the required Escrow Payments for each Mortgage and
adjusted the amount of such payments so that, assuming all required payments are
timely made, any deficiency will be eliminated on or before the first
anniversary of such analysis, or any overage will be refunded to the Mortgagor,
in accordance with RESPA and any other applicable law;
(tt) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in strict compliance with Accepted Servicing Practices;
(uu) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded by the terms of
the Mortgage Loan Documents from furnishing the same to any subsequent or
prospective purchaser of such Mortgage. The Seller shall hold the Purchaser
harmless from any and all damages, losses, costs and expenses (including
attorney's fees) arising from disclosure of credit information in connection
with the Purchaser's secondary marketing operations and the purchase and sale of
mortgages or Servicing Rights thereto;
(vv) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee simple interest in
the land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the collateral assignment of the lease without the lessor's
consent (or such consent has been obtained) and the acquisition by the holder of
the Mortgage of the rights of the lessee upon foreclosure or assignment in lieu
of foreclosure or provide the holder of the Mortgage with substantially similar
protections; (3) the terms of such lease do not (a) allow the termination
thereof upon the lessee's default without the holder of the Mortgage being
entitled to receive written notice of, and opportunity to cure, such default,
(b) allow the termination of the lease in the event of damage or destruction as
long as the Mortgage is in existence, (c) prohibit the holder of the Mortgage
from being insured (or receiving proceeds of insurance) under the hazard
insurance policy or policies relating to the Mortgaged Property or (d) permit
any increase in rent other than pre-established increases set forth in the
lease; (4) the original term of such lease is not less than 15 years; (5) the
term of such lease does not terminate earlier than five years after the maturity
date of the Mortgage Note; and (6) the Mortgaged Property is located in a
jurisdiction in which the use of leasehold estates in transferring ownership in
residential properties is a widely accepted practice;
(ww) Prepayment Penalty. (i) Each Mortgage Loan is subject to a
prepayment penalty as provided in the related Mortgage Note, except as set forth
on the related Mortgage Loan Schedule, and (ii) no such prepayment penalty may
be imposed for a term in excess of five (5) years from the date of origination;
(xx) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law;
(yy) Single-premium credit life insurance policy. In connection with
the origination of the Mortgage Loan, no proceeds from such Mortgage Loan were
used to finance or acquire a single-premium credit life insurance policy;
(zz) Compliance with Anti-Money Laundering Laws. The Seller has
complied with all applicable anti-money laundering laws and regulations,
including without limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws");
(aaa) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code;
(bbb) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real Estate
Tax Service or another issuer reasonably acceptable to the Purchaser, and such
contract is transferable;
(ccc) Reports. On or prior to the related Closing Date, Seller has
provided the Custodian and the Purchaser with a MERS Report listing the
Purchaser as the Investor and the Custodian as the Custodian with respect to
each MERS Designated Mortgage Loan;
(ddd) MERS Designations. With respect to each MERS Designated
Mortgage Loan, Seller shall designate the Purchaser as the Investor, the
Custodian as the Custodian and no Person shall be listed as Interim Funder on
the MERS(R) System;
(eee) [Reserved];
(fff) Fair Credit Reporting Act. The Seller has, in its capacity as
servicer for each Mortgage Loan, fully furnished, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company (three of the
credit repositories), on a monthly basis;
(ggg) Mortgagor Selection. No Mortgagor was encouraged or required
to select a mortgage loan product offered by the Mortgage Loan's originator
which is a higher cost product designed for less creditworthy mortgagors, unless
at the time of the Mortgage Loan's origination, such Mortgagor did not qualify
taking into account credit history and debt-to-income ratios for a lower-cost
credit product then offered by the Mortgage Loan's originator or any affiliate
of the Mortgage Loan's originator. If, at the time of loan application, the
Mortgagor may have qualified for a lower-cost credit product then offered by any
mortgage lending affiliate of the Mortgage Loan's originator, the Mortgage
Loan's originator referred the related Mortgagor's application to such affiliate
for underwriting consideration;
(hhh) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs, in part, objective
mathematical principles which relate the related Mortgagor's income, assets and
liabilities to the proposed payment and such underwriting methodology does not
rely on the extent of the related Mortgagor's equity in the collateral as the
principal determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of origination
(application/approval) the related Mortgagor had a reasonable ability to make
timely payments on the Mortgage Loan, relying on the Mortgagor's representation
of the Mortgagor's income in the case of loan programs which did not require
verification of the Mortgagor's income;
(iii) Mortgage Loans with Prepayment Premiums. With respect to any
Mortgage Loan that contains a provision permitting imposition of a premium upon
a prepayment prior to maturity: (i) a mortgage loan without such a premium was
available to the Mortgagor at an interest rate and/or fee structure higher than
that of the Mortgage Loan, (ii) prior to the Mortgage Loan's funding, the
related Mortgagor had the option of obtaining the Mortgage Loan without a
requirement for payment of such a premium, and (iii) the prepayment premium is
disclosed to the related Mortgagor in the Mortgage Loan documents pursuant to
applicable state and federal law;
(jjj) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, accident or health insurance policy in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(kkk) [Reserved];
(lll) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(mmm) No Arbitration. No Mortgage Loan originated on or after August
1, 2004, requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
Subsection 9.03. Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 9.01 and 9.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or failure to examine any Mortgage
File in accordance with Section 5 hereof. Upon discovery by either the Seller or
the Purchaser of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other.
Within 60 days of the earlier of either discovery by or notice to
the Seller of any such breach of a representation or warranty, which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Purchaser therein (or which materially and adversely affects the value of the
applicable Mortgage Loan or the interest of the Purchaser therein in the case of
a representation and warranty relating to a particular Mortgage Loan), the
Seller shall use its best efforts promptly to cure such breach in all material
respects and, if such breach cannot be cured, the Seller shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price.
Notwithstanding the above sentence, within 60 days of the earlier of either
discovery by, or notice to, the Seller of any breach of the representations or
warranties set forth in paragraph (ww)(ii), (xx), (yy), (aaa), (fff), (ggg),
(hhh), (iii), (jjj), (lll) or (mmm) of Subsection 9.02, the Seller shall
repurchase such Mortgage Loan at the Repurchase Price. In the event that a
breach shall involve any representation or warranty set forth in Subsection
9.01, and such breach cannot be cured within 60 days of the earlier of either
discovery by or notice to the Seller of such breach, all of the Mortgage Loans
affected by such breach shall, at the Purchaser's option, be repurchased by the
Seller at the Repurchase Price. However, if the breach shall involve a
representation or warranty set forth in Subsection 9.02 (except as provided in
the second sentence of this paragraph with respect to certain breaches for which
no substitution is permitted) and the Seller discovers or receives notice of any
such breach within 120 days of the related Closing Date, the Seller shall, at
the Purchaser's option and provided that the Seller has a Qualified Substitute
Mortgage Loan, rather than repurchase the Mortgage Loan as provided above,
remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in its
place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than 120 days after the related Closing
Date. If the Seller has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan at the Repurchase Price. With regards to
any repurchase under this Subsection 9.03: (i) the repurchase request must be
made by the Purchaser in a prompt and timely manner and must contain reasonably
sufficient information to enable the Seller to evaluate the request, including
in the case of a first payment default, the payment history and collection
comments, and (ii) with respect to any Mortgage Loan which was never included in
a Securitization Transaction, the Purchaser shall use best efforts to notify the
Seller of any known breach of a representation and warranty and require the
Seller to repurchase such Mortgage Loan prior to foreclosure procedures
commencing on such Mortgage Loan. Any repurchase of a Mortgage Loan or Loans
pursuant to the foregoing provisions of this Subsection 9.03 shall be
accomplished by either (a) if the Interim Servicing Agreement has been entered
into and is in effect, deposit in the Custodial Account of the amount of the
Repurchase Price, for distribution to the Purchaser on the next scheduled
Remittance Date, after deducting therefrom any amount received in respect of
such repurchased Mortgage Loan or Loans and being held in the Custodial Account
for future distribution or (b) if the Interim Servicing Agreement has not been
entered into or is no longer in effect, by direct remittance of the Repurchase
Price, to the Purchaser or its designee in accordance with the Purchaser's
instructions. In the event of a repurchase or substitution, the Seller shall,
simultaneously with such reassignment, give written notice to the Purchaser that
such repurchase or substitution has taken place, and, in the case of
substitution, identify a Qualified Substitute Mortgage Loan and amend the
related Mortgage Loan Schedule to reflect the addition of such Qualified
Substitute Mortgage Loan to this Agreement. The Purchaser shall advise its
servicer/subservicer that such repurchase had taken place promptly after the
Repurchase Price has been received. At the same time the Seller shall provide
servicing transfer instructions to each of the Purchaser and the Purchaser's
servicer/subservicer so it may adequately comply with the provisions set forth
below.
Promptly upon the Purchaser's receipt of the Repurchase Price, the
Purchaser shall or shall cause its designee to release the Purchaser's interest
in the repurchased Mortgage Loan or Loans and shall promptly effect, or cause to
be effected, (i) the reconveyance of such repurchased Mortgage Loan or Loans to
the Seller free and clear of any lien, charge or encumbrance suffered or
incurred by the Purchaser and (ii) the delivery to the Seller of any documents
held by the Custodian relating to the Deleted Mortgage Loan (and in any event
within thirty days after the Seller repurchases the Mortgage Loan or Loans). In
connection with any such substitution, the Seller shall be deemed to have made
as to such Qualified Substitute Mortgage Loan the representations and warranties
set forth in this Agreement except that all such representations and warranties
set forth in this Agreement shall be deemed made as of the date of such
substitution. The Seller shall effect such substitution by delivering to the
Custodian or to such other party as the Purchaser may designate in writing for
such Qualified Substitute Mortgage Loan the documents required by Subsection
6.03 and the Custodial Agreement, with the Mortgage Note endorsed as required by
Subsection 6.03 and the Custodial Agreement. No substitution will be made in any
calendar month after the Determination Date for such month. The Seller shall
remit directly to the Purchaser, or its designee in accordance with the
Purchaser's instructions the Monthly Payment less the Servicing Fee due, if any,
on such Qualified Substitute Mortgage Loan or Loans in the month following the
date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution shall be retained by the
Seller. For the month of substitution, distributions to the Purchaser shall
include the Monthly Payment due on any Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by the Seller or any other party in respect of such
Deleted Mortgage Loan.
For any month in which the Seller substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Seller shall determine the amount
(if any) by which the aggregate principal balance of all Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all Deleted Mortgage Loans (after application of scheduled
principal payments due in the month of substitution). The amount of such
shortfall shall be distributed by the Seller directly to the Purchaser or its
designee in accordance with the Purchaser's instructions within two (2) Business
Days of such substitution.
In addition to such repurchase or substitution obligation, the
Seller shall indemnify the Purchaser and its present and former directors,
officers, employees and agents and any Successor Servicer and its present and
former directors, officers, employees and agents and hold such parties harmless
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and expenses and related costs, judgments, and other costs
and expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Seller representations and
warranties contained in this Agreement or any Reconstitution Agreement. It is
understood and agreed that the obligations of the Seller set forth in this
Subsection 9.03 to cure, substitute for or repurchase a defective Mortgage Loan
and to indemnify the Purchaser and Successor Servicer as provided in this
Subsection 9.03 and in Subsection 14.01 constitute the sole remedies of the
Purchaser respecting a breach of the foregoing representations and warranties.
For purposes of this paragraph "Purchaser" shall mean the Person then acting as
the Purchaser under this Agreement and any and all Persons who previously were
"Purchasers" under this Agreement and "Successor Servicer" shall mean any Person
designated as the Successor Servicer pursuant to this Agreement and any and all
Persons who previously were "Successor Servicers" pursuant to this Agreement.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 9.01 and
9.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Seller by the Purchaser for compliance with
this Agreement.
Subsection 9.04 [RESERVED].
Subsection 9.05 Mortgage Loans with First Payment Defaults;
Repurchase.
In the event that the first Monthly Payment with respect to any
Mortgage Loan due either (i) after origination of such Mortgage Loan, or (ii)
after the related Closing Date is not paid by the related Mortgagor to the
Purchaser within thirty (30) days of such Due Date, the Seller, at the
Purchaser's option, shall repurchase such Mortgage Loan from the Purchaser at
the Repurchase Price; provided, however, the Seller shall have until the date
which is sixty (60) days following such Due Date (the "Breach Date") to cause
the related Mortgagor to cure any such nonpayment. In addition, and
notwithstanding the foregoing, the Purchaser's right to request a repurchase
hereunder shall not commence until the Breach Date. The Purchaser shall have
sixty (60) days following the Breach Date (the "Notice Period") to notify the
Seller and request a repurchase and the Seller shall repurchase such delinquent
Mortgage Loan within thirty (30) days of receipt of such notice; provided that
the repurchase request includes the related payment history and collection
comments. Also, the Purchaser reserves the right to request a repurchase
following the expiration of the Notice Period in the event of a NSF return in
connection with such first Monthly Payment that is not cured, provided the
Purchaser notifies the Seller of such a repurchase request within thirty (30)
days of notice of such NSF return but in no event more than one hundred eighty
(180) days following the related Due Date.
Subsection 9.06 Repurchase of Certain Mortgage Loans That Prepay in
Full.
With respect to Mortgage Loans without prepayment penalties, in the
event that any such Mortgage Loan prepays in full during the first three months
following the related Closing Date, the Seller shall pay the Purchaser, within
ten (10) Business Days of such prepayment in full, an amount equal to the
product of the applicable Purchase Price Percentage less 100%, multiplied by the
outstanding principal balance of such Mortgage Loan as of the related Cut-off
Date; provided, however, that the Purchaser must request that Seller pay such
amount within sixty (60) days of the date the Mortgage Loan is prepaid in full.
SECTION 10. Closing.
The closing for the purchase and sale of each Mortgage Loan Package
shall take place on the related Closing Date. At the Purchaser's option, each
Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree, or conducted in person, at such place as the parties shall
agree.
The closing for the Mortgage Loans to be purchased on each Closing
Date shall be subject to each of the following conditions:
(i) at least two Business Days prior to the related Closing
Date, the Seller shall deliver to the Purchaser a magnetic
diskette, or transmit by modem, a listing on a loan-level
basis of the necessary information to compute the Purchase
Price of the Mortgage Loans delivered on such Closing Date
(including accrued interest), and prepare a Mortgage Loan
Schedule;
(ii) all of the representations and warranties of the Seller
under this Agreement and under the Interim Servicing
Agreement (with respect to each Mortgage Loan, for an
interim period, as specified therein) shall be true and
correct as of the related Closing Date and no event shall
have occurred which, with notice or the passage of time,
would constitute a default under this Agreement or an Event
of Default under the Interim Servicing Agreement;
(iii) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing
documents as specified in Section 11 of this Agreement, in
such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the
Purchaser as required pursuant to the terms hereof;
(iv) the Seller shall have delivered and released to the
Custodian all documents required pursuant to the Custodial
Agreement; and
(v) all other terms and conditions of this Agreement and the
related Purchase Price and Terms Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the related Closing Date the Purchase Price, plus accrued interest
pursuant to Section 4 of this Agreement, by wire transfer of immediately
available funds to the account designated by the Seller.
SECTION 11. Closing Documents.
The Closing Documents for the Mortgage Loans to be purchased on each
Closing Date shall consist of fully executed originals of the following
documents:
1. this Agreement (to be executed and delivered only for the
initial Closing Date);
2. the Interim Servicing Agreement, dated as of the initial
Cut-off Date (to be executed and delivered only for the
initial Closing Date);
3. with respect to the initial Closing Date, the Custodial
Agreement, dated as of the initial Cut-off Date;
4. the related Mortgage Loan Schedule (one copy to be attached to
the Custodian's counterpart of the Custodial Agreement in
connection with the initial Closing Date, and one copy to be
attached to the related Assignment and Conveyance as the
Mortgage Loan Schedule thereto);
5. a Custodian's Certification, as required under the Custodial
Agreement, in the form of Exhibit 2 to the Custodial
Agreement;
6. with respect to the initial Closing Date, a Custodial Account
Letter Agreement or a Custodial Account Certification, as
applicable, as required under the Interim Servicing Agreement;
7. with respect to the initial Closing Date, an Escrow Account
Letter Agreement or an Escrow Account Certification, as
applicable, as required under the Interim Servicing Agreement;
8. with respect to the initial Closing Date, an Officer's
Certificate, in the form of Exhibit C hereto with respect to
the Seller, including all attachments thereto; with respect to
subsequent Closing Dates, an Officer's Certificate upon
request of the Purchaser;
9. with respect to the initial Closing Date, an Opinion of
Counsel of the Seller (who may be an employee of the Seller),
in the form of Exhibit D hereto ("Opinion of Counsel of the
Seller"); with respect to subsequent Closing Dates, an Opinion
of Counsel of the Seller upon request of the Purchaser;
10. with respect to the initial Closing Date, an Opinion of
Counsel of the Custodian (who may be an employee of the
Custodian), in the form of an exhibit to the Custodial
Agreement;
11. a Security Release Certification, in the form of Exhibit E or
F, as applicable, hereto, or in the form of the Seller's
warehouse lender's standard bailee letter, subject to the
Purchaser's reasonable approval, executed by any person, as
requested by the Purchaser, if any of the Mortgage Loans have
at any time been subject to any security interest, pledge or
hypothecation for the benefit of such person;
12. a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if
any of the Mortgage Loans were acquired by the Seller by
merger or acquired or originated by the Seller while
conducting business under a name other than its present name,
if applicable;
13. with respect to the initial Closing Date, the Underwriting
Guidelines to be attached hereto as Exhibit G;
14. Assignment and Conveyance Agreement in the form of Exhibit H
hereto;
15. Exhibit B to the related Assignment and Conveyance Agreement;
and
16. a MERS Report reflecting the Purchaser as Investor, the
Custodian as custodian and no Person as Interim Funder for
each MERS Designated Mortgage Loan.
The Seller shall bear the risk of loss of the closing documents
until such time as they are received by the Purchaser or its attorneys.
SECTION 12. Costs.
The Purchaser shall pay any commissions due its salesmen, the legal
fees and expenses of its attorneys and the costs and expenses of the Custodian.
All other costs and expenses incurred in connection with the transfer and
delivery of the Mortgage Loans and the Servicing Rights, including costs and
expenses related to the servicing transfer from the Seller to any successor
servicer, recording fees, fees for a one-time transfer on the MERS(R) System,
fees for title policy endorsements and continuations and the Seller's attorney's
fees, shall be paid by the Seller.
SECTION 13. Cooperation of Seller with a Reconstitution.
The Seller and the Purchaser agree that with respect to some or all
of the Mortgage Loans, after each Closing Date, on one or more dates (each, a
"Reconstitution Date") at the Purchaser's sole option, the Purchaser may effect
a sale (each, a "Reconstitution") of some or all of the Mortgage Loans then
subject to this Agreement, without recourse, to:
(i) ▇▇▇▇▇▇ ▇▇▇ under its Cash Purchase Program or MBS Program
(Special Servicing Option) (each a "▇▇▇▇▇▇ Mae Transfer");
or
(ii) ▇▇▇▇▇▇▇ Mac (the "▇▇▇▇▇▇▇ Mac Transfer"); or
(iii) one or more third party purchasers in one or more Whole Loan
Transfers; or
(iv) one or more trusts or other entities to be formed as part of
one or more Securitization Transactions.
The Seller agrees to execute in connection with any Agency Transfer,
any and all pool purchase contracts, and/or agreements reasonably acceptable to
the Seller among the Purchaser, the Seller, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac (as the
case may be) and any servicer in connection with a Whole Loan Transfer, a
seller's warranties and servicing agreement or a participation and servicing
agreement in form and substance reasonably acceptable to the Seller, and in
connection with a Securitization Transaction, a pooling and servicing agreement
in form and substance reasonably acceptable to the parties or an Assignment and
Recognition Agreement substantially in the form attached hereto as Exhibit I
(collectively, the agreements referred to herein are designated the
"Reconstitution Agreements"), together with an opinion of counsel with respect
to such Reconstitution Agreements.
With respect to each Whole Loan Transfer and each Securitization
Transaction entered into by the Purchaser, the Seller agrees (1) to cooperate
fully with the Purchaser and any prospective purchaser with respect to all
reasonable requests and due diligence procedures; (2) to execute, deliver and
perform all Reconstitution Agreements required by the Purchaser; and (3) to
restate the representations and warranties set forth in this Agreement and the
Interim Servicing Agreement in connection with such Reconstitution that occurs
on or prior to the date which is six (6) months following the related Closing
Date, such restatement to be in the form of Exhibit B to Exhibit I hereto. The
Seller shall use its reasonable best efforts to provide to such master servicer
or issuer, as the case may be, and any other participants in such
Reconstitution: (i) any and all information and appropriate verification of
information which may be reasonably available to the Seller or its affiliates,
whether through letters of its auditors and counsel or otherwise, as the
Purchaser or any such other participant shall request; (ii) such additional
representations, warranties, covenants, opinions of counsel, letters from
auditors, and certificates of public officials or officers of the Seller as are
reasonably believed necessary by the Purchaser or any such other participant and
as are customarily provided in connection with Securitization Transactions
involving mortgage loans similar to the Mortgage Loans; and (iii) to execute,
deliver and satisfy all conditions set forth in any indemnity agreement required
by the Purchaser or any such participant, including, without limitation, an
Indemnification and Contribution Agreement in substantially the form attached
hereto as Exhibit J. The Seller shall indemnify the Purchaser, each Affiliate
designated by the Purchaser and each Person who controls the Purchaser or such
Affiliate and hold each of them harmless from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that each of them may
sustain in any way related to any information provided by or on behalf of the
Seller regarding the Seller, the Seller's servicing practices or performance,
the Mortgage Loans or the Underwriting Guidelines set forth in any offering
document prepared in connection with any Reconstitution. For purposes of the
previous sentence, "Purchaser" shall mean the Person then acting as the
Purchaser under this Agreement and any and all Persons who previously were
"Purchasers" under this Agreement. Moreover, the Seller agrees to cooperate with
all reasonable requests made by the Purchaser to effect such Reconstitution
Agreements.
All Mortgage Loans not sold or transferred pursuant to a
Reconstitution shall remain subject to this Agreement and, if the Interim
Servicing Agreement shall remain in effect with respect to the related Mortgage
Loan Package, shall continue to be serviced in accordance with the terms of this
Agreement and the Interim Servicing Agreement and with respect thereto this
Agreement shall remain in full force and effect.
SECTION 14. The Seller.
Subsection 14.01. Additional Indemnification by the Seller; Third
Party Claims.
(a) The Seller shall indemnify the Purchaser and its present and
former directors, officers, employees and agents and any Successor Servicer and
its present and former directors, officers, employees and agents, and hold such
parties harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and expenses (including legal
fees and expenses incurred in connection with the enforcement of the Seller's
indemnification obligation under this Subsection 14.01) and related costs,
judgments, and any other costs, fees and expenses that such parties may sustain
in any way related to the failure of the Seller to perform its duties or to
service the Mortgage Loans in strict compliance with the terms of this Agreement
or any Reconstitution Agreement entered into pursuant to Section 13 or any
breach of any of Seller's representations, warranties and covenants set forth in
this Agreement. For purposes of this paragraph "Purchaser" shall mean the Person
then acting as the Purchaser under this Agreement and any and all Persons who
previously were "Purchasers" under this Agreement and "Successor Servicer" shall
mean any Person designated as the Successor Servicer pursuant to this Agreement
and any and all Persons who previously were "Successor Servicers" pursuant to
this Agreement.
(b) Promptly after receipt by an indemnified party under this
Subsection 14.01 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Subsection 14.01, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may have to
any indemnified party under this Subsection 14.01, except to the extent that it
has been prejudiced in any material respect, or from any liability which it may
have, otherwise than under this Subsection 14.01. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided that if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party or parties shall have reasonably concluded that there may
be legal defenses available to it or them and/or other indemnified parties which
are different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate counsel
to assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party for
expenses incurred by the indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with one local counsel, if applicable)), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii).
Subsection 14.02 Merger or Consolidation of the Seller.
The Seller will keep in full effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Seller shall be a party, or any Person succeeding to the business of the
Seller, shall be the successor of the Seller hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall have a net worth of at least $25,000,000.
SECTION 15. Financial Statements.
The Seller understands that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser shall make available to
prospective purchasers audited financial statements of the Seller for the most
recently completed three fiscal years respecting which such statements are
available, as well as a Consolidated Statement of Condition of the Seller at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Seller shall also make available any comparable interim
statements to the extent any such statements have been prepared by the Seller
(and are available upon request to members or stockholders of the Seller or the
public at large). The Seller, if it has not already done so, agrees to furnish
promptly to the Purchaser copies of the statements specified above. The Seller
shall also make available information on its servicing performance with respect
to loans serviced for others, including delinquency ratios. The Purchaser shall
use reasonable best efforts to cause any prospective purchaser to enter into a
confidentiality agreement in connection with such financial information.
The Seller also agrees to allow reasonable access to a knowledgeable
financial or accounting officer for the purpose of answering questions asked by
any prospective purchaser regarding recent developments affecting the Seller or
the financial statements of the Seller.
SECTION 16. Mandatory Delivery.
The sale and delivery on the related Closing Date of the Mortgage
Loans described on the related Mortgage Loan Schedule is mandatory from and
after the date of the execution of the related Purchase Price and Terms
Agreement, it being specifically understood and agreed that each Mortgage Loan
is unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser (including damages to prospective purchasers of the
Mortgage Loans) in the event of the Seller's failure to deliver (i) each of the
related Mortgage Loans or (ii) one or more Qualified Substitute Mortgage Loans
or (iii) one or more Mortgage Loans otherwise acceptable to the Purchaser on or
before the related Closing Date. All rights and remedies of the Purchaser under
this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
SECTION 17. 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 the address as follows:
(i) if to the Seller:
Accredited Home Lenders, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Capital Markets
(ii) if to the Purchaser:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loan Operations Manager
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 18. Severability Clause.
Any part, provision representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
SECTION 19. 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 20. Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Purchaser in the State of New York and
shall be deemed to have been made in the State of New York. The Agreement 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 the substantive laws of the State of New York (without regard to
conflicts of laws principles), except to the extent preempted by Federal law.
SECTION 21. Intention of the Parties.
It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to treat
the transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Loan Files to
determine the characteristics of the Mortgage Loans which shall affect the
Federal income tax consequences of owning the Mortgage Loans and the Seller
shall cooperate with all reasonable requests made by the Purchaser in the course
of such review.
SECTION 22. Successors and Assigns; Assignment of Purchase
Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller and the Purchaser and the respective permitted
successors and assigns of the Seller and the successors and assigns of the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Seller to a third party without the prior written consent of the Purchaser. This
Agreement may be assigned, pledged or hypothecated by the Purchaser without the
consent of the Seller. In the event the Purchaser assigns this Agreement, and
the assignee assumes any of the Purchaser's obligations hereunder, the Seller
acknowledges and agrees to look solely to such assignee, and not to the
Purchaser, for performance of the obligations so assumed and the Purchaser shall
be relieved from any liability to the Seller with respect thereto.
SECTION 23. 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 24. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a
part hereof and are an integral part of this Agreement.
SECTION 25. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 26. Reproduction of Documents.
This Agreement and all documents relating thereto, 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 27. Further Agreements.
The Seller and the Purchaser 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 this
Agreement.
SECTION 28. Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments
of Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or their comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Seller's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
SECTION 29. No Solicitation.
From and after the related Closing Date, the Seller agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Seller's behalf,
to personally, by telephone or mail, solicit the borrower or obligor under any
Mortgage Loan for any purpose whatsoever, including to refinance a Mortgage
Loan, in whole or in part, without (i) the prior written consent of the
Purchaser; or (ii) written notice from the related borrower or obligor under a
Mortgage Loan of such party's intention to refinance such Mortgage Loan. It is
understood and agreed that all rights and benefits relating to the solicitation
of any Mortgagors and the attendant rights, title and interest in and to the
list of such Mortgagors and data relating to their Mortgages (including
insurance renewal dates) shall be transferred to the Purchaser pursuant hereto
on the related Closing Date and the Seller shall take no action to undermine
these rights and benefits. Notwithstanding the foregoing, it is understood and
agreed that promotions undertaken by the Seller or any affiliate of the Seller
which are directed to the general public at large, including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute solicitation
under this Section 29.
SECTION 30. Waiver of Trial by Jury.
THE SELLER AND THE PURCHASER EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 31. Submission to Jurisdiction; Waivers.
The Seller hereby irrevocably and unconditionally:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-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;
(B) 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;
(C) 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 HEREIN OR AT SUCH OTHER ADDRESS OF WHICH THE PURCHASER SHALL HAVE BEEN
NOTIFIED; AND
(D) 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 ▇▇▇ IN ANY OTHER JURISDICTION.
SECTION 32. Confidentiality.
The Seller hereby acknowledges the Purchaser's need to share
non-public information ("Information") with the Purchaser's employees,
Affiliates, attorneys or accountants (the "Representatives"), as well as Persons
performing due diligence investigations in connection with securities or
merger/acquisition transactions, taxing authorities or other governmental
agencies or regulatory bodies or in order to comply with any applicable federal
or state laws (collectively with the Representatives, the "Agents"). The
Purchaser hereby agrees to use best efforts to avoid causing the Seller to
violate applicable securities laws governing publicly traded companies. The
Purchaser and the Seller shall use mutual best efforts to determine which
Information will remain confidential.
SECTION 33. Compliance with Regulation AB
Subsection 33.01 Intent of the Parties; Reasonableness.
The Purchaser and the Seller acknowledge and agree that the purpose
of Section 33 of this Agreement is to facilitate compliance by the Purchaser and
any Depositor with the provisions of Regulation AB and related rules and
regulations of the Commission. Although Regulation AB is applicable by its terms
only to offerings of asset-backed securities that are registered under the
Securities Act, the Seller acknowledges that investors in privately offered
securities may require that the Purchaser or any Depositor provide comparable
disclosure in unregistered offerings. References in this Agreement to compliance
with Regulation AB include provision of comparable disclosure in private
offerings. Neither the Purchaser nor any Depositor shall exercise its right to
request delivery of information or other performance under these provisions
other than in good faith, or for purposes other than compliance with the
Securities Act, the Exchange Act and the rules and regulations of the Commission
thereunder (or the provision in a private offering of disclosure comparable to
that required under the Securities Act). The Seller acknowledges that
interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset backed securities markets, advice of
counsel, or otherwise, and agrees to comply with requests made by the Purchaser
or any Depositor in good faith for delivery of information under these
provisions on the basis of evolving interpretations of Regulation AB.
Furthermore, the Purchaser and the Company agree that if any such changes in the
interpretations of the requirements of Regulation AB materially affect this
Section 33, then the Purchaser and the Seller will amend such affected
provisions. In connection with the above, the Purchaser agrees to give the
Seller prompt written notice of changes in the requirements of Regulation AB
that might affect its obligations under this Section 33. In connection with any
Securitization Transaction, the Seller shall cooperate fully with the Purchaser
to deliver to the Purchaser (including any of its assignees or designees) and
any Depositor, any and all statements, reports, certifications, records and any
other information necessary in the good faith determination of the Purchaser or
any Depositor to permit the Purchaser or such Depositor to comply with the
provisions of Regulation AB, together with such disclosures relating to the
Seller, any Third Party Originator and the Mortgage Loans, reasonably believed
by the Purchaser or any Depositor to be necessary in order to effect such
compliance.
The Purchaser (including any of its assignees or designees) shall
cooperate with the Seller by providing timely notice of requests for information
under these provisions and by reasonably limiting such requests to information
required, in the Purchaser's reasonable judgment, to comply with Regulation AB.
Subsection 33.02 Additional Representations and Warranties of
the Seller.
(a) The Seller shall be deemed to represent to the Purchaser and to
any Depositor, as of the date on which information is first provided to the
Purchaser or any Depositor under Subsection 33.03 that, except as disclosed in
writing to the Purchaser or such Depositor prior to such date: (i) there are no
material legal or governmental proceedings pending (or known to be contemplated)
against the Seller or any Third Party Originator; and (ii) there are no
affiliations, relationships or transactions relating to the Seller or any Third
Party Originator with respect to any Securitization Transaction and any party
thereto identified by the related Depositor of a type described in Item 1119 of
Regulation AB.
(b) If so requested by the Purchaser or any Depositor on any date
following the date on which information is first provided to the Purchaser or
any Depositor under Subsection 33.03, the Seller shall, within five (5) Business
Days following such request, confirm in writing the accuracy of the
representations and warranties set forth in paragraph (a) of this Section or, if
any such representation and warranty is not accurate as of the date of such
request, provide reasonably adequate disclosure of the pertinent facts, in
writing, to the requesting party.
Subsection 33.03 Information To Be Provided by the Seller.
In connection with any Securitization Transaction the Seller shall
(i) within five (5) Business Days following request by the Purchaser or any
Depositor, provide to the Purchaser and such Depositor (or, as applicable, cause
each Third Party Originator to provide), in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor, the information and
materials specified in paragraphs (a) and (b) of this Subsection, and (ii) as
promptly as practicable following notice to or discovery by the Seller, provide
to the Purchaser and any Depositor (in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor) the information
specified in paragraph (d) of this Subsection. Notwithstanding the foregoing, it
is understood and agreed that (1) the information required pursuant to Items
1103(a)(1), 1110(a) and 1119 of Regulation AB (including the information
required pursuant to subparts (a)(A), (a)(D) and (c)(i)(B) of this Subsection
33.03) shall only be required to the extent that mortgage loans originated by
the Seller or a Third Party Originator, as the case may be, in the related
Securitization Transaction comprise 10% or more (or such other percentage as may
be required from time to time under Regulation AB) of the aggregate pool of
mortgage loans in such Securitization Transaction, (2) the information required
pursuant to Items 1110(b) and 1117 of Regulation AB (including the information
required pursuant to subparts (a)(B), (a)(C) and (c)(i)(A) of this Subsection
33.03) shall only be required to the extent that mortgage loans originated by
the Seller or a Third Party Originator, as the case may be, in the related
Securitization Transaction comprise 20% or more (or such other percentage as may
be required from time to time under Regulation AB) of the aggregate pool of
mortgage loans in such Securitization Transaction and (3) the information
required pursuant to Item 1105 of Regulation AB (including the information
required pursuant to subpart (b) below) shall only be required in Securitization
Transactions in which such Static Pool Information is material, as determined by
the Purchaser or Depositor in its sole reasonable determination of the
requirements of Regulation AB. Notwithstanding the foregoing, neither the
Purchaser nor any Depositor shall exercise its right to request delivery of such
information or other performance under these provisions other than in good faith
or for purposes other than compliance with the Securities Act, the Exchange Act
and the rules and regulations of the Commission thereunder.
(a) Subject to the provisions of the preceding paragraph, if so
requested by the Purchaser or any Depositor, the Seller shall provide such
information regarding (i) the Seller, as originator of the Mortgage Loans
(including as an acquirer of Mortgage Loans from a Qualified Correspondent), or
(ii) each Third Party Originator, as is requested for the purpose of compliance
with Items 1103(a)(1), 1105, 1110, 1117 and 1119 of Regulation AB. Such
information shall include, at a minimum.
(i) the originator's form of organization;
(ii) a description of the originator's origination program and how
long the originator has been engaged in originating residential mortgage loans,
which description shall include a discussion of the originator's experience in
originating mortgage loans of a similar type as the Mortgage Loans; information
regarding the size and composition of the originator's origination portfolio;
and information that may be material, in the good faith judgment of the
Purchaser or any Depositor, to an analysis of the performance of the Mortgage
Loans, including the originator's credit granting or underwriting criteria for
mortgage loans of similar type(s) as the Mortgage Loans and such other
information as the Purchaser or any Depositor may reasonably request for the
purpose of compliance with Item 1110(b)(2) of Regulation AB;
(iii) a description of any material legal or governmental
proceedings pending (or known to be contemplated) against the Seller and each
Third Party Originator; and
(iv) a description of any affiliation or relationship between the
Seller, each Third Party Originator and any of the following parties to a
Securitization Transaction, as such parties are identified to the Seller by the
Purchaser or any Depositor in writing in advance of such Securitization
Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(b) Subject to the provisions of the initial paragraph, if so
requested by the Purchaser or any Depositor, the Seller shall provide (or, as
applicable, cause each Third Party Originator to provide) Static Pool
Information with respect to the mortgage loans (of a similar type as the
Mortgage Loans, as reasonably identified by the Purchaser as provided below)
originated by (i) the Seller, if the Seller is an originator of Mortgage Loans
(including as an acquirer of Mortgage Loans from a Qualified Correspondent),
and/or (ii) each Third Party Originator. Such Static Pool Information shall be
prepared by the Seller (or Third Party Originator) on the basis of its
reasonable, good faith interpretation of the requirements of Item 1105(a)(1) (3)
of Regulation AB. To the extent that there is reasonably available to the Seller
(or Third Party Originator) Static Pool Information with respect to more than
one mortgage loan type, the Purchaser or any Depositor shall be entitled to
specify whether some or all of such information shall be provided pursuant to
this paragraph. The content of such Static Pool Information may be in the form
customarily provided by the Seller, and need not be customized for the Purchaser
or any Depositor. Such Static Pool Information for each vintage origination year
or prior securitized pool, as applicable, shall be presented in increments no
less frequently than quarterly over the life of the mortgage loans included in
the vintage origination year or prior securitized pool. The most recent periodic
increment must be as of a date no later than 135 days prior to the date of the
prospectus or other offering document in which the Static Pool Information is to
be included or incorporated by reference. The Static Pool Information shall be
provided in an electronic format that provides a permanent record of the
information provided, such as a portable document format (pdf) file, or other
such electronic format reasonably required by the Purchaser or the Depositor, as
applicable.
Promptly following notice or discovery of a material error in Static
Pool Information provided pursuant to the immediately preceding paragraph
(including an omission to include therein information required to be provided
pursuant to such paragraph), the Seller shall provide corrected Static Pool
Information to the Purchaser or any Depositor, as applicable, in the same format
in which Static Pool Information was previously provided to such party by the
Seller.
If so requested by the Purchaser or any Depositor, the Seller shall
provide (or, as applicable, cause each Third Party Originator to provide), at
the expense of the requesting party (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement), such agreed upon
procedures letters of certified public accountants reasonably acceptable to the
Purchaser or Depositor, as applicable, pertaining to Static Pool Information
relating to prior securitized pools for securitizations closed on or after
January 1, 2006 or, in the case of Static Pool Information with respect to the
Seller's or Third Party Originator's originations or purchases, to calendar
months commencing January 1, 2006, as the Purchaser or such Depositor shall
reasonably request. Such statements and letters shall be addressed to and be for
the benefit of such parties as the Purchaser or such Depositor shall designate,
which may include, by way of example, any Sponsor, any Depositor and any broker
dealer acting as underwriter, placement agent or initial purchaser with respect
to a Securitization Transaction. Any such statement or letter may take the form
of a standard, generally applicable document accompanied by a reliance letter
authorizing reliance by the addressees designated by the Purchaser or such
Depositor.
(c) [Reserved].
(d) Subject to the provisions of the initial paragraph, if so
requested by the Purchaser or any Depositor for the purpose of satisfying its
reporting obligation under the Exchange Act with respect to any class of asset
backed securities, the Seller shall (or shall cause each Third Party Originator
to) (i) notify the Purchaser and any Depositor in writing of (A) any material
litigation or governmental proceedings pending against the Seller or any Third
Party Originator and (B) any affiliations or relationships that develop
following the closing date of a Securitization Transaction between the Seller or
any Third Party Originator and any of the parties specified in clause (vi) of
paragraph (a) of this Subsection (and any other parties identified in writing by
the requesting party) with respect to such Securitization Transaction, and (ii)
provide to the Purchaser and any Depositor a description of such proceedings,
affiliations or relationships.
(e) With respect to those Mortgage Loans that were sold to the
Purchaser pursuant to this Agreement, the Purchaser shall, to the extent
consistent with then-current industry practice, cause the servicer (or another
party) to be obligated to provide information, in the form customarily provided
by such servicer or other party (which need not be customized for the Seller)
with respect to the Mortgage Loans reasonably necessary for the Seller to comply
with its obligations under Regulation AB, including, without limitation,
providing to the Seller Static Pool Information, as set forth in Item 1105(a)(2)
and (3) of Regulation AB (such information provided by the servicer or such
other party, the "Loan Performance Information").
Subsection 33.04 Indemnification.
(a) The Seller shall indemnify the Purchaser, each affiliate of the
Purchaser, and each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person responsible for the
preparation, execution or filing of any report required to be filed with the
Commission with respect to such Securitization Transaction, or for execution of
a certification pursuant to Rule 13a 14(d) or Rule 15d 14(d) under the Exchange
Act with respect to such Securitization Transaction; each broker dealer acting
as underwriter, placement agent or initial purchaser, each Person who controls
any of such parties or the Depositor (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the respective present
and former directors, officers, employees and agents of each of the foregoing
and of the Depositor, and shall hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon:
(i)(A) any untrue statement of a material fact contained or alleged
to be contained in any information, report, certification, accountants' letter
or other material provided in written or electronic form under this Section 33
by or on behalf of the Seller, or provided under this Section 33 by or on behalf
of any Third Party Originator (collectively, the "Seller Information"), or (B)
the omission or alleged omission to state in the Seller Information a material
fact required to be stated in the Seller Information or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, by way of clarification, that clause (B) of
this paragraph shall be construed solely by reference to the Seller Information
and not to any other information communicated in connection with a sale or
purchase of securities, without regard to whether the Seller Information or any
portion thereof is presented together with or separately from such other
information;
(ii) any failure by the Seller or any Third Party Originator to
deliver any information, report, certification, accountants' letter or other
material when and as required under this Section 33; or
(iii) any breach by the Seller of a representation or warranty set
forth in Subsection 33.02(a) or in a writing furnished pursuant to Subsection
33.02(b) and made as of a date prior to the closing date of the related
Securitization Transaction, to the extent that such breach is not cured by such
closing date, or any breach by the Seller of a representation or warranty in a
writing furnished pursuant to Subsection 33.02(b) to the extent made as of a
date subsequent to such closing date.
(b) In the case of any failure of performance described in clause
(a)(ii) of this Section, the Seller shall promptly reimburse the Purchaser, any
Depositor, as applicable, and each Person responsible for the preparation,
execution or filing of any report required to be filed with the Commission with
respect to such Securitization Transaction, or for execution of a certification
pursuant to Rule 13a 14(d) or Rule 15d 14(d) under the Exchange Act with respect
to such Securitization Transaction, for all costs reasonably incurred by each
such party in order to obtain the information, report, certification,
accountants' letter or other material not delivered as required by the Seller or
any Third Party Originator.
(c) The Purchaser shall indemnify the Seller, each affiliate of the
Seller and the respective present and former directors, officers, employees and
agents of each of the foregoing, and shall hold each of them harmless from and
against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses
that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in the Loan Performance Information or (B)
the omission or alleged omission to state in the Loan Performance
Information a material fact required to be stated in the Loan
Performance Information or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, by way of clarification, that clause
(B) of this paragraph shall be construed solely by reference to the
Loan Performance Information and not to any other information
communicated in connection with a sale or purchase of securities,
without regard to whether the Loan Performance Information or any
portion thereof is presented together with or separately from such
other information; or
(ii) any failure by the Purchaser or by the related servicer
to deliver any Loan Performance Information as required under
Subsection 34.03(e).
[Signatures Commence on Following Page]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
(Purchaser)
By:____________________________________
Name:__________________________________
Title:_________________________________
ACCREDITED HOME LENDERS, INC.
(Seller)
By:____________________________________
Name:__________________________________
Title:_________________________________
EXHIBIT A
EXHIBIT A
CONTENTS OF EACH MORTGAGE FILE
------------------------------
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and any prospective Purchaser, and which shall be delivered to the
Custodian, or to such other Person as the Purchaser shall designate in writing,
pursuant to Section 6 of the Fifth Amended and Restated Mortgage Loan Purchase
and Warranties Agreement to which this Exhibit is attached (the "Agreement"):
(a) the original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________, without recourse" and signed in the
name of the last endorsee (the "Last Endorsee") by an authorized officer. To the
extent that there is no room on the face of the Mortgage Notes for endorsements,
the endorsement may be contained on an allonge, if state law so allows and the
Custodian is so advised by the Seller that state law so allows. If the Mortgage
Loan was acquired by the Seller in a merger, the endorsement must be by "[Last
Endorsee], successor by merger to [name of predecessor]." If the Mortgage Loan
was acquired or originated by the Last Endorsee while doing business under
another name, the endorsement must be by "[Last Endorsee], formerly known as
[previous name]";
(b) the original of any guarantee executed in connection with the
Mortgage Note;
(c) the original Mortgage with evidence of recording thereon;
(d) the originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon;
(e) except with respect to each MERS Designated Mortgage Loan, the
original Assignment of Mortgage for each Mortgage Loan, in form and substance
acceptable for recording. The Assignment of Mortgage shall be delivered in
blank. If the Mortgage Loan was acquired by the Seller in a merger, the
Assignment of Mortgage must be made by "[Seller], successor by merger to [name
of predecessor]." If the Mortgage Loan was acquired or originated by the Seller
while doing business under another name, the Assignment of Mortgage must be by
"[Seller], formerly known as [previous name]";
(f) the originals of all intervening assignments of mortgage (if
any) evidencing a complete chain of assignment from the Seller to the Last
Endorsee (or MERS, with respect to each MERS Designated Mortgage Loan) with
evidence of recording thereon;
(g) The original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy of the
related policy binder, preliminary report or commitment for title issued by the
title insurance company; and
(h) security agreement, chattel mortgage or equivalent document
executed in connection with the Mortgage.
Notwithstanding the foregoing, in connection with any item described
above in clauses (c), (d) or (f), if the Seller cannot deliver or cause to be
delivered the original of any such item with evidence of recording thereon on or
prior to the related Closing Date because of a delay caused by the public
recording office where such item has been delivered for recordation or because
such item has been lost or because such public recording office retains the
original recorded item (each such item, a "Delayed Document"), the Seller shall
deliver or cause to be delivered to the Custodian, (i) in the case of a delay
caused by the public recording office, a photocopy of such Delayed Document,
together with an Officer's Certificate of the Seller (or certified by the title
company, escrow agent, or closing attorney) to the effect that such copy is a
true and correct copy of the Delayed Document that has been dispatched to the
appropriate public recording office for recordation (and the original recorded
Delayed Document or a copy of such Delayed Document certified by such public
recording office to be a true and complete copy of the original recorded Delayed
Document will be promptly delivered to the Custodian upon receipt thereof by the
Seller); or (ii) in the case of a Delayed Document where a public recording
office retains the original recorded Delayed Document or in the case where a
Delayed Document is lost after recordation in a public recording office, a copy
of such Delayed Document certified by such public recording office to be a true
and complete copy of the original recorded Delayed Document.
In the event an Officer's Certificate of the Seller is delivered to
the Purchaser because of a delay caused by the public recording office in
returning any recorded document, the Seller shall deliver to the Purchaser,
within 90 days of the related Closing Date, an Officer's Certificate which shall
(i) identify the recorded document, (ii) state that the recorded document has
not been delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will be
delivered to the Custodian. An extension of the date specified in (iv) above may
be requested from the Purchaser, which consent shall not be unreasonably
withheld.
Exhibit B
EXHIBIT B
[RESERVED]
Exhibit C
EXHIBIT C
SELLER'S OFFICER'S CERTIFICATE
------------------------------
I, ____________________, hereby certify that I am the duly elected
[Vice] President of ________________[COMPANY], a corporation organized under the
laws of the state of ____________] (the "Company") and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete copy
of the charter of the Company which is in full force and effect on the
date hereof and which has been in effect without amendment, waiver,
rescission or modification since ___________.
2. Attached hereto as Exhibit 2 is a true, correct and complete copy
of the bylaws of the Company which are in effect on the date hereof and
which have been in effect without amendment, waiver, rescission or
modification since ___________.
3. Attached hereto as Exhibit 3 is an original certificate of good
standing of the Company issued within ten days of the date hereof, and no
event has occurred since the date thereof which would impair such
standing.
4. Attached hereto as Exhibit 4 is a true, correct and complete copy
of the corporate resolutions of the Board of Directors of the Company
authorizing the Company to execute and deliver agreements such as the
Fifth Amended and Restated Mortgage Loan Purchase and Warranties
Agreement, dated as of _______ __, 200_, by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. (the "Purchaser") and the Company (the "Purchase
Agreement"), the Interim Servicing Agreement, dated as of _______ __,
200_, by and between the Company and the Purchaser (the "Servicing
Agreement"), and the Custodial Agreement dated as of _____ __, 200_ by and
among the Company, the Purchaser and Deutsche Bank Trust Company Americas
(the "Custodial Agreement") and to endorse the Mortgage Notes and execute
the Assignments of Mortgages by original [or facsimile] signature, and
such resolutions are in effect on the date hereof and have been in effect
without amendment, waiver, rescission or modification since ____________.
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Company of or compliance by the Company
with the Purchase Agreement, the Servicing Agreement, the Custodial
Agreement, the sale of the mortgage loans or the consummation of the
transactions contemplated by the agreements; or (ii) any required consent,
approval, authorization or order has been obtained by the Company.
6. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of the Purchase Agreement, the Servicing
Agreement and the Custodial Agreement conflicts or will conflict with or
results or will result in a breach of or constitutes or will constitute a
default under the charter or by-laws of the Company, the terms of any
indenture or other agreement or instrument to which the Company is a party
or by which it is bound or to which it is subject, or any statute or
order, rule, regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which the Company is subject
or by which it is bound.
7. Except as previously identified by the Company to the Purchaser
in writing, to the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the Company
which, in my judgment, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Company or in any
material impairment of the right or ability of the Company to carry on its
business substantially as now conducted or in any material liability on
the part of the Company or which would draw into question the validity of
the Purchase Agreement, the Servicing Agreement and the Custodial
Agreement, or the mortgage loans or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which would be
likely to impair materially the ability of the Company to perform under
the terms of the Purchase Agreement, the Servicing Agreement and the
Custodial Agreement.
8. Each person listed on Exhibit 5 attached hereto who, as an
officer or representative of the Company, signed (a) the Purchase
Agreement, (b) the Servicing Agreement, (c) the Custodial Agreement and
(d) any other document delivered or on the date hereof in connection with
any purchase described in the agreements set forth above was, at the
respective times of such signing and delivery, and is now, a duly elected
or appointed, qualified and acting officer or representative of the
Company, who holds the office set forth opposite his or her name on
Exhibit 5, and the signatures of such persons appearing on such documents
are their genuine signatures.
9. The Company is duly authorized to engage in the transactions
described and contemplated in the Purchase Agreement, the Servicing
Agreement and the Custodial Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated:____________________ By:___________________________
Name:_________________________
[Seal] Title: [Executive/Assistant Vice] President
I, ________________________, an [Assistant] Secretary of
______________[COMPANY], hereby certify that ____________ is the duly elected,
qualified and acting [Executive/Assistant Vice] President of the Company and
that the signature appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:____________________ By:___________________________
Name:_________________________
Title: [Assistant] Secretary
EXHIBIT 5 to
Company's Officer's Certificate
NAME TITLE SIGNATURE
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Exhibit D
EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER
----------------------------------------
(date)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
You have requested [our] [my] opinion, as [Assistant] General
Counsel to ___________________ (the "Company"), with respect to certain matters
in connection with the sale by the Company of the Mortgage Loans pursuant to
that certain Fifth Amended and Restated Mortgage Loan Purchase and Warranties
Agreement by and between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
(the "Purchaser"), dated as of _________ __, 200_ (the "Purchase Agreement"),
which sale is in the form of whole loans, delivered pursuant to a Custodial
Agreement dated as of _____ __, 200_ among the Purchaser, the Company and
Deutsche Bank Trust Company Americas (the "Custodial Agreement"), and serviced
pursuant to an Interim Servicing Agreement, dated as of ______ __, 200_ by and
between the Seller and the Purchaser (the "Servicing Agreement" and,
collectively with the Purchase Agreement and the Custodial Agreement, the
"Agreements"). Capitalized terms not otherwise defined herein have the meanings
set forth in the Purchase Agreement and the Servicing Agreement.
[We] [I] have examined the following documents:
1. the Purchase Agreement;
2. the Servicing Agreement;
3. the Custodial Agreement;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as [we] [I] have
deemed necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Company contained in
the Purchase Agreement and in the Servicing Agreement, as applicable. [We] [I]
have assumed the authenticity of all documents submitted to [us] [me] as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to the originals of all documents.
Based upon the foregoing, it is [our] [my] opinion that:
1. The Company is [type of entity] duly organized, validly
existing and in good standing under the laws of the [state of
incorporation] and is qualified to transact business in, and
is in good standing under, the laws of [the state of
incorporation].
2. The Company has the power to engage in the transactions
contemplated by the Agreements to which it is a party and all
requisite power, authority and legal right to execute and
deliver such Agreements and to perform and observe the terms
and conditions of such Agreements.
3. Each of the Agreements to which it is a party has been duly
authorized, executed and delivered by the Company, and is a
legal, valid and binding agreement enforceable in
accordance with its respective terms against the Company,
subject to bankruptcy laws and other similar laws of
general application affecting rights of creditors and
subject to the application of the rules of equity,
including those respecting the availability of specific
performance, none of which will materially interfere with
the realization of the benefits provided thereunder or with
the Purchaser's ownership of the Mortgage Loans.
4. The Company has been duly authorized to allow certain of its
officers to execute any and all documents by original
signature in order to complete the transactions contemplated
by the Agreements to which it is a party
5. The Company has been duly authorized to allow certain of
its officers to execute by original [or facsimile]
signature the endorsements to the Mortgage Notes and the
Assignments of Mortgages, and the original [or facsimile]
signature of the officer at the Company executing the
endorsements to the Mortgage Notes and the Assignments of
Mortgages represents the legal and valid signature of said
officer of the Company.
6. Either (i) no consent, approval, authorization or order of
any court or governmental agency or body is required for
the execution, delivery and performance by the Company of
or compliance by the Company with the Agreements to which
it is a party and the sale of the Mortgage Loans by the
Company or the consummation of the transactions
contemplated by the Agreements to which each is a party or
(ii) any required consent, approval, authorization or order
has been obtained by the Company.
7. Neither the consummation of the transactions contemplated
by, nor the fulfillment of the terms of, the Agreements to
which it is a party conflicts or will conflict with or
results or will result in a breach of or constitutes or
will constitute a default under the charter or by-laws of
the Company, the terms of any indenture or other agreement
or instrument to which the Company is a party or by which
it is bound or to which it is subject, or violates any
statute or order, rule, regulations, writ, injunction or
decree of any court, governmental authority or regulatory
body to which the Company is subject or by which it is
bound.
8. Except as previously identified by the Company to the
Purchaser in writing, there is no action, suit, proceeding
or investigation pending or, to the best of [our] [my]
knowledge, threatened against the Company which, in [our]
[my] judgment, either in any one instance or in the
aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or
assets of the Company or in any material impairment of the
right or ability of the Company to carry on its business
substantially as now conducted or in any material liability
on the part of the Company or which would draw into
question the validity of the Agreements to which it is a
party or the Mortgage Loans or of any action taken or to be
taken in connection with the transactions contemplated
thereby, or which would be likely to impair materially the
ability of the Company to perform under the terms of the
Agreements to which it is a party.
9. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Purchase Agreement, the Servicing
Agreement and the Custodial Agreement is sufficient to fully
transfer to the Purchaser all right, title and interest of the
Company thereto as noteholder and mortgagee.
10. The endorsement of the Mortgage Notes, the delivery to the
Purchaser, or its designee, of the Assignments of Mortgage,
and the delivery of the original endorsed Mortgage Notes to
the Purchaser, or its designee, are sufficient to permit
the Purchaser to avail itself of all protection available
under applicable law against the claims of any present or
future creditors of the Company, and are sufficient to
prevent any other sale, transfer, assignment, pledge or
hypothecation of the Mortgages and the Mortgage Notes by
the Company from being enforceable.
I am admitted to the bar of the State of California, and I express
no opinion as to the laws of any other jurisdiction except as to matters that
are governed by federal law. I make no undertaking to supplement or update this
opinion if, after the date hereof, facts or circumstances come to my attention
or changes in the law occur which could affect such opinion. This opinion is
given to you for your sole benefit, and no other person or entity is entitled to
rely hereon except that the purchaser or purchasers to which you initially and
directly resell the Mortgage Loans may rely on this opinion as if it were
addressed to them as of its date.
Very truly yours,
_____________________________
[Name]
[Assistant] General Counsel
Exhibit E
EXHIBIT E
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
___________________, 200__
[Federal Home Loan Bank of
______(the "Association")]
________________________
________________________
________________________
Attention: ___________________________
___________________________
Re: Notice of Sale and Release of Collateral
----------------------------------------
Dear Sirs:
This letter serves as notice that ________________________[COMPANY]
a [type of entity], organized pursuant to the laws of [the state of
incorporation] (the "Company") has committed to sell to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. under the Fifth Amended and Restated Mortgage Loan Purchase and
Warranties Agreement, dated as of ______ __, 200_, certain mortgage loans
originated by the Association. The Company warrants that the mortgage loans to
be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. are in addition to and beyond
any collateral required to secure advances made by the Association to the
Company.
The Company acknowledges that the mortgage loans to be sold to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. shall not be used as additional or
substitute collateral for advances made by the Association. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. understands that the balance of the Company's mortgage
loan portfolio may be used as collateral or additional collateral for advances
made by the Association, and confirms that it has no interest therein.
Execution of this letter by the Association shall constitute a full
and complete release of any security interest, claim, or lien which the
Association may have against the mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc.
Very truly yours,
____________________________
By:__________________________
Name:________________________
Title:_________________________
Date:_________________________
Acknowledged and approved:
[FEDERAL HOME LOAN BANK OF]
__________________________
By:______________________________
Name:___________________________
Title:____________________________
Date:____________________________
Exhibit F
EXHIBIT F
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
I. Release of Security Interest
----------------------------
Upon receipt of the sum of $_____________ in immediately available
funds, the financial institution named below hereby relinquishes any and all
right, title and interest it may have in all Mortgage Loans to be purchased by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. from the Company named below pursuant to
that certain Fifth Amended and Restated Mortgage Loan Purchase and Warranties
Agreement, dated as of ______ __, 200_, and certifies that all notes, mortgages,
assignments and other documents in its possession relating to such Mortgage
Loans have been delivered and released to the Company named below or its
designees, as of the date and time of the sale of such Mortgage Loans to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage Capital Inc.
Name and Address of Financial Institution
________________________________
(Name)
________________________________
(Address)
By:_____________________________
II. Certification of Release
------------------------
The Company named below hereby certifies to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. the security interests in
the Mortgage Loans released by the above-named financial institution comprise
all security interests relating to or affecting any and all such Mortgage Loans.
The Company warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
_____________________________
By:__________________________
Title:_________________________
Date:_________________________
Exhibit G
EXHIBIT G
UNDERWRITING GUIDELINES
-----------------------
Exhibit H
FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
-------------------------------------------
On this ___ day of __________, ____, ___________________ ("Seller"),
as (i) the Seller under that certain Purchase Price and Terms Agreement, dated
as of ___________, _____ (the "PPTA"), (ii) the Seller under that certain Fifth
Amended and Restated Mortgage Loan Purchase and Warranties Agreement, dated as
of ________, ____ (the "Purchase Agreement"), and (iii) the Seller/Interim
Servicer under that certain Interim Servicing Agreement, dated as of
___________, ____ (the "Interim Servicing Agreement" and, together with the PPTA
and the Purchase Agreement, the "Agreements"), does hereby sell, transfer,
assign, set over and convey to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
("Purchaser") as the Purchaser under the Agreements, without recourse, but
subject to the terms of the Agreements, all right, title and interest of, in and
to the Mortgage Loans listed on the Mortgage Loan Schedule attached hereto as
Exhibit A (the "Mortgage Loans"), together with the Mortgage Files and all
rights and obligations arising under the documents contained therein. Each
Mortgage Loan subject to the Agreements was underwritten in accordance with, and
conforms to, the Underwriting Guidelines attached hereto as Exhibit C. Pursuant
to Section 6 of the Purchase Agreement, the Seller has delivered to the
Custodian the documents for each Mortgage Loan to be purchased as set forth in
the Custodial Agreement. The contents of each Servicing File required to be
retained by __________________________ ("Interim Servicer") to service the
Mortgage Loans pursuant to the Interim Servicing Agreement and thus not
delivered to the Purchaser are and shall be held in trust by the Seller in its
capacity as Interim Servicer for the benefit of the Purchaser as the owner
thereof. The Interim Servicer's possession of any portion of the Servicing File
is at the will of the Purchaser for the sole purpose of facilitating servicing
of the related Mortgage Loan pursuant to the Interim Servicing Agreement, and
such retention and possession by the Interim Servicer shall be in a custodial
capacity only. The ownership of each Mortgage Note, Mortgage, the Servicing
Rights and the contents of the Mortgage File and Servicing File is vested in the
Purchaser and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Seller or the Interim Servicer shall immediately vest in the Purchaser and shall
be retained and maintained, in trust, by the Seller at the will of the Purchaser
in such custodial capacity only.
The Mortgage Loan Package characteristics of the Mortgage Loans
subject hereto are set forth on Exhibit B hereto.
In accordance with Section 6 of the Purchase Agreement, the
Purchaser accepts the Mortgage Loans listed on Exhibit A attached hereto.
Notwithstanding the foregoing the Purchaser does not waive any rights or
remedies it may have under the Agreements.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
[SELLER]
By:____________________________________
Name:__________________________________
Title:_________________________________
Accepted and Agreed:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE
CAPITAL INC.
By: ________________________________
Name: ___________________________
Title: ___________________________
Exhibit H
EXHIBIT A
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
THE MORTGAGE LOANS
Exhibit H
EXHIBIT B
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE POOL CHARACTERISTICS OF
EACH MORTGAGE LOAN PACKAGE
Pool Characteristics of the Mortgage Loan Package as delivered on
the related Closing Date:
No Mortgage Loan has: (1) an outstanding principal balance less
than $_________; (2) an origination date earlier than _ months prior to the
related Cut-off Date; (3) a CLTV of greater than _____%; (4) a FICO Score of
less than ___; or (5) a debt-to-income ratio of more than __%. Each First
Lien Loan has a Mortgage Interest Rate of at least ___% per annum and an
outstanding principal balance less than $_________. Each Second Lien Loan has
a Mortgage Interest Rate of at least ______% per annum and an outstanding
principal balance less than $________. Each Adjustable Rate Mortgage Loan has
an Index of [_______].
Exhibit H
EXHIBIT C
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
UNDERWRITING GUIDELINES
EXHIBIT I
EXHIBIT I
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
--------------------------------------------
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated [____________ __,
20__] ("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"),
[____________________] ("Assignee") and [SELLER] (the "Company"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and
other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
Assignment and Conveyance
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Fifth Amended
and Restated Mortgage Loan Purchase and Warranties Agreement (the "Purchase
Agreement"), dated as of [DATE], between the Assignor, as purchaser (the
"Purchaser"), and the Company, as seller, solely insofar as the Purchase
Agreement relates to the Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder any and all right, title and interest in, to and under and
any obligations of the Assignor with respect to any mortgage loans subject to
the Purchase Agreement which are not the Mortgage Loans set forth on the
Mortgage Loan Schedule and are not the subject of this Agreement.
Recognition of the Company
--------------------------
2. From and after the date hereof (the "Securitization Closing
Date"), the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Purchase Agreement
(solely to the extent set forth herein) and this Agreement to
[__________________] (the "Trust") created pursuant to a Pooling and Servicing
Agreement, dated as of [______], 200_ (the "Pooling Agreement"), among the
Assignee, the Assignor, [___________________], as trustee (including its
successors in interest and any successor trustees under the Pooling Agreement,
the "Trustee"), [____________________], as servicer (including its successors in
interest and any successor servicer under the Pooling Agreement, the
"Servicer"). The Company hereby acknowledges and agrees that from and after the
date hereof (i) the Trust will be the owner of the Mortgage Loans, (ii) the
Company shall look solely to the Trust for performance of any obligations of the
Assignor insofar as they relate to the Mortgage Loans, (iii) the Trust
(including the Trustee and the Servicer acting on the Trust's behalf) shall have
all the rights and remedies available to the Assignor, insofar as they relate to
the Mortgage Loans, under the Purchase Agreement, including, without limitation,
the enforcement of the document delivery requirements set forth in Section 6 of
the Purchase Agreement, and shall be entitled to enforce all of the obligations
of the Company thereunder insofar as they relate to the Mortgage Loans, and (iv)
all references to the Purchaser or the Custodian under the Purchase Agreement
insofar as they relate to the Mortgage Loans shall be deemed to refer to the
Trust (including the Trustee and the Servicer acting on the Trust's behalf).
Neither the Company nor the Assignor shall amend or agree to amend, modify,
waiver, or otherwise alter any of the terms or provisions of the Purchase
Agreement which amendment, modification, waiver or other alteration would in any
way affect the Mortgage Loans or the Company's performance under the Purchase
Agreement with respect to the Mortgage Loans without the prior written consent
of the Trustee.
Representations and Warranties of the Company
---------------------------------------------
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation;
(b) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement and has full power and
authority to perform its obligations under the Purchase Agreement. The
execution by the Company of this Agreement is in the ordinary course of
the Company's business and will not conflict with, or result in a breach
of, any of the terms, conditions or provisions of the Company's charter or
bylaws or any legal restriction, or any material agreement or instrument
to which the Company is now a party or by which it is bound, or result in
the violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject. The execution, delivery and
performance by the Company of this Agreement have been duly authorized by
all necessary corporate action on part of the Company. This Agreement has
been duly executed and delivered by the Company, and, upon the due
authorization, execution and delivery by the Assignor and the Assignee,
will constitute the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms except as
enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity
regardless of whether enforceability is considered in a proceeding in
equity or at law;
(c) No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required to be
obtained or made by the Company in connection with the execution, delivery
or performance by the Company of this Agreement, or if required, such
approval has been obtained prior to the date hereof; and
(d) Except as previously identified by the Company to the Assignor in
writing, there is no action, suit, proceeding or investigation pending or
threatened against the Company, before any court, administrative agency or
other tribunal, which would draw into question the validity of this
Agreement or the Purchase Agreement, or which, either in any one instance
or in the aggregate, would result in any material adverse change in the
ability of the Company to perform its obligations under this Agreement or
the Purchase Agreement, and the Company is solvent.
4. Pursuant to Section 13 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor, the Assignee
and the Trust, that the representations and warranties set forth on Exhibit B
hereto are true and correct as of the date hereof as if such representations and
warranties were made on the date hereof unless otherwise specifically stated in
such representations and warranties.
Remedies for Breach of Representations and Warranties
-----------------------------------------------------
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicer acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Sections 3 and 4
hereof shall be as set forth in Subsection 9.03 of the Purchase Agreement as if
they were set forth herein (including without limitation the repurchase and
indemnity obligations set forth therein).
Miscellaneous
-------------
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicer acting on the Trust's behalf). Any entity into which Assignor,
Assignee or Company may be merged or consolidated shall, without the requirement
for any further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
9. Each of this Agreement and the Purchase Agreement shall survive
the conveyance of the Mortgage Loans and the assignment of the Purchase
Agreement (to the extent assigned hereunder) by Assignor to Assignee and by
Assignee to the Trust and nothing contained herein shall supersede or amend the
terms of the Purchase Agreement.
10. 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.
11. In the event that any provision of this Agreement conflicts with
any provision of the Purchase Agreement with respect to the Mortgage Loans, the
terms of this Agreement shall control.
12. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the Purchase Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
[SELLER]
By: __________________________________
Name:__________________________________
Its: __________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: __________________________________
Name:__________________________________
Its: __________________________________
[__________________________]
By: __________________________________
Name:__________________________________
Its: __________________________________
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Mortgage Loan Schedule
EXHIBIT B TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Representations and Warranties as to the Mortgage Loans
(insert reps from Exhibit B to PPTA here)
EXHIBIT J
FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
--------------------------------------------------
THIS INDEMNIFICATION AND CONTRIBUTION AGREEMENT, dated
[______________] ("Agreement"), among [_________________] (the "Depositor"),
[________________] (the "Underwriter"), [_____________} (the "Initial
Purchaser") and [_________________] (the "Indemnifying Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Indemnifying Party or its affiliate originated or
acquired the Mortgage Loans and subsequently sold the Mortgage Loans to
[_____________], an affiliate of the Depositor, in anticipation of the
securitization transaction;
WHEREAS, pursuant to Section [__] of the Fifth Amended and Restated
Mortgage Loan Purchase and Warranties Agreement, dated as of December 1, 2005,
by and between the Indemnifying Party and the Initial Purchaser, the
Indemnifying Party wishes to provide for indemnification and contribution on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
1933 Act: The Securities Act of 1933, as amended.
1934 Act: The Securities Exchange Act of 1934, as amended.
Agreement: This Indemnification and Contribution Agreement, as
the same may be amended in accordance with the terms hereof.
Free Writing Prospectus: Any written communication that
constitutes a "free writing prospectus," as defined in Rule 405 under the
1933 Act.
Indemnified Parties: As defined in Section 3.1.
Indemnifying Party Information: [(A)] All information in the
[Prospectus Supplement,] [the Offering Circular] or [any Free Writing
Prospectus] or any amendment or supplement thereto (i) contained under the
headings "Transaction Overview--Parties--The Original Loan Sellers-Accredited
Home Lenders, Inc." and "The Mortgage Loan Pool--Underwriting
Guidelines--Accredited Home Lenders, Inc." and (ii) regarding the Mortgage
Loans, the related mortgagors and/or the related Mortgaged Properties (but in
the case of this clause (ii), only to the extent any untrue statement or
omission arose from or is based upon errors or omissions in the information
concerning the Mortgage Loans, the related mortgagors and/or the related
Mortgaged Properties, as applicable, provided to the Depositor or any
affiliate by or on behalf of the Indemnifying Party) [and (B) static pool
information regarding mortgage loans originated or acquired by the Seller
[and included in the Prospectus Supplement, the Offering Circular or the Free
Writing Prospectus or any amendment or supplement thereto][incorporated by
reference from the website located at ___________]].
Offering Circular: The offering circular, dated [_______], 200___,
relating to the private offering of the Privately Offered Certificates,
including any structural term sheets, collateral terms sheets and computational
materials used in connection with such offering.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Pooling and Servicing Agreement: The Pooling and Servicing
Agreement, dated as of [__________], among the Depositor, the Indemnifying Party
and [_____________].
[Privately Offered Certificates: [______________], Mortgage
Pass-Through Certificates, Series [_______], Class [__] issued pursuant to
the Pooling and Servicing Agreement.]
Prospectus Supplement: The prospectus supplement, dated
[___________], relating to the offering of the Publicly Offered Certificates.
Publicly Offered Certificates: [______________], Mortgage
Pass-Through Certificates, Series [_______], Class [__], Class [__],
Class [__], Class [__], Class [__], Class [__] and Class [__] issued pursuant
to the Pooling and Servicing Agreement.
Underwriting Agreement: The Underwriting Agreement, dated
___________, 200_, between the Depositor and the Underwriter, relating to the
sale of the Publicly Offered Certificates.
1.2 Other Terms. Capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Pooling and Servicing Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Each party hereto represents that:
(a) it has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement;
(b) this Agreement has been duly authorized, executed and
delivered by such party; and
(c) assuming the due authorization, execution and delivery by each
other party hereto, this Agreement constitutes the legal, valid and binding
obligation of such party.
ARTICLE III
INDEMNIFICATION
3.1 Indemnification by the Indemnifying Party of the Depositor and
the Underwriter. (a) The Indemnifying Party shall indemnify and hold harmless
the Depositor, the Underwriter and the Initial Purchaser and their respective
affiliates, and their respective present and former directors, officers,
employees, agents and each Person, if any, that controls the Depositor, the
Underwriter or such affiliate, within the meaning of either the 1933 Act or the
1934 Act (collectively, the "Indemnified Parties"), against any and all losses,
claims, damages, penalties, fines, forfeitures or liabilities, joint or several,
to which each such Indemnified Party may become subject, under the 1933 Act, the
1934 Act or otherwise, to the extent that such losses, claims, damages,
penalties, fines, forfeitures or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the [Prospectus Supplement,] [the Offering
Circular,] [any Free Writing Prospectus] or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission relates to information set forth in the
Indemnifying Party Information, and the Indemnifying Party shall in each case
reimburse each Indemnified Party for any legal or other costs, fees, or expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such loss, claim, damage, penalty, fine, forfeiture, liability
or action. The Indemnifying Party's liability under this Section 3.1 shall be in
addition to any other liability that the Indemnifying Party may otherwise have.
(b) If the indemnification provided for in this Section 3.1 shall
for any reason be unavailable to an Indemnified Party under this Section 3.1,
then the party which would otherwise be obligated to indemnify with respect
thereto, on the one hand, and the parties which would otherwise be entitled to
be indemnified, on the other hand, shall contribute to the aggregate losses,
liabilities, claims, damages, penalty, fine, forfeiture, costs, fees and
expenses of the nature contemplated herein and incurred by the parties hereto in
such proportions that are appropriate to reflect the relative benefit to the
Depositor and the Indemnifying Party from the issuance and sale of the Publicly
Offered Certificates or, if such allocation is not permitted by a court of
competent jurisdiction, then on a basis appropriate to also recognize the
relative fault of the Depositor or the Underwriter, on the one hand, and the
Indemnifying Party, on the other hand, in connection with the applicable
misstatements or omissions as well as any other relevant equitable
considerations. Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be
entitled to contribution from any Person that was not guilty of such fraudulent
misrepresentation. For purposes of this Section 3.1, each director of a party to
this Agreement and each Person, if any, that controls a party to this Agreement
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such party.
3.2 Notification; Procedural Matters. Promptly after receipt by an
Indemnified Party under Section 3.1 of notice of any claim or the commencement
of any action, such Indemnified Party shall, if a claim in respect thereof is to
be made against the Indemnifying Party (or if a claim for contribution is to be
made against another party) under Section 3.1, notify the Indemnifying Party (or
other contributing party) in writing of the claim or the commencement of such
action; provided, however, that the failure to notify the Indemnifying Party (or
other contributing party) shall not relieve it from any liability which it may
have under Section 3.1 except to the extent it has been materially prejudiced by
such failure; and provided, further, however, that the failure to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
any Indemnified Party (or to the party requesting contribution) otherwise than
under Section 3.1. In case any such action is brought against any Indemnified
Party and it notifies the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that, by written notice delivered to the Indemnified Party promptly after
receiving the aforesaid notice from such Indemnified Party, the Indemnifying
Party elects to assume the defense thereof, it may participate with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that if
the defendants in any such action include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party or Parties shall reasonably have
concluded that there may be legal defenses available to it or them and/or other
Indemnified Parties that are different from or additional to those available to
the Indemnifying Party, the Indemnified Party or Parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party or
Parties. Upon receipt of notice from the Indemnifying Party to such Indemnified
Party of its election so to assume the defense of such action and approval by
the Indemnified Party of such counsel, the Indemnifying Party shall not be
liable to such Indemnified Party under this paragraph for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel (plus any local counsel) in connection with the assertion of legal
defenses in accordance with the proviso to the immediately preceding sentence,
(ii) the Indemnifying Party shall not have employed counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party within
a reasonable time after notice of commencement of the action or (iii) the
Indemnifying Party shall have authorized the employment of counsel for the
Indemnified Party at the expense of the Indemnifying Party. No party shall be
liable for contribution with respect to any action or claim settled without its
consent, which consent shall not be unreasonably withheld. In no event shall the
Indemnifying Party be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from its own counsel for all
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
ARTICLE IV
GENERAL
4.1 Survival. This Agreement and the obligations of the parties
hereunder shall survive the purchase and sale of the Publicly Offered
Certificates [and Privately Offered Certificates].
4.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, each Indemnified Party and their respective
successors and assigns, and no other Person shall have any right or obligation
hereunder.
4.3 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to principles of conflict of laws.
4.4 Miscellaneous. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by a writing signed by the
party against which 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.
4.5 Notices. All communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered to:
In the case of the Depositor:
[______________]
[______________]
[______________]
Attention:
Telephone:
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loans Operations Manager
Telephone:
In the case of the Underwriter:
[______________]
[______________]
[______________]
Attention:
Telephone:
In the case of the Indemnifying Party:
[______________]
[______________]
[______________]
Attention:
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized officers as of the date first above written.
[DEPOSITOR]
By:____________________________________
Name:
Title:
[UNDERWRITER]
By:____________________________________
Name:
Title:
[INDEMNIFYING PARTY]
By:____________________________________
Name:
Title:
================================================================================
FOURTH AMENDED AND RESTATED MORTGAGE LOAN
PURCHASE AND WARRANTIES AGREEMENT
--------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
Purchaser
ACCREDITED HOME LENDERS, INC.,
Seller
--------------------
Dated as of August 1, 2005
Conventional,
Fixed and Adjustable Rate, B/C Residential Mortgage Loans
================================================================================
TABLE OF CONTENTS
SECTION 1. DEFINITIONS..................................................
SECTION 2. AGREEMENT TO PURCHASE........................................
SECTION 3. MORTGAGE SCHEDULES...........................................
SECTION 4. PURCHASE PRICE...............................................
SECTION 5. EXAMINATION OF MORTGAGE FILES................................
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER..........................
Subsection 6.01 Conveyance of Mortgage Loans; Possession of
Servicing Files........................................
Subsection 6.02 Books and Records......................................
Subsection 6.03 Delivery of Mortgage Loan Documents....................
Subsection 6.04 Quality Control Procedures.............................
SECTION 7. SERVICING OF THE MORTGAGE LOANS..............................
SECTION 8. TRANSFER OF SERVICING........................................
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REMEDIES FOR BREACH..........................................
Subsection 9.01 Representations and Warranties Regarding the Seller....
Subsection 9.02 Representations and Warranties Regarding
Individual Mortgage Loans..............................
Subsection 9.03 Remedies for Breach of Representations and Warranties..
Subsection 9.04 [RESERVED].............................................
Subsection 9.05 Mortgage Loans with First Payment Defaults;
Repurchase.............................................
Subsection 9.06 Repurchase of Certain Mortgage Loans That
Prepay in Full.........................................
SECTION 10. CLOSING......................................................
SECTION 11. CLOSING DOCUMENTS............................................
SECTION 12. COSTS........................................................
SECTION 13. COOPERATION OF SELLER WITH A RECONSTITUTION..................
SECTION 14. THE SELLER...................................................
Subsection 14.01 Additional Indemnification by the Seller;
Third Party Claims.....................................
Subsection 14.02 Merger or Consolidation of the Seller..................
SECTION 15. FINANCIAL STATEMENTS.........................................
SECTION 16. MANDATORY DELIVERY...........................................
SECTION 17. NOTICES......................................................
SECTION 18. SEVERABILITY CLAUSE..........................................
SECTION 19. COUNTERPARTS.................................................
SECTION 20. GOVERNING LAW................................................
SECTION 21. INTENTION OF THE PARTIES.....................................
SECTION 22. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT.....
SECTION 23. WAIVERS......................................................
SECTION 24. EXHIBITS.....................................................
SECTION 25. GENERAL INTERPRETIVE PRINCIPLES..............................
SECTION 26. REPRODUCTION OF DOCUMENTS....................................
SECTION 27. FURTHER AGREEMENTS...........................................
SECTION 28. RECORDATION OF ASSIGNMENTS OF MORTGAGE.......................
SECTION 29. NO SOLICITATION..............................................
SECTION 30. WAIVER OF TRIAL BY JURY......................................
SECTION 31. SUBMISSION TO JURISDICTION; WAIVERS..........................
SECTION 32. CONFIDENTIALITY..............................................
EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B [RESERVED]
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT E FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G UNDERWRITING GUIDELINES
EXHIBIT H FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
EXHIBIT I FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT J FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
FOURTH AMENDED AND RESTATED MORTGAGE LOAN PURCHASE
--------------------------------------------------
AND WARRANTIES AGREEMENT
------------------------
This FOURTH AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND
WARRANTIES AGREEMENT (the "Agreement"), dated as of August 1, 2005, by and
between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York corporation, having an
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Purchaser"),
and Accredited Home Lenders, Inc., a California corporation, having an office at
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Purchaser and the Seller are parties to that certain
Third Amended and Restated Mortgage Loan Purchase and Warranties Agreement,
dated as of February 1, 2004, as amended by Amendment No. 1, dated as of April
2, 2004, Amendment No. 2, dated as of July 2, 2004, Amendment No. 3, dated as of
February 15, 2005 and Amendment No. 4, dated as of April 15, 2005 (the "Original
Purchase Agreement"), pursuant to which the Seller may sell, from time to time,
to the Purchaser, and the Purchaser may purchase, from time to time, from the
Seller, certain conventional adjustable and fixed rate B/C, residential first
mortgage loans (the "Mortgage Loans") on a servicing released basis as described
therein, and which shall be delivered in pools of whole loans (each, a "Mortgage
Loan Package") on various dates as provided therein (each, a "Closing Date");
and
WHEREAS, at the present time, the Purchaser and the Seller desire to
amend the Original Purchase Agreement to make certain modifications as set forth
herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and the
Seller agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below. Other capitalized terms used in
this Agreement and not defined herein shall have the respective meanings set
forth in the Interim Servicing Agreement.
Accepted Servicing Practices: 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 and incorporating
the Delinquency Collection Policies and Procedures.
Act: The National Housing Act, as amended from time to time.
Adjustable Rate Mortgage Loan: An adjustable rate Mortgage Loan
purchased pursuant to this Agreement.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agency Transfer: A ▇▇▇▇▇▇ Mae Transfer or a ▇▇▇▇▇▇▇ Mac Transfer.
Agreement: This Fourth Amended and Restated Mortgage Loan Purchase
and Warranties Agreement and all amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Ancillary Income: All late charges, assumption fees, escrow account
benefits, reinstatement fees and similar types of fees arising from or in
connection with any Mortgage, to the extent not otherwise payable to the
Mortgagor under applicable law or pursuant to the terms of the related Mortgage
Note.
Appraised Value: 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.
Appropriate Federal Banking Agency: Appropriate Federal Banking
Agency shall have the meaning ascribed to it by Section 1813(q) of Title 12 of
the United States Code, as amended from time to time.
Assignment and Conveyance Agreement: As defined in Subsection 6.01.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking and savings and loan institutions in (a) the State of New
York, (b) the state in which the Seller's servicing operations are located or
(c) the State in which the Custodian's operations are located, are authorized or
obligated by law or executive order to be closed.
Closing Date: The date or dates on which the Purchaser from time to
time shall purchase, and the Seller from time to time shall sell, the Mortgage
Loans listed on the related Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
Code: Internal Revenue Code of 1986, as amended.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Convertible Mortgage Loan: Any individual Adjustable Rate Mortgage
Loan purchased pursuant to this Agreement which contains a provision whereby the
Mortgagor is permitted to convert the Adjustable Rate Mortgage Loan to a fixed
rate Mortgage Loan in accordance with the terms of the related Mortgage Note.
Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
Custodial Account: The separate trust account created and maintained
pursuant to Section 2.04 of the Interim Servicing Agreement (with respect to
each Mortgage Loan, as specified therein).
Custodial Agreement: The Custodial Agreement, dated as of the date
hereof, among the Seller, the Purchaser and the Custodian, which governs the
retention of the originals of each Mortgage Note, Mortgage, Assignment of
Mortgage and other Mortgage Loan Documents.
Custodian: Deutsche Bank Trust Company Americas, or its successor in
interest or permitted assigns, or any successor to the Custodian under the
Custodial Agreement as therein provided.
Cut-off Date: The date or dates designated as such on the related
Mortgage Loan Schedule with respect to the related Mortgage Loan Package.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased or
replaced or to be replaced with a Qualified Substitute Mortgage Loan by the
Seller in accordance with the terms of this Agreement.
Determination Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, for an interim period, as
specified therein).
Due Date: The day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date and any Mortgage
Loan, the period commencing on the day immediately succeeding the Due Date for
such Mortgage Loan occurring in the month preceding the month of the Remittance
Date and ending on the next Due Date.
Equity Take-out Refinanced Mortgage Loan: A Mortgage Loan used to
refinance an existing mortgage loan, the proceeds of which were in excess of the
outstanding principal balance of the existing mortgage loan.
Escrow Account: The separate account created and maintained pursuant
to Section 2.06 of the Interim Servicing Agreement (with respect to each
Mortgage Loan, as specified therein).
Escrow Payments: 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.
▇▇▇▇▇▇ ▇▇▇: The Federal National Mortgage Association, or any
successor thereto.
▇▇▇▇▇▇ Mae Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇ Mae
Servicers' Guide and all amendments or additions thereto.
▇▇▇▇▇▇ ▇▇▇ Transfer: As defined in Section 13 hereof.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHA: 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: A corporation or institution approved as a
mortgagee by the FHA under the Act, and applicable HUD regulations, and eligible
to own and service mortgage loans such as the FHA mortgage loans.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A fixed rate mortgage loan purchased
pursuant to this Agreement.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
▇▇▇▇▇▇▇ Mac Transfer: As defined in Section 13 hereof.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note which amount
is added to the Index in accordance with the terms of the related Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate
for such Mortgage Loan.
High Cost Loan: A Mortgage Loan classified as (a) a "high cost" loan
under the Home Ownership and Equity Protection Act of 1994 or (b) a "high cost
home," "threshold," "covered," "high risk home," "predatory" or similar loan
under any other applicable state, federal or local law (or a similarly
classified loan using different terminology under a law imposing heightened
regulatory scrutiny or additional legal liability for residential mortgage loans
having high interest rates, points and/or fees) or (c) a Mortgage Loan
categorized as High Cost pursuant to Appendix E of Standard & Poor's Glossary.
For avoidance of doubt, the parties agree that this definition shall apply to
any law regardless of whether such law is presently, or in the future becomes,
the subject of judicial review or litigation.
Home Loan: A Mortgage Loan categorized as Home Loan pursuant to
Appendix E of Standard & Poor's Glossary.
HUD: The Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA Mortgage Insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and Government National Mortgage Association.
Index: The index indicated in the related Mortgage Note for each
Adjustable Rate Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Insured Depository Institution: Insured Depository Institution shall
have the meaning ascribed to such term by Section 1813(c)(2) of Title 12 of the
United States Code, as amended from time to time.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the related
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
Interim Funder: With respect to each MERS Designated Mortgage Loan,
the Person named on the MERS(R) System as the interim funder pursuant to the
MERS Procedures Manual.
Interim Servicing Agreement: The Interim Servicing Agreement,
between Purchaser and Seller, as servicer, dated as of August 1, 2002, as
amended by Amendment No. 1, dated as of January 15, 2004, which agreement
provides for the Seller to service the Mortgage Loans for an interim period.
Investor: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS(R) System as the investor pursuant to the MERS
Procedures Manual.
Lifetime Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum Mortgage
Interest Rate thereunder. The Mortgage Interest Rate during the terms of each
Adjustable Rate Mortgage Loan shall not at any time exceed the Mortgage Interest
Rate at the time of origination of such Adjustable Rate Mortgage Loan by more
than the Lifetime Rate Cap set forth as an amount per annum on the related
Mortgage Loan Schedule.
Limited Documentation Program: The guidelines under which the Seller
generally originates Mortgage Loans principally on the basis of the
Loan-to-Value Ratio of the related Mortgage Loan and the creditworthiness of the
Mortgagor.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise or the sale
of the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the outstanding principal amount of the
Mortgage Loan as of the related Cut-off Date (unless otherwise indicated), to
the lesser of (a) the Appraised Value of the Mortgaged Property at origination
and (b) if the Mortgage Loan was made to finance the acquisition of the related
Mortgaged Property, or was made within 12 months following such acquisition, the
purchase price of the Mortgaged Property.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, and its successors in interest.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Seller has designated or will designate MERS as, and has taken or will take such
action as is necessary to cause MERS to be, the mortgagee of record, as nominee
for the Seller, in accordance with MERS Procedure Manual, (b) the Seller has
designated or will designate the Purchaser as the Investor on the MERS(R)
System, and (c) the Seller has designated or will designate the Custodian as the
Custodian on the MERS(R) System.
MERS Procedure Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS Designated
Mortgage Loans and other information.
MERS(R) System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note; except that with respect to
real property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely-accepted practice, the mortgage, deed of
trust or other instrument securing the Mortgage Note may secure and create a
first lien upon a leasehold estate of the Mortgagor.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit A annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note with respect to each Mortgage Loan.
Mortgage Interest Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the applicable Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
Servicing Rights and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan, excluding replaced or
repurchased mortgage loans.
Mortgage Loan Documents: The documents required to be delivered to
the Custodian pursuant to Section 6.03 hereof with respect to any Mortgage Loan.
Mortgage Loan Package: Each pool of Mortgage Loans, which shall be
purchased by the Purchaser from the Seller from time to time on each Closing
Date.
Mortgage Loan Schedule: The schedule attached to the Purchase Price
and Terms Agreement as the "Points Schedule" together with the schedule of
Mortgage Loans setting forth the following information with respect to each
Mortgage Loan in the related Mortgage Loan Package: (1) the Seller's Mortgage
Loan identifying number; (2) the Mortgagor's name; (3) the street address of the
Mortgaged Property including the city, state and zip code; (4) a code indicating
whether the Mortgagor is self-employed; (5) a code indicating whether the
Mortgaged Property is owner-occupied; (6) the number and type of residential
units constituting the Mortgaged Property; (7) the original months to maturity
or the remaining months to maturity from the related Cut-off Date, in any case
based on the original amortization schedule and, if different, the maturity
expressed in the same manner but based on the actual amortization schedule; (8)
with respect to each First Lien Loan, the Loan-to-Value Ratio at origination,
and with respect to each Second Lien Loan, the CLTV at origination; (9) the
Mortgage Interest Rate as of the related Cut-off Date; (10) the date on which
the Monthly Payment was due on the Mortgage Loan and, if such date is not
consistent with the Due Date currently in effect, such Due Date; (11) the stated
maturity date; (12) the first payment date; (13) the amount of the Monthly
Payment as of the related Cut-off Date; (14) the last payment date on which a
payment was actually applied to the outstanding principal balance; (15) the
original principal amount of the Mortgage Loan; (16) the principal balance of
the Mortgage Loan as of the close of business on the related Cut-off Date, after
deduction of payments of principal due and collected on or before the related
Cut-off Date; (17) delinquency status as of the related Cut-off Date; (18) with
respect to each Adjustable Rate Mortgage Loan, the Interest Rate Adjustment
Date; (19) with respect to each Adjustable Rate Mortgage Loan, the Gross Margin;
(20) with respect to each Adjustable Rate Mortgage Loan, the Lifetime Rate Cap
under the terms of the Mortgage Note; (21) with respect to each Adjustable Rate
Mortgage Loan, a code indicating the type of Index; (22) the type of Mortgage
Loan (i.e., Fixed or Adjustable Rate Mortgage Loan, First or Second Lien Loan);
(23) a code indicating the purpose of the loan (i.e., purchase, rate and term
refinance, equity take-out refinance); (24) a code indicating the documentation
style (i.e., full, alternative or reduced); (25) asset verification (Y/N); (26)
the loan credit classification (as described in the Underwriting Guidelines);
(27) whether such Mortgage Loan provides for a Prepayment Penalty and, if
applicable, the Prepayment Penalty period; (28) the Mortgage Interest Rate as of
origination; (29) the credit risk score (FICO score); (30) the date of
origination; (31) with respect to Adjustable Rate Mortgage Loans, the Mortgage
Interest Rate adjustment period; (32) with respect to each Adjustable Rate
Mortgage Loan, the Mortgage Interest Rate adjustment percentage; (33) with
respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest Rate floor;
(34) with respect to each Adjustable Rate Mortgage Loan, the Mortgage Interest
Rate Cap as of the first Interest Rate Adjustment Date; (35) with respect to
each Adjustable Rate Mortgage Loan, the Periodic Rate Cap subsequent to the
first Interest Rate Adjustment Date; (36) with respect to each Adjustable Rate
Mortgage Loan, a code indicating whether the Mortgage Loan provides for negative
amortization; (37) with respect to each Adjustable Rate Mortgage Loan with
negative amortization, the negative amortization limit; (38) a code indicating
whether the Mortgage Loan is a Home Loan; (39) a code indicating whether the
Mortgage Loan is a Balloon Mortgage Loan; (40) the Due Date for the first
Monthly Payment; (41) the original Monthly Payment due; (42) a code indicating
the PMI Policy provider and percentage of coverage, if applicable; (43)
Appraised Value; (44) appraisal type; (45) automated valuation model (AVM); (46)
appraisal date; (47) with respect to the related Mortgagor, the debt-to-income
ratio; and (48) the MERS Identification Number, if applicable. With respect to
the Mortgage Loans in the aggregate, the Mortgage Loan Schedule shall set forth
the following information, as of the related Cut-off Date: (1) the number of
Mortgage Loans; (2) the current aggregate outstanding principal balance of the
Mortgage Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage
Loans; (4) the weighted average maturity of the Mortgage Loans; (5) the
applicable Cut-off Date; and (6) the applicable Closing Date.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property (or leasehold estate, if
applicable) securing repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Non-Convertible Mortgage Loan: Any individual Adjustable Rate
Mortgage Loan purchased pursuant to this Agreement which does not contain a
provision pursuant to which the Mortgagor may convert the Adjustable Rate
Mortgage Loan to a Fixed Rate Mortgage Loan.
Nonrecoverable Advance: Any advance previously made or proposed to
be made in respect of a Mortgage Loan which, in the good faith judgment of the
Seller, will not or, in the case of a proposed advance, would not, be ultimately
recoverable from related Insurance Proceeds, Liquidation Proceeds or otherwise.
The determination by the Seller that it has made a Nonrecoverable Advance or
that any proposed advance of principal and interest, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by an Officers' Certificate delivered
to the Purchaser.
OCC: Office of the Comptroller of the Currency, and any successor
thereto.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President
(including Assistant Vice Presidents) and by the Treasurer or the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Seller, and
delivered to the Purchaser as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Seller, reasonably acceptable to the Purchaser, provided that any
Opinion of Counsel relating to (a) the qualification of any account required to
be maintained pursuant to this Agreement as an Eligible Account, (b)
qualification of the Mortgage Loans in a REMIC or (c) compliance with the REMIC
Provisions, must be (unless otherwise stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact independent of the Seller and any servicer
of the Mortgage Loans, (ii) does not have any material direct or indirect
financial interest in the Seller or any servicer of the Mortgage Loans or in an
Affiliate of either and (iii) is not connected with the Seller or any servicer
of the Mortgage Loans as an officer, employee, director or person performing
similar functions.
OTS: Office of Thrift Supervision, and any successor thereto.
Periodic Rate Cap: The provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum amount by
which the Mortgage Interest Rate therein may increase or decrease on an Interest
Rate Adjustment Date above or below the Mortgage Interest Rate previously in
effect. The Periodic Rate Cap for each Adjustable Rate Mortgage Loan is the rate
set forth as such on the related Mortgage Loan Schedule.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
Preliminary Mortgage Schedule: As defined in Section 3.
Principal Prepayment: Any payment or other recovery of principal on
a Mortgage Loan which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon and which is not accompanied
by an amount of interest representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller in exchange for the Mortgage Loans purchased on such
Closing Date as calculated in Section 4 of this Agreement.
Purchase Price Percentage: As defined in the related Purchase Price
and Terms Agreement.
Purchase Price and Terms Agreement: Those certain agreements setting
forth the general terms and conditions of the transactions consummated herein
and identifying the Mortgage Loans to be purchased from time to time hereunder,
by and between the Seller and the Purchaser.
Purchaser: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., or its successor in
interest or assigns or any successor to the Purchaser under this Agreement as
herein provided.
Qualified Appraiser: An 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, and whose compensation was not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfied the requirements of Title XI of
the Financial 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.
Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by ▇▇▇▇▇▇
Mae and ▇▇▇▇▇▇▇ Mac and whose claims paying ability is rated in the highest
rating category by any of the Rating Agencies with respect to primary mortgage
insurance and in the two highest rating categories by Best's with respect to
hazard and flood insurance (or such other rating as may be required by a Rating
Agency in connection with a Securitization Transfer in order to achieve the
desired ratings for the securities to be issued in connection with such
Securitization Transfer).
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Seller for a Deleted Mortgage Loan which must, on the date of
such substitution, (i) have an outstanding principal balance, after deduction of
all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the outstanding principal balance
of the Deleted Mortgage Loan (the amount of any shortfall will be deposited in
the Custodial Account by the Seller in the month of substitution); (ii) have a
Mortgage Interest Rate not less than and not more than 1% greater than the
Mortgage Interest Rate of the Deleted Mortgage Loan; (iii) have a remaining term
to maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; (iv) be of the same type as the Deleted Mortgage Loan
(i.e., fixed rate or adjustable rate with same Periodic Rate Cap, Index and lien
priority); and (v) comply with each representation and warranty (respecting
individual Mortgage Loans) set forth in Section 9 hereof.
Rating Agency: Any of Fitch, Moody's or Standard & Poor's, or their
respective successors designated by the Purchaser.
Reconstitution: A Whole Loan Transfer or a Securitization Transfer.
Reconstitution Agreements: The agreement or agreements entered into
by the Seller and the Purchaser and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Mortgage Loans
sold hereunder, in connection with a Whole Loan Transfer, Agency Transfer or a
Securitization Transfer pursuant to Section 13, including, but not limited to, a
seller's warranties and servicing agreement with respect to a Whole Loan
Transfer, and a trust and servicing agreement, pooling and servicing agreement
and/or seller/servicer agreements and related custodial/trust agreement and
documents with respect to a Securitization Transfer.
Reconstitution Date: As defined in Section 13.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, and any other comparable state statute.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter
1, Subtitle A of the Code, and related provisions and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The date specified in the Interim Servicing
Agreement (with respect to each Mortgage Loan, as specified therein).
Repurchase Price: As defined in the related Purchase Price and Terms
Agreement.
RESPA: Real Estate Settlement Procedures Act, as amended from time
to time.
Securitization Transfer: The sale or transfer of some or all of the
Mortgage Loans to a trust or other entity as part of a publicly issued or
privately placed, rated or unrated mortgage pass-through or other
mortgage-backed securities transaction.
Seller: Accredited Home Lenders, Inc., its successors in interest
and assigns.
Servicing Fee: With respect to each Mortgage Loan subject to the
Interim Servicing Agreement, a fee payable monthly equal to one-twelfth of the
product of (a) the Servicing Fee Rate and (b) the outstanding principal balance
of such Mortgage Loan. Such fee shall be payable monthly and shall be pro-rated
for any portion of a month during which the Mortgage Loan is serviced by the
Seller under the Interim Servicing Agreement. The obligation of the Purchaser to
pay the Servicing Fee is limited to, and the Servicing Fee is payable solely
from, the interest portion (including recoveries with respect to interest from
Liquidation Proceeds, to the extent permitted by this Agreement) of such Monthly
Payment collected by the Seller, or as otherwise provided under this Agreement.
Servicing Fee Rate: 50 basis points (0.50%) per annum.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Seller consisting of originals of all documents in the Mortgage
File which are not delivered to the Purchaser or the Custodian and copies of the
Mortgage Loan Documents set forth in Section 2 of the Custodial Agreement.
Servicing Rights: Any and all of the following: (a) any and all
rights to service the Mortgage Loans; (b) any payments to or monies received by
the Seller for servicing the Mortgage Loans; (c) any late fees, penalties or
similar payments with respect to the Mortgage Loans; (d) all agreements or
documents creating, defining or evidencing any such servicing rights to the
extent they relate to such servicing rights and all rights of the Seller
thereunder; (e) Escrow Payments or other similar payments with respect to the
Mortgage Loans and any amounts actually collected by the Seller with respect
thereto; (f) all accounts and other rights to payment related to any of the
property described in this paragraph; and (g) any and all documents, files,
records, servicing files, servicing documents, servicing records, data tapes,
computer records, or other information pertaining to the Mortgage Loans or
pertaining to the past, present or prospective servicing of the Mortgage Loans.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies Inc., and any successor thereto.
Standard & Poor's Glossary: The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
Stated Principal Balance: As to each Mortgage Loan on any date of
determination, (i) the principal balance of such Mortgage Loan at the related
Cut-off Date after giving effect to payments of principal due on or before such
date, to the extent actually received, minus (ii) all amounts previously
distributed to the Purchaser with respect to the related Mortgage Loan
representing payments or recoveries of principal on such Mortgage Loan.
Successor Servicer: Any servicer of one or more Mortgage Loans
designated by the Purchaser as being entitled to the benefits of the
indemnifications set forth in Subsections 9.03 and 14.01.
Transfer Date: The date on which the Purchaser, or its designee,
shall receive the transfer of servicing responsibilities and begin to perform
the servicing of the Mortgage Loans with respect to the related Mortgage Loan
Package, and the Seller shall cease all servicing responsibilities. Such date
shall occur on the day indicated by the Purchaser to the Seller in accordance
with the Interim Servicing Agreement.
Underwriting Guidelines: The underwriting guidelines of the Seller
(which take into account the exception policies set forth therein), a copy of
which is attached hereto as Exhibit G and a then-current copy of which shall be
attached as an exhibit to the related Assignment and Conveyance.
Well Capitalized: Well Capitalized shall mean, with respect to any
Insured Depository Institution, the maintenance by such Insured Depository
Institution of capital ratios at or above the required minimum levels for such
capital category under the regulations promulgated pursuant to Section 1831(o)
of the United States Code, as amended from time to time, by the Appropriate
Federal Banking Agency for such institution, as such regulation may be amended
from time to time.
Whole Loan Agreement: Any Reconstitution Agreement in respect of a
Whole Loan Transfer.
Whole Loan Transfer: The sale or transfer by Purchaser of some or
all of the Mortgage Loans in a whole loan or participation format pursuant to a
Reconstitution Agreement.
SECTION 2. Agreement to Purchase.
The Seller agrees to sell from time to time, and the Purchaser
agrees to purchase from time to time, Mortgage Loans having an aggregate
principal balance on the related Cut-off Date in an amount as set forth in the
related Purchase Price and Terms Agreement, or in such other amount as agreed by
the Purchaser and the Seller as evidenced by the actual aggregate principal
balance of the Mortgage Loans accepted by the Purchaser on each Closing Date.
SECTION 3. Mortgage Schedules.
The Seller from time to time shall provide the Purchaser with
certain information constituting a preliminary listing of the Mortgage Loans to
be purchased on each Closing Date in accordance with the related Purchase Price
and Terms Agreement and this Agreement (each, a "Preliminary Mortgage
Schedule").
The Seller is obligated to deliver those Mortgage Loans funded by
the Seller pursuant to the original terms of the Seller's commitment to the
mortgagor. The Seller shall deliver the related Mortgage Loan Schedule for the
Mortgage Loans to be purchased on a particular Closing Date to the Purchaser at
least two (2) Business Days prior to the related Closing Date. The related
Mortgage Loan Schedule shall be the related Preliminary Mortgage Schedule with
those Mortgage Loans which are not being purchased by the Purchaser deleted.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan shall be the percentage of
par as stated in the related Purchase Price and Terms Agreement (subject to
adjustment as provided therein), multiplied by the aggregate principal balance,
as of the related Cut-off Date, of the Mortgage Loans, after application of
scheduled payments of principal due on or before the related Cut-off Date, to
the extent such payments were actually received. The initial principal amount of
the Mortgage Loans shall be the aggregate principal balance of the Mortgage
Loans, so computed as of the related Cut-off Date. If so provided in the related
Purchase Price and Terms Agreement, portions of the Mortgage Loans shall be
priced separately.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the current principal
amount of the related Mortgage Loans as of the related Cut-off Date at the
weighted average Mortgage Interest Rate of those Mortgage Loans. The Purchase
Price plus accrued interest as set forth in the preceding paragraph shall be
paid to the Seller by wire transfer of immediately available funds to an account
designated by the Seller in writing.
The Purchaser shall be entitled to (l) all scheduled principal due
after the related Cut-off Date, (2) all other recoveries of principal collected
on or after the related Cut-off Date, and (3) all payments of interest on the
Mortgage Loans net of applicable Servicing Fees (minus that portion of any such
payment which is allocable to the period prior to the related Cut-off Date). The
outstanding principal balance of each Mortgage Loan as of the related Cut-off
Date is determined after application of payments of principal due on or before
the related Cut-off Date, to the extent actually collected, together with any
unscheduled principal prepayments collected prior to such Cut-off Date;
provided, however, that payments of scheduled principal and interest paid prior
to such Cut-off date, but to be applied on a Due Date beyond the related Cut-off
Date shall not be applied to the principal balance as of the related Cut-off
Date. Such prepaid amounts shall be the property of the Purchaser. The Seller
shall deposit any such prepaid amounts into the Custodial Account, which account
is established for the benefit of the Purchaser for subsequent remittance by the
Seller to the Purchaser.
SECTION 5. Examination of Mortgage Files.
At least five (5) Business Days prior to the related Closing Date,
the Seller shall (a) deliver to the Purchaser or its designee in escrow, for
examination with respect to each Mortgage Loan to be purchased, the related
Mortgage File, including a copy of the Assignment of Mortgage pertaining to each
Mortgage Loan (except with respect to each MERS Designated Mortgage Loan), or
(b) make the related Mortgage File available to the Purchaser for examination at
such other location as shall otherwise be acceptable to the Purchaser. Such
examination may be made by the Purchaser or its designee at any reasonable time
before or after the related Closing Date. If the Purchaser makes such
examination prior to the related Closing Date and determines, in its sole
discretion, that any Mortgage Loans are unacceptable to the Purchaser for any
reason, such Mortgage Loans shall be deleted from the related Mortgage Loan
Schedule, and may be replaced by a Qualified Substitute Mortgage Loan (or Loans)
acceptable to the Purchaser. The Purchaser may, at its option and without notice
to the Seller, purchase some or all of the Mortgage Loans without conducting any
partial or complete examination. The fact that the Purchaser or its designee has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the Purchaser's (or any of its successor's)
rights to demand repurchase, substitution or other relief as provided herein;
provided, however, that the Purchaser may not demand repurchase, substitution or
other relief on the basis that a Mortgage Loan examined by the Purchaser or its
designee prior to purchase does not comply with the Underwriting Guidelines
provided by the Seller to the Purchaser prior to such examination and attached
as an exhibit hereto.
SECTION 6. Conveyance from Seller to Purchaser.
Subsection 6.01 Conveyance of Mortgage Loans; Possession of
Servicing Files.
The Seller, simultaneously with the delivery of the Mortgage Loan
Schedule with respect to the related Mortgage Loan Package to be purchased on
each Closing Date, shall execute and deliver an Assignment and Conveyance
Agreement in the form attached hereto as Exhibit H (the "Assignment and
Conveyance Agreement"). The Seller shall cause the Servicing File retained by it
pursuant to this Agreement to be appropriately identified in its computer system
and/or books and records, as appropriate, to clearly reflect the sale of the
related Mortgage Loan to the Purchaser. The Seller shall release from its
custody the contents of any Servicing File retained by it only in accordance
with this Agreement or the Interim Servicing Agreement, except when such release
is required in connection with a repurchase of any such Mortgage Loan pursuant
to Subsection 9.03.
Subsection 6.02 Books and Records.
Record title to each Mortgage as of the related Closing Date shall
be in the name of the Seller. Notwithstanding the foregoing, each Mortgage and
related Mortgage Note shall be possessed solely by the Purchaser or the
appropriate designee of the Purchaser, as the case may be. All rights arising
out of the Mortgage Loans including, but not limited to, all funds received by
the Seller after the related Cut-off Date on or in connection with a Mortgage
Loan shall be vested in the Purchaser or one or more designees of the Purchaser;
provided, however, that all funds received on or in connection with a Mortgage
Loan shall be received and held by the Seller in trust for the benefit of the
Purchaser or the appropriate designee of the Purchaser, as the case may be, as
the owner of the Mortgage Loans pursuant to the terms of this Agreement.
The sale of each Mortgage Loan shall be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
The Seller shall be responsible for maintaining, and shall maintain,
a complete set of books and records for each Mortgage Loan which shall be marked
clearly to reflect the ownership of each Mortgage Loan by the Purchaser. In
particular, the Seller shall maintain in its possession, available for
inspection by the Purchaser, and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, and applicable requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, including
but not limited to documentation as to the method used in determining the
applicability of the provisions of the National Flood Insurance Act of 1968, as
amended, to the Mortgaged Property, documentation evidencing insurance coverage
and periodic inspection reports, as required by the ▇▇▇▇▇▇ Mae Guides, if
applicable. To the extent that original documents are not required for purposes
of realization of Liquidation Proceeds or Insurance Proceeds, documents
maintained by the Seller may be in the form of microfilm or microfiche so long
as the Seller complies with the requirements of the ▇▇▇▇▇▇ ▇▇▇ Guides, if
applicable.
Subsection 6.03 Delivery of Mortgage Loan Documents.
The Seller shall deliver and release to the Custodian no later than
three (3) Business Days prior to the related Closing Date those Mortgage Loan
Documents set forth on Exhibit A hereto as required by the Custodial Agreement
with respect to each Mortgage Loan set forth on the related Mortgage Loan
Schedule.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement for the
related Closing Date, as evidenced by the Initial Certification of the Custodian
in the form annexed to the Custodial Agreement. The Seller shall comply with the
terms of the Custodial Agreement and the Purchaser shall pay all fees and
expenses of the Custodian.
The Seller shall forward to the Custodian, or to such other Person
as the Purchaser shall designate in writing, original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with this Agreement within two weeks of their
execution, provided, however, that the Seller shall provide the Custodian, or to
such other Person as the Purchaser shall designate in writing, with a certified
true copy of any such document submitted for recordation within two weeks of its
execution, and shall promptly provide the original of any document submitted for
recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within ninety
days of its submission for recordation.
In the event any document required to be delivered to the Custodian
in the Custodial Agreement, including an original or copy of any document
submitted for recordation to the appropriate public recording office, is not so
delivered to the Custodian, or to such other Person as the Purchaser shall
designate in writing, within 90 days following the related Closing Date (other
than with respect to the Assignments of Mortgage which shall be delivered to the
Custodian in blank and recorded subsequently by the Purchaser or its designee),
and in the event that the Seller does not cure such failure within 30 days of
discovery or receipt of written notification of such failure from the Purchaser,
the related Mortgage Loan shall, upon the request of the Purchaser, be
repurchased by the Seller at the price and in the manner specified in Subsection
9.03. The foregoing repurchase obligation shall not apply in the event that the
Seller cannot deliver an original document submitted for recordation to the
appropriate public recording office within the specified period due to a delay
caused by the recording office in the applicable jurisdiction; provided that the
Seller shall instead deliver a recording receipt of such recording office or, if
such recording receipt is not available, an officer's certificate of a servicing
officer of the Seller, confirming that such documents have been accepted for
recording; provided that, upon request of the Purchaser and delivery by the
Purchaser to the Seller of a schedule of the related Mortgage Loans, the Seller
shall reissue and deliver to the Purchaser or its designee said officer's
certificate.
The Seller shall pay all initial recording fees, if any, for the
assignments of mortgage and any other fees or costs in transferring all original
documents to the Custodian or, upon written request of the Purchaser, to the
Purchaser or the Purchaser's designee. The Purchaser or the Purchaser's designee
shall be responsible for recording the Assignments of Mortgage and shall be
reimbursed by the Seller for the costs associated therewith pursuant to the
preceding sentence.
Subsection 6.04 Quality Control Procedures.
The Seller shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the legal documents,
credit documents, property appraisals, and underwriting decisions. The program
shall include evaluating and monitoring the overall quality of the Seller's loan
production and the servicing activities of the Seller. The program is to ensure
that the Mortgage Loans are originated and serviced in accordance with Accepted
Servicing Standards and the Underwriting Guidelines; guard against dishonest,
fraudulent, or negligent acts; and guard against errors and omissions by
officers, employees, or other authorized persons.
SECTION 7. Servicing of the Mortgage Loans.
The Mortgage Loans have been sold by the Seller to the Purchaser on
a servicing released basis. Subject to, and upon the terms and conditions of
this Agreement and the Interim Servicing Agreement (with respect to each
Mortgage Loan, for an interim period, as specified therein), the Seller hereby
sells, transfers, assigns, conveys and delivers to the Purchaser the Servicing
Rights.
The Purchaser shall retain the Seller as contract servicer of the
Mortgage Loans for an interim period pursuant to and in accordance with the
terms and conditions contained in the Interim Servicing Agreement (with respect
to each Mortgage Loan, for an interim period, as specified therein). The
Purchaser and Seller shall execute the Interim Servicing Agreement on the
Closing Date. Pursuant to the Interim Servicing Agreement, the Seller shall
begin servicing the Mortgage Loans on behalf of the Purchaser and shall be
entitled to a Servicing Fee with respect to each Mortgage Loan from the related
Closing Date until the termination of the Interim Servicing Agreement with
respect to such Mortgage Loan as set forth therein.
SECTION 8. Transfer of Servicing.
On the applicable Transfer Date, the Purchaser, or its designee,
shall assume all servicing responsibilities related to, and the Seller shall
cease all servicing responsibilities related to the related Mortgage Loans. The
Transfer Date shall be the date determined in accordance with Section 6.03 of
the Interim Servicing Agreement (with respect to each Mortgage Loan, for an
interim period, as specified therein).
On or prior to the applicable Transfer Date, or as otherwise
specified below, the Seller shall, at its sole cost and expense, take such steps
as may be necessary or appropriate to effectuate and evidence the transfer of
the servicing of the related Mortgage Loans to the Purchaser, or its designee,
including but not limited to the following:
(a) Notice to Mortgagors. The Seller shall mail to the Mortgagor of
each related Mortgage Loan a letter advising such Mortgagor of the transfer of
the servicing of the related Mortgage Loan to the Purchaser, or its designee, in
accordance with the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ National Affordable Housing Act of 1990;
provided, however, the content and format of the letter shall have the prior
approval of the Purchaser. The Seller shall provide the Purchaser with copies of
all such related notices within five (5) Business Days following the Transfer
Date;
(b) Notice to Taxing Authorities and Insurance Companies. The Seller
shall transmit to the applicable taxing authorities and insurance companies
(including primary mortgage insurance policy insurers, if applicable) and/or
agents, notification of the transfer of the servicing to the Purchaser, or its
designee, and instructions to deliver all notices, tax bills and insurance
statements, as the case may be, to the Purchaser from and after the Transfer
Date. The Seller shall provide the Purchaser with copies of all such notices
within five (5) Business Days following the Transfer Date;
(c) Delivery of Servicing Records. The Seller shall forward to the
Purchaser, or its designee, all servicing records and the Servicing File in the
Seller's possession relating to each related Mortgage Loan including the
information enumerated in the Interim Servicing Agreement (with respect to each
such Mortgage Loan, for an interim period, as specified therein);
(d) Escrow Payments. The Seller shall provide the Purchaser, or its
designee, with immediately available funds by wire transfer in the amount of the
net Escrow Payments and suspense balances and all loss draft balances associated
with the related Mortgage Loans. The Seller shall provide the Purchaser with an
accounting statement of Escrow Payments and suspense balances and loss draft
balances sufficient to enable the Purchaser to reconcile the amount of such
payment with the accounts of the Mortgage Loans. Additionally, the Seller shall
wire transfer to the Purchaser the amount of any agency, trustee or prepaid
Mortgage Loan payments and all other similar amounts held by the Seller;
(e) Payoffs and Assumptions. The Seller shall provide to the
Purchaser, or its designee, copies of all assumption and payoff statements
generated by the Seller on the related Mortgage Loans from the related Cut-off
Date to the Transfer Date;
(f) Mortgage Payments Received Prior to Transfer Date. Prior to the
Transfer Date all payments received by the Seller on each related Mortgage Loan
shall be properly applied by the Seller to the account of the particular
Mortgagor;
(g) Mortgage Payments Received After Transfer Date. The amount of
any related Monthly Payments received by the Seller after the Transfer Date
shall be forwarded to the Purchaser by overnight mail within one (1) Business
Day following the date of receipt. The Seller shall notify the Purchaser of the
particulars of the payment, which notification requirement shall be satisfied if
the Seller forwards with its payment sufficient information to permit
appropriate processing of the payment by the Purchaser. The Seller shall assume
full responsibility for the necessary and appropriate legal application of such
Monthly Payments received by the Seller after the Transfer Date with respect to
related Mortgage Loans then in foreclosure or bankruptcy; provided, for purposes
of this Agreement, necessary and appropriate legal application of such Monthly
Payments shall include, but not be limited to, endorsement of a Monthly Payment
to the Purchaser with the particulars of the payment such as the account number,
dollar amount, date received and any special Mortgagor application instructions
and the Seller shall comply with the foregoing requirements with respect to all
Monthly Payments received by the it after the Transfer Date;
(h) Misapplied Payments. Misapplied payments shall be processed as
follows:
(i) All parties shall cooperate in correcting misapplication
errors;
(ii) The party receiving notice of a misapplied payment
occurring prior to the applicable Transfer Date and discovered after
the Transfer Date shall immediately notify the other party;
(iii) If a misapplied payment which occurred prior to the
Transfer Date cannot be identified and said misapplied payment has
resulted in a shortage in a Custodial Account or Escrow Account, the
Seller shall be liable for the amount of such shortage. The Seller
shall reimburse the Purchaser for the amount of such shortage within
thirty (30) days after receipt of written demand therefor from the
Purchaser;
(iv) If a misapplied payment which occurred prior to the
Transfer Date has created an improper Purchase Price as the result
of an inaccurate outstanding principal balance, a check shall be
issued to the party shorted by the improper payment application
within five (5) Business Days after notice thereof by the other
party; and
(v) Any check issued under the provisions of this Section 8(h)
shall be accompanied by a statement indicating the corresponding
Seller and/or the Purchaser Mortgage Loan identification number and
an explanation of the allocation of any such payments;
(i) Books and Records. On the Transfer Date, the books, records and
accounts of the Seller with respect to the related Mortgage Loans shall be in
accordance with all applicable Purchaser requirements as set forth in this
Agreement;
(j) Reconciliation. The Seller shall, on or before the Transfer
Date, reconcile principal balances and make any monetary adjustments required by
the Purchaser. Any such monetary adjustments will be transferred between the
Seller and the Purchaser as appropriate;
(k) IRS Forms. The Seller shall file all IRS forms 1099, 1099A, 1098
or 1041 and K-1 which are required to be filed on or before the Transfer Date in
relation to the servicing and ownership of the related Mortgage Loans. The
Seller shall provide copies of such forms to the Purchaser upon request and
shall reimburse the Purchaser for any costs or penalties incurred by the
Purchaser due to the Seller's failure to comply with this paragraph; and
(l) MERS. With respect to each MERS Designated Mortgage Loan, the
Seller shall, on or before the Transfer Date, designate, as directed by the
Purchaser, the Purchaser, or its designee, as the Servicer on the MERS(R)
System. In addition, the Seller shall promptly take all other actions reasonably
requested by Purchaser with respect to MERS Designated Mortgage Loans and the
MERS(R) System to effectuate and evidence the transfer of servicing in
accordance with the terms of this Agreement and the Interim Servicing Agreement.
SECTION 9. Representations, Warranties and Covenants of the Seller;
Remedies for Breach.
Subsection 9.01 Representations and Warranties Regarding the
Seller.
The Seller represents, warrants and covenants to the Purchaser that
as of the date hereof and as of each Closing Date:
(a) Due Organization and Authority. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
California and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in each state wherein
it owns or leases any material properties or where a Mortgaged Property is
located, if the laws of such state require licensing or qualification in order
to conduct business of the type conducted by the Seller, and in any event the
Seller is in compliance with the laws of any such state to the extent necessary
to ensure the enforceability of the related Mortgage Loan and the servicing of
such Mortgage Loan in accordance with the terms of this Agreement and the
Interim Servicing Agreement; the Seller has the full corporate power, authority
and legal right to hold, transfer and convey the Mortgage Loans and to execute
and deliver this Agreement and to perform its obligations hereunder and
thereunder; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Seller and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized; this Agreement and all agreements
contemplated hereby have been duly executed and delivered and constitute the
valid, legal, binding and enforceable obligations of the Seller, regardless of
whether such enforcement is sought in a proceeding in equity or at law, but
subject to bankruptcy laws and general principles of equity; and all requisite
corporate or other action has been taken by the Seller to make this Agreement
and all agreements contemplated hereby valid and binding upon the Seller in
accordance with their terms;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation of the
transactions contemplated hereby and thereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement, will conflict with
or result in a breach of any of the terms, conditions or provisions of the
Seller's charter, by-laws or other organizational documents or any legal
restriction or any agreement or instrument to which the Seller is now a party or
by which it is bound, or constitute a default or result in an acceleration under
any of the foregoing, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Seller or its property is subject, or
result in the creation or imposition of any lien, charge or encumbrance that
would have an adverse effect upon any of its properties pursuant to the terms of
any mortgage, contract, deed of trust or other instrument, or impair the ability
of the Purchaser to realize on the Mortgage Loans, impair the value of the
Mortgage Loans, or impair the ability of the Purchaser to realize the full
amount of any insurance benefits accruing pursuant to this Agreement;
(d) Ability to Service. Seller has the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Seller is duly qualified, licensed,
registered and otherwise authorized under all applicable federal, state and
local laws, and regulations, if applicable, meets the minimum capital
requirements set forth by HUD, the OTS, the OCC or the FDIC, if applicable, and
is in good standing to enforce, originate, sell mortgage loans to, and service
mortgage loans in each jurisdiction wherein the Mortgaged Properties are
located;
(e) Reasonable Servicing Fee. The Seller acknowledges and agrees
that the Servicing Fee, represents reasonable compensation for performing such
services and that the entire Servicing Fee shall be treated by the Seller, for
accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement and the Interim
Servicing Agreement;
(f) Ability to Perform; Solvency. 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 this Agreement. The Seller is solvent and the sale
of the Mortgage Loans will not cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud
any of Seller's creditors;
(g) No Litigation Pending. Except as previously identified by the
Seller to the Purchaser in writing, there is no action, suit, proceeding or
investigation pending or threatened against the Seller, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Seller, or in any
material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Seller contemplated herein, or which
would be likely to impair materially the ability of the Seller to perform under
the terms of this Agreement;
(h) No Consent Required. No consent, approval, authorization or
order of, or registration or filing with, or notice to any court or governmental
agency or body including HUD, the FHA or the Department of Veterans Affairs is
required for the execution, delivery and performance by the Seller of or
compliance by the Seller with this Agreement or the Mortgage Loans, the delivery
of a portion of the Mortgage Files to the Custodian or the sale of the Mortgage
Loans or the consummation of the transactions contemplated by this Agreement, or
if required, such approval has been or will be obtained prior to the date
required by federal, state or local law;
(i) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio at
the related Closing Date as to which the representations and warranties set
forth in Subsection 9.02 could be made and such selection was not intentionally
made in a manner so as to affect adversely the interests of the Purchaser;
(j) Delivery to the Custodian. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered with
respect to each Mortgage Loan pursuant to the Custodial Agreement, shall be
delivered to the Custodian all in compliance with the specific requirements of
the Custodial Agreement. With respect to each Mortgage Loan, the Seller will be
in possession of a complete Mortgage File in compliance with Exhibit A hereto,
except for such documents as will be delivered to the Custodian;
(k) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 11 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(l) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby (including
any Securitization Transfer or Whole Loan Transfer) contains or will contain any
untrue statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading;
(m) Financial Statements. The Seller has delivered to the Purchaser
financial statements as to its last three complete fiscal years and any later
quarter ended more than 60 days prior to the execution of this Agreement. All
such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial
position at the end of each such period of the Seller and its subsidiaries and
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto. In addition, the Seller has delivered information as to its loan
gain and loss experience in respect of foreclosures and its loan delinquency
experience for the immediately preceding three-year period, in each case with
respect to mortgage loans owned by it and such mortgage loans serviced for
others during such period, and all such information so delivered shall be true
and correct in all material respects. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement. The
Seller has completed any forms requested by the Purchaser in a timely manner and
in accordance with the provided instructions;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller intends to reflect the transfer of
the Mortgage Loans as a sale on the books and records of the Seller and the
Seller has determined that the disposition of the Mortgage Loans pursuant to
this Agreement will be afforded sale treatment for tax and accounting purposes;
(p) Owner of Record. The Seller is the owner of record of each
Mortgage and the indebtedness evidenced by each Mortgage Note, and upon the sale
of the Mortgage Loans to the Purchaser, the Seller will retain the Mortgage
Files with respect thereto in trust only for the purpose of servicing and
supervising the servicing of each Mortgage Loan; and
(q) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon Seller's underwriting guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated.
Subsection 9.02 Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser that, as
to each Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
(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
related Closing Date for the Mortgage Loan under the terms of the Mortgage Note,
other than payments not yet 30 days delinquent, have been made and credited. No
payment required under the Mortgage Loan is 30 days or more delinquent nor has
any payment under the Mortgage Loan been 30 days or more delinquent at any time
since the origination of the Mortgage Loan;
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. 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 earlier, to the day which precedes by
one month the related Due Date of the first installment of principal and
interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any respect,
from the date of origination except by a written instrument which has been
recorded, if necessary to protect the interests of the Purchaser, and which has
been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any, to the extent
required by the policy, and its terms are reflected on the related Mortgage Loan
Schedule, if applicable. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement, approved by the issuer of the
title insurer, to the extent required by the policy, and which assumption
agreement is part of the Mortgage Loan File delivered to the Custodian or to
such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor in any state or Federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was funded;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located pursuant to insurance policies conforming to the requirements of
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in
Section 2.10 of the Interim Servicing Agreement. If required by the National
Flood Insurance Act of 1968, as amended, each Mortgage Loan is covered by a
flood insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect which policy conforms to ▇▇▇▇▇▇
Mae and ▇▇▇▇▇▇▇ Mac, as well as all additional requirements set forth in Section
2.10 of the Interim Servicing Agreement. All individual insurance policies
contain a standard mortgagee clause naming the Seller and its successors and
assigns as mortgagee, and all premiums thereon have been paid. The Mortgage
obligates the Mortgagor thereunder to maintain the hazard insurance policy at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance at
such Mortgagor's cost and expense, and to seek reimbursement therefor from the
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, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser upon
the consummation of the purchase of the Mortgage Loan as contemplated by this
Agreement. The 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 or entity, and no such unlawful items have been
received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. 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, disclosure and all predatory and abusive lending laws
applicable to the Mortgage Loan, including, without limitation, any provisions
relating to prepayment penalties, have been complied with, the consummation of
the transactions contemplated hereby will not involve the violation of any such
laws or regulations, and the Seller shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, 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
release, cancellation, subordination or rescission. 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) Location and Type of Mortgaged Property. The Mortgaged Property
is a fee simple property located in the state identified in the related Mortgage
Loan Schedule, except that with respect to real property located in
jurisdictions in which the use of leasehold estates for residential properties
is a widely-accepted practice, the Mortgaged Property may be a leasehold estate,
and consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a condominium project, or an individual unit in
a planned unit development and that no residence or dwelling is a mobile home;
provided, however, that any condominium unit or planned unit development shall
not fall within any of the "Ineligible Projects" of part XII, Section 102 of the
▇▇▇▇▇▇ Mae Selling Guide and shall conform with the Underwriting Guidelines. In
the case of any Mortgaged Properties that are manufactured homes (a
"Manufactured Home Mortgage Loans"), (i) such Manufactured Home Mortgage Loan
conforms with the applicable ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac requirements regarding
mortgage loans related to manufactured dwellings, (ii) the related manufactured
dwelling is permanently affixed to the land, (iii) the related manufactured
dwelling and the related land are subject to a Mortgage properly filed in the
appropriate public recording office and naming Seller as mortgagee, (iv) the
applicable laws of the jurisdiction in which the related Mortgaged Property is
located will deem the manufactured dwelling located on such Mortgaged Property
to be a part of the real property on which such dwelling is located, and (v)
such Manufactured Home Mortgage Loan is (x) a qualified mortgage under Section
860G(a)(3) of the Internal Revenue Code of 1986, as amended, and (y) secured by
manufactured housing treated as a single family residence under Section
25(e)(10) of the Code. As of the date of origination, no portion of the
Mortgaged Property was used for commercial purposes, and since the date of
origination, no portion of the Mortgaged Property has been used for commercial
purposes; provided, that Mortgaged Properties which contain a home office shall
not be considered as being used for commercial purposes as long as the Mortgaged
Property has not been altered for commercial purposes and is not storing any
chemicals or raw materials other than those commonly used for homeowner repair,
maintenance and/or household purposes;
(j) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien on the Mortgaged Property, including all
buildings and improvements 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:
(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 prudent mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (a) specifically 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; and
(iii) 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,
subsisting, enforceable and perfected first lien and first priority security
interest on the property described therein and the Seller has full right to sell
and assign the same to the Purchaser. As used in this Subsection 9.02,
"enforceable" shall be deemed to be subject to bankruptcy laws and general
principles of equity;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to prepayment
penalties). 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 other such related parties. No fraud, error,
omission, misrepresentation, or similar occurrence with respect to the
origination of 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.
The Seller has reviewed all of the documents constituting the Servicing File and
has made such inquiries as it deems necessary to make and confirm the accuracy
of the representations set forth herein;
(l) Full Disbursement of Proceeds. Except to the extent the Mortgage
Loan is subject to completion escrows which have been disclosed to and
acknowledged by the Purchaser and which meet the requirements of the
Underwriting Guidelines, and as to which a completed ▇▇▇▇▇▇ ▇▇▇ form 442 has
been delivered to the Purchaser within sixty (60) days after the related Closing
Date, the Mortgage Loan has been closed and the proceeds of the Mortgage Loan
have been fully disbursed and there is no requirement for future advances
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 were paid, and the Mortgagor
is not entitled to any refund of any amounts paid or due under the Mortgage Note
or Mortgage;
(m) Ownership. The Seller is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by each Mortgage Note and upon
the sale of the Mortgage Loans to the Purchaser, the Seller will retain the
Mortgage Files or any part thereof with respect thereto not delivered to the
Custodian, the Purchaser or the Purchaser's designee, in trust only for the
purpose of servicing and supervising the servicing of each Mortgage Loan. Upon
payment of the Purchase Price, the Mortgage Loan is not assigned or pledged, and
the Seller has good, indefeasible and marketable title thereto, and has full
right to transfer and sell the Mortgage Loan to the Purchaser 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 and assign each
Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Seller intends to relinquish all rights to possess,
control and monitor the Mortgage Loan. After the related Closing Date, the
Seller will have no right to modify or alter the terms of the sale of the
Mortgage Loan and the Seller will have no obligation or right to repurchase the
Mortgage Loan or substitute another Mortgage Loan, except as provided in this
Agreement;
(n) 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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(o) LTV. No Mortgage Loan had an LTV at origination greater than
100%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy, or with respect to any Mortgage Loan for which
the related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and each such title insurance policy is
issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first priority lien
of the Mortgage 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) and (ii) of paragraph (j) of this Subsection
9.02, 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 Seller, its successor 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 purchase of the
Mortgage Loan as contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no prior holder of the related
Mortgage, including the 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 or entity, and no such unlawful
items have been received, retained or realized by the Seller;
(q) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Seller nor any of its affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(r) No Mechanics' Liens. Except as insured against by the related
title insurance, 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
the law could give rise to such liens) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. Either (a) the Mortgage Loan was
originated by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, a
savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or other similar institution which is supervised and examined
by a federal or state authority, or (b) the following requirements have been met
with respect to the Mortgage Loan: the Seller meets the requirements set forth
in clause (a), and (i) such Mortgage Loan was underwritten in accordance with
standards established by the Seller, using application forms and related credit
documents approved by the Seller, (ii) the Seller approved each application and
the related credit documents before a commitment by the correspondent was
issued, and no such commitment was issued until the Seller agreed to fund such
Mortgage Loan, (iii) the closing documents for such Mortgage Loan were prepared
on forms approved by the Seller, and (iv) such Mortgage Loan was actually funded
by the Seller and was purchased by the Seller at closing or soon thereafter. The
documents, instruments and agreements submitted for loan underwriting were not
falsified and contain no untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the information
and statements therein not misleading. Principal payments on the Mortgage Loan
are required to commence no more than sixty days after funds were disbursed in
connection with the Mortgage Loan. The Mortgage Interest Rate as well as the
Lifetime Rate Cap and the Periodic Cap, are as set forth on the related Mortgage
Loan Schedule. Except with respect to a "balloon" Mortgage Loan, the Mortgage
Note is payable 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 thirty years from commencement of
amortization. Unless otherwise specified on the related Mortgage Loan Schedule,
the Mortgage Loan is payable on the first day of each month. There are no
Convertible Mortgage Loans which contain a provision allowing the Mortgagor to
convert the Mortgage Note from an adjustable interest rate Mortgage Note to a
fixed interest rate Mortgage Note;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines.
The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇
Mae and the Seller has not made any representations to a Mortgagor that are
inconsistent with the mortgage instruments used;
(w) Occupancy of the Mortgaged Property. As of the related Closing
Date the Mortgaged Property is capable of being 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 and fire underwriting certificates, have been made or
obtained from the appropriate authorities;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in paragraph (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. The Seller has no knowledge of any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor, the Mortgage File or the Mortgagor's credit standing,
other than the subprime nature of such credit standing, that can reasonably be
expected to cause private institutional investors who invest in mortgage loans
similar to the Mortgage Loan, to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent, or adversely affect
the value or marketability of the Mortgage Loan, or cause the Mortgage Loans to
prepay during any period materially faster or slower than the mortgage loans
originated by the Seller generally;
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under the Custodial Agreement for each Mortgage Loan have been
delivered to the Custodian. The Seller is in possession of a complete, true and
accurate Mortgage File in compliance with Exhibit A hereto, except for such
documents the originals of which have been delivered to the Custodian;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project such Mortgage Loan was originated in accordance with, and the Mortgaged
Property meets the guidelines set forth in the Seller's Underwriting Guidelines;
(cc) Transfer of Mortgage Loans. Except with respect to MERS
Designated Mortgage Loans, the Assignment of Mortgage with respect to each
Mortgage Loan is in recordable form and is acceptable for recording under the
laws of the jurisdiction in which the Mortgaged Property is located. The
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller are not subject to the bulk transfer or similar statutory provisions
in effect in any applicable jurisdiction;
(dd) Due-on-Sale. With respect to each Fixed Rate Mortgage Loan, the
Mortgage contains an enforceable provision (subject to applicable law) 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 mortgagee thereunder, and such provision is
enforceable;
(ee) [Reserved];
(ff) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(gg) Consolidation of Future Advances. Any future 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.
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 ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan;
(hh) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property. The Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property and the Seller
has no knowledge of any such proceedings in the future;
(ii) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in compliance
with Accepted Servicing Practices, applicable laws and regulations, and have
been in all respects legal and proper. With respect to escrow deposits and
Escrow Payments, 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. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and, if requested by the Mortgagor,
has been established in an amount sufficient to pay for every item that remains
unpaid and has been assessed but is not yet due and payable. No escrow deposits
or Escrow Payments or other charges or payments due the Seller have been
capitalized under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in strict compliance with state and federal law and
the terms of the related Mortgage and Mortgage Note on the related Interest Rate
Adjustment Date. If, pursuant to the terms of the Mortgage Note, another index
was selected for determining the Mortgage Interest Rate, the same index was used
with respect to each Mortgage Note which required a new index to be selected,
and such selection did not conflict with the terms of the related Mortgage Note.
The Seller executed and delivered any and all notices required under applicable
law and the terms of the related Mortgage Note and Mortgage regarding the
Mortgage Interest Rate and the Monthly Payment adjustments. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited;
(jj) Conversion to Fixed Interest Rate. With respect to Adjustable
Rate Mortgage Loans, the Mortgage Loan is not a Convertible Mortgage Loan;
(kk) Other Insurance Policies. 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, special hazard insurance 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 by any officer, director, or employee of 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;
(ll) No Violation of Environmental Laws. There is no pending action
or proceeding directly involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue. To the best of Seller's
knowledge, based upon customary and prudent residential mortgage industry
underwriting standards, there is no violation of any environmental law, rule or
regulation with respect to the Mortgage Property, and nothing further remains to
be done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(mm) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not
notified the Seller, and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Relief Act or any similar state statute;
(nn) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property 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, and whose compensation was not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfied
the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
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;
(oo) Disclosure Materials. The Mortgagor has executed one or more
statements to the effect that the Mortgagor has received all disclosure
materials required by, and the Seller has complied with, all applicable law with
respect to the making of the Mortgage Loans. The Seller shall maintain such
statement(s) in the Mortgage File;
(pp) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(qq) Value of Mortgaged Property. The Seller has no knowledge of any
circumstances existing that could reasonably be expected to adversely affect the
value or the marketability of any Mortgaged Property or Mortgage Loan or to
cause the Mortgage Loans to prepay during any period materially faster or slower
than similar mortgage loans held by the Seller generally secured by properties
in the same geographic area as the related Mortgaged Property;
(rr) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts exists or has
existed on or prior to the related Closing Date (whether or not known to the
Seller on or prior to such date) which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any primary mortgage
insurance (including, without limitation, any exclusions, denials or defenses
which would limit or reduce the availability of the timely payment of the full
amount of the loss otherwise due thereunder to the insured) whether arising out
of actions, representations, errors, omissions, negligence, or fraud of the
Seller, the related Mortgagor or any party involved in the application for such
coverage, including the appraisal, plans and specifications and other exhibits
or documents submitted therewith to the insurer under such insurance policy, or
for any other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay;
(ss) Escrow Analysis. With respect to each Mortgage, the Seller has
within the last twelve months (unless such Mortgage was originated within such
twelve month period) analyzed the required Escrow Payments for each Mortgage and
adjusted the amount of such payments so that, assuming all required payments are
timely made, any deficiency will be eliminated on or before the first
anniversary of such analysis, or any overage will be refunded to the Mortgagor,
in accordance with RESPA and any other applicable law;
(tt) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in strict compliance with Accepted Servicing Practices;
(uu) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded by the terms of
the Mortgage Loan Documents from furnishing the same to any subsequent or
prospective purchaser of such Mortgage. The Seller shall hold the Purchaser
harmless from any and all damages, losses, costs and expenses (including
attorney's fees) arising from disclosure of credit information in connection
with the Purchaser's secondary marketing operations and the purchase and sale of
mortgages or Servicing Rights thereto;
(vv) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee simple interest in
the land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the collateral assignment of the lease without the lessor's
consent (or such consent has been obtained) and the acquisition by the holder of
the Mortgage of the rights of the lessee upon foreclosure or assignment in lieu
of foreclosure or provide the holder of the Mortgage with substantially similar
protections; (3) the terms of such lease do not (a) allow the termination
thereof upon the lessee's default without the holder of the Mortgage being
entitled to receive written notice of, and opportunity to cure, such default,
(b) allow the termination of the lease in the event of damage or destruction as
long as the Mortgage is in existence, (c) prohibit the holder of the Mortgage
from being insured (or receiving proceeds of insurance) under the hazard
insurance policy or policies relating to the Mortgaged Property or (d) permit
any increase in rent other than pre-established increases set forth in the
lease; (4) the original term of such lease is not less than 15 years; (5) the
term of such lease does not terminate earlier than five years after the maturity
date of the Mortgage Note; and (6) the Mortgaged Property is located in a
jurisdiction in which the use of leasehold estates in transferring ownership in
residential properties is a widely accepted practice;
(ww) Prepayment Penalty. (i) Each Mortgage Loan is subject to a
prepayment penalty as provided in the related Mortgage Note, except as set forth
on the related Mortgage Loan Schedule, and (ii) no such prepayment penalty may
be imposed for a term in excess of five (5) years from the date of origination;
(xx) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law;
(yy) Single-premium credit life insurance policy. In connection with
the origination of the Mortgage Loan, no proceeds from such Mortgage Loan were
used to finance or acquire a single-premium credit life insurance policy;
(zz) Compliance with Anti-Money Laundering Laws. The Seller has
complied with all applicable anti-money laundering laws and regulations,
including without limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws");
(aaa) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code;
(bbb) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract issued by First American Real Estate
Tax Service or another issuer reasonably acceptable to the Purchaser, and such
contract is transferable;
(ccc) Reports. On or prior to the related Closing Date, Seller has
provided the Custodian and the Purchaser with a MERS Report listing the
Purchaser as the Investor and the Custodian as the Custodian with respect to
each MERS Designated Mortgage Loan;
(ddd) MERS Designations. With respect to each MERS Designated
Mortgage Loan, Seller shall designate the Purchaser as the Investor, the
Custodian as the Custodian and no Person shall be listed as Interim Funder on
the MERS(R) System;
(eee) [Reserved];
(fff) Fair Credit Reporting Act. The Seller has, in its capacity as
servicer for each Mortgage Loan, fully furnished, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and complete
information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company (three of the
credit repositories), on a monthly basis;
(ggg) Mortgagor Selection. No Mortgagor was encouraged or required
to select a mortgage loan product offered by the Mortgage Loan's originator
which is a higher cost product designed for less creditworthy mortgagors, unless
at the time of the Mortgage Loan's origination, such Mortgagor did not qualify
taking into account credit history and debt-to-income ratios for a lower-cost
credit product then offered by the Mortgage Loan's originator or any affiliate
of the Mortgage Loan's originator. If, at the time of loan application, the
Mortgagor may have qualified for a lower-cost credit product then offered by any
mortgage lending affiliate of the Mortgage Loan's originator, the Mortgage
Loan's originator referred the related Mortgagor's application to such affiliate
for underwriting consideration;
(hhh) Underwriting Methodology. The methodology used in underwriting
the extension of credit for each Mortgage Loan employs, in part, objective
mathematical principles which relate the related Mortgagor's income, assets and
liabilities to the proposed payment and such underwriting methodology does not
rely on the extent of the related Mortgagor's equity in the collateral as the
principal determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of origination
(application/approval) the related Mortgagor had a reasonable ability to make
timely payments on the Mortgage Loan, relying on the Mortgagor's representation
of the Mortgagor's income in the case of loan programs which did not require
verification of the Mortgagor's income;
(iii) Mortgage Loans with Prepayment Premiums. With respect to any
Mortgage Loan that contains a provision permitting imposition of a premium upon
a prepayment prior to maturity: (i) a mortgage loan without such a premium was
available to the Mortgagor at an interest rate and/or fee structure higher than
that of the Mortgage Loan, (ii) prior to the Mortgage Loan's funding, the
related Mortgagor had the option of obtaining the Mortgage Loan without a
requirement for payment of such a premium, and (iii) the prepayment premium is
disclosed to the related Mortgagor in the Mortgage Loan documents pursuant to
applicable state and federal law;
(jjj) Purchase of Insurance. No Mortgagor was required to purchase
any credit life, disability, accident or health insurance product as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single-premium credit life, disability, accident or health insurance policy in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(kkk) [Reserved];
(lll) Disclosure of Fees and Charges. All fees and charges
(including finance charges), whether or not financed, assessed, collected or to
be collected in connection with the origination and servicing of each Mortgage
Loan, have been disclosed in writing to the Mortgagor in accordance with
applicable state and federal law and regulation; and
(mmm) No Arbitration. No Mortgage Loan originated on or after August
1, 2004, requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
Subsection 9.03 Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 9.01 and 9.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or failure to examine any Mortgage
File in accordance with Section 5 hereof. Upon discovery by either the Seller or
the Purchaser of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other.
Within 60 days of the earlier of either discovery by or notice to
the Seller of any such breach of a representation or warranty, which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Purchaser therein (or which materially and adversely affects the value of the
applicable Mortgage Loan or the interest of the Purchaser therein in the case of
a representation and warranty relating to a particular Mortgage Loan), the
Seller shall use its best efforts promptly to cure such breach in all material
respects and, if such breach cannot be cured, the Seller shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price.
Notwithstanding the above sentence, within 60 days of the earlier of either
discovery by, or notice to, the Seller of any breach of the representations or
warranties set forth in paragraph (ww)(ii), (xx), (yy), (aaa), (fff), (ggg),
(hhh), (iii), (jjj), (lll) or (mmm) of Subsection 9.02, the Seller shall
repurchase such Mortgage Loan at the Repurchase Price. In the event that a
breach shall involve any representation or warranty set forth in Subsection
9.01, and such breach cannot be cured within 60 days of the earlier of either
discovery by or notice to the Seller of such breach, all of the Mortgage Loans
affected by such breach shall, at the Purchaser's option, be repurchased by the
Seller at the Repurchase Price. However, if the breach shall involve a
representation or warranty set forth in Subsection 9.02 (except as provided in
the second sentence of this paragraph with respect to certain breaches for which
no substitution is permitted) and the Seller discovers or receives notice of any
such breach within 120 days of the related Closing Date, the Seller shall, at
the Purchaser's option and provided that the Seller has a Qualified Substitute
Mortgage Loan, rather than repurchase the Mortgage Loan as provided above,
remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in its
place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than 120 days after the related Closing
Date. If the Seller has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan at the Repurchase Price. With regards to
any repurchase under this Subsection 9.03: (i) the repurchase request must be
made by the Purchaser in a prompt and timely manner and must contain reasonably
sufficient information to enable the Seller to evaluate the request, including
in the case of a first payment default, the payment history and collection
comments, and (ii) with respect to any Mortgage Loan which was never included in
a Securitization Transfer, the Purchaser shall use best efforts to notify the
Seller of any known breach of a representation and warranty and require the
Seller to repurchase such Mortgage Loan prior to foreclosure procedures
commencing on such Mortgage Loan. Any repurchase of a Mortgage Loan or Loans
pursuant to the foregoing provisions of this Subsection 9.03 shall be
accomplished by either (a) if the Interim Servicing Agreement has been entered
into and is in effect, deposit in the Custodial Account of the amount of the
Repurchase Price, for distribution to the Purchaser on the next scheduled
Remittance Date, after deducting therefrom any amount received in respect of
such repurchased Mortgage Loan or Loans and being held in the Custodial Account
for future distribution or (b) if the Interim Servicing Agreement has not been
entered into or is no longer in effect, by direct remittance of the Repurchase
Price, to the Purchaser or its designee in accordance with the Purchaser's
instructions. In the event of a repurchase or substitution, the Seller shall,
simultaneously with such reassignment, give written notice to the Purchaser that
such repurchase or substitution has taken place, and, in the case of
substitution, identify a Qualified Substitute Mortgage Loan and amend the
related Mortgage Loan Schedule to reflect the addition of such Qualified
Substitute Mortgage Loan to this Agreement. The Purchaser shall advise its
servicer/subservicer that such repurchase had taken place promptly after the
Repurchase Price has been received. At the same time the Seller shall provide
servicing transfer instructions to each of the Purchaser and the Purchaser's
servicer/subservicer so it may adequately comply with the provisions set forth
below.
Promptly upon the Purchaser's receipt of the Repurchase Price, the
Purchaser shall or shall cause its designee to release the Purchaser's interest
in the repurchased Mortgage Loan or Loans and shall promptly effect, or cause to
be effected, (i) the reconveyance of such repurchased Mortgage Loan or Loans to
the Seller free and clear of any lien, charge or encumbrance suffered or
incurred by the Purchaser and (ii) the delivery to the Seller of any documents
held by the Custodian relating to the Deleted Mortgage Loan (and in any event
within thirty days after the Seller repurchases the Mortgage Loan or Loans). In
connection with any such substitution, the Seller shall be deemed to have made
as to such Qualified Substitute Mortgage Loan the representations and warranties
set forth in this Agreement except that all such representations and warranties
set forth in this Agreement shall be deemed made as of the date of such
substitution. The Seller shall effect such substitution by delivering to the
Custodian or to such other party as the Purchaser may designate in writing for
such Qualified Substitute Mortgage Loan the documents required by Subsection
6.03 and the Custodial Agreement, with the Mortgage Note endorsed as required by
Subsection 6.03 and the Custodial Agreement. No substitution will be made in any
calendar month after the Determination Date for such month. The Seller shall
remit directly to the Purchaser, or its designee in accordance with the
Purchaser's instructions the Monthly Payment less the Servicing Fee due, if any,
on such Qualified Substitute Mortgage Loan or Loans in the month following the
date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution shall be retained by the
Seller. For the month of substitution, distributions to the Purchaser shall
include the Monthly Payment due on any Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by the Seller or any other party in respect of such
Deleted Mortgage Loan.
For any month in which the Seller substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Seller shall determine the amount
(if any) by which the aggregate principal balance of all Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all Deleted Mortgage Loans (after application of scheduled
principal payments due in the month of substitution). The amount of such
shortfall shall be distributed by the Seller directly to the Purchaser or its
designee in accordance with the Purchaser's instructions within two (2) Business
Days of such substitution.
In addition to such repurchase or substitution obligation, the
Seller shall indemnify the Purchaser and its present and former directors,
officers, employees and agents and any Successor Servicer and its present and
former directors, officers, employees and agents and hold such parties harmless
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and expenses and related costs, judgments, and other costs
and expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Seller representations and
warranties contained in this Agreement or any Reconstitution Agreement. It is
understood and agreed that the obligations of the Seller set forth in this
Subsection 9.03 to cure, substitute for or repurchase a defective Mortgage Loan
and to indemnify the Purchaser and Successor Servicer as provided in this
Subsection 9.03 and in Subsection 14.01 constitute the sole remedies of the
Purchaser respecting a breach of the foregoing representations and warranties.
For purposes of this paragraph "Purchaser" shall mean the Person then acting as
the Purchaser under this Agreement and any and all Persons who previously were
"Purchasers" under this Agreement and "Successor Servicer" shall mean any Person
designated as the Successor Servicer pursuant to this Agreement and any and all
Persons who previously were "Successor Servicers" pursuant to this Agreement.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 9.01 and
9.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Seller by the Purchaser for compliance with
this Agreement.
Subsection 9.04. [RESERVED].
Subsection 9.05 Mortgage Loans with First Payment Defaults;
Repurchase.
In the event that the first Monthly Payment with respect to any
Mortgage Loan due either (i) after origination of such Mortgage Loan, or (ii)
after the related Closing Date is not paid by the related Mortgagor to the
Purchaser within thirty (30) days of such Due Date, the Seller, at the
Purchaser's option, shall repurchase such Mortgage Loan from the Purchaser at
the Repurchase Price; provided, however, the Seller shall have until the date
which is sixty (60) days following such Due Date (the "Breach Date") to cause
the related Mortgagor to cure any such nonpayment. In addition, and
notwithstanding the foregoing, the Purchaser's right to request a repurchase
hereunder shall not commence until the Breach Date. The Purchaser shall have
sixty (60) days following the Breach Date (the "Notice Period") to notify the
Seller and request a repurchase and the Seller shall repurchase such delinquent
Mortgage Loan within thirty (30) days of receipt of such notice; provided that
the repurchase request includes the related payment history and collection
comments. Also, the Purchaser reserves the right to request a repurchase
following the expiration of the Notice Period in the event of a NSF return in
connection with such first Monthly Payment that is not cured, provided the
Purchaser notifies the Seller of such a repurchase request within thirty (30)
days of notice of such NSF return but in no event more than one hundred eighty
(180) days following the related Due Date.
Subsection 9.06 Repurchase of Certain Mortgage Loans That Prepay in
Full.
With respect to Mortgage Loans without prepayment penalties, in the
event that any such Mortgage Loan prepays in full during the first three months
following the related Closing Date, the Seller shall pay the Purchaser, within
ten (10) Business Days of such prepayment in full, an amount equal to the
product of the applicable Purchase Price Percentage less 100%, multiplied by the
outstanding principal balance of such Mortgage Loan as of the related Cut-off
Date; provided, however, that the Purchaser must request that Seller pay such
amount within sixty (60) days of the date the Mortgage Loan is prepaid in full.
SECTION 10. Closing.
The closing for the purchase and sale of each Mortgage Loan Package
shall take place on the related Closing Date. At the Purchaser's option, each
Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree, or conducted in person, at such place as the parties shall
agree.
The closing for the Mortgage Loans to be purchased on each Closing
Date shall be subject to each of the following conditions:
(i) at least two Business Days prior to the related Closing Date,
the Seller shall deliver to the Purchaser a magnetic diskette,
or transmit by modem, a listing on a loan-level basis of the
necessary information to compute the Purchase Price of the
Mortgage Loans delivered on such Closing Date (including
accrued interest), and prepare a Mortgage Loan Schedule;
(ii) all of the representations and warranties of the Seller under
this Agreement and under the Interim Servicing Agreement (with
respect to each Mortgage Loan, for an interim period, as
specified therein) shall be true and correct as of the related
Closing Date and no event shall have occurred which, with
notice or the passage of time, would constitute a default
under this Agreement or an Event of Default under the Interim
Servicing Agreement;
(iii) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing documents
as specified in Section 11 of this Agreement, in such forms as
are agreed upon and acceptable to the Purchaser, duly executed
by all signatories other than the Purchaser as required
pursuant to the terms hereof;
(iv) the Seller shall have delivered and released to the Custodian
all documents required pursuant to the Custodial Agreement;
and
(v) all other terms and conditions of this Agreement and the
related Purchase Price and Terms Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the related Closing Date the Purchase Price, plus accrued interest
pursuant to Section 4 of this Agreement, by wire transfer of immediately
available funds to the account designated by the Seller.
SECTION 11. Closing Documents.
The Closing Documents for the Mortgage Loans to be purchased on each
Closing Date shall consist of fully executed originals of the following
documents:
1. this Agreement (to be executed and delivered only for the
initial Closing Date);
2. the Interim Servicing Agreement, dated as of the initial
Cut-off Date (to be executed and delivered only for the
initial Closing Date);
3. with respect to the initial Closing Date, the Custodial
Agreement, dated as of the initial Cut-off Date;
4. the related Mortgage Loan Schedule (one copy to be attached to
the Custodian's counterpart of the Custodial Agreement in
connection with the initial Closing Date, and one copy to be
attached to the related Assignment and Conveyance as the
Mortgage Loan Schedule thereto);
5. a Custodian's Certification, as required under the Custodial
Agreement, in the form of Exhibit 2 to the Custodial
Agreement;
6. with respect to the initial Closing Date, a Custodial Account
Letter Agreement or a Custodial Account Certification, as
applicable, as required under the Interim Servicing Agreement;
7. with respect to the initial Closing Date, an Escrow Account
Letter Agreement or an Escrow Account Certification, as
applicable, as required under the Interim Servicing Agreement;
8. with respect to the initial Closing Date, an Officer's
Certificate, in the form of Exhibit C hereto with respect to
the Seller, including all attachments thereto; with respect to
subsequent Closing Dates, an Officer's Certificate upon
request of the Purchaser;
9. with respect to the initial Closing Date, an Opinion of
Counsel of the Seller (who may be an employee of the Seller),
in the form of Exhibit D hereto ("Opinion of Counsel of the
Seller"); with respect to subsequent Closing Dates, an Opinion
of Counsel of the Seller upon request of the Purchaser;
10. with respect to the initial Closing Date, an Opinion of
Counsel of the Custodian (who may be an employee of the
Custodian), in the form of an exhibit to the Custodial
Agreement;
11. a Security Release Certification, in the form of Exhibit E or
F, as applicable, hereto, or in the form of the Seller's
warehouse lender's standard bailee letter, subject to the
Purchaser's reasonable approval, executed by any person, as
requested by the Purchaser, if any of the Mortgage Loans have
at any time been subject to any security interest, pledge or
hypothecation for the benefit of such person;
12. a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if
any of the Mortgage Loans were acquired by the Seller by
merger or acquired or originated by the Seller while
conducting business under a name other than its present name,
if applicable;
13. with respect to the initial Closing Date, the Underwriting
Guidelines to be attached hereto as Exhibit G;
14. Assignment and Conveyance Agreement in the form of Exhibit H
hereto;
15. Exhibit B to the related Assignment and Conveyance Agreement;
and
16. a MERS Report reflecting the Purchaser as Investor, the
Custodian as custodian and no Person as Interim Funder for
each MERS Designated Mortgage Loan.
The Seller shall bear the risk of loss of the closing documents
until such time as they are received by the Purchaser or its attorneys.
SECTION 12. Costs.
The Purchaser shall pay any commissions due its salesmen, the legal
fees and expenses of its attorneys and the costs and expenses of the Custodian.
All other costs and expenses incurred in connection with the transfer and
delivery of the Mortgage Loans and the Servicing Rights, including costs and
expenses related to the servicing transfer from the Seller to any successor
servicer, recording fees, fees for a one-time transfer on the MERS(R) System,
fees for title policy endorsements and continuations and the Seller's attorney's
fees, shall be paid by the Seller.
SECTION 13. Cooperation of Seller with a Reconstitution.
The Seller and the Purchaser agree that with respect to some or all
of the Mortgage Loans, after each Closing Date, on one or more dates (each, a
"Reconstitution Date") at the Purchaser's sole option, the Purchaser may effect
a sale (each, a "Reconstitution") of some or all of the Mortgage Loans then
subject to this Agreement, without recourse, to:
(i) ▇▇▇▇▇▇ Mae under its Cash Purchase Program or MBS Program
(Special Servicing Option) (each a "▇▇▇▇▇▇ Mae Transfer"); or
(ii) ▇▇▇▇▇▇▇ Mac (the "▇▇▇▇▇▇▇ Mac Transfer"); or
(iii) one or more third party purchasers in one or more Whole Loan
Transfers; or
(iv) one or more trusts or other entities to be formed as part of
one or more Securitization Transfers.
The Seller agrees to execute in connection with any Agency Transfer,
any and all pool purchase contracts, and/or agreements reasonably acceptable to
the Seller among the Purchaser, the Seller, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac (as the
case may be) and any servicer in connection with a Whole Loan Transfer, a
seller's warranties and servicing agreement or a participation and servicing
agreement in form and substance reasonably acceptable to the Seller, and in
connection with a Securitization Transfer, a pooling and servicing agreement in
form and substance reasonably acceptable to the parties or an Assignment and
Recognition Agreement substantially in the form attached hereto as Exhibit I
(collectively, the agreements referred to herein are designated the
"Reconstitution Agreements"), together with an opinion of counsel with respect
to such Reconstitution Agreements.
With respect to each Whole Loan Transfer and each Securitization
Transfer entered into by the Purchaser, the Seller agrees (1) to cooperate fully
with the Purchaser and any prospective purchaser with respect to all reasonable
requests and due diligence procedures; (2) to execute, deliver and perform all
Reconstitution Agreements required by the Purchaser; and (3) to restate the
representations and warranties set forth in this Agreement and the Interim
Servicing Agreement in connection with such Reconstitution that occurs on or
prior to the date which is six (6) months following the related Closing Date,
such restatement to be in the form of Exhibit B to Exhibit I hereto. The Seller
shall use its reasonable best efforts to provide to such master servicer or
issuer, as the case may be, and any other participants in such Reconstitution:
(i) any and all information and appropriate verification of information which
may be reasonably available to the Seller or its affiliates, whether through
letters of its auditors and counsel or otherwise, as the Purchaser or any such
other participant shall request; (ii) such additional representations,
warranties, covenants, opinions of counsel, letters from auditors, and
certificates of public officials or officers of the Seller as are reasonably
believed necessary by the Purchaser or any such other participant and as are
customarily provided in connection with Securitization Transfers involving
mortgage loans similar to the Mortgage Loans; and (iii) to execute, deliver and
satisfy all conditions set forth in any indemnity agreement required by the
Purchaser or any such participant, including, without limitation, an
Indemnification and Contribution Agreement in substantially the form attached
hereto as Exhibit J. The Seller shall indemnify the Purchaser, each Affiliate
designated by the Purchaser and each Person who controls the Purchaser or such
Affiliate and hold each of them harmless from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses that each of them may
sustain in any way related to any information provided by or on behalf of the
Seller regarding the Seller, the Seller's servicing practices or performance,
the Mortgage Loans or the Underwriting Guidelines set forth in any offering
document prepared in connection with any Reconstitution. For purposes of the
previous sentence, "Purchaser" shall mean the Person then acting as the
Purchaser under this Agreement and any and all Persons who previously were
"Purchasers" under this Agreement. Moreover, the Seller agrees to cooperate with
all reasonable requests made by the Purchaser to effect such Reconstitution
Agreements.
All Mortgage Loans not sold or transferred pursuant to a
Reconstitution shall remain subject to this Agreement and, if the Interim
Servicing Agreement shall remain in effect with respect to the related Mortgage
Loan Package, shall continue to be serviced in accordance with the terms of this
Agreement and the Interim Servicing Agreement and with respect thereto this
Agreement shall remain in full force and effect.
SECTION 14. The Seller.
Subsection 14.01 Additional Indemnification by the Seller; Third
Party Claims.
(a) The Seller shall indemnify the Purchaser and its present and
former directors, officers, employees and agents and any Successor Servicer and
its present and former directors, officers, employees and agents, and hold such
parties harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and expenses (including legal
fees and expenses incurred in connection with the enforcement of the Seller's
indemnification obligation under this Subsection 14.01) and related costs,
judgments, and any other costs, fees and expenses that such parties may sustain
in any way related to the failure of the Seller to perform its duties or to
service the Mortgage Loans in strict compliance with the terms of this Agreement
or any Reconstitution Agreement entered into pursuant to Section 13 or any
breach of any of Seller's representations, warranties and covenants set forth in
this Agreement. For purposes of this paragraph "Purchaser" shall mean the Person
then acting as the Purchaser under this Agreement and any and all Persons who
previously were "Purchasers" under this Agreement and "Successor Servicer" shall
mean any Person designated as the Successor Servicer pursuant to this Agreement
and any and all Persons who previously were "Successor Servicers" pursuant to
this Agreement.
(b) Promptly after receipt by an indemnified party under this
Subsection 14.01 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Subsection 14.01, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may have to
any indemnified party under this Subsection 14.01, except to the extent that it
has been prejudiced in any material respect, or from any liability which it may
have, otherwise than under this Subsection 14.01. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided that if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party or parties shall have reasonably concluded that there may
be legal defenses available to it or them and/or other indemnified parties which
are different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate counsel
to assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party for
expenses incurred by the indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with one local counsel, if applicable)), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii).
Subsection 14.02 Merger or Consolidation of the Seller.
The Seller will keep in full effect its existence, rights and
franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Seller shall be a party, or any Person succeeding to the business of the
Seller, shall be the successor of the Seller hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall have a net worth of at least $25,000,000.
SECTION 15. Financial Statements.
The Seller understands that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser shall make available to
prospective purchasers audited financial statements of the Seller for the most
recently completed three fiscal years respecting which such statements are
available, as well as a Consolidated Statement of Condition of the Seller at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Seller shall also make available any comparable interim
statements to the extent any such statements have been prepared by the Seller
(and are available upon request to members or stockholders of the Seller or the
public at large). The Seller, if it has not already done so, agrees to furnish
promptly to the Purchaser copies of the statements specified above. The Seller
shall also make available information on its servicing performance with respect
to loans serviced for others, including delinquency ratios. The Purchaser shall
use reasonable best efforts to cause any prospective purchaser to enter into a
confidentiality agreement in connection with such financial information.
The Seller also agrees to allow reasonable access to a knowledgeable
financial or accounting officer for the purpose of answering questions asked by
any prospective purchaser regarding recent developments affecting the Seller or
the financial statements of the Seller.
SECTION 16. Mandatory Delivery.
The sale and delivery on the related Closing Date of the Mortgage
Loans described on the related Mortgage Loan Schedule is mandatory from and
after the date of the execution of the related Purchase Price and Terms
Agreement, it being specifically understood and agreed that each Mortgage Loan
is unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser (including damages to prospective purchasers of the
Mortgage Loans) in the event of the Seller's failure to deliver (i) each of the
related Mortgage Loans or (ii) one or more Qualified Substitute Mortgage Loans
or (iii) one or more Mortgage Loans otherwise acceptable to the Purchaser on or
before the related Closing Date. All rights and remedies of the Purchaser under
this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
SECTION 17. 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 the address as follows:
(i) if to the Seller:
Accredited Home Lenders, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Capital Markets
(ii) if to the Purchaser:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loan Operations Manager
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 18. Severability Clause.
Any part, provision representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
SECTION 19. 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 20. Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Purchaser in the State of New York and
shall be deemed to have been made in the State of New York. The Agreement 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 the substantive laws of the State of New York (without regard to
conflicts of laws principles), except to the extent preempted by Federal law.
SECTION 21. Intention of the Parties.
It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to treat
the transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Loan Files to
determine the characteristics of the Mortgage Loans which shall affect the
Federal income tax consequences of owning the Mortgage Loans and the Seller
shall cooperate with all reasonable requests made by the Purchaser in the course
of such review.
SECTION 22. Successors and Assigns; Assignment of Purchase
Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller and the Purchaser and the respective permitted
successors and assigns of the Seller and the successors and assigns of the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Seller to a third party without the prior written consent of the Purchaser. This
Agreement may be assigned, pledged or hypothecated by the Purchaser without the
consent of the Seller. In the event the Purchaser assigns this Agreement, and
the assignee assumes any of the Purchaser's obligations hereunder, the Seller
acknowledges and agrees to look solely to such assignee, and not to the
Purchaser, for performance of the obligations so assumed and the Purchaser shall
be relieved from any liability to the Seller with respect thereto.
SECTION 23. 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 24. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a
part hereof and are an integral part of this Agreement.
SECTION 25. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 26. Reproduction of Documents.
This Agreement and all documents relating thereto, 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 27. Further Agreements.
The Seller and the Purchaser 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 this
Agreement.
SECTION 28. Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments
of Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or their comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Seller's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
SECTION 29. No Solicitation.
From and after the related Closing Date, the Seller agrees that it
will not take any action or permit or cause any action to be taken by any of its
agents or affiliates, or by any independent contractors on the Seller's behalf,
to personally, by telephone or mail, solicit the borrower or obligor under any
Mortgage Loan for any purpose whatsoever, including to refinance a Mortgage
Loan, in whole or in part, without (i) the prior written consent of the
Purchaser; or (ii) written notice from the related borrower or obligor under a
Mortgage Loan of such party's intention to refinance such Mortgage Loan. It is
understood and agreed that all rights and benefits relating to the solicitation
of any Mortgagors and the attendant rights, title and interest in and to the
list of such Mortgagors and data relating to their Mortgages (including
insurance renewal dates) shall be transferred to the Purchaser pursuant hereto
on the related Closing Date and the Seller shall take no action to undermine
these rights and benefits. Notwithstanding the foregoing, it is understood and
agreed that promotions undertaken by the Seller or any affiliate of the Seller
which are directed to the general public at large, including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute solicitation
under this Section 29.
SECTION 30. Waiver of Trial by Jury.
THE SELLER AND THE PURCHASER EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 31. Submission to Jurisdiction; Waivers.
The Seller hereby irrevocably and unconditionally:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-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;
(B) 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;
(C) 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 HEREIN OR AT SUCH OTHER ADDRESS OF WHICH THE PURCHASER SHALL
HAVE BEEN NOTIFIED; AND
(D) 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 ▇▇▇ IN ANY OTHER JURISDICTION.
SECTION 32. Confidentiality.
The Seller hereby acknowledges the Purchaser's need to share
non-public information ("Information") with the Purchaser's employees,
Affiliates, attorneys or accountants (the "Representatives"), as well as Persons
performing due diligence investigations in connection with securities or
merger/acquisition transactions, taxing authorities or other governmental
agencies or regulatory bodies or in order to comply with any applicable federal
or state laws (collectively with the Representatives, the "Agents"). The
Purchaser hereby agrees to use best efforts to avoid causing the Seller to
violate applicable securities laws governing publicly traded companies. The
Purchaser and the Seller shall use mutual best efforts to determine which
Information will remain confidential.
[Signatures Commence on Following Page]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
(Purchaser)
By:____________________________________
Name:__________________________________
Title:_________________________________
ACCREDITED HOME LENDERS, INC.
(Seller)
By:____________________________________
Name:__________________________________
Title:_________________________________
Exhibit A
EXHIBIT A
CONTENTS OF EACH MORTGAGE FILE
------------------------------
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and any prospective Purchaser, and which shall be delivered to the
Custodian, or to such other Person as the Purchaser shall designate in writing,
pursuant to Section 6 of the Fourth Amended and Restated Mortgage Loan Purchase
and Warranties Agreement to which this Exhibit is attached (the "Agreement"):
(a) the original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________, without recourse" and signed in the
name of the last endorsee (the "Last Endorsee") by an authorized officer. To the
extent that there is no room on the face of the Mortgage Notes for endorsements,
the endorsement may be contained on an allonge, if state law so allows and the
Custodian is so advised by the Seller that state law so allows. If the Mortgage
Loan was acquired by the Seller in a merger, the endorsement must be by "[Last
Endorsee], successor by merger to [name of predecessor]." If the Mortgage Loan
was acquired or originated by the Last Endorsee while doing business under
another name, the endorsement must be by "[Last Endorsee], formerly known as
[previous name]";
(b) the original of any guarantee executed in connection with the
Mortgage Note;
(c) the original Mortgage with evidence of recording thereon;
(d) the originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon;
(e) except with respect to each MERS Designated Mortgage Loan, the
original Assignment of Mortgage for each Mortgage Loan, in form and substance
acceptable for recording. The Assignment of Mortgage shall be delivered in
blank. If the Mortgage Loan was acquired by the Seller in a merger, the
Assignment of Mortgage must be made by "[Seller], successor by merger to [name
of predecessor]." If the Mortgage Loan was acquired or originated by the Seller
while doing business under another name, the Assignment of Mortgage must be by
"[Seller], formerly known as [previous name]";
(f) the originals of all intervening assignments of mortgage (if
any) evidencing a complete chain of assignment from the Seller to the Last
Endorsee (or MERS, with respect to each MERS Designated Mortgage Loan) with
evidence of recording thereon;
(g) The original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy of the
related policy binder, preliminary report or commitment for title issued by the
title insurance company; and
(h) security agreement, chattel mortgage or equivalent document
executed in connection with the Mortgage.
Notwithstanding the foregoing, in connection with any item described
above in clauses (c), (d) or (f), if the Seller cannot deliver or cause to be
delivered the original of any such item with evidence of recording thereon on or
prior to the related Closing Date because of a delay caused by the public
recording office where such item has been delivered for recordation or because
such item has been lost or because such public recording office retains the
original recorded item (each such item, a "Delayed Document"), the Seller shall
deliver or cause to be delivered to the Custodian, (i) in the case of a delay
caused by the public recording office, a photocopy of such Delayed Document,
together with an Officer's Certificate of the Seller (or certified by the title
company, escrow agent, or closing attorney) to the effect that such copy is a
true and correct copy of the Delayed Document that has been dispatched to the
appropriate public recording office for recordation (and the original recorded
Delayed Document or a copy of such Delayed Document certified by such public
recording office to be a true and complete copy of the original recorded Delayed
Document will be promptly delivered to the Custodian upon receipt thereof by the
Seller); or (ii) in the case of a Delayed Document where a public recording
office retains the original recorded Delayed Document or in the case where a
Delayed Document is lost after recordation in a public recording office, a copy
of such Delayed Document certified by such public recording office to be a true
and complete copy of the original recorded Delayed Document.
In the event an Officer's Certificate of the Seller is delivered to
the Purchaser because of a delay caused by the public recording office in
returning any recorded document, the Seller shall deliver to the Purchaser,
within 90 days of the related Closing Date, an Officer's Certificate which shall
(i) identify the recorded document, (ii) state that the recorded document has
not been delivered to the Custodian due solely to a delay caused by the public
recording office, (iii) state the amount of time generally required by the
applicable recording office to record and return a document submitted for
recordation, and (iv) specify the date the applicable recorded document will be
delivered to the Custodian. An extension of the date specified in (iv) above may
be requested from the Purchaser, which consent shall not be unreasonably
withheld.
Exhibit B
EXHIBIT B
[RESERVED]
Exhibit C
EXHIBIT C
SELLER'S OFFICER'S CERTIFICATE
------------------------------
I, ____________________, hereby certify that I am the duly elected
[Vice] President of ________________[COMPANY], a corporation organized under the
laws of the state of ____________] (the "Company") and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete copy
of the charter of the Company which is in full force and effect on the
date hereof and which has been in effect without amendment, waiver,
rescission or modification since
-----------.
2. Attached hereto as Exhibit 2 is a true, correct and complete copy
of the bylaws of the Company which are in effect on the date hereof and
which have been in effect without amendment, waiver, rescission or
modification since ___________.
3. Attached hereto as Exhibit 3 is an original certificate of good
standing of the Company issued within ten days of the date hereof, and no
event has occurred since the date thereof which would impair such
standing.
4. Attached hereto as Exhibit 4 is a true, correct and complete copy
of the corporate resolutions of the Board of Directors of the Company
authorizing the Company to execute and deliver agreements such as the
Fourth Amended and Restated Mortgage Loan Purchase and Warranties
Agreement, dated as of _______ __, 200_, by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. (the "Purchaser") and the Company (the "Purchase
Agreement"), the Interim Servicing Agreement, dated as of _______ __,
200_, by and between the Company and the Purchaser (the "Servicing
Agreement"), and the Custodial Agreement dated as of _____ __, 200_ by and
among the Company, the Purchaser and Deutsche Bank Trust Company Americas
(the "Custodial Agreement") and to endorse the Mortgage Notes and execute
the Assignments of Mortgages by original [or facsimile] signature, and
such resolutions are in effect on the date hereof and have been in effect
without amendment, waiver, rescission or modification since
------------.
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Company of or compliance by the Company
with the Purchase Agreement, the Servicing Agreement, the Custodial
Agreement, the sale of the mortgage loans or the consummation of the
transactions contemplated by the agreements; or (ii) any required consent,
approval, authorization or order has been obtained by the Company.
6. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of the Purchase Agreement, the Servicing
Agreement and the Custodial Agreement conflicts or will conflict with or
results or will result in a breach of or constitutes or will constitute a
default under the charter or by-laws of the Company, the terms of any
indenture or other agreement or instrument to which the Company is a party
or by which it is bound or to which it is subject, or any statute or
order, rule, regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which the Company is subject
or by which it is bound.
7. Except as previously identified by the Company to the Purchaser
in writing, to the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the Company
which, in my judgment, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Company or in any
material impairment of the right or ability of the Company to carry on its
business substantially as now conducted or in any material liability on
the part of the Company or which would draw into question the validity of
the Purchase Agreement, the Servicing Agreement and the Custodial
Agreement, or the mortgage loans or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which would be
likely to impair materially the ability of the Company to perform under
the terms of the Purchase Agreement, the Servicing Agreement and the
Custodial Agreement.
8. Each person listed on Exhibit 5 attached hereto who, as an
officer or representative of the Company, signed (a) the Purchase
Agreement, (b) the Servicing Agreement, (c) the Custodial Agreement and
(d) any other document delivered or on the date hereof in connection with
any purchase described in the agreements set forth above was, at the
respective times of such signing and delivery, and is now, a duly elected
or appointed, qualified and acting officer or representative of the
Company, who holds the office set forth opposite his or her name on
Exhibit 5, and the signatures of such persons appearing on such documents
are their genuine signatures.
9. The Company is duly authorized to engage in the transactions
described and contemplated in the Purchase Agreement, the Servicing
Agreement and the Custodial Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated:____________________ By:___________________________
Name:_________________________
[Seal] Title: [Executive/Assistant Vice] President
I, ________________________, an [Assistant] Secretary of
______________[COMPANY], hereby certify that ____________ is the duly elected,
qualified and acting [Executive/Assistant Vice] President of the Company and
that the signature appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:____________________ By:___________________________
Name:_________________________
Title: [Assistant] Secretary
EXHIBIT 5 to
Company's Officer's Certificate
NAME TITLE SIGNATURE
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Exhibit D
EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER
----------------------------------------
(date)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
You have requested [our] [my] opinion, as [Assistant] General
Counsel to ___________________ (the "Company"), with respect to certain matters
in connection with the sale by the Company of the Mortgage Loans pursuant to
that certain Fourth Amended and Restated Mortgage Loan Purchase and Warranties
Agreement by and between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
(the "Purchaser"), dated as of _________ __, 200_ (the "Purchase Agreement"),
which sale is in the form of whole loans, delivered pursuant to a Custodial
Agreement dated as of _____ __, 200_ among the Purchaser, the Company and
Deutsche Bank Trust Company Americas (the "Custodial Agreement"), and serviced
pursuant to an Interim Servicing Agreement, dated as of ______ __, 200_ by and
between the Seller and the Purchaser (the "Servicing Agreement" and,
collectively with the Purchase Agreement and the Custodial Agreement, the
"Agreements"). Capitalized terms not otherwise defined herein have the meanings
set forth in the Purchase Agreement and the Servicing Agreement.
[We] [I] have examined the following documents:
1. the Purchase Agreement;
2. the Servicing Agreement;
3. the Custodial Agreement;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as [we] [I] have
deemed necessary and relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I]
have relied upon the representations and warranties of the Company contained in
the Purchase Agreement and in the Servicing Agreement, as applicable. [We] [I]
have assumed the authenticity of all documents submitted to [us] [me] as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to the originals of all documents.
Based upon the foregoing, it is [our] [my] opinion that:
1. The Company is [type of entity] duly organized, validly
existing and in good standing under the laws of the [state of
incorporation] and is qualified to transact business in, and
is in good standing under, the laws of [the state of
incorporation].
2. The Company has the power to engage in the transactions
contemplated by the Agreements to which it is a party and all
requisite power, authority and legal right to execute and
deliver such Agreements and to perform and observe the terms
and conditions of such Agreements.
3. Each of the Agreements to which it is a party has been duly
authorized, executed and delivered by the Company, and is a
legal, valid and binding agreement enforceable in accordance
with its respective terms against the Company, subject to
bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application
of the rules of equity, including those respecting the
availability of specific performance, none of which will
materially interfere with the realization of the benefits
provided thereunder or with the Purchaser's ownership of the
Mortgage Loans.
4. The Company has been duly authorized to allow certain of its
officers to execute any and all documents by original
signature in order to complete the transactions contemplated
by the Agreements to which it is a party
5. The Company has been duly authorized to allow certain of its
officers to execute by original [or facsimile] signature the
endorsements to the Mortgage Notes and the Assignments of
Mortgages, and the original [or facsimile] signature of the
officer at the Company executing the endorsements to the
Mortgage Notes and the Assignments of Mortgages represents the
legal and valid signature of said officer of the Company.
6. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Company of or
compliance by the Company with the Agreements to which it is a
party and the sale of the Mortgage Loans by the Company or the
consummation of the transactions contemplated by the
Agreements to which each is a party or (ii) any required
consent, approval, authorization or order has been obtained by
the Company.
7. Neither the consummation of the transactions contemplated by,
nor the fulfillment of the terms of, the Agreements to which
it is a party conflicts or will conflict with or results or
will result in a breach of or constitutes or will constitute a
default under the charter or by-laws of the Company, the terms
of any indenture or other agreement or instrument to which the
Company is a party or by which it is bound or to which it is
subject, or violates any statute or order, rule, regulations,
writ, injunction or decree of any court, governmental
authority or regulatory body to which the Company is subject
or by which it is bound.
8. Except as previously identified by the Company to the
Purchaser in writing, there is no action, suit, proceeding or
investigation pending or, to the best of [our] [my] knowledge,
threatened against the Company which, in [our] [my] judgment,
either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations,
financial condition, properties or assets of the Company or in
any material impairment of the right or ability of the Company
to carry on its business substantially as now conducted or in
any material liability on the part of the Company or which
would draw into question the validity of the Agreements to
which it is a party or the Mortgage Loans or of any action
taken or to be taken in connection with the transactions
contemplated thereby, or which would be likely to impair
materially the ability of the Company to perform under the
terms of the Agreements to which it is a party.
9. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Purchase Agreement, the Servicing
Agreement and the Custodial Agreement is sufficient to fully
transfer to the Purchaser all right, title and interest of the
Company thereto as noteholder and mortgagee.
10. The endorsement of the Mortgage Notes, the delivery to the
Purchaser, or its designee, of the Assignments of Mortgage,
and the delivery of the original endorsed Mortgage Notes to
the Purchaser, or its designee, are sufficient to permit the
Purchaser to avail itself of all protection available under
applicable law against the claims of any present or future
creditors of the Company, and are sufficient to prevent any
other sale, transfer, assignment, pledge or hypothecation of
the Mortgages and the Mortgage Notes by the Company from being
enforceable.
I am admitted to the bar of the State of California, and I express
no opinion as to the laws of any other jurisdiction except as to matters that
are governed by federal law. I make no undertaking to supplement or update this
opinion if, after the date hereof, facts or circumstances come to my attention
or changes in the law occur which could affect such opinion. This opinion is
given to you for your sole benefit, and no other person or entity is entitled to
rely hereon except that the purchaser or purchasers to which you initially and
directly resell the Mortgage Loans may rely on this opinion as if it were
addressed to them as of its date.
Very truly yours,
_____________________________
[Name]
[Assistant] General Counsel
Exhibit E
EXHIBIT E
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
___________________, 200__
[Federal Home Loan Bank of
______(the "Association")]
___________________________
___________________________
___________________________
Attention: ___________________________
___________________________
Re: Notice of Sale and Release of Collateral
----------------------------------------
Dear Sirs:
This letter serves as notice that ________________________[COMPANY]
a [type of entity], organized pursuant to the laws of [the state of
incorporation] (the "Company") has committed to sell to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. under the Fourth Amended and Restated Mortgage Loan Purchase and
Warranties Agreement, dated as of ______ __, 200_, certain mortgage loans
originated by the Association. The Company warrants that the mortgage loans to
be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. are in addition to and beyond
any collateral required to secure advances made by the Association to the
Company.
The Company acknowledges that the mortgage loans to be sold to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. shall not be used as additional or
substitute collateral for advances made by the Association. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. understands that the balance of the Company's mortgage
loan portfolio may be used as collateral or additional collateral for advances
made by the Association, and confirms that it has no interest therein.
Execution of this letter by the Association shall constitute a full
and complete release of any security interest, claim, or lien which the
Association may have against the mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc.
Very truly yours,
____________________________
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
Acknowledged and approved:
[FEDERAL HOME LOAN BANK OF]
__________________________
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
Exhibit F
EXHIBIT F
FORM OF SECURITY RELEASE CERTIFICATION
--------------------------------------
I. Release of Security Interest
----------------------------
Upon receipt of the sum of $_____________ in immediately available
funds, the financial institution named below hereby relinquishes any and all
right, title and interest it may have in all Mortgage Loans to be purchased by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. from the Company named below pursuant to
that certain Fourth Amended and Restated Mortgage Loan Purchase and Warranties
Agreement, dated as of ______ __, 200_, and certifies that all notes, mortgages,
assignments and other documents in its possession relating to such Mortgage
Loans have been delivered and released to the Company named below or its
designees, as of the date and time of the sale of such Mortgage Loans to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage Capital Inc.
Name and Address of Financial Institution
________________________________
(Name)
________________________________
(Address)
By:_____________________________
II. Certification of Release
------------------------
The Company named below hereby certifies to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. the security interests in
the Mortgage Loans released by the above-named financial institution comprise
all security interests relating to or affecting any and all such Mortgage Loans.
The Company warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
_____________________________
By:__________________________
Title:_________________________
Date:_________________________
Exhibit G
EXHIBIT G
UNDERWRITING GUIDELINES
-----------------------
Exhibit H
EXHIBIT H
FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
-------------------------------------------
On this ___ day of __________, ____, ___________________ ("Seller"),
as (i) the Seller under that certain Purchase Price and Terms Agreement, dated
as of ___________, _____ (the "PPTA"), (ii) the Seller under that certain Fourth
Amended and Restated Mortgage Loan Purchase and Warranties Agreement, dated as
of ________, ____ (the "Purchase Agreement"), and (iii) the Seller/Interim
Servicer under that certain Interim Servicing Agreement, dated as of
___________, ____ (the "Interim Servicing Agreement" and, together with the PPTA
and the Purchase Agreement, the "Agreements"), does hereby sell, transfer,
assign, set over and convey to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
("Purchaser") as the Purchaser under the Agreements, without recourse, but
subject to the terms of the Agreements, all right, title and interest of, in and
to the Mortgage Loans listed on the Mortgage Loan Schedule attached hereto as
Exhibit A (the "Mortgage Loans"), together with the Mortgage Files and all
rights and obligations arising under the documents contained therein. Each
Mortgage Loan subject to the Agreements was underwritten in accordance with, and
conforms to, the Underwriting Guidelines attached hereto as Exhibit C. Pursuant
to Section 6 of the Purchase Agreement, the Seller has delivered to the
Custodian the documents for each Mortgage Loan to be purchased as set forth in
the Custodial Agreement. The contents of each Servicing File required to be
retained by __________________________ ("Interim Servicer") to service the
Mortgage Loans pursuant to the Interim Servicing Agreement and thus not
delivered to the Purchaser are and shall be held in trust by the Seller in its
capacity as Interim Servicer for the benefit of the Purchaser as the owner
thereof. The Interim Servicer's possession of any portion of the Servicing File
is at the will of the Purchaser for the sole purpose of facilitating servicing
of the related Mortgage Loan pursuant to the Interim Servicing Agreement, and
such retention and possession by the Interim Servicer shall be in a custodial
capacity only. The ownership of each Mortgage Note, Mortgage, the Servicing
Rights and the contents of the Mortgage File and Servicing File is vested in the
Purchaser and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Seller or the Interim Servicer shall immediately vest in the Purchaser and shall
be retained and maintained, in trust, by the Seller at the will of the Purchaser
in such custodial capacity only.
The Mortgage Loan Package characteristics of the Mortgage Loans
subject hereto are set forth on Exhibit B hereto.
In accordance with Section 6 of the Purchase Agreement, the
Purchaser accepts the Mortgage Loans listed on Exhibit A attached hereto.
Notwithstanding the foregoing the Purchaser does not waive any rights or
remedies it may have under the Agreements.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
Exhibit H
[SELLER]
By:____________________________________
Name:__________________________________
Title:_________________________________
Accepted and Agreed:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE
CAPITAL INC.
By: __________________________________
Name: _____________________________
Title: ____________________________
Exhibit H
EXHIBIT A
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
THE MORTGAGE LOANS
Exhibit H
EXHIBIT B
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE POOL CHARACTERISTICS O
F EACH MORTGAGE LOAN PACKAGE
Pool Characteristics of the Mortgage Loan Package as delivered on
the related Closing Date:
No Mortgage Loan has: (1) an outstanding principal balance less than
$_________; (2) an origination date earlier than _ months prior to the related
Cut-off Date; (3) a CLTV of greater than _____%; (4) a FICO Score of less than
___; or (5) a debt-to-income ratio of more than __%. Each First Lien Loan has a
Mortgage Interest Rate of at least ___% per annum and an outstanding principal
balance less than $_________. Each Second Lien Loan has a Mortgage Interest Rate
of at least ______% per annum and an outstanding principal balance less than
$________. Each Adjustable Rate Mortgage Loan has an Index of [_______].
Exhibit H
EXHIBIT C
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
UNDERWRITING GUIDELINES
EXHIBIT I
EXHIBIT I
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
--------------------------------------------
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated [____________ __,
20__] ("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"),
[____________________] ("Assignee") and [SELLER] (the "Company"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and
other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
Assignment and Conveyance
-------------------------
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Fourth Amended
and Restated Mortgage Loan Purchase and Warranties Agreement (the "Purchase
Agreement"), dated as of [DATE], between the Assignor, as purchaser (the
"Purchaser"), and the Company, as seller, solely insofar as the Purchase
Agreement relates to the Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder any and all right, title and interest in, to and under and
any obligations of the Assignor with respect to any mortgage loans subject to
the Purchase Agreement which are not the Mortgage Loans set forth on the
Mortgage Loan Schedule and are not the subject of this Agreement.
Recognition of the Company
2. From and after the date hereof (the "Securitization Closing
Date"), the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Purchase Agreement
(solely to the extent set forth herein) and this Agreement to
[__________________] (the "Trust") created pursuant to a Pooling and Servicing
Agreement, dated as of [______], 200_ (the "Pooling Agreement"), among the
Assignee, the Assignor, [___________________], as trustee (including its
successors in interest and any successor trustees under the Pooling Agreement,
the "Trustee"), [____________________], as servicer (including its successors in
interest and any successor servicer under the Pooling Agreement, the
"Servicer"). The Company hereby acknowledges and agrees that from and after the
date hereof (i) the Trust will be the owner of the Mortgage Loans, (ii) the
Company shall look solely to the Trust for performance of any obligations of the
Assignor insofar as they relate to the Mortgage Loans, (iii) the Trust
(including the Trustee and the Servicer acting on the Trust's behalf) shall have
all the rights and remedies available to the Assignor, insofar as they relate to
the Mortgage Loans, under the Purchase Agreement, including, without limitation,
the enforcement of the document delivery requirements set forth in Section 6 of
the Purchase Agreement, and shall be entitled to enforce all of the obligations
of the Company thereunder insofar as they relate to the Mortgage Loans, and (iv)
all references to the Purchaser or the Custodian under the Purchase Agreement
insofar as they relate to the Mortgage Loans shall be deemed to refer to the
Trust (including the Trustee and the Servicer acting on the Trust's behalf).
Neither the Company nor the Assignor shall amend or agree to amend, modify,
waiver, or otherwise alter any of the terms or provisions of the Purchase
Agreement which amendment, modification, waiver or other alteration would in any
way affect the Mortgage Loans or the Company's performance under the Purchase
Agreement with respect to the Mortgage Loans without the prior written consent
of the Trustee.
Representations and Warranties of the Company
---------------------------------------------
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation;
(b) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement and has full power and
authority to perform its obligations under the Purchase Agreement. The
execution by the Company of this Agreement is in the ordinary course of
the Company's business and will not conflict with, or result in a breach
of, any of the terms, conditions or provisions of the Company's charter or
bylaws or any legal restriction, or any material agreement or instrument
to which the Company is now a party or by which it is bound, or result in
the violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject. The execution, delivery and
performance by the Company of this Agreement have been duly authorized by
all necessary corporate action on part of the Company. This Agreement has
been duly executed and delivered by the Company, and, upon the due
authorization, execution and delivery by the Assignor and the Assignee,
will constitute the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms except as
enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity
regardless of whether enforceability is considered in a proceeding in
equity or at law;
(c) No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required to be
obtained or made by the Company in connection with the execution, delivery
or performance by the Company of this Agreement, or if required, such
approval has been obtained prior to the date hereof; and
(d) Except as previously identified by the Company to the Assignor in
writing, there is no action, suit, proceeding or investigation pending or
threatened against the Company, before any court, administrative agency or
other tribunal, which would draw into question the validity of this
Agreement or the Purchase Agreement, or which, either in any one instance
or in the aggregate, would result in any material adverse change in the
ability of the Company to perform its obligations under this Agreement or
the Purchase Agreement, and the Company is solvent.
4. Pursuant to Section 13 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor, the Assignee
and the Trust, that the representations and warranties set forth on Exhibit B
hereto are true and correct as of the date hereof as if such representations and
warranties were made on the date hereof unless otherwise specifically stated in
such representations and warranties.
Remedies for Breach of Representations and Warranties
-----------------------------------------------------
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicer acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Sections 3 and 4
hereof shall be as set forth in Subsection 9.03 of the Purchase Agreement as if
they were set forth herein (including without limitation the repurchase and
indemnity obligations set forth therein).
Miscellaneous
-------------
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicer acting on the Trust's behalf). Any entity into which Assignor,
Assignee or Company may be merged or consolidated shall, without the requirement
for any further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
9. Each of this Agreement and the Purchase Agreement shall survive
the conveyance of the Mortgage Loans and the assignment of the Purchase
Agreement (to the extent assigned hereunder) by Assignor to Assignee and by
Assignee to the Trust and nothing contained herein shall supersede or amend the
terms of the Purchase Agreement.
10. 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.
11....In the event that any provision of this Agreement conflicts
with any provision of the Purchase Agreement with respect to the Mortgage Loans,
the terms of this Agreement shall control.
12....Capitalized terms used in this Agreement (including the
exhibits hereto) but not defined in this Agreement shall have the meanings given
to such terms in the Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
[SELLER]
By: __________________________________
Name:__________________________________
Its: __________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: __________________________________
Name:__________________________________
Its: __________________________________
[__________________________]
By: __________________________________
Name:__________________________________
Its: __________________________________
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Mortgage Loan Schedule
EXHIBIT B TO ASSIGNMENT AND RECOGNITION AGREEMENT
-------------------------------------------------
Representations and Warranties as to the Mortgage Loans
(insert reps from Exhibit B to PPTA here)
Exhibit J
EXHIBIT J
FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
WHEREAS, [________________] (the "Depositor") is acting as depositor
and registrant with respect to the Prospectus, dated [________________], and the
Prospectus Supplement to the Prospectus, [________________] (the "Prospectus
Supplement"), relating to [________________] Certificates (the "Certificates")
to be issued pursuant to a Pooling and Servicing Agreement, dated as of
[________________] (the "P&S"), among the Depositor, as depositor,
[________________], as servicer (the "Servicer"), and [________________], as
trustee (the "Trustee");
WHEREAS, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇")
purchased from [SELLER] ("Seller") certain of the Mortgage Loans underlying the
Certificates (the "Mortgage Loans") from Seller pursuant to the Fourth Amended
and Restated Mortgage Loan Purchase and Warranties Agreement, dated as of [DATE]
(the "Purchase Agreement"), by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Seller; and
WHEREAS, pursuant to Section 13 of the Purchase Agreement, Seller
has agreed to indemnify ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its affiliates and their respective
present and former directors, officers, employees and agents;
NOW THEREFORE, in consideration of the agreements contained herein,
and other valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Seller and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ agree as follows:
1. Indemnification and Contribution.
(a) Seller agrees to indemnify and hold harmless ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and its affiliates and their respective present and former directors, officers,
employees and agents and each person, if any, who controls ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or
such affiliate within the meaning of either Section 15 of the Securities Act of
1933, as amended (the "1933 Act"), or Section 20 of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the 1933 Act, the 1934 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based in whole or in part upon any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus Supplement or in the
Comp Materials or any omission or alleged omission to state in the Prospectus
Supplement or in the Comp Materials a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any such untrue
statement or omission or alleged untrue statement or alleged omission made in
any amendment of or supplement to the Prospectus Supplement or the Comp
Materials and agrees to reimburse ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or such affiliate and each such
officer, director, employee, agent and controlling person promptly upon demand
for any legal or other expenses reasonably incurred by any of them in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that Seller shall be liable in any such case only to the extent that
any such loss, claim, damage, liability or action arises out of, or is based
upon, any untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with the Seller Information.
The foregoing indemnity agreement is in addition to any liability which Seller
may otherwise have to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, its affiliates or any such director,
officer, employee, agent or controlling person of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or its
affiliates.
As used herein:
"Seller Information" means any information relating to Seller, the
Mortgage Loans and/or the underwriting guidelines relating to the Mortgage Loans
set forth in the Prospectus Supplement or the Comp Materials.
The terms "Collateral Term Sheet" and "Structural Term Sheet" shall
have the respective meanings assigned to them in the February 13, 1995 letter
(the "PSA Letter") of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ on behalf of the Public
Securities Association (which letter, and the SEC staff's response thereto, were
publicly available February 17, 1995). The term "Collateral Term Sheet" as used
herein includes any subsequent Collateral Term Sheet that reflects a substantive
change in the information presented. The term "Computational Materials" has the
meaning assigned to it in the May 17, 1994 letter (the "▇▇▇▇▇▇ letter" and,
together with the PSA Letter, the "No-Action Letters") of ▇▇▇▇▇ & ▇▇▇▇ on behalf
of ▇▇▇▇▇▇, Peabody & Co., Inc. (which letter, and the SEC staff's response
thereto, were publicly available May 20, 1994). The term "Comp Materials" as
used herein means, collectively, Collateral Term Sheets, Structural Term Sheet
and Computational Materials relating to the Certificates or the transaction
contemplated by the Prospectus Supplement.
(b) Promptly after receipt by any indemnified party under this
Section 1 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 1, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 1 except to the extent it has
been materially prejudiced by such failure; and provided, further, however, that
the failure to notify any indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 1.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, except as provided in
the following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section 1 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
necessary or appropriate for such indemnified party to employ separate counsel;
or (iii) the indemnifying party has failed to assume the defense of such action
and employ counsel reasonably satisfactory to the indemnified party, in which
case, if such indemnified party notifies the indemnifying party in writing that
it elects to employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties.
Each indemnified party, as a condition of the indemnity agreements
contained in this Section 1, shall cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into more
than 30 days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement.
(c) If the indemnification provided for in this Section 1 is
unavailable to an indemnified party, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities, in such proportion as is appropriate to reflect the relative fault
of the indemnifying party and the indemnified party, respectively, in connection
with the statements or omissions that result in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the indemnified party and indemnifying party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission and any other equitable considerations.
(d) The indemnity and contribution agreements contained in this
Section 1 and the representations and warranties set forth in Section 2 shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, its directors,
officers, employees or agents or any person controlling ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and
(iii) acceptance of and payment for any of the Offered Certificates.
2. Representations and Warranties. Seller represents and warrants
that:
(i) Seller is validly existing and in good standing under the laws
of its jurisdiction of formation or incorporation, as applicable, and has
full power and authority to own its assets and to transact the business in
which it is currently engaged. Seller is duly qualified to do business and
is in good standing in each jurisdiction in which the character of the
business transacted by it or any properties owned or leased by it requires
such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets or condition
(financial or otherwise) of Seller;
(ii) Seller is not required to obtain the consent of any other
person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement;
(iii) the execution, delivery and performance of this Agreement by
Seller will not violate any provision of any existing law or regulation or
any order decree of any court applicable to Seller or any provision of the
charter or bylaws of Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which Seller is a
party or by which it may be bound;
(iv) except as previously identified by Seller to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in
writing, (a) no proceeding of or before any court, tribunal or
governmental body is currently pending or, (b) to the knowledge of Seller,
threatened against Seller or any of its properties or with respect to this
Agreement or the Offered Certificates, in either case, which would have a
material adverse effect on the business, properties, assets or condition
(financial or otherwise) of Seller;
(v) Seller has full power and authority to make, execute, deliver
and perform this Agreement and all of the transactions contemplated
hereunder, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the legal, valid and binding
obligation of each of Seller enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally, by the availability of equitable remedies,
and by limitations of public policy under applicable securities law as to
rights of indemnity and contribution thereunder; and
(vi) this Agreement has been duly executed and delivered by Seller.
3. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to Seller, will be mailed, delivered or
telegraphed and confirmed [______________________]; or, if sent to ▇▇▇▇▇▇
▇▇▇▇▇▇▇, will be mailed, delivered or telegraphed and confirmed to ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
[____________].
4. Miscellaneous. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
the conflict of laws provisions thereof. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors and
assigns and the controlling persons referred to herein, and no other person
shall have any right or obligation hereunder. Neither this Agreement nor any
term hereof may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. This Agreement may be
executed in counterparts, each of which when so executed and delivered shall be
considered an original, and all such counterparts shall constitute one and the
same instrument. Capitalized terms used but not defined herein shall have the
meanings provided in the P&S.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers hereunto duly authorized, this
__th day of
[_____________].
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:____________________________________
Name:
Title:
ACCREDITED HOME LENDERS, INC.
By:____________________________________
Name:
Title:
EXHIBIT S
CHL AGREEMENTS
ASSIGNMENT AND RECOGNITION AGREEMENT
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated March 30, 2006
("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ABS Capital I Inc. ("Assignee"), Countrywide Home Loans Servicing LP
(the "Servicer") and Countrywide Home Loans, Inc. (the "Company"):
For and in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Assignment and Conveyance
-------------------------
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title, interest and obligations of the
Assignor, as purchaser, in, to and under (a) those certain Mortgage Loans listed
on the schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Mortgage Loan
Sale and Servicing Agreement (the "Sale and Servicing Agreement"), dated as of
October 1, 2005, as amended by the Amendment Reg AB thereto, dated as of January
26, 2006, among the Assignor, as purchaser (the "Purchaser"), the Company, as
seller, and the Servicer, as servicer, solely insofar as the Sale and Servicing
Agreement relates to the Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder any and all right, title and interest in, to and under and
any obligations of the Assignor with respect to (a) Subsection 7.04 of the Sale
and Servicing Agreement or (b) any mortgage loans subject to the Sale and
Servicing Agreement which are not the Mortgage Loans set forth on the Mortgage
Loan Schedule and are not the subject of this Agreement.
Recognition of the Company
--------------------------
2. From and after the date hereof (the "Securitization Closing
Date"), each of the Company and the Servicer shall and does hereby recognize
that the Assignee, in connection with a securitization of the Mortgage Loans
(the "Securitization"), will transfer the Mortgage Loans and assign its rights
under the Sale and Servicing Agreement (solely to the extent set forth herein)
and this Agreement to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2 (the "Trust")
created pursuant to a Pooling and Servicing Agreement, dated as of March 1, 2006
(the "Pooling Agreement"), among the Assignee, First NLC Financial Services,
LLC, HomEq Servicing Corporation, JPMorgan Chase Bank, National Association and
Deutsche Bank National Trust Company, as trustee (including its successors in
interest and any successor trustees under the Pooling Agreement, the "Trustee").
Each of the Company and the Servicer hereby acknowledges and agrees that from
and after the date hereof (i) the Trust will be the owner of the Mortgage Loans,
(ii) the Company and the Servicer shall look solely to the Trust for performance
of any obligations of the Assignor insofar as they relate to the Mortgage Loans,
(iii) the Trust shall have all the rights and remedies available to the
Assignor, insofar as they relate to the Mortgage Loans, under the Sale and
Servicing Agreement, including, without limitation, the enforcement of the
document delivery requirements set forth in Section 6 of the Sale and Servicing
Agreement, and shall be entitled to enforce all of the obligations of the
Company thereunder insofar as they relate to the Mortgage Loans, (iv) all
references to the Purchaser under the Sale and Servicing Agreement insofar as
they relate to the Mortgage Loans, shall be deemed to refer to the Trust and (v)
the Mortgage Loans will be part of a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code (a "REMIC"), and the Servicer
shall service the Mortgage Loans and any real property acquired upon default
thereof (including, without limitation, making or permitting any modification,
waiver or amendment of any term of any Mortgage Loan) in accordance with the
Sale and Servicing Agreement but in no event in a manner that would (A) cause
the REMIC to fail to qualify as a REMIC or (B) result in the imposition of a tax
upon the REMIC, and all custodial accounts and escrow accounts maintained under
the Sale and Servicing Agreement with respect to the Mortgage Loans shall be
segregated accounts for the benefit of the Trust and all such accounts and all
Eligible Investments purchased under the Sale and Servicing Agreement for the
reinvestment of proceeds from the Mortgage Loans shall meet the applicable
requirements of the Rating Agencies in the Securitization. None of the Company,
the Servicer or the Assignor shall amend or agree to amend, modify, waiver, or
otherwise alter any of the terms or provisions of the Sale and Servicing
Agreement which amendment, modification, waiver or other alteration would in any
way affect the Mortgage Loans or the Company's or the Servicer's performance
under the Sale and Servicing Agreement with respect to the Mortgage Loans
without the prior written consent of the Trustee.
Representations and Warranties of the Company and the Servicer
--------------------------------------------------------------
3. Each of the Company and the Servicer warrants and represents to
the Assignor, the Assignee and the Trust as of the date hereof that:
(a) It is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, as
applicable;
(b) It has full power and authority to execute, deliver and perform
its obligations under this Agreement and has full power and authority to perform
its obligations under the Sale and Servicing Agreement. The execution by it of
this Agreement is in the ordinary course of its business and will not conflict
with, or result in a breach of, any of the terms, conditions or provisions of
its charter or bylaws or organization documents, as applicable, or any legal
restriction, or any material agreement or instrument to which it is now a party
or by which it is bound, or result in the violation of any law, rule,
regulation, order, judgment or decree to which its or its property is subject.
The execution, delivery and performance by it of this Agreement have been duly
authorized by all necessary corporate action on its part. This Agreement has
been duly executed and delivered by it, and, upon the due authorization,
execution and delivery by the Assignor and the Assignee, will constitute its
valid and legally binding obligation, enforceable against it in accordance with
its terms except as enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and by general principles of equity regardless
of whether enforceability is considered in a proceeding in equity or at law;
(c) No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required to be obtained
or made by it in connection with the execution, delivery or performance by it of
this Agreement; and
(d) There is no action, suit, proceeding or investigation pending or
to the best of its knowledge threatened against it, before any court,
administrative agency or other tribunal, which would draw into question the
validity of this Agreement or the Sale and Servicing Agreement, or which, either
in any one instance or in the aggregate, would result in any material adverse
change in its ability to perform its obligations under this Agreement or the
Sale and Servicing Agreement, and it is solvent.
4. Pursuant to Section 15 of the Sale and Servicing Agreement, each
of the Company and the Servicer hereby represents and warrants, for the benefit
of the Assignor, the Assignee and the Trust, that the representations and
warranties set forth in Subsection 7.02 of the Sale and Servicing Agreement are
true and correct as of the date hereof as if such representations and warranties
were made on the date hereof unless otherwise specifically stated in such
representations and warranties.
Remedies for Breach of Representations and Warranties
-----------------------------------------------------
5. Each of the Company and the Servicer hereby acknowledges and
agrees that the remedies available to the Assignor, the Assignee and the Trust
in connection with any breach of the representations and warranties made by it
set forth in Section 3 hereof shall be as set forth in Subsection 7.03 of the
Sale and Servicing Agreement as if they were set forth herein (including without
limitation the repurchase and indemnity obligations set forth therein).
Amendments to Sale and Servicing Agreement for the Securitization
-----------------------------------------------------------------
6. Solely with respect to the Mortgage Loans, the following
amendments are hereby made to the Sale and Servicing Agreement:
The following definitions set forth in the Sale and Servicing
Agreement are amended and restated in their entirety as follows:
Distribution Date: With respect to any Mortgage Loan, the 25th day
of each calendar month, or if such 25th day is not a Business Day, the next
succeeding Business Day, commencing in April 2006.
Remittance Date: With respect to any Distribution Date, the second
Business Day immediately preceding such Distribution Date.
Miscellaneous
-------------
7. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
8. 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, with the prior
written consent of the Trustee.
9. This Agreement shall inure to the benefit of (i) the parties
hereto and their respective successors and assigns and (ii) the Trust. Any
entity into which Assignor, Assignee, the Servicer or Company may be merged or
consolidated shall, without the requirement for any further writing, be deemed
Assignor, Assignee, the Servicer or Company, respectively, hereunder.
10. Each of this Agreement and the Sale and Servicing Agreement
shall survive the conveyance of the Mortgage Loans and the assignment of the
Sale and Servicing Agreement (to the extent assigned hereunder) by Assignor to
Assignee and by Assignee to the Trust and nothing contained herein shall
supersede or amend the terms of the Sale and Servicing Agreement.
11. 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.
12. In the event that any provision of this Agreement conflicts with
any provision of the Sale and Servicing Agreement with respect to the Mortgage
Loans, the terms of this Agreement shall control.
13. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the Sale and Servicing Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
COUNTRYWIDE HOME LOANS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Its: Senior Vice President
COUNTRYWIDE HOME LOANS SERVICING LP
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Its:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Managing Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Executive Director
EXHIBIT A TO ASSIGNMENT AND RECOGNITION AGREEMENT
Mortgage Loan Schedule
(Delivered to Trustee on the Closing Date)
AMENDMENT REG AB
TO THE MORTGAGE LOAN SALE AND SERVICING AGREEMENT
This is Amendment Reg AB ("Amendment Reg AB"), dated as of January 26, 2006, by
and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. (the "Purchaser"), Countrywide
Home Loans, Inc. (the "Seller") and Countrywide Home Loans Servicing LP (the
"Servicer", and collectively with the Seller, the "Company") to (i) that certain
Second Amended and Restated Mortgage Sale and Servicing Agreement, dated as of
September 1, 2005, by and among the Seller, the Servicer and the Purchaser, and
(ii) that certain Mortgage Sale and Servicing Agreement, dated as of October 1,
2005, by and among the Seller, the Servicer and the Purchaser (collectively, as
amended, modified or supplemented, the "Existing Agreements").
W I T N E S S E T H
WHEREAS, the Company and the Purchaser have agreed, subject to the terms
and conditions of this Amendment Reg AB that the Existing Agreements be amended
to reflect agreed upon revisions to the terms of the Existing Agreement.
Accordingly, the Company and the Purchaser hereby agree, in consideration
of the mutual premises and mutual obligations set forth herein, that each
Existing Agreement is hereby amended as follows:
1. Capitalized terms used herein but not otherwise defined shall have the
meanings set forth in the Existing Agreements. Each Existing Agreement is hereby
amended by adding the following definitions in their proper alphabetical order:
Commission: The United States Securities and Exchange Commission.
Company Information: As defined in Section 2(g)(i)(A)(1).
Depositor: The depositor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Qualified Correspondent: Any Person from which the Company purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were either (x) originated pursuant to an agreement between the
Company and such Person that contemplated that such Person would underwrite
mortgage loans from time to time, for sale to the Company, in accordance with
underwriting guidelines designated by the Company ("Designated Guidelines") or
guidelines that do not vary materially from such Designated Guidelines or (y)
individually re-underwritten by the Company to the Designated Guidelines at the
time such Mortgage Loans were acquired by the Company; (ii) either (x) the
Designated Guidelines were, at the time such Mortgage Loans were originated,
used by the Company in origination of mortgage loans of the same type as the
Mortgage Loans for the Company's own account or (y) the Designated Guidelines
were, at the time such Mortgage Loans were underwritten, designated by the
Company on a consistent basis for use by lenders in originating mortgage loans
to be purchased by the Company; and (iii) the Company employed, at the time such
Mortgage Loans were acquired by the Company, pre-purchase or post-purchase
quality assurance procedures (which may involve, among other things, review of a
sample of mortgage loans purchased during a particular time period or through
particular channels) designed to ensure that either Persons from which it
purchased mortgage loans properly applied the underwriting criteria designated
by the Company or the Mortgage Loans purchased by the Company substantially
comply with the Designated Guidelines.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Reconstitution Agreement: An agreement or agreements entered into by the
Company and the Purchaser and/or certain third parties in connection with a
Reconstitution with respect to any or all of the Mortgage Loans serviced under
the Agreement.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction subject to Regulation AB
involving either (1) a sale or other transfer of some or all of the Mortgage
Loans directly or indirectly to an issuing entity in connection with an issuance
of publicly offered, rated mortgage-backed securities or (2) an issuance of
publicly offered, rated securities, the payments on which are determined
primarily by reference to one or more portfolios of residential mortgage loans
consisting, in whole or in part, of some or all of the Mortgage Loans.
Servicer: As defined in Section 2(c)(iii).
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Static Pool Information: Static pool information as described in Item
1105.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Company or a Subservicer.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Company or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Company under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB; provided, however, that the term "Subservicer" shall
not include any master servicer, or any special servicer engaged at the request
of a Depositor, Purchaser or investor in a Securitization Transaction, nor any
"back-up servicer" or trustee performing servicing functions on behalf of a
Securitization Transaction.
Third-Party Originator: Each Person, other than a Qualified Correspondent,
that originated Mortgage Loans acquired by the Company.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans, other than a Securitization Transaction.
2. The Purchaser and the Company agree that each Existing Agreement is
hereby amended by adding the following provisions:
(a) Intent of the Parties; Reasonableness.
The Purchaser and the Company acknowledge and agree that the purpose of
Article 2 of this Agreement is to facilitate compliance by the Purchaser and any
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission. Neither the Purchaser nor any Depositor shall exercise its
right to request delivery of information or other performance under these
provisions other than in good faith, or for purposes other than compliance with
the Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder. The Company acknowledges that interpretations of the
requirements of Regulation AB may change over time, whether due to interpretive
guidance provided by the Commission or its staff, and agrees to negotiate in
good faith with the Purchaser or any Depositor with regard to any reasonable
requests for delivery of information under these provisions on the basis of
evolving interpretations of Regulation AB. In connection with any Securitization
Transaction, the Company shall cooperate fully with the Purchaser to deliver to
the Purchaser (including any of its assignees or designees) and any Depositor,
any and all statements, reports, certifications, records and any other
information necessary to permit the Purchaser or such Depositor to comply with
the provisions of Regulation AB, together with such disclosures relating to the
Company, and any parties or items identified in writing by the Purchaser,
including, any Subservicer, any Third-Party Originator and the Mortgage Loans,
or the servicing of the Mortgage Loans necessary in order to effect such
compliance.
The Purchaser agrees that it will cooperate with the Company and provide
sufficient and timely notice of any information requirements pertaining to a
Securitization Transaction. The Purchaser will make all reasonable efforts to
contain requests for information, reports or any other materials to items
required for compliance with Regulation AB, and shall not request information
which is not required for such compliance.
(b) Additional Representations and Warranties of the Company.
(i) The Company shall be deemed to represent to the Purchaser and to
any Depositor, as of the date on which information is first provided to
the Purchaser or any Depositor under Section 2(c) that, except as
disclosed in writing to the Purchaser or such Depositor prior to such
date: (i) the Company is not aware and has not received notice that any
default, early amortization or other performance triggering event has
occurred as to any other securitization due to any act or failure to act
of the Company; (ii) the Company has not been terminated as servicer in a
residential mortgage loan securitization, either due to a servicing
default or to application of a servicing performance test or trigger;
(iii) no material noncompliance with the applicable servicing criteria
with respect to other securitizations of residential mortgage loans
involving the Company as servicer has been disclosed or reported by the
Company; (iv) no material changes to the Company's policies or procedures
with respect to the servicing function it will perform under this
Agreement and any Reconstitution Agreement for mortgage loans of a type
similar to the Mortgage Loans have occurred during the three-year period
immediately preceding the related Securitization Transaction; (v) there
are no aspects of the Company's financial condition that could have a
material adverse effect on the performance by the Company of its servicing
obligations under this Agreement or any Reconstitution Agreement; (vi)
there are no material legal or governmental proceedings pending (or known
to be contemplated) against the Company, any Subservicer or any
Third-Party Originator; and (vii) there are no affiliations, relationships
or transactions relating to the Company, any Subservicer or any
Third-Party Originator with respect to any Securitization Transaction and
any party thereto identified by the related Depositor of a type described
in Item 1119 of Regulation AB.
(ii) If so requested by the Purchaser or any Depositor on any date
following the date on which information is first provided to the Purchaser
or any Depositor under Section 2(c), the Company shall, within ten
Business Days following such request, confirm in writing the accuracy of
the representations and warranties set forth in paragraph (i) of this
Section or, if any such representation and warranty is not accurate as of
the date of such request, provide reasonably adequate disclosure of the
pertinent facts, in writing, to the requesting party.
(c) Information to Be Provided by the Company.
In connection with any Securitization Transaction the Company shall (1)
within ten Business Days following request by the Purchaser or any Depositor,
provide to the Purchaser and such Depositor (or, as applicable, cause each
Third-Party Originator and each Subservicer to provide), in writing reasonably
required for compliance with Regulation AB, the information and materials
specified in paragraphs (i), (ii), (iii) and (vi) of this Section 2(c), and (2)
as promptly as practicable following notice to or discovery by the Company,
provide to the Purchaser and any Depositor (as required by Regulation AB) the
information specified in paragraph (iv) of this Section.
(i) If so requested by the Purchaser or any Depositor, the Company
shall provide such information regarding (x) the Company, as originator of
the Mortgage Loans (including as an acquirer of Mortgage Loans from a
Qualified Correspondent, if applicable), or (y) as applicable, each
Third-Party Originator, and (z) as applicable, each Subservicer, as is
requested for the purpose of compliance with Items 1103(a)(1), 1105
(subject to paragraph (b) below), 1110, 1117 and 1119 of Regulation AB.
Such information shall include, at a minimum:
(A) the originator's form of organization;
(B) to the extent material, a description of the originator's
origination program and how long the originator has been engaged in
originating residential mortgage loans, which description shall
include a discussion of the originator's experience in originating
mortgage loans of a similar type as the Mortgage Loans; if material,
information regarding the size and composition of the originator's
origination portfolio; and information that may be material to an
analysis of the performance of the Mortgage Loans, including the
originators' credit-granting or underwriting criteria for mortgage
loans of similar type(s) as the Mortgage Loans and such other
information as the Purchaser or any Depositor may reasonably request
for the purpose of compliance with Item 1110(b)(2) of Regulation AB;
(C) a brief description of any material legal or governmental
proceedings pending (or known to be contemplated by a governmental
authority) against the Company, each Third-Party Originator, if
applicable, and each Subservicer; and
(D) a description of any affiliation or relationship between
the Company, each Third-Party Originator, if applicable, each
Subservicer and any of the following parties to a Securitization
Transaction, as such parties are identified to the Company by the
Purchaser or any Depositor in writing within ten days in advance of
such Securitization Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(ii) If so requested by the Purchaser or any Depositor, and if
required by Regulation AB, the Company shall provide (or, as applicable,
cause each Third-Party Originator to provide) Static Pool Information with
respect to the mortgage loans (of a similar type as the Mortgage Loans, as
reasonably identified by the Purchaser as provided below) originated by
(a) the Company, if the Company is an originator of Mortgage Loans
(including as an acquirer of Mortgage Loans from a Qualified
Correspondent, if applicable), and/or (b) as applicable, each Third-Party
Originator. Such Static Pool Information shall be prepared by the Company
(or, if applicable, the Third-Party Originator) on the basis of its
reasonable, good faith interpretation of the requirements of Item
1105(a)(1)-(3) of Regulation AB. To the extent that there is reasonably
available to the Company (or Third-Party Originator, as applicable) Static
Pool Information with respect to more than one mortgage loan type, the
Purchaser or any Depositor shall be entitled to specify whether some or
all of such information shall be provided pursuant to this paragraph. The
content of such Static Pool Information may be in the form customarily
provided by the Company, and need not be customized for the Purchaser or
any Depositor. Such Static Pool Information for each vintage origination
year or prior securitized pool, as applicable, shall be presented in
increments no less frequently than quarterly over the life of the mortgage
loans included in the vintage origination year or prior securitized pool.
The most recent periodic increment must be as of a date no later than 135
days prior to the date of the prospectus or other offering document in
which the Static Pool Information is to be included or incorporated by
reference. The Static Pool Information shall be provided in an electronic
format that provides a permanent record of the information provided, such
as a portable document format (pdf) file, or other such electronic format
mutually agreed upon by the Purchaser and the Company.
Promptly following notice or discovery of a material error (as
determined in the judgment of the Company) in Static Pool Information
provided pursuant to the immediately preceding paragraph (including an
omission to include therein information required to be provided pursuant
to such paragraph), the Company shall provide corrected Static Pool
Information to the Purchaser or any Depositor, as applicable, in the same
format in which Static Pool Information was previously provided to such
party by the Company.
If so requested by the Purchaser or any Depositor, the Company shall
provide (or, as applicable, cause each Third-Party Originator to provide),
at the expense of the requesting party (to the extent of any additional
incremental expense associated with delivery pursuant to this Agreement),
agreed-upon procedures letters of certified public accountants pertaining
to Static Pool Information relating to prior securitized pools for
securitizations closed on or after January 1, 2006 or, in the case of
Static Pool Information with respect to the Company's or, if applicable,
Third-Party Originator's originations or purchases, to calendar months
commencing January 1, 2006, as the Purchaser or such Depositor shall
reasonably request. Such statements and letters shall be addressed to and
be for the benefit of such parties as the Purchaser or such Depositor
shall designate, which shall be limited to any Sponsor, any Depositor, any
broker dealer acting as underwriter, placement agent or initial purchaser
with respect to a Securitization Transaction or any other party that is
reasonably and customarily entitled to receive such statements and letters
in a Securitization Transaction. Any such statement or letter may take the
form of a standard, generally applicable document accompanied by a
reliance letter authorizing reliance by the addressees designated by the
Purchaser or such Depositor.
(iii) If reasonably requested by the Purchaser or any Depositor, the
Company shall provide such information regarding the Company, as servicer
of the Mortgage Loans, and each Subservicer (each of the Company and each
Subservicer, for purposes of this paragraph, a "Servicer"), as is
reasonably requested for the purpose of compliance with Items 1108 of
Regulation AB. Such information shall include, at a minimum:
(A) the Servicer's form of organization;
(B) a description of how long the Servicer has been servicing
residential mortgage loans; a general discussion of the Servicer's
experience in servicing assets of any type as well as a more
detailed discussion of the Servicer's experience in, and procedures
for, the servicing function it will perform under this Agreement and
any Reconstitution Agreements; information regarding the size,
composition and growth of the Servicer's portfolio of residential
mortgage loans of a type similar to the Mortgage Loans and
information on factors related to the Servicer that may be material,
in the reasonable determination of the Purchaser or any Depositor,
to any analysis of the servicing of the Mortgage Loans or the
related asset-backed securities, as applicable, including, without
limitation:
(1) whether any prior securitizations of mortgage loans
of a type similar to the Mortgage Loans involving the Servicer
have defaulted or experienced an early amortization or other
performance triggering event because of servicing during the
three-year period immediately preceding the related
Securitization Transaction;
(2) the extent of outsourcing the Servicer utilizes;
(3) whether there has been previous disclosure of
material noncompliance with the applicable servicing criteria
with respect to other securitizations of residential mortgage
loans involving the Servicer as a servicer during the
three-year period immediately preceding the related
Securitization Transaction;
(4) whether the Servicer has been terminated as servicer
in a residential mortgage loan securitization, either due to a
servicing default or to application of a servicing performance
test or trigger; and
(5) such other information as the Purchaser or any
Depositor may reasonably request for the purpose of compliance
with Item 1108(b)(2) of Regulation AB;
(C) a description of any material changes during the
three-year period immediately preceding the related Securitization
Transaction to the Servicer's policies or procedures with respect to
the servicing function it will perform under this Agreement and any
Reconstitution Agreements for mortgage loans of a type similar to
the Mortgage Loans;
(D) information regarding the Servicer's financial condition,
to the extent that there is a material risk that an adverse
financial event or circumstance involving the Servicer could have a
material adverse effect on the performance by the Company of its
servicing obligations under this Agreement or any Reconstitution
Agreement;
(E) information regarding advances made by the Servicer on the
Mortgage Loans and the Servicer's overall servicing portfolio of
residential mortgage loans for the three-year period immediately
preceding the related Securitization Transaction, which may be
limited to a statement by an authorized officer of the Servicer to
the effect that the Servicer has made all advances required to be
made on residential mortgage loans serviced by it during such
period, or, if such statement would not be accurate, information
regarding the percentage and type of advances not made as required,
and the reasons for such failure to advance;
(F) a description of the Servicer's processes and procedures
designed to address any special or unique factors involved in
servicing loans of a similar type as the Mortgage Loans;
(G) a description of the Servicer's processes for handling
delinquencies, losses, bankruptcies and recoveries, such as through
liquidation of mortgaged properties, sale of defaulted mortgage
loans or workouts; and
(H) information as to how the Servicer defines or determines
delinquencies and charge-offs, including the effect of any grace
period, re-aging, restructuring, partial payments considered current
or other practices with respect to delinquency and loss experience.
(iv) For the purpose of satisfying its reporting obligation under
the Exchange Act with respect to any class of asset-backed securities, the
Company shall (or shall cause each Subservicer and, if applicable, any
Third-Party Originator to) (a) provide prompt notice to the Purchaser, any
Master Servicer and any Depositor in writing of (1) any merger,
consolidation or sale of substantially all of the assets of the Company,
(2) the Company's entry into an agreement with a Subservicer to perform or
assist in the performance of any of the Company's obligations under the
Agreement or any Reconstitution Agreement, (3) any Event of Default under
the terms of the Agreement or any Reconstitution Agreement, and (4) any
material litigation or governmental proceedings involving the Company, any
Subservicer or any Third Party Originator.
(v) As a condition to the succession to the Company or any
Subservicer as servicer or subservicer under this Agreement or any
applicable Reconstitution Agreement related thereto by any Person (i) into
which the Company or such Subservicer may be merged or consolidated, or
(ii) which may be appointed as a successor to the Company or any
Subservicer, the Company shall provide to the Purchaser and any Depositor,
at least 15 calendar days prior to the effective date of such succession
or appointment, (x) written notice to the Purchaser and any Depositor of
such succession or appointment and (y) in writing, all information
reasonably requested by the Purchaser or any Depositor in order to comply
with its reporting obligation under Item 6.02 of Form 8-K with respect to
any class of asset-backed securities.
(vi) If reasonably requested by the Purchaser or the Master
Servicer, the Company shall provide to the Purchaser or the Master
Servicer, evidence of the authorization of the person signing any
certification or statement.
(vii) The Company shall provide to the Purchaser and any Depositor a
description of any affiliation or relationship required to be disclosed
under Item 1119 of Regulation AB between the Company and any of the
parties listed in Items 1119(a)(1)-(6) of Regulation AB that develops
following the closing date of a Securitization Transaction (other than an
affiliation or relationship that the Purchaser, the Depositor or any
issuing entity has with any of such parties listed in Items 1119(a)(1)-(6)
of Regulation AB) no later than 15 calendar days prior to the date the
Depositor is required to file its Form 10-K disclosing such affiliation or
relationship. For purposes of the foregoing, the Company (1) shall be
entitled to assume that the parties to the Securitization Transaction with
whom affiliations or relations must be disclosed are the same as on the
closing date if it provides a written request (which may be by e-mail) to
the Depositor or Master Servicer, as applicable, requesting such
confirmation and either obtains such confirmation or receives no response
within three (3) Business Days, (2) shall not be obligated to disclose any
affiliations or relationships that may develop after the closing date for
the Securitization Transaction with any parties not identified to the
Company pursuant to clause (D) of paragraph (i) of this Section 2(c), and
(3) shall be entitled to rely upon any written identification of parties
provided by the Depositor, the Purchaser or any master servicer.
(viii) Not later than ten days prior to the deadline for the filing
of any distribution report on Form 10-D in respect of any Securitization
Transaction that includes any of the Mortgage Loans serviced by the
Company or any Subservicer, the Company or such Subservicer, as
applicable, shall, to the extent the Company or such Subservicer has
knowledge, provide to the party responsible for filing such report
(including, if applicable, the Master Servicer) notice of the occurrence
of any of the following events along with all information, data, and
materials related thereto as may be required to be included in the related
distribution report on Form 10-D (as specified in the provisions of
Regulation AB referenced below):
(a) any material modifications, extensions or waivers of
Mortgage Loan terms, fees, penalties or payments during the distribution
period or that have cumulatively become material over time (Item
1121(a)(11) of Regulation AB;
(b) material breaches of Mortgage Loan representations or
warranties or transaction covenants under the applicable Existing
Agreement, as amended herein (Item 1121(a)(12) of Regulation AB); and
(c) information regarding any Mortgage Loan changes (such as,
additions, substitutions or repurchases), and any material changes in
origination, underwriting or other criteria for acquisition or selection
of pool assets (Item 1121(a)(14) of Regulation AB).
(d) Servicer Compliance Statement.
On or before March 5 of each calendar year, commencing in 2007, the
Company shall deliver to the Purchaser and any Depositor a statement of
compliance addressed to the Purchaser and such Depositor and signed by an
authorized officer of the Company, to the effect that (i) a review of the
Company's servicing activities during the immediately preceding calendar year
(or applicable portion thereof) and of its performance under the servicing
provisions of this Agreement and any applicable Reconstitution Agreement during
such period has been made under such officer's supervision, and (ii) to the best
of such officers' knowledge, based on such review, the Company has fulfilled all
of its servicing obligations under this Agreement and any applicable
Reconstitution Agreement in all material respects throughout such calendar year
(or applicable portion thereof) or, if there has been a failure to fulfill any
such obligation in any material respect, specifically identifying each such
failure known to such officer and the nature and the status thereof.
(e) Report on Assessment of Compliance and Attestation.
(i) On or before March 5 of each calendar year, commencing in 2007,
the Company shall:
(A) deliver to the Purchaser and any Depositor a report
regarding the Company's assessment of compliance with the Servicing
Criteria during the immediately preceding calendar year, as required
under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB. Such report shall be addressed to the Purchaser and
such Depositor and signed by an authorized officer of the Company,
and shall address each of the Servicing Criteria specified on
Exhibit A hereto (wherein "Investor" shall mean the master
servicer);
(B) deliver to the Purchaser and any Depositor a report of a
registered public accounting firm that attests to, and reports on,
the assessment of compliance made by the Company and delivered
pursuant to the preceding paragraph. Such attestation shall be in
accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under
the Securities Act and the Exchange Act;
(C) cause each Subservicer and each Subcontractor determined
by the Company pursuant to Section 2(f)(ii) to be "participating in
the servicing function" within the meaning of Item 1122 of
Regulation AB (each, a "Participating Entity"), to deliver to the
Purchaser and any Depositor an assessment of compliance and
accountants' attestation as and when provided in paragraphs (i) and
(ii) of this Section 2(e); and
(D) deliver to the Purchaser, Depositor or any other Person
that will be responsible for signing the certification (a "Sarbanes
Certification") required by Rules 13a-14(d) and 15d-14(d) under the
Exchange Act (pursuant to Section 302 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002) on behalf of an asset-backed issuer with respect to a
Securitization Transaction a certification, signed by an appropriate
officer of the Company, in the form attached hereto as Exhibit B;
provided that such certification delivered by the Company may not be
filed as an exhibit to, or included in, any filing with the
Commission.
The Company acknowledges that the party identified in clause (i)(D) above
may rely on the certification provided by the Company pursuant to such clause in
signing a Sarbanes Certification and filing such with the Commission.
(ii) Each assessment of compliance provided by a Subservicer
pursuant to Section 2(e)(i)(A) shall address each of the Servicing
Criteria specified on Exhibit A hereto or, in the case of a Subservicer
subsequently appointed as such, on or prior to the date of such
appointment. An assessment of compliance provided by a Participating
Entity pursuant to Section 2(e)(i)(C) need not address any elements of the
Servicing Criteria other than those specified by the Company pursuant to
Section 2(f).
(f) Use of Subservicers and Subcontractors.
The Company shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Company as servicer under
this Agreement or any related Reconstitution Agreement unless the Company
complies with the provisions of paragraph (i) of this Subsection (f). The
Company shall not hire or otherwise utilize the services of any Subcontractor,
and shall not permit any Subservicer to hire or otherwise utilize the services
of any Subcontractor, to fulfill any of the obligations of the Company as
servicer under this Agreement or any related Reconstitution Agreement unless the
Company complies with the provisions of paragraph (ii) of this Subsection (f).
(i) It shall not be necessary for the Company to seek the consent of
the Purchaser or any Depositor to the utilization of any Subservicer. If
required by Regulation AB, the Company shall cause any Subservicer used by
the Company (or by any Subservicer) for the benefit of the Purchaser and
any Depositor to comply with the provisions of this Section and with
Sections 2(b), 2(c)(iii), 2(c)(v), 2(d), and 2(e) of this Agreement , and
to provide the information required with respect to such Subservicer under
Section 2(c)(iv) of this Agreement. The Company shall be responsible for
obtaining from each Subservicer and delivering to the Purchaser and any
Depositor any servicer compliance statement required to be delivered by
such Subservicer under Section 2(d), any assessment of compliance and
attestation required to be delivered by such Subservicer under Section
2(e) and any certification required to be delivered to the Person that
will be responsible for signing the Sarbanes Certification under Section
2(e) as and when required to be delivered.
(ii) It shall not be necessary for the Company to seek the consent
of the Purchaser or any Depositor to the utilization of any Subcontractor.
If required by Regulation AB, the Company shall after engagement of such
Subcontractor, promptly provide a written description of the role and
function of each Subcontractor utilized by the Company or any Subservicer,
specifying (A) the identity of each such Subcontractor, (B) which (if any)
of such Subcontractors are Participating Entities, and (C) which elements
of the Servicing Criteria will be addressed in assessments of compliance
provided by each Participating Entity identified pursuant to clause (B) of
this paragraph.
The Company shall cause any such Participating Entity used by the Company
(or by any Subservicer) for the benefit of the Purchaser and any Depositor to
comply with the provisions of Section 2(e) of this Agreement. The Company shall
be responsible for obtaining from each Participating Entity and delivering to
the Purchaser and any Depositor any assessment of compliance and attestation
required to be delivered by such Participating Entity under Section 2(e), in
each case as and when required to be delivered.
(g) Indemnification; Remedies.
(i) The Company shall indemnify the Purchaser and the Depositor and
each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person responsible for
the execution or filing of any report required to be filed with the
Commission with respect to such Securitization Transaction, or for
execution of a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d)
under the Exchange Act with respect to such Securitization Transaction;
each Person who controls any of such parties (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act); and
the respective present and former directors, officers and employees of
each of the foregoing, and shall hold each of them harmless from and
against any losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and
expenses that any of them may sustain arising out of or based upon:
(A) (1) any untrue statement of a material fact contained or
alleged to be contained in any information, report, certification or
other material provided in written or electronic form under this
Amendment Reg AB by or on behalf of the Company, or provided under
this Amendment Reg AB by or on behalf of any Subservicer,
Participating Entity or, if applicable, Third-Party Originator
(collectively, the "Company Information"), or (2) the omission or
alleged omission to state in the Company Information a material fact
required to be stated in the Company Information or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
by way of clarification, that clause (2) of this paragraph shall be
construed solely by reference to the Company Information and not to
any other information communicated in connection with a sale or
purchase of securities, without regard to whether the Company
Information or any portion thereof is presented together with or
separately from such other information;
(B) any failure by the Company, any Subservicer, any
Participating Entity or any Third-Party Originator to deliver any
information, report, certification, accountants' letter or other
material when and as required under this Amendment Reg AB, including
any failure by the Company to identify pursuant to Section 2(f)(ii)
any Participating Entity;
(C) any breach by the Company of a representation or warranty
set forth in Section 2(b)(i) or in a writing furnished pursuant to
Section 2(b)(ii) and made as of a date prior to the closing date of
the related Securitization Transaction, to the extent that such
breach is not cured by such closing date, or any breach by the
Company of a representation or warranty in a writing furnished
pursuant to Section 2(b)(ii) to the extent made as of a date
subsequent to such closing date.
If the indemnification provided for in this Section 2(g)(i) is unavailable
or insufficient to hold harmless the indemnified parties set forth in this
Section 2(g)(i) above, then the Company agrees that it shall contribute to
the amount paid or payable by such indemnified party as a result of any
claims, losses, damages or liabilities incurred by such indemnified party
in such proportion as is appropriate to reflect the relative fault of such
indemnified party on the one hand and the Company on the other.
In the case of any failure of performance described in clause (i)(B) of
this Section, the Company shall promptly reimburse the Purchaser, any
Depositor, as applicable, and each Person responsible for the execution or
filing of any report required to be filed with the Commission with respect
to such Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with
respect to such Securitization Transaction, for all costs reasonably
incurred by each such party in order to obtain the information, report,
certification, accountants' letter or other material not delivered as
required by the Company, any Subservicer, any Participating Entity or any
Third-Party Originator.
(ii) (A) Any failure by the Company to deliver or, if required by
Regulation AB, any Subservicer, any Participating Entity or any
Third-Party Originator to deliver any information, report,
certification, accountants' letter or other material when and as
required under this Amendment Reg AB, which continues unremedied for
three Business Days after receipt by the Company and by the
applicable Subservicer, Subcontractor, or Third-Party Originator, so
long as their addresses for notices has been provided, in writing,
previously to the Purchaser or the Depositor, of written notice of
such failure from the Purchaser or Depositor shall, except as
provided in clause (B) of this paragraph, constitute an Event of
Default with respect to the Company under this Agreement and any
applicable Reconstitution Agreement, and shall entitle the Purchaser
or Depositor, as applicable, in its sole discretion to terminate the
rights and obligations of the Company as servicer under this
Agreement and/or any applicable Reconstitution Agreement related
thereto without payment (notwithstanding anything in this Agreement
or any applicable Reconstitution Agreement related thereto to the
contrary) of any compensation to the Company; provided, however it
is understood that the Company shall remain entitled to receive
reimbursement for all unreimbursed Monthly Advances and Servicing
Advances made by the Company under this Agreement and/or any
applicable Reconstitution Agreement. Notwithstanding anything to the
contrary set forth herein, to the extent that any provision of this
Agreement and/or any applicable Reconstitution Agreement expressly
provides for the survival of certain rights or obligations following
termination of the Company as servicer, such provision shall be
given effect.
(B) Any failure by the Company, or, if required under
Regulation AB, any Subservicer or any Participating Entity to
deliver any information, report, certification or accountants'
letter when and as required under Section 2(d) or 2(e), including
any failure by the Company to identify a Participating Entity, which
continues unremedied for ten calendar days after the date on which
such information, report, certification or accountants' letter was
required to be delivered shall constitute an Event of Default with
respect to the Company under this Agreement and any applicable
Reconstitution Agreement, and shall entitle the Purchaser or
Depositor, as applicable, in its sole discretion to terminate the
rights and obligations of the Company as servicer under this
Agreement and/or any applicable Reconstitution Agreement without
payment (notwithstanding anything in this Agreement to the contrary)
of any compensation to the Company; provided, however it is
understood that the Company shall remain entitled to receive
reimbursement for all unreimbursed Monthly Advances and Servicing
Advances made by the Company under this Agreement and/or any
applicable Reconstitution Agreement. Notwithstanding anything to the
contrary set forth herein, to the extent that any provision of this
Agreement and/or any applicable Reconstitution Agreement expressly
provides for the survival of certain rights or obligations following
termination of the Company as servicer, such provision shall be
given effect.
(C) The Company shall promptly reimburse the Purchaser (or any
affected designee of the Purchaser, such as a master servicer) and
any Depositor, as applicable, for all reasonable expenses incurred
by the Purchaser (or such designee) or such Depositor as such are
incurred, in connection with the termination of the Company as
servicer and the transfer of servicing of the Mortgage Loans to a
successor servicer. The provisions of this paragraph shall not limit
whatever rights the Company, the Purchaser or any Depositor may have
under other provisions of this Agreement and/or any applicable
Reconstitution Agreement or otherwise, whether in equity or at law,
such as an action for damages, specific performance or injunctive
relief.
(iii) The indemnification and contribution obligations set forth in
this Section 2(g) shall survive the termination of this Agreement or
the termination of any party to this Agreement.
3. Notwithstanding any other provision of this Amendment Reg AB, the
Company shall seek the consent of the Purchaser for the utilization of all
Subservicers and Participating Entities, when required by and in accordance with
the terms of the applicable Existing Agreement.
4. Each Existing Agreement is hereby amended by adding the Exhibit
attached hereto as Exhibit A to the end thereto. References in this Amendment
Reg AB to "this Agreement" or words of similar import (including indirect
references to the Agreement) shall be deemed to be references to the applicable
Existing Agreement as amended by this Amendment Reg AB. Except as expressly
amended and modified by this Amendment Reg AB, each Existing Agreement shall
continue to be, and shall remain, in full force and effect in accordance with
its terms. In the event of a conflict between this Amendment Reg AB and any
other document or agreement, including without limitation the applicable
Existing Agreement, this Amendment Reg AB shall control.
5. This Amendment Reg AB may be executed in one or more counterparts and
by different parties hereto on separate counterparts, each of which, when so
executed, shall constitute one and the same agreement. This Amendment Reg AB
will become effective as of the date first mentioned above. This Amendment Reg
AB shall bind and inure to the benefit of and be enforceable by the Company and
the Purchaser and the respective permitted successors and assigns of the Company
and the successors and assigns of the Purchaser.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have caused their names to be signed
hereto by their respective officers thereunto duly authorized as of the day and
year first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:
------------------------------------
Name:
----------------------------------
Title:
COUNTRYWIDE HOME LOANS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
COUNTRYWIDE HOME LOANS SERVICING LP
By:
------------------------------------
Name:
----------------------------------
Title:
Signature page to Amendment Reg AB
EXHIBIT A
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Company] [Name of
Subservicer] shall address, at a minimum, the applicable criteria identified
below as "Applicable Servicing Criteria":
--------------------------------------------------------------------------------
Applicable
Servicing Criteria Servicing Criteria
--------------------------------------------------------------------------------
Reference Criteria
--------------------------------------------------------------------------------
General Servicing Considerations
--------------------------------------------------------------------------------
Policies and procedures are instituted
to monitor any performance or other
triggers and events of default in X
accordance with the transaction
1122(d)(1)(i) agreements.
--------------------------------------------------------------------------------
If any material servicing activities are
outsourced to third parties, policies
and procedures are instituted to monitor X
the third party's performance and
compliance with such servicing
1122(d)(1)(ii) activities.
--------------------------------------------------------------------------------
1122(d)(1)(iii) Any requirements in the transaction
agreements to maintain a back-up
servicer for the mortgage loans are
maintained.
--------------------------------------------------------------------------------
A fidelity bond and errors and omissions
policy is in effect on the party
participating in the servicing function
throughout the reporting period in the X
amount of coverage required by and
otherwise in accordance with the terms
1122(d)(1)(iv) of the transaction agreements.
--------------------------------------------------------------------------------
Cash Collection and Administration
--------------------------------------------------------------------------------
Payments on mortgage loans are deposited
into the appropriate custodial bank
accounts and related bank clearing
accounts no more than two business days X
following receipt, or such other number
of days specified in the transaction
1122(d)(2)(i) agreements.
--------------------------------------------------------------------------------
Disbursements made via wire transfer on
behalf of an obligor or to an investor X
1122(d)(2)(ii) are made only by authorized personnel.
--------------------------------------------------------------------------------
Advances of funds or guarantees X
regarding collections, cash flows or
distributions, and any interest or other
fees charged for such advances, are
made, reviewed and approved as specified
1122(d)(2)(iii) in the transaction agreements.
--------------------------------------------------------------------------------
The related accounts for the
transaction, such as cash reserve
accounts or accounts established as a
form of overcollateralization, are X
separately maintained (e.g., with
respect to commingling of cash) as set
forth in the transaction
1122(d)(2)(iv) 1122(d)(2)(iv)agreements.
--------------------------------------------------------------------------------
Each custodial account is maintained at
a federally insured depository
institution as set forth in the
transaction agreements. For purposes of
this criterion, "federally insured
depository institution" with respect to X
a foreign financial institution means a
foreign financial institution that meets
the requirements of Rule 13k-1(b)(1) of
1122(d)(2)(v) the Securities Exchange Act.
--------------------------------------------------------------------------------
Unissued checks are safeguarded so as to
1122(d)(2)(vi) prevent unauthorized access. X
--------------------------------------------------------------------------------
Reconciliations are prepared on a
monthly basis for all asset-backed
securities related bank accounts,
including custodial accounts and related
bank clearing accounts. These
reconciliations are (A) mathematically
accurate; (B) prepared within 30
calendar days after the bank statement
cutoff date, or such other number of
days specified in the transaction X
agreements; (C) reviewed and approved by
someone other than the person who
prepared the reconciliation; and (D)
contain explanations for reconciling
items. These reconciling items are
resolved within 90 calendar days of
their original identification, or such
other number of days specified in the
1122(d)(2)(vii) transaction agreements.
--------------------------------------------------------------------------------
Investor Remittances and Reporting
--------------------------------------------------------------------------------
Reports to investors, including those to
be filed with the Commission, are
maintained in accordance with the
transaction agreements and applicable
Commission requirements. Specifically,
such reports (A) are prepared in
accordance with timeframes and other
terms set forth in the transaction
agreements; (B) provide information X
calculated in accordance with the terms
specified in the transaction agreements;
(C) are filed with the Commission as
required by its rules and regulations;
and (D) agree with investors' or the
trustee's records as to the total unpaid
principal balance and number of mortgage
1122(d)(3)(i) loans serviced by the Servicer.
--------------------------------------------------------------------------------
Amounts due to investors are allocated
and remitted in accordance with
timeframes, distribution priority and X
other terms set forth in the transaction
1122(d)(3)(ii) agreements.
--------------------------------------------------------------------------------
Disbursements made to an investor are
posted within two business days to the
Servicer's investor records, or such X
other number of days specified in the
1122(d)(3)(iii) transaction agreements.
--------------------------------------------------------------------------------
Amounts remitted to investors per the
investor reports agree with cancelled
checks, or other form of payment, or X
1122(d)(3)(iv) custodial bank statements.
--------------------------------------------------------------------------------
Pool Asset Administration
--------------------------------------------------------------------------------
Collateral or security on mortgage loans
is maintained as required by the
transaction agreements or related X
1122(d)(4)(i) mortgage loan documents.
--------------------------------------------------------------------------------
Mortgage loan and related documents are
safeguarded as required by the X
1122(d)(4)(ii) transaction agreements
--------------------------------------------------------------------------------
Any additions, removals or substitutions
to the asset pool are made, reviewed
and approved in accordance with any X
conditions or requirements in the
1122(d)(4)(iii) transaction agreements.
--------------------------------------------------------------------------------
Payments on mortgage loans, including
any payoffs, made in accordance with
the related mortgage loan documents are
posted to the Servicer's obligor records
maintained no more than two business
days after receipt, or such other number X
of days specified in the transaction
agreements, and allocated to principal,
interest or other items (e.g., escrow)
in accordance with the related mortgage
1122(d)(4)(iv) loan documents.
--------------------------------------------------------------------------------
The Servicer's records regarding the
mortgage loans agree with the
Servicer's records with respect to an X
1122(d)(4)(v) obligor's unpaid principal balance.
--------------------------------------------------------------------------------
Changes with respect to the terms or
status of an obligor's mortgage loans
(e.g., loan modifications or re-agings)
are made, reviewed and approved by X
authorized personnel in accordance with
the transaction agreements and related
1122(d)(4)(vi) pool asset documents.
--------------------------------------------------------------------------------
Loss mitigation or recovery actions
(e.g., forbearance plans,
modifications and deeds in lieu of
foreclosure, foreclosures and
repossessions, as applicable) are X
initiated, conducted and concluded in
accordance with the timeframes or other
requirements established by the
1122(d)(4)(vii) transaction agreements.
--------------------------------------------------------------------------------
Records documenting collection efforts
are maintained during the period a
mortgage loan is delinquent in
accordance with the transaction
agreements. Such records are maintained
on at least a monthly basis, or such X
other period specified in the
transaction agreements, and describe the
entity's activities in monitoring
delinquent mortgage loans including, for
example, phone calls, letters and
payment rescheduling plans in cases
where delinquency is deemed temporary
1122(d)(4)(viii) (e.g., illness or unemployment).
--------------------------------------------------------------------------------
Adjustments to interest rates or rates
of return for mortgage loans with
variable rates are computed based on the X
1122(d)(4)(ix) related mortgage loan documents.
--------------------------------------------------------------------------------
Regarding any funds held in trust for an
obligor (such as escrow accounts): (A)
such funds are analyzed, in accordance
with the obligor's mortgage loan
documents, on at least an annual basis,
or such other period specified in the
transaction agreements; (B) interest on X
such funds is paid, or credited, to
obligors in accordance with applicable
mortgage loan documents and state laws;
and (C) such funds are returned to the
obligor within 30 calendar days of full
repayment of the related mortgage loans,
or such other number of days specified
1122(d)(4)(x) in the transaction agreements.
--------------------------------------------------------------------------------
Payments made on behalf of an obligor
(such as tax or insurance payments)
are made on or before the related
penalty or expiration dates, as
indicated on the appropriate bills or
notices for such payments, provided that X
such support has been received by the
servicer at least 30 calendar days prior
to these dates, or such other number of
days specified in the transaction
1122(d)(4)(xi) agreements.
--------------------------------------------------------------------------------
Any late payment penalties in connection
with any payment to be made on behalf
of an obligor are paid from the
servicer's funds and not charged to the X
obligor, unless the late payment was due
1122(d)(4)(xii) to the obligor's error or omission.
--------------------------------------------------------------------------------
Disbursements made on behalf of an
obligor are posted within two business
days to the obligor's records maintained X
by the servicer, or such other number
of days specified in the transaction
1122(d)(4)(xii) agreements.
--------------------------------------------------------------------------------
Delinquencies, charge-offs and
uncollectible accounts are recognized
and recorded in accordance with the X
1122(d)(4)(xiv) transaction agreements.
--------------------------------------------------------------------------------
Any external enhancement or other
support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation
AB, is maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
--------------------------------------------------------------------------------
EXHIBIT B
FORM OF ANNUAL CERTIFICATION
Re: The [ ] agreement dated as of [ ], 200[ ] (the "Agreement"), among
[IDENTIFY PARTIES]
I, ________________________________, the _______________________ of
Countrywide Home Loans, Inc., certify to [the Purchaser], [the Depositor],
[Master Servicer], [Securities Administrator] or [Trustee], and its officers,
with the knowledge and intent that they will rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Company's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18
under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Item 1122 of Regulation AB (the "Servicing Assessment"), the registered
public accounting firm's attestation report provided in accordance with
Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
Regulation AB (the "Attestation Report"), and all servicing reports,
officer's certificates and other information relating to the servicing of
the Mortgage Loans by the Company during 200[ ] that were delivered by the
Company to the [Depositor] [Master Servicer] [Securities Administrator] or
[Trustee] pursuant to the Agreement (collectively, the "Company Servicing
Information");
(2) Based on my knowledge, the Company Servicing Information, taken
as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in
the light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Company
Servicing Information;
(3) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor] [Master Servicer] [Securities Administrator]
or [Trustee];
(4) I am responsible for reviewing the activities performed by the
Company as servicer under the Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment
or the Attestation Report, the Company has fulfilled its obligations under
the Agreement; and
[Intentionally Left Blank]
(5) The Compliance Statement required to be delivered by the Company
pursuant to this Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by each Subservicer and
Participating Entity pursuant to the Agreement, have been provided to the
[Depositor] [Master Servicer]. Any material instances of noncompliance
described in such reports have been disclosed to the [Depositor] [Master
Servicer]. Any material instance of noncompliance with the Servicing
Criteria has been disclosed in such reports.
Date:
By:
------------------------------------
Name:
----------------------------------
Title:
SUB-PRIME
--------------------------------------------------------------------------------
MORTGAGE LOAN SALE AND SERVICING AGREEMENT
among
COUNTRYWIDE HOME LOANS, INC.,
as Seller
COUNTRYWIDE HOME LOANS SERVICING LP,
as Servicer
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.,
as Purchaser
Dated as of October 1, 2005
Conventional,
Fixed and Adjustable Rate,
Subprime Residential Mortgage Loans
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.....................................................
SECTION 2. PURCHASE AND CONVEYANCE.........................................
SECTION 3. MORTGAGE LOAN SCHEDULE..........................................
SECTION 4. PURCHASE PRICE..................................................
SECTION 5. EXAMINATION OF MORTGAGE FILES...................................
SECTION 6. DELIVERY OF MORTGAGE LOAN DOCUMENTS.............................
Subsection 6.01 Possession of Mortgage Files ..............................
Subsection 6.02 Books and Records .........................................
Subsection 6.03 Delivery of Mortgage Loan Documents .......................
Subsection 6.04 MERS Designated Loans .....................................
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS; REMEDIES FOR
BREACH..........................................................
Subsection 7.01 Representations and Warranties Regarding Individual
Mortgage Loans ............................................
Subsection 7.02 Seller and Servicer Representations .......................
Subsection 7.03 Remedies for Breach of Representations
and Warranties ............................................
Subsection 7.04 Repurchase of Mortgage Loans with First
Payment Defaults ..........................................
Subsection 7.05 Premium Recapture .........................................
Subsection 7.06 Representations and Warranties Regarding
the Purchaser .............................................
SECTION 8. CLOSING.........................................................
SECTION 9. CLOSING DOCUMENTS...............................................
SECTION 10. COSTS...........................................................
SECTION 11. ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS..............
Subsection 11.01 Servicer to Act as Servicer ..............................
Subsection 11.02 Liquidation of Mortgage Loans ............................
Subsection 11.03 Collection of Mortgage Loan Payments .....................
Subsection 11.04 Establishment of Custodial Account; Deposits
in Custodial Account. ....................................
Subsection 11.05 Withdrawals From the Custodial Account ...................
Subsection 11.06 Establishment of Escrow Account; Deposits
in Escrow Account ........................................
Subsection 11.07 Withdrawals From Escrow Account ..........................
Subsection 11.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder ...................................
Subsection 11.09 Transfer of Accounts .....................................
Subsection 11.10 Maintenance of Hazard Insurance ..........................
Subsection 11.11 Fidelity Bond; Errors and Omissions Insurance ............
Subsection 11.12 Title, Management and Disposition of REO Property ........
Subsection 11.13 Servicing Compensation ...................................
Subsection 11.14 Distributions ............................................
Subsection 11.15 Statements to the Purchaser ..............................
Subsection 11.16 Advances by the Servicer .................................
Subsection 11.17 Assumption Agreements ....................................
Subsection 11.18 Satisfaction of Mortgages and Release
of Mortgage Files ........................................
Subsection 11.19 Annual Statement as to Compliance ........................
Subsection 11.20 Annual Independent Public Accountants'
Servicing Report or Attestation ..........................
Subsection 11.21 Servicer Shall Provide Access and Information
as Reasonably Required ...................................
Subsection 11.22 Transfer of Servicing ....................................
SECTION 12. THE SERVICER....................................................
Subsection 12.01 Indemnification; Third Party Claims ......................
Subsection 12.02 Merger or Consolidation of the Seller or
Servicer .................................................
Subsection 12.03 Limitation on Liability of the Servicer and
Others ...................................................
Subsection 12.04 Seller and Servicer Not to Resign ........................
SECTION 13. DEFAULT.........................................................
Subsection 13.01 Events of Default ........................................
Subsection 13.02 Waiver of Defaults .......................................
SECTION 14. TERMINATION.....................................................56
Subsection 14.01 Termination ..............................................
Subsection 14.02 Termination of the Servicer Without Cause ................
Subsection 14.03 Successors to the Servicer ...............................
SECTION 15. COOPERATION OF SELLER AND THE SERVICER WITH A RECONSTITUTION....
SECTION 16. NOTICES.........................................................
SECTION 17. SEVERABILITY CLAUSE.............................................
SECTION 18. NO PARTNERSHIP..................................................
SECTION 19. COUNTERPARTS....................................................
SECTION 20. GOVERNING LAW JURISDICTION; CONSENT TO SERVICE OF PROCESS.......
SECTION 21. MANDATORY DELIVERY..............................................
SECTION 22. INTENTION OF THE PARTIES........................................
SECTION 23. SUCCESSORS AND ASSIGNS..........................................
SECTION 24. WAIVERS.........................................................
SECTION 25. EXHIBITS........................................................
SECTION 26. GENERAL INTERPRETIVE PRINCIPLES.................................
SECTION 27. REPRODUCTION OF DOCUMENTS.......................................
SECTION 28. AMENDMENT.......................................................
SECTION 29. CONFIDENTIALITY.................................................
SECTION 30. ENTIRE AGREEMENT................................................
SECTION 31. FURTHER AGREEMENTS..............................................
SECTION 32. NO SOLICITATION.................................................
SECTION 33. WAIVER OF JURY TRIAL............................................
EXHIBITS
EXHIBIT 1 MORTGAGE LOAN DOCUMENTS
EXHIBIT 2 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 3 FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
EXHIBIT 4 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 5 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 6 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 7 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 8 [RESERVED]
EXHIBIT 9 FORM OF MONTHLY REMITTANCE REPORT
EXHIBIT 10-1 FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 10-2 FORM OF SERVICER'S OFFICER'S CERTIFICATE
EXHIBIT 11 [RESERVED]
EXHIBIT 12 FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT 13 FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT 14 FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
EXHIBIT 15 FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT 16 FORM OF ANNUAL CERTIFICATION
MORTGAGE LOAN SALE AND SERVICING AGREEMENT
THIS MORTGAGE LOAN SALE AND SERVICING AGREEMENT (the "Agreement"),
dated as of October 1, 2005, is hereby executed by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
MORTGAGE CAPITAL INC., a New York corporation (the "Purchaser"), and COUNTRYWIDE
HOME LOANS, INC., a New York corporation, as seller (the "Seller" or
"Countrywide") and COUNTRYWIDE HOME LOANS SERVICING LP, a Texas limited
partnership, as servicer (the "Servicer").
W I T N E S S E T H:
WHEREAS, the Seller desires to sell, from time to time, to the
Purchaser, and the Purchaser desires to purchase, from time to time, from the
Seller, on a servicing-retained basis, certain conventional fixed and adjustable
rate residential first or second lien mortgage loans (the "Mortgage Loans")
serviced by the Servicer as described herein, and which shall be delivered in
pools of whole loans (each, a "Mortgage Loan Package") on various dates as
provided herein (each, a "Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust
or other security instrument creating a first lien or a second lien, as
applicable, on a residential dwelling located in the jurisdiction indicated on
the Mortgage Loan Schedule for the related Mortgage Loan Schedule for the
related Mortgage Loan Package;
WHEREAS, the Purchaser, the Seller and the Servicer wish to
prescribe the manner of the conveyance, servicing by the Servicer and control of
the Mortgage Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the
Seller, the Purchaser desires to sell some or all of the Mortgage Loans to one
or more purchasers as a whole loan transfer or a public or private, rated or
unrated mortgage pass through transaction;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser, the
Seller and the Servicer agree as follows:
Definitions. For purposes of this Agreement, the following
capitalized terms shall have the respective meanings set forth below.
Accepted Servicing Practices: Practices (including collection
procedures) that the Servicer customarily employs and exercises in servicing and
administering mortgage loans for its own account that are similar to the
Mortgage Loans and which are in accordance with accepted mortgage servicing
practices of prudent mortgage lending institutions which service mortgage loans
of the same type as the Mortgage Loans in the jurisdictions where the related
Mortgaged Properties are located.
Adjustable Rate Mortgage Loan: A Mortgage Loan purchased pursuant to
this Agreement, the Mortgage Interest Rate of which is adjusted from time to
time in accordance with the terms of the related Mortgage Note.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. The Servicer shall be
deemed an Affiliate of the Seller.
Agency Transfer: A ▇▇▇▇▇▇ Mae Transfer or a ▇▇▇▇▇▇▇ Mac Transfer.
Agreement: This Mortgage Loan Sale and Servicing Agreement including
all exhibits, schedules, amendments and supplements hereto.
ALTA: The American Land Title Association.
Appraised Value: With respect to any Mortgaged Property, the lesser
of (i) the value thereof as determined by an appraisal made for the originator
of the Mortgage Loan at the time of origination of the Mortgage Loan by a
Qualified Appraiser and (ii) the purchase price paid for the related Mortgaged
Property by the Mortgagor with the proceeds of the Mortgage Loan; provided,
however, that in the case of a Refinanced Mortgage Loan, such value of the
Mortgaged Property is based solely upon the value determined by an appraisal
made for such Refinanced Mortgage Loan at the time of origination of such
Refinanced Mortgage Loan by a Qualified Appraiser.
Assignment and Conveyance Agreement: As defined in Section 2.
Assignment of Mortgage: An individual assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form and in blank,
sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to give record notice of the sale of the Mortgage to the
Purchaser.
Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the state in which (i) the
Servicer is located or (ii) the Custodial Account is maintained, are authorized
or obligated by law or executive order to be closed.
Cash-Out Refinance: A Refinanced Mortgage Loan in which the proceeds
received were in excess of the amount of funds required to repay the principal
balance of any existing first mortgage on the related Mortgaged Property, pay
related closing costs and satisfy any outstanding subordinate mortgages on the
related Mortgaged Property and which provided incidental cash to the related
Mortgagor of more than the lesser $2,000 or 2% of the original principal balance
of such Mortgage Loan.
Closing Date: The date or dates on which the Purchaser from time to
time shall purchase, and the Seller from time to time shall sell, the Mortgage
Loans listed on the related Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
Closing Documents: The documents required to be delivered on each
Closing Date pursuant to Section 9.
CLTA: The California Land Title Association.
Code: The Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
Commission: The United States Securities and Exchange Commission.
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking of all or part of a Mortgaged Property by exercise of the
power of condemnation or the right of eminent domain, to the extent not required
to be released to a Mortgagor in accordance with the terms of the related
Mortgage Loan Documents.
Co-op: A private, cooperative housing corporation, having only one
class of stock outstanding, which owns or leases land and all or part of a
building or buildings, including apartments, spaces used for commercial purposes
and common areas therein and whose board of directors authorizes the sale of
stock and the issuance of a Co-op Lease.
Co-op Lease: With respect to a Co-op Loan, the lease with respect to
a dwelling unit occupied by the Mortgagor and relating to the stock allocated to
the related dwelling unit.
Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated
to a dwelling unit in a residential cooperative housing corporation and a
collateral assignment of the related Co-op Lease.
Covered Loan: A Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor's Glossary.
Custodial Account: As defined in Subsection 11.04.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents. If more than one Custodial Agreement is in effect at
any given time, all of the individual Custodial Agreements shall collectively be
referred to as the "Custodial Agreement."
Custodian: The custodian under each Custodial Agreement, and its
successors in interest, or any successor to the Custodian under the Custodial
Agreement as therein provided.
Cut-off Date: The date or dates designated as such on the related
Mortgage Loan Schedule with respect to the related Mortgage Loan Package.
Cut-off Date Principal Balance: The aggregate Stated Principal
Balance of the Mortgage Loans as of the applicable Cut-off Date, which is
determined after the application, to the reduction of principal, of payments of
principal due on or before such Cut-off Date, whether or not collected, and of
partial principal prepayments received before such Cut-off Date.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
with a Qualified Substitute Mortgage Loan in accordance with this Agreement.
Delinquent Mortgage Loans: As defined in Subsection 11.01.
Determination Date: With respect to each Remittance Date, the 18th
day (or, if such 18th day is not a Business Day, the following Business Day) of
the month in which such Remittance Date occurs.
Due Date: With respect to each Remittance Date, the first day of the
calendar month in which such Remittance Date occurs, which is the day on which
the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date and any Mortgage
Loan, the period beginning on the second day of the month preceding such
Remittance Date through and including the first day of the month in which such
Remittance Date occurs.
Eligible Investments: Any one or more of the following obligations
or securities:
(a) obligations of or guaranteed as to principal and interest by
▇▇▇▇▇▇▇ Mac, ▇▇▇▇▇▇ ▇▇▇ or any agency or instrumentality of the United States
when such obligations are backed by the full faith and credit of the United
States; provided, however, that such obligations of ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ ▇▇▇
shall be limited to senior debt obligations and mortgage participation
certificates except that investments in mortgage-backed or mortgage
participation securities with yields evidencing extreme sensitivity to the rate
of principal payments on the underlying mortgages shall not constitute Eligible
Investments hereunder;
(b) repurchase agreements on obligations specified in clause (a)
maturing not more than one month from the date of acquisition thereof;
(c) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an original maturity of
not more than ninety (90) days and, in the case of bankers' acceptances, shall
in no event have an original maturity of more than 365 days or a remaining
maturity of more than thirty (30) days) denominated in United States dollars of
any United States depository institution or trust company incorporated under the
laws of the United States or any state thereof or of any domestic branch of a
foreign depository institution or trust company;
(d) commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of the United States or
any state thereof which is rated not lower than "P-2" by ▇▇▇▇▇'▇ Investors
Service, Inc. and rated not lower than "A-2" by Standard & Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.; and
(e) a money market fund;
provided, however, that no instrument shall be an Eligible Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest with respect to such instrument provide a yield to
maturity greater than 120% of the yield to maturity at par of such underlying
obligations.
Escrow Account: As defined in Subsection 11.06.
Escrow Payments: 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 (to the extent required under the related
condominium agreement), and any other payments required to be escrowed by the
Mortgagor with the Mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any one of the conditions or circumstances
enumerated in Subsection 13.01.
▇▇▇▇▇▇ Mae: The Federal National Mortgage Association or any
successor thereto.
▇▇▇▇▇▇ ▇▇▇ Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇ ▇▇▇
Servicers' Guide and all amendments or additions thereto.
▇▇▇▇▇▇ Mae Transfer: As defined in Section 15.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Fidelity Bond: The fidelity bond required to be obtained by the
Servicer pursuant to Subsection 11.11.
First Lien Loan: A Mortgage Loan secured by a first lien Mortgage on
the related Mortgaged Property.
Fitch: Fitch, Inc., or its successor in interest.
Fixed Rate Mortgage Loan: A fixed rate mortgage loan purchased
pursuant to this Agreement.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
▇▇▇▇▇▇▇ Mac Transfer: As defined in Section 15.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note which amount
is added to the Index in accordance with the terms of the related Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate
for such Mortgage Loan.
High Cost Loan: A Mortgage Loan (a) covered by the Home Ownership
and Equity Protection Act of 1994, (b) classified as a "high cost home,"
"threshold," "covered," (excluding New Jersey "Covered Home Loans" as that term
is defined in clause (1) of the definition of that term in the New Jersey Home
Ownership Security Act of 2002 that were originated between November 26, 2003
and July 7, 2004) "high risk home," or "predatory" loan under any other
applicable federal, state or local law (or a similarly classified loan using
different terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high interest
rates, points and/or fees) or (c) categorized as High Cost pursuant to Appendix
E of Standard & Poor's Glossary.
Home Loan: A Mortgage Loan categorized as a Home Loan pursuant to
Appendix E of the Standard & Poor's Glossary.
HUD: The United States Department of Housing and Urban Development,
or any successor thereto.
Index: The index indicated in the related Mortgage Note for each
Adjustable Rate Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Only Mortgage Loan: A Mortgage Loan that requires payments
of interest only during its term and the entire original principal balance at
maturity, and that does not amortize during its term.
Interest Rate Adjustment Date: With respect to each Adjustable Rate
Mortgage Loan, the date as specified in the related Mortgage Note with respect
to the initial Interest Rate Adjustment Date, or the related Mortgage Loan
Schedule, with respect to subsequent Interest Rate Adjustment Dates.
Interim Funder: With respect to each MERS Designated Mortgage Loan,
the Person named on the MERS System as the interim funder pursuant to the MERS
Procedures Manual.
Investor: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the investor pursuant to the MERS Procedures
Manual.
Liquidation Proceeds: The proceeds received in connection with the
liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure
sale or otherwise, other than amounts received following the acquisition of REO
Property, Insurance Proceeds and Condemnation Proceeds.
Loan-to-Value Ratio: With respect to any Mortgage Loan as of any
date of determination, the ratio, expressed as a percentage, the numerator of
which is the outstanding principal balance of such Mortgage Loan at origination
(unless otherwise indicated) and the denominator of which is the Appraised Value
of the related Mortgaged Property.
LPMI Fee: With respect to an LPMI Loan, the LPMI Fee Rate for that
LPMI Loan times the Stated Principal Balance of such LPMI Loan as of the
applicable Cut-off Date.
LPMI Fee Rate: The portion of the Mortgage Interest Rate relating to
an LPMI Loan, which is set forth on the related Mortgage Loan Schedule, to be
retained by the Servicer to pay the premium due on the Policy with respect to
such LPMI Loan.
LPMI Loan: Any mortgage loan with respect to which the Servicer is
responsible for paying the premium due on the related LPMI Policy with the
proceeds generated by the LPMI Fee relating to such Mortgage Loan, as set forth
on the related Mortgage Loan Schedule.
LPMI Policy: A policy of mortgage guaranty insurance issued by an
insurer qualified to do business in the jurisdiction where the Mortgaged
Property is located.
LTV: Loan-to-Value Ratio.
Manufactured Home: A single family residential unit that is
constructed in a factory in sections in accordance with the Federal Manufactured
Home Construction and Safety Standards adopted on July 15, 1976, by the
Department of Housing and Urban Development ("HUD Code"), as amended in 2000,
which preempts state and local building codes. Each unit is identified by the
presence of a HUD Plate/Compliance Certificate label. The sections are then
transported to the site and joined together and affixed to a pre-built permanent
foundation (which satisfies the manufacturer's requirements and all state,
county, and local building codes and regulations). The manufactured home is
built on a non-removable, permanent frame chassis that supports the complete
unit of walls, floors, and roof. The underneath part of the home may have
running gear (wheels, axles, and brakes) that enable it to be transported to the
permanent site. The wheels and hitch are removed prior to anchoring the unit to
the permanent foundation. The manufactured home must be classified as real
estate and taxed accordingly. The permanent foundation may be on land owned by
the mortgager or may be on leased land.
Maximum Mortgage Interest Rate: The provision of each Mortgage Note
related to an Adjustable Rate Mortgage Loan which provides for an absolute
maximum Mortgage Interest Rate thereunder. The Mortgage Interest Rate during the
term of each Adjustable Rate Mortgage Loan shall not at any time exceed such
maximum Mortgage Interest Rate set forth in the related Mortgage Note.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, and its successors in interest.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Seller has designated or will designate MERS as, and has taken or will take such
action as is necessary to cause MERS to be, the mortgagee of record, as nominee
for the Seller, in accordance with the MERS Procedures Manual and (b) the Seller
has designated or will designate the Purchaser as the Investor on the MERS
System.
MERS Identification Number: The eighteen digit number permanently
assigned to each MERS Designated Mortgage Loan.
MERS Procedures Manual: The MERS Procedures Manual, as it may be
amended, supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS Designated
Mortgage Loans and other information.
MERS System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Monthly Payment: With respect to any Mortgage Loan, the scheduled
payment of principal and interest payable by a Mortgagor under the related
Mortgage Note on each Due Date.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., and any successor thereto.
Mortgage: With respect to a Mortgage Loan that is not a Co-op Loan,
the mortgage, deed of trust or other instrument securing a Mortgage Note, which
creates a first lien on the Mortgaged Property. With respect to a Co-op Loan,
the Security Agreement.
Mortgage File: With respect to any Mortgage Loan, the items listed
in Exhibit 2 hereto and any additional documents required to be added to the
Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note.
Mortgage Loan: Each mortgage loan sold, assigned and transferred
pursuant to this Agreement and identified on the applicable Mortgage Loan
Schedule, which Mortgage Loan includes, without limitation, the Mortgage File,
the Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
mortgage loan.
Mortgage Loan Documents: With respect to any Mortgage Loan, the
documents listed in Exhibit 1 hereto.
Mortgage Loan Package: Each pool of Mortgage Loans, which shall be
purchased by the Purchaser from the Seller from time to time on each Closing
Date.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan,
the annual rate of interest payable to the Purchaser, which shall be equal to
the related Mortgage Interest Rate minus the related Servicing Fee Rate and the
LPMI Fee, if any.
Mortgage Loan Schedule: The schedule of Mortgage Loans setting forth
the following information with respect to each Mortgage Loan in the related
Mortgage Loan Package: (1) the Seller's Mortgage Loan identifying number; (2)
the Mortgagor's name; (3) the street address of the Mortgaged Property including
the city, state and zip code; (4) a code indicating whether the Mortgagor is
self-employed; (5) a code indicating whether the Mortgaged Property is
owner-occupied; (6) the number and type of residential units constituting the
Mortgaged Property; (7) the original months to maturity or the remaining months
to maturity from the related Cut-off Date, in any case based on the original
amortization schedule and, if different, the maturity expressed in the same
manner but based on the actual amortization schedule; (8) with respect to each
First Lien Loan, the Loan-to-Value Ratio at origination, and with respect to
each Second Lien Loan, the CLTV at origination; (9) the Mortgage Interest Rate
as of the related Cut-off Date; (10) the date on which the Monthly Payment was
due on the Mortgage Loan and, if such date is not consistent with the Due Date
currently in effect, such Due Date; (11) the stated maturity date; (12)
[reserved]; (13) the amount of the Monthly Payment as of the related Cut-off
Date; (14) payment current through date; (15) the original principal amount of
the Mortgage Loan; (16) the principal balance of the Mortgage Loan as of the
close of business on the related Cut-off Date, after deduction of payments of
principal due and collected on or before the related Cut-off Date; (17) the type
of lien (i.e. First or Second Lien Loan); (18) with respect to each Adjustable
Rate Mortgage Loan, the Interest Rate Adjustment Date; (19) with respect to each
Adjustable Rate Mortgage Loan, the Gross Margin; (20) with respect to each
Adjustable Rate Mortgage Loan, the Lifetime Rate Cap under the terms of the
Mortgage Note; (21) with respect to each Adjustable Rate Mortgage Loan, a code
indicating the type of Index; (22) the type of Mortgage Loan (i.e., Fixed or
Adjustable Rate Mortgage Loan); (23) a code indicating the purpose of the loan
(i.e., purchase, rate and term refinance, Cash-out refinance); (24) a code
indicating the documentation style (i.e., full, alternative or reduced); (25)
[reserved]; (26) the loan's risk grade (as described in the Underwriting
Guidelines); (27) whether such Mortgage Loan provides for a Prepayment Penalty
and, if applicable, the Prepayment Penalty period; (28) [reserved]; (29) the
Mortgage Interest Rate as of origination; (30) the credit risk score (FICO
score); (31) the date of origination; (32) with respect to Adjustable Rate
Mortgage Loans, the Mortgage Interest Rate adjustment period; (33) with respect
to each Adjustable Rate Mortgage Loan, the Mortgage Interest Rate adjustment
percentage; (34) with respect to each Adjustable Rate Mortgage Loan, the
Mortgage Interest Rate floor; (35) with respect to each Adjustable Rate Mortgage
Loan, the Mortgage Interest Rate Cap as of the first Interest Rate Adjustment
Date; (36) [reserved]; (37) with respect to each Adjustable Rate Mortgage Loan,
a code indicating whether the Mortgage Loan provides for negative amortization;
(38) with respect to each Adjustable Rate Mortgage Loan with negative
amortization, the negative amortization limit; (39) a code indicating whether
the Mortgage Loan is a Home Loan; (40) a code indicating whether the Mortgage
Loan is a Balloon Mortgage Loan; (41) the Due Date for the first Monthly
Payment; (42) the original Monthly Payment due; (43) a code indicating whether
there is a LPMI Policy, the percentage of coverage and the LPMI Fee, if any;
(44) Appraised Value; (45) appraisal type; (46) LPMI Fee Rate; (47) LPMI Loan;
(48) [reserved]; (49) the MERS Identification Number, if applicable; and (50) a
code indicating whether the Mortgage Loan is an Interest Only Mortgage Loan.
With respect to the Mortgage Loans in the aggregate, the Mortgage Loan Schedule
shall set forth the following information, as of the related Cut-off Date: (1)
the number of Mortgage Loans; (2) the current aggregate outstanding principal
balance of the Mortgage Loans; (3) the weighted average Mortgage Interest Rate
of the Mortgage Loans; (4) the weighted average maturity of the Mortgage Loans;
(5) the applicable Cut-off Date; and (6) the applicable Closing Date.
Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor, including any riders or addenda
thereto.
Mortgaged Property: With respect to a Mortgage Loan that is not a
Co-op Loan, the Mortgagor's real property securing repayment of a related
Mortgage Note, consisting of an unsubordinated estate in fee simple or, with
respect to real property located in jurisdictions in which the use of leasehold
estates for residential properties is a widely-accepted practice, a leasehold
estate, in a single parcel or multiple parcels of real property improved by a
Residential Dwelling. With respect to a Co-op Loan, the stock allocated to a
dwelling unit in the residential cooperative housing corporation that was
pledged to secure such Co-op Loan and the related Co-op Lease.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and
the successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note, who is an owner of the
Mortgaged Property and the grantor or mortgagor named in the Mortgage and such
grantor's or mortgagor's successors in title to the Mortgaged Property.
NAIC: The National Association of Insurance Commissioners or any
successor thereto.
OCC: Office of the Comptroller of the Currency, or any successor
thereto.
Officer's Certificate: A certificate signed by a Vice President or a
more senior officer, and by the Treasurer, the Secretary, or one of the
Assistant Treasurers or the Assistant Secretaries of the Person on behalf of
whom such certificate is being delivered.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Seller or the Servicer, reasonably acceptable to the Purchaser, provided
that any Opinion of Counsel relating to (a) the qualification of any account
required to be maintained pursuant to this Agreement as an eligible account, (b)
qualification of the Mortgage Loans in a REMIC or (c) compliance with the REMIC
Provisions, must be (unless otherwise stated in such Opinion of Counsel) an
opinion of counsel who (i) is in fact independent of the Seller and any servicer
of the Mortgage Loans, (ii) does not have any material direct or indirect
financial interest in the Seller or Servicer or in an Affiliate of either and
(iii) is not connected with the Seller or Servicer as an officer, employee,
director or person performing similar functions.
OTS: The Office of Thrift Supervision or any successor thereto.
Owner: As defined in Subsection 11.12.
P&I Advance: As defined in Subsection 11.16.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans to a trust or other entity as part of a publicly-offered or
privately-placed, rated or unrated mortgage pass-through or other
mortgage-backed securities transaction.
Payment Adjustment Date: As to each Adjustable Rate Mortgage Loan,
the date on which an adjustment to the Monthly Payment on a Mortgage Note
becomes effective.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage
Loan, the provision of each Mortgage Note which provides for an absolute maximum
amount by which the Mortgage Interest Rate therein may increase or decrease on
an Interest Rate Adjustment Date above or below the Mortgage Interest Rate
previously in effect.
Periodic Rate Floor: With respect to each Adjustable Rate Mortgage
Loan, the provision of each Mortgage Note which provides for an absolute maximum
amount by which the Mortgage Interest Rate therein may decrease on an Interest
Rate Adjustment Date below the Mortgage Interest Rate previously in effect.
Person: An individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Preliminary Mortgage Loan Schedule: The initial schedule of Mortgage
Loans delivered prior to the related Closing Date setting forth the information
described under the definition of Mortgage Loan Schedule with respect to each
Mortgage Loan in the related Mortgage Loan Package.
Prepayment Interest Excess: With respect to any Remittance Date, for
each Mortgage Loan that was the subject of a Principal Prepayment during the
period from the related Due Date to the end of the related Principal Prepayment
Period, any prepayment of interest received in connection therewith (net of any
applicable Servicing Fee) representing interest accrued for any portion of such
month of receipt.
Prepayment Penalty: With respect to each Mortgage Loan, the penalty
if the Mortgagor prepays such Mortgage Loan as provided in the related Mortgage
Note or Mortgage. Such Prepayment Penalties shall be retained by the Purchaser.
Prime Rate: The prime rate announced to be in effect from time to
time, as published as the average rate in The Wall Street Journal (Northeast
edition).
Principal Prepayment: Any payment or other recovery of principal on
a Mortgage Loan which is received in advance of its scheduled Due Date, which is
not accompanied by an amount of interest representing scheduled interest due on
any date or dates in any month or months subsequent to the month of prepayment.
Principal Prepayment Period: With respect to each Remittance Date
and any Mortgage Loan, the period beginning on the sixteenth day of the month
preceding such Remittance Date through and including the fifteenth day of the
month in which such Remittance Date occurs.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller pursuant to this Agreement in exchange for the Mortgage
Loans purchased on such Closing Date, which shall be the percentage of par
(expressed as a decimal) set forth in the Purchase Price and Terms Agreement
times the applicable Cut-off Date Principal Balance.
Purchase Price Percentage: The percentage of par (expressed as
decimal) set forth in the related Purchase Price and Terms Agreement.
Purchase Price and Terms Agreement: Those certain agreements setting
forth the general terms and conditions of the transactions consummated herein
and identifying the Mortgage Loans to be purchased from time to time hereunder
and thereunder, between the Seller and the Purchaser.
Purchaser: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., a New York
corporation, and its successors in interest and assigns, or any successor to the
Purchaser under this Agreement as herein provided.
Qualified Appraiser: An appraiser who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security thereof,
and whose compensation was not affected by the approval or disapproval of the
Mortgage Loan, and such appraiser and the appraisal made by such appraiser both
satisfied all of the requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac in effect from
time to time, as in effect on the date the Mortgage Loan was originated.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Seller for a Deleted Mortgage Loan which must, on the date of
such substitution, be approved by the Purchaser and (i) have an outstanding
principal balance, after deduction of all scheduled payments due in the month of
substitution (or in the case of a substitution of more than one mortgage loan
for a Deleted Mortgage Loan, an aggregate principal balance), not in excess of
the Stated Principal Balance of the Deleted Mortgage Loan (the amount of any
shortfall will be deposited in the Custodial Account by the Seller in the month
of substitution); (ii) have a Mortgage Interest Rate not less than and not more
than one percent (1%) greater than the Mortgage Interest Rate of the Deleted
Mortgage Loan; (iii) have a remaining term to maturity not greater than and not
more than one (1) year less than that of the Deleted Mortgage Loan (iv) be of
the same type as the Deleted Mortgage Loan (i.e., fixed rate or adjustable rate
with same Mortgage Interest Rate Cap and Index); (v) comply as of the date of
substitution with each representation and warranty set forth in Subsection 7.01
of this Agreement; (vi) be current in the payment of principal and interest;
(vii) be secured by a Mortgaged Property of the same type and occupancy status
as secured the Deleted Mortgage Loan; and (viii) have payment terms that do not
vary in any material respect from those of the Deleted Mortgage Loan.
Rate/Term Refinance: A Refinanced Mortgage Loan, in which the
proceeds received were not in excess of the amount of funds required to repay
the principal balance of any existing first mortgage loan on the related
Mortgaged Property, pay related closing costs and satisfy any outstanding
subordinate mortgages on the related Mortgaged Property and did not provide
incidental cash to the related Mortgagor of more than two percent (2%) of the
original principal balance of such Mortgage Loan.
Rating Agency: Any of Fitch, ▇▇▇▇▇'▇ or Standard & Poor's, or their
respective successors designated by the Purchaser.
Reconstitution Agreement: As defined in Section 15.
Record Date: The close of business of the last Business Day of the
month preceding the month of the related Remittance Date.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
Regulation AB: Regulation AB under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, as such Regulation
is amended from time to time.
Remittance Date: The 24th day of any month (or, if such 24th day is
not a Business Day, the following Business Day).
REO Disposition: The final sale by the Servicer of an REO Property.
REO Disposition Proceeds: All amounts received with respect to an
REO Disposition pursuant to Subsection 11.12.
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed in lieu of foreclosure, as described in Subsection 11.12.
Repurchase Price: As defined in the related Purchase Price and Terms
Agreement.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project, or (iv) a one-family dwelling
in a planned unit development, none of which is a co-operative, mobile or
Manufactured Home.
Second Lien Loan: A Mortgage Loan secured by a second lien Mortgage
on the related Mortgaged Property.
Securities Act: The federal Securities Act of 1933, as amended.
Securities Exchange Act: The federal Securities Exchange Act of
1934, as amended.
Security Agreement: The agreement creating a security interest in
the stock allocated to a dwelling unit in the residential cooperative housing
corporation that was pledged to secure such Co-op Loan and the related Co-op
Lease.
Seller: As defined in the initial paragraph of this Agreement,
together with its successors in interest.
Servicer: As defined in the initial paragraph of this Agreement,
together with its successors and assigns as permitted under the terms of this
Agreement.
Servicing Advances: All customary, reasonable and necessary
out-of-pocket costs and expenses incurred in the performance by the Servicer of
its servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, and (iv) payments made by the
Servicer with respect to a Mortgaged Property pursuant to Subsection 11.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Servicer, which shall, for each month,
be equal to one-twelfth of (i) the product of the Servicing Fee Rate and (ii)
the Stated Principal Balance of such Mortgage Loan. Such fee shall be payable
monthly, computed on the basis of the same principal amount and period
respecting which any related interest payment on a Mortgage Loan is computed,
and shall be pro rated (based upon the number of days of the related month the
Servicer so acted as Servicer relative to the number of days in that month) for
each part thereof. The obligation of the Purchaser to pay the Servicing Fee is
limited to, and payable solely from, the interest portion (including recoveries
with respect to interest from Liquidation Proceeds and other proceeds, to the
extent permitted by Subsection 11.05) of related Monthly Payments collected by
the Servicer, or as otherwise provided under Subsection 11.05.
Servicing Fee Rate: With respect to each Mortgage Loan, the per
annum rate set forth in the applicable Purchase Price and Terms Agreement.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Servicer, during the period in which the Servicer is acting as
servicer pursuant to this Agreement, consisting of originals of all documents in
the Mortgage File which are not delivered to the Purchaser, its designee or the
Custodian and copies of the Mortgage Loan Documents listed on Exhibit 1 hereto.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished to the Purchaser by the
Servicer, as such list may be amended from time to time.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies Inc., and any successor thereto.
Standard & Poor's Glossary: The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
Stated Principal Balance: As to each Mortgage Loan as to any date of
determination, (i) the principal balance of the Mortgage Loan at the related
Cut-off Date after giving effect to payments of principal due on or before such
date, whether or not received, minus (without duplication) (ii) all amounts
previously distributed to the Purchaser with respect to the related Mortgage
Loan representing payments or recoveries of principal, or advances in lieu
thereof on such Mortgage Loan.
Successor Servicer: Any servicer of one or more Mortgage Loans
designated by the Purchaser as being entitled to the benefits of the
indemnifications set forth in Subsections 7.03 and 12.01.
Transfer Date: In the event the Servicer is terminated as servicer
of a Mortgage Loan pursuant to Subsections 12.04, 13.01, 14.01(c) or 14.02, the
date on which the Purchaser, or its designee, shall receive the transfer of
servicing responsibilities and begin to perform the servicing of such Mortgage
Loans, and the Servicer, shall cease all servicing responsibilities.
Underwriting Guidelines: The then-current underwriting guidelines of
the Seller applicable to the Mortgage Loans for the Mortgage Loan Package, a
copy of which shall be attached as an exhibit to the related Assignment and
Conveyance Agreement.
Whole Loan Transfer: The sale or transfer by the Purchaser of some
or all of the Mortgage Loans in a whole loan or participation format pursuant to
a Reconstitution Agreement.
Section 2. Purchase and Conveyance. The Seller agrees to sell from
time to time, and the Purchaser agrees to purchase from time to time, Mortgage
Loans having an aggregate principal balance on the related Cut-off Date in an
amount as set forth in the related Purchase Price and Terms Agreement, or in
such other amount as agreed by the Purchaser and the Seller as evidenced by the
actual aggregate principal balance of the Mortgage Loans accepted by the
Purchaser on each Closing Date, together with the related Mortgage Files and all
rights and obligations arising under the documents contained therein. The
Seller, simultaneously with the delivery of the Mortgage Loan Schedule with
respect to the related Mortgage Loan Package to be purchased on each Closing
Date, shall execute and deliver an Assignment and Conveyance Agreement in the
form attached hereto as Exhibit 14 (the "Assignment and Conveyance Agreement").
With respect to each Mortgage Loan purchased, the Purchaser shall
own and be entitled to receive: (a) all scheduled principal due after the
related Cut-off Date, (b) all other payments and/or recoveries of principal
collected after the related Cut-off Date (provided, however, that all scheduled
payments of principal due on or before the related Cut-off Date and collected by
the Servicer after the related Cut-off Date shall belong to the Seller), and (c)
all payments of interest on the Mortgage Loans net of the Servicing Fee and LPMI
Fee, if any, (minus that portion of any such interest payment that is allocable
to the period prior to the related Cut-off Date).
For the purposes of this Agreement, payments of scheduled principal
and interest prepaid for a Due Date beyond the related Cut-off Date shall not be
applied to reduce the Stated Principal Balance as of the related Cut-off Date.
Such prepaid amounts (minus the applicable Servicing Fee) shall be the property
of the Purchaser. The Seller shall remit to the Servicer for deposit any such
prepaid amounts into the Custodial Account, which account is established for the
benefit of the Purchaser, for remittance by the Servicer to the Purchaser on the
appropriate Remittance Date. All payments of principal and interest, less the
applicable Servicing Fee, due on a Due Date following the related Cut-off Date
shall belong to the Purchaser.
Section 3. Mortgage Loan Schedule. The Seller from time to time
shall provide the Purchaser with a Preliminary Mortgage Loan Schedule setting
forth certain information constituting a preliminary listing of the Mortgage
Loans to be purchased on each Closing Date in accordance with the related
Purchase Price and Terms Agreement and this Agreement.
The Seller shall deliver the related Mortgage Loan Schedule for the
Mortgage Loans to be purchased on a particular Closing Date to the Purchaser at
least two (2) Business Days prior to the related Closing Date. The related
Mortgage Loan Schedule shall include all Mortgage Loans to be purchased on the
related Closing Date.
Section 4. Purchase Price. Subject to the conditions set forth
herein, the Purchaser shall pay the Purchase Price plus accrued interest on the
Stated Principal Balance of each Mortgage Loan as of the applicable Cut-off Date
at its Mortgage Loan Remittance Rate from the related Cut-off Date through the
day prior to the related Closing Date, both inclusive, to the Seller on the
related Closing Date. Such payment shall be made by wire transfer of immediately
available funds to the account designated by the Seller.
Section 5. Examination of Mortgage Files. At least five (5) Business
Days prior to the related Closing Date, the Seller shall either (a) deliver to
the Purchaser or its designee in escrow, for examination with respect to each
Mortgage Loan to be purchased, the related Mortgage File, including a copy of
the Assignment of Mortgage to the extent available (other than with respect to
MERS Designated Mortgage Loans), pertaining to each Mortgage Loan, or (b) make
the related Mortgage File available to the Purchaser for examination at such
other location as shall otherwise be acceptable to the Purchaser. Such
examination of the Mortgage Files may be made by the Purchaser or its designee
at any reasonable time before or after the related Closing Date. If the
Purchaser makes such examination prior to the related Closing Date and
determines, in its sole discretion, that any Mortgage Loans do not conform to
any of the requirements set forth in the related Purchase Price and Terms
Agreement, or as an Exhibit annexed thereto, the Purchaser may delete such
Mortgage Loans from the related Mortgage Loan Schedule, and such Deleted
Mortgage Loan (or Loans) may be replaced by a Qualified Substitute Mortgage Loan
(or Loans) acceptable to the Purchaser. The Purchaser may, at its option and
without notice to the Seller, purchase some or all of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Purchaser or
its designee has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not impair in any way the Purchaser's
(or any of its successor's) rights to demand repurchase, substitution or other
remedy as provided in this Agreement. In the event that the Seller fails to
deliver the Mortgage File with respect to any Mortgage Loan, the Seller shall,
upon the request of the Purchaser, repurchase such Mortgage Loan as the price
and in the manner specified in Subsection 7.03.
Section 6. Delivery of Mortgage Loan Documents.
Subsection 6.01 Possession of Mortgage Files. The contents of each
Mortgage File required to be retained by or delivered to the Servicer to service
the Mortgage Loans pursuant to this Agreement and thus not delivered to the
Purchaser, or its designee, are and shall be held in trust by the Servicer for
the benefit of the Purchaser as the owner thereof. The Servicer's possession of
any portion of each such Mortgage File is at the will of the Purchaser for the
sole purpose of facilitating servicing of the Mortgage Loans pursuant to this
Agreement, and such retention and possession by the Servicer shall be in a
custodial capacity only. The ownership of each Mortgage Note, each Mortgage and
the contents of each Mortgage File is vested in the Purchaser and the ownership
of all records and documents with respect to the related Mortgage Loan prepared
by or which come into the possession of the Servicer shall immediately vest in
the Purchaser and shall be retained and maintained, in trust, by the Servicer at
the will of the Purchaser in such custodial capacity only. The Mortgage File
retained by the Servicer with respect to each Mortgage Loan pursuant to this
Agreement shall be appropriately identified in the Servicer's computer system to
reflect clearly the sale of such related Mortgage Loan to the Purchaser. The
Servicer shall release from its custody the contents of any Mortgage File
retained by it only in accordance with this Agreement, except when such release
is required in connection with a repurchase of any such Mortgage Loan pursuant
to Subsection 7.03 or if required under applicable law or court order.
Subsection 6.02 Books and Records. Record title to each Mortgage and
the related Mortgage Note as of the related Closing Date shall be in the name of
the Seller, or of an Affiliate of the Seller; provided, however, that if a
Mortgage has been recorded in the name of MERS or its designee, the Seller is
shown as the owner of the related Mortgage Loan on the records of MERS for
purposes of the system of recording transfers of beneficial ownership of
mortgages maintained by MERS. Notwithstanding the foregoing, ownership of each
Mortgage and the related Mortgage Note shall be vested solely in the Purchaser
or the appropriate designee of the Purchaser, as the case may be. All rights
arising out of the Mortgage Loans including, but not limited to, all funds
received by the Servicer after the related Cut-off Date and due on or after such
Cut-off Date on or in connection with a Mortgage Loan as provided in Section 2
shall be vested in the Purchaser; provided, however, that all such funds
received on or in connection with a Mortgage Loan as provided in Section 2 shall
be received and held by the Servicer in trust for the benefit of the Purchaser
as the owner of the Mortgage Loans pursuant to the terms of this Agreement.
It is the express intention of the parties that the transactions
contemplated by this Agreement be, and be construed as, a sale of the related
Mortgage Loans by the Seller and not a pledge of such Mortgage Loans by the
Seller to the Purchaser to secure a debt or other obligation of the Seller.
Consequently, the sale of each Mortgage Loan shall be reflected as a purchase on
the Purchaser's business records, tax returns and financial statements, and as a
sale of assets on the Seller's business records, tax returns and financial
statements.
Subsection 6.03 Delivery of Mortgage Loan Documents. The Seller
shall (i) at least two (2) Business Days prior to the related Closing Date (with
respect to any Mortgage Loan Package for up to 250 Mortgage Loans), or (ii) at
least three (3) Business Days prior to the related Closing Date (with respect to
any Mortgage Loan Package for more than 250 Mortgage Loans), or, in either case,
such later date as the Purchaser may reasonably request, deliver and release to
the Purchaser, or its designee, the Mortgage Loan Documents with respect to each
Mortgage Loan pursuant to a bailee letter agreement.
To the extent received by it, the Servicer shall forward to the
Purchaser, or its designee, original documents evidencing an assumption,
modification, consolidation or extension of any Mortgage Loan entered into in
accordance with this Agreement within two (2) weeks after their execution;
provided, however, that the Servicer shall provide the Purchaser, or its
designee, with a copy, certified by the Servicer as a true copy, of any such
document submitted for recordation within two (2) weeks after its execution, and
shall provide the original of any document submitted for recordation or a copy
of such document certified by the appropriate public recording office to be a
true and complete copy of the original within two (2) weeks following receipt of
the original document by the Servicer; provided, however, that such original
recorded document or certified copy thereof shall be delivered to the Purchaser
no later than 270 days following the related Closing Date, unless there has been
a delay at the applicable recording office.
In the event any document required to be delivered hereunder,
including an the original or copy of any document submitted for recordation to
the appropriate public recording office, is not delivered to the Purchaser or
its designee within 270 days following the related Closing Date, the related
Mortgage Loan shall, upon the request of the Purchaser, be repurchased by the
Seller at the price and in the manner specified in Subsection 7.03. The
foregoing repurchase obligation shall not apply if the Seller cannot cause the
Servicer to deliver such original or copy of any document submitted for
recordation to the appropriate public recording office within the specified
period due to a delay caused by the recording office in the applicable
jurisdiction; provided that (i) the Servicer shall instead deliver a recording
receipt of such recording office or, if such recording receipt is not available,
an officer's certificate of a servicing officer of the Servicer, confirming that
such document has been accepted for recording, and (ii) such document is
delivered within twelve (12) months of the related Closing Date.
The Seller shall pay all initial recording fees, if any, for the
Assignments of Mortgage and any other fees or costs in transferring all original
documents to the Custodian or, upon written request of the Purchaser, to the
Purchaser or the Purchaser's designee. The Purchaser or the Purchaser's designee
shall be responsible for recording the Assignments of Mortgage and shall be
reimbursed by the Seller for the costs associated therewith pursuant to the
preceding sentence.
Subsection 6.04 MERS Designated Loans. With respect to each MERS
Designated Mortgage Loan, the Seller shall, on the related Closing Date or the
next Business Day, designate the Purchaser as the Investor and the Custodian as
custodian, and no Person shall be listed as Interim Funder on the MERS System,
such listing to be effected within 2 Business Days of the related Closing Date.
In addition, within two (2) Business Days of the related Closing Date, Seller
shall provide the Custodian and the Purchaser with a MERS Report listing the
Purchaser as the Investor, the Custodian as custodian and no Person listed as
Interim Funder with respect to each MERS Designated Mortgage Loan.
Section 7. Representations, Warranties and Covenants; Remedies for
Breach.
Subsection 7.01 Representations and Warranties Regarding Individual
Mortgage Loans. The Seller hereby represents and warrants to the Purchaser that,
as to each Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
(a) Mortgage Loans as Described. The information set forth in the
related Mortgage Loan Schedule is complete, true and correct in all material
respects;
(b) Payments Current. All payments of principal and interest
required to be made up to the related Closing Date for the Mortgage Loan under
the terms of the Mortgage Note, other than payments not yet 30 days delinquent,
have been made and credited. No payment required under the Mortgage Loan is 30
days or more delinquent;
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. 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 earlier, to the day which precedes by
one month the related Due Date of the first installment of principal and
interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any material
respect, from the date of origination except by a written instrument which has
been recorded, if necessary to protect the interests of the Purchaser, and which
has been delivered to the Custodian or to such other Person as the Purchaser
shall designate in writing, and the terms of which are reflected in the related
Mortgage Loan Schedule. The substance of any such waiver, alteration or
modification has been approved by the issuer of any related LPMI Policy and the
title insurer, if any, to the extent required by the policy, and its terms are
reflected on the related Mortgage Loan Schedule, if applicable. No Mortgagor has
been released, in whole or in part, except in connection with an assumption
agreement, approved by the issuer of any related LPMI Policy and the title
insurer, to the extent required by the policy, and which assumption agreement is
part of the Mortgage Loan File delivered to the Custodian or to such other
Person as the Purchaser shall designate in writing and the terms of which are
reflected in the related Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any valid right
of rescission, set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are provided for in the Underwriting Guidelines. If
required by the National Flood Insurance Act of 1968, as amended, each Mortgage
Loan is covered by a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration as in effect which
policy conforms with the Underwriting Guidelines. All individual insurance
policies contain a standard mortgagee clause naming the Seller and its
successors and assigns as mortgagee, and all premiums thereon have been paid.
The Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such insurance
at such Mortgagor's cost and expense, and to seek reimbursement therefor from
the 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, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Purchaser upon
the consummation of the transactions contemplated by this Agreement. The 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 or entity,
and no such unlawful items have been received, retained or realized by the
Seller;
(g) Compliance with Applicable Laws. At the time of origination, 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, predatory and abusive lending, equal credit opportunity and
disclosure laws applicable to the Mortgage Loan, including, without limitation,
any provisions relating to the Illinois Interest Act and Prepayment Penalties,
have been complied with in all material respects, the consummation of the
transactions contemplated hereby will not involve the violation of any such laws
or regulations, and the Seller shall maintain in its possession, to the extent
required by applicable law, available for the Purchaser's inspection, and shall
deliver to the Purchaser upon demand, evidence of compliance with all such
requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, 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
release, cancellation, subordination or rescission. 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) Type of Mortgaged Property. With respect to a Mortgage Loan that
is not a Co-op Loan and is not secured by an interest in a leasehold estate, the
Mortgaged Property is a fee simple estate that consists of a single parcel of
real property with a detached single family residence erected thereon, or a two-
to four-family dwelling, or an individual residential condominium unit in a
condominium project, or an individual unit in a planned unit development, or an
individual unit in a residential cooperative housing corporation); provided,
however, that any condominium unit, planned unit development or residential
cooperative housing corporation shall conform with the Underwriting Guidelines.
As of the date of origination, no portion of the Mortgaged Property was being
used for commercial purposes, and to the best of Seller's knowledge, no portion
of the Mortgaged Property (or underlying Mortgaged Property, in the case of a
Co-op Loan) is being used for commercial purposes; provided, that Mortgaged
Properties which contain a home office shall not be considered as being used for
commercial purposes as long as the Mortgaged Property has not been altered for
commercial purposes and is not storing any chemicals or raw materials other than
those commonly used for homeowner repair, maintenance and/or household purposes.
None of the Mortgaged Properties are Manufactured Homes, log homes, mobile
homes, geodesic domes or other unique property types;
(j) Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first or second lien on the Mortgaged Property,
including all buildings and improvements on the Mortgaged Property. The lien of
the Mortgage is subject only to:
(A) the lien of current real property taxes and assessments
not yet due and payable;
(B) with respect to any Second Lien Loan, the lien of the
related first mortgage loan;
(C) 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 the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (A) specifically 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; and
(D) 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, subsisting, enforceable and perfected first or second lien and
first or second priority security interest on the property described therein and
the Seller has full right to sell and assign the same to the Purchaser;
With respect to any Co-op Loan, the related Mortgage is a valid,
subsisting and enforceable first or second priority security interest on the
related cooperative shares securing the Mortgage Note, subject only to (a) liens
of the related residential cooperative housing corporation for unpaid
assessments representing the Mortgagor's pro rata share of the related
residential cooperative housing corporation's payments for its blanket mortgage,
current and future real property taxes, insurance premiums, maintenance fees and
other assessments to which like collateral is commonly subject and (b) other
matters to which like collateral is commonly subject which do not materially
interfere with the benefits of the security interest intended to be provided by
the related Security Agreement;
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagor 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
(including, without limitation, any provisions therein relating to Prepayment
Penalties). 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 other such related parties. No fraud, error,
omission, misrepresentation, negligence or similar occurrence with respect to
the origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan has taken place on the part of the Seller, or, to
the best of the Seller's knowledge, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of such Mortgage Loan
or in the application of any insurance in relation to such Mortgage Loan. The
Seller has reviewed all of the documents constituting the Servicing File and has
made such inquiries as it deems necessary to make and confirm the accuracy of
the representations set forth herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been closed
and the proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances 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 were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) Ownership. Immediately prior to the payment of the purchase
price, the Seller is the sole owner of record and holder of the Mortgage Loan
and the indebtedness evidenced by each Mortgage Note and upon the sale of the
Mortgage Loans to the Purchaser, the Seller will retain the Mortgage Files or
any part thereof with respect thereto not delivered to the Custodian, the
Purchaser or the Purchaser's designee, in trust only for the purpose of
servicing and supervising the servicing of each Mortgage Loan. The Mortgage Loan
is not assigned or pledged, and the Seller has good, indefeasible and marketable
title thereto, and has full right to transfer and sell the Mortgage Loan to the
Purchaser 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 and assign each Mortgage Loan pursuant to this Agreement
and following the sale of each Mortgage Loan, the Purchaser will own such
Mortgage Loan free and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest. The Seller intends to
relinquish all rights to possess, control and monitor the Mortgage Loan. After
the related Closing Date, the Seller will have no right to modify or alter the
terms of the sale of the Mortgage Loan and the Seller will have no obligation or
right to repurchase the Mortgage Loan or substitute another Mortgage Loan,
except as provided in this Agreement;
(n) 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) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) either (i) organized
under the laws of such state, or (ii) qualified to do business in such state, or
(iii) a federal savings and loan association, a savings bank or a national bank
having a principal office in such state, or (3) not doing business in such
state;
(o) LTV. No Mortgage Loan has an LTV greater than 100%.
(p) Title Insurance. With respect to a Mortgage Loan which is not a
Co-op Loan, the Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy or insurance acceptable
under the Underwriting Guidelines and each such title insurance policy is issued
by a title insurer acceptable under the Underwriting Guidelines and qualified to
do business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first priority lien
of the Mortgage 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 (A) through (D) of paragraph (j) of this
Subsection 7.02, 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 Seller, its successor 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 Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the related Mortgage, including
the 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 or entity, and no such unlawful items have been received,
retained or realized by the Seller;
(q) No Defaults. Other than payments due but not yet 30 days or more
delinquent, there is no default, breach, violation or event which would permit
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 which
would permit acceleration, and neither the Seller nor any of its Affiliates nor
any of their respective predecessors, have waived any default, breach, violation
or event which would permit acceleration;
(r) No Mechanics' Liens. Other than liens insured against by a title
policy, 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 liens) affecting the related Mortgaged Property which are or
may be liens prior to, or equal or coordinate with, the lien of the related
Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the 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 Mortgaged
Property is in violation of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority. Principal payments on the Mortgage Loan commenced no more than
seventy days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Interest Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the Maximum Mortgage Interest Rate and the Periodic Rate Cap and
the Periodic Rate Floor are as set forth on the related Mortgage Loan Schedule.
As stated in the related Mortgage Note, 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 (generally rounded up or down to
the nearest 0.125%), subject to the Periodic Rate Cap. Except with respect to
Interest Only Mortgage Loans, the Mortgage Note is payable 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 thirty (30) years from commencement of amortization. Unless otherwise
specified on the related Mortgage Loan Schedule, the Mortgage Loan is payable on
the first day of each month. The Mortgage Loan by its original terms or any
modification thereof, does not provide for amortization beyond its scheduled
maturity date;
(u) Customary Provisions. 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, subject to applicable federal and state laws and judicial precedent
with respect to bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting Guidelines (a
copy of which is attached to the related Assignment and Conveyance Agreement as
Exhibit C). The Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇▇
Mac or ▇▇▇▇▇▇ Mae;
(w) Occupancy of the Mortgaged Property. As of the origination of
the Mortgage Loan, the related 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 and fire underwriting certificates, have been made or
obtained from the appropriate authorities. Unless otherwise specified on the
related Mortgage Loan Schedule, the Mortgagor represented at the time of
origination of the Mortgage Loan that the Mortgagor would occupy the Mortgaged
Property as the Mortgagor's primary residence;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement or chattel mortgage
referred to in clause (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and 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 Purchaser to
the trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(z) Acceptable Investment. There are no circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can reasonably be expected
to cause private institutional investors who invest in mortgage loans similar to
the Mortgage Loan to regard the Mortgage Loan as an unacceptable investment;
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered under this Agreement for each Mortgage Loan have been delivered to the
Custodian;
(bb) Transfer of Mortgage Loans. The Assignment of Mortgage (except
with respect to any Mortgage that has been recorded in the name of MERS or its
designee) with respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(cc) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan, 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 Mortgagee thereunder;
(dd) Assumability. With respect to each Adjustable Rate Mortgage
Loan, the Mortgage Loan Documents provide that after the related first Interest
Rate Adjustment Date, a related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements stated in the
Mortgage Loan Documents;
(ee) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant to which
Monthly Payments are paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it contain
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;
(ff) Consolidation of Future Advances. Any future advances made to
the Mortgagor prior to the applicable 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. The lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first (with respect to a First Lien Loan)
or second (with respect to a Second Lien Loan) 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 ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan;
(gg) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or, to the best of the Seller's knowledge,
threatened for the total or partial condemnation of the Mortgaged Property. At
the time of origination and, to the best of the Seller's knowledge as of the
Closing Date, the related Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty so as
to affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended and each Mortgaged
Property is in good repair. There have not been any condemnation proceedings
with respect to the Mortgaged Property and the Seller has no knowledge of any
such proceedings in the future;
(hh) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices used by the
Seller with respect to the Mortgage Loan have been in all respects in compliance
with Accepted Servicing Practices, applicable laws and regulations, and have
been in all respects legal and proper. With respect to escrow deposits and
Escrow Payments, 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. All
Escrow Payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item that remains unpaid and has been assessed but
is not yet due and payable. No escrow deposits or Escrow Payments or other
charges or payments due the Seller have been capitalized under the Mortgage or
the Mortgage Note. All Mortgage Interest Rate adjustments have been made in
strict compliance with state and federal law and the terms of the related
Mortgage and Mortgage Note on the related Interest Rate Adjustment Date. If,
pursuant to the terms of the Mortgage Note, another index was selected for
determining the Mortgage Interest Rate, the same index was used with respect to
each Mortgage Note which required a new index to be selected, and such selection
did not conflict with the terms of the related Mortgage Note. The Seller
executed and delivered any and all notices required under applicable law and the
terms of the related Mortgage Note and Mortgage regarding the Mortgage Interest
Rate and the Monthly Payment adjustments. Any interest required to be paid
pursuant to state, federal and local law has been properly paid and credited;
(ii) Conversion to Fixed Interest Rate. The Mortgage Loan does not
contain a provision whereby the Mortgagor is permitted to convert the Mortgage
Interest Rate from an adjustable rate to a fixed rate;
(jj) Other Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has existed on or
prior to the Closing Date that has resulted or will result in the exclusion
from, denial of, or defense to coverage under any applicable hazard insurance
policy, LPMI Policy or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of
the timely payment of the full amount of the loss otherwise due thereunder to
the insured), irrespective of the cause of such failure of coverage. The Seller
has caused or will cause to be performed any and all acts required to preserve
the rights and remedies of the Purchaser in such policies or bonds 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 Purchaser. In connection with the placement
of any such insurance, 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 or entity, and no such unlawful
items have been received, retained or realized by the Seller, or, to the best of
Seller's knowledge, by any third party;
(kk) No Violation of Environmental Laws. At the time of origination
and to the best of the Seller's knowledge as of the Closing Date, there is no
pending action or proceeding directly involving the Mortgaged Property in which
compliance with any environmental law, rule or regulation is an issue; there is
no violation of any environmental law, rule or regulation with respect to the
Mortgage Property, and nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a prerequisite to
use and enjoyment of said property;
(ll) Servicemembers Civil Relief Act. The Mortgagor has not notified
the Seller, and the Seller has no knowledge of any relief requested or allowed
to the Mortgagor under the Servicemembers Civil Relief Act, as amended, or other
similar state statute;
(mm) Appraisal. Unless the Mortgage Loan was underwritten in
accordance with one of the Seller's streamline documentation programs (as
described in the Underwriting Guidelines) and identified on the Mortgage Loan
Schedule, the Mortgage File contains an appraisal of the related Mortgaged
Property signed prior to the approval of the Mortgage Loan application by a
Qualified Appraiser, who had no interest, direct or indirect in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the Mortgage Loan, and the
appraisal and appraiser both satisfy the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇
Mac and Title XI of the Financial 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;
(nn) Disclosure Materials. The Mortgagor has received all disclosure
materials required by, and the Seller has complied with, all applicable law with
respect to the making of the Mortgage Loans;
(oo) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property or
facilitating the trade-in or exchange of a Mortgaged Property;
(pp) Request for Notice; No Consent Required. With respect to any
Second Lien Loan, where required in the jurisdiction in which the Mortgaged
Property is located, the original lender has filed for record a request for
notice of any action by the related senior lienholder, and the Seller has
notified the senior lienholder in writing of the existence of the Second Lien
Loan and requested notification of any action to be taken against the Mortgagor
by the senior lienholder. Either (a) no consent for the Second Lien Loan is
required by the holder of the related first lien or (b) such consent has been
obtained and is contained in the Mortgage File;
(qq) Credit Reporting. The Seller has caused to be fully furnished,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (i.e., favorable and unfavorable)
on its borrower credit files to Equifax, Experian, and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis;
(rr) Escrow Analysis. If applicable, with respect to each Mortgage,
the Seller has within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the required Escrow
Payments for each Mortgage and adjusted the amount of such payments so that,
assuming all required payments are timely made, any deficiency will be
eliminated on or before the first anniversary of such analysis, or any overage
will be refunded to the Mortgagor, in accordance with RESPA and any other
applicable law;
(ss) [Reserved];
(tt) No Default Under First Lien. With respect to each Second Lien
Loan, the related First Lien Loan related thereto is in full force and effect,
and there is no default, breach, violation or event which would permit
acceleration existing under such first Mortgage or 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 which
would permit acceleration thereunder;
(uu) Right to Cure First Lien. With respect to each Second Lien
Loan, the related first lien Mortgage contains a provision which provides for
giving notice of default or breach to the Mortgagee under the Mortgage Loan and
allows such Mortgagee to cure any default under the related first lien Mortgage;
(vv) No Failure to Cure Default. With respect to Second Lien Loans,
the Seller has not received a written notice of default of any senior mortgage
loan related to the Mortgaged Property which has not been cured;
(ww) Credit Information. As to each consumer report (as defined in
the Fair Credit Reporting Act, Public Law 91-508) or other credit information
furnished by the Seller to the Purchaser, that Seller has full right and
authority and is not precluded by law or contract from furnishing such
information to the Purchaser and the Purchaser is not precluded from furnishing
the same to any subsequent or prospective purchaser of such Mortgage;
(xx) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the ground lease
will not terminate earlier than five years after the maturity date of the
Mortgage Loan; (3) the ground lease does not provide for termination of the
lease in the event of lessee's default without the Mortgagee being entitled to
receive written notice of, and a reasonable opportunity to cure the default; (4)
the ground lease permits the mortgaging of the related Mortgaged Property; (5)
the ground lease protects the Mortgagee's interests in the event of a property
condemnation; (6) all ground lease rents, other payments, or assessments that
have become due have been paid; and (7) the use of leasehold estates for
residential properties is a widely accepted practice in the jurisdiction in
which the Mortgaged Property is located;
(yy) Prepayment Penalty. Each Mortgage Loan that is subject to a
Prepayment Penalty as provided in the related Mortgage Note is identified on the
related Mortgage Loan Schedule and each such Prepayment Penalty is permitted
pursuant to applicable federal, state or local law. Except as set forth on the
related Mortgage Loan Schedule, no Prepayment Penalty may be imposed for a term
in excess of five (5) years following origination;
(zz) Predatory Lending Regulations. No Mortgage Loan is a High Cost
Loan or Covered Loan, as applicable, and no Mortgage Loan originated on or after
October 1, 2002, through March 6, 2003 is governed by the Georgia Fair Lending
Act. No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 and no Mortgage Loan is in violation of any comparable state or local
law;
(aaa) Purchase of Insurance. No Mortgagor was required to purchase
any single premium credit insurance policy (e.g., life, disability, property,
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,
disability, property, accident, unemployment, mortgage or health insurance) in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(bbb) Qualified Mortgage. The Mortgage Loan is a "qualified
mortgage" under Section 860G(a)(3) of the Code;
(ccc) Tax Service Contract. Each Mortgage Loan is covered by a paid
in full, life of loan, tax service contract, and such contract is transferable;
(ddd) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without regard to the
ability of the Mortgagor to repay and the extension of credit which has no
apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan;
(eee) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the assignment to
the Purchaser) 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;
(fff) Mortgagor Bankruptcy. On or prior to the date related Closing
Date, the Mortgagor has not filed a bankruptcy petition or has not become the
subject of involuntary bankruptcy proceedings or has not consented to the filing
of a bankruptcy proceeding against it or to a receiver being appointed in
respect of the related Mortgaged Property; and
(ggg) No Arbitration. Solely with respect to each Mortgage Loan that
(i) has an original Stated Principal Balance that meets ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇
Mac limits for conforming mortgage loans, and (ii) is subsequently sold to
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, no Mortgage Loan originated on or after August 1,
2004 requires the related Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the Mortgage Loan transaction.
Subsection 7.02 Seller and Servicer Representations. Each of the
Seller and Servicer hereby represents and warrants to the Purchaser that, as of
the related Closing Date:
(a) Due Organization and Authority. The Seller and the Servicer are
each validly existing, and in good standing under the laws of their jurisdiction
of incorporation or formation and have all licenses necessary to carry on their
business as now being conducted and are licensed, qualified and in good standing
in the states where the Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Seller or the Servicer. Each of the Seller and the Servicer
have the power and authority to execute and deliver this Agreement and to
perform their obligations hereunder; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Seller and the Servicer and the consummation of the
transactions contemplated hereby have been duly and validly authorized; this
Agreement has been duly executed and delivered and constitutes the valid, legal,
binding and enforceable obligation of the Seller and the Servicer, except as
enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws affecting the
enforcement of the rights of creditors and (ii) general principles of equity,
whether enforcement is sought in a proceeding in equity or at law. All requisite
action has been taken by the Seller and the Servicer to make this Agreement
valid and binding upon the Seller and the Servicer in accordance with its terms;
(b) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this Agreement from any
court, governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Seller or the Servicer is required or, if required,
such consent, approval, authorization or order has been or will, prior to the
related Closing Date, be obtained;
(c) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller and the Servicer, and the transfer, assignment and
conveyance of the Mortgage Notes and the Mortgages by the Seller pursuant to
this Agreement are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction;
(d) No Conflicts. Neither the execution and delivery of this
Agreement by the Seller and the Servicer, the acquisition or origination of the
Mortgage Loans by the Seller, the sale of the Mortgage Loans to the Purchaser,
the consummation of the transactions contemplated hereby, nor the fulfillment of
or compliance with the terms and conditions of this Agreement, will conflict
with or result in a breach of any of the terms, conditions or provisions of the
Seller's charter or by-laws or the Servicer's partnership agreement or any legal
restriction or any agreement or instrument to which the Seller or the Servicer
are now a party or by which they are bound, or constitute a default or result in
an acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Seller, the
Servicer or their property is subject, or result in the creation or imposition
of any lien, charge or encumbrance that would have an adverse effect upon any of
their properties pursuant to the terms of any mortgage, contract, deed of trust
or other instrument, or impair the ability of the Purchaser to realize on the
Mortgage Loans, impair the value of the Mortgage Loans, or impair the ability of
the Purchaser to realize the full amount of any insurance benefits accruing
pursuant to this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to best of knowledge of the Seller or the Servicer,
threatened against the Seller or the Servicer, before any court, administrative
agency or other tribunal asserting the invalidity of this Agreement, seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or which, either in any one instance or in the aggregate, may
reasonably result in any material adverse change in the business, operations,
financial condition, properties or assets of the Seller or the Servicer, or in
any material impairment of the right or ability of the Seller and the Servicer
to carry on their business substantially as now conducted, or in any material
liability on the part of the Seller or the Servicer, or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of the Seller and the
Servicer contemplated herein, or which would be likely to impair materially the
ability of the Seller or the Servicer to perform under the terms of this
Agreement;
(f) Ability to Perform; Solvency. Neither the Seller nor the
Servicer believes, nor do they have any reason or cause to believe, that they
cannot perform each and every covenant contained in this Agreement. The Seller
and the Servicer are solvent and the sale of the Mortgage Loans will not cause
the Seller to become insolvent. The sale of the Mortgage Loans is not undertaken
with the intent to hinder, delay or defraud any of Seller's creditors;
(g) Seller's Origination. The Seller's decision to originate any
mortgage loan or to deny any mortgage loan application is an independent
decision based upon the Underwriting Guidelines, and is in no way made as a
result of Purchaser's decision to purchase, or not to purchase, or the price
Purchaser may offer to pay for, any such mortgage loan, if originated;
(h) Anti-Money Laundering Laws. The Seller has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the "Anti-Money Laundering
Laws");
(i) Servicer's Ability to Service. The Servicer is an approved
seller/servicer for ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac in good standing and is a
mortgagee approved by the Secretary of HUD. No event has occurred, including a
change in insurance coverage, which would make the Servicer unable to comply
with ▇▇▇▇▇▇ Mae, ▇▇▇▇▇▇▇ Mac or HUD eligibility requirements;
(j) Reasonable Servicing Fee. The Servicer acknowledges and agrees
that the Servicing Fee represents reasonable compensation for performing such
services and that the entire Servicing Fee shall be treated by the Servicer, for
accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement;
(k) Selection Process. The Mortgage Loans were selected from among
the outstanding one- to four-family mortgage loans in the Seller's portfolio at
the related Closing Date as to which the representations and warranties set
forth in Subsection 7.01 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description of the pool
characteristics for the applicable Mortgage Loan Package delivered pursuant to
Section 9 on the related Closing Date in the form attached as Exhibit B to each
related Assignment and Conveyance Agreement;
(m) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other document
furnished or to be furnished pursuant to this Agreement or any Reconstitution
Agreement or in connection with the transactions contemplated hereby (including
any Pass-Through Transfer or Whole Loan Transfer) contains or will contain any
untrue statement of fact or omits or will omit to state a fact necessary to make
the statements contained herein or therein not misleading;
(n) No Brokers. The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans;
(o) Sale Treatment. The Seller expects to be advised by its
independent certified public accountants that under generally accepted
accounting principles the transfer of the Mortgage Loans will be treated as a
sale on the books and records of the Seller and the Seller has determined that
the disposition of the Mortgage Loans pursuant to this Agreement will be
afforded sale treatment for tax and accounting purposes;
(p) Reasonable Purchase Price. The consideration received by the
Seller upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans; and
(q) Financial Statements. The Seller has delivered to the Purchaser
financial statements as to its last three complete fiscal years and any later
quarter ended more than 60 days prior to the execution of this Agreement. All
such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial
position at the end of each such period of the Seller and its subsidiaries and
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto. In addition, the Seller has delivered information as to its loan
gain and loss experience in respect of foreclosures and its loan delinquency
experience for the immediately preceding three year period, in each case with
respect to mortgage loans owned by it and such mortgage loans serviced for
others during such period, and all such information so delivered shall be true
and correct in all material respects. There has been no change in the business,
operations, financial condition, properties or assets of the Seller since the
date of the Seller's financial Statements that would have a material adverse
effect on its ability to perform its obligations under this Agreement.
Subsection 7.03 Remedies for Breach of Representations and
Warranties. It is understood and agreed that the representations and warranties
set forth in Subsections 7.01 and 7.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by the Seller, the Servicer or the Purchaser of a breach of
any of the foregoing representations and warranties, the party discovering such
breach shall give prompt written notice to the other relevant parties.
Within ninety (90) days after the earlier of either discovery by or
notice to the Seller and the Servicer of any breach of a representation or
warranty which materially and adversely affects the value of the Mortgage Loans
or the interest of the Purchaser therein (or which materially and adversely
affects the value of the applicable Mortgage Loan or the interest of the
Purchaser therein in the case of a representation and warranty relating to a
particular Mortgage Loan), the Seller shall use its best efforts promptly to
cure such breach in all material respects and, if such breach cannot be cured,
the Seller shall repurchase such Mortgage Loan or Mortgage Loans at the
Repurchase Price. Notwithstanding the above sentence, within sixty (60) days
after the earlier of either discovery by, or notice to, the Seller of any breach
of the representations or warranties set forth in clauses (qq), (yy), (zz),
(aaa), (bbb), or (ggg) of Subsection 7.01, the Seller shall repurchase such
Mortgage Loan at the Repurchase Price. In the event that a breach shall involve
any representation or warranty set forth in Subsection 7.02, and such breach
cannot be cured in sixty (60) days of the earlier of either discovery by or
notice to the Seller of such breach, all of the Mortgage Loans affected by such
breach shall, at the Purchaser's option, be repurchased by the Seller at the
Repurchase Price. However, if the breach, shall involve a representation or
warranty set forth in Subsection 7.01 (except as provided in the second sentence
of this paragraph with respect to certain breaches for which no substitution is
permitted) and the Seller discovers or receives notice of any such breach within
two hundred seventy (270) days of the related Closing Date, the Seller shall, at
the Purchaser's option and provided that the Seller has a Qualified Substitute
Mortgage Loan, rather than repurchase the Mortgage Loan as provided above,
remove such Mortgage Loan and substitute in its place a Qualified Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans; provided, however, that
any such substitution shall be effected not later than two hundred seventy (270)
days after the related Closing Date. If the Seller has no Qualified Substitute
Mortgage Loan, it shall repurchase the deficient Mortgage Loan at the Repurchase
Price. Any repurchase of a Mortgage Loan pursuant to the foregoing provisions of
this Subsection 7.03 shall occur on a date designated by the Purchaser, and
acceptable to the Seller, and shall be accomplished by the Seller remitting to
the Servicer for deposit the amount of the Repurchase Price in the Custodial
Account for distribution to the Purchaser on the next scheduled Remittance Date.
At the time of repurchase of any deficient Mortgage Loan (or removal
of any Deleted Mortgage Loan), the Purchaser and the Seller shall arrange for
the assignment of the repurchased Mortgage Loan (or Deleted Mortgage Loan) to
the Seller or its designee and the delivery to the Seller of any documents held
by the Purchaser relating to the repurchased Mortgage Loan in the manner
required by this Agreement with respect to the purchase and sale of such
Mortgage Loan on the related Closing Date. In the event the Repurchase Price is
deposited in the Custodial Account, the Seller shall, simultaneously with its
remittance to the Servicer of such Repurchase Price for deposit, give written
notice to the Purchaser that such deposit has taken place. Upon such repurchase,
the related Mortgage Loan Schedule shall be amended to reflect the withdrawal of
the repurchased Mortgage Loan from this Agreement.
As to any Deleted Mortgage Loan for which the Seller substitutes one
or more Qualified Substitute Mortgage Loans, the Seller shall be deemed to have
made the representations and warranties set forth in this Agreement except that
all such representations and warranties set forth in this Agreement shall be
deemed made as of the date of such substitution. No substitution will be made in
any calendar month after the Determination Date for such month. The Seller shall
effect such substitution by delivering to the Purchaser for each Qualified
Substitute Mortgage Loan the Mortgage Note, the Mortgage, the Assignment of
Mortgage and such other documents and agreements as are required by Subsection
6.03. The Seller shall remit to the Servicer for deposit in the Custodial
Account the Monthly Payment less the Servicing Fee due on each Qualified
Substitute Mortgage Loan in the month following the date of such substitution.
Monthly Payments due with respect to Qualified Substitute Mortgage Loans in the
month of substitution shall be retained by the Seller. For the month of
substitution, distributions to the Purchaser shall include the Monthly Payment
due on such Deleted Mortgage Loan in the month of substitution, and the Seller
shall thereafter be entitled to retain all amounts subsequently received by the
Seller in respect of such Deleted Mortgage Loan. The Seller shall give written
notice to the Purchaser that such substitution has taken place and shall amend
the related Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Qualified Substitute Mortgage Loan. Upon such substitution, each Qualified
Substitute Mortgage Loan shall be subject to the terms of this Agreement in all
respects, and the Seller shall be deemed to have made with respect to such
Qualified Substitute Mortgage Loan, as of the date of substitution, the
covenants, representations and warranties set forth in Subsections 7.01 and
7.02.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Seller
will determine the amount (if any) by which the aggregate principal balance of
all such Qualified Substitute Mortgage Loans as of the date of substitution is
less than the aggregate unpaid Principal Balance of all such Deleted Mortgage
Loans (after application of scheduled principal payments due in the month of
substitution). The amount of such shortfall shall be remitted to the Servicer by
the Seller for distribution by the Servicer in the month of substitution
pursuant to Subsection 11.04. Accordingly, on the date of such substitution, the
Seller will remit to the Servicer from its own funds for deposit into the
Custodial Account an amount equal to the amount of such shortfall plus one
month's interest thereon at the Mortgage Loan Remittance Rate.
In addition to such repurchase or substitution obligation, the
Seller and the Servicer, jointly and severally, shall indemnify the Purchaser
and its present and former directors, officers, employees and agents and any
Successor Servicer and its present and former directors, officers, employees and
agents and hold such parties harmless against any losses, damages, penalties,
fines, forfeitures, legal fees and expenses and related costs, judgments, and
other costs and expenses resulting from any claim, demand, defense or assertion
based on or grounded upon, or resulting from, a breach of the Seller or of the
Servicer of the representations and warranties contained in this Agreement or
any Reconstitution Agreement. It is understood and agreed that the obligations
of the Seller set forth in this Subsection 7.03 to cure, substitute for or
repurchase a defective Mortgage Loan and to indemnify the Purchaser and
Successor Servicer as provided in this Subsection 7.03 and in Subsection 12.01
constitute the sole remedies of the Purchaser respecting a breach of the
foregoing representations and warranties. For purposes of this paragraph,
"Purchaser" shall mean the Person then acting as the Purchaser under this
Agreement and any and all Persons who previously were "Purchasers" under this
Agreement and "Successor Servicer" shall mean any Person designated as the
Successor Servicer pursuant to this Agreement and any and all Persons who
previously were "Successor Servicers" pursuant to this Agreement.
Any cause of action against the Seller or the Servicer relating to
or arising out of the breach of any representations and warranties made in
Subsections 7.01 and 7.02 shall accrue as to any Mortgage Loan upon (i)
discovery of such breach by the Purchaser or notice thereof by the Seller or the
Servicer to the Purchaser, (ii) failure by the Seller or the Servicer to cure
such breach, substitute a Qualified Substitute Mortgage Loan, or repurchase such
Mortgage Loan as specified above and (iii) demand upon the Seller or the
Servicer by the Purchaser for compliance with this Agreement.
Subsection 7.04 Repurchase of Mortgage Loans with First Payment
Defaults. If the related Mortgagor is delinquent with respect to the Mortgage
Loan's first Monthly Payment after the related Closing Date, the Seller, at the
Purchaser's option, shall repurchase such Mortgage Loan from the Purchaser at a
price equal to the Repurchase Price. The Seller shall repurchase such delinquent
Mortgage Loan within thirty (30) days of such request.
Subsection 7.05 Premium Recapture.
With respect to any Mortgage Loan that prepays in full during the
first month following the Closing Date, the Seller shall pay the Purchaser,
within three (3) business days after such prepayment in full, (a) with respect
to any Mortgage Loan without a prepayment penalty, an amount equal to the
difference between (i) the Purchase Price for such Mortgage Loan and (ii) the
outstanding principal balance of such Mortgage Loan as of the cut-off date, and
(b) with respect to any Mortgage Loan with a prepayment penalty, an amount equal
to the difference between (i) the Purchase Price for such Mortgage Loan and (ii)
the sum of (x) the outstanding principal balance of such Mortgage Loan as of the
cut-off date and (y) the prepayment penalty contractually due. This premium
protection will be assignable.
Subsection 7.06 Representations and Warranties Regarding the
Purchaser.
The Purchaser represents, warrants and covenants to the Seller and
the Servicer that as of each Closing Date:
(a) Due Organization and Authority. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of New York and has all licenses necessary to carry on its business as now
being conducted. The execution, delivery and performance of this Agreement by
the Purchaser and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized; this Agreement and all agreements
contemplated hereby have been duly executed and delivered and constitute the
valid, legal, binding and enforceable obligations of the Purchaser, regardless
of whether such enforcement is sought in a proceeding in equity or at law; and
all requisite corporate action has been taken by the Purchaser to make this
Agreement and all agreements contemplated hereby valid and binding upon the
Purchaser in accordance with their terms;
(b) No Conflicts. Neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and thereby,
nor the fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Purchaser's charter or by-laws or any legal
restriction or any agreement or instrument to which the Purchaser is now a party
or by which it is bound;
(c) No Litigation Pending. No litigation or administrative
proceeding of or before any court, tribunal or governmental body is currently
pending or to the knowledge of the Purchaser threatened, against the Purchaser
or with respect to this Agreement, which if adversely determined would have a
material adverse effect on the transactions contemplated by this Agreement; and
(d) No Consent Required. No consent, approval, authorization or
order of, or registration or filing with, or notice to any court or governmental
agency or body is required for the execution, delivery and performance by the
Purchaser of or compliance by the Purchaser with this Agreement or the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the related Closing Date;
Section 8. Closing. The closing for the purchase and sale of each
Mortgage Loan Package shall take place on the related Closing Date. At the
Purchaser's option, each closing shall be either: by telephone, confirmed by
letter or wire as the parties shall agree, or conducted in person, at such place
as the parties shall agree. Each closing shall be subject to each of the
following conditions:
(a) all of the representations and warranties of the Seller and the
Servicer in this Agreement shall be true and correct as of the related Closing
Date and no event shall have occurred which, with notice or the passage of time,
would constitute an Event of Default under this Agreement;
(b) the Purchaser's attorneys shall have received in escrow, all
Closing Documents as specified in Section 9, in such forms as are agreed upon
and acceptable to the Purchaser, duly executed by all signatories as required
pursuant to the terms hereof; and
(c) all other terms and conditions of this Agreement shall have been
complied with.
Section 9. Closing Documents. On the related Closing Date (or, with
respect to Section 9(p) below, within the time period specified therein), the
Purchaser, the Seller and the Servicer, as applicable, shall deliver, or the
Purchaser shall cause the Custodian to deliver, to the Purchaser's attorneys in
escrow fully executed originals of:
(a) this Agreement (to be executed and delivered only for the
initial Closing Date);
(b) the related Purchase Price and Terms Agreement, executed in four
(4) counterparts;
(c) with respect to the initial Closing Date, a Custodial Account
Certification in the form attached as Exhibit 4 hereto or a Custodial Account
Letter Agreement in the form attached as Exhibit 5 hereto;
(d) with respect to the initial Closing Date, an Escrow Account
Certification in the form attached as Exhibit 6 hereto or an Escrow Account
Letter Agreement in the form attached as Exhibit 7 hereto;
(e) the related Mortgage Loan Schedule, segregated by Mortgage Loan
Package, one copy to be attached to the Custodian's counterpart of the Custodial
Agreement, and one copy to be attached to the related Assignment and Conveyance
Agreement as the Mortgage Loan Schedule thereto;
(f) with respect to the initial Closing Date, an Officer's
Certificate, in the form of Exhibit 10-1 hereto with respect to the Seller,
including all attachments thereto and with respect to subsequent Closing Dates,
an Officer's Certificate upon reasonable request of the Purchaser;
(g) with respect to the initial Closing Date, an Officer's
Certificate, in the form of Exhibit 10-2 hereto with respect to the Servicer,
including all attachments thereto and with respect to subsequent Closing Dates,
an Officer's Certificate upon reasonable request of the Purchaser;
(h) with respect to the initial Closing Date, an Opinion of Counsel
of the Seller and Servicer (who may be an employee of the Seller or the
Servicer), in the form reasonably acceptable to the Purchaser and with respect
to subsequent Closing Dates, an Opinion of Counsel of the Seller upon the
reasonable request of the Purchaser;
(i) with respect to the initial Closing Date, an Opinion of Counsel
of the Custodian (who may be an employee of the Custodian), in the form of an
exhibit to the Custodial Agreement;
(j) a Security Release Certification, in the form of Exhibit 12 or
Exhibit 13, as applicable, hereto executed by any person, as requested by the
Purchaser, with respect to any Mortgage Loan which, as of the related Closing
Date, is subject to any security interest, pledge or hypothecation for the
benefit of such person;
(k) a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if any of the Mortgage
Loans were acquired by the Seller by merger or acquired or originated by the
Seller while conducting business under a name other than its present name, if
applicable;
(l) with respect to each Closing Date, the Underwriting Guidelines
to be attached to the related Assignment and Conveyance Agreement;
(m) Assignment and Conveyance Agreement in the form of Exhibit 14
hereto, including all exhibits thereto;
(n) a Custodian's Certification, as required under the Custodial
Agreement, in the form required by the Custodial Agreement; and
(o) no later than 2 Business Days after the related Closing Date, a
MERS Report listing the Purchaser as Investor, the Custodian as custodian and no
Person as Interim Funder for each MERS Designated Mortgage Loan.
The Seller and Servicer shall bear the risk of loss of their
respective closing documents until such time as they are received by the
Purchaser or its attorneys.
Section 10. Costs. The Purchaser shall pay any commissions due its
salesmen and the legal fees and expenses of its attorneys and custodial fees.
All other costs and expenses incurred in connection with the transfer and
delivery of the Mortgage including recording fees, fees for title policy
endorsements and continuations, fees for recording the initial Assignments of
Mortgage, and the Seller's and Servicer's attorney's fees, shall be paid by the
Seller and the Servicer, respectively.
Section 11. Administration and Servicing of the Mortgage Loans.
Subsection 11.01 Servicer to Act as Servicer. The Servicer shall
service and administer the Mortgage Loans in accordance with this Agreement and
Accepted Servicing Practices and the terms of the Mortgage Notes and Mortgages,
and shall have full power and authority, acting alone or through sub-servicers
or agents, to do or cause to be done any and all things in connection with such
servicing and administration which the Servicer may deem necessary or desirable
and consistent with the terms of this Agreement. The Servicer may perform its
servicing responsibilities through agents or independent contractors, but shall
not thereby be released from any of its responsibilities hereunder.
Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor; provided, however, that (unless the Mortgagor is in default with
respect to the Mortgage Loan, or such default is, in the judgment of the
Servicer, imminent, and the Servicer has the consent of the Purchaser) the
Servicer shall not permit any modification with respect to any Mortgage Loan
which materially and adversely affects the Mortgage Loan, including without
limitation, any modification that would defer or forgive the payment of any
principal or interest, change the outstanding principal amount (except for
actual payments of principal), make any future advances, extend the final
maturity date or change the Mortgage Interest Rate, as the case may be, with
respect to such Mortgage Loan. Notwithstanding the foregoing, the Servicer shall
not waive any Prepayment Penalty or portion thereof unless (i) the
enforceability thereof shall have been limited by bankruptcy, insolvency,
moratorium, receivership or other similar laws relating to creditors' rights
generally or is otherwise prohibited by law, or (ii) the enforceability thereof
shall have been permanently limited due to acceleration in connection with a
foreclosure or other involuntary payment or (iii) in the Servicer's reasonable
judgment, (x) such waiver relates to a default or a reasonably foreseeable
default, (y) such waiver would maximize recovery of total proceeds taking into
account the value of such Prepayment Penalty and related Mortgage Loan and (z)
doing so is in accordance with Acceptable Servicing Practices (including any
waiver of a Prepayment Penalty in connection with a refinancing of a Mortgage
Loan that is related to a default or reasonably foreseeable default). Except as
provided in the preceding sentence, in no event will the Servicer waive a
Prepayment Penalty in connection with a refinancing of a Mortgage Loan that is
not related to a default or a reasonably foreseeable default. If the Servicer
waives or does not collect all or a portion of a Prepayment Penalty relating to
a Principal Prepayment in full or in part due to any action or omission of the
Servicer, other than as permitted above, the Servicer shall deposit from its own
funds without any right of reimbursement therefor the amount of such Prepayment
Penalty (or such portion thereof as had been waived for deposit) into the
Custodial Account for distribution in accordance with the terms of this
Agreement. In connection with any waiver of a Prepayment Penalty by the
Servicer, the Servicer shall account for such waiver in its monthly reports as
agreed upon by the Servicer and the Purchaser. Without limiting the generality
of the foregoing, the Servicer in its own name or acting through sub-servicers
or agents is hereby authorized and empowered by the Purchaser when the Servicer
believes it appropriate and reasonable in its best judgment, to execute and
deliver, on behalf of itself and the Purchaser, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and the Mortgaged
Properties and to institute foreclosure proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and to hold or
cause to be held title to such properties, on behalf of the Purchaser pursuant
to the provisions of Subsection 11.12. The Servicer shall make all required
Servicing Advances and shall service and administer the Mortgage Loans in
accordance with applicable state and federal law and shall provide to the
Mortgagors any reports required to be provided to them thereby. The Purchaser
shall furnish to the Servicer any powers of attorney and other documents
reasonably necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
Notwithstanding anything to the contrary in this Agreement, the
Purchaser may at any time and from time to time, in its sole discretion, upon
written notice to the Servicer, with respect to (1) any REO Property or (2) all
Mortgage Loans that are 90 or more days delinquent as of the date of such notice
and any Mortgage Loans that subsequently become 90 or more days delinquent
following the date of such notice (for the purposes of this paragraph such
Mortgage Loans, "Delinquent Mortgage Loans"), terminate the Servicer's servicing
obligations hereunder with respect to such REO Properties and Delinquent
Mortgage Loans, upon reimbursement of any unreimbursed advances owed to the
Servicer and payment of the termination fee referred to in Subsection 14.02.
Upon the effectiveness of any such termination of the Servicer's servicing
obligations with respect to any such REO Property or Delinquent Mortgage Loan,
the Servicer shall deliver all agreements, documents, and instruments related
thereto to the Purchaser, in accordance with Accepted Servicing Practices and
applicable law and shall transfer servicing to the Purchaser's designee in
accordance with Acceptable Servicing Practices, at the sole cost and expense of
the Purchaser.
Subsection 11.02 Liquidation of Mortgage Loans. If any payment due
under any Mortgage Loan is not paid when the same becomes due and payable, or in
the event the Mortgagor fails to perform any other covenant or obligation under
the Mortgage Loan and such failure continues beyond any applicable grace period,
the Servicer shall take such action as it shall deem to be in the best interest
of the Purchaser. If any payment due under any Mortgage Loan remains delinquent
for a period of one hundred twenty (120) days or more, the Servicer shall
commence foreclosure proceedings in accordance with the guidelines set forth by
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. In such event, the Servicer shall from its own funds
and to the extent deemed recoverable make all necessary and proper Servicing
Advances.
Subsection 11.03 Collection of Mortgage Loan Payments. Continuously
from the date hereof until the principal and interest on all Mortgage Loans are
paid in full, the Servicer will proceed diligently, in accordance with this
Agreement, to collect all payments due under each of the Mortgage Loans when the
same shall become due and payable. Further, the Servicer will in accordance with
Accepted Servicing Practicies ascertain and estimate taxes, assessments, fire
and hazard insurance premiums, and all other charges that, as provided in any
Mortgage, will become due and payable to the end that the installments payable
by the Mortgagors, if applicable, will be sufficient to pay such charges as and
when they become due and payable.
Subsection 11.04 Establishment of Custodial Account; Deposits in
Custodial Account. The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Custodial
Accounts (collectively, the "Custodial Account"), titled "[SERVICER], in trust
for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. as Purchaser of Mortgage Loans and
various Mortgagors." Such Custodial Account shall be established with a
commercial bank, a savings bank or a savings and loan association (which may be
a depository Affiliate of the Servicer) which meets the guidelines set forth by
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac as an eligible depository institution for custodial
accounts. In any case, the Custodial Account shall be insured by the FDIC in a
manner which shall provide maximum available insurance thereunder and which may
be drawn on by the Servicer. The creation of any Custodial Account shall be
evidenced by (i) a certification in the form of Exhibit 4 hereto, in the case of
an account established with a depository Affiliate of the Servicer, or (ii) a
letter agreement in the form of Exhibit 5 hereto, in the case of an account held
by a depository other than an Affiliate of the Servicer. In either case, a copy
of such certification or letter agreement shall be furnished to the Purchaser
upon request.
The Servicer shall deposit in the Custodial Account within two (2)
Business Days following receipt thereof, and retain therein the following
payments and collections received or made by it subsequent to the related
Cut-off Date (other than in respect of principal and interest on the Mortgage
Loans due on or before the related Cut-off Date):
(a) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(b) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Loan Remittance Rate;
(c) all Liquidation Proceeds;
(d) all proceeds received by the Servicer under any title insurance
policy, hazard insurance policy, or other insurance policy other than proceeds
to be held in the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with Accepted
Servicing Practices;
(e) all awards or settlements in respect of condemnation proceedings
or eminent domain affecting any Mortgaged Property which are not released to the
Mortgagor in accordance with Accepted Servicing Practices;
(f) any amount required to be deposited in the Custodial Account
pursuant to Subsections 11.14, 11.16 and 11.18;
(g) any amount required to be deposited by the Servicer in
connection with any REO Property pursuant to Subsection 11.12;
(h) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Subsection 7.03, and all amounts required to be
deposited by the Servicer in connection with shortfalls in principal amount of
Qualified Substitute Mortgage Loans pursuant to Subsection 7.03; and
(i) with respect to each Principal Prepayment in full, an amount (to
be paid by the Servicer out of its own funds) which, when added to all amounts
allocable to interest received in connection with the Principal Prepayment in
full, equals one month's interest on the amount of principal so prepaid for the
month of prepayment at the applicable Mortgage Loan Remittance Rate; provided,
however, that the Servicer's aggregate obligations under this paragraph for any
month shall be limited to the total amount of Servicing Fees actually received
with respect to the Mortgage Loans by the Servicer during such month.
The foregoing requirements for deposit in the Custodial Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
assumption fees, (excluding any Prepayment Penalties, which shall belong to the
Purchaser), Prepayment Interest Exess and other ancillary fees need not be
deposited by the Servicer in the Custodial Account.
The Servicer may invest the funds in the Custodial Account in
Eligible Investments designated in the name of the Servicer for the benefit of
the Purchaser, which shall mature not later than the Business Day next preceding
the Remittance Date next following the date of such investment (except that (A)
any investment in the institution with which the Custodial Account is maintained
may mature on such Remittance Date and (B) any other investment may mature on
such Remittance Date if the Servicer shall advance funds on such Remittance
Date, pending receipt thereof to the extent necessary to make distributions to
the Owner) and shall not be sold or disposed of prior to maturity.
Notwithstanding anything to the contrary herein and above, all income and gain
realized from any such investment shall be for the benefit of the Servicer and
shall be subject to withdrawal by the Servicer. The amount of any losses
incurred in respect of any such investments shall be deposited in the Custodial
Account by the Servicer out of its own funds immediately as realized.
Subsection 11.05 Withdrawals From the Custodial Account. The
Servicer shall, from time to time, withdraw funds from the Custodial Account for
the following purposes:
(a) to make payments to the Purchaser in the amounts and in the
manner provided for in Subsection 11.14;
(b) to reimburse itself for P&I Advances, the Servicer's right to
reimburse itself pursuant to this subclause (b) with respect to any Mortgage
Loan being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, REO Disposition Proceeds and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of any such reimbursement,
the Servicer's right thereto shall be prior to the rights of the Purchaser,
except that, where the Seller is required to repurchase a Mortgage Loan,
pursuant to Subsection 7.03, the Servicer's right to such reimbursement shall be
subsequent to the payment to the Purchaser of the Repurchase Price pursuant to
Subsection 7.03, and all other amounts required to be paid to the Purchaser with
respect to such Mortgage Loan;
(c) to reimburse itself for any unpaid Servicing Fees and for
unreimbursed Servicing Advances, the Servicer's right to reimburse itself
pursuant to this subclause (c) with respect to any Mortgage Loan being limited
to related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO
Disposition Proceeds and such other amounts as may be collected by the Servicer
from the Mortgagor or otherwise relating to the Mortgage Loan, it being
understood that, in the case of any such reimbursement, the Servicer's right
thereto shall be prior to the rights of the Purchaser unless the Seller is
required to repurchase a Mortgage Loan pursuant to Subsection 7.03, in which
case the Servicer's right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase Price pursuant to Subsection 7.03 and
all other amounts required to be paid to the Purchaser with respect to such
Mortgage Loan;
(d) to reimburse itself for unreimbursed Servicing Advances and for
▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances, in accordance with Subsection 11.16, to the extent
that such amounts are nonrecoverable by the Servicer pursuant to subclause (b)
or (c) above, provided that the Mortgage Loan for which such advances were made
is not required to be repurchased by the Seller pursuant to Subsection 7.03;
(e) to reimburse itself for expenses incurred by and reimbursable to
it pursuant to Subsection 12.01;
(f) to withdraw amounts to make P&I Advances in accordance with
Subsection 11.16;
(g) to pay to itself any interest earned or any investment earnings
on funds deposited in the Custodial Account;
(h) to reimburse itself for LPMI Fees, if any;
(i) to withdraw any amounts inadvertently deposited in the Custodial
Account; and
(j) to clear and terminate the Custodial Account upon the
termination of this Agreement.
Subsection 11.06 Establishment of Escrow Account; Deposits in Escrow
Account. The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts (collectively, the "Escrow Account"),
titled "[SERVICER], in trust for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. as
Purchaser of Mortgage Loans and various Mortgagors." The Escrow Account shall be
established with a commercial bank, a savings bank or a savings and loan
association (which may be a depository Affiliate of Servicer), which meets the
guidelines set forth by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac as an eligible institution for
escrow accounts. In any case, the Escrow Account shall be insured by the FDIC in
a manner which shall provide maximum available insurance thereunder and which
may be drawn on by the Servicer. The creation of any Escrow Account shall be
evidenced by a certification in the form of Exhibit 6 hereto, in the case of an
account established with a depository Affiliate of the Servicer, or by a letter
agreement in the form of Exhibit 7 hereto, in the case of an account held by a
depository. In either case, a copy of such certification or letter agreement
shall be furnished to the Purchaser upon request.
The Servicer shall deposit in the Escrow Account within two (2)
Business Days, and retain therein: (a) all Escrow Payments collected on account
of the Mortgage Loans, for the purpose of effecting timely payment of any such
items as required under the terms of this Agreement, and (b) all amounts
representing proceeds of any hazard insurance policy which are to be applied to
the restoration or repair of any Mortgaged Property. The Servicer shall make
withdrawals therefrom only in accordance with Subsection 11.07. As part of its
servicing duties, the Servicer shall pay to the Mortgagors interest on funds in
the Escrow Account, to the extent required by law.
Subsection 11.07 Withdrawals From Escrow Account. Withdrawals from
the Escrow Account shall be made by the Servicer only (a) to effect timely
payments of ground rents, taxes, assessments, fire and hazard insurance premiums
or other items constituting Escrow Payments for the related Mortgage, (b) to
reimburse the Servicer for any Servicing Advance made by Servicer pursuant to
Subsection 11.08 with respect to a related Mortgage Loan, (c) to refund to any
Mortgagor any funds found to be in excess of the amounts required under the
terms of the related Mortgage Loan, (d) for transfer to the Custodial Account
upon default of a Mortgagor or in accordance with the terms of the related
Mortgage Loan and if permitted by applicable law, (e) for application to restore
or repair of the Mortgaged Property, (f) to pay to the Mortgagor, to the extent
required by law, any interest paid on the funds deposited in the Escrow Account,
(g) to pay to itself any interest earned on funds deposited in the Escrow
Account (and not required to be paid to the Mortgagor), (h) to the extent
permitted under the terms of the related Mortgage Note and applicable law, to
pay late fees with respect to any Monthly Payment which is received after the
applicable grace period, (i) to withdraw suspense payments that are deposited
into the Escrow Account, (j) to withdraw any amounts inadvertently deposited in
the Escrow Account or (k) to clear and terminate the Escrow Account upon the
termination of this Agreement.
Subsection 11.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder. With respect to each Mortgage Loan, the Servicer shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments and other charges which are or may become a lien upon the Mortgaged
Property and the status of fire and hazard insurance coverage and shall obtain,
from time to time, all bills for the payment of such charges (including renewal
premiums) and shall effect payment thereof prior to the applicable penalty or
termination date and at a time appropriate for securing maximum discounts
allowable, employing for such purpose deposits of the Mortgagor in the Escrow
Account which shall have been estimated and accumulated by the Servicer in
amounts sufficient for such purposes, as allowed under the terms of the
Mortgage. If a Mortgage does not provide for Escrow Payments, the Servicer shall
determine that any such payments are made by the Mortgagor. The Servicer assumes
full responsibility for the timely payment of all such bills and shall effect
timely payments of all such bills irrespective of each Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make Servicing Advances to effect such payments, subject to its ability to
recover such Servicing Advances pursuant to Subsection 11.07(b). With respect to
each Mortgage Loan, on or before January 31st of each year during the term of
this Agreement, beginning January 31, 2006, the Servicer shall ensure that all
taxes due during the prior calendar year have been paid on the related Mortgaged
Property.
Subsection 11.09 Transfer of Accounts. The Servicer may transfer the
Custodial Account or the Escrow Account to a different depository institution.
Such transfer shall be made only upon obtaining the prior written consent of the
Purchaser; such consent not to be unreasonably withheld.
Subsection 11.10 Maintenance of Hazard Insurance. The Servicer shall
cause to be maintained for each Mortgage Loan fire and hazard insurance with
extended coverage customary in the area where the Mortgaged Property is located
that conforms to the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. If the Mortgaged
Property is in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards (and such flood
insurance has been made available) the Servicer will cause to be maintained a
flood insurance policy meeting the requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
The Servicer shall also maintain on REO Property fire and hazard insurance with
extended coverage in an amount which meets the requirements of ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac. Any amounts collected by the Servicer under any such policies
(other than amounts to be deposited in the Escrow Account and applied to the
restoration or repair of the property subject to the related Mortgage or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor in accordance with Accepted Servicing Practices) shall be deposited in
the Custodial Account, subject to withdrawal pursuant to Subsection 11.05. It is
understood and agreed that no earthquake or other additional insurance need be
required by the Servicer of any Mortgagor or maintained on REO Property other
than pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. All policies required
hereunder shall be endorsed with standard mortgagee clauses with loss payable to
Servicer, and shall provide for at least thirty (30) days prior written notice
of any cancellation, reduction in amount or material change in coverage to the
Servicer. The Servicer shall not interfere with the Mortgagor's freedom of
choice in selecting either its insurance carrier or agent; provided, however,
that the Servicer shall not accept any such insurance policies that do not
conform to the requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
Subsection 11.11 Fidelity Bond; Errors and Omissions Insurance. The
Servicer shall maintain, at its own expense, a blanket Fidelity Bond and an
errors and omissions insurance policy, with broad coverage on all officers,
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Mortgage Loans. These
policies shall insure the Servicer against losses resulting from dishonest or
fraudulent acts committed by the Servicer's personnel, any employees of outside
firms that provide data processing services for the Servicer, and temporary
contract employees or student interns. The Fidelity Bond shall also protect and
insure the Servicer against losses in connection with the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Subsection 11.11 requiring
such Fidelity Bond and errors and omissions insurance shall diminish or relieve
the Servicer of its duties and obligations as set forth in this Agreement. The
minimum coverage under any such Fidelity Bond and insurance policy shall be at
least equal to the corresponding amounts required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇
▇▇▇ Servicing Guide or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' & Servicers'
Guide, as amended or restated from time to time, or in an amount as may be
permitted to the Servicer by express waiver of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
Subsection 11.12 Title, Management and Disposition of REO Property.
If title to the Mortgaged Property is acquired in foreclosure or by deed in lieu
of foreclosure, the deed or certificate of sale shall be taken in the name of
the Servicer or its nominee, in either case as nominee, for the benefit of the
Purchaser of record on the date of acquisition of title (the "Owner"). If the
Servicer is not authorized or permitted to hold title to real property in the
state where the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an opinion of counsel obtained by the Servicer, at the
expense of the Purchaser, from an attorney duly licensed to practice law in the
state where the REO Property is located. The Person or Persons holding such
title other than the Owner shall acknowledge in writing that such title is being
held as nominee for the Owner.
The Servicer shall cause to be deposited within two (2) Business
Days in the Custodial Account all revenues received with respect to the
conservation and disposition of the related REO Property and shall withdraw
therefrom funds necessary for the proper operation, management and maintenance
of the REO Property, including the cost of maintaining any hazard insurance
pursuant to Subsection 11.10 and the fees of any managing agent acting on behalf
of the Servicer. Any disbursement in excess of $5,000 shall be made only with
the written approval of the Purchaser. The Servicer shall make distributions as
required on each Remittance Date to the Purchaser of the net cash flow from the
REO Property (which shall equal the revenues from such REO Property net of the
expenses described above and of any reserves reasonably required from time to
time to be maintained to satisfy anticipated liabilities for such expenses).
The disposition of REO Property shall be carried out by the Servicer
in accordance with the provisions of this Agreement and shall be made at such
price, and upon such terms and conditions, as the Servicer deems to be in the
best interests of the Owner. Upon the request of the Owner, and at the Owner's
expense, the Servicer shall cause an appraisal of the REO Property to be
performed for the Owner. The proceeds of sale of the REO Property shall be
promptly deposited in the Custodial Account and, as soon as practical
thereafter, the expenses of such sale shall be paid, the Servicer shall
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees, unreimbursed advances made pursuant to Subsection 11.16 and any
appraisal performed pursuant to this paragraph and the net cash proceeds of such
sale remaining in the Custodial Account shall be distributed to the Purchaser.
The Servicer shall either itself or through an agent selected by the
Servicer, manage, conserve, protect and operate the REO Property in the same
manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. The Servicer shall attempt to
sell the same (and may temporarily rent the same) on such terms and conditions
as the Servicer deems to be in the best interest of the Owner.
If a REMIC election is or is to be made with respect to the
arrangement under which the Mortgage Loans and any REO Property are held, the
Servicer shall manage, conserve, protect and operate each REO Property in a
manner which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by such REMIC of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" within the meaning of Section 860G(c)(2) of the Code.
Upon request, with respect to any REO Property, the Servicer shall
furnish to the Owner a statement covering the Servicer's efforts in connection
with the sale of that REO Property and any rental of the REO Property incidental
to the sale thereof for the previous month (together with an operating
statement).
Subsection 11.13 Servicing Compensation. As compensation for its
services hereunder, the Servicer shall be entitled to retain the Servicing Fee
from interest payments on the Mortgage Loans. Additional servicing compensation
in the form of assumption fees, Prepayment Interest Excess, late payment charges
and other ancillary income shall be retained by the Servicer. The Servicer shall
be required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
Subsection 11.14 Distributions. On each Remittance Date the Servicer
shall remit by wire transfer of immediately available funds to the account
designated in writing by the Purchaser of record on the preceding Record Date
(a) all Monthly Payments due in the Due Period relating to such Remittance Date
and received by the Servicer prior to the related Determination Date, plus (b)
all amounts, if any, which the Servicer is obligated to distribute pursuant to
Subsection 11.16, plus (c) any amounts attributable to Principal Prepayments
received during the Principal Prepayment Period relating to such Remittance
Date, together with any additional interest required to be deposited in the
Custodial Account in connection with such Principal Prepayments in accordance
with Subsection 11.04(i), minus (d) all amounts that may be withdrawn from the
Custodial Account pursuant to Subsections 11.05(b) through (e).
With respect to any remittance received by the Purchaser after the
Business Day on which such payment was due, the Servicer shall pay to the
Purchaser interest on any such late payment at an annual rate equal to the Prime
Rate, adjusted as of the date of each change, plus three percent (3%), but in no
event greater than the maximum amount permitted by applicable law. Such interest
shall be paid by the Servicer to the Purchaser on the date such late payment is
made and shall cover the period commencing with the Business Day on which such
payment was due and ending with the Business Day immediately preceding the
Business Day on which such payment is made, both inclusive. The payment by the
Servicer of any such interest shall not be deemed an extension of time for
payment or a waiver of any Event of Default by the Servicer.
Subsection 11.15 Statements to the Purchaser. Not later than on each
Remittance Date, the Servicer shall forward to the Purchaser in hard copy and
electronic format mutually acceptable to the Purchaser and the Servicer, a
statement, substantially in the form of Exhibit 9 and certified by a Servicing
Officer, setting forth (a) the amount of the distribution made on such
Remittance Date which is allocable to principal and allocable to interest; (b)
the amount of servicing compensation received by the Servicer during the prior
calendar month; (c) the aggregate Stated Principal Balance and the aggregate
unpaid principal balance of the Mortgage Loans as of the last day of the
preceding month; and (d) the paid through date for each Mortgage Loan. Such
statement shall also include information regarding delinquencies on Mortgage
Loans, indicating the number and aggregate principal amount of Mortgage Loans
which are either one (1), two (2) or three (3) or more months delinquent and the
book value of any REO Property. The Servicer shall submit to the Purchaser
monthly a liquidation report with respect to each Mortgaged Property sold in a
foreclosure sale as of the related Record Date and not previously reported. Such
liquidation report shall be incorporated into the remittance report delivered to
Purchaser in the form of Exhibit 9 hereto.
The Servicer shall furnish to the Purchaser an individual loan
accounting report in hard copy and electronic format mutually acceptable to the
Purchaser and the Seller, as of the last Business Day of each month, in the
Purchaser's assigned loan number order (provided that such loan numbers
previously have been provided in writing by the Purchaser to the Servicer) to
document Mortgage Loan payment activity on an individual Mortgage Loan basis.
With respect to each month, the corresponding individual loan accounting report
shall be received by the Purchaser no later than the 10th calendar day of the
following month, which report shall contain the following:
(i) with respect to each Monthly Payment, the amount of such
remittance allocable to principal (including a separate breakdown of any
Principal Prepayment, including the date of such prepayment, along with a
detailed report of interest on principal prepayment amounts remitted in
accordance with Subsection 11.14);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to interest; and
(iii) the next actual due date for each Mortgage Loan.
The Servicer shall provide the Purchaser with such information
concerning the Mortgage Loans as is necessary for such Purchaser to prepare
federal income tax returns as the Purchaser may reasonably request from time to
time.
Subsection 11.16 Advances by the Servicer. On the Business Day
immediately preceding each Remittance Date, the Servicer shall either (a)
deposit in the Custodial Account from its own funds an amount equal to the
aggregate amount of all Monthly Payments (with interest adjusted to the Mortgage
Loan Remittance Rate) which were due on the Mortgage Loans during the applicable
Due Period and which were delinquent at the close of business on the immediately
preceding Determination Date (each such advance, a "P&I Advance"), (b) cause to
be made an appropriate entry in the records of the Custodial Account that
amounts held for future distribution have been, as permitted by this Subsection
11.16, used by the Servicer in discharge of any such P&I Advance or (c) make P&I
Advances in the form of any combination of (a) or (b) aggregating the total
amount of P&I Advances to be made. Any amounts held for future distribution and
so used shall be replaced by the Servicer by deposit in the Custodial Account on
or before any future Remittance Date if funds in the Custodial Account on such
Remittance Date shall be less than payments to the Purchaser required to be made
on such Remittance Date. The Servicer's obligation to make P&I Advances as to
any Mortgage Loan will continue through the last Monthly Payment due prior to
the payment in full of a Mortgage Loan, or through the last Remittance Date
prior to the Remittance Date for the distribution of all other payments or
recoveries (including proceeds under any title, hazard or other insurance
policy, or condemnation awards) with respect to a Mortgage Loan; provided,
however, that such obligation shall cease (i) for any Mortgage Loan and on any
Remittance Date that the distribution of all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds and Condemnation Proceeds)
occurs with respect to such Mortgage Loan or (ii) if the Servicer, in its good
faith judgment, determines that P&I Advances would not be recoverable pursuant
to Subsection 11.05(d). The determination by the Servicer that a P&I Advance, if
made, would be nonrecoverable, shall be evidenced by an Officer's Certificate of
the Servicer, delivered to the Purchaser, which details the reasons for such
determination.
Subsection 11.17 Assumption Agreements. The Servicer will use its
best efforts to enforce any "due-on-sale" provision contained in any Mortgage or
Mortgage Note, provided that the Servicer shall permit such assumption if so
required in accordance with the terms of the Mortgage or the Mortgage Note. When
the Mortgaged Property has been conveyed by the Mortgagor, the Servicer will, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto; provided, however, the Servicer will not exercise such
rights if prohibited by law from doing so. In connection with any such
assumption, the outstanding principal amount, the Monthly Payment or the
Mortgage Interest Rate of the related Mortgage Note shall not be changed, and
the term of the Mortgage Loan will not be increased or decreased. If an
assumption is allowed pursuant to this Subsection 11.17, the Servicer is
authorized to enter into a substitution of liability agreement with the
purchaser of the Mortgaged Property pursuant to which the original Mortgagor is
released from liability and the purchaser of the Mortgaged Property is
substituted as Mortgagor and becomes liable under the Mortgage Note.
Subsection 11.18 Satisfaction of Mortgages and Release of Mortgage
Files. Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will obtain the portion of the
Mortgage File that is in the possession of the Purchaser or its designee,
prepare and process any required satisfaction or release of the Mortgage and
notify the Purchaser in accordance with the provisions of this Agreement. The
Purchaser agrees to deliver to the Servicer the original Mortgage Note for any
Mortgage Loan not later than three (3) Business Days following its receipt of a
notice from the Servicer that such a payment in full has been received or that a
notification has been received that such a payment in full shall be made. Such
Mortgage Note shall be held by the Servicer, in trust, for the purpose of
canceling such Mortgage Note and delivering the cancelled Mortgage Note to the
Mortgagor in a timely manner as and to the extent provided under applicable
state law. If the Mortgage has been recorded in the name of MERS or its
designee, the Servicer shall take all necessary action to effect the release of
the Mortgage Loan on the records of MERS.
If the Servicer grants a satisfaction or release of a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or should the Servicer otherwise prejudice any right the Purchaser may
have under the mortgage instruments, the Servicer, upon written demand of the
Purchaser, shall remit to the Purchaser the Stated Principal Balance of the
related Mortgage Loan by deposit thereof in the Custodial Account. After the
Purchaser has received such remittance, the Servicer shall have the right to
pursue any course of action it may have against the Mortgagor with respect to
any such Mortgage. The Fidelity Bond shall insure the Servicer against any loss
it may sustain with respect to any Mortgage Loan not satisfied in accordance
with the procedures set forth herein.
Subsection 11.19 Annual Statement as to Compliance. The Servicer
shall deliver to the Purchaser, by March 15, 2006 and by March 15th of each year
thereafter (or if not a Business Day, the immediately preceding Business Day),
an Officer's Certificate stating that (A) a review of the activities of the
Servicer during the preceding calendar year and if performance under this
Agreement has been made under such officer's supervision, and (B) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and the action
being taken by the Servicer to cure such default.
Subsection 11.20 Annual Independent Public Accountants' Servicing
Report or Attestation. On or before March 15, 2006 and by March 15th of each
year thereafter, the Servicer, at its expense, shall cause a firm of independent
public accountants which is a member of the American Institute of Certified
Public Accountants to furnish a statement to the Purchaser to the effect that
such firm has examined certain documents and records relating to the Servicer's
servicing of mortgage loans of the same type as the Mortgage Loans pursuant to
servicing agreements substantially similar to this Agreement, which agreements
may include this Agreement, and that, on the basis of such an examination,
conducted substantially in accordance with the Uniform Single Attestation
Program for Mortgage Bankers, such firm is of the opinion that the Servicer's
servicing has been conducted in compliance with the agreements examined pursuant
to this Subsection 11.20, except for (i) such exceptions as such firm shall
believe to be immaterial, and (ii) such other exceptions as shall be set forth
in such statement. Copies of such statement shall be provided by the Servicer to
the Purchaser upon request.
Subsection 11.21 Servicer Shall Provide Access and Information as
Reasonably Required. The Servicer shall provide to the Purchaser, and for any
Purchaser insured by FDIC or NAIC, the supervisory agents and examiners of FDIC
and OTS or NAIC, access to any documentation regarding the Mortgage Loans which
may be required by applicable regulations. Such access shall be afforded without
charge, but only upon reasonable request, during normal business hours and at
the offices of the Servicer.
In addition, the Servicer shall furnish upon request by the
Purchaser, and at the reasonable expense of the Purchaser, during the term of
this Agreement, such periodic, special or other reports or information as are
standard in the securitization industry, whether or not provided for herein, as
shall be commercially reasonable and appropriate with respect to the purposes of
this Agreement and applicable regulations. All such reports or information shall
be provided by and in accordance with all reasonable instructions and directions
the Purchaser may require. The Servicer agrees to execute and deliver all such
instruments and take all such action as the Purchaser, from time to time, may
reasonably request in order to effectuate the purposes and to carry out the
terms of this Agreement.
Subsection 11.22 Transfer of Servicing.
On the related Transfer Date, if any, the Purchaser, or its
designee, shall assume all servicing responsibilities related to, and the
Servicer cease all servicing responsibilities related to, the related Mortgage
Loans subject to such Transfer Date. On or prior to the related Transfer Date,
the Servicer shall, at its sole cost and expense in the Event of Default
hereunder, or at Purchaser's sole cost and expense in connection with any
termination under Subsection 14.02 hereof, take such steps as may be necessary
or appropriate to effectuate and evidence the transfer of the servicing of the
related Mortgage Loans to the Purchaser, or its designee, including but not
limited to the following:
(a) Notice to Mortgagors. The Servicer shall mail to the Mortgagor
of each related Mortgage Loan a letter advising such Mortgagor of the transfer
of the servicing of the related Mortgage Loan to the Purchaser, or its designee,
in accordance with the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ National Affordable Housing Act of
1990, as amended; provided, however, the content and format of the letter shall
have the prior approval of the Purchaser. The Servicer shall provide the
Purchaser with copies of all such related notices no later than the related
Transfer Date.
(b) Notice to Taxing Authorities and Insurance Companies. The Seller
shall transmit to the applicable taxing authorities and insurance companies
(including primary mortgage insurance policy insurers, if applicable) and/or
agents, notification of the transfer of the servicing to the Purchaser, or its
designee, and instructions to deliver all notices, tax bills and insurance
statements, as the case may be, to the Purchaser from and after the related
Transfer Date. The Seller shall provide the Purchaser with copies of all such
notices no later than the related Transfer Date.
(c) Delivery of Servicing Records. The Seller shall forward to the
Purchaser, or its designee, all servicing records and the Servicing File in the
Seller's possession relating to each related Mortgage Loan.
(d) Escrow Payments. No later than five (5) Business Days after the
related transfer, the Seller shall provide the Purchaser, or its designee, with
immediately available funds by wire transfer in the amount of the net Escrow
Payments and suspense balances and all loss draft balances associated with the
related Mortgage Loans. The Seller shall provide the Purchaser with an
accounting statement, in electronic format acceptable to the Purchaser in its
sole discretion, of Escrow Payments and suspense balances and loss draft
balances sufficient to enable the Purchaser to reconcile the amount of such
payment with the accounts of the Mortgage Loans. Additionally, the Seller shall
wire transfer to the Purchaser the amount of any agency, trustee or prepaid
Mortgage Loan payments and all other similar amounts held by the Seller.
(e) Payoffs and Assumptions. The Seller shall provide to the
Purchaser, or its designee, copies of all assumption and payoff statements
generated by the Seller on the related Mortgage Loans from the related Cut-off
Date to the related Transfer Date.
(f) Mortgage Payments Received Prior to Transfer Date. Prior to the
related Transfer Date all payments received by the Seller on each related
Mortgage Loan shall be properly applied by the Seller to the account of the
particular Mortgagor.
(g) Mortgage Payments Received after Transfer Date. The amount of
any related Monthly Payments received by the Seller after the related Transfer
Date shall be forwarded to the Purchaser by overnight mail on the date of
receipt. The Seller shall notify the Purchaser of the particulars of the
payment, which notification requirement shall be satisfied if the Seller
forwards with its payment sufficient information to permit appropriate
processing of the payment by the Purchaser. The Seller shall assume full
responsibility for the necessary and appropriate legal application of such
Monthly Payments received by the Seller after the related Transfer Date with
respect to related Mortgage Loans then in foreclosure or bankruptcy; provided,
for purposes of this Agreement, necessary and appropriate legal application of
such Monthly Payments shall include, but not be limited to, endorsement of a
Monthly Payment to the Purchaser with the particulars of the payment such as the
account number, dollar amount, date received and any special Mortgagor
application instructions and the Seller shall comply with the foregoing
requirements with respect to all Monthly Payments received by the Seller after
the related Transfer Date.
(h) Misapplied Payments. Misapplied payments shall be processed as
follows:
(i) All parties shall cooperate in correcting misapplication errors;
(ii) The party receiving notice of a misapplied payment occurring
prior to the related Transfer Date and discovered after such Transfer Date
shall immediately notify the other party;
(iii) If a misapplied payment which occurred prior to the related
Transfer Date cannot be identified and said misapplied payment has
resulted in a shortage in a Custodial Account or Escrow Account, the
Seller shall be liable for the amount of such shortage. The Seller shall
reimburse the Purchaser for the amount of such shortage within thirty (30)
days after receipt of written demand therefor from the Purchaser;
(iv) If a misapplied payment which occurred prior to the related
Transfer Date has created an improper Purchase Price as the result of an
inaccurate outstanding principal balance, a check shall be issued to the
party shorted by the improper payment application within five (5) Business
Days after notice thereof by the other party; and
(v) Any check issued under the provisions of this Section 11.22(h)
shall be accompanied by a statement indicating the corresponding Seller
and/or the Purchaser Mortgage Loan identification number and an
explanation of the allocation of any such payments.
(i) Books and Records. On the related Transfer Date, the books,
records and accounts of the Seller with respect to the related Mortgage Loans
shall conform in all material respects with all applicable Purchaser
requirements.
(j) Reconciliation. The Seller shall, on or before the related
Transfer Date, reconcile principal balances and make any monetary adjustments
required by the Purchaser. Any such monetary adjustments will be transferred
between the Seller and the Purchaser as appropriate.
(k) IRS Forms. The Seller shall file or shall cause to be filed all
IRS forms 1099, 1099A or 1098 which are required to be filed on or before the
related Transfer Date in relation to the servicing and ownership of the related
Mortgage Loans. The Seller shall provide copies of such forms to the Purchaser
upon request and shall reimburse the Purchaser for any costs or penalties
incurred by the Purchaser due to the Seller's failure to comply with this
paragraph.
Section 12. The Servicer.
Subsection 12.01 Indemnification; Third Party Claims. The Servicer
agrees to indemnify and hold the Purchaser and any Successor Servicer and their
respective present and former directors, officers, employees and agents harmless
from any and all claims, losses, damages, penalties, fines, forfeitures, legal
fees and expenses (including, without limitation, any legal fees and expenses,
judgments or expenses relating to such liability, claim, loss or damage) and
related costs, judgments, and any other costs, fees and expenses that such
parties may sustain in any way related to the Servicer's failure:
(a) to observe and perform any or all of Servicer's duties,
obligations, covenants, agreements, warranties or representations contained in
this Agreement or in the related Purchase Price and Terms Agreement; or
(b) to comply with all applicable requirements contained in this
Agreement or the related Purchase Price and Terms Agreement with respect to the
servicing of the Mortgage Loans and the transfer of servicing rights.
The Servicer immediately shall notify the Purchaser if a claim is
made by a third party with respect to this Agreement.
For purposes of this Section, "Purchaser" shall mean the Person then
acting as the Purchaser under this Agreement and any and all Persons who
previously were "Purchasers" under this Agreement and "Successor Servicer" shall
mean any Person designated as the Successor Servicer pursuant to this Agreement
and any and all Persons who previously were "Successor Servicers" pursuant to
this Agreement.
If any action is commenced for which indemnification may be
available under this Subsection 12.01 of which an indemnified party has notice,
promptly after receipt by such indemnified party under this Subsection 12.01 of
notice of the commencement of such action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Subsection 12.01, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any indemnified
party under this Subsection 12.01, except to the extent that it has been
prejudiced in any material respect, or from any liability which it may have,
otherwise than under this Subsection 12.01. In case any such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided that if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party or parties shall have reasonably concluded that there may
be legal defenses available to it or them and/or other indemnified parties which
are different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate counsel
to assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party for
expenses incurred by the indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with one local counsel, if applicable)), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause (i) or (iii)
is applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii).
Subsection 12.02 Merger or Consolidation of the Seller or Servicer.
The Seller and the Servicer will keep in full effect their existence, rights and
franchises under the laws of its jurisdiction of incorporation or organization,
and will obtain and preserve their qualification to do business in each other
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, or any of the Mortgage Loans and
to perform its duties under this Agreement.
Any Person into which the Seller or the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Seller or the Servicer shall be a party, or any
Person succeeding to the business of the Seller or the Servicer, shall be the
successor of the Seller or the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall be an institution whose deposits are insured
by FDIC or a company whose business is the origination and servicing of mortgage
loans, unless otherwise consented to by the Purchaser, which consent shall not
be unreasonably withheld, and shall be qualified to service mortgage loans on
behalf of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
Subsection 12.03 Limitation on Liability of the Servicer and Others.
The duties and obligations of the Servicer shall be determined solely by the
express provisions of this Agreement, the Servicer shall not be liable except
for the performance of such duties and obligations as are specifically set forth
in this Agreement and no implied covenants or obligations shall be read into
this Agreement against the Servicer. Neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer shall be under any
liability to the Purchaser for any action taken or for refraining from the
taking of any action in accordance with Accepted Servicing Practices and
otherwise in good faith pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer against
any liability resulting from any breach of any representation or warranty made
herein, or from any liability specifically imposed on the Servicer herein; and,
provided, further, that this provision shall not protect the Servicer against
any liability that would otherwise be imposed by reason of the willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of the obligations or duties hereunder. The Servicer and
any director, officer, employee or agent of the Servicer may rely on any
document of any kind which it in good faith reasonably believes to be genuine
and to have been adopted or signed by the proper authorities respecting any
matters arising hereunder. Subject to the terms of Subsection 12.01, the
Servicer shall have no obligation to appear with respect to, prosecute or defend
any legal action which is not incidental to the Servicer's duty to service the
Mortgage Loans in accordance with this Agreement.
Subsection 12.04 Seller and Servicer Not to Resign. With respect to
the retention of the Servicer to service the Mortgage Loans hereunder, the
Seller and the Servicer acknowledge that the Purchaser has acted in reliance
upon the Seller and the Servicer's independent status, the adequacy of their
servicing facilities, plan, personnel, records and procedures, its integrity,
reputation and financial standing and the continuance thereof. Without in any
way limiting the generality of this Section, neither Seller nor Servicer shall
assign this Agreement or the servicing hereunder or delegate its rights or
duties hereunder or any portion thereof, or sell or otherwise dispose of all or
substantially all of its property or assets, without the prior written approval
of the Purchaser, which consent shall not be unreasonably withheld, or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer. Any
such determination permitting the unilateral resignation of the Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered to the Purchaser,
which Opinion of Counsel shall be in form and substance reasonably acceptable to
the Purchaser. No such resignation or assignment shall become effective until a
successor has assumed the Servicer's responsibilities and obligations hereunder
in accordance with Subsection 14.03.
Section 13. Default.
Subsection 13.01 Events of Default. In case one or more of the
following Events of Default by the Servicer shall occur and be continuing:
(a) any failure by the Servicer to remit to the Purchaser any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of one (1) Business Day after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Purchaser;
(b) failure by the Servicer to duly observe or perform, in any
material respect, any other covenants, obligations or agreements of the Servicer
as set forth in this Agreement which failure continues unremedied for a period
of sixty (60) days (or, in the case of (i) the annual statement of compliance
required under Subsection 11.19, (ii) the annual independent public accountants'
servicing report or attestation required under Subsection 11.20, (iii) the
annual assessment of servicing compliance required under Subsection 11.23, or
(iv) the certification required under Section 15 in the form of Exhibit 16, ten
(10) days) after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the Purchaser;
(c) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force, undischarged or unstayed for
a period of sixty (60) days;
(d) the Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Servicer or relating to all or substantially all of the Servicer's property;
or
(e) the Servicer shall admit in writing its inability to pay its
debts as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Servicer, may, in
addition to whatever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, commence termination of
all the rights and obligations of the Servicer under this Agreement and in and
to the Mortgage Loans and the proceeds thereof. Upon receipt by the Servicer of
such written notice from the Purchaser stating that it intends to terminate the
Servicer as a result of such Event of Default, all authority and power of the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Subsection 14.03. Upon written request from the Purchaser, the Servicer shall,
in accordance with Subsection 11.22 prepare, execute and deliver to a successor
any and all documents and other instruments, place in such successor's
possession all Mortgage Files and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Mortgage Loans and related documents to the successor at the
Servicer's sole expense. The Servicer agrees to cooperate with the Purchaser and
such successor in effecting the termination of the Servicer's responsibilities
and rights hereunder, including, without limitation, the transfer to such
successor for administration by it of all amounts which shall at the time be
credited by the Servicer to the Custodial Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.
Subsection 13.02 Waiver of Defaults. The Purchaser may waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived.
Section 14. Termination.
Subsection 14.01 Termination. The respective obligations and
responsibilities of the Servicer, as servicer, shall terminate upon (a) the
distribution to the Purchaser of the final payment or liquidation with respect
to the last Mortgage Loan (or advances of same by the Servicer); (b) the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure with respect to the last Mortgage Loan and the remittance of all
funds due hereunder or (c) by mutual consent of the Servicer and the Purchaser
in writing. Upon written request from the Purchaser in connection with any such
termination, the Servicer shall prepare, execute and deliver, any and all
documents and other instruments, place in the Purchaser's possession all
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Purchaser's sole expense. The Servicer
agrees to cooperate with the Purchaser and such successor in effecting the
termination of the Servicer's responsibilities and rights hereunder as servicer,
including, without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Servicer to
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
Subsection 14.02 Termination of the Servicer Without Cause.
Notwithstanding anything herein to the contrary, the Purchaser may terminate the
obligations and responsibilities of the Servicer in its capacity as Servicer,
without cause, upon payment to the Servicer of a termination fee equal to the
greater of (i) two and one half percent (2.5%) of the aggregate outstanding
principal balance of the Mortgage Loans as of the date of such termination, as
well as any reasonable and necessary costs to transfer servicing under
Subsection 11.22 or (ii) the fair market value of the related servicing rights,
as determined by a portfolio market valuation performed by a mutually agreed
upon independent third-party appraiser selected by the parties (provided,
however, that if the parties are unable to agree upon such an appraiser, such
portfolio market valuation shall be made by two independent third-party
appraisers, one selected by each of the parties, with the final portfolio market
valuation being the average of the two portfolio market valuations provided by
the two independent third-party appraisers). The termination fee provided for in
this Subsection 14.02 shall be paid by the Purchaser within three (3) Business
Days of any such termination without cause by the Purchaser or as mutually
agreed by Servicer and Purchaser.
Subsection 14.03 Successors to the Servicer. Prior to the
termination of the Servicer's responsibilities and duties under this Agreement
pursuant to Subsections 12.04, 13.01, 14.01 or 14.02, the Purchaser shall, (a)
succeed to and assume all of the Servicer's responsibilities, rights, duties and
obligations under this Agreement or (b) appoint a successor which shall succeed
to all rights and assume all of the responsibilities, duties and liabilities of
the Servicer under this Agreement upon such termination. In connection with such
appointment and assumption, the Purchaser may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree. If the Servicer's duties, responsibilities and
liabilities under this Agreement shall be terminated pursuant to the
aforementioned Subsections, the Servicer shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement, and shall
take no action whatsoever that might impair or prejudice the rights or financial
condition of its successor. The resignation or removal of the Servicer pursuant
to the aforementioned Subsections shall not become effective until a successor
shall be appointed pursuant to this Subsection 14.03 and shall in no event
relieve the Seller of the representations and warranties made pursuant to
Subsections 7.01 and 7.02 and the remedies available to the Purchaser under
Subsection 7.03, it being understood and agreed that the provisions of such
Subsections 7.01 and 7.02 shall be applicable to the Seller notwithstanding any
such resignation or termination of the Servicer, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Purchaser an instrument
accepting such appointment, whereupon such successor shall become fully vested
with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer, with like effect as if originally named as a party
to this Agreement. Any termination or resignation of the Servicer or this
Agreement pursuant to Subsections 12.04, 13.01, 14.01 or 14.02 shall not affect
any claims that the Purchaser may have against the Servicer arising prior to any
such termination or resignation.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify by mail the Purchaser of such appointment.
Section 15. Cooperation of Seller and the Servicer with a
Reconstitution. The Seller, the Servicer and the Purchaser agree that with
respect to some or all of the Mortgage Loans, after the related Closing Date, on
one or more dates (each, a "Reconstitution Date") at the Purchaser's sole
option, the Purchaser may effect a sale (each, a "Reconstitution") of some or
all of the Mortgage Loans then subject to this Agreement, without recourse, to:
(a) ▇▇▇▇▇▇ ▇▇▇ under its Cash Purchase Program or MBS Program
(Special Servicing Option) (each, a "▇▇▇▇▇▇ Mae Transfer");
(b) ▇▇▇▇▇▇▇ Mac (the "▇▇▇▇▇▇▇ Mac Transfer");
(c) one or more third party purchasers in one or more Whole Loan
Transfers; or
(d) one or more trusts or other entities to be formed as part of
one or more Pass-Through Transfers
provided that Purchaser shall not enter into more than five (5) Reconstitutions
of the Mortgage Loans in a Mortgage Loan Package.
The Seller and the Servicer agree to execute in connection with any
Agency Transfer, any and all pool purchase contracts, and/or agreements
reasonably acceptable among the Purchaser, the Seller, the Servicer, ▇▇▇▇▇▇ ▇▇▇
or ▇▇▇▇▇▇▇ Mac (as the case may be), a seller's warranties and servicing
agreement or a participation and servicing agreement in form and substance
reasonably acceptable to the parties, and in connection with a Pass-Through
Transfer, a pooling and servicing agreement in form and substance reasonably
acceptable to the parties or an Assignment and Recognition Agreement
substantially in the form attached hereto as Exhibit 15 (collectively, the
agreements referred to herein are designated, the "Reconstitution Agreements"),
together with an opinion of counsel with respect to such Reconstitution
Agreements if such opinion of counsel is reasonably required in connection with
such Reconstitution.
With respect to each Whole Loan Transfer and each Pass Through
Transfer entered into by the Purchaser, the Seller and the Servicer agree (1) to
cooperate fully with the Purchaser and any prospective purchaser with respect to
all reasonable requests and due diligence procedures; (2) to execute, deliver
and perform all Reconstitution Agreements required by the Purchaser and
reasonably acceptable to Seller and the Servicer; and (3) to restate the
representations and warranties set forth in Subsection 7.02 of this Agreement as
of the settlement or closing date in connection with such Reconstitution (each,
a "Reconstitution Date"). The Seller and the Servicer shall provide to such
master servicer, the Depositor or the trustee, as the case may be, and any other
participants or purchasers in such Reconstitution, at the reasonable expense of
the Purchaser: (i) any and all information and appropriate verification of
information which may be reasonably available to the Seller or its Affiliates,
whether through letters of its auditors and counsel or otherwise, as the
Purchaser or any such other participant shall request; and (ii) such additional
representations, warranties, covenants, opinions of counsel, letters from
auditors, and certificates of public officials or officers of the Seller or the
Servicer as are reasonably believed necessary by the Purchaser or any such other
participant and deemed reasonably acceptable to the Seller or the Servicer, as
applicable; and (iii) execute, deliver and satisfy all conditions set forth in
any indemnity agreement required by the Purchaser or any such participant,
including, without limitation, an Indemnification and Contribution Agreement in
substantially the form attached hereto as Exhibit 3. Moreover, the Seller and
the Servicer agree to cooperate with all reasonable requests made by the
Purchaser to effect such Reconstitution Agreements.
In connection with any Pass-Through Transfer, Countrywide and
Servicer, jointly and severally, shall indemnify, defend and hold harmless the
Purchaser from and against any and all losses, claims, expenses, damages or
liabilities to which the Purchaser may be subject to as a result of any untrue
statement of any material fact contained in any information (such information,
the "Countrywide Information" or the Servicer Information", respectively)
prepared and furnished to the Purchaser or any Affiliate thereof by Countrywide
or the Servicer for inclusion in any related offering document or prospectus (or
incorporated by reference therein, as specified by the Seller) (collectively,
"Offering Materials"), necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will reimburse the
Purchaser for damages or expenses reasonably incurred by it; provided, however,
that Countrywide and the Servicer shall be liable only insofar as such untrue
statement or omission relates solely to the Countrywide Information or the
Servicer Information in the Offering Materials furnished to the Purchaser by
Countrywide and the Servicer specifically for inclusion in the Prospectus
Supplement. The Purchaser shall indemnify, defend and hold harmless Countrywide
and the Servicer from and against any and all losses, claims, expenses, damages
or liabilities to which Countrywide and the Servicer may be subject to as a
result of any untrue statement of any material fact contained in any Offering
Materials, or arise out of, or are based upon, any omission in any information
included in the Offering Materials necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and will
reimburse Countrywide and the Servicer for damages or expenses reasonably
incurred by it; provided, however, that Purchaser shall be liable only insofar
as such untrue statement or omission does not relate to the Countrywide
Information or the Servicer Information in the Offering Materials furnished to
the Purchaser by Countrywide and the Servicer specifically for inclusion in the
Offering Materials.
With respect to any Mortgage Loans that are subject to a
Pass-Through Transfer or other securitization, to the extent that either of the
Purchaser, any master servicer which is master servicing loans in connection
with such transaction (a "Master Servicer"), any related depositor (a
"Depositor"), or any related trustee (a "Trustee") is required under the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as may be amended and in effect from time to time
(the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") to prepare and file a certification pursuant to
Section 302 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, on or before March 15, 2005, and March
15th of each year thereafter, an officer of Countrywide shall, prior to the
deadline for such certification, execute and deliver an Officer's Certificate,
in the form attached hereto as Exhibit 16 (with such changes as the Purchaser
reasonably determines to be necessary or appropriate as a result of such changes
promulgated under Regulation AB to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act certification required
to be delivered by the party providing such certification) to such Purchaser,
Master Servicer, Depositor, or Trustee as the case may be, for the benefit of
such entity. For the purposes of this subsection (e) only, the Master Servicer,
Depositor or Trustee, as the case may be, shall be deemed a third party
beneficiary of this subsection and shall be entitled to enforce the provisions
of this subsection (e).
Countrywide and the Servicer, jointly and severally, shall indemnify
and hold harmless such Purchaser, Master Servicer, Depositor or Trustee, as the
case may be (any such party, an "Indemnified Party") from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or based
upon a breach by Countrywide or the Servicer or any of its officers, directors,
or agents of its obligations pursuant to the preceding paragraph; provided,
however, that Countrywide and the Servicer shall not be obligated to indemnify
or hold harmless any Indemnified Party from or against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon the
negligence, bad faith or willful misconduct of such Indemnified Party. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless any Indemnified Party, then Countrywide and the Servicer agree that
they shall contribute to the amount paid or payable by the Indemnified Party as
a result of the losses, claims, damages or liabilities of the Indemnified Party
in such proportion as is appropriate to reflect the relative fault of the
Indemnified Party and Countrywide or the Servicer, as the case may be, in the
other in connection with a breach of Countrywide's or the Servicer's obligations
under this Section 15, or Countrywide's or the Servicer's gross negligence or
willful misconduct in connection therewith.
Notwithstanding any provision in this Agreement to the contrary, in
connection with each Pass-Through Transfer with a Reconstitution Date after
December 31, 2005, the Seller and the Servicer shall provide the Purchaser and
any prospective purchaser, in form and substance reasonably satisfactory, all
information (including without limitation, static pool information of the Seller
and the Servicer), statements, reports and certifications reasonably necessary
to comply with the final rules promulgated by the Commission related to
asset-backed securities (Release Nos. 33-8518; 34-50905) (as such rules may be
amended or modified from time to time). The Seller and the Servicer shall
provide the Purchaser and such prospective purchaser with such additional
opinions of counsel, letters from auditors, and certificates of public officials
or officers of the Seller or the Servicer as are reasonably necessary to the
Purchaser or any such other participant in such Pass-Through Transfer
(including, without limitation, such revisions to this Agreement relating to the
servicing of REO Property and the provision of remittance reports reasonably
necessary to enable such servicer to fulfill its servicing obligations).
All Mortgage Loans not sold or transferred pursuant to a
Reconstitution shall remain subject to this Agreement and shall continue to be
serviced in accordance with the terms of this Agreement, and with respect
thereto this Agreement shall remain in full force and effect.
Section 16. Notices. All demands, notices and communications
hereunder shall be in writing and shall be given via email, facsimile
transmission or registered or certified mail to the person at the address set
forth below:
(a) if to the Purchaser:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Whole Loan Operations Manager
(b) if to the Servicer:
Countrywide Home Loans Servicing LP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇_▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(c) if to the Seller:
Countrywide Home Loans, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇_▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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 17. Severability Clause. Any part, provision representation
or warranty of this Agreement which is prohibited or unenforceable or is held to
be void or unenforceable in any jurisdiction shall be ineffective, as to such
jurisdiction, to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto waive any provision
of law which prohibits or renders void or unenforceable any provision hereof. If
the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate, in good-faith, to
develop a structure the economic effect of which is nearly as possible the same
as the economic effect of this Agreement without regard to such invalidity.
Section 18. No Partnership. Nothing herein contained shall be deemed
or construed to create a co-partnership or joint venture between the parties
hereto and the services of the Servicer shall be rendered as an independent
contractor and not as agent for the Purchaser.
Section 19. 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 20. Governing Law Jurisdiction; Consent to Service of
Process. THIS AGREEMENT SHALL BE DEEMED IN EFFECT WHEN A FULLY EXECUTED
COUNTERPART THEREOF IS RECEIVED BY THE PURCHASER IN THE STATE OF NEW YORK AND
SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK. THIS AGREEMENT SHALL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
TO ITS CHOICE OF LAW RULES AND PRINCIPLES. EACH OF THE PURCHASER, THE SELLER AND
THE SERVICER IRREVOCABLY (I) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT; (II) WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM IN ANY ACTION OR
PROCEEDING IN ANY SUCH COURT; (III) AGREES THAT A FINAL JUDGMENT IN ANY ACTION
OR PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW; AND (IV) CONSENTS TO SERVICE OF PROCESS UPON IT BY MAILING A COPY THEREOF
BY CERTIFIED MAIL ADDRESSED TO IT AS PROVIDED FOR NOTICES HEREUNDER.
Section 21. Mandatory Delivery. The sale and delivery on the related
Closing Date of the Mortgage Loans described on the related Mortgage Loan
Schedule is mandatory from and after the date of the execution of the related
Purchase Price and Terms Agreement, it being specifically understood and agreed
that each Mortgage Loan is unique and identifiable on the date hereof and that
an award of money damages would be insufficient to compensate the Purchaser for
the losses and damages incurred by the Purchaser (including damages to
prospective purchasers of the Mortgage Loans) in the event of the Seller's
failure to deliver (i) each of the related Mortgage Loans or (ii) one or more
Qualified Substitute Mortgage Loans or (iii) one or more Mortgage Loans
otherwise acceptable to the Purchaser on or before the related Closing Date. All
rights and remedies of the Purchaser under this Agreement are distinct from, and
cumulative with, any other rights or remedies under this Agreement or afforded
by law or equity and all such rights and remedies may be exercised concurrently,
independently or successively.
Section 22. Intention of the Parties. It is the intention of the
parties that the Purchaser is purchasing, and the Seller is selling the Mortgage
Loans and not a debt instrument of the Seller or another security. Accordingly,
the parties hereto each intend to treat the transaction for federal income tax
purposes as a sale by the Seller, and a purchase by the Purchaser, of the
Mortgage Loans. Moreover, the arrangement under which the Mortgage Loans are
held shall be consistent with classification of such arrangement as a grantor
trust in the event it is not found to represent direct ownership of the Mortgage
Loans. The Purchaser shall have the right to review the Mortgage Loans and the
related Mortgage Loan Files to determine the characteristics of the Mortgage
Loans which shall affect the federal income tax consequences of owning the
Mortgage Loans and the Seller and the Servicer shall cooperate with all
reasonable requests made by the Purchaser in the course of such review.
Section 23. Successors and Assigns. Subject to Section 15, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Seller, the Servicer and the Purchaser and the respective permitted successors
and assigns of the Seller, the Servicer and assigns of the Purchaser. This
Agreement shall not be assigned, pledged or hypothecated by the Seller or the
Servicer to a third party without the prior written consent of the Purchaser,
which consent may not be unreasonably withheld by the Purchaser. This Agreement
may be assigned, pledged or hypothecated by the Purchaser in whole or in part,
and with respect to one or more of the Mortgage Loans, without the consent of
the Seller. The number of assignments or transfers allowable by the Purchaser
with respect to the Mortgage Loans and this Agreement shall be subject to
Section 15. In the event the Purchaser assigns this Agreement, and the assignee
assumes any of the Purchaser's obligations hereunder, the Seller and the
Servicer acknowledge and agree to look solely to such assignee, and not to the
Purchaser, for performance of the obligations so assumed and the Purchaser shall
be relieved from any liability to the Seller or the Servicer with respect
thereto.
Section 24. 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 25. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
Section 26. General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the terms "include" and "including" shall mean without
limitation by reason of enumeration.
Section 27. Reproduction of Documents. This Agreement and all
documents relating thereto, 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 hereto 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 hereto in the regular
course of business, and that any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence.
Section 28. Amendment. This Agreement may be amended from time to
time by the Purchaser, the Seller and the Servicer by written agreement signed
by the parties hereto.
Section 29. Confidentiality. Each of the Purchaser, the Seller and
the Servicer shall employ proper procedures and standards designed to maintain
the confidential nature of the terms of this Agreement, except to the extent:
(a) the disclosure of which is reasonably believed by such party to be required
in connection with regulatory requirements or other legal requirements relating
to its affairs; (b) disclosed to any one or more of such party's employees,
officers, directors, agents, attorneys or accountants who would have access to
the contents of this Agreement and such data and information in the normal
course of the performance of such Person's duties for such party, to the extent
such party has procedures in effect to inform such Person of the confidential
nature thereof; (c) that is disclosed in a prospectus, prospectus supplement or
private placement memorandum relating to a securitization of the Mortgage Loans
by the Purchaser (or an Affiliate assignee thereof) or to any Person in
connection with the resale or proposed resale of all or a portion of the
Mortgage Loans by such party in accordance with the terms of this Agreement; and
(d) that is reasonably believed by such party to be necessary for the
enforcement of such party's rights under this Agreement.
Notwithstanding any other express or implied agreement to the
contrary, each of the Purchaser, the Seller and the Servicer agree and
acknowledge that each of them and each of their employees, representatives, and
other agents may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the transaction and all materials
of any kind (including opinions or other tax analyses) that are provided to any
of them relating to such tax treatment and tax structure, except to the extent
that confidentiality is reasonably necessary to comply with U.S. federal or
state securities laws. For purposes of this paragraph, the terms "tax treatment"
and "tax structure" have the meanings specified in Treasury Regulation section
1.6011-4(c).
Section 30. Entire Agreement. This Agreement constitutes the entire
agreement and understanding relating to the subject matter hereof between the
parties hereto and any prior oral or written agreements between them shall be
deemed to have merged herewith.
Section 31. Further Agreements. The Seller, the Servicer and the
Purchaser 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 this Agreement.
Section 32. No Solicitation. From and after the related Closing
Date, the Seller hereby agrees that the Seller will not take any action or
permit or cause any action to be taken by any of its agents or affiliates, or by
any independent contractors or independent mortgage brokerage companies on the
Seller's behalf, to personally, by telephone or mail, solicit the Mortgagor
under any Mortgage Loan for the purpose of refinancing such Mortgage Loan;
provided, that the Seller may solicit any Mortgagor for whom the Seller or its
affiliates have received a request for verification of mortgage, a request for
demand for payoff, a Mortgagor-initiated written or verbal communication
indicating a desire to prepay the related Mortgage Loan, or the Mortgagor
initiates a title search, provided further, it is understood and agreed that
promotions undertaken by the Seller or any of its affiliates which (i) concern
optional insurance products or other additional products or (ii) are directed to
the general public at large, including, without limitation, mass mailings based
on commercially acquired mailing lists, newspaper, radio and television
advertisements shall not constitute solicitation nor is the Seller prohibited
from responding to unsolicited requests or inquiries made by a Mortgagor or an
agent of a Mortgagor. Notwithstanding the foregoing, the following
solicitations, if undertaken by the Seller or any affiliate of the Seller, shall
not be prohibited: (i) solicitations that are directed to the general public at
large, including, without limitation, mass mailings based on commercially
acquired mailing lists and newspaper, radio, television and other mass media
advertisements and (ii) borrower messages included on, and statement inserts
provided with, the monthly statements sent to mortgagors; provided, however,
that similar messages and inserts are sent to the borrowers of other mortgage
loans serviced by the Seller or any affiliate of the Seller.
Section 33. Waiver of Jury Trial. THE SELLER, THE SERVICER, AND THE
PURCHASER EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF
ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
[Signature Page Follows]
IN WITNESS WHEREOF, the Purchaser, the Seller and the Servicer have
caused their names to be signed hereto by their respective officers thereunto
duly authorized on the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:
--------------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.
By:
--------------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS SERVICING LP
By: Countrywide GP, Inc.,
its general partner
By:
--------------------------------------
Name:
Title:
EXHIBIT 1
MORTGAGE LOAN DOCUMENTS
With respect to each Mortgage Loan, the Mortgage Loan Documents
shall consist of the following:
(a) the original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________, without recourse" and signed in the
name of the last endorsee (the "Last Endorsee") by an authorized officer. To the
extent that there is no room on the face of the Mortgage Notes for endorsements,
the endorsement may be contained on an allonge, if state law so allows and the
Custodian is so advised by the Seller that state law so allows. If the Mortgage
Loan was acquired by the Seller in a merger, the endorsement must be by "[Last
Endorsee], successor by merger to [name of predecessor]". If the Mortgage Loan
was acquired or originated by the Last Endorsee while doing business under
another name, the endorsement must be by "[Last Endorsee], formerly known as
[previous name]." If the original Mortgage Note is not available, the Seller
shall provide a lost note affidavit in a form acceptable to the Purchaser, with
a copy of the Mortgage Note attached thereto;
(b) the original of any guarantee executed in connection with the
Mortgage Note;
(c) with respect to Mortgage Loans that are not Co-op Loans, the
original Mortgage with evidence of recording thereon. With respect to any Co-op
Loan, an original or copy of the Security Agreement. If in connection with any
Mortgage Loan, the Seller cannot deliver or cause to be delivered the original
Mortgage with evidence of recording thereon on or prior to the Closing Date
because of a delay caused by the public recording office where such Mortgage has
been delivered for recordation or because such Mortgage has been lost or because
such public recording office retains the original recorded Mortgage, the Seller
shall deliver or cause to be delivered to the Custodian, a photocopy of such
Mortgage, together with (i) in the case of a delay caused by the public
recording office, an Officer's Certificate of the Seller (or certified by the
title company, escrow agent, or closing attorney) stating that such Mortgage has
been dispatched to the appropriate public recording office for recordation and
that the original recorded Mortgage or a copy of such Mortgage certified by such
public recording office to be a true and complete copy of the original recorded
Mortgage will be promptly delivered to the Custodian upon receipt thereof by the
Seller; or (ii) in the case of a Mortgage where a public recording office
retains the original recorded Mortgage or in the case where a Mortgage is lost
after recordation in a public recording office, a copy of such Mortgage
certified by such public recording office to be a true and complete copy of the
original recorded Mortgage;
(d) the originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon, or if any such
instrument has not been returned from the applicable recording office or has
been lost or if such public recording office retains the original recorded
instruments, the Seller shall deliver or cause to be delivered to the Custodian,
a photocopy of such instrument, together with (i) in the case of a delay caused
by the public recording office, an Officers Certificate of the Seller (or
certified by the title company, escrow agent, or closing attorney) stating that
such instrument has been dispatched to the appropriate public recording office
for recordation and that such original recorded instrument or a copy of such
instrument certified by the appropriate public recording office to be a true and
complete copy of the original recorded instrument will be promptly delivered to
the Custodian upon receipt thereof by the Seller; or (ii) in the case of an
instrument where a public recording office retains the original recorded
instrument or in the case where an instrument is lost after recordation in a
public recording office, a copy of such instrument certified by such public
recording office to be a true and complete copy of the original recorded
instrument;
(e) with respect to Mortgage Loans that are not Co-op Loans, the
original Assignment of Mortgage for each Mortgage Loan, in form and substance
acceptable for recording (except with respect to MERS Designated Loans). The
Assignment of Mortgage must be duly recorded only if recordation is either
necessary under applicable law or commonly required by private institutional
mortgage investors in the area where the Mortgaged Property is located or on
direction of the Purchaser as provided in this Agreement. If the Assignment of
Mortgage is to be recorded, the Mortgage shall be assigned to the Purchaser. If
the Assignment of Mortgage is not to be recorded, the Assignment of Mortgage
shall be delivered in blank. If the Mortgage Loan was acquired by the Seller in
a merger, the Assignment of Mortgage must be made by "[Seller], successor by
merger to [name of predecessor]". If the Mortgage Loan was acquired or
originated by the Seller while doing business under another name, the Assignment
of Mortgage must be by "[Seller], formerly known as [previous name]";
(f) with respect to Mortgage Loans that are not Co-op Loans, the
originals of all intervening assignments of mortgage (if any) evidencing a
complete chain of assignment from the Seller to the Last Endorsee (or, in the
case of a MERS Designated Loan, MERS) with evidence of recording thereon, or if
any such intervening assignment has not been returned from the applicable
recording office or has been lost or if such public recording office retains the
original recorded assignments of mortgage, the Seller shall deliver or cause to
be delivered to the Custodian, a photocopy of such intervening assignment,
together with (i) in the case of a delay caused by the public recording office,
an Officer's Certificate of the Seller (or certified by the title company,
escrow agent, or closing attorney) stating that such intervening assignment of
mortgage has been dispatched to the appropriate public recording office for
recordation and that such original recorded intervening assignment of mortgage
or a copy of such intervening assignment of mortgage certified by the
appropriate public recording office to be a true and complete copy of the
original recorded intervening assignment of mortgage will be promptly delivered
to the Custodian upon receipt thereof by the Seller; or (ii) in the case of an
intervening assignment where a public recording office retains the original
recorded intervening assignment or in the case where an intervening assignment
is lost after recordation in a public recording office, a copy of such
intervening assignment certified by such public recording office to be a true
and complete copy of the original recorded intervening assignment;
(g) with respect to Mortgage Loans that are not Co-op Loans, the
original mortgagee policy of title insurance (upon receipt thereof by the
Seller) or, in the event such original title policy is unavailable, a certified
true copy of the related policy binder or commitment for title certified to be
true and complete by the title insurance company;
(h) the original or, if unavailable, a copy of any security
agreement, chattel mortgage or equivalent document executed in connection with
the Mortgage;
(i) with respect to any Co-op Loan: (i) a copy of the Co-op Lease
and the assignment of such Co-op Lease, with all intervening assignments showing
a complete chain of title and an assignment thereof by Seller; (ii) the stock
certificate together with an undated stock power relating to such stock
certificate executed in blank; (iii) the recognition agreement of the interests
of the Mortgagee with respect to the Co-op Loan by the residential cooperative
housing corporation, the stock of which was pledged by the related Mortgagor to
the originator of such Co-op Loan; and (iv) copies of the financing statement
filed by the originator as secured party and, if applicable, a filed UCC-3
assignment of the subject security interest showing a complete chain of title,
together with an executed UCC-3 assignment of such security interest by the
Seller in a form sufficient for filing; and
(j) if any of the above documents has been executed by a person
holding a power of attorney, an original or photocopy of such power certified by
the Seller to be a true and correct copy of the original.
EXHIBIT 2
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, unless otherwise disclosed to the Purchaser on the
data tape, which shall be available for inspection by the Purchaser and which
shall be retained by the Servicer or delivered to the Purchaser:
(a) Copies of the Mortgage Loan Documents.
(b) Residential loan application.
(c) Mortgage Loan closing statement.
(d) Verification of employment and income, if required.
(e) Verification of acceptable evidence of source and amount of
downpayment, if applicable.
(f) Credit report on Mortgagor, in a form acceptable to either
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
(g) Residential appraisal report (except the case of a stream-lined
refinancing).
(h) Photograph of the Mortgaged Property and photographs of
comparable properties.
(i) Survey of the Mortgaged Property, unless a survey is not
required by the title insurer.
(j) Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title policy, i.e., map
or plat, restrictions, easements, home owner association declarations, etc.
(k) Copies of all required disclosure statements.
(l) If applicable, termite report, structural engineer's report,
water potability and septic certification.
(m) Sales Contract, if applicable.
(n) Copy of the owner's title insurance policy or attorney's opinion
of title and abstract of title, as applicable.
(o) Evidence of electronic notation of the hazard insurance policy,
and, if required by law, evidence of the flood insurance policy.
EXHIBIT 3
FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
This INDEMNIFICATION AND CONTRIBUTION AGREEMENT ("Agreement"), dated
as of [_______], 200_, among [________________] (the "Depositor"), a
[______________] corporation (the "Depositor"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital
Inc., a New York corporation ("▇▇▇▇▇▇"), [_____________], a [_______________]
(the "Seller") and [_____], a [______] (the "Servicer").
W I T N E S S E T H:
WHEREAS, the Depositor is acting as depositor and registrant with
respect to the Prospectus, dated [________________], and the Prospectus
Supplement to the Prospectus, [________________] (the "Prospectus Supplement"),
relating to [________________] Certificates (the "Certificates") to be issued
pursuant to a Pooling and Servicing Agreement, dated as of [________________]
(the "P&S"), among the Depositor, as depositor, [________________], as servicer
(the "Servicer"), and [________________], as trustee (the "Trustee");
WHEREAS, as an inducement to the Depositor to enter into the P&S,
and [____________________] (the "Underwriter[s]") to enter into the Underwriting
Agreement, dated [____________________] (the "Underwriting Agreement"), between
the Depositor and the Underwriter[s], and [_______________] (the "Initial
Purchaser[s]") to enter into the Certificate Purchase Agreement, dated
[____________] (the "Certificate Purchase Agreement"), between the Depositor and
the Initial Purchaser[s], Seller has agreed to provide for indemnification and
contribution on the terms and conditions hereinafter set forth;
WHEREAS, ▇▇▇▇▇▇ purchased from Seller certain of the Mortgage Loans
underlying the Certificates (the "Mortgage Loans") serviced by the Servicer
pursuant to the Mortgage Loan Sale and Servicing Agreement, dated as of October
1, 2005 (the "Sale and Servicing Agreement"), by and among ▇▇▇▇▇▇, Seller and
Servicer; and
WHEREAS, pursuant to Section 15 of the Sale and Servicing Agreement,
the Seller and the Servicer have agreed to indemnify the Depositor, ▇▇▇▇▇▇, the
Underwriter[s], the Initial Purchaser[s] and their respective Affiliates,
present and former directors, officers, employees and agents, and ▇▇▇▇▇▇ has
agreed to indemnify Seller, the Servicer and their respective Affiliates,
present and former directors, officers, employees and agents.
NOW THEREFORE, in consideration of the agreements contained herein,
and other valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Depositor, ▇▇▇▇▇▇, the Seller and the Servicer agree as
follows:
1. Indemnification and Contribution.
The Seller and the Servicer, jointly and severally, shall indemnify
and hold harmless the Depositor, ▇▇▇▇▇▇, the Underwriter[s], the Initial
Purchaser[s], their respective Affiliates and their respective present and
former directors, officers, employees and agents and each Person, if any, who
controls the Depositor, ▇▇▇▇▇▇, the Underwriter[s], the Initial Purchaser[s], or
such Affiliates, within the meaning of either Section 15 of the Securities Act
of 1933, as amended (the "1933 Act") or Section 20 of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), against any and all losses, claims,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments, and any other costs, fees and expenses to which the
Depositor, ▇▇▇▇▇▇, the Underwriter[s] or the Initial Purchaser[s], or their
respective Affiliates or any present and former director, officer, employee and
agent or controlling Person may become subject, under the 1933 Act, the 1934 Act
or otherwise, to the extent that such losses, claims, damages, penalties, fines,
forfeitures, fees, costs, judgments or expenses arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the Prospectus Supplement, the Offering Circular or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission relates to information
set forth in the Seller Information or the Servicer Information and Seller and
Servicer shall in each case reimburse the Depositor, ▇▇▇▇▇▇, the Underwriter[s]
and the Initial Purchaser[s], their respective Affiliates and each present and
former director, officer, employee and agent or controlling Person for any legal
or other expenses reasonably incurred by the Depositor, ▇▇▇▇▇▇, the
Underwriter[s] and the Initial Purchaser[s], their respective Affiliates and
each present and former director, officer, employee and agent or controlling
Person, in connection with investigating or defending any such loss, claim,
damage, liability, penalty, fine, forfeiture, or action. The foregoing indemnity
is in addition to any liability which Seller or Servicer may otherwise have to
the Depositor, ▇▇▇▇▇▇, the Underwriter[s], the Initial Purchaser[s] and their
respective Affiliates and each present and former director, officer, employee
and agent or controlling Person.
▇▇▇▇▇▇ shall indemnify and hold harmless Seller and the Servicer,
their respective Affiliates and their respective present and former directors,
officers, employees and agents and each Person, if any, who controls Seller or
the Servicer or such Affiliates within the meaning of either the 1933 Act or the
1934 Act, against any and all losses, claims, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and any other cost, fees and expenses to which Seller, Servicer or their
respective Affiliates or any present and former director, officer, employee and
agent or controlling Person may become subject, under the 1933 Act, the 1934 Act
or otherwise, to the extent that such losses, claims, damages, penalties, fines,
forfeitures, fees, costs, judgments or expenses arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the Prospectus Supplement, the Offering Circular or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission relates to information
set forth in the ▇▇▇▇▇▇ Information in the Prospectus Supplement or the Offering
Circular, and ▇▇▇▇▇▇ shall in each case reimburse Seller, Servicer, their
respective Affiliates and each present and former director, officer, employee
and agent or controlling Person for any legal or other expenses reasonably
incurred by Seller, Servicer, their respective Affiliates and each present and
former director, officer, employee and agent or controlling Person, in
connection with investigating or defending any such loss, claim, damage,
liability, penalty, fine, forfeiture or action.
Notwithstanding the foregoing, nothing in this Agreement shall
amend, modify or supercede the obligations of Seller, the Servicer and ▇▇▇▇▇▇
under the terms of the Sale and Servicing Agreement between the Servicer and
▇▇▇▇▇▇.
As used herein:
"▇▇▇▇▇▇ Information" means any information set forth in the
Prospectus Supplement other than Seller Information or Servicer Information.
"Offering Circular" means the offering circular, dated [__________]
relating to the private offering of the [_______________] Certificates.
"Seller Information" means any information relating to Seller, the
Mortgage Loans and/or the underwriting guidelines relating to the Mortgage Loans
provided by the Seller for inclusion in the Prospectus Supplement or the
Offering Circular [and static pool information regarding mortgage loans
originated or acquired by the Seller and included in the Prospectus Supplement
or Offering Circular] [or incorporated by reference from the website located at
[________]].
"Servicer Information" means any information relating to Servicer,
the Mortgage Loans and/or the servicing of the Mortgage Loans provided by the
Servicer for inclusion in the Prospectus Supplement or the Offering Circular.
(a) Promptly after receipt by any indemnified party under this
Section 1 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 1, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 1 except to the extent it has
been materially prejudiced by such failure; and provided, further, however, that
the failure to notify any indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 1.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, except as provided in
the following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section 1 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
necessary or appropriate for such indemnified party to employ separate counsel;
or (iii) the indemnifying party has failed to assume the defense of such action
and employ counsel reasonably satisfactory to the indemnified party, in which
case, if such indemnified party notifies the indemnifying party in writing that
it elects to employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties.
Each indemnified party, as a condition of the indemnity agreements
contained in this Section 1, shall cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into more
than 30 days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement.
(b) If the indemnification provided for in this Section 1 is
unavailable to an indemnified party, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities, in such proportion as is appropriate to reflect the relative fault
of the indemnifying party and the indemnified party, respectively, in connection
with the statements or omissions that result in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the indemnified party and indemnifying party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission and any other equitable considerations.
(c) The indemnity and contribution agreements contained in this
Section 1 and the representations and warranties set forth in Section 2 shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by the Depositor, ▇▇▇▇▇▇, the
Underwriter[s], the Initial Purchaser[s] or their respective affiliates,
directors, officers, employees or agents or any person controlling the
Depositor, ▇▇▇▇▇▇, the Underwriter[s], the Initial Purchaser[s] or any such
affiliate, and (iii) acceptance of and payment for any of the Offered
Certificates.
2. Representations and Warranties. The Depositor, ▇▇▇▇▇▇, Seller and Servicer
each represent and warrant that:
(i) it has full power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated hereunder,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement;
(ii) this Agreement has been duly executed and delivered by such
party; and
(iii) assuming the due authorization, execution and delivery by each
other party hereto, this Agreement will constitute the legal, valid and
binding obligation of the party making this representation, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, by the
availability of equitable remedies, and by limitations of public policy
under applicable securities law as to rights of indemnity and contribution
thereunder.
3. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to Seller, will be mailed, delivered or
faxed or emailed and confirmed by mail to [______________________]; if
sent to ▇▇▇▇▇▇, ▇▇▇▇ be mailed, delivered or faxed or emailed and
confirmed by mail to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ - Whole Loans
Operations Manager, Fax: [_____], Email:
▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, with copies to (i) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Legal Counsel, Securities, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Fax [_____], Email:
▇▇▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, and (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
- SPG Finance, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Fax [_____], Email: ▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; if to
the Depositor, will be mailed, delivered or telegraphed and confirmed to
[____________________]; or if to the Underwriter[s], will be mailed,
delivered or telegraphed and confirmed to [_____________________]; or if
to the Initial Purchaser[s], will be mailed, delivered or telegraphed and
confirmed to [_____________________].
4. Miscellaneous. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect
to the conflict of laws provisions thereof. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their successors
and assigns and the controlling persons referred to herein, and no other
person shall have any right or obligation hereunder. Neither this
Agreement nor any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the
party against whom enforcement of the change, waiver, discharge or
termination is sought. This Agreement may be executed in counterparts,
each of which when so executed and delivered shall be considered an
original, and all such counterparts shall constitute one and the same
instrument. Capitalized terms used but not defined herein shall have the
meanings provided in the P&S.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers hereunto duly authorized, this
__th day of [_____________].
[DEPOSITOR]
By:
--------------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:
--------------------------------------
Name:
Title:
[SELLER]
By:
--------------------------------------
Name:
Title:
[SERVICER]
By:
--------------------------------------
Name:
Title:
EXHIBIT 4
CUSTODIAL ACCOUNT CERTIFICATION
[_________], 2005
Countrywide Home Loans Servicing LP hereby certifies that it has
established the account described below as a Custodial Account pursuant to
Subsection 11.04 of the Mortgage Loan Sale and Servicing Agreement, dated as of
October 1, 2005, Conventional Fixed and Adjustable Rate Residential Mortgage
Loans.
Title of Account: "Countrywide Home Loans Servicing LP in trust for ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage Capital Inc. as Purchaser of Mortgage Loans and various
Mortgagors."
Account Number:
--------------------------
Address of office or
branch of [_____________________]
at which the Custodial
Account is maintained:
----------------------
----------------------
----------------------
COUNTRYWIDE HOME LOANS SERVICING LP
By: Countrywide GP, Inc.,
its general partner
By:
--------------------------------------
Name:
Title:
EXHIBIT 5
CUSTODIAL ACCOUNT LETTER AGREEMENT
[_________], 2005
To:
(the "Depository")
As Servicer under the Mortgage Loan Sale and Servicing Agreement,
dated as of October 1, 2005, we hereby authorize and request you to establish an
account, as a Custodial Account, to be designated as "Countrywide Home Loans
Servicing LP in trust for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. as Purchaser of
Mortgage Loans and various Mortgagors." All deposits in the account shall be
subject to withdrawal therefrom by order signed by the Servicer. You may refuse
any deposit which would result in violation of the requirement that the account
be fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
COUNTRYWIDE HOME LOANS SERVICING LP
By: Countrywide GP, Inc.,
its general partner
By:
--------------------------------------
Name:
Title:
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number
____________________ at the office of the Depository indicated above, and agrees
to honor withdrawals on such account as provided above. The account will be
insured by the Federal Deposit Insurance Corporation through the Bank Insurance
Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
[___________________________],
as Depository
By:
--------------------------------------
Name:
Title:
Date:
EXHIBIT 6
ESCROW ACCOUNT CERTIFICATION
[_________], 2005
[_____________________] hereby certifies that it has established the
account described below as an Escrow Account pursuant to Subsection 11.06 of the
Mortgage Loan Sale and Servicing Agreement, dated as of October 1, 2005
Conventional, Fixed and Adjustable Rate Residential Mortgage Loans.
Title of Account: "Countrywide Home Loans Servicing LP, in trust for
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. as Purchaser of Mortgage Loans and
various Mortgagors."
Account Number: __________________________
Address of office or
branch of [_____________________]
at which the Escrow
Account is maintained:
----------------------
----------------------
----------------------
COUNTRYWIDE HOME LOANS SERVICING LP
By: Countrywide GP, Inc.,
its general partner
By:
--------------------------------------
Name:
Title:
EXHIBIT 7
ESCROW ACCOUNT LETTER AGREEMENT
June [__], 2005
To:
(the "Depository")
As Servicer under the Mortgage Loan Sale and Servicing Agreement,
dated as of October 1, 2005, we hereby authorize and request you to establish an
account, as an Escrow Account, to be designated as "Countrywide Home Loans
Servicing LP in trust for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. as Purchaser of
Mortgage Loans and various Mortgagors." All deposits in the account shall be
subject to withdrawal therefrom by order signed by the Servicer. You may refuse
any deposit which would result in violation of the requirement that the account
be fully insured as described below. This letter is submitted to you in
duplicate. Please execute and return one original to us.
COUNTRYWIDE HOME LOANS SERVICING LP
By: Countrywide GP, Inc.,
its general partner
By:
--------------------------------------
Name:
Title:
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number
____________________ at the office of the Depository indicated above, and agrees
to honor withdrawals on such account as provided above. The account will be
insured by the Federal Deposit Insurance Corporation through the Bank Insurance
Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
[____________________],
as Depository
By:
--------------------------------------
Name:
Title:
Date:
EXHIBIT 8
[Reserved]
EXHIBIT 9
FORM OF MONTHLY REMITTANCE REPORT
[SERVICER TO PROVIDE]
EXHIBIT 10-1
FORM OF SELLER'S OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly elected
[Vice] President of Countrywide Home Loans, Inc. [COMPANY], a [state]
[federally] chartered institution organized under the laws of the [state of
____________] [United States] (the "Company") and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete copy
of the charter of the Company which is in full force and effect on the
date hereof.
2. Attached hereto as Exhibit 2 is a true, correct and complete copy
of the bylaws of the Company which are in effect on the date hereof.
3. Attached hereto as Exhibit 3 is a [copy of the][for the initial
Closing Date: an original] certificate of good standing of the Company
issued within ten days of the date hereof, and no event has occurred since
the date thereof which would impair such standing.
4. Attached hereto as Exhibit 4 is a true, correct and complete copy
of the corporate resolutions of the Board of Directors of the Company
authorizing the Company to execute and deliver each of the Mortgage Loan
Sale and Servicing Agreement, dated as of October 1, 2005, by and among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. (the "Purchaser"), Countrywide Home
Loans Servicing LP and the Company (the "Sale and Servicing Agreement")
[and to endorse the Mortgage Notes and execute the Assignments of
Mortgages by original [or facsimile] signature], and such resolutions are
in effect on the date hereof.
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Company of or compliance by the Company
with the Sale and Servicing Agreement, the sale of the mortgage loans or
the consummation of the transactions contemplated by the agreements; or
(ii) any required consent, approval, authorization or order has been
obtained by the Company.
6. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of the Sale and Servicing Agreement conflicts
or will conflict with or results or will result in a breach of or
constitutes or will constitute a default under the charter or by-laws of
the Company, the terms of any indenture or other agreement or instrument
to which the Company is a party or by which it is bound or to which it is
subject, or any statute or order, rule, regulations, writ, injunction or
decree of any court, governmental authority or regulatory body to which
the Company is subject or by which it is bound.
7. To the best of my knowledge, there is no action, suit, proceeding
or investigation pending or threatened against the Company which, in my
judgment, either in any one instance or in the aggregate, may reasonably
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Company or in any
material impairment of the right or ability of the Company to carry on its
business substantially as now conducted or in any material liability on
the part of the Company or which would draw into question the validity of
the Sale and Servicing Agreement or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which would be
likely to impair materially the ability of the Company to perform under
the terms of the Sale and Servicing Agreement.
8. Each person listed on Exhibit 5 attached hereto who, as an
officer or representative of the Company, signed (a) the Sale and
Servicing Agreement and (b) any other document delivered or on the date
hereof in connection with any purchase described in the agreements set
forth above was, at the respective times of such signing and delivery, and
is now, a duly elected or appointed, qualified and acting officer or
representative of the Company, who holds the office set forth opposite his
or her name on Exhibit 5, and the signatures of such persons appearing on
such documents are their genuine signatures.
9. The Company is duly authorized to engage in the transactions
described and contemplated in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated:
------------------------
By:
------------------------
Name:
------------------------
[Seal] Title: [Vice] President
I, ________________________, an [Assistant] Secretary of Countrywide
Home Loans, Inc., hereby certify that ____________ is the duly elected,
qualified and acting [Vice] President of the Company and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
------------------------
By:
------------------------
Name:
------------------------
[Assistant] Secretary
EXHIBIT 5 to
Company's Officer's Certificate
NAME TITLE SIGNATURE
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
EXHIBIT 10-2
FORM OF SERVICER'S OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly elected
[Vice] President of Countrywide Home Loans Servicing LP, a partnership organized
under the laws of the [state of ____________] [United States] (the "Servicer")
and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete copy
of the partnership agreement of the Servicer which is in full force and
effect on the date hereof.
2. Attached hereto as Exhibit 2 is a [copy of the][for the initial
Closing Date: an original] certificate of good standing of the Servicer
issued within ten days of the date hereof.
3. The execution and delivery of the Mortgage Loan Sale and
Servicing Agreement, dated as of October 1, 2005, by and among ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Mortgage Capital Inc. (the "Purchaser"), Countrywide Home Loans,
Inc. and the Servicer (the "Sale and Servicing Agreement") and any other
documents or certificates related to and in furtherance of the
transactions contemplated by the foregoing, are in the ordinary course for
the Servicer and therefore do not require specific resolutions.
4. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by the Servicer
with the Sale and Servicing Agreement, or the consummation of the
transactions contemplated thereby; or (ii) any required consent, approval,
authorization or order has been obtained by the Servicer.
5. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of the Sale and Servicing Agreement conflicts
or will conflict with or results or will result in a breach of or
constitutes or will constitute a default under the partnership agreement
of the Servicer, the terms of any indenture or other agreement or
instrument to which the Servicer is a party or by which it is bound or to
which it is subject, or any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or regulatory
body to which the Servicer is subject or by which it is bound.
6. To the best of my knowledge, there is no action, suit, proceeding
or investigation pending or threatened against the Servicer which, in my
judgment, either in any one instance or in the aggregate, may reasonably
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Servicer or in any
material impairment of the right or ability of the Servicer to carry on
its business substantially as now conducted or in any material liability
on the part of the Servicer or which would draw into question the validity
of the Sale and Servicing Agreement, or of any action taken or to be taken
in connection with the transactions contemplated hereby, or which would be
likely to impair materially the ability of the Servicer to perform under
the terms of the Sale and Servicing Agreement.
7. Each person listed on Exhibit 4 attached hereto who, as an
officer or representative of the Servicer, signed (a) the Sale and
Servicing Agreement, and (b) any other document delivered or on the date
hereof in connection with any purchase described in the agreements set
forth above was, at the respective times of such signing and delivery, and
is now, a duly elected or appointed, qualified and acting officer or
representative of the Servicer, who holds the office set forth opposite
his or her name on Exhibit 4, and the signatures of such persons appearing
on such documents are their genuine signatures.
8. The Servicer is duly authorized to engage in the transactions
described and contemplated in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Servicer.
Dated:
------------------------
By:
------------------------
Name:
------------------------
[Seal] Title: [Vice] President
I, ________________________, an [Assistant] Secretary of Countrywide
Home Loans Servicing LP, hereby certify that ____________ is the duly elected,
qualified and acting [Vice] President of the Servicer and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
------------------------
By:
------------------------
Name:
------------------------
Title:
------------------------
[Assistant] Secretary
EXHIBIT 4 to
Servicer's Officer's Certificate
NAME TITLE SIGNATURE
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
--------------------- -------------------------- -------------------------------
EXHIBIT 11
[RESERVED]
EXHIBIT 12
FORM OF SECURITY RELEASE CERTIFICATION
-------------------, -----
------------------------
------------------------
------------------------
Attention:
---------------------------
---------------------------
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that Countrywide Home Loans, Inc. a
corporation organized pursuant to the laws of the state of [___________] (the
"Company") has committed to sell to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. under
the Mortgage Loan Sale and Servicing Agreement, dated as of October 1, 2005,
certain mortgage loans originated by the Company. The Company warrants that the
mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. are in
addition to and beyond any collateral required to secure advances made by you to
the Company.
The Company acknowledges that the mortgage loans to be sold to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. shall not be used as additional or
substitute collateral for advances made by [____________]. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. understands that the balance of the Company's mortgage
loan portfolio may be used as collateral or additional collateral for advances
made by [___________], and confirms that it has no interest therein.
Execution of this letter by [___________] shall constitute a full
and complete release of any security interest, claim, or lien which
[___________] may have against the mortgage loans to be sold to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc.
Very truly yours,
-----------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
Acknowledged and approved:
--------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
EXHIBIT 13
FORM OF SECURITY RELEASE CERTIFICATION AGREEMENT
I. Release of Security Interest
The financial institution named below hereby relinquishes any and
all right, title and interest it may have in all Mortgage Loans to be purchased
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. from the Company named below pursuant to
that certain Mortgage Loan Sale and Servicing Agreement, dated as of October 1,
2005 and certifies that all notes, mortgages, assignments and other documents in
its possession relating to such Mortgage Loans have been delivered and released
to the Company named below or its designees, as of the date and time of the sale
of such Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc.
Name and Address and Wire Instructions of Financial Institution
--------------------------------
(Name)
--------------------------------
(Address)
--------------------------------
--------------------------------
--------------------------------
By:
-----------------------------
II. Certification of Release
The Company named below hereby certifies to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage
Capital Inc. that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. the security interests in
the Mortgage Loans released by the above-named financial institution comprise
all security interests relating to or affecting any and all such Mortgage Loans.
The Company warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
----------------------------------
By:
--------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
EXHIBIT 14
FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
On this ___ day of __________, ____, ___________________ ("Seller"),
as (i) the Seller under that certain Purchase Price and Terms Agreement, dated
as of ___________, _____ (the "PPTA"), (ii) the Seller under that certain
Mortgage Loan Sale and Servicing Agreement, dated as of October 1, 2005 (the
"Sale and Servicing Agreement") and, together with the PPTA, the "Agreements")
does hereby sell, transfer, assign, set over and convey to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Mortgage Capital Inc. ("Purchaser") as the Purchaser under the Agreements,
without recourse, but subject to the terms of the Agreements, all right, title
and interest of, in and to the Mortgage Loans listed on the Mortgage Loan
Schedule attached hereto as Exhibit A (the "Mortgage Loans"), together with the
Mortgage Files and all rights and obligations arising under the documents
contained therein. Each Mortgage Loan subject to the Agreements was underwritten
in accordance with, and conforms to, the Underwriting Guidelines attached hereto
as Exhibit C. Pursuant to Section 6 of the Sale and Servicing Agreement, the
Seller has delivered to the Custodian the documents for each Mortgage Loan to be
purchased as set forth in the Custodial Agreement. The contents of each
Servicing File required to be retained by the Servicer to service the Mortgage
Loans pursuant to the Sale and Servicing Agreement and thus not delivered to the
Purchaser are and shall be held in trust by the Servicer in its capacity as
Servicer for the benefit of the Purchaser as the owner thereof. The Servicer's
possession of any portion of the Servicing File is at the will of the Purchaser
for the sole purpose of facilitating servicing of the related Mortgage Loan
pursuant to the Sale and Servicing Agreement, and such retention and possession
by the Servicer shall be in a custodial capacity only. The ownership of each
Mortgage Note, Mortgage and the contents of the Mortgage File and Servicing File
is vested in the Purchaser and the ownership of all records and documents with
respect to the related Mortgage Loan prepared by or which come into the
possession of the Seller or the Servicer shall immediately vest in the Purchaser
and shall be retained and maintained, in trust, by the Servicer at the will of
the Purchaser in such custodial capacity only.
The Mortgage Loan Package characteristics of the Mortgage Loans
subject hereto are set forth on Exhibit B hereto.
In accordance with Section 6 of the Sale and Servicing Agreement,
the Purchaser accepts the Mortgage Loans listed on Exhibit A attached hereto.
Notwithstanding the foregoing the Purchaser does not waive any rights or
remedies it may have under the Agreements.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Sale and Servicing Agreement.
[Signature Page Follows]
[SELLER]
By:
--------------------------------------
Name:
Title:
Accepted and Agreed:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:
--------------------------------------
Name:
Title:
EXHIBIT A
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
THE MORTGAGE LOANS
EXHIBIT B
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE POOL CHARACTERISTICS OF
EACH MORTGAGE LOAN PACKAGE
Pool Characteristics of the Mortgage Loan Package as delivered on
the related Closing Date:
No Mortgage Loan has: (1) an outstanding principal balance less than
$_________; (2) an origination date earlier than _ months prior to the related
Cut-off Date; (3) an LTV of greater than _____%; (4) a FICO Score of less than
___; or (5) a debt-to-income ratio of more than __%. Each Mortgage Loan has a
Mortgage Interest Rate of at least ___% per annum and an outstanding principal
balance of less than $_________. Each Adjustable Rate Mortgage Loan has an Index
of [_______].
EXHIBIT C
TO ASSIGNMENT AND CONVEYANCE AGREEMENT
UNDERWRITING GUIDELINES
EXHIBIT 15
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
THIS ASSIGNMENT AND RECOGNITION AGREEMENT, dated [____________ __,
20__] ("Agreement"), among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mortgage Capital Inc. ("Assignor"),
[____________________] ("Assignee") and [SELLER] (the "Company"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and
other valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
Assignment and Conveyance
1. The Assignor hereby conveys, sells, grants, transfers and assigns
to the Assignee all of the right, title and interest of the Assignor, as
purchaser, in, to and under (a) those certain Mortgage Loans listed on the
schedule (the "Mortgage Loan Schedule") attached hereto as Exhibit A (the
"Mortgage Loans") and (b) except as described below, that certain Mortgage Loan
Sale and Servicing Agreement (the "Sale and Servicing Agreement"), dated as of
October 1, 2005, among the Assignor, as purchaser (the "Purchaser"), the
Company, as seller, and Countrywide Home Loans Servicing LP, as servicer, solely
insofar as the Sale and Servicing Agreement relates to the Mortgage Loans.
The Assignor specifically reserves and does not assign to the
Assignee hereunder any and all right, title and interest in, to and under and
any obligations of the Assignor with respect to (a) Subsection 7.04 of the Sale
and Servicing Agreement or (b) any mortgage loans subject to the Sale and
Servicing Agreement which are not the Mortgage Loans set forth on the Mortgage
Loan Schedule and are not the subject of this Agreement.
Recognition of the Company
2. From and after the date hereof (the "Securitization Closing
Date"), the Company shall and does hereby recognize that the Assignee will
transfer the Mortgage Loans and assign its rights under the Sale and Servicing
Agreement (solely to the extent set forth herein) and this Agreement to
[__________________] (the "Trust") created pursuant to a Pooling and Servicing
Agreement, dated as of [__________, 200_] (the "Pooling Agreement"), among the
Assignee, the Assignor, [___________________], as trustee (including its
successors in interest and any successor trustees under the Pooling Agreement,
the "Trustee"), [____________________], as servicer (including its successors in
interest and any successor servicer under the Pooling Agreement, the
"Servicer"). The Company hereby acknowledges and agrees that from and after the
date hereof (i) the Trust will be the owner of the Mortgage Loans, (ii) the
Company shall look solely to the Trust for performance of any obligations of the
Assignor insofar as they relate to the Mortgage Loans, (iii) the Trust
(including the Trustee and the Servicer acting on the Trust's behalf) shall have
all the rights and remedies available to the Assignor, insofar as they relate to
the Mortgage Loans, under the Sale and Servicing Agreement, including, without
limitation, the enforcement of the document delivery requirements set forth in
Section 6 of the Sale and Servicing Agreement, and shall be entitled to enforce
all of the obligations of the Company thereunder insofar as they relate to the
Mortgage Loans, and (iv) all references to the Purchaser, the Custodian or the
Bailee under the Sale and Servicing Agreement insofar as they relate to the
Mortgage Loans, shall be deemed to refer to the Trust (including the Trustee and
the Servicer acting on the Trust's behalf). Neither the Company nor the Assignor
shall amend or agree to amend, modify, waiver, or otherwise alter any of the
terms or provisions of the Sale and Servicing Agreement which amendment,
modification, waiver or other alteration would in any way affect the Mortgage
Loans or the Company's performance under the Sale and Servicing Agreement with
respect to the Mortgage Loans without the prior written consent of the Trustee.
Representations and Warranties of the Company
3. The Company warrants and represents to the Assignor, the Assignee
and the Trust as of the date hereof that:
(a) The Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement and has full power and
authority to perform its obligations under the Sale and Servicing
Agreement. The execution by the Company of this Agreement is in the
ordinary course of the Company's business and will not conflict with, or
result in a breach of, any of the terms, conditions or provisions of the
Company's charter or bylaws or any legal restriction, or any material
agreement or instrument to which the Company is now a party or by which it
is bound, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Company or its property is subject. The
execution, delivery and performance by the Company of this Agreement have
been duly authorized by all necessary corporate action on part of the
Company. This Agreement has been duly executed and delivered by the
Company, and, upon the due authorization, execution and delivery by the
Assignor and the Assignee, will constitute the valid and legally binding
obligation of the Company, enforceable against the Company in accordance
with its terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and by
general principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
(c) No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required to be
obtained or made by the Company in connection with the execution, delivery
or performance by the Company of this Agreement; and
(d) There is no action, suit, proceeding or investigation pending or
to the best of the Company's knowledge threatened against the Company,
before any court, administrative agency or other tribunal, which would
draw into question the validity of this Agreement or the Sale and
Servicing Agreement, or which, either in any one instance or in the
aggregate, would result in any material adverse change in the ability of
the Company to perform its obligations under this Agreement or the Sale
and Servicing Agreement, and the Company is solvent.
4. Pursuant to Section 15 of the Sale and Servicing Agreement, the
Company hereby represents and warrants, for the benefit of the Assignor, the
Assignee and the Trust, that the representations and warranties set forth in
Section 7.02 of the Sale and Servicing Agreement are true and correct as of the
date hereof as if such representations and warranties were made on the date
hereof unless otherwise specifically stated in such representations and
warranties.
Remedies for Breach of Representations and Warranties
5. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee and the Trust (including the Trustee and
the Servicer acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Section 3 hereof
shall be as set forth in Subsection 7.03 of the Sale and Servicing Agreement as
if they were set forth herein (including without limitation the repurchase and
indemnity obligations set forth therein).
Miscellaneous
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
7. 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, with the prior
written consent of the Trustee.
8. This Agreement shall inure to the benefit of (i) the successors
and assigns of the parties hereto and (ii) the Trust (including the Trustee and
the Servicer acting on the Trust's behalf). Any entity into which Assignor,
Assignee or Company may be merged or consolidated shall, without the requirement
for any further writing, be deemed Assignor, Assignee or Company, respectively,
hereunder.
9. Each of this Agreement and the Sale and Servicing Agreement shall
survive the conveyance of the Mortgage Loans and the assignment of the Sale and
Servicing Agreement (to the extent assigned hereunder) by Assignor to Assignee
and by Assignee to the Trust and nothing contained herein shall supersede or
amend the terms of the Sale and Servicing Agreement.
10. 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.
11. In the event that any provision of this Agreement conflicts with
any provision of the Sale and Servicing Agreement with respect to the Mortgage
Loans, the terms of this Agreement shall control.
12. Capitalized terms used in this Agreement (including the exhibits
hereto) but not defined in this Agreement shall have the meanings given to such
terms in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
[SELLER]
By:
Name:
---------------------------------
Its:
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC.
By:
Name:
---------------------------------
Its:
----------------------------------
[ASSIGNEE]
By:
Name:
---------------------------------
Its:
----------------------------------
EXHIBIT 16
ANNUAL CERTIFICATION
Re: [_______________] (the "Trust"), Mortgage Pass-Through Certificates,
Series [_____], issued pursuant to the Pooling and Servicing
Agreement, dated as of [_____], 200_ (the "Pooling and Servicing
Agreement"), among [_____], as depositor (the "Depositor"), [_____],
as trustee (the "Trustee"), [_____], as servicer (the "Servicer"),
and [_____], as responsible party
I, [identify the certifying individual], certify to the Depositor,
the Trustee [and the Master Servicer], and their officers, directors and
affiliates, and with the knowledge and intent that they will rely upon this
certification, that:
1. The servicing information required to be provided to the
[Purchaser]/[Depositor]/[Servicer]/[Trustee] by Countrywide Home
Loans Servicing LP under the Pooling and Servicing Agreement has
been so provided;
2. I am responsible for reviewing the activities performed by
Countrywide Home Loans Servicing LP under the Pooling and Servicing
Agreement and based upon my knowledge and the annual compliance
review required under the Pooling and Servicing Agreement, and
except as disclosed in the annual compliance statement required to
be delivered to the [Purchaser]/[Depositor]/[ Servicer]/[Trustee] in
accordance with the terms of the Pooling and Servicing Agreement
(which has been so delivered to the
[Purchaser]/[Depositor]/[Servicer]/[Trustee]), Countrywide Home
Loans Servicing LP has fulfilled its obligations under the Pooling
and Servicing Agreement; and
3. All significant deficiencies relating to the Countrywide
Home Loans Servicing LP's compliance with the minimum servicing
standards for purposes of the report provided by an independent
public accountant, after conducting a review conducted in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or
similar procedure, as set forth in the Pooling and Servicing
Agreement, have been disclosed to such accountant and are included
in such report.
Date:
----------------------------------
----------------------------------------
[Signature]
[Title]
EXHIBIT T
FORM OF SERVICER POWER OF ATTORNEY
When Recorded Mail To:
[JPMorgan Chase Bank, National Association
c/o Chase Home Finance LLC
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇]
[HomEq Servicing Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇]
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Deutsche Bank National Trust Company, a
national banking association organized and existing under the laws of the United
States, and having its principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Trustee pursuant to that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Home Equity Loan Trust 2006-2 Pooling and Servicing Agreement, dated as of March
1, 2006, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as Depositor, HomEq Servicing
Corporation ("HomEq"), as Servicer, First NLC Financial Services LLC, as
Responsible Party, JPMorgan Chase Bank, National Association ("JPMorgan"), as
Servicer, and Deutsche Bank National Trust Company, as Trustee, hereby
constitutes and appoints [HomEq] [JPMorgan], by and through [HomEq's]
[JPMorgan's] officers, the Trustee's true and lawful Attorney-in-fact, in the
Trustee's name, place and stead and for the Trustee's benefit, in connection
with all mortgage loans serviced by [HomEq] [JPMorgan] pursuant to the Agreement
solely for the purpose of performing such acts and executing such documents in
the name of the Trustee necessary and appropriate to effectuate the following
enumerated transactions in respect of any of the mortgages or deeds of trust
(the "Mortgages" and the "Deeds of Trust" respectively) and promissory notes
secured thereby (the "Mortgage Notes") for which the undersigned is acting as
Trustee for various certificateholders (whether the undersigned is named therein
as mortgagee or beneficiary or has become mortgagee by virtue of endorsement of
the Mortgage Note secured by any such Mortgage or Deed of Trust) and for which
[HomEq] [JPMorgan] is acting as servicer.
This Appointment shall apply only to the following enumerated transactions and
nothing herein or in the Agreement shall be construed to the contrary:
1. The modification or re-recording of a Mortgage or Deed of Trust,
where said modification or re-recording is solely for the purpose of
correcting the Mortgage or Deed of Trust to conform same to the
original intent of the parties thereto or to correct title errors
discovered after such title insurance was issued; provided that (i)
said modification or re-recording, in either instance, does not
adversely affect the lien of the Mortgage or Deed of Trust as
insured and (ii) otherwise conforms to the provisions of the
Agreement.
2. The subordination of the lien of a Mortgage or Deed of Trust to an
easement in favor of a public utility company of a government agency
or unit with powers of eminent domain; this section shall include,
without limitation, the execution of partial satisfactions/releases,
partial reconveyances or the execution or requests to trustees to
accomplish same.
3. The conveyance of the properties to the mortgage insurer, or the
closing of the title to the property to be acquired as real estate
owned, or conveyance of title to real estate owned.
4. The completion of loan assumption agreements.
5. The full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage
Note.
6. The assignment of any Mortgage or Deed of Trust and the related
Mortgage Note, in connection with the repurchase of the mortgage
loan secured and evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the
refinancing thereof, including, without limitation, the assignment
of the related Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the
taking of a deed in lieu of foreclosure, or the completion of
judicial or non-judicial foreclosure or termination, cancellation or
rescission of any such foreclosure, including, without limitation,
any and all of the following acts:
a. the substitution of trustee(s) serving under a Deed of Trust,
in accordance with state law and the Deed of Trust;
b. the preparation and issuance of statements of breach or
non-performance;
c. the preparation and filing of notices of default and/or
notices of sale;
d. the cancellation/rescission of notices of default and/or
notices of sale;
e. the taking of deed in lieu of foreclosure; and
f. the preparation and execution of such other documents and
performance of such other actions as may be necessary under
the terms of the Mortgage, Deed of Trust or state law to
expeditiously complete said transactions in paragraphs 8.a.
through 8.e. above.
9. With respect to the sale of property acquired through a foreclosure
or deed-in lieu of foreclosure, including, without limitation, the
execution of the following documentation:
a. listing agreements;
b. purchase and sale agreements;
▇. ▇▇▇▇▇/warranty/quit claim deeds or any other deed causing the
transfer of title of the property to a party contracted to
purchase same;
d. escrow instructions; and
e. any and all documents necessary to effect the transfer of
property.
10. The modification or amendment of escrow agreements established for
repairs to the mortgaged property or reserves for replacement of
personal property.
The undersigned gives said Attorney-in-fact full power and authority
to execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or could
do, and hereby does ratify and confirm to all that said Attorney-in-fact shall
be effective as of March 30, 2006.
This appointment is to be construed and interpreted as a limited
power of attorney. The enumeration of specific items, rights, acts or powers
herein is not intended to, nor does it give rise to, and it is not to be
construed as a general power of attorney.
Nothing contained herein shall (i) limit in any manner any
indemnification provided by [HomEq] [JPMorgan] to the Trustee under the
Agreement, or (ii) be construed to grant [HomEq] [JPMorgan] the power to
initiate or defend any suit, litigation or proceeding in the name of Deutsche
Bank National Trust Company except as specifically provided for herein. If
[HomEq] [JPMorgan] receives any notice of suit, litigation or proceeding in the
name of Deutsche Bank National Trust Company or Bankers Trust Company of
California, N.A., then [HomEq] [JPMorgan] shall promptly forward a copy of same
to the Trustee.
This limited power of attorney is not intended to extend the powers
granted to [HomEq] [JPMorgan] under the Agreement or to allow [HomEq] [JPMorgan]
to take any action with respect to Mortgages, Deeds of Trust or Mortgage Notes
not authorized by the Agreement.
[HomEq] [JPMorgan] hereby agrees to indemnify and hold the Trustee
and its directors, officers, employees and agents harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever incurred by reason or result of or in connection with the exercise by
[HomEq] [JPMorgan] of the powers granted to it hereunder. The foregoing
indemnity shall survive the termination of this Limited Power of Attorney and
the Agreement or the earlier resignation or removal of the Trustee under the
Agreement.
This Limited Power of Attorney is entered into and shall be governed
by the laws of the State of New York, without regard to conflicts of law
principles of such state.
Third parties without actual notice may rely upon the exercise of
the power granted under this Limited Power of Attorney; and may be satisfied
that this Limited Power of Attorney shall continue in full force and effect and
has not been revoked unless an instrument of revocation has been made in writing
by the undersigned.
IN WITNESS WHEREOF, Deutsche Bank National Trust Company, as Trustee
has caused its corporate seal to be hereto affixed and these presents to be
signed and acknowledged in its name and behalf by a duly elected and authorized
signatory this ___________ day of ____________.
Deutsche Bank National Trust Company,
as Trustee
By:____________________________________
Name:
Title:
Acknowledged and Agreed
[HomEq Servicing Corporation]
[JPMorgan Chase Bank, National Association]
By:__________________________________
Name:
Title:
STATE OF CALIFORNIA
COUNTY OF ____________
On ________________, _____, before me, the undersigned, a Notary
Public in and for said state, personally appeared ______________________________
of Deutsche Bank National Trust Company, as Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home
Equity Loan Trust 2006-2, personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
that same in his/her authorized capacity, and that by his/her signature on the
instrument the entity upon behalf of which the person acted and executed the
instrument.
WITNESS my hand and official seal.
(SEAL)
____________________________________________
Notary Public, State of California
EXHIBIT U
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Trustee], [the Servicer],
[each Subservicer] and [each Subcontractor] shall address, at a minimum, the
criteria identified as below as "Applicable Servicing Criteria":
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SERVICING CRITERIA APPLICABLE
SERVICING CRITERIA
------------------------------------------------------------------------------------------------------------------------------------
Reference Criteria
------------------------------------------------------------------------------------------------------------------------------------
General Servicing Considerations
------------------------------------------------------------------------------------------------------------------------------------
Policies and procedures are instituted to monitor any performance or other Trustee/Servicer
1122(d)(1)(i) triggers and events of default in accordance with the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
If any material servicing activities are outsourced to third parties, policies
and procedures are instituted to monitor the third party's performance and Trustee/Servicer
1122(d)(1)(ii) compliance with such servicing activities.
------------------------------------------------------------------------------------------------------------------------------------
Any requirements in the transaction agreements to maintain a back-up servicer
1122(d)(1)(iii) for the mortgage loans are maintained. N/A
------------------------------------------------------------------------------------------------------------------------------------
A fidelity bond and errors and omissions policy is in effect on the party
participating in the servicing function throughout the reporting period in the Servicer
amount of coverage required by and otherwise in accordance with the terms of
1122(d)(1)(iv) the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Cash Collection and Administration
------------------------------------------------------------------------------------------------------------------------------------
Payments on mortgage loans are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business days Servicer
following receipt, or such other number of days specified in the transaction
1122(d)(2)(i) agreements.
------------------------------------------------------------------------------------------------------------------------------------
Disbursements made via wire transfer on behalf of an obligor or to an investor
1122(d)(2)(ii) are made only by authorized personnel. Servicer/Trustee
------------------------------------------------------------------------------------------------------------------------------------
Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such advances, are Servicer
1122(d)(2)(iii) made, reviewed and approved as specified in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
The related accounts for the transaction, such as cash reserve accounts or
accounts established as a form of overcollateralization, are separately Servicer/Trustee
maintained (e.g., with respect to commingling of cash) as set forth in the
1122(d)(2)(iv) transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Each custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes of this
criterion, "federally insured depository institution" with respect to a foreign Servicer/Trustee
financial institution means a foreign financial institution that meets the
1122(d)(2)(v) requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.
------------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access. Servicer/Trustee
------------------------------------------------------------------------------------------------------------------------------------
Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and related bank
clearing accounts. These reconciliations are (A) mathematically accurate; (B)
prepared within 30 calendar days after the bank statement cutoff date, or such
other number of days specified in the transaction agreements; (C) reviewed and Servicer/Trustee
approved by someone other than the person who prepared the reconciliation; and
(D) contain explanations for reconciling items. These reconciling items are
resolved within 90 calendar days of their original identification, or such
1122(d)(2)(vii) other number of days specified in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Investor Remittances and Reporting
------------------------------------------------------------------------------------------------------------------------------------
Reports to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared in
accordance with timeframes and other terms set forth in the transaction Trustee/Servicer
agreements; (B) provide information calculated in accordance with the terms
specified in the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with investors' or the
trustee's records as to the total unpaid principal balance and number of
1122(d)(3)(i) mortgage loans serviced by the Servicer.
------------------------------------------------------------------------------------------------------------------------------------
Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the transaction Trustee/Servicer
1122(d)(3)(ii) agreements.
------------------------------------------------------------------------------------------------------------------------------------
Disbursements made to an investor are posted within two business days to the
Servicer's investor records, or such other number of days specified in the Trustee/Servicer
1122(d)(3)(iii) transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Amounts remitted to investors per the investor reports agree with cancelled
1122(d)(3)(iv) checks, or other form of payment, or custodial bank statements. Trustee/Servicer
------------------------------------------------------------------------------------------------------------------------------------
Pool Asset Administration
------------------------------------------------------------------------------------------------------------------------------------
Collateral or security on mortgage loans is maintained as required by the
1122(d)(4)(i) transaction agreements or related mortgage loan documents. Trustee/Servicer
------------------------------------------------------------------------------------------------------------------------------------
Mortgage loan and related documents are safeguarded as required by the
1122(d)(4)(ii) transaction agreements Trustee/Servicer
------------------------------------------------------------------------------------------------------------------------------------
Any additions, removals or substitutions to the asset pool are made, reviewed
and approved in accordance with any conditions or requirements in the
1122(d)(4)(iii) transaction agreements. Trustee/Servicer
------------------------------------------------------------------------------------------------------------------------------------
Payments on mortgage loans, including any payoffs, made in accordance with the
related mortgage loan documents are posted to the Servicer's obligor records
maintained no more than two business days after receipt, or such other number Servicer
of days specified in the transaction agreements, and allocated to principal,
interest or other items (e.g., escrow) in accordance with the related mortgage
1122(d)(4)(iv) loan documents.
------------------------------------------------------------------------------------------------------------------------------------
The Servicer's records regarding the mortgage loans agree with the Servicer's
1122(d)(4)(v) records with respect to an obligor's unpaid principal balance. Servicer
------------------------------------------------------------------------------------------------------------------------------------
Changes with respect to the terms or status of an obligor's mortgage loans
(e.g., loan modifications or re-agings) are made, reviewed and approved by Servicer
authorized personnel in accordance with the transaction agreements and related
1122(d)(4)(vi) pool asset documents.
------------------------------------------------------------------------------------------------------------------------------------
Loss mitigation or recovery actions (e.g., forbearance plans, modifications and
deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) Servicer
are initiated, conducted and concluded in accordance with the timeframes or
1122(d)(4)(vii) other requirements established by the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Records documenting collection efforts are maintained during the period a
mortgage loan is delinquent in accordance with the transaction agreements. Such
records are maintained on at least a monthly basis, or such other period
specified in the transaction agreements, and describe the entity's activities Servicer
in monitoring delinquent mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency is deemed
1122(d)(4)(viii) temporary (e.g., illness or unemployment).
------------------------------------------------------------------------------------------------------------------------------------
Adjustments to interest rates or rates of return for mortgage loans with
1122(d)(4)(ix) variable rates are computed based on the related mortgage loan documents. Servicer
------------------------------------------------------------------------------------------------------------------------------------
Regarding any funds held in trust for an obligor (such as escrow accounts): (A)
such funds are analyzed, in accordance with the obligor's mortgage loan
documents, on at least an annual basis, or such other period specified in the
transaction agreements; (B) interest on such funds is paid, or credited, to Servicer
obligors in accordance with applicable mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar days of full
repayment of the related mortgage loans, or such other number of days specified
1122(d)(4)(x) in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Payments made on behalf of an obligor (such as tax or insurance payments) are
made on or before the related penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided that such support has Servicer
been received by the servicer at least 30 calendar days prior to these dates,
1122(d)(4)(xi) or such other number of days specified in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Any late payment penalties in connection with any payment to be made on behalf
of an obligor are paid from the servicer's funds and not charged to the Servicer
1122(d)(4)(xii) obligor, unless the late payment was due to the obligor's error or omission.
------------------------------------------------------------------------------------------------------------------------------------
Disbursements made on behalf of an obligor are posted within two business days
to the obligor's records maintained by the servicer, or such other number of Servicer
1122(d)(4)(xiii) days specified in the transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
Delinquencies, charge-offs and uncollectible accounts are recognized and
1122(d)(4)(xiv) recorded in accordance with the transaction agreements. Servicer
------------------------------------------------------------------------------------------------------------------------------------
Any external enhancement or other support, identified in Item 1114(a)(1)
through (3) or Item 1115 of Regulation AB, is maintained as set forth in the Trustee
1122(d)(4)(xv) transaction agreements.
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT V
ADDITIONAL FORM 10-D DISCLOSURE
--------------------------------------------------------------------------------
Item on Form 10-D Party Responsible
--------------------------------------------------------------------------------
Item 1: Distribution and Pool Servicer
Performance Information Trustee
Any information required by Item
1121 of Regulation AB which is
NOT included on the Monthly
Statement
--------------------------------------------------------------------------------
Item 2: Legal Proceedings (i) All parties to the Agreement (as
to themselves), (ii) the Trustee and
per Item 1117 of Regulation AB Servicer as to the issuing entity,
(iii) the Depositor as to the sponsor,
and each Originator (other than a
Responsible Party) or any Regulation
AB Item 1100(d)(1) party
--------------------------------------------------------------------------------
Item 3: Sale of Securities and Use Depositor
of Proceeds
--------------------------------------------------------------------------------
Item 4: Defaults Upon Senior Trustee
Securities
--------------------------------------------------------------------------------
Item 5: Submission of Matters to a Depositor or the party to this
Vote of Security Holders Agreement submitting such matter to a
vote of Certificateholders
--------------------------------------------------------------------------------
Item 6: Significant Obligors of N/A
Pool Assets
--------------------------------------------------------------------------------
Item 7: Significant Enhancement Depositor
Provider Information
--------------------------------------------------------------------------------
Item 8: Other Information Any party to the Agreement responsible
for disclosure items on Form 8-K
--------------------------------------------------------------------------------
Item 9: Exhibits Trustee
--------------------------------------------------------------------------------
EXHIBIT W
ADDITIONAL FORM 10-K DISCLOSURE
--------------------------------------------------------------------------------
Item on Form 10-K Party Responsible
--------------------------------------------------------------------------------
Item 9B: Other Information Any party to the Agreement responsible
for disclosure items on Form 8-K
--------------------------------------------------------------------------------
Item 15: Exhibits, Financial Trustee
Statement Schedules Depositor
--------------------------------------------------------------------------------
Additional Item: (i) All parties to the Agreement (as to
themselves), (ii) the Trustee and
Disclosure per Item 1117 of Servicer as to the Trust, (iii) the
Regulation AB Depositor as to the sponsor and each
Originator (other than a Responsible
Party) or any 1100(d)(1) party
--------------------------------------------------------------------------------
Additional Item: (i) All parties to the Agreement as to
Disclosure per Item 1119 of themselves, (ii) the Depositor as to the
Regulation AB sponsor, or any derivative provider
--------------------------------------------------------------------------------
Additional Item: N/A
Disclosure per Item 1112(b) of
Regulation AB
--------------------------------------------------------------------------------
Additional Item: Depositor
Disclosure per Items 1114(b) and
1115(b) of Regulation AB
--------------------------------------------------------------------------------
EXHIBIT X
FORM 8-K DISCLOSURE INFORMATION
--------------------------------------------------------------------------------
Item on Form 8-K Party Responsible
--------------------------------------------------------------------------------
Item 1.01- Entry into a Material The party to this Agreement
Definitive Agreement entering into such material
definitive agreement
--------------------------------------------------------------------------------
Item 1.02- Termination of a Material The party to this Agreement
Definitive Agreement requesting termination of a
material definitive agreement
--------------------------------------------------------------------------------
Item 1.03- Bankruptcy or Receivership (i) All parties to the Agreement
(as to themselves), (ii) the
Trustee and Servicer as to the
Trust, (iii) the Depositor as to
the sponsor and each Originator
(other than a Responsible Party)
or any 1100(d)(1) party
--------------------------------------------------------------------------------
Item 2.04- Triggering Events that Trustee/Depositor
Accelerate or Increase a Direct
Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement
--------------------------------------------------------------------------------
Item 3.03- Material Modification to The party requesting such
Rights of Security Holders modification
--------------------------------------------------------------------------------
Item 5.03- Amendments of Articles of Depositor
Incorporation or Bylaws; Change of
Fiscal Year
--------------------------------------------------------------------------------
Item 6.01- ABS Informational and Depositor
Computational Material
--------------------------------------------------------------------------------
Item 6.02- Change of Servicer or Trustee Servicer, Trustee
--------------------------------------------------------------------------------
Item 6.03- Change in Credit Enhancement Depositor/Trustee
or External Support
--------------------------------------------------------------------------------
Item 6.04- Failure to Make a Required Trustee
Distribution
--------------------------------------------------------------------------------
Item 6.05- Securities Act Updating Depositor
Disclosure
--------------------------------------------------------------------------------
Item 7.01- Regulation FD Disclosure Depositor
--------------------------------------------------------------------------------
Item 8.01 Depositor
--------------------------------------------------------------------------------
EXHIBIT Y
INTEREST RATE SWAP AGREEMENT
(Multicurrency -- Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of March 30, 2006
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital and Deutsche Bank National
Services Inc Trust Company, not
individually, but solely
as Trustee for ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Home Equity Loan
Trust 2006-2, Mortgage
Pass-Through
Certificates, Series
2006-2
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows: --
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than by
payment), such delivery will be made for receipt on the due date in the
manner customary for the relevant obligation unless otherwise specified in
the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing,
(2) the condition precedent that no Early Termination Date in respect of
the relevant Transaction has occurred or been effectively designated and
(3) each other applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified by
the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party
("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y under
this Section 2(d)) promptly upon the earlier of determining that
such deduction or withholding is required or receiving notice that
such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net amount
actually received by Y (free and clear of Indemnifiable Taxes,
whether assessed against X or Y) will equal the full amount Y would
have received had no such deduction or withholding been required.
However, X will not be required to pay any additional amount to Y to
the extent that it would not be required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure would
not have occurred but for (I) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on
or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (II) a Change in Tax
Law.
(ii) Liability. If: --
(1) X is required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, to make any
deduction or withholding in respect of which X would not be required
to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against
X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
o-f the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:--
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant
under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform
its obligations under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken all necessary
action to authorise such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of
its constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in lull
force and effect and all conditions of any such consents have been
complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding
in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of Default
or, to its knowledge, Termination Event with respect to it has occurred and is
continuing and no such event or circumstance would occur as a result of its
entering into or performing its obligations under this Agreement or any Credit
Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligations under this Agreement or such
Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true. (f)
Payee Tax Representations. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) Furnish Specified Information. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation specified in
the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to allow
such other party or its Credit Support Provider to make a payment under
this Agreement or any applicable Credit Support Document without any
deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of such
demand), with any such form or document to be accurate and completed in a
manner reasonably satisfactory to such other party and to be executed and
to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or an Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organised, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party:--
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
required to be made by it if such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to the
party;
(ii) Breach of Agreement. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any payment
under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give
notice of a Termination Event or any agreement or obligation under Section
4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party
in accordance with this Agreement if such failure is not remedied on or
before the thirtieth day after notice of such failure is given to the
party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applicable
grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or
the failing or ceasing of such Credit Support Document to be in full
force and effect for the purpose of this Agreement (in either case
other than in accordance with its terms) prior to the satisfaction
of all obligations of such party under each Transaction to which
such Credit Support Document relates without the written consent of
the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the
validity of such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made or
repeated by the party or any Credit Support Provider of such party in this
Agreement or any Credit Support Document proves to have been incorrect or
misleading in any material respect when made or repeated or deemed to have
been made or repeated;
(v) Default under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or delivery due
on the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at
least three Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is
taken by any person or entity appointed or empowered to operate it or act
on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default, event
of default or other similar condition or event (however described) in
respect of such party, any Credit Support Provider of such party or any
applicable Specified Entity of such party under one or more agreements or
instruments relating to Specified Indebtedness of any of them
(individually or collectively) in an aggregate amount of not less than the
applicable Threshold Amount (as specified in the Schedule) which has
resulted in such Specified Indebtedness becoming, or becoming capable at
such time of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2) a
default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments on
the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation, amalgamation
or merger); (2) becomes insolvent or is unable to pay its debts or
fails or admits in writing its inability generally to pay its debts as
they become due; (3) makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (4) institutes
or has instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights, or a
petition is presented for its winding-up or liquidation, and, in the
case of any such proceeding or petition instituted or presented
against it, such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in each case within 30
days of the institution or presentation thereof; (5) has a resolution
passed for its winding-up, official management or liquidation (other
than pursuant to a consolidation, amalgamation or merger); (6) seeks
or becomes subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other similar
official for it or for all or substantially all its assets; (7) has a
secured party take possession of all or substantially all its assets
or has a distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or substantially
all its assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or restrained, in
each case within 30 days thereafter; (8) causes or is subject to any
event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified
in clauses (1) to (7) (inclusive); or (9) takes any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or transfer:--
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below, a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an Additional Termination Event if the event
is specified pursuant to (v) below:--
(i) Illegality. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party): --
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action is
taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is
required to be paid in respect of such Tax under Section 2(d)(i)(4) (other
than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on the next
succeeding Scheduled Payment Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which
the other party is not required to pay an additional amount (other than by
reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a
party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates
or amalgamates with, or merges with or into, or transfers all or
substantially all its assets to, another entity and such action does not
constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) Additional Termination Event. If any "Additional Termination Event" is
specified in the Schedule or any Confirmation as applying, the occurrence
of such event (and, in such event, the Affected Party or Affected Parties
shall be as specified for such Additional Termination Event in the
Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying the
nature of that Termination Event and each Affected Transaction and will
also give such other information about that Termination Event as the other
party may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
Affected Party, the Affected Party will, as a condition to its right to
designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and obligations
under this Agreement in respect of the Affected Transactions to another of
its Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days after
the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or a
Tax Event occurs and there are two Affected Parties, each party will use
all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that Termination
Event.
(iv) Right to Terminate. If: --
(1) a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect to
all Affected Transactions within 30 days after an Affected Party
gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the case
of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event
or an Additional Termination Event if there is more than one Affected
Party, or the party which is not the Affected Party in the case of a
Credit Event Upon Merger or an Additional Termination Event if there is
only one Affected Party may, by not more than 20 days notice to the other
party and provided that the relevant Termination Event is then continuing,
designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under Section
6(a) or (b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination
Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in
respect of the Terminated Transactions will be required to be made, but
without prejudice to the other provisions of this Agreement. The amount,
if any, payable in respect of an Early Termination Date shall be
determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant
account to which any amount payable to it is to be paid. In the absence of
written confirmation from the source of a quotation obtained in
determining a Market Quotation, the records of the party obtaining such
quotation will be conclusive evidence of the existence and accuracy of
such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day that
notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event of
Default) and on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (in the case of an Early
Termination Date which is designated as a result of a Termination Event).
Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon (before as well as after judgment) in the
Termination Currency, from (and including) the relevant Early Termination
Date to (but excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from an Event
of Default: --
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a positive
number, the Non-Defaulting Party's Loss in respect of this
Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party less (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party. If that amount is
a positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of that amount to the Defaulting
Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Non-defaulting Party will pay the absolute
value of that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event: --
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3), if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies,
except that, in either case, references to the Defaulting Party and
to the Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected Party,
respectively, and, if Loss applies and fewer than all the
Transactions are being terminated, Loss shall be calculated in
respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties: --
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with the
lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination
Date occurs because "Automatic Early Termination" applies in respect of a party,
the amount determined under this Section 6(e) will be subject to such
adjustments as are appropriate and permitted by law to reflect any payments or
deliveries made by one party to the other under this Agreement (and retained by
such other party) during the period from the relevant Early Termination Date to
the date for payment determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies an amount
recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not
a penalty. Such amount is payable for the loss of bargain and the loss of
protection against future risks and except as otherwise provided in this
Agreement neither party will be entitled to recover any additional damages as a
consequence of such losses.
7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that: --
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this Agreement will
be made in the relevant currency specified in this Agreement for that payment
(the "Contractual Currency"). To the extent permitted by applicable law, any
obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire Agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect
of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered
or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments ▇▇▇ ▇▇▇▇ or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any reason any party's
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. Definitions
As used in this Agreement:--
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:--
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6 (d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the ease of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except so as to avoid duplication, if Section 6(e)(i)(l) or (3) or
6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with a respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such determination as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head or
home office.
"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) its relation to any payment, from or through which such
payment is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of: --
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meanings specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either ease) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each ease
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the Termination Currency Equivalents of the fair market
values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Services Inc. Deutsche Bank National Trust Company,
not individually, but solely as
Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity
Loan Trust 2006-2, Mortgage
Pass-Through Certificates, Series
2006-2
By: /s/ ▇▇▇▇▇▇▇▇▇ Feason By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- -------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ Feason Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President Title: Associate
Date: 3-30-06 Date: 3-30-06
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of March 30, 2006
between
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL SERVICES INC.
a Delaware corporation
("Party A")
and
DEUTSCHE BANK NATIONAL TRUST COMPANY
a national banking association, not individually,
but solely as Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Home Equity Loan Trust 2006-2 (the "Trust"),
Mortgage Pass-Through Certificates,
Series 2006-2 ("Party B")
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A for the purpose of:
Section 5(a)(v), None Specified
Section 5(a)(vi), None Specified
Section 5(a)(vii), None Specified
Section 5(b)(iv), None Specified
and in relation to Party B for the purpose of:
Section 5(a)(v), None Specified
Section 5(a)(vi), None Specified
Section 5(a)(vii), None Specified
Section 5(b)(iv), None Specified
(b) "Specified Transaction" is not applicable to Party A or Party B for
any purpose, and, accordingly, Section 5(a)(v) shall not apply to
Party A or Party B.
(c) "Cross Default" provisions of Section 5(a)(vi) will not apply to
Party A and will not apply to Party B.
(d) "Credit Event Upon Merger" provisions of Section 5(b)(iv) will not
apply to Party A and will not apply to Party B.
(e) The "Automatic Early Termination" provisions of Section 6(a) will
not apply to Party A and will not apply to Party B.
(f) Payments on Early Termination. "Market Quotation" and "Second
Method" will apply for the purpose of Section 6(e) of this
Agreement.
(g) "Termination Currency" means United States Dollars.
(h) Additional Termination Event will apply. The following Additional
Termination Events will apply, in each case with respect to Party B
as the sole Affected Party (unless otherwise provided below):
(i) Upon any amendment, supplement, modification or waiver of any
provision of the PSA (as defined below) without the consent of
Party A that materially and adversely affects the rights or
interests of Party A.
(ii) Party A fails to comply with the Rating Agency Downgrade
provisions as set forth in Part 5(f) below. For all purposes
of this Agreement, Party A shall be the sole Affected Party
with respect to the occurrence of a Termination Event
described in this Part 1(h)(ii).
(iii) The Servicer exercises its option to purchase the Mortgage
Loans pursuant to Section 9.01 of the PSA.
(iv) Upon the irrevocable direction to dissolve or otherwise
terminate the Trust following which all assets of the Trust
will be liquidated and the proceeds of such liquidation
distributed to the Certificateholders.
(i) "Breach of Agreement" provision of Section 5(a)(ii) will not apply
to Party A or Party B.
(j) "Credit Support Default" provisions of Section 5(a)(iii) will not
apply to Party B.
(k) "Misrepresentation" provisions of Section 5(a)(iv) will not apply to
Party A or Party B.
(l) The "Merger Without Assumption" provisions of Section 5(a)(viii)
will not apply to Party B.
(m) Failure to Pay or Deliver. Section 5(a)(i) is hereby amended by
deleting the word "third" in the third line thereof and replacing it
with the word "second".
(n) Bankruptcy. Section 5(a)(vii) shall apply to Party A and to Party B;
provided, however, with respect to Party B, Section 5(a)(vii)(2)
shall not apply.
Part 2. Tax Representations.
(a) Party A and Party B Payer Tax Representations. For the purpose of
Section 3(e), each of Party A and Party B makes the following
representation:
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of any
Relevant Jurisdiction to make any deduction or withholding for or on
account of any Tax from any payment (other than interest under
Section 2(e), 6(d)(ii) or 6(e)) to be made by it to the other party
under this Agreement. In making this representation, it may rely on
(i) the accuracy of any representation made by the other party
pursuant to Section 3(f); (ii) the satisfaction of the agreement of
the other party contained in Section 4(a)(i) or 4(a)(iii) and the
accuracy and effectiveness of any document provided by the other
party pursuant to Section 4(a)(i) or 4(a)(iii); and (iii) the
satisfaction of the agreement of the other party contained in
Section 4(d), provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) and the other
party does not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice to its legal or commercial position.
(b) Party A and Party B Payee Tax Representations.
(i) For the purpose of Section 3(f), Party A makes the following
representation:
(1) It is a U.S. corporation organized under the laws of the
State of Delaware.
(ii) For the purpose of Section 3(f), Party B makes the following
representations:
Party B is the Trust for which Deutsche Bank National Trust
Company as trustee is signing. The Trust is duly formed under
the laws of the State of New York and is not a foreign
corporation for United States tax purposes.
Part 3. Agreement to Deliver Documents.
For the purpose of Sections 4(a)(i) and (ii), each party agrees to deliver the
following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
Party
required to
deliver
document Form/Document/Certificate Date by which to be delivered
----------- ---------------------------- ----------------------------------
Party B Any document required or Promptly after the earlier of
reasonably requested to (i) reasonable demand by Party A
allow Party A to make or (ii) learning that such form
payments under this or document is required.
Agreement without any
deduction or withholding
for or on the account of
any Tax or with such
deduction or withholding at
a reduced rate.
(b) Other documents to be delivered are:-
Party Covered by
required to Section
deliver Date by which to be 3(d)
document Form/Document/Certificate delivered Representation
------------ ---------------------------- --------------------- --------------
Party A Either (1) a signature The earlier of the Yes
and booklet containing fifth Business Day
Party B secretary's certificate and after the Trade
resolutions ("authorizing Date of the first
resolutions") authorizing Transaction or upon
the party to enter into execution of this
derivatives transactions of Agreement and as
the type contemplated by deemed necessary
the parties or (2) a for any further
secretary's certificate, documentation.
authorizing resolutions and
incumbency certificate, in
either case, for such party
and any Credit Support
Provider of such party
reasonably satisfactory in
form and substance to the
other party.
Party B An executed copy of the Upon execution of Yes
Pooling and Servicing this Agreement.
Agreement ("PSA"), dated as
of March 1, 2006, among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital
I Inc., HomEq Servicing
Corporation, JPMorgan Chase
Bank, National Association,
First NLC Financial
Services, LLC and Deutsche
Bank National Trust Company.
Party A A duly executed copy of the As soon as No
and Credit Support Document practicable after
Party B specified in Part 4 of this the execution of
Schedule. this Agreement.
Party A An opinion of counsel As soon as No
and Party B reasonably satisfactory in practicable after
form and substance to the the execution of
other party. this Agreement.
Party B Taxpayer Identification Upon execution of Yes
Number of Party B as this Agreement
required by Part I of
United States Internal
Revenue Service Form W-9
Part 4. Miscellaneous
(a) Addresses for Notices. For the purpose of Section 12(a):-
(i) Address for notices or communications to Party A:-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL SERVICES INC.
Transaction Management Group
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: CHIEF LEGAL OFFICER
Fax No: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
(ii) Address for notices or communications to Party B:
DEUTSCHE BANK NATIONAL TRUST COMPANY
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Trust Administration -MS06X2
Facsimile No.: ▇▇▇ ▇▇▇ ▇▇▇▇
Telephone No.: ▇▇▇ ▇▇▇ ▇▇▇▇
(b) Notices. Section 12(a) is amended by adding in the third line
thereof after the phrase "messaging system" and before the ")" the
words, "; provided, however, any such notice or other communication
may be given by facsimile transmission if telex is unavailable, no
telex number is supplied to the party providing notice, or if answer
back confirmation is not received from the party to whom the telex
is sent."
(c) Process Agent. For the purpose of Section 13(c):
Party A does not appoint a Process Agent.
Party B does not appoint a Process Agent.
(d) Offices. The provisions of Section 10(a) will not apply to Party A
and to Party B.
(e) Multibranch Party. For the purpose of Section 10(c):
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(f) "Calculation Agent" means Party A.
(g) "Credit Support Document" means any Confirmation and any other
document any of which by its terms secures, guarantees or otherwise
supports either or both parties' obligations under this Agreement,
including, but not limited to, the ISDA Credit Support Annex
attached hereto as Exhibit A and dated as of the date hereof (the
provisions of which are incorporated by reference herein) and the
guarantee of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
(h) Credit Support Provider means in relation to Party A: ▇▇▇▇▇▇
▇▇▇▇▇▇▇, a Delaware corporation.
Credit Support Provider means in relation to Party B: None
(i) Governing Law; Jurisdiction. This Agreement, each Credit Support
Document and each Confirmation will be governed by and construed in
accordance with the laws of the State of New York without regard to
conflict of law provisions thereof other than New York General
Obligations Law Sections 5-1401 and 5-1402. Section 13(b) is amended
by: (1) deleting "non-" from the second line of clause (i); and (2)
deleting the final paragraph.
(j) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by
jury in respect of any Proceedings relating to this Agreement or any
Credit Support Document.
(k) Netting of Payments. Clause (ii) of Section 2(c) will apply to any
amounts payable with respect to Transactions from the date of this
Agreement.
(l) "Affiliate". Party A and Party B shall be deemed not to have any
Affiliates for purposes of this Agreement, including for purposes of
Section 6(b)(ii). For the avoidance of doubt, with respect to Party
A, such definition shall be understood to exclude ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Derivative Products Inc.
(m) Additional Definitions. All capitalized terms used but not otherwise
defined in this Agreement shall have the meanings given thereto in
the PSA.
Part 5. Other Provisions
(a) Representations.
(i) The introductory clause of Section 3 of this Agreement is hereby
amended to read in its entirety as follows:
"Each party represents to the other party (which representations
will be deemed to be repeated by each party on each date on which a
Transaction is entered into and, in the case of the representations
in Section 3(f) and Section 3(g)(4), at all times until the
termination of this Agreement) that:--"
(ii) Section 3 of this Agreement is hereby amended by adding at the end
thereof the following subsection (g):
"(g) Relationship Between Parties.
(1) Nonreliance. It is not relying on any statement or
representation of the other party regarding a Transaction
(whether written or oral), other than the representations
expressly made in this Agreement or the Confirmation in
respect of that Transaction.
(2) Evaluation and Understanding.
(i) Non-Reliance. In the case of Party A, it is acting
for its own account, and in the case of Party B, it is acting
as Trustee. It has made its own independent decisions to enter
into that Transaction and as to whether that Transaction is
appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary and,
with respect to Party B, as directed under the PSA. It is not
relying on any communication (written or oral) of the other
party as investment advice or as a recommendation to enter
into that Transaction; it being understood that information
and explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a
recommendation to enter into that Transaction. No
communication (written or oral) received from the other party
shall be deemed to be an assurance or guarantee as to the
expected results of that Transaction.
(ii) Assessment and Understanding. It is capable of
assessing the merits of and understanding (on its own behalf
or through independent professional advice), and understands
and accepts, the terms, conditions and risks of that
Transaction. It is also capable of assuming, and assumes, the
risks of that Transaction.
(iii) Status of Parties. The other party is not acting
as a fiduciary for or an adviser to it in respect of that
Transaction.
(3) Purpose. It is an "eligible swap participant" as such term
is defined in Section 35.1(b)(2) of the regulations (17 C.F.R
35) promulgated under, and an "eligible contract participant"
as defined in Section 1a(12) of, the Commodity Exchange Act,
as amended, and it is entering into the Transaction for the
purposes of managing its borrowings or investments, hedging
its underlying assets or liabilities or in connection with a
line of business.
(4) ERISA Representation. It is not (i) an employee benefit
plan (hereinafter an "ERISA Plan"), as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), subject to Title I of ERISA or a plan
subject to Section 4975 of the Internal Revenue Code of 1986,
as amended, or subject to any other statute, regulation,
procedure or restriction that is materially similar to Section
406 of ERISA or Section 4975 of the Code (together with ERISA
Plans, "Plans"), (ii) a person acting on behalf of a Plan or
(iii) a person any of the assets of whom constitute assets of
a Plan. It will provide notice to the other party in the event
that it is aware that it is in breach of any aspect of this
representation or is aware that with the passing of time,
giving of notice or expiry of any applicable grace period it
will breach this representation."
(b) Set off. Subject to Section 2(c), notwithstanding any other
provision of this Agreement or any other existing or future
agreement, each party irrevocably waives any and all rights it may
have to set off, net, recoup or otherwise withhold, suspend or
condition payment or performance of any obligation between it and
the other party hereunder against any obligation between it and the
other party under any other agreements. The provisions for set off
set forth in Section 6(e) of this Agreement shall not apply.
(c) Confirmations. Party A will deliver to Party B a Confirmation
relating to each Transaction.
(d) Form of Agreement. The parties hereby agree that the text of the
body of this Agreement is intended to be the printed form of 1992
ISDA Master Agreement (Multicurrency--Cross Border) as published and
copyrighted by the International Swaps and Derivatives Association,
Inc.
(e) Transfer, Amendment and Assignment. No transfer, amendment, waiver,
supplement, assignment or other modification of this Agreement shall
be permitted by either party unless each of Standard & Poor's
Ratings Service, a division of The McGraw Hill Companies, Inc.
("S&P"), ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") and Fitch, Inc.
("Fitch", and together with S&P and ▇▇▇▇▇'▇, the "Rating Agencies")
has been provided notice of the same and confirms in writing
(including by facsimile transmission) that it will not downgrade,
qualify, withdraw or otherwise modify its then current rating of the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2, Mortgage Pass-Through
Certificates, Series 2006-2.
(f) Rating Agency Downgrade. (i) In the event that any of the Rating
Agencies downgrades ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or a replacement counterparty, or
an entity that guarantees the obligations of Party A or a
replacement counterparty, below the Required Swap Counterparty
Rating (as defined below) or Moody's or Fitch withdraws its ratings
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or a replacement counterparty, or an entity that
guarantees the obligations of Party A or a replacement counterparty,
then, within 30 days after such rating downgrade or withdrawal,
Party A or such replacement counterparty, as the case may be, shall,
subject to the Rating Agency Condition (as defined below), at its
own expense, either (1) cause another entity to replace Party A as
party to this Agreement that meets or exceeds the Required Swap
Counterparty Rating on terms substantially similar to this
Agreement, (2) obtain a guaranty of, or a contingent agreement of
another person with the Required Swap Counterparty Rating to honor
Party A's obligations under this Agreement, (3) collateralize its
exposure to the Trust pursuant to the ISDA Credit Support Annex
attached hereto as Exhibit A, subject to the satisfaction of the
Rating Agency Condition or (4) take other steps, if any, to enable
the Trust to satisfy the Rating Agency Condition; provided that for
purposes of this Part 5(f), Party A shall be responsible for (A)
posting collateral in accordance with such ISDA Credit Support Annex
at its own cost and (B) any cost incurred by it in complying with
its obligations.
"Required Swap Counterparty Rating" means, with respect to a
counterparty or entity guaranteeing the obligations of such
counterparty, (x) either (i) if such counterparty or entity has only
a long-term rating by Moody's, a long-term senior, unsecured debt
obligation rating, credit rating or other similar rating (as the
case may be, the "Long-Term Rating") of at least "Aa3" by Moody's
and if rated "Aa3" by ▇▇▇▇▇'▇ is not on negative credit watch by
Moody's or (ii) if such counterparty or entity has a Long-Term
Rating and a short-term rating by Moody's, a Long-Term Rating of at
least "A1" by Moody's and a short-term rating of "P-1" by Moody's
and, in each case, such rating is not on negative credit watch by
Moody's, (y) (i) a short-term rating of at least "A-1" by S&P or
(ii) if such counterparty or entity does not have a short-term
rating by S&P, a Long-Term Rating of at least "A+" by S&P and (z)
(i) short-term rating of at least "F1" by Fitch or (ii) if such
counterparty or entity does not have a short-term rating by Fitch, a
Long-Term Rating of at least "A+" by Fitch.
"Rating Agency Condition" means, with respect to any particular
proposed act or omission to act hereunder that the party acting or
failing to act must consult with each of the Rating Agencies then
providing a rating of the Certificates and receive from each Rating
Agency a prior written confirmation that the proposed action or
inaction would not cause a downgrade or withdrawal of the then
current rating of the Certificates.
(ii) In the event that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or a replacement counterparty,
or an entity that guarantees the obligations of Party A or a
replacement counterparty, has its rating by S&P withdrawn, has a
rating of less than "BBB-" or "A-3", if applicable, by S&P, a rating
of less than "BBB-" or "F3", if applicable, by Fitch or a rating
less than or equal to "A3" or "P-2," if applicable, by Moody's,
Party A or such replacement counterparty, as the case may be, shall,
within 10 days thereafter, while collateralizing its exposure to the
Trust pursuant to the ISDA Credit Support Annex attached hereto as
Exhibit A, (1) transfer this Agreement at its sole cost and expense,
in whole, but not in part, to a counterparty that satisfies the
Required Swap Counterparty Rating, subject to satisfaction of the
Rating Agency Condition or (2) obtain a guaranty of, or a contingent
agreement of, another person with the Required Swap Counterparty
Rating to honor Party A's obligations under this Agreement, subject
to satisfaction of the Rating Agency Condition.
(iii) Failure to act in accordance with this Part 5(f) shall
constitute an Additional Termination Event but shall not constitute
an Event of Default under Section 5(a)(ii) (Breach of Agreement).
(g) Severability. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance,
shall be held to be invalid or unenforceable (in whole or in part)
for any reason, the remaining terms, provisions, covenants, and
conditions hereof shall continue in full force and effect as if this
Agreement had been executed with the invalid or unenforceable
portion eliminated, so long as this Agreement as so modified
continues to express, without material change, the original
intentions of the parties as to the subject matter of this Agreement
and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or expectations of the
parties; provided, however, that nothing in this provision shall
adversely affect the rights of each party under this Agreement; and
provided further that this severability provision shall not be
applicable if any provision of Section 1, 2, 5, 6, or 13 (or any
definition or provision in Section 14 to the extent it relates to,
or is used in or connection with any such Section) shall be so held
to be invalid or unenforceable. The parties shall endeavor to engage
in good faith negotiations to replace any invalid or unenforceable
term, provision, covenant or condition with a valid or enforceable
term, provision, covenant or condition, the economic effect of which
comes as close as possible to that of the invalid or unenforceable
term, provision, covenant or condition.
(h) Consent to Recording. Each party hereto consents to the monitoring
or recording, at any time and from time to time, by the other party
of any and all communications between trading and marketing
personnel of the parties, waives any further notice of such
monitoring or recording, and agrees to notify its officers and
employees of such monitoring or recording.
(i) Proceedings. Party A shall not institute against or cause any other
person to institute against, or join any other person in instituting
against, the Trust or Deutsche Bank National Trust Company, not
individually, but solely as Trustee, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law for
a period of one year and one day (or, if longer, the applicable
preference period) following payment in full of the Certificates;
provided, however, that this shall not restrict or prohibit Party A
from joining in any bankruptcy, reorganization, arrangement,
insolvency, moratorium or liquidation proceedings or other analogous
proceedings under applicable laws.
(j) Trustee Capacity. It is expressly understood and agreed by the
parties hereto that insofar as this Agreement is executed by
Deutsche Bank National Trust Company (i) this Agreement is executed
and delivered by Deutsche Bank National Trust Company not in its
individual capacity but solely as Trustee under the PSA in the
exercise of the powers and authority conferred and invested in it as
trustee thereunder, (ii) each of the representations, undertakings
and agreements herein made on behalf of the Trust is made and
intended not as personal representations of the Trustee but is made
and intended for the purpose of binding only the Trust, and (iii)
under no circumstances shall Deutsche Bank National Trust Company in
its individual capacity be personally liable for the payment of any
indebtedness or expenses or be personally liable for the breach or
failure of any obligation, representation, warranty or covenant made
or undertaken under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Schedule by their
duly authorized officers as of the date hereof:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL SERVICES INC. DEUTSCHE BANK NATIONAL TRUST COMPANY,
not individually, but solely as
Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home
Equity Loan Trust 2006-2, Mortgage
Pass-Through Certificates, Series
2006-2
By: /s/ ▇▇▇▇▇▇▇▇▇ Feason By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------- ------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ Feason Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice Persident Title: Associate
Date: March 30, 2006 Date: March 30, 2006
EXHIBIT A
Credit Support Annex
Paragraph 13. Elections and Variables
(a) Security Interest for "Obligations". The term "Obligations" as used in
this Annex includes the following additional obligations with respect to
Party A and Party B: None.
(b) Credit Support Obligations.
(i) "Delivery Amount" and "Return Amount" each has the meaning specified
in Paragraph 3. "Credit Support Amount" has the meaning specified in
Paragraph 3; provided, however, that in the event Party A elects or
is required to post collateral pursuant to Part 5(f) of the Schedule
due to a ratings downgrade or withdrawal by S&P, "Credit Support
Amount" means, with respect to a Valuation Date, an amount equal to
the greater of (1) the sum of (a) the MTM and (b) the Volatility
Buffer multiplied by the Notional Amount and (2) zero. "MTM" means
the Secured Party's Exposure for that Valuation Date. "Volatility
Buffer" means (a) if, on the date of determination, Party A has a
short-term credit rating of "A-2" by S&P and the Termination Date of
the Transaction will occur in less than 5 years, 3.25%, (b) if, on
the date of determination, Party A has a short-term credit rating of
"A-2" by S&P and the Termination Date of the Transaction will occur
in less than 10 years but more than 5 years, 4.00%, (c) if, on the
date of determination, Party A has a short-term credit rating of
"A-3" by S&P and the Termination Date of the Transaction will occur
in less than 5 years, 4.00%, (d) if, on the date of determination,
Party A has a short-term credit rating of "A-3" by S&P and the
Termination Date of the Transaction will occur in less than 10 years
but more than 5 years, 5.00%, (e) if, on the date of determination,
Party A has a long-term credit rating of "BB+" or lower by S&P and
the Termination Date of the Transaction will occur in less than 5
years, 4.50%, or (f) if, on the date of determination, Party A has a
long-term credit rating of "BB+" or lower by S&P and the Termination
Date of the Transaction will occur in less than 10 years but more
than 5 years, 5.75%.
In the event Party A elects or is required to post collateral
pursuant to Part 5(f) of the Schedule due to a ratings downgrade or
withdrawal by S&P, the Valuation Agent shall verify its calculation
of the Secured Party's Exposure on a quarterly basis by seeking two
quotations from Reference Market-makers. If two Reference
Market-makers are not available to provide a quotation, then fewer
than two Reference Market-makers may be used for such purpose. If no
Reference Market-makers are available, then the Valuation Agent's
estimates at mid-market will be used. The Valuation Agent may not
obtain the quotations referred to above from the same person in
excess of four times during any 12 month period. Where more than one
quotation is obtained, the quotation representing the greatest
amount of Exposure shall be used by the Valuation Agent. In the
event the verification procedures set forth above indicate that
there is a deficiency in the amount of Eligible Collateral that has
been Transferred to the Secured Party, the Pledgor shall Transfer
the amount of Eligible Collateral necessary to cure such deficiency
to the Secured Party within three Local Business Days.
(ii) Eligible Collateral. The following items will qualify as "Eligible
Collateral" for Party A:
Valuation
Eligible Collateral Party A Percentage
--------------------------------- ------- ------------
(A) Cash X 100.0%
(B) Treasury Securities with a X 98.5%
remaining maturity of 52 weeks or
less
(C) Treasury Securities with a X 93.6%
remaining maturity of more than 52
weeks but no more than 5 years
(D) Treasury Securities with a X 89.9%
remaining maturity of more than 5
years but no more than 10 years
(E) Treasury Securities with a X 83.9%
remaining maturity of more than 10
years but no more than 30 years
(F) Agency Notes with a remaining X 81.3%
maturity of no more than 15 years
(G) Agency Notes with a remaining X 74.8%
maturity of more than 15 years
but no more than 30 years
(H) Commercial Paper rated "A-1+" by X 98.0%
S&P and "P-1" by ▇▇▇▇▇'▇, with a
remaining maturity of 180 days or
less
(I) Commercial Paper rated "A-1" by X 97.0%
S&P and P-1 by ▇▇▇▇▇'▇, with a
remaining maturity of 180 days or
less
(J) Commercial Paper rated "A-1" by X 94.0%
S&P and "P-1" by ▇▇▇▇▇'▇, with a
remaining maturity of more than
180 days or but no more than 360
days
Notwithstanding the above, Commercial Paper will qualify as Eligible
Collateral for Party A only if the aggregate amount of Commercial
Paper Transferred as Eligible Collateral under this Annex
constitutes the obligations of 10 or more issuers.
(iii) Other Eligible Support: Not applicable.
(iv) Thresholds.
(A) "Independent Amount" means, with respect to Party A, zero;
provided, however, if Party A elects or is required to post
collateral pursuant to Part 5(f) of the Schedule due to a
ratings downgrade or withdrawal by ▇▇▇▇▇'▇ or Fitch, then the
"Independent Amount" with respect to Party A shall be the
aggregate of any Transaction Independent Amounts in respect of
all Transactions outstanding at that time. "Transaction
Independent Amount" shall mean (unless otherwise agreed by
▇▇▇▇▇'▇ and Fitch) 1% of the Notional Amount of each
Transaction.
"Independent Amount" means, with respect to Party B, zero.
(B) "Threshold" means with, respect to Party A: Infinite;
provided, however, if Party A elects or is required to post
collateral pursuant to Part 5(f) of the Schedule due to a
ratings downgrade or withdrawal by ▇▇▇▇▇'▇ or Fitch, then the
"Threshold" with respect to Party A shall be zero (unless
otherwise agreed by ▇▇▇▇▇'▇ and Fitch);
"Threshold" means with respect to Party B: Infinite.
(C) "Minimum Transfer Amount" means with respect to Party A: USD
100,000; and with respect to Party B: USD 100,000; provided,
however, that if such party is a Defaulting Party at the time,
"Minimum Transfer Amount" shall mean zero with respect to such
party.
(D) Rounding. The Delivery Amount will be rounded up to the
nearest multiple of $1000 and the Return Amount will be
rounded down to the nearest multiple of $1000.
(c) Valuation and Timing.
(i) "Valuation Agent" means for purposes of Paragraphs 3 and 5, the
party making the demand under Paragraph 3, and, for purposes of
Paragraph 6(d), the Secured Party receiving or deemed to receive the
Distributions or the Interest Amount, as applicable.
(ii) "Valuation Date" means (A) each and every Wednesday commencing on
the first such date following the date hereof or if any Wednesday is
not a Local Business Day, the next succeeding Local Business Day and
(B) any other Local Business Day on which notice is made before
12:00 noon, New York time on the immediately preceding Local
Business Day.
(iii) "Valuation Time" means the close of business in New York on the New
York Banking Day before the Valuation Date or date of calculation,
as applicable, or any time on the Valuation Date or date of
calculation, as applicable; provided that the calculations of Value
and Exposure will be made as of approximately the same time on the
same date.
(iv) "Notification Time" means 1:00 p.m., New York time, on a Local
Business Day.
(v) The Valuation Agent's calculations pursuant to the terms hereof
shall be made in accordance with standard market practice, using
commonly accepted third party sources that comply with S&P's
criteria (e.g. Bloomberg, Bridge Information Services, Reuters and
Telerate).
(d) Conditions Precedent and Secured Party's Rights and Remedies. The
following Termination Events will be a "Specified Condition" for the party
specified (that party being the Affected Party of the Termination Event
occurs with respect to that party): Not Applicable.
(e) Substitution.
(i) "Substitution Date" has the meaning specified in Paragraph 4(d)(ii).
(ii) Consent. The Pledgor need not obtain the Secured Party's consent for
any substitution pursuant to Paragraph 4(d).
(f) Dispute Resolution.
(i) "Resolution Time" means 1:00 p.m., New York time, on the Local
Business Day following the date on which the notice of the dispute
is given under Paragraph 5.
(ii) Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of
Posted Credit Support or of any Transfer of Eligible Credit Support
or Posted Credit Support, as the case may be, will be calculated by
the Valuation Agent in accordance with standard market practice
using third party sources (such as, by way of example only,
Bloomberg or Reuters) where available.
(iii) Alternative. The provisions of Paragraph 5 will apply.
(g) Holding and Using Posted Collateral.
(i) Eligibility to Hold Posted Collateral; Custodian.
Party B and its Custodian will be entitled to hold Posted Collateral
pursuant to Paragraph 6(b); provided that the following conditions
applicable to it are satisfied:
(A) Party B is not a Defaulting Party.
(B) Posted Collateral may be held only in the following
jurisdictions: the United States of America.
Initially, the Custodian for Party B is Party B
(ii) Use of Posted Collateral. The provisions of Paragraph 6(c) will
apply.
(h) Distributions and Interest Amount.
(i) "Interest Rate". The "Interest Rate" shall be the rate actually
earned by the Custodian on Posted Collateral in the form of Cash.
(ii) Transfer of Interest Amount. The Transfer of the Interest Amount
will be made on the last Local Business Day of each calendar month
and on any Local Business Day that Posted Collateral in the form of
Cash is Transferred to the Pledgor pursuant to Paragraph 3(b).
(iii) Alternative to Interest Amount. The provisions of Paragraph 6(d)(ii)
will apply.
(i) Additional Representation(s). None.
(j) Other Eligible Support and Other Posted Support. "Value" and "Transfer"
with respect to Other Eligible Support and Other Posted Support each
means: Not applicable.
(k) Demands and Notices
All demands, specifications and notices to Party A under this Annex will
be made to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Services Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇. - FID Controllers
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: FID Collateral Manager
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
and all demands, specifications and notices to Party B under this Annex
will be to:
Deutsche Bank National Trust Company, as trustee of the Trust
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Trust Administration -MS06X2
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
; provided that any demand, specification or notice may be made by
telephone ("Telephone Notice") between employees of each party if such
Telephone Notice is confirmed by a subsequent written instruction (which
may be delivered via facsimile or email) by the close of business on the
same day that such Telephone Notice is given.
(l) Addresses for Transfers.
Party A:
Cash: CITIBANK, New York
ABA No.: 021 000 089
Account No.: 4072 - 4601
Treasury Securities
and Agency Notes: Bank of New York, New York/▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated
ABA No.: ▇▇▇▇▇▇▇▇▇
Other Forms of Eligible Collateral: As provided by Party A.
Party B:
Cash: As provided by Party B
DTC Eligible Securities: As provided by Party B
(m) Other Provisions.
(i) Notwithstanding any other provision in this Agreement to the
contrary, no full or partial failure to exercise and no delay in
exercising, on the part of Party A or Party B, any right, remedy,
power or privilege permitted hereunder shall operate in any way as a
waiver thereof by such party, including without limitation any
failure to exercise or any delay in exercising to any or to the full
extent of such party's rights with respect to transfer timing
pursuant to Paragraph 4(b), regardless of the frequency of such
failure or delay.
(ii) In all cases, in order to facilitate calculation of the Delivery
Amount and the Return Amount for a particular Valuation Date in
accordance with Paragraph 3 of this Annex:
(A) Eligible Collateral;
(B) Exposure; and
(C) Posted Collateral
shall each be expressed in US Dollars. If any of these items are
expressed in a currency other than US Dollars, then they shall be
converted into US Dollar amounts at the spot exchange rate
determined by the Valuation Agent on that Valuation Date.
(iii) Form of Annex. The parties hereby agree that the text of the body of
this Annex is intended to be the printed form of 1994 ISDA Credit
Support Annex (Bilateral Form - ISDA Agreements Subject to New York
Law Only version) as published and copyrighted by the International
Swaps and Derivatives Association, Inc.
(n) Agreement as to Single Secured Party and Pledgor. Party A and Party B
agree that, notwithstanding anything to the contrary in the recital to
this Annex, Paragraph 1(b) or Paragraph 2 or the definitions of Paragraph
12, (a) the term "Secured Party" as used in this Annex shall mean only
Party B, (b) the term "Pledgor" as used in this Annex shall mean only
Party A, (c) only Party A makes the pledge and grant in Paragraph 2, the
acknowledgement in the final sentence of Paragraph 8(a) and the
representations in paragraph 9 and (d) only Party A will be required to
make Transfers of Eligible Credit Support hereunder.
(o) Additional Definitions
"Agency Notes" means U.S. Dollar-denominated fixed rate, non-amortising,
non-mortgage-backed, senior debt securities of fixed maturity, rated Aaa
by ▇▇▇▇▇'▇ and AAA by S&P issued by any of the Federal Home Loan Banks
(including their consolidated obligations issued through the Office of
Finance of the Federal Home Loan Bank System), the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation or the
Federal Farm Credit Bank.
"Commercial Paper" means U.S. Dollar-denominated, coupon-bearing,
commercial paper issued by a corporation, finance company, partnership or
limited liability company.
"Treasury Securities" means U.S. Dollar-denominated, coupon-bearing,
senior debt securities of the United States of America issued by the U.S.
Treasury Department and backed by the full faith and credit of the United
States of America.
(p) Trustee Capacity. It is expressly understood and agreed by the parties
hereto that insofar as this Annex is executed by Deutsche Bank National
Trust Company (i) this Annex is executed and delivered by Deutsche Bank
National Trust Company not in its individual capacity but solely as
Trustee under the PSA in the exercise of the powers and authority
conferred and invested in it as trustee thereunder, (ii) each of the
representations, undertakings and agreements herein made on behalf of the
Trust is made and intended not as personal representations of the Trustee
but is made and intended for the purpose of binding only the Trust, and
(iii) under no circumstances shall Deutsche Bank National Trust Company in
its individual capacity be personally liable for the payment of any
indebtedness or expenses or be personally liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken
under this Annex.
IN WITNESS WHEREOF, the parties have executed this Credit Support
Annex by their duly authorized officers as of the date hereof.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL SERVICES INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ Feason
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ Feason
Title: Vice President
Date: ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ BANK NATIONAL TRUST COMPANY,
not individually, but solely as
Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home
Equity Loan Trust 2006-2, Mortgage
Pass-Through Certificates, Series
2006-2
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Associate
Date: March 30, 2006
[▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LOGO]
--------------------------------------------------------------------------------
DATE: March 30, 2006
TO: Deutsche Bank National Trust Company, not individually,
but solely as Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan
Trust 2006-2, Mortgage Pass-Through Certificates,
Series 2006-2
ATTENTION: Trust Administration - MS06X2
TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
FROM: Derivatives Documentation
TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
SUBJECT: Fixed Income Derivatives Confirmation
REFERENCE NUMBER: FRRES
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the Swap Transaction entered into on the Trade Date
specified below (the "Transaction") between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Services Inc.
("Party A") and Deutsche Bank National Trust Company, not individually, but
solely as Trustee ("Party B") under the Pooling and Servicing Agreement, dated
and effective as of March 1, 2006, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., as
Depositor, HomEq Servicing Corporation, as Servicer, JPMorgan Chase Bank,
National Association, as Servicer, First NLC Financial Services, LLC, as
Responsible Party, and Deutsche Bank National Trust Company, as Trustee (the
"PSA") for the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2, Mortgage
Pass-Through Certificates, Series 2006-2.
The definitions and provisions contained in the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives
Association, Inc., are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern. Terms capitalized but not defined in this Confirmation (including
the Definitions) have the meanings attributed to them in the PSA.
This Confirmation constitutes a "Confirmation" as referred to in, and
supplements, forms part of and is subject to, the ISDA Master Agreement dated as
of March 30, 2006, as amended and supplemented from time to time (the
"Agreement"), between Party A and Party B. All provisions contained in the
Agreement govern this Confirmation except as expressly modified below.
1. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Notional Amount:............................ With respect to any
Calculation Period, the
amount set forth for such
Calculation Period in
Schedule I attached hereto.
Trade Date:................................. March 7, 2006
Effective Date:............................. ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Date:........................... September 25, 2010
Fixed Amounts:
Fixed Rate Payer:.................. Party B
Fixed Rate Payer Payment Dates:.... The 25th calendar day of
each month during the Term
of this Transaction,
commencing April 25, 2006
and ending on the
Termination Date, subject to
adjustment in accordance
with the Business Day
Convention
Fixed Rate Payer Period End
Dates:........................... The 25th calendar day of
each month during the Term
of this Transaction,
commencing April 25, 2006
and ending on the
Termination Date, subject to
No Adjustment.
Fixed Rate:........................ 5.15%
Fixed Amount:...................... To be determined in
accordance with the
following formula:
10 * Fixed Rate * Notional
Amount * Fixed Rate Day
Count Fraction.
Fixed Rate Day Count Fraction:..... 30/360
Floating Amounts:
Floating Rate Payer:............... Party A
Floating Rate Payer Payment
Dates:........................... The 25th calendar day of
each month during the Term
of this Transaction,
commencing April 25, 2006
and ending on the
Termination Date, subject to
adjustment in accordance
with the Business Day
Convention.
Floating Rate Payer Period End
Dates:........................... The 25th calendar day of
each month during the Term
of this Transaction,
commencing April 25, 2006
and ending on the
Termination Date, subject to
adjustment in accordance
with the Business Day
Convention.
Floating Rate Option:.............. USD-LIBOR-BBA
Floating Amount:................... To be determined in
accordance with the
following formula:
10 * Floating Rate *
Notional Amount * Floating
Rate Day Count Fraction.
Designated Maturity:............... One month
Floating Rate Day Count Fraction:.. Actual/360
Reset Dates:....................... The first day of each
Calculation Period.
Compounding:....................... Inapplicable
Business Days:.............................. New York and Los Angeles
Business Day Convention:.................... Following
2. Account Details and Settlement Information:
Payments to Party A:
Citibank, New York
ABA No.: 021 000 089
Account No.: 4072-4601
Account Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Services Inc.
Payments to Party B:
Deutsche Bank
ABA No.: ▇▇▇▇▇▇▇▇▇
Account No: ▇▇▇▇▇▇▇▇
Acct Name: NYLTD Funds Control - Stars West
Ref: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2
3. Trustee Capacity. It is expressly understood and agreed by the parties
hereto that insofar as this Confirmation is executed by Deutsche Bank
National Trust Company (i) this Confirmation is executed and delivered by
Deutsche Bank National Trust Company not in its individual capacity but
solely as Trustee under the PSA in the exercise of the powers and
authority conferred and invested in it as trustee thereunder, (ii) each of
the representations, undertakings and agreements herein made on behalf of
the Trust is made and intended not as personal representations of the
Trustee but is made and intended for the purpose of binding only the
Trust, and (iii) under no circumstances shall Deutsche Bank National Trust
Company in its individual capacity be personally liable for the payment of
any indebtedness or expenses or be personally liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken under this Confirmation.
We are very pleased to have entered into this Transaction with you and we look
forward to completing other transactions with you in the near future.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL SERVICES INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Party B, acting through its duly authorized signatory, hereby agrees to, accepts
and confirms the terms of the foregoing as of the Trade Date.
DEUTSCHE BANK NATIONAL TRUST COMPANY,
not individually, but solely as
Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home
Equity Loan Trust 2006-2, Mortgage
Pass-Through Certificates,
Series 2006-2
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Associate
SCHEDULE I
-------------------------------------------------------------------------------
Line Calculation Period Notional Amount ($) Multiplier
-------- ---------------------------------- ------------------- ------------
1 Effective Date 4/25/2006 94,145,175.68 10
2 4/25/2006 5/25/2006 90,279,223.79 10
3 5/25/2006 6/25/2006 86,752,974.91 10
4 6/25/2006 7/25/2006 83,217,497.19 10
5 7/25/2006 8/25/2006 79,870,024.95 10
6 8/25/2006 9/25/2006 76,698,007.21 10
7 9/25/2006 10/25/2006 73,630,091.18 10
8 10/25/2006 11/25/2006 70,661,601.69 10
9 11/25/2006 12/25/2006 67,788,251.59 10
10 12/25/2006 1/25/2007 65,006,133.20 10
11 1/25/2007 2/25/2007 62,311,683.53 10
12 2/25/2007 3/25/2007 59,701,751.06 10
13 3/25/2007 4/25/2007 57,173,726.57 10
14 4/25/2007 5/25/2007 54,733,215.83 10
15 5/25/2007 6/25/2007 52,397,461.47 10
16 6/25/2007 7/25/2007 50,162,052.30 10
17 7/25/2007 8/25/2007 48,022,651.63 10
18 8/25/2007 9/25/2007 45,975,110.99 10
19 9/25/2007 10/25/2007 44,015,462.49 10
20 10/25/2007 11/25/2007 42,018,088.34 10
21 11/25/2007 12/25/2007 23,158,083.40 10
22 12/25/2007 1/25/2008 11,222,584.11 10
23 1/25/2008 2/25/2008 10,776,772.46 10
24 2/25/2008 3/25/2008 10,376,173.86 10
25 3/25/2008 4/25/2008 9,990,559.21 10
26 4/25/2008 5/25/2008 9,619,363.21 10
27 5/25/2008 6/25/2008 9,262,041.63 10
28 6/25/2008 7/25/2008 8,918,032.02 10
29 7/25/2008 8/25/2008 8,586,849.56 10
30 8/25/2008 9/25/2008 8,268,037.12 10
31 9/25/2008 10/25/2008 7,961,128.99 10
32 10/25/2008 11/25/2008 7,399,147.00 10
33 11/25/2008 12/25/2008 5,739,038.20 10
34 12/25/2008 1/25/2009 5,481,705.66 10
35 1/25/2009 2/25/2009 5,291,180.15 10
36 2/25/2009 3/25/2009 5,107,203.45 10
37 3/25/2009 4/25/2009 4,929,553.26 10
38 4/25/2009 5/25/2009 4,758,014.50 10
39 5/25/2009 6/25/2009 4,592,378.50 10
40 6/25/2009 7/25/2009 4,432,441.21 10
41 7/25/2009 8/25/2009 4,278,013.30 10
42 8/25/2009 9/25/2009 4,128,907.43 10
43 9/25/2009 10/25/2009 3,984,942.34 10
44 10/25/2009 11/25/2009 3,845,942.80 10
45 11/25/2009 12/25/2009 3,711,739.59 10
46 12/25/2009 1/25/2010 3,582,168.19 10
47 1/25/2010 2/25/2010 3,457,071.42 10
48 2/25/2010 3/25/2010 3,336,296.64 10
49 3/25/2010 4/25/2010 3,219,696.21 10
50 4/25/2010 5/25/2010 3,107,127.48 10
51 5/25/2010 6/25/2010 2,998,452.63 10
52 6/25/2010 7/25/2010 2,893,538.46 10
53 7/25/2010 8/25/2010 2,792,256.30 10
54 8/25/2010 Termination Date 2,694,481.80 10
[▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LOGO]
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ Bank National Trust Company
A national banking association, not individually,
but solely as Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity
Loan Trust 2006-2 (the "Trust") Mortgage Pass-Through
Certificates, Series 2006-2
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
In consideration of that certain ISDA Master Agreement and that certain
ISDA Schedule, each dated as March 30, 2006 between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital
Services Inc., a Delaware corporation (hereinafter "MSCS") and Deutsche Bank
national Trust Company, a national banking association, not individually, but
solely as Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home Equity Loan Trust 2006-2 (the
"Trust") Mortgage Pass-Through Certificates, Series 2006-2 (hereinafter
"Counterparty") (such ISDA Master Agreement and ISDA Schedule, together with
each Confirmation exchanged between the parties pursuant thereto, hereinafter
the "Agreement"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a Delaware corporation (hereinafter "MS"),
hereby irrevocably and unconditionally guarantees to Counterparty, with effect
from the date of the Agreement, the due and punctual payment of all amounts
payable by MSCS under the Agreement when the same shall become due and payable,
whether on Scheduled Payment Dates, upon demand, upon declaration of termination
or otherwise, in accordance with the terms of the Agreement and giving effect to
any applicable grace period. Upon failure of MSCS punctually to pay any such
amounts, and upon written demand by Counterparty to MS at its address set forth
in the signature block of this Guarantee (or to such other address as MS may
specify in writing), MS agrees to pay or cause to be paid such amounts; provided
that delay by Counterparty in giving such demand shall in no event affect MS's
obligations under this Guarantee.
MS hereby agrees that its obligations hereunder shall be unconditional and
will not be discharged except by complete payment of the amounts payable under
the Agreement, irrespective of any claim as to the Agreement's validity,
regularity or enforceability or the lack of authority of MSCS to execute or
deliver the Agreement; or any change in or amendment to the Agreement; or any
waiver or consent by Counterparty with respect to any provisions thereof; or the
absence of any action to enforce the Agreement or the recovery of any judgment
against MSCS or of any action to enforce a judgment against MSCS under the
Agreement; or any similar circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor generally. MS hereby waives
diligence, presentment, demand on MSCS for payment or otherwise (except as
provided hereinabove), filing of claims, requirement of a prior proceeding
against MSCS and protest or notice, except as provided for in the Agreement with
respect to amounts payable by MSCS. If at any time payment under the Agreement
is rescinded or must be otherwise restored or returned by Counterparty upon the
insolvency, bankruptcy or reorganization of MSCS or MS or otherwise, MS's
obligations hereunder with respect to such payment shall be reinstated upon such
restoration or return being made by Counterparty.
MS represents to Counterparty as of the date hereof, which representations
will be deemed to be repeated by MS on each date on which a Transaction is
entered into, that:
(1) it is duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has full power and legal right to execute
and deliver this Guarantee and to perform the provisions of this Guarantee on
its part to be performed;
(2) its execution, delivery and performance of this Guarantee have been
and remain duly authorized by all necessary corporate action and do not
contravene any provision of its certificate of incorporation or by-laws or any
law, regulation or contractual restriction binding on it or its assets;
(3) all consents, authorizations, approvals and clearances (including,
without limitation, any necessary exchange control approval) and notifications,
reports and registrations requisite for its due execution, delivery and
performance of this Guarantee have been obtained from or, as the case may be,
filed with the relevant governmental authorities having jurisdiction and remain
in full force and effect and all conditions thereof have been duly complied with
and no other action by, and no notice to or filing with, any governmental
authority having jurisdiction is required for such execution, delivery or
performance; and
(4) this Guarantee is its legal, valid and binding obligation enforceable
against it in accordance with its terms except as enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights or by general equity
principles.
By accepting this Guarantee and entering into the Agreement, Counterparty
agrees that MS shall be subrogated to all rights of Counterparty against MSCS in
respect of any amounts paid by MS pursuant to this Guarantee, provided that MS
shall be entitled to enforce or to receive any payment arising out of or based
upon such right of subrogation only to the extent that it has paid all amounts
payable by MSCS under the Agreement.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York. All capitalized terms not otherwise defined
herein shall have the respective meanings assigned to them in the Agreement.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Treasurer
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Ph. No.: 212-761-4000
[▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LOGO] ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
SECRETARY'S CERTIFICATE
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a duly elected and acting Assistant Secretary of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a corporation organized and existing under the laws of the State
of Delaware (the "Corporation"), certify that (i) ▇▇▇▇▇ ▇. ▇▇▇▇ is the duly
elected Treasurer and ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is a duly elected Assistant Treasurer
of the Corporation; (ii) pursuant to Section 7.01 of the Bylaws of the
Corporation and resolutions adopted by a Unanimous Consent of Directors in Lieu
of a Meeting, dated as of May 31, 1997, both of which are attached as an
exhibit, the Treasurer and the Assistant Treasurers are authorized to enter into
agreements and other instruments on behalf of the Corporation; and (iii) the
signatures of ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ appearing below are copies
of their genuine signatures:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------- ---------------------------
IN WITNESS WHEREOF, I have hereunto set my name and affixed the seal of
the Corporation as of the 22nd day of March, 2006.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Secretary
[SEAL]
[▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LOGO]
EXHIBIT
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Section 7.01 of the Bylaws
SECTION 7.01. Contracts. Except as otherwise required by law, the Amended
and Restated Certificate of Incorporation or these Amended and Restated Bylaws,
any contracts or other instruments may be executed and delivered in the name and
on the behalf of the Corporation by such officer or officers of the Corporation
as the Board of Directors may from time to time direct. Such authority may be
general or confined to specific instances as the Board may determine. Subject to
the control and direction of the Board of Directors, the Chairman of the Board,
the President, the Chief Financial Officer, the Chief Risk Officer, the Chief
Legal Officer and the Treasurer may enter into, execute, deliver and amend
bonds, promissory notes, contracts, agreements, deeds, leases, guarantees,
loans, commitments, obligations, liabilities and other instruments to be made or
executed for or on behalf of the Corporation. Subject to any restrictions
imposed by the Board of Directors, such officers of the Corporation may delegate
such powers to others under his or her jurisdiction, it being understood,
however, that any such delegation of power shall not relieve such officer of
responsibility with respect to the exercise of such delegated power.
Resolution adopted by a Unanimous Consent of
Directors in Lieu of a Meeting, dated as of May 31, 1997
RESOLVED FURTHER, that the Treasurer shall have charge and custody
of, and be responsible for, all funds and securities of the Corporation
and shall be authorized to deposit all such funds in the name of the
Corporation in banks or other depositories. In addition, the Treasurer
shall perform all other necessary acts and duties in connection with the
financial affairs of the Corporation, shall generally perform all duties
appertaining to the office of treasurer of a corporation and shall perform
such other duties and have such other powers as may be prescribed by the
Board, subject to the supervision of the Chief Financial Officer; and
RESOLVED FURTHER, that the Assistant Treasurer, if any, or, if there
shall be more than one, the Assistant Treasurers, shall, under the
supervision of the Treasurer, perform the duties and exercise the powers
of an assistant treasurer and powers of the Treasurer. In addition, each
Assistant Treasurer is authorized to enter into, execute, deliver and
amend on behalf of the Corporation any and all letters of credit,
uncommitted short-term credit obligations and short-term promissory notes
(as defined by generally accepted accounting principles), such
authorization to cease automatically upon termination of employment with
the Corporation.
EXHIBIT Z
SUBSERVICING AGREEMENT
SUBSERVICING AGREEMENT
THIS SUBSERVICING AGREEMENT (the "Agreement") is made and entered into
between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION a national banking association
(hereinafter called "JPMCB") and CHASE HOME FINANCE LLC, a Delaware limited
liability corporation (hereinafter called "CHF LLC") dated as of March 1, 2006.
RECITALS
WHEREAS, JPMCB, as servicer, desires CHF LLC to act as subservicer on
certain mortgage loans (the "Subserviced Loans" as further defined below);
WHEREAS, CHF LLC desires to act as subservicer on behalf of JPMCB on such
Subserviced Loans;
WHEREAS, JPMCB and CHF LLC desire to set forth, in writing, their
agreement as to the subservicing of the Subserviced Loans.
NOW, THEREFORE, JPMCB and CHF LLC hereby agree as follows:
A. MORTGAGE LOANS TO BE SUBSERVICED HEREUNDER
The mortgage loans to be subserviced hereunder are all residential
mortgage loans serviced by JPMCB pursuant to the Pooling and
Servicing Agreement (the "PSA") dated as of March 1, 2006 among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I Inc., JPMCB, as servicer, First NLC
Financial Services, LLC, HomEq Servicing Corporation, and Deutsche
Bank, National Trust Company relating to the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Home
Equity Loan Trust 2006-2 securitization transaction (all of which
mortgage loans are hereinafter referred to as "Subserviced Loans").
B. GENERAL SUBSERVICING PROCEDURE:
CHF LLC shall service and administer the Subserviced Loans in
accordance with (i) any federal, state or local statute, law,
ordinance, rule, administrative interpretation, regulation, order,
writ, injunction, directive, judgment, decree or other requirement
of any governmental authority, as applicable to the Subserviced
Loans (hereinafter referred to as "Applicable Law") and (ii)
Accepted Servicing Practices (as defined in the PSA).
It is agreed that CHF LLC, as subservicer, shall perform all
servicing functions relative to the Subserviced Loans on behalf of
JPMCB as are required to be performed by CHF pursuant to the
Agreement Regarding Servicing and Subservicing between JPMCB and CHF
dated effective as of January 1, 2005 (the "Primary Subservicing
Agreement"). The Primary Subservicing Agreement requires, among
other things, for CHF LLC to comply with (x) Regulation AB (as
defined in the PSA) and (y) all terms and conditions of the
operative agreement pursuant to which JPMCB is named servicer
including the PSA. In addition, CHF LLC shall perform all of the
obligations, responsibilities and duties of a "Subservicer" under
the PSA. .
C. SERVICING FEE:
1. The fee paid to CHF LLC hereunder for the Subserviced Loans shall be
the "Servicing Fee" provided in the PSA less such amount as may be
set out in the Primary Subservicing Agreement.
2. In addition to the foregoing, CHF LLC shall retain all ancillary
income that JPMCB is entitled to receive under the PSA.
D. TERMINATION OF AGREEMENT:
JPMCB may, by written notice to CHF LLC, terminate this Agreement as
to the Subserviced Loans in accordance with the provisions of the
Primary Subservicing Agreement.
E. MISCELLANEOUS:
1. This Agreement may not be modified or changed except by an
instrument in writing duly executed by all parties hereto.
2. This Agreement shall be construed and enforced in accordance with
the laws of the State of New York.
3. To the extent of any conflict between the provisions of this
Agreement on the one hand and the Primary Subservicing Agreement on
the other hand, the Primary Subservicing Agreement shall control.
4. Except for their proper successors and assigns, the parties hereto
intend that no third party shall have any rights or claims by reason
of this Agreement.
5. Headings in this Agreement are for convenience and are not to be
used for interpreting or construing any provisions hereof.
IN WITNESS WHEREOF, each party has caused this instrument to be signed in its
corporate name on its behalf by its proper officials duly authorized as of March
1, 2006.
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Its: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
----------------------------------------
CHASE HOME FINANCE LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Its: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
----------------------------------------
EXHIBIT AA
FORM OF ADDITIONAL DISCLOSURE NOTIFICATION
**SEND VIA EMAIL TO ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇.▇▇▇ AND VIA OVERNIGHT MAIL TO THE
ADDRESS IMMEDIATELY BELOW
Deutsche Bank National Trust Company, as trustee
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Email: ▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇.▇▇▇
Attn.: Trust & Securities Services
RE: **Additional Form [10-D] [10-K] [8-K] Disclosure** Required
Ladies and Gentlemen:
In accordance with Section 8.12 of the Pooling and Servicing Agreement (the
"Agreement"), dated as of March 1, 2006, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I
Inc., as depositor, HomEq Servicing Corporation, as servicer, JPMorgan Chase
Bank, National Association, as servicer, First NLC Financial Services, LLC, as
responsible party, and Deutsche Bank National Trust Company, as trustee, the
undersigned, as [_________________________] hereby notifies you that certain
events have come to our attention that we are required to report to you for
disclosure on Form [10-D] [10-K] [8-K].
Description of additional Form [10-D] [10-K] [8-K] Disclosure:
List of any attachments hereto to be included in the Additional Form [10-D]
[10-K] [8-K] Disclosure:
Each of the attachments hereto is being transmitted to the Trustee in an
▇▇▇▇▇-compatible format.
Any inquiries related to this notification should be directed to
[_________________] phone number [___________________]; email address
[_________________].
[NAME OF PARTY],
As [Role]
By:
-----------------------------------
Name: