Assignment, Assumption and Recognition Agreement
This Assignment, Assumption and Recognition Agreement (this "Assignment
Agreement"), dated as of December 1, 2006, between HSBC Bank USA, National
Association, a National Banking Association (the "Assignor"), HSI Asset
Securitization Corporation, a Delaware Corporation (the "Assignee")
CitiMortgage, Inc., as Master Servicer (the "Master Servicer"), and Wachovia
Mortgage Corporation, a North Carolina corporation (the "Seller" and
"Servicer"):
For good and valuable consideration the receipt and sufficiency of which
hereby are acknowledged, and of the premises and mutual covenants herein
contained, the parties hereto hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to 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 Attachment 1 attached hereto
(the "Mortgage Loans"); and (b) the Seller's Purchase, Warranties and Servicing
Agreement dated as of August 1, 2006, but only to the extent of the Mortgage
Loans (the "Purchase Agreement"). For purposes of this Assignment Agreement, the
term "Purchase Agreement" includes any separate Assignment and Conveyance
pursuant to which Seller and Assignor effectuated the purchase and sale of any
Mortgage Loan following the execution and delivery of the Purchase Agreement.
The Assignor specifically reserves and does not assign to the Assignee
hereunder any and all right, title and interest in, to and under any all
obligations of the Assignor with respect to any mortgage loans subject to the
Purchase Agreement which are not the Mortgage Loans set forth on Attachment 1
attached hereto and are not the subject of this Assignment Agreement.
The Servicer shall service the Mortgage Loans in accordance with the
Purchase Agreement as modified by this Assignment Agreement.
2. Each of the Seller and the Assignor represent and warrant to the
Assignee and the Master Servicer that (a) the copy of the Purchase Agreement,
attached hereto as Attachment 2, provided to the Assignee and the Master
Servicer, is a true, complete and accurate copy of the Purchase Agreement, (b)
the Purchase Agreement is in full force and effect as of the date hereof, (c)
the provisions thereof have not been waived, amended or modified in any respect,
nor have any notices of termination been given thereunder, (d) the Purchase
Agreement contains all of the terms and conditions governing the sale of the
Mortgage Loans by Seller to the Assignor and the purchase of the Mortgage Loans
by the Assignor from Seller; provided, however, that the date of purchase and
sale and the amount of payment for the Mortgage Loans may be set out in a
Purchase Price and Terms Letter, as defined in the Purchase Agreement, and (e)
the Seller sold, conveyed and transferred each Mortgage Loan to the Assignor
pursuant to the Purchase Agreement.
3. From and after the date hereof, the Seller shall and does hereby
recognize that the Assignee (a) will transfer the Mortgage Loans and assign its
rights under the Purchase Agreement (solely to the extent set forth herein) and
this Assignment Agreement to HSI Asset Loan Obligation Trust 2006-2 (the
"Trust") created pursuant to a Pooling and Servicing Agreement, dated as of
December 1, 2006 (the "Pooling Agreement"), among the Assignee, as depositor,
Deutsche Bank National Trust Company, CitiMortgage, Inc., as master servicer
(including its successors in interest and any successor master servicer under
the Pooling Agreement, the "Master Servicer"), Citibank, N.A. as securities
administrator (the "Securities Administrator") and ▇▇▇▇▇ Fargo Bank, N.A. as
custodian (the "Custodian"). The Seller hereby acknowledges and agrees that from
and after the date hereof (i) the Trust will be the owner of the Mortgage Loans,
(ii) the Seller shall look solely to the Trust for performance of any
obligations of the Assignor insofar as they relate to the enforcement of the
representations, warranties and covenants with respect 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 Purchase
Agreement, including, without limitation, the enforcement of the document
delivery requirements and remedies with respect to breaches of representations
and warranties set forth in the Purchase Agreement, and shall be entitled to
enforce all of the obligations of the Seller thereunder insofar as they relate
to the Mortgage Loans, and (iv) all references to the Purchaser (insofar as they
relate to the rights, title and interest and, with respect to obligations of the
Purchaser, only insofar as they relate to the enforcement of the
representations, warranties and covenants of the Seller) under the Purchase
Agreement insofar as they relate to the Mortgage Loans, shall be deemed to refer
to the Trust. Neither the Seller 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 Seller's performance under the
Purchase Agreement with respect to the Mortgage Loans without the prior written
consent of the Assignee, the Master Servicer and the Trustee. Any party
requesting such amendment shall provide to the Assignee, the Master Servicer and
the Trustee, at its own expense, an opinion of counsel stating that (i) such
amendment is permitted under the terms of the Purchase Agreement and (ii) such
amendment will not materially and adversely affect the interests of the holders
of any securities issued by the Trust.
(b) The Servicer hereby acknowledges that CitiMortgage, Inc., has been
appointed as the Master Servicer of the Mortgage Loans pursuant to this
Assignment Agreement and therefore has the right to enforce all obligations of
the Servicer, as they relate to the Assigned Loans, under the Purchase Agreement
and this Assignment Agreement.
4. The Assignor warrants and represents to, and covenants with, the
Assignee, the Master Servicer and the Seller that:
(a) As of the date hereof, the Assignor is not in default under the
Purchase Agreement;
(b) The Assignor is the lawful owner of the Mortgage Loans with the full
right to transfer the Mortgage Loans and any and all of its interests, rights
and obligations under the Purchase Agreement, free from any and all claims and
encumbrances arising out of the Assignor's ownership thereof, and the Mortgage
Loans, as well as the Purchase Agreement, upon the transfer thereof to the
Assignee as contemplated herein, shall be free and clear of all such liens,
claims and encumbrances or any lien claim or encumbrance arising out of the
ownership of the Mortgage Loans by any person at any time after Assignor first
acquired any Mortgage Loan from the Seller;
(c) The Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to the Seller with respect to
the Purchase Agreement or the Mortgage Loans;
(d) The Assignor has not waived or agreed to any waiver under, or agreed to
any amendment or other modification of, the Purchase Agreement or the Mortgage
Loans. The Assignor has no knowledge of, and has not received notice of, any
waivers under or amendments or other modifications of, or assignments of rights
or obligations under or defaults under, the Purchase Agreement, or the Mortgage
Loans;
(e) The Assignor is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, and has
all requisite corporate power and authority to sell, transfer and assign the
Mortgage Loans;
(f) The Assignor has full corporate power and authority to execute, deliver
and perform under this Assignment Agreement, and to consummate the transactions
set forth herein. The consummation of the transactions contemplated by this
Assignment Agreement is in the ordinary course of the Assignor's business and
will not conflict with, or result in a breach of, any of the terms, conditions
or provisions of the Assignor's charter or by-laws, or any legal restriction, or
any material agreement or instrument to which the Assignor 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 Assignor or its property is subject. The
execution, delivery and performance by the Assignor of this Assignment
Agreement, and the consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action of the Assignor.
This Assignment Agreement has been duly executed and delivered by the Assignor
and constitutes the valid and legally binding obligation of the Assignor
enforceable against the Assignor in accordance with its respective terms except
as enforceability thereof may be limited by bankruptcy, insolvency, or
reorganization or other similar laws now or hereinafter in effect relating to
creditor's rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or in law;
(g) No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity is required to
be obtained or made by the Assignor in connection with the execution, delivery
or performance by the Assignor of this Assignment Agreement, or the consummation
by it of the transactions contemplated hereby; and
(h) The Assignor has paid the purchase price for the Mortgage Loans and has
satisfied any conditions to closing required of it under the terms of the
Purchase Agreement.
5. The Assignee warrants and represents to, and covenants with, the
Assignor and the Seller that:
(a) The Assignee is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, and has
all requisite corporate power and authority to acquire, own and purchase the
Mortgage Loans;
(b) The Assignee has full corporate power and authority to execute, deliver
and perform under this Assignment Agreement, and to consummate the transactions
set forth herein. The consummation of the transactions contemplated by this
Assignment Agreement is in the ordinary course of the Assignee's business and
will not conflict with, or result in a breach of, any of the terms, conditions
or provisions of the Assignee's charter or by-laws, or any legal restriction, or
any material agreement or instrument to which the Assignee 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 Assignee or its property is subject. The
execution, delivery and performance by the Assignee of this Assignment
Agreement, and the consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action of the Assignee.
This Assignment Agreement has been duly executed and delivered by the Assignee
and constitutes the valid and legally binding obligation of the Assignee
enforceable against the Assignee in accordance with its respective terms except
as enforceability thereof may be limited by bankruptcy, insolvency, or
reorganization or other similar laws now or hereinafter in effect relating to
creditor's rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or in law;
(c) No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity is required to
be obtained or made by the Assignee in connection with the execution, delivery
or performance by the Assignee of this Assignment Agreement, or the consummation
by it of the transactions contemplated hereby; and
(d) The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Purchase Agreement and the Mortgage Loans, and
from and after the date hereof, the Assignee assumes for the benefit of each of
the Seller and the Assignor all of the Assignor's obligations as Purchaser
thereunder, with respect to the Mortgage Loans.
6. The Seller warrants and represents to, and covenants with, the Assignor,
the Master Servicer and the Assignee that:
(a) The Seller is not a natural person or a general partnership and is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, and has all requisite power and authority to
service the Mortgage Loans;
(b) The Seller has full power and authority to execute, deliver and perform
under this Assignment Agreement, and to consummate the transactions set forth
herein. The consummation of the transactions contemplated by this Assignment
Agreement is in the ordinary course of the Seller's business and will not
conflict with, or result in a breach of, any of the terms, conditions or
provisions of the Seller's charter or by-laws, or any legal restriction, or any
material agreement or instrument to which the Seller 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 Seller or its property is subject. The
execution, delivery and performance by the Seller of this Assignment Agreement,
and the consummation by it of the transactions contemplated hereby, have been
duly authorized by all necessary corporate action of the Seller. This Assignment
Agreement has been duly executed and delivered by the Seller and constitutes the
valid and legally binding obligation of the Seller enforceable against the
Seller in accordance with its respective terms except as enforceability thereof
may be limited by bankruptcy, insolvency, or reorganization or other similar
laws now or hereinafter in effect relating to creditors' rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or in law;
(c) No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity is required to
be obtained or made by the Seller in connection with the execution, delivery or
performance by the Seller of this Assignment Agreement, or the consummation by
it of the transactions contemplated hereby;
(d) As of the date hereof, the Seller is not in default under the Purchase
Agreement; and
(e) No event has occurred or has failed to occur, during the period
commencing on the date on which Assignor acquired the Mortgage Loans and ending
on the date hereof, inclusive, which would make the representations and
warranties set forth in Section 3.01 of the Purchase Agreement untrue if such
representations and warranties were made with respect to the Mortgage Loans
effective as of the date hereof. The Seller hereby restates the representations
and warranties set forth in Section 3.02 of the Purchase Agreement with respect
to the Mortgage Loans as of the date originally made.
6. The Seller 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 the Seller set forth in Section 6 hereof
shall be as set forth in Section 3.03 of the Purchase Agreement as if they were
set forth herein (including without limitation any repurchase or indemnity
obligation set forth therein).
7. In connection with the transfer of the Mortgage Loans hereunder, the
Seller agrees that, from and after the date hereof, each Mortgage Loan
transferred hereunder will be subject to, and serviced under, the Purchase
Agreement, provided that, solely with respect to the Mortgage Loans, the
following modifications shall be made (all capitalized terms used below shall
have the meanings assigned to such terms by this Assignment Agreement and such
terms shall be incorporated into the Purchase Agreement to the extent such terms
are not already defined therein):
(i) Section 4.01 shall be amended as follows:
(a) the reference to the "Purchaser" in the fifth line of the third
paragraph shall be changed to "the Trustee for the benefit of the
holders of any security issued by the Trust";
(b) the phrase "provided, however, that unless the Seller has obtained
the prior written consent of the Purchaser" found in the fifth line of
the third paragraph shall be deleted; and
(c) the following shall be added after the phrase "future advances"
found in the ninth line of the third paragraph: "effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code and
cause either any REMIC designation made in connection with a
Pass-Through Transfer to fail to qualify as a REMIC under the Code or
the imposition of any tax on `prohibited transactions' or
`contributions after the startup day' under the REMIC provisions of
the Code".
(ii) Section 4.03 shall be amended so that the reference to "Purchaser" in
the second line of the final paragraph thereof shall be changed to "Trustee";
(iii) Section 4.04 shall be amended to delete the last paragraph thereof in
its entirety;
(iv) Section 4.05 shall be amended so that the phrase "in excess of the
Repurchase Price" is added after the word "thereon" found in the second line of
subsection (v);
(v) Section 4.09 shall be deleted in its entirety and replaced with the
following:
"The Seller may transfer a Custodial Account, Buydown Account or an
Escrow Account to a different Eligible Account from time to time. Such
transfer may be made Seller only after receiving the prior written consent
of the Master Servicer and the Depositor (such consent not to be
unreasonably withheld)";
(vi) Section 4.13 shall be amended as follows:
(a) the first paragraph shall be deleted in its entirety and replaced
with the following "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 deed or
certificate of sale shall be issued to the Trust, or if not permitted
by law, to the Trustee, or its nominee for the benefit of the holders
of any security issued by the Trust.";
(b) the following shall be added as the first sentence to the third
paragraph, "The Servicer shall manage, conserve, protect and operate
each REO Property for the Trustee solely for the purpose of its prompt
disposition and sale."
(c) the following shall be ended to the end of paragraph 3: "The
Seller shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event with in
two years after title has been taken to such REO Property; unless the
Seller determines and gives appropriate notice to the Master Servicer,
the Trustee and the Depositor that a longer period is necessary for
the orderly liquidation of such REO Property. Notwithstanding the
foregoing, if a REMIC election is made with respect to the arrangement
under which the Mortgage Loans and the REO Property are held, such REO
Property shall be disposed of within three years or such other period
as may be permitted under Section 860G(a)(8) of the Code. To the
extent allowed for in this Agreement, the Seller shall receive
immediate reimbursement from the Custodial Account for any related
unreimbursed Servicing Advances"
(d) paragraph 4 shall be deleted in its entirety.
(vii) Sections 6.04 and 6.05 shall be deleted in their entirety
(viii) Section 6.06, 6.07 and 6.08 shall be amended so that references to
the "Purchaser" shall be replaced with references to the "Depositor and the
Trustee";
(ix) Section 7.04 shall be amended so that (a) the reference to the
"Purchaser" in the first sentence thereof will be changed to "the Master
Servicer, the Depositor and the Securities Administrator and with written notice
to the Trustee"; and (b) the reference to "Purchaser" in the second sentence
there of will be changed to "Depositor";
(x) Section 7.05 shall be amended so that the following replaces the second
sentence thereof: "Without in any way limiting the generality of this Section
7.05 and except as pursuant to section 7.02, the Seller shall not either assign
this Agreement or the servicing hereunder or delegate its rights or duties
hereunder or any portion thereof without the prior written consent of the Master
Servicer and the Depositor (such consent to not be unreasonably withheld) and
without first providing notice to the Trustee.";
(xi) Section 8.01 shall be amended so that (a) all references to the
"Purchaser" in the last paragraph shall be changed to "Master Servicer" and (b)
references in the ninth line of paragraph two to "Section 12.01" shall be
changed to "Section 11.01";
(xii) Section 8.02 shall be amended so that references to the "Purchaser"
in the first sentence thereof shall be changes to "Master Servicer";
(xiii) Section 11.01 shall be amended so that the following is added at the
end of the second sentence of the first paragraph thereof: "provided, however,
no such compensation shall be in excess of that permitted the Seller under this
Agreement".
8. Pursuant to Section 5.02 to the Purchase Agreement, the Seller shall
furnish to the Master Servicer (i)(a) monthly loan data in a mutually
agreed-upon format between the Servicer and the Master Servicer, (b) default
loan data in a format mutually agreed upon between the Servicer and the Master
Servicer and (c) information regarding the realized losses and gains in a format
mutually agreed upon between the Servicer and the Master Servicer, in each case
relating to the period ending on the last day of the preceding calendar month
and (ii) all such information required pursuant to clause (i)(a) above on a
magnetic tape, electronic mail, or other similar media reasonably acceptable to
the Master Servicer and the Seller. Notwithstanding the foregoing, the Seller is
not required to report data relating to prepayment charges or penalties to the
extent such prepayment charges or penalties are retained by the Seller.
9. Notice Addresses.
(a) The Assignee's address for purposes of all notices and correspondence
related to the Mortgage Loans and this Assignment Agreement is:
HSI Asset Securitization Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: HALO 2006-2
(b) The Assignor's address for purposes for all notices and correspondence
related to the Mortgage Loans and this Assignment Agreement is:
HSBC Bank USA, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(c) The Seller's address for purposes of all notices and correspondence
related to the Mortgage Loans and this Assignment Agreement is:
Wachovia Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
(d) The Trustee's address for purposes of all notices and correspondence
related to the Mortgage Loans and this Assignment Agreement is:
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: [ ]
10. This Assignment Agreement shall be construed in accordance with the
substantive laws of the State of New York (without regard to conflict of laws
principles) and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws, except to the extent preempted
by federal law.
11. This Assignment Agreement shall inure to the benefit of the successors
and assigns of the parties hereto. Any entity into which the Seller, the
Assignor or the Assignee may be merged or consolidated shall, without the
requirement for any further writing, be deemed the Seller, the Assignor or the
Assignee, respectively, hereunder.
12. No term or provision of this Assignment 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.
13. This Assignment Agreement shall survive the conveyance of the Mortgage
Loans and the assignment of the Purchase Agreement by the Assignor contemplated
by this Assignment Agreement.
14. Notwithstanding the assignment of the Purchase Agreement by either the
Assignor or Assignee, this Assignment Agreement shall not be deemed assigned by
the Seller or the Assignor unless assigned by separate written instrument.
15. For the purpose for facilitating the execution of this Assignment
Agreement as herein provided and for other purposes, this Assignment 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 and be one and the same instrument.
16. In the even that any provision of this Assignment Agreement conflicts
with any provision of the Purchase Agreement with respect to the Mortgage Loans,
the terms of this Assignment Agreement shall control.
[signatures on following page]
IN WITNESS WHEREOF, the parties have caused this Assignment Agreement to be
executed by their duly authorized officers as of the date first above written.
HSBC Bank USA, National Association
Assignor
By:
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director #14311
HSI Asset Securitization Corporation
Assignee
By:
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Wachovia Mortgage Corporation
Seller and Servicer
By:
-----------------------------------------
Name:
---------------------------------------
Title:
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Deutsche Bank National Trust Company, as Trustee
By:
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Name:
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Title:
--------------------------------------
Acknowledged:
CitiMortgage, Inc. as Master Servicer
By:
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Name:
---------------------------------------
Title:
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Citibank, N.A., as Securities Administrator
By:
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Name:
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Title:
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ATTACHMENT 1
(Mortgage Loan Schedule)
ATTACHMENT 2
(Form of Purchase Agreement)
EXHIBIT 3
FORM OF MONTHLY REMITTANCE ADVICE
[to be agreed upon between Master Servicer and Seller]
EXHIBIT 4
FORM OF MONTHLY DEFAULTED LOAN REPORT
Data must be submitted to CitiMortgage in an Excel spreadsheet format with fixed
field names and data type. The Excel spreadsheet should be used as a template
consistently every month when submitting data.
Table: Delinquency
Name Type Size
--------------------------------------------------------------------------------
Servicer Loan # Number 8
(Double)
Investor Loan # Number 8
(Double)
Borrower Name Text 20
Address Text 30
State Text 2
Due Date Date/Time 8
Action Code Text 2
FC Received Date/Time 8
File Referred to Atty Date/Time 8
NOD Date/Time 8
Complaint Filed Date/Time 8
Sale Published Date/Time 8
Target Sale Date Date/Time 8
Actual Sale Date Date/Time 8
Loss Mit Approval Date Date/Time 8
Loss Mit Type Text 5
Loss Mit Estimated Completion Date/Time 8
Date
Loss Mit Actual Completion Date Date/Time 8
Loss Mit Broken Plan Date Date/Time 8
BK Chapter Text 6
BK Filed Date Date/Time 8
Post Petition Due Date/Time 8
Motion for Relief Date/Time 8
Lift of Stay Date/Time 8
RFD Text 10
Occupant Code Text 10
Eviction Start Date Date/Time 8
Eviction Completed Date Date/Time 8
List Price Currency 8
List Date Date/Time 8
Accepted Offer Price Currency 8
Accepted Offer Date Date/Time 8
Estimated REO Closing Date Date/Time 8
Actual REO Sale Date Date/Time 8
o Items in bold are MANDATORY FIELDS. We must receive information in those
fields every month in order for your file to be accepted.
The Action Code Field should show the applicable numeric code to indicate that a
special action is being taken. The Action Codes are the following:
12-Relief Provisions
15-Bankruptcy/Litigation
20-Referred for Deed-in-Lieu
30-Referred fore Foreclosure
▇▇-▇▇▇▇▇▇
▇▇-▇▇▇▇▇▇▇▇▇▇
▇▇-▇▇▇-▇▇▇▇ for Sale
71-Third Party Sale/Condemnation
72-REO-Pending Conveyance-Pool Insurance claim filed
CitiMortgage will accept alternative Action Codes to those above, provided that
the Codes are consistent with industry standards. If Action Codes other than
those above are used, the Servicer must supply CitiMortgage with a description
of each of the Action Codes prior to sending the file.
Description of Action Codes:
Action Code 12 - To report a Mortgage Loan for which the Borrower has been
granted relief for curing a delinquency. The Action Date is the date the relief
is expected to end. For military indulgence, it will be three months after the
Borrower's discharge from military service.
Action Code 15 - To report the Borrower's filing for bankruptcy or instituting
some other type of litigation that will prevent or delay liquidation of the
Mortgage Loan. The Action Date will be either the date that any repayment plan
(or forbearance) instituted by the bankruptcy court will expire or an additional
date by which the litigation should be resolved.
Action Code 20 - To report that the Borrower has agreed to a deed-in-lieu or an
assignment of the property. The Action Date is the date the Servicer decided to
pursue a deed-in-lieu or the assignment.
Action Code 30 - To report that the decision has been made to foreclose the
Mortgage Loan. The Action Date is the date the Servicer referred the case to the
foreclosure attorney.
Action Code 60 - To report that a Mortgage Loan has been paid in full either at,
or prior to, maturity. The Action Date is the date the pay-off funds were
remitted to the Master Servicer.
Action Code 65 - To report that the Servicer is repurchasing the Mortgage Loan.
The Action Date is the date the repurchase proceeds were remitted to the Master
Servicer.
Action Code 70 - To report that a Mortgage Loan has been foreclosed or a
deed-in-lieu of foreclosure has been accepted, and the Servicer, on behalf of
the owner of the Mortgage Loan, has acquired the property and may dispose of it.
The Action Date is the date of the foreclosure sale or, for deeds-in-lieu, the
date the deed is recorded on behalf of the owner of the Mortgage Loan.
Action Code 71 - To report that a Mortgage Loan has been foreclosed and a third
party acquired the property, or a total condemnation of the property has
occurred. The Action Date is the date of the foreclosure sale or the date the
condemnation award was received.
Action Code 72 - To report that a Mortgage Loan has been foreclosed, or a
deed-in-lieu has been accepted, and the property may be conveyed to the mortgage
insurer and the pool insurance claim has been filed. The Action Date is the date
of the foreclosure sale, or, for deeds-in-lieu, the date of the deed for
conventional mortgages.
The Loss Mit Type field should show the approved Loss Mitigation arrangement.
The following are acceptable:
ASUM-Approved Assumption
BAP-Borrower Assistance Program
CO-Charge Off
DIL-Deed-in-Lieu
FFA-Formal Forbearance Agreement
MOD-Loan Modification
PRE-Pre-Sale
SS-Short Sale
MISC-Anything else approved by the PMI or Pool Insurer
CitiMortgage will accept alternative Loss Mitigation Types to those above,
provided that they are consistent with industry standards. If Loss Mitigation
Types other than those above are used, the Servicer must supply CitiMortgage
with a description of each of the Loss Mitigation Types prior to sending the
file.
The Occupant Code field should show the current status of the property. The
acceptable codes are:
Mortgagor
Tenant
Unknown
Vacant
EXHIBIT 5
FORM OF LOAN LOSS REPORT
REALIZED LOSS CALCULATION INFORMATION CITIMORTGAGE, N.A. Form 332
Calculation of Realized Loss
Purpose
To provide the Servicer with a form for the calculation of any Realized Loss (or
gain) as a result of a Mortgage Loan having been foreclosed and Liquidated.
Distribution
The Servicer will prepare the form in duplicate and send the original together
with evidence of conveyance of title and appropriate supporting documentation to
the Master Servicer with the Monthly Accounting Reports which supports the
Mortgage Loan's removal from the Mortgage Loan Activity Report. The Servicer
will retain the duplicate for its own records.
Due Date
With respect to any liquidated Mortgage Loan, the form will be submitted to the
Master Servicer no later than the date on which statements are due to the Master
Servicer under Section 4.02 of this Agreement (the "Statement Date") in the
month following receipt of final liquidation proceeds and supporting
documentation relating to such liquidated Mortgage Loan; provided, that if such
Statement Date is not at least 30 days after receipt of final liquidation
proceeds and supporting documentation relating to such liquidated Mortgage Loan,
then the form will be submitted on the first Statement Date occurring after the
30th day following receipt of final liquidation proceeds and supporting
documentation.
Preparation Instructions
The numbers on the form correspond with the numbers listed below.
1. The actual Unpaid Principal Balance of the Mortgage Loan.
2. The Total Interest Due less the aggregate amount of servicing fee that
would have been earned if all delinquent payments had been made as
agreed.
3-7. Complete as necessary. All line entries must be supported by copies of
appropriate statements, vouchers, receipts, canceled checks, etc., to
document the expense. Entries not properly documented will not be
reimbursed to the Servicer.
8. Accrued Servicing Fees based upon the Scheduled Principal Balance of the
Mortgage Loan as calculated on a monthly basis.
10. The total of lines 1 through 9.
Credits
11-17. Complete as necessary. All line entries must be supported by copies of
the appropriate claims forms, statements, payment checks, etc. to
document the credit. If the Mortgage Loan is subject to a Bankruptcy
Deficiency, the difference between the Unpaid Principal Balance of the
Note prior to the Bankruptcy Deficiency and the Unpaid Principal Balance
as reduced by the Bankruptcy Deficiency should be input on line 16.
18. The total of lines 11 through 17.
Total Realized Loss (or Amount of Any Gain)
19. The total derived from subtracting line 18 from 10. If the amount
represents a realized gain, show the amount in parenthesis ( ).
CITIMORTGAGE, N.A.
CALCULATION OF REALIZED LOSS
CitiMortgage, Inc. Trust: ___________________________
Prepared by: __________________ Date: _______________
Phone: ______________________
Servicer Loan No. Servicer Name Servicer Address
CITIMORTGAGE
Loan No._____________________________
Borrower's Name:
---------------------------------------------------------------
Property Address:
--------------------------------------------------------------
Liquidation and Acquisition Expenses:
Actual Unpaid Principal Balance of Mortgage Loan $ _______________(1)
Interest accrued at Net Rate ________________(2)
Attorney's Fees ________________(3)
Taxes ________________(4)
Property Maintenance ________________(5)
MI/Hazard Insurance Premiums ________________(6)
Hazard Loss Expenses ________________(7)
Accrued Servicing Fees ________________(8)
Other (itemize) ________________(9)
$___________________
Total Expenses $ ______________(10)
Credits:
Escrow Balance $ ______________(11)
HIP Refund ________________(12)
Rental Receipts ________________(13)
Hazard Loss Proceeds ________________(14)
Primary Mortgage Insurance Proceeds ________________(15)
Proceeds from Sale of Acquired Property ________________(16)
Other (itemize) ________________(17)
====================
Total Credits $_______________(18)
Total Realized Loss (or Amount of Gain) $____________________
HSBC BANK USA, NATIONAL ASSOCIATION
Purchaser
and
WACHOVIA MORTGAGE CORPORATION
Seller
SELLER'S PURCHASE, WARRANTIES AND SERVICING AGREEMENT
Dated as of August 1, 2006
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS..........................................................5
Section 1.01. Defined Terms...............................................5
ARTICLE II SERVICING OF MORTGAGE LOANS; RECORD TITLE AND POSSESSION
OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL
AGREEMENT; DELIVERY OF MORTGAGE LOAN DOCUMENTS..................22
Section 2.01. Agreement to Purchase......................................22
Section 2.02. Purchase Price.............................................22
Section 2.03. Servicing of Mortgage Loans................................23
Section 2.04. Examination of Mortgage Files..............................23
Section 2.05. Record Title and Possession of Mortgage Files;
Maintenance of Servicing Files.............................23
Section 2.06. Books and Records..........................................24
Section 2.07. Transfer of Mortgage Loans.................................24
Section 2.08. Delivery of Mortgage Loan Documents........................25
Section 2.09. Quality Control Procedures.................................26
Section 2.10. Closing....................................................26
Section 2.11. Closing Documents..........................................27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER;
REPURCHASE; REVIEW OF MORTGAGE LOANS............................28
Section 3.01. Representations and Warranties of the Seller...............28
Section 3.02. Representations and Warranties as to Individual
Mortgage Loans.............................................30
Section 3.03. Repurchase; Substitution...................................48
Section 3.04. Purchase Price Protection..................................50
Section 3.05. Repurchase of Mortgage Loans With First Payment Defaults...50
ARTICLE IV ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS.................51
Section 4.01. The Seller to Act as Servicer..............................51
Section 4.02. Collection of Mortgage Loan Payments.......................52
Section 4.03. Realization Upon Defaulted Mortgage Loans..................53
Section 4.04. Establishment of Custodial Accounts; Deposits in
Custodial Accounts.........................................55
Section 4.05. Permitted Withdrawals From the Custodial Account...........57
i
Section 4.06. Establishment of Escrow Accounts; Deposits in Accounts.....58
Section 4.07. Permitted Withdrawals From the Escrow Account..............59
Section 4.08. Payment of Taxes, Insurance and Charges; Maintenance
of Primary Mortgage Insurance; Collections Thereunder......60
Section 4.09. Transfer of Accounts.......................................61
Section 4.10. Maintenance of Hazard Insurance............................61
Section 4.11. Maintenance of Mortgage Impairment Insurance Policy........62
Section 4.12. Maintenance of Fidelity Bond and Errors and Omissions
Insurance..................................................63
Section 4.13. Title, Management and Disposition of REO Property..........63
Section 4.14. Notification of Maturity Date..............................65
Section 4.15. Establishment of and Deposits to Buydown Account...........66
ARTICLE V PAYMENTS TO THE PURCHASER...........................................67
Section 5.01. Distributions..............................................67
Section 5.02. Statements to the Purchaser................................67
Section 5.03. Monthly Advances by the Seller.............................69
Section 5.04. Liquidation Reports........................................69
ARTICLE VI GENERAL SERVICING PROCEDURES.......................................69
Section 6.01. Assumption Agreements......................................69
Section 6.02. Satisfaction of Mortgages and Release of Mortgage Files....70
Section 6.03. Servicing Compensation.....................................71
Section 6.04. Annual Statement as to Compliance..........................71
Section 6.05. Annual Independent Certified Public Accountants'
Servicing Report...........................................72
Section 6.06. Purchaser's Right to Examine Seller Records................72
Section 6.07. Seller Shall Provide Information as Reasonably Required....73
Section 6.08. Notification of Adjustments................................73
Section 6.09. Compliance with REMIC Provisions...........................73
ARTICLE VII THE SELLER........................................................74
Section 7.01. Indemnification; Third Party Claims........................74
Section 7.02. Merger or Consolidation of the Seller......................74
Section 7.03. Limitation on Liability of the Seller and Others...........75
Section 7.04. Seller Not to Resign.......................................75
Section 7.05. No Transfer of Servicing...................................75
ii
ARTICLE VIII DEFAULT..........................................................76
Section 8.01. Events of Default..........................................76
Section 8.02. Waiver of Defaults.........................................78
ARTICLE IX TERMINATION........................................................78
Section 9.01. Termination................................................78
ARTICLE X RECONSTITUTION OF MORTGAGE LOANS....................................79
Section 10.01. Reconstitution of Mortgage Loans..........................79
ARTICLE XI MISCELLANEOUS PROVISIONS...........................................80
Section 11.01. Successor to the Seller...................................80
Section 11.02. Amendment.................................................81
Section 11.03. Recordation of Agreement..................................81
Section 11.04. Governing Law.............................................82
Section 11.05. Notices...................................................82
Section 11.06. Severability of Provisions................................83
Section 11.07. Exhibits..................................................83
Section 11.08. General Interpretive Principles...........................83
Section 11.09. Reproduction of Documents.................................84
Section 11.10. Confidentiality of Information............................84
Section 11.11. Recordation of Assignments of Mortgage....................84
Section 11.12. Assignment by Purchaser...................................84
Section 11.13. No Partnership............................................85
Section 11.14. Execution; Successors and Assigns.........................85
Section 11.15. Entire Agreement..........................................85
Section 11.16. No Solicitation...........................................85
Section 11.17. Costs.....................................................86
Section 11.18. Protection of Mortgagor Personal Information..............86
EXHIBITS
A-1 Contents of Mortgage File
A-2 Contents of Servicing File
B Form of Custodial Account Letter Agreement
C Form of Escrow Account Letter Agreement
D Form of Assignment, Assumption and Recognition Agreement
E Form of Assignment and Conveyance
iii
F Regulation AB Compliance Addendum
G Seller's Officer's Certificate
H Form of Opinion of Counsel To The Seller and The Servicer
I Security Release Certification
J Form of Indemnification Agreement
K Custodial Agreement
iv
This is a Seller's Purchase, Warranties and Servicing
Agreement, dated as of August 1, 2006, and is executed by and between HSBC Bank
USA, National Association, as purchaser (the "Purchaser"), and Wachovia Mortgage
Corporation, as seller and servicer (in such capacity, the "Seller").
WITNESSETH:
WHEREAS, the Purchaser has heretofore agreed to purchase from
the Seller and the Seller has heretofore agreed to sell to the Purchaser certain
Mortgage Loans, servicing rights retained, from time to time, pursuant to the
terms of a letter agreement by and between the Seller and the Purchaser (the
"Purchase Price and Terms Letter");
WHEREAS, each of the Mortgage Loans 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 related
Mortgage Loan Schedule, which is annexed to the related Assignment and
Conveyance. The Mortgage Loans as described herein shall be delivered in groups
of whole loans (each, a "Mortgage Loan Package") on various dates as provided
herein (each, a "Closing Date"); and
WHEREAS, the Purchaser and the Seller wish to prescribe the
representations and warranties of the Seller with respect to itself, the
Mortgage Loans and the management, servicing and control of the Mortgage Loans
by the Seller.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Purchaser and the
Seller agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following meaning
specified in this Article:
Accepted Servicing Practices: With respect to any Mortgage
Loan, those mortgage servicing practices (including collection procedures) of
prudent mortgage banking institutions which service mortgage loans of the same
type as such Mortgage Loan in the jurisdiction where the related Mortgaged
Property is located, and which are in accordance with ▇▇▇▇▇▇ ▇▇▇ servicing
practices and procedures, for MBS pool mortgages, as defined in the ▇▇▇▇▇▇ Mae
Guides, including future updates the terms of the Mortgage Loan Documents and
all applicable federal, state and local legal and regulatory requirements.
Adjustable Rate Mortgage Loan: A Mortgage Loan as to which the
related Mortgage Note provides that the Mortgage Interest Rate may be adjusted
periodically.
5
Adjustment Date: With respect to each Adjustable Rate Mortgage
Loan, the date set forth in the related Mortgage Note on which the Mortgage
Interest Rate on the Mortgage Loan is adjusted in accordance with the terms of
the 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.
Agency Transfer: The sale or transfer by the Purchaser of
some or all of the Mortgage Loans to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
Agreement: This Seller's Purchase, Warranties and Servicing
Agreement including all exhibits hereto, amendments hereof and supplements
hereto.
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, 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 the originator of such Refinanced Mortgage Loan at the time of
origination of such Refinanced Mortgage Loan by an appraiser who met the
underwriting requirements of the originator.
Assignment and Conveyance: As defined in Section 2.03.
Assignment of Mortgage: An assignment of the Mortgage, notice
of transfer or equivalent instrument in recordable form and in blank, sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect the transfer of the Mortgage.
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 a Sunday,
or (ii) a legal holiday in the States of New York or North Carolina, or (iii) a
day on which banks in the States of New York or North Carolina are authorized or
obligated by law or executive order to be closed.
Buydown Account: An account maintained by the Seller
specifically to hold all Buydown Funds to be applied to individual Buydown
Mortgage Loans.
Buydown Agreement: An agreement between the Seller and a
Mortgagor, or an agreement among the Seller, a Mortgagor and a seller of a
Mortgaged Property or a third party with respect to a Mortgage Loan which
provides for the application of Buydown Funds.
6
Buydown Funds: In respect of any Buydown Mortgage Loan, any
amount contributed by the seller of a Mortgaged Property subject to a Buydown
Mortgage Loan, the buyer of such property, the Seller or any other source, plus
interest earned thereon, in order to enable the Mortgagor to reduce the payments
required to be made from the mortgagor's funds in the early years of a Mortgage
Loan.
Buydown Mortgage Loan: Any Mortgage Loan in respect of which,
pursuant to a Buydown Agreement, (i) the Mortgagor pays less than the full
monthly payments specified in the Mortgage Note for a specified period, and (ii)
the difference between the payments required under such Buydown Agreement and
the Mortgage Note is provided from Buydown Funds.
Buydown Period: The period of time when a Buydown Agreement is
in effect with respect to a related Buydown Mortgage Loan.
Closing Date: The date or dates set forth in the related
Purchase Price and Terms Letter on which the Purchaser from time to time shall
purchase and the Seller from time to time shall sell to the Purchaser, the
Mortgage Loans listed on the related Mortgage Loan Schedule with respect to the
related Mortgage Loan Package.
Closing Documents: With respect to any Closing Date, the
documents required pursuant to Section 2.11.
Code: The Internal Revenue Code of 1986, as the same may be
amended from time to time (or any successor statute thereto).
Combined Loan-to-Value Ratio or 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 of the
Mortgaged Property.
Commission: The United States Securities and Exchange
Commission.
Compensating Interest: For any Remittance Date, the lesser of
(i) the aggregate Servicing Fee payable to the Seller for such Remittance Date
and (ii) the aggregate Prepayment Interest Shortfall for such Remittance Date.
Condemnation Proceeds: All awards, compensation and
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 Adjustable Rate Mortgage Loan
purchased pursuant to this Agreement as to which the related Mortgage Note
permits the Mortgagor to convert the Mortgage Interest Rate on such Mortgage
Loan to a fixed Mortgage Interest Rate.
7
Covered Loan: A Mortgage Loan categorized as Covered pursuant
to Appendix E of Standard & Poor's Glossary.
Credit Score: The credit score for each Mortgage Loan shall be
the minimum of two (2) credit bureau scores obtained at origination or such
other time by the Seller. If two (2) credit bureau scores are obtained, the
Credit Score will be the lower score. If three (3) credit bureau scores are
obtained, the Credit Score will be the middle of the three. When there is more
than one (1) applicant, the lowest of the applicants' Credit Scores will be
used. There is only one (1) score for any loan regardless of the number of
borrowers and/or applicants.
Custodial Account: Each separate demand account or accounts
created and maintained pursuant to Section 4.04 which shall be entitled
"Wachovia Mortgage Corporation, in trust for the Purchaser, owner of various
whole loan series" and shall be established as an Eligible Account, in the name
of the Person that is the "Purchaser" with respect to the related Mortgage
Loans.
Custodial Agreement: The agreement governing the retention of
the originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, annexed hereto as Exhibit K.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodial Agreement, as therein provided.
Cut-off Date: With respect to each Mortgage Loan Package, the
first Business Day of the month of the related Closing Date, or as otherwise set
forth in the related Purchase Price and Terms Letter.
Determination Date: With respect to each Remittance Date, the
15th day (or if such 15th day is not a Business Day, the Business Day
immediately preceding such 15th day) of the month in which such Remittance Date
occurs.
Due Date: With respect to any Mortgage Loan, the day of the
month on which the Monthly Payment is due on such Mortgage Loan, exclusive of
any days of grace.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of such Remittance
Date and ending on, and including the first day of the month of the Remittance
Date.
Eligible Account: Either (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company 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 or is a subsidiary of a holding company that has
an outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated A-1 by S&P or Primare-1 by Moody's (or a comparable
rating is another rating agency is specified by the Initial Purchaser by written
notice to the Seller) 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 the corporate trust
8
department of a federal or state chartered depository institution or trust
company acting in its fiduciary capacity. Eligible Accounts may bear interest.
Eligible Institution: An institution having (i) the highest
short-term debt rating, and one of the two highest long-term debt ratings of the
Rating Agency; or (ii) with respect to any Custodial Account, an unsecured
long-term debt rating of at least one of the two highest unsecured long-term
debt ratings of the Rating Agencies.
Eligible Investments: Any one or more of the following
obligations or securities:
(a) direct obligations of, and obligations fully
guaranteed by the United States of America or any agency or instrumentality of
the United States of America the obligations of which are backed by the full
faith and credit of the United States of America;
(b) (i) demand or time deposits, federal funds or
bankers' acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America or any state thereof
and subject to supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or the short-term deposit
rating and/or the long-term unsecured debt obligations or deposits of such
depository institution or trust company at the time of such investment or
contractual commitment providing for such investment are rated in one of the two
highest rating categories by each Rating Agency and (ii) any other demand or
time deposit or certificate of deposit that is fully insured by the FDIC;
(c) repurchase obligations with a term not to exceed
thirty (30) days and with respect to (i) any security described in clause (a)
above and entered into with a depository institution or trust company (acting as
principal) described in clause (b)(ii) above;
(d) securities bearing interest or old at a discount
issued by any corporation incorporated under the laws of the United States of
America or any state thereof that are rated in one of the two highest rating
categories by each Rating Agency at the time of such investment or contractual
commitment providing for such investment; provided, however, that securities
issued by any particular corporation will not be Eligible Investments to the
extent that investments therein will cause the then outstanding principal amount
of securities issued by such corporation and held as Eligible Investments to
exceed 10% of the aggregate outstanding principal balances of all of the
Mortgage Loans and Eligible Investments;
(e) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one (1) year after the date of issuance thereof)
which are rated in one of the two highest rating categories by each Rating
Agency at the time of such investment;
(f) any other demand, money market or time deposit,
obligation, security or investment as may be acceptable to each Rating Agency as
evidenced in writing by each Rating Agency; and
(g) any money market funds the collateral of which
consists of obligations fully guaranteed by the United States of America or any
agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United
9
States of America (which may include repurchase obligations secured by
collateral described in clause (a)) and other securities and which money market
funds are rated in one of the two highest rating categories by each Rating
Agency.
provided, however, that no instrument or security shall be an Eligible
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par or if such
investment or security is purchased at a price greater than par.
Equity: With respect to any Second Lien Loan, the Appraised
Value, less the unpaid principal balance of the related First Lien Loan.
Equity Loan-to-Value: With respect to any Second Lien Loan,
the original principal balance of such Mortgage Loan, divided by the Equity.
Escrow Account: Each separate trust account or accounts
created and maintained pursuant to Section 4.06 which shall be entitled
"Wachovia Mortgage Corporation, in trust for the Purchaser, as owner of various
whole loan series and various Mortgagors" and shall be established as an
Eligible Account, in the name of the Person that is the "Purchaser" with respect
to the related Mortgage Loans.
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, applicable law or any
other related document.
Event of Default: Any one of the conditions or circumstances
enumerated in Section 8.01.
▇▇▇▇▇▇ ▇▇▇: The entity formerly known as the Federal National
Mortgage Association, or any successor thereto.
▇▇▇▇▇▇ Mae Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the
▇▇▇▇▇▇ Mae Servicers' Guide and all amendments or additions thereto, including,
but not limited to, future updates thereof.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Seller
pursuant to Section 4.12.
Final Recovery Determination: With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
repurchased by the Seller pursuant to this Agreement), a determination made by
the Seller that all Insurance Proceeds, Liquidation Proceeds and other payments
or recoveries which the Seller, in its reasonable good faith judgment, expects
to be finally recoverable in respect thereof have been so recovered. The
10
Seller shall maintain records, prepared by a servicing officer of the Seller,
of each Final Recovery Determination.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended and in effect from time to time.
First Lien Loan: A Mortgage Loan secured by a first lien
Mortgage on the related Mortgaged Property.
First Remittance Date: The eighteenth (18th) day of the month
following each respective Closing Date, or if such day is not a Business Day,
the first Business Day immediately thereafter.
Fixed Rate Mortgage Loan: A Mortgage Loan purchased pursuant
to this Agreement which bears a fixed Mortgage Interest Rate during the life of
the loan.
Flood Zone Service Contract: A transferable contract
maintained for the Mortgaged Property with a nationally recognized flood zone
service provider for the purpose of obtaining the current flood zone status
relating to such Mortgaged Property.
▇▇▇▇▇▇▇ Mac: The entity formerly known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.
▇▇▇▇▇▇▇ Mac Guides: The ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the
▇▇▇▇▇▇▇ Mac Servicers' Guide and all amendments or additions thereto, including,
but not limited to, any future updates thereof.
GAAP: Generally accepted accounting principles, consistently
applied.
Gross Margin: With respect to any Adjustable Rate Mortgage
Loan, the fixed percentage amount set forth in the related Mortgage Note and the
related Mortgage Loan Schedule that is added to the Index on each Adjustment
Date in accordance with the terms of the related Mortgage Note to determine the
new 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," "covered," "high risk home" or "predatory" loan under any 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 or a Covered Loan 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.
11
HUD: The United States Department of Housing and Urban
Development or any successor thereto.
Index: With respect to any Adjustable Rate Mortgage Loan, the
index identified on the Mortgage Loan Schedule and set forth in the related
Mortgage Note for the purpose of calculating the Mortgage Interest Rate thereon.
Initial Closing Date: The Closing Date on which the Initial
Purchaser purchases and the Seller sells the first Mortgage Loan Package
hereunder.
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 only
requires payments of interest for a period of time specified in the related
Mortgage Note.
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.
Liquidation Proceeds: Amounts received in connection with the
partial or complete liquidation of a defaulted Mortgage Loan, whether through
the sale or assignment of such Mortgage Loan, trustee's sale, foreclosure sale
or otherwise, or in connection with the sale of the Mortgaged Property if the
Mortgaged Property is acquired in satisfaction of the Mortgage.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan,
the ratio (expressed as a percentage) of the original outstanding principal
amount of the Mortgage Loan and, with respect to any Second Lien Loan, the
outstanding principal amount of any related First Lien Loan as of the date of
origination of such mortgage loan, 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.
Maximum Mortgage Interest Rate: With respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Mortgage
Loan Schedule and in the related Mortgage Note and is the maximum interest rate
to which the Mortgage Interest Rate on such Mortgage Loan may be increased on
any Adjustment Date.
MERS: Mortgage Electronic Registration Systems, Inc.,
a corporation organized and existing under the laws of the State of Delaware,
or any successor thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on
the MERS System.
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for any MERS Mortgage
Loan.
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Minimum Mortgage Interest Rate: With respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Mortgage
Loan Schedule and in the related Mortgage Note and is the minimum interest rate
to which the Mortgage Interest Rate on such Mortgage Loan may be decreased on
any Adjustment Date.
MOM Loan: Any Mortgage Loan as to which MERS is acting as
mortgagee, solely as nominee for the originator of such Mortgage Loan and its
successors and assigns.
Monthly Advance: The payment required to be made by the
Seller with respect to any Remittance Date pursuant to Section 5.03.
Monthly Payment: The scheduled monthly payment on a Mortgage
Loan due on any Due Date allocable to principal and/or interest on such Mortgage
Loan pursuant to the terms of the related Mortgage Note.
Mortgage: With respect to any Mortgage Loan, the mortgage,
deed of trust or other instrument securing a Mortgage Note which creates a first
or second 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 or second lien upon a
leasehold estate of the Mortgagor.
Mortgage File: With respect to each Mortgage Loan, the
documents pertaining thereto specified in Exhibit A-1 and any additional
documents required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: As to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan in accordance with the
provisions of 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 related 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, any escrow accounts related to the
Mortgage Loan, 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 contained in a
Mortgage File.
Mortgage Loan Package: As defined in the Recitals to this
Agreement.
Mortgage Loan Remittance Rate: With respect to each
Mortgage Loan, the Mortgage Interest Rate less the related Servicing Fee Rate.
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Mortgage Loan Schedule: The schedule of Mortgage Loans annexed
to the related Assignment and Conveyance, each such schedule 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 Mortgaged Property
is owner-occupied, a second home or investment property;
(5) the number of units and type of residential
property constituting the Mortgaged Property (e.g., single family,
two- to four-family, condominium, etc);
(6) the original months to maturity and 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;
(7) the date of the Mortgage Note;
(8) the Loan-to-Value Ratio at origination and as of
the related Cut-off Date;
(9) with respect to any Second Lien Loan, the Equity
Loan-to-Value-Ratio at origination and as of the related Cut-off Date;
(10) with respect to any Second Lien Loan, the Combined
Loan-to-Value Ratio at origination and as of the related Cut-off Date;
(11) the Mortgage Interest Rate at origination and as of
the related Cut-off Date;
(12) the Mortgage Loan origination date;
(13) the last payment date on which a Monthly Payment
was actually applied to pay interest and the outstanding principal
balance;
(14) the stated maturity date of the Mortgage Loan and
of the First Lien Loan, if applicable;
(15) the amount of the Monthly Payment (PITI or ITI, as
applicable) as of the related Cut-off Date;
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(16) the original principal amount of the Mortgage Loan
and the principal balance of the related First Lien Loan, if
applicable, as of the date of origination;
(17) a code indicating the purpose of the Mortgage Loan
(i.e., purchase, rate and term refinance, equity take-out refinance);
(18) a code indicating the documentation style;
(19) the date on which the first Monthly Payment is due;
(20) a code indicating whether or not the Mortgage
Loan is insured as to payment defaults by a Primary Mortgage Insurance
Policy; and, in the case of any Mortgage Loan which is insured as to
payment defaults by a Primary Mortgage Insurance Policy, the name of
the provider of such Primary Mortgage Insurance Policy, the Primary
Mortgage Insurance Policy certificate number and the Primary Mortgage
Insurance Policy coverage percentage;
(21) a code indicating whether or not the Mortgage Loan
is the subject of a Prepayment Penalty, and if so, a description of and
the terms of such Prepayment Penalty;
(22) a code indicating the Credit Score of the Mortgagor
at the time of origination of the Mortgage Loan;
(23) the loan type (i.e. fixed, adjustable; 2/28, 3/27,
5/25, etc.);
(24) with respect to each Adjustable Rate Mortgage Loan,
the first Adjustment Date and the Adjustment Date frequency;
(25) with respect to each Adjustable Rate Mortgage Loan,
the Gross Margin;
(26) with respect to each Adjustable Rate Mortgage Loan,
the Maximum Mortgage Interest Rate under the terms of the Mortgage
Note;
(27) with respect to each Adjustable Rate Mortgage Loan,
the Minimum Mortgage Interest Rate under the terms of the Mortgage
Note;
(28) with respect to each Adjustable Rate Mortgage Loan,
the Periodic Rate Cap;
(29) with respect to each Adjustable Rate Mortgage Loan,
the Index;
(30) with respect to each Adjustable Rate Mortgage Loan,
the lookback (# of days) under the terms of the Mortgage Note;
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(31) a code indicating whether the Mortgage Loan is a
Second Lien Loan;
(32) MIN, if applicable;
(33) a code indicating whether the Mortgage Loan is an
Interest Only Mortgage Loan and the term of the interest-only period;
(34) the Due Date for the first Monthly Payment;
(35) with respect to the related Mortgagor,
the debt-to-income ratio;
(36) the Appraised Value of the Mortgaged Property;
(37) the sales price of the Mortgaged Property if the
Mortgage Loan was originated in connection with the purchase of the
Mortgaged Property;
(38) with respect to each Mortgage Loan that was
originated six (6) or more months prior to the related Closing Date,
the amount of the Monthly Payment at origination;
(39) a code indicating if the Mortgage Loan is a Balloon
Mortgage Loan and the term of the Balloon Loan;
(40) the total monthly income for all Mortgagors;
(41) a code indicating whether the Mortgagor is a first
time home buyer;
(42) the race/ethnicity and gender of each Mortgagor and
Co-Mortgagor;
(43) the date of birth of each Mortgagor and
co-Mortgagor; and
(44) a code indicating if the Mortgage Loan is a
Negative Amoritization Mortgage Loan.
With respect to the Mortgage Loans in the aggregate in each
Mortgage Loan Package, the Mortgage Loan Schedule shall set forth the following
information, as of the related Cut-off Date unless otherwise specified:
(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;
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(4) the weighted average original months to maturity
of the Mortgage Loans and the weighted average remaining months to
maturity of the Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
Mortgaged Property: With respect to any Mortgage Loan, the
underlying real property securing repayment of the related Mortgage Note,
consisting of a fee simple parcel of real estate or a leasehold estate, the term
of which is equal to or longer than the term of such Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Mortgagor Personal Information: Any information, including,
but not limited to, all personal information about a Mortgagor that is disclosed
to the Seller or the Purchaser by or on behalf of the Mortgagor.
Negative Amortization: With respect to each Negative
Amortization Mortgage Loan, that portion of interest accrued at the Mortgage
Interest Rate in any month that exceeds the Monthly Payment on the related
Mortgage Loan for such month and which, pursuant to the terms of the Mortgage
Note, is added to the principal balance of the Mortgage Loan.
Negative Amortization Mortgage Loan: Each Mortgage Loan that
is identified on the Mortgage Loan Schedule as a Mortgage Loan that may be
subject to Negative Amortization.
OCC: Office of the Comptroller of the Currency, its successors
and assigns.
Officers' Certificate: A certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, a Senior Vice
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
an employee of the party on behalf of whom the opinion is being given,
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 or in an Affiliate of either and (iii) is not connected
with the Seller or any servicer as an officer, employee, director or person
performing similar functions.
OTS: Office of Thrift Supervision or any successor thereto.
Pass-Through Transfer: As defined in Section 10.01(a)(iii).
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Periodic Rate Cap: With respect to each Adjustable Rate
Mortgage Loan and any Adjustment Date therefor, a number of percentage points
per annum that is set forth in the related Mortgage Loan Schedule and in the
related Mortgage Note, which is the maximum amount by which the Mortgage
Interest Rate for such Mortgage Loan may increase (without regard to the Maximum
Mortgage Interest Rate) or decrease (without regard to the Minimum Mortgage
Interest Rate) on such Adjustment Date from the Mortgage Interest Rate in effect
immediately prior to such Adjustment Date, which may be a different amount with
respect to the first Adjustment Date.
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.
Premium Percentage: With respect to any Mortgage Loan, a
percentage equal to the excess of the Purchase Price Percentage over 100%.
Prepayment Interest Shortfall: As to any Remittance Date and
Principal Prepayment in full, the difference between (i) one (1) full month's
interest at the applicable Mortgage Interest Rate (after giving effect to any
applicable relief act reduction, debt service reduction and deficient
valuation), as reduced by the Servicing Fee Rate, on the outstanding principal
balance of the related Mortgage Loan immediately prior to such Principal
Prepayment and (ii) the amount of interest actually received with respect to
such Mortgage Loan in connection with such Principal Prepayment.
Prepayment Penalty: With respect to each Mortgage Loan, the
amount of any premium or penalty required to be paid by the Mortgagor if the
Mortgagor prepays such Mortgage Loan as provided in the related Mortgage Note or
Mortgage.
Primary Mortgage Insurance Policy: Each policy of primary
mortgage insurance represented to be in effect pursuant to Section 3.02(bb), or
any replacement policy therefor obtained by the Seller pursuant to Section 4.08.
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 full or partial 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: As defined in Section 2.02.
Purchase Price and Terms Letter: As defined in the
Recitals to this Agreement which may also be a form of trade execution notice.
Purchase Price Percentage: The purchase price percentage used
in calculating the Purchase Price, as set forth in the related Purchase Price
and Terms Letter.
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Purchaser: HSBC Bank USA, National Association, its
successors in interest and assigns.
Qualified Appraiser: With respect to each Mortgage Loan, 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 is not affected by the approval or disapproval of the Mortgage
Loan, and such appraiser and the appraisal made by such appraiser both satisfy
the requirements of ▇▇▇▇▇▇ ▇▇▇ and Title XI of FIRREA 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 by the insurance policy issued by
it, approved as an insurer by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
Rating Agencies: Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇- ▇▇▇▇ Companies, Inc., ▇▇▇▇▇'▇ Investors Service, Inc.
or, in the event that some or all ownership of the Mortgage Loans is evidenced
by mortgage-backed securities, the nationally recognized rating agencies issuing
ratings with respect to such securities, if any.
Reconstitution: Any Pass-Through Transfer or Whole Loan
Transfer.
Reconstitution Agreement: 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
serviced hereunder, in connection with a Whole Loan Transfer or a Pass-Through
Transfer as provided in Section 10.
Reconstitution Date: The date or dates on which any or all of
the Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of a Whole Loan Transfer or Pass-Through
Transfer pursuant to Section 10 hereof.
Record Date: With respect to each Remittance Date, the last
Business Day of the month immediately preceding the month in which such
Remittance Date occurs.
Refinanced Mortgage Loan: A Mortgage Loan which was made to a
Mortgagor who owned the Mortgaged Property prior to the origination of such
Mortgage Loan and the proceeds of which were used in whole or part to satisfy an
existing mortgage.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ssss229.1100-229.1123, 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.
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Remittance Date: The 18th day of each month, beginning with
the First Remittance Date, or if such day is not a Business Day, the first
Business Day thereafter.
REO Account: The separate trust account or accounts created
and maintained pursuant to this Agreement which shall be entitled "Wachovia
Mortgage Corporation, in trust for the Purchaser, as of [date of acquisition of
title], Fixed and Adjustable Rate Mortgage Loans".
REO Disposition: The final sale by the Seller of any REO
Property.
REO Disposition Proceeds: Amounts received by the Seller in
connection with an REO Disposition.
REO Property: A Mortgaged Property acquired by or on behalf of
the Purchaser in full or partial satisfaction of the related Mortgage as
described in Section 4.13.
Repurchase Price: With respect to any Mortgage Loan, a price
equal to the then outstanding principal balance of the Mortgage Loan to be
repurchased, plus accrued interest thereon at the Mortgage Interest Rate from
the date to which interest had last been paid through the date of such
repurchase, plus the amount of any outstanding advances owed to any servicer,
and plus all costs and expenses incurred by the Purchaser or any servicer
arising out of or based upon such breach, including without limitation costs and
expenses incurred in the enforcement of the Seller's repurchase obligation
hereunder, and plus, in the event a Mortgage Loan is repurchased during the
first twelve (12) months following the related Closing Date and has not been
placed in a Pass-Through Transfer, an amount equal to the Premium Percentage
multiplied by the outstanding principal balance of such Mortgage Loan as of the
date of such repurchase.
RESPA: Real Estate Settlement Procedures Act, as amended from
time to time.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
Scheduled Principal Balance: As to each Mortgage Loan and any
date of determination, (i) the principal balance of such Mortgage Loan as of the
related 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
distributed to the Purchaser with respect to the Mortgage Loan representing
payments or recoveries of principal (or advances in lieu thereof).
Second Lien Loan: A Mortgage Loan secured by a second lien
Mortgage on the related Mortgaged Property.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Seller of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of a Mortgaged Property, (b) any enforcement,
administrative or judicial proceedings, or any legal work or advice specifically
related to servicing the Mortgage Loans, including but not limited to,
foreclosures, bankruptcies, condemnations, drug seizures, elections,
foreclosures by subordinate or superior lienholders, and other legal actions
incidental to the servicing of the Mortgage Loans (provided that such expenses
are reasonable and that the Seller specifies the Mortgage Loan(s) to which such
20
expenses relate, and provided further that any such enforcement, administrative
or judicial proceeding does not arise out of a breach of any representation,
warranty or covenant of the Seller hereunder), (c) the management and
liquidation of any REO Property, (d) taxes, assessments, water rates, sewer
rates and other charges which are or may become a lien upon the Mortgaged
Property, and Primary Mortgage Insurance Policy premiums and fire and hazard
insurance coverage, (e) any expenses reasonably sustained by the Seller with
respect to the liquidation of the Mortgaged Property in accordance with the
terms of this Agreement and (f) compliance with the obligations under Section
4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount
of the annual fee the Purchaser shall pay to the Seller for servicing the
Mortgage Loans in accordance with the terms of this Agreement, which shall, for
each month, be equal to one-twelfth of the product of (i) the Servicing Fee Rate
and (ii) the Scheduled 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 Seller 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 Section 4.05) of related Monthly
Payments collected by the Seller, or as otherwise provided under Section 4.05.
Servicing Fee Rate: The per annum rate at which the Servicing
Fee accrues, which rate with respect to each Mortgage Loan shall be as set forth
in the related Purchase Price and Terms Letter.
Servicing File: With respect to each Mortgage Loan, the
documents pertaining thereto specified in Exhibit A-2 and copies of all
documents for such Mortgage Loan specified in Exhibit A-1.
Servicing Officer: Any officer of the Seller involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Seller to the
Purchaser upon request, as such list may from time to time be amended.
Standard & Poor's: Standard & Poor's Rating Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies Inc., and its successors in interest.
Standard & Poor's Glossary: The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
Tax Service Contract: A transferable contract maintained for
the Mortgaged Property with a tax service provider for the purpose of obtaining
current information from local taxing authorities relating to such Mortgaged
Property.
Underwriting Standards: As to each Mortgage Loan, the Seller's
underwriting guidelines in effect as of the date of origination of such Mortgage
Loan.
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Whole Loan Transfer: As defined in Section 10.01(a)(i).
ARTICLE II
SERVICING OF MORTGAGE LOANS; RECORD TITLE AND POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01. Agreement to Purchase.
The Seller agrees to sell and the Purchaser agrees to purchase
on each Closing Date, pursuant to this Agreement and the related Purchase Price
and Terms Letter, the Mortgage Loans being sold by the Seller and listed on the
related Mortgage Loan Schedule, servicing rights retained, having an aggregate
Scheduled Principal Balance in an amount as set forth in the related Purchase
Price and Terms Letter, 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 such Closing Date. The Seller shall
deliver in an electronic format the Mortgage Loan Schedule for the Mortgage
Loans to be purchased on such Closing Date to the Purchaser at least two (2)
Business Days prior to such Closing Date.
Section 2.02. Purchase Price.
The Purchase Price for the Mortgage Loans in a Mortgage Loan
Package shall be equal to the sum of (a) the percentage of par as stated in the
related Purchase Price and Terms Letter (subject to adjustment as provided
therein), multiplied by the aggregate Scheduled Principal Balance of Mortgage
Loans as of the related Cut-off Date listed on the related Mortgage Loan
Schedule plus (b) accrued interest on the aggregate Scheduled Principal Balance
as of the related Cut-off Date of the related Mortgage Loans at the weighted
average Mortgage Loan Remittance Rate of such Mortgage Loans from the related
Cut-off Date to but not including such Closing Date (the "Purchase Price"). If
so provided in the related Purchase Price and Terms Letter, portions of each
Mortgage Loan Package shall be priced separately.
The Purchase Price as set forth in the preceding paragraph for
the Mortgage Loans in a Mortgage Loan Package shall be paid on the related
Closing Date by wire transfer of immediately available funds.
With respect to each Mortgage Loan, the Purchaser shall be
entitled to (1) the principal portion of all Monthly Payments due after the
related Cut-off Date, (2) all other recoveries of principal and any Prepayment
Penalties collected on or after the related Cut-off Date (provided, however,
that the principal portion of all Monthly Payments and any Prepayment Penalties
due on or before the related Cut-off Date and collected by the Seller or any
successor servicer after the related Cut-off Date shall belong to the Seller),
and (3) all payments of interest on the Mortgage Loans at the related Mortgage
Loan Remittance Rate (minus that portion of any such payment which is allocable
to the period prior to the related Cut-off Date). The Scheduled 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
whether or not collected, together with any unscheduled Principal Prepayments
collected prior to the related Cut-off Date; provided, however, that Monthly
Payments for a Due Date beyond the related Cut-
22
off Date shall not be applied to the principal balance as of the related Cut-off
Date. Such Monthly Payments shall be the property of the Purchaser. The Seller
shall deposit any such Monthly Payments into the Custodial Account for
remittance by the Seller to the Purchaser on the first related Remittance Date.
Section 2.03. Servicing of Mortgage Loans.
On each Closing Date, the Mortgage Loans in the related
Mortgage Loan Package will be sold by the Seller to the Purchaser on a servicing
retained basis upon the execution and delivery of an Assignment and Conveyance
in the form attached hereto as Exhibit E (the "Assignment and Conveyance").
Simultaneously with the execution and delivery of the related
Assignment and Conveyance, for each Mortgage Loan Package, the Seller hereby
agrees to service the Mortgage Loans listed on the Mortgage Loan Schedule in
accordance with Accepted Servicing Practices and this Agreement. The rights of
the Purchaser to receive payments with respect to the related Mortgage Loans
shall be as set forth in this Agreement.
Section 2.04. Examination of Mortgage Files.
In addition to the rights granted to the Purchaser under the
related Purchase Price and Terms Letter to underwrite the Mortgage Loans and
review the Mortgage Files prior to the Closing Date, the Seller shall, at the
Purchaser's option prior to the related Closing Date (a) deliver to the
Custodian in escrow, for examination with respect to each Mortgage Loan to be
purchased on such Closing Date, the related Mortgage File, including the
Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) make the
related Mortgage File available to the Purchaser for examination at the Seller's
offices or such other location as shall otherwise be agreed upon by the
Purchaser and the Seller. 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
identifies any Mortgage Loans that do not conform to the terms of the related
Purchase Price and Terms Letter or the Underwriting Standards, such Mortgage
Loans may, at the Purchaser's option, be rejected for purchase by the Purchaser.
If not purchased by the Purchaser, such Mortgage Loans shall be deleted from the
related Mortgage Loan Schedule. The Purchaser may, at its option and without
notice to the Seller, purchase all or part of any Mortgage Loan Package without
conducting any partial or complete examination. The fact that the Purchaser has
conducted or has determined not to conduct any partial or complete examination
of the Mortgage Files shall not affect the Purchaser's (or any of its
successors') rights to demand repurchase or other relief or remedy provided for
in this Agreement.
Section 2.05. Record Title and Possession of Mortgage Files;
Maintenance of Servicing Files.
As of each Closing Date, the Seller will have
sold, transferred, assigned, set over and conveyed to the Purchaser, without
recourse, and the Seller hereby acknowledges that the Purchaser will have,
all the right, title and interest of the Seller in and to the
Mortgage Loans. In accordance with Section 2.07, the Seller
shall deliver at its own expense, the Mortgage Files for
23
the related Mortgage Loans to Purchaser or its designee. The possession
of each Servicing File by the Seller is for the sole purpose of servicing
the related Mortgage Loan. From each Closing Date, the ownership of each
related Mortgage Loan, including the Mortgage Note, the Mortgage, the contents
of the related Mortgage File and all rights, benefits, proceeds and obligations
arising therefrom or in connection therewith, has been vested in the Purchaser.
All rights arising out of the Mortgage Loans including, but not limited to,
all funds received on or in connection with the Mortgage Loans and all records
or documents with respect to the Mortgage Loans prepared by or which come into
the possession of the Seller shall be received and held by the Seller in trust
for the benefit of the Purchaser as the owner of the Mortgage Loans. Any
portion of the Mortgage Files retained by the Seller shall be appropriately
identified in the Seller's computer system to clearly reflect the ownership of
the Mortgage Loans by the Purchaser.
In addition, in connection with the assignment of any MERS
Mortgage Loan, the Seller agrees that it will cause, at its own expense, the
MERS(R) System to indicate that such Mortgage Loans have been assigned by the
Seller to the Purchaser in accordance with this Agreement by including (or
deleting, in the case of Mortgage Loans which are repurchased in accordance with
this Agreement) in such computer files the information required by the MERS(R)
System to identify the Purchaser of such Mortgage Loans. The Seller further
agrees that it will not alter the information referenced in this paragraph with
respect to any Mortgage Loan during the term of this Agreement unless and until
such Mortgage Loan is repurchased in accordance with the terms of this
Agreement.
Section 2.06. Books and Records.
The sale of each Mortgage Loan will be reflected on the
Seller's balance sheet and other financial statements as a sale of assets by the
Seller and will be reflected on the Purchaser's balance sheet and other
financial statements as a purchase by the Purchaser. The Seller shall maintain,
a complete set of books and records for the Mortgage Loans sold by it which
shall be appropriately identified in the Seller's computer system to clearly
reflect the ownership of the Mortgage Loans by the Purchaser. In particular, the
Seller shall maintain in its possession, available for inspection by the
Purchaser, or its designee and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, and requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, as applicable,
including but not limited to documentation as to the method used in determining
the applicability of the provisions of the Flood Disaster Protection Act of
1973, as amended, to the Mortgaged Property, documentation evidencing insurance
coverage and eligibility of any condominium project for approval by Seller and
periodic inspection reports as required by Section 4.13. 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 or such other reliable means of recreating
original documents, including but not limited to, optical imagery techniques so
long as the Seller complies with the requirements of the ▇▇▇▇▇▇ Mae Guides.
Section 2.07. Transfer of Mortgage Loans.
The Seller shall keep at its office books and
records in which, subject to such reasonable regulations as it may
prescribe, the Seller shall note transfers of Mortgage Loans. No
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transfer of a Mortgage Loan may be made unless such transfer is in compliance
with the terms of Section 11.12. For the purposes of this Agreement, the Seller
shall be under no obligation to deal with any person with respect to this
Agreement or any Mortgage Loan unless a properly executed Assignment, Assumption
and Recognition Agreement in the form of Exhibit D with respect to such Mortgage
Loan has been delivered to the Seller; provided, that, unless otherwise provided
in the related Purchase Price and Terms Letter, in no event shall there be more
than three (3) "Purchasers" pursuant to any Whole Loan Transfers or three (3)
"Purchasers" pursuant to Pass-Through Transfers with respect to any Mortgage
Loan Package. Upon receipt of notice of the transfer, the Seller shall ▇▇▇▇
its books and records to reflect the ownership of the Mortgage Loans by such
assignee, and, except as otherwise provided herein, the previous Purchaser
shall be released from its obligations hereunder with respect to the Mortgage
Loans sold or transferred.
Section 2.08. Delivery of Mortgage Loan Documents.
The Seller shall deliver and release to the Purchaser or its
designee the Mortgage Loan Documents no later than two (2) Business Days prior
to the related Closing Date pursuant to a bailee letter agreement. If the Seller
cannot deliver the original recorded Mortgage Loan Documents within two (2)
Business Days of the related Closing Date. The Seller shall provide the
Purchaser, or its designee, with a copy, certified by the Seller, to be a true
and complete copy of any original document submitted for recordation on or
before the second Business Day prior to the related Closing Date. The Seller
shall, promptly upon receipt thereof and in any case not later than 270 days
from the related Closing Date, deliver such original recorded documents to the
Purchaser or its designee (unless the Seller is delayed in making such delivery
by reason of the fact that such documents shall not have been returned by the
appropriate recording office). If delivery is not completed within 270 days of
the related Closing Date solely because such documents shall not have been
returned by the appropriate recording office, the Seller shall 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 document has been accepted for recording and shall use its
best efforts to deliver such document within twelve (12) months of the related
Closing Date.
No later than three (3) days prior to the related Closing
Date, the Seller shall provide a copy of the commitment for title insurance to
the Purchaser or its designee.
Any review by the Purchaser or its designee of the Mortgage
Files shall in no way alter or reduce the Seller's obligations hereunder.
To the extent received by it, the Seller shall forward to the
Custodian, 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 Seller shall provide the Purchaser, or its designee, with a copy,
certified by the Seller as a true copy, of any such document submitted for
recordation within two (2) weeks after 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 two (2) weeks of its return from the
appropriate public recording office.
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In the event the Seller does not comply with the delivery
requirements set forth in this Section 2.08 and such noncompliance materially
and adversely affects the Purchaser's interest in the Mortgage Loan, the
Purchaser shall notify the Seller of such noncompliance, and the Seller shall
correct or cure the related omission or defect within thirty (30) days of the
receipt of such notice. If the Seller does not correct or cure such material and
adverse omission or defect within such period, then the Seller shall repurchase
such Mortgage Loan from the Purchaser within ten (10) Business Days after the
expiration of such thirty (30) day period at the Repurchase Price.
Section 2.09. 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
must be capable of evaluating and monitoring the overall quality of its loan
production and servicing activities. The program is to ensure that the Mortgage
Loans are originated and serviced in accordance with Accepted Servicing
Practices 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 2.10. Closing.
The closing for the purchase and sale of the Mortgage Loans
shall take place on the related Closing Date. The 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 the
related Closing Date shall be subject to each of the following conditions:
(a) at least two (2) Business Days prior to the related
Closing Date, the Seller shall deliver to the Purchaser a magnetic diskette,
or transmit by modem or e-mail, a listing on a loan-level basis of the
information contained in the Mortgage Loan Schedule;
(b) all of the representations and warranties of the Seller
under this Agreement shall be materially true and correct as of the related
Closing Date or, with respect to representations and warranties made as of
a date other than the related Closing Date, as of such date, and no event shall
have occurred which, with notice or the passage of time, would constitute a
material default under this Agreement;
(c) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all Closing Documents as specified in
Section 2.11, 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;
(d) the Seller shall have delivered and released to the
Custodian on or prior to the related Closing Date all documents required to be
delivered and released pursuant to the terms of this Agreement; and
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(e) all other terms and conditions of this Agreement, the
related Purchase Price and Terms Letter and the related Assignment and
Conveyance shall have been materially complied with.
Subject to the foregoing conditions, the Purchaser shall pay
to the Seller on the related Closing Date the Purchase Price pursuant to Section
2.02 of this Agreement, by wire transfer of immediately available funds to the
account designated by the Seller.
Section 2.11. Closing Documents.
(a) On or before the Initial Closing Date, the Seller shall
submit to the Purchaser fully executed originals of the following documents:
(1) this Agreement, in four counterparts;
(2) a Custodial Account Letter Agreement in the form
attached as Exhibit B hereto;
(3) as Escrow Account Letter Agreement in the form
attached as Exhibit C hereto;
(4) a Seller's Officer's Certificate, in the form
of Exhibit G hereto, including all attachments hereto;
(5) an Opinion of Counsel to the Seller, substantially
in the form of Exhibit H hereto; and
(6) the Underwriting Standards.
(b) 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) the related Purchase Price and Terms Letter;
(2) the related Mortgage Loan Schedule;
(3) a Custodian's Trust Receipt and Initial
Certification, as required under the Custodial Agreement, in a form
acceptable to the Purchaser;
(4) a Security Release Certification, in the form of
Exhibit I hereto executed by any Person, as requested by the Purchaser,
if any of the Mortgage Loans has at any time been subject to any
security interest, pledge or hypothecation for the benefit of such
Person;
(5) 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;
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(6) any modifications, amendments or supplements to
the Underwriting Standards following the Initial Closing Date; and
(7) an Assignment and Conveyance in the form of Exhibit
E hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER; REPURCHASE;
REVIEW OF MORTGAGE LOANS
Section 3.01. Representations and Warranties of the Seller.
The Seller represents, warrants and covenants to the Purchaser
and to any subsequent Purchaser that as of each Closing Date or as of such date
specifically provided herein:
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all licenses and approvals necessary to carry out its
business as now being conducted, and is licensed and qualified to transact
business in and is in good standing under the laws of each state in which any
Mortgaged Property is located or is otherwise exempt under applicable law from
such licensing or qualification or is otherwise not required under applicable
law to effect such licensing or qualification and no demand for such licensing
or qualification has been made upon the Seller by any such state, 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 each Mortgage Loan and the servicing
of the Mortgage Loans in accordance with the terms of this Agreement. No
licenses or approvals obtained by the Seller are currently suspended by any
court, administrative agency, arbitrator or governmental body and no proceedings
are pending which might result in such suspension;
(b) The Seller has the full corporate power and authority
and legal right to hold, transfer and convey each Mortgage Loan, to sell each
Mortgage Loan and to execute, deliver and perform, and to enter into and
consummate all transactions contemplated by this Agreement, the related Purchase
Price and Terms Letter and the related Assignment and Conveyance and to conduct
its business as presently conducted; the Seller has duly authorized the
execution, delivery and performance of this Agreement and any agreements
contemplated hereby, has duly executed and delivered this Agreement, the related
Purchase Price and Terms Letter and the related Assignment and Conveyance, and
any agreements contemplated hereby, and this Agreement, the related Purchase
Price and Terms Letter, the related Assignment and Conveyance and each
Assignment of Mortgage to the Purchaser and any agreements contemplated hereby,
constitute the legal, valid and binding obligations of the Seller, enforceable
against it in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and similar laws, and by equitable principles affecting the
enforceability of the rights of creditors; and all requisite corporate action
has been taken by the Seller to make this Agreement, the related Purchase Price
and Terms Letter, the related Assignment and Conveyance and all agreements
contemplated hereby valid and binding upon the Seller in accordance with their
respective terms;
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(c) None of the execution and delivery of this Agreement,
the related Purchase Price and Terms Letter, the related Assignment and
Conveyance, the sale of the Mortgage Loans to the Purchaser, the consummation
of the transactions contemplated hereby, or the fulfillment of or compliance
with the terms and conditions of this Agreement, the related Purchase Price and
Terms Letter or the related Assignment and Conveyance will conflict with any
of the terms, conditions or provisions of the Seller's charter or by-laws
or materially conflict with or result in a material breach of any of the terms,
conditions or provisions of any legal restriction or any material 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 material violation of any law, rule, regulation, order,
judgment or decree to which the Seller or its property is subject;
(d) There is no litigation, suit, proceeding or
investigation pending or, to the Seller's knowledge, threatened, or any order
or decree outstanding, which is reasonably likely to have a material adverse
effect on the sale of the Mortgage Loans, the execution, delivery, performance
or enforceability of this Agreement, the related Purchase Price and Terms
Letter or the related Assignment and Conveyance, or which is reasonably
likely to have a material adverse effect on the financial condition of the
Seller;
(e) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery
and performance by the Seller of or compliance by the Seller with this
Agreement, the related Purchase Price and Terms Letter and the related
Assignment and Conveyance, except for consents, approvals, authorizations and
orders which have been obtained;
(f) The consummation of the transactions contemplated by
this Agreement, the related Purchase Price and Terms Letter and the related
Assignment and Conveyance 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, the related Purchase
Price and Terms Letter and the related Assignment and Conveyance are not
subject to bulk transfer or any similar statutory provisions in effect in
any applicable jurisdiction;
(g) The Seller has not used selection procedures that
identified the Mortgage Loans as being less desirable or valuable than other
comparable mortgage loans in the Seller's portfolio at the Cut-off Date;
(h) The Seller will treat the sale of the Mortgage Loans to
the Purchaser as a sale for reporting and accounting purposes and, to the extent
appropriate, for federal income tax purposes;
(i) The Seller is an approved seller/servicer of residential
mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and HUD, with such facilities,
procedures and personnel necessary for the sound servicing of such mortgage
loans. The Seller is duly qualified, licensed, registered and otherwise
authorized under all applicable federal, state and local laws and regulations,
meets the minimum capital requirements, if applicable, set forth by the OCC,
and is in good standing to sell mortgage loans to and service mortgage loans for
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and no event
29
has occurred which would make the Seller unable to comply with eligibility
requirements or which would require notification to either ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇
Mac;
(j) The Seller does not believe, nor does it have any
cause or reason to believe, that it cannot perform each and every covenant
contained in this Agreement and the related Purchase Price and Terms Letter.
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 the Seller's creditors;
(k) Neither this Agreement nor any information, statement,
tape, diskette, form, report, 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 Pass-Through 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;
(l) 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;
(m) The Seller acknowledges and agrees that the
consideration received by it upon the sale of the Mortgage Loans constitutes
fair consideration and reasonably equivalent value for such Mortgage Loans;
(n) The Seller has delivered to the Purchaser financial
statements as to its last two (2) complete fiscal years for which financial
statements are available. 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 GAAP
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 related Purchase
Price and Terms Letter or the related Assignment and Conveyance;
(o) 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; and
(p) The Seller is a member of MERS in good standing, and
will comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the MERS Mortgage Loans for as long as such
Mortgage Loans are registered with MERS.
Section 3.02. Representations and Warranties as to Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser and
any subsequent Purchaser, as to each Mortgage Loan, as of the related Closing
Date as follows:
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(a) The information set forth in the Mortgage Loan Schedule,
including any diskette or other related data tapes delivered to the Purchaser,
is complete, true and correct;
(b) With respect to a First Lien Loan, the Mortgage creates
a first lien or a first priority ownership interest in an estate in fee simple
in real property securing the related Mortgage Note; (c) With respect to a
Second Lien Loan, the Mortgage creates a second lien or a second priority
ownership interest in an estate in fee simple in real property securing the
related Mortgage Note;
(d) All payments due on or prior to the related Cut-off Date
for such Mortgage Loan have been made as of the related Closing Date, the
Mortgage Loan is not delinquent thirty (30) days or more in payment and has not
been dishonored; there are no material defaults under the terms of the Mortgage
Loan; the Seller has not advanced funds, or induced, solicited or knowingly
received any advance of funds from a party other than the owner of the
Mortgaged Property subject to the Mortgage, directly or indirectly, for
the payment of any amount required by the Mortgage Loan; as to each Mortgage
Loan, there has been no more than one thirty (30) day delinquency during
the immediately preceding twelve-month period;
(e) 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 escrow funds have been
established in an amount sufficient to pay for every such escrowed item which
remains unpaid and which has been assessed but is not yet due and payable;
(f) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by written
instruments which have been recorded to the extent any such recordation is
required by law, or, necessary to protect the lien priority of the mortgage,
and which have been delivered to the Custodian. No instrument of waiver,
alteration or modification has been executed in connection with such Mortgage
Loan, and no Mortgagor has been released, in whole or in part, from the terms
thereof except in connection with an assumption agreement and which assumption
agreement is part of the Mortgage File 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 issuer of any related Primary Mortgage
Insurance Policy and title insurance policy, to the extent required by the
related policies;
(g) The Mortgage Note and the Mortgage are 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 the Mortgage Note or Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense, including
the defense of usury, and no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto. Each Prepayment Penalty
with respect to any Mortgage Loan is permissible, enforceable and collectible
under applicable federal, state and local law;
31
(h) All buildings or other customarily insured improvements
upon the Mortgaged Property are insured by an insurer acceptable under the
▇▇▇▇▇▇ Mae Guides, 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 4.10 of this
Agreement. All such standard hazard policies are in full force and effect and on
the date of origination contained a standard mortgagee clause naming the Seller
and its successors in interest and assigns as loss payee and such clause is
still in effect and all premiums due thereon have been paid. If required
by the Flood Disaster Protection Act of 1973, as amended, the Mortgage Loan
is covered by a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration which policy conforms to
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac requirements, as well as all additional requirements
set forth in Section 4.10 of this Agreement. Such policy was issued by an
insurer acceptable under ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac guidelines. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(i) 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,
fair housing or disclosure laws and all predatory and abusive lending laws
applicable to the origination and servicing of Mortgage Loans of a type similar
to the Mortgage Loans and applicable to any Prepayment Penalty associated with
the Mortgage Loan at origination, have been complied with in all material
respects and the Seller shall deliver to the Purchaser, upon request, evidence
of compliance with all such requirements;
(j) The Mortgage has not been satisfied, canceled or
subordinated, in whole or in part, or rescinded, 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;
(k) With respect to any First Lien Loan, the related
Mortgage is a valid, subsisting, enforceable and perfected first lien on the
Mortgaged Property and, with respect to any Second Lien Loan, the related
Mortgage is a valid, subsisting, enforceable and perfected second lien on the
Mortgaged Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems affixed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing securing the
Mortgage Note's original principal balance. The Mortgage and the Mortgage Note
do not contain any evidence of any security interest or other interest or right
thereto. Such lien is free and clear of all adverse claims, liens and
encumbrances having priority over the first or second lien, as applicable,
of the Mortgage subject only to (1) with respect to any Second Lien Loan, the
related First Lien Loan, (2) the lien of non-delinquent 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 which are acceptable to mortgage lending
institutions generally and either (a) which
32
are 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 as 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 (1) with
respect to any First Lien Loan, a valid, subsisting, enforceable and perfected
first lien and first priority security interest and (2) with respect to any
Second Lien Loan, a valid, subsisting, enforceable and perfected second lien
and second priority security interest, in each case, on the property described
therein, and the Seller has the full right to sell and assign the same to the
Purchaser;
(l) The Mortgage Note and the related Mortgage are original
and genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in all respects in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization and other laws of general application affecting the rights of
creditors generally and the equitable remedy of specific performance and by
general equitable principles. All parties to the Mortgage Note and the related
Mortgage had the legal capacity to enter into the Mortgage Loan and to execute
and deliver the Mortgage Note and the related Mortgage. The Mortgage Note
and the related Mortgage have been duly and properly executed by such parties.
No fraud, error, omission, misrepresentation, negligence or similar occurrence
with respect to a Mortgage Loan has taken place on the part of Seller or the
Mortgagor, or, to Seller's knowledge, any builder or developer or any other
party involved in the origination of the Mortgage Loan or in the application
of any insurance in relation to such Mortgage Loan. 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 improvements 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 related Mortgage;
(m) Except with respect to MERS Mortgage Loans, the Seller or
its Affiliate is the sole owner of record and holder of the Mortgage Loan and
the indebtedness evidenced by the Mortgage Note, and upon recordation the
Purchaser or its designee will be the owner of record of the Mortgage and the
indebtedness evidenced by the Mortgage Note, and upon the sale of the Mortgage
Loan to the Purchaser, the Seller will retain the Servicing File in trust for
the Purchaser only for the purpose of servicing and supervising the servicing of
the Mortgage Loan. Immediately prior to the transfer and assignment to the
Purchaser on the related Closing Date, the Mortgage Loan, including the Mortgage
Note and the Mortgage, were not subject to an assignment or pledge, and the
Seller had good and marketable title to and was the sole owner thereof and had
full right to transfer and sell the Mortgage Loan to the Purchaser free and
clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest and has the full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign the
Mortgage Loan pursuant to this Agreement and following the sale of the 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, except for the
33
purposes of servicing the Mortgage Loan as set forth in this Agreement. 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) Each Mortgage Loan is covered by an ALTA lender's
title insurance policy or other generally acceptable form of policy (which, in
the case of Adjustable Rate Mortgage Loan has an adjustable rate mortgage
endorsement in the form of ALTA 6.0 or 6.1), or insurance acceptable to ▇▇▇▇▇▇
▇▇▇ or ▇▇▇▇▇▇▇ Mac, 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 (subject to the exceptions contained in (k)
(1), (2), and (3) above) the Seller, its successors and assigns, as to the
first or second priority lien, as applicable, of the Mortgage in the original
principal amount of the Mortgage Loan (including, if the Mortgage Loan provides
for Negative Amortization, the maximum amount of Negative Amortization in
accordance with the Mortgage) and, with respect to any Adjustable Rate Mortgage
Loan, against any loss by reasons of the invalidity or unenforceability
of the lien resulting from the provisions of the Mortgage providing for
adjustment in the Mortgage Interest Rate and Monthly Payment and Negative
Amortization provisions of the Mortgage Note. Additionally, such lender's
title insurance policy affirmatively insures ingress and egress to and from the
Mortgaged Property, and against encroachments by or upon the Mortgaged Property
or any interest therein. Where required by applicable state law or regulation,
the Mortgagor has been given the opportunity to choose the carrier of the
required mortgage title insurance. The Seller, its successors and assigns, are
the sole insureds of such lender's title insurance policy, such title
insurance policy has been duly and validly endorsed to the Purchaser or the
assignment to the Purchaser of the Seller's interest therein does not require
the consent of or notification to the insurer and such lender's title
insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by this
Agreement and the related Purchase Price and Terms Letter. 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;
(o) Except with respect to Mortgage Loans less than 30
days delinquent as of the related Closing Date, there is no default, breach,
violation or event of acceleration existing under the Mortgage or the related
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 permitting acceleration; and neither the Seller nor,
to the Seller's knowledge, any prior mortgagee has waived any default, breach,
violation or event permitting acceleration. With respect to each Second Lien
Loan, (i) the First Lien Loan is in full force and effect, (ii) there is no
default, breach, violation or event of acceleration existing under such first
lien mortgage or the related mortgage note, (iii) no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration
thereunder, (iv) either (a) the prior mortgage contains a provision which allows
or (b) applicable law requires, the mortgagee under the Second Lien Loan to
receive notice of, and affords such mortgagee an opportunity to cure any
default by payment in full or otherwise under the first lien mortgage, (v) the
related first lien does not provide for or permit Negative Amortization under
such first lien Mortgage Loan, and (vi) either
34
no consent for the Mortgage Loan is required by the holder of the first lien
or such consent has been obtained and is contained in the Mortgage File;
(p) 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 to the lien of the related
Mortgage, which are not insured against by the title insurance policy referenced
in paragraph (n) above;
(q) All improvements subject to the Mortgage which were
considered in determining the Appraised Value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of the Mortgaged
Property (and wholly within the project with respect to a condominium unit) and
no improvements on adjoining properties encroach upon the Mortgaged Property
except those which are insured against by the title insurance policy referred to
in clause (n) above and all improvements on the property comply with all
applicable zoning and subdivision laws and ordinances;
(r) The Mortgage Loan was originated by or for the Seller.
The Mortgage Loan complies with the terms, conditions and requirements of
the Underwriting Standards in all material respects which underwriting standards
satisfy the standards of prudent lenders in the secondary mortgage market and
except as described in writing to the Purchaser prior to the related Closing
Date, the standards of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. The Mortgage Notes and
Mortgages (exclusive of any riders) are on forms generally acceptable to ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac. The Mortgage Loan bears interest at the Mortgage Interest
Rate set forth in the related Mortgage Loan Schedule, and Monthly Payments
under the Mortgage Note are due and payable on the first day of each month. The
Mortgage contains the usual and enforceable provisions of the originator at
the time of origination for the acceleration of the payment of the unpaid
principal amount of the Mortgage Loan if the related Mortgaged Property is sold
without the prior consent of the mortgagee thereunder;
(s) The Mortgaged Property is free of material damage and
waste. 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. At origination of the Mortgage Loan there was, and there currently
is, no proceeding pending for the total or partial condemnation of the Mortgaged
Property;
(t) The related 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. 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 the 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;
35
(u) If the Mortgage constitutes a deed of trust, a trustee,
authorized and duly qualified if required under applicable law to act as such,
has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses, except as may be required by local law, are
or will become payable by the Purchaser to the trustee under the deed of
trust, except in connection with a trustee's sale or attempted sale after
default by the Mortgagor;
(v) The Mortgage File contains an appraisal of the related
Mortgaged Property, in a form acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, and
such appraisal was signed prior to the final approval of the mortgage loan
application by a Qualified Appraiser. Each appraisal of the Mortgage Loan
was made in accordance with the relevant provisions of the financial
institutions Reform, Recovery and Enforcement Act of 1989;
(w) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (a) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (b) (1) organized under the
laws of such state, or (2) qualified to do business in such state, or (3)
federal savings and loan associations or national banks or a Federal Home
Loan Bank or savings bank having principal offices in such state, or (4)
not doing business in such state;
(x) The related 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 (k) above and such collateral does not serve as security
for any other obligation;
(y) The Mortgage Loan does not contain "graduated payment"
features; to the extent any Mortgage Loan is a Buydown Mortgage Loan:
(i) On or before the date of origination of such
Mortgage Loan, the Seller and the Mortgagor, or the Seller,
the Mortgagor and the seller of the Mortgaged Property or a
third party entered into a Buydown Agreement. The Buydown
Agreement provides that the seller of the Mortgaged Property
(or third party) shall deliver to the Seller temporary Buydown
Funds in an amount equal to the aggregate undiscounted amount
of payments that, when added to the amount the Mortgagor
on such Mortgage Loan is obligated to pay on each Due Date
in accordance with the terms of the Buydown Agreement, is
equal to the full scheduled Monthly Payment due on such
Mortgage Loan. The temporary Buydown Funds enable the
Mortgagor to qualify for the Buydown Mortgage Loan. The
effective interest rate of a Buydown Mortgage Loan if less
than the interest rate set forth in the related Mortgage Note
will increase within the Buydown Period as provided in the
related Buydown Agreement so that the effective interest rate
will be equal to the interest rate as set forth in the related
Mortgage Note. All Buydown Funds required to make the full
payment of principal and interest under each Buydown Loan are
in the Buydown Account held by the Seller in its capacity as
servicer. The Buydown Mortgage Loan satisfies the requirements
of the Underwriting Standards;
36
(ii) The Mortgage and Mortgage Note reflect the
permanent payment terms rather than the payment terms of the
Buydown Agreement. The Buydown Agreement provides for the
payment by the Mortgagor of the full amount of the Monthly
Payment on any Due Date that the Buydown Funds are not
available. The Buydown Funds were not used to reduce the
original principal balance of the Mortgage Loan or to increase
the Appraised Value of the Mortgage Property when calculating
the Loan-to-Value Ratios for purposes of the Agreement;
(iii) The Buydown Funds may not be refunded to the
Mortgagor unless the Mortgagor makes a principal payment for
the outstanding balance of the Mortgage Loan; and
(iv) As of the date of origination of the Mortgage
Loan, the provisions of the related Buydown Agreement complied
with the Underwriting Standards.
(z) The Mortgagor was not in bankruptcy or insolvent as of
the date of origination of the Mortgage Loan and, is not in bankruptcy or
insolvent as of the related Closing Date and the Mortgaged Property has not been
subject to any bankruptcy or foreclosure proceeding;
(aa) Each Fixed Rate Mortgage Loan has an original term to
maturity of not more than forty (40) years, with interest calculated and payable
in arrears on the first day of each month in equal monthly installments of
principal and interest. Except with respect to Interest Only Mortgage Loans,
each Mortgage Note requires a monthly payment which is sufficient to fully
amortize the original principal balance of the Mortgage Loan fully by the stated
maturity date, over an original term of not more than forty (40) years and
to pay interest at the related Mortgage Interest Rate; provided, however, in the
case of a Balloon Mortgage Loan, the Mortgage Loan matures at least seven (7)
years after the first payment date thereby requiring a final payment of the
outstanding principal balance prior to the full amortization of the Mortgage
Loan. With respect to each Mortgage Loan identified on the Mortgage Loan
Schedule as an Interest-Only Mortgage Loan, the interest-only period shall not
exceed ten (10) years (or such other period specified on the Mortgage Loan
Schedule) and following the expiration of such original principal balance over
the remaining term of the Mortgage Loan and to pay interest at the related
Mortgage Interest Rate. No Mortgage Loan contains terms or provisions which
would result in Negative Amortization;
(bb) If a Mortgage Loan has an LTV greater than 80%, the
portion of the principal balance of such Mortgage Loan in excess of the portion
of the Appraisal Value of the Mortgaged Property required by ▇▇▇▇▇▇ ▇▇▇,
is and will be insured as to payment defaults by a Primary Mortgage Insurance
Policy issued by a Qualified Insurer. All provisions of such Primary Mortgage
Insurance Policy have been and are being complied with, such policy is in full
force and effect, and all premiums due thereunder have been paid. 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. Any Mortgage
Loan subject to a Primary Mortgage Insurance Policy obligates the Mortgagor
thereunder to maintain the Primary Mortgage Insurance Policy and to pay all
premiums and charges in connection therewith. The mortgage interest rate for
the Mortgage Loan as set forth on the related Mortgage Loan Schedule is
net of any such insurance
37
premium. Except as set forth in the related Trade Confirmation, no Mortgage
Loan is subject to a lender paid primary mortgage insurance policy;
(cc) The Assignment of Mortgage is in recordable form and
is acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(dd) As to Mortgage Loans that are not secured by an interest
in a leasehold estate, the Mortgaged Property is located in the state
identified in the related Mortgage Loan Schedule and consists of a single
parcel of real property with a detached single family residence erected thereon,
or a townhouse, or a two-to four-family dwelling, or an individual condominium
unit in a condominium project, or an individual unit in a planned unit
development or a de minimis planned unit development, provided, however, that
no residence or dwelling is a mobile home, geodesic dome or any other property
generally deemed unacceptable by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. 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, except as permitted under the
Underwriting Standards;
(ee) Except with respect to Interest Only Mortgage Loans,
principal payments on the Mortgage Loan commenced no more than sixty (60)
days after the funds were disbursed in connection with such Mortgage Loan;
(ff) Reserved;
(gg) The Mortgaged Property is lawfully occupied under
applicable law, and 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;
(hh) If the Mortgaged Property is a condominium unit or a
planned unit development (other than a de minimis planned unit development),
or stock in a cooperative housing corporation, such condominium, cooperative
or planned unit development project meets the eligibility requirements of the
Underwriting Standards;
(ii) There is no pending action or proceeding directly
involving the Mortgaged Property in which compliance with any environmental law,
rule or regulation pertaining to environmental hazards including, without
limitation, asbestos, is an issue and to the Seller's knowledge, there is
no violation of any environmental law, rule or regulation pertaining to
environmental hazards including, without limitation, asbestos, with respect
to the Mortgaged Property;
(jj) The related 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;
(kk) No action has been taken or failed to be taken by the
Seller on or prior to the related Closing Date which has resulted or will result
in an exclusion from, denial of, or defense to coverage under any Primary
Mortgage Insurance Policy (including, without
38
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, or for any other reason
under such coverage;
(ll) Each Mortgage Loan has been serviced by the Seller and
any predecessor servicer in all material respects in compliance with the terms
of the Mortgage Note and Accepted Servicing Practices;
(mm) No Mortgage Loan is secured by cooperative housing,
commercial property or mixed use property;
(nn) [Reserved;]
(oo) [Reserved;]
(pp) [Reserved;]
(qq) 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 similar institution
which is supervised and examined by a federal or state authority;
(rr) With respect to any ground lease to which a Mortgaged
Property may be subject: (i) a true, correct and complete copy of the ground
lease and all amendments, modifications and supplements thereto is included in
the Servicing File, and the Mortgagor is the owner of a valid and subsisting
leasehold interest under such ground lease; (ii) such ground lease is in full
force and effect, unmodified and not supplemented by any writing or otherwise
except as contained in the Mortgage File; (iii) all ground lease rents,
additional rent, assessments and other charges reserved therein that have become
due have been fully paid to the extent payable as of the related Closing Date;
(iv) the Mortgagor enjoys the quiet and peaceful possession of the leasehold
estate, subject to any sublease; (v) the Mortgagor is not in default under any
of the terms of such ground lease, and there are no circumstances which, with
the passage of time or the giving of notice, or both, would result in a default
under such ground lease; (vi) the lessor under such ground lease is not in
default under any of the terms or provisions of such ground lease on the part
of the lessor to be observed or performed; (vii) the lessor under such ground
lease has satisfied any repair or construction obligations due as of the related
Closing Date pursuant to the terms of such ground lease; (viii) the execution,
delivery and performance of the Mortgage do not require the consent (other than
those consents which have been obtained and are in full force and effect) under,
and will not contravene any provision of or cause a default under, such ground
lease; (ix) the ground lease will not terminate earlier than five (5) years
after the maturity date of the related Mortgage Loan; (x) the Purchaser has the
right to cure defaults on the ground lease; (xi) the use of leasehold estates
for residential properties is a widely accepted practice in the jurisdiction in
which the Mortgage Property is located; (xii) the ground lease protects the
mortgagee's interests in the event of a property condemnation; (xiii) the
ground lease permits the mortgaging of the related Mortgage Property; (xiv)
the ground lease is assignable or
39
transferable; and (xv) 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;
(ss) With respect to any broker fees collected and paid on
any of the Mortgage Loans, all broker fees have been properly assessed to
the borrower and no claims will arise as to broker fees that are double charged
and for which the borrower would be entitled to reimbursement;
(tt) Each Mortgage Loan constitutes a "qualified mortgage"
under Section 860G(a)(3)(a) of the Code and Treasury Regulations Section
1.860G-2(a)(1);
(uu) Except as provided in Section 2.07, the Mortgage Note,
the Mortgage, the Assignment of Mortgage and the other documents set forth in
Exhibit A-1 and required to be delivered on the related Closing Date have been
delivered to the Purchaser or its designee;
(vv) To the Seller's knowledge, all information supplied by,
on behalf of, or concerning the Mortgagor is true, accurate and complete and
does not contain any statement that is or will be inaccurate or misleading in
any material respect;
(ww) The Mortgagor has executed a statement to the effect
that the Mortgagor has received all disclosure materials required by applicable
law with respect to the making of adjustable rate mortgage loans in the case of
Adjustable Rate Mortgage Loans and fixed rate mortgage loans in the case of
Fixed Rate Mortgage Loans and rescission materials with respect to Refinanced
Mortgage Loans. The Seller shall maintain such statement in the Servicing File;
(xx) No Mortgage Loan had a Loan-to-Value Ratio or CLTV at
the time of origination of more than 100%. No Second Lien Loan has an Equity LTV
in excess of 100%;
(yy) [Reserved;]
(zz) With respect to any Second Lien Loan, the Seller has
not received notice of: (1) any proceeding for the total or partial condemnation
of any Mortgaged Property, (2) any subsequent, intervening mortgage, lien,
attachment, lis pendens or other encumbrance affecting any Mortgaged Property
or (3) any default under any mortgage, lien or other encumbrance senior
to each Mortgage;
(aaa) No Second Lien Loan is a "home equity line of credit";
(bbb) As of the Closing Date, the Seller has not received a
notice of default of a First Lien Loan which has not been cured;
(ccc) No Mortgage Loan provides for Negative Amortization;
(ddd) No Mortgage Loan is a High Cost Loan or Covered Loan.
No Mortgage Loan is covered by the Home Ownership and Equity Protection Act
of 1994 ("HOEPA") or has an APR or total points and fees that are equal to or
exceeds the HOEPA thresholds (as defined in 12 CFR 226.32 (a)(1)(i)(ii)) and no
Mortgage Loan is in violation of any comparable state or
40
local law. The Mortgaged Property is not located in a jurisdiction where a
breach of this representation with respect to the related Mortgage Loan may
result in additional assignee liability to the Purchaser, as determined by
Purchaser in its reasonable discretion. No predatory or deceptive lending
practices were employed in the origination of the Mortgage Loan. Each Mortgage
Loan is in compliance with the anti-predatory lending eligibility for purchase
requirements of ▇▇▇▇▇▇ Mae's Selling Guide;
(eee) With respect to any Mortgage Loan which is a Texas Home
Equity Loan, any and all requirements of Section 50, Article XVI of the Texas
Constitution applicable to Texas Home Equity Loans which were in effect at the
time of the origination of the Mortgage Loan have been complied with;
(fff) The origination and servicing practices with respect to
each Mortgage Note and Mortgage have been legal and in accordance with
applicable laws and regulations, and in all material respects proper and
prudent in the mortgage origination and servicing business. With respect to
escrow deposits and payments that the Seller is entitled to collect, 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 and are being maintained in full compliance with applicable
state and federal law and the provisions of the related Mortgage Note and
Mortgage. As to any Mortgage Loan that is the subject of an escrow, escrow
of funds is not prohibited by applicable law and has been established in an
amount sufficient to pay for every escrowed item that remains unpaid and has
been assessed but is not yet due and payable. No escrow deposits or other
charges or payments due under the Mortgage Note have been capitalized under any
Mortgage or the related Mortgage Note and no such escrow deposits or Escrow
Payments are being held by the Seller for any work on a Mortgaged Property
which has not been completed. All Mortgage Interest Rate adjustments have been
made in strict compliance with state and federal law and the terms of the
related Mortgage Note. Any interest required to be paid pursuant to state and
local law has been properly paid and credited;
(ggg) No Mortgage Loan is a Convertible Mortgage Loan;
(hhh) 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;
(iii) 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 or second lien (as indicated on the Mortgage
Loan Schedule) 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 ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac. The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan;
41
(jjj) No Mortgage Loan was made in connection with the
construction (other than a "construct-to-perm" loan which has become a
permanent loan and construction has been completed) or rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property;
(kkk) If applicable, with respect to each Mortgage, the Seller
has within the last twelve (12) months (unless such Mortgage was originated
within such twelve (12) 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;
(lll) 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;
(mmm) 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;
(nnn) 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;
(ooo) No Mortgagor with respect to any Mortgage Loan
originated on or after August 1, 2004 agreed to submit to arbitration to
resolve any dispute arising out of or relating in any way to the mortgage loan
transaction;
(ppp) The Seller's parent has adopted an Anti-Money Laundering
and Terrorist-Finance Policy (the "Policy") that requires the Seller to comply
with applicable anti-money laundering law and regulations, including without
limitation on the USA Patriot Act of 2001 (collectively, the "Anti-Money
Laundering Laws") and based upon the succeeding information the Seller believes
that it is compliant with that Policy; the Seller has established an
anti-money laundering compliance program as required by Policy, has procedure
in place to conduct due diligence, based upon the Seller's risk assessment
of the applicable Mortgagor, in connection with the origination of each Mortgage
Loan for purposes of the Policy, including the verification of the identity of
the applicable Mortgagor and, where required, the origin of the assets used
by the said Mortgagor to purchase the property in question and has procedures,
including record keeping procedures, in place to comply with Section 326 of the
USA Patriot Act of 2001 and its implementing regulation 31 CFR 103.121 regarding
the identity of the applicable Mortgagor. On or before the closing of any
Mortgage Loan, the Seller conducts or causes to be conducted an OFAC screening
of the Mortgagor to comply with regulations of the Office of Foreign Assets
Control ("OFAC") of the United States Department of Treasury implementing
certain United States laws and the executive orders issued under the authority
of such laws; and thereafter Seller
42
periodically re-screens or causes the re-screening of Mortgagors when the OFAC
sanctioned parties lists are updated;
(qqq) 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;
(rrr) Interest on each Mortgage Loan is calculated on the
basis of a 360-day year consisting of twelve 30-day months;
(sss) No Mortgage Loan provides for interest payable on a
simple interest basis;
(ttt) Each Mortgage Loan at the time it was made complied in
all material respects with applicable local, state and federal laws, including,
but not limited to, all applicable predatory, abusive and fair lending laws;
(uuu) [Reserved;]
(vvv) No Mortgage Loan is secured by real property or secured
by a manufactured home located in the State of Georgia unless (x) such Mortgage
Loan was originated prior to October 1, 2002 or after March 6, 2003, or (y) the
property securing the Mortgage Loan is not, nor will be, occupied by the
Mortgagor as the Mortgagor's principal dwelling. No Mortgage Loan is a "High
Cost Home Loan" as defined in the Georgia Fair Lending Act, as amended (the
"Georgia Act"). Each Mortgage Loan that is a "Home Loan" under the Georgia
Act complies with all applicable provisions of the Georgia Act. No Mortgage
Loan secured by owner occupied real property or an owner occupied manufactured
home located in the State of Georgia was originated (or modified) on or
after October 1, 2002 through and including March 6, 2003;
(www) [Reserved;]
(xxx) No Mortgagor was required to purchase any single
premium credit insurance policy (e.g., life, disability, accident, unemployment,
or health insurance product) or debt cancellation agreement 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;
(yyy) 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 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 borrower agreed
to such premium in exchange for a monetary benefit, to the borrower (e.g.,
such as rate or fee reduction); (ii) prior to the Mortgage Loan's origination,
the borrower was offered the option of obtaining a mortgage loan that did
not require payment of such a premium; (iii) the prepayment premium was
adequately disclosed to the borrower pursuant to applicable state and federal
law; (iv) no Mortgage Loan will impose a prepayment premium for a term in
excess of three (3)
43
years; and (v) notwithstanding any state or federal law to the contrary,
the Servicer shall not impose such prepayment premium in any instance when
the Mortgage Loan is accelerated or paid off in connection with the workout
of a delinquent mortgage or due to the borrower's default, notwithstanding
that the terms of the Mortgage Loan or state or federal law might permit the
Servicer to impose such premium;
(zzz) The Seller has and shall 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 (3) of the
credit repositories), on a monthly basis unless such reporting is suspended due
to the Servicemembers Civil Relief Act or an eligible disaster declaration;
(aaaa) 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 borrowers, 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 Mortgagor's
application to such affiliate for underwriting consideration. With respect to
any Mortgage Loan, the Mortgagor was assigned the highest credit grade available
with respect to a mortgage loan product offered by such Mortgage Loan's
originator, based on a comprehensive assessment of risk factors, including the
Mortgagor's credit history;
(bbbb) The methodology used in underwriting the extension of
credit for each Mortgage Loan employs objective criteria which relate the
borrower's income, assets and liabilities (except in the case of loan programs
which do not require the borrower to report the borrower's income or assets,
such as "no income, no assets" lending programs or which rely on the
borrower's representation of the borrower's income, such as "stated income"
lending programs) to the proposed payment and such underwriting methodology
does not rely on the extent of the borrower's equity in the collateral as
the principal determining factor in approving such credit extension. Such
underwriting methodology determined that at the time of origination
(application/approval) the borrower had the reasonable ability to make
timely payments on the Mortgage Loan;
(cccc) No Mortgagor was charged "points and fees" (whether
or not financed) greater than (a) $1,000 or (b) 5% of the principal amount of
such Mortgage Loan. For purposes of this representation, such 5% limitation
is calculated in accordance with ▇▇▇▇▇▇ Mae's anti-predatory lending
requirements as set forth in the ▇▇▇▇▇▇ ▇▇▇ Guides and "points and fees" (i)
include origination, underwriting, broker and finder fees and charges that the
mortgagee imposed as a condition of making the Mortgage Loan, whether they are
paid to the mortgagee or a third party, and (ii) exclude bona fide discount
points, fees paid for actual services rendered in connection with the
origination of the Mortgage Loan (such as attorneys' fees, notaries fees and
fees paid for property appraisals, credit reports, surveys, title examinations
and extracts, flood and tax certifications, and home inspections), the cost
of mortgage insurance or credit-risk price
44
adjustments, the costs of title, hazard, and flood insurance policies, state
and local transfer taxes or fees, escrow deposits for the future payment of
taxes and insurance premiums, and other miscellaneous fees and charges
that, in total, do not exceed 0.25% of the principal amount of such Mortgage
Loan. All fees and charges (including finance charges) and whether or not
financed, assessed, collected or to be collected in connection with the
origination and servicing of each Mortgage Loan has been disclosed in writing
to the borrower in accordance with applicable state and federal law and
regulation; and
(dddd) With respect to any Mortgage Loan originated on or
after August 1, 2004, neither the related Mortgage nor the related Mortgage
Note requires the borrower to submit to arbitration to resolve any dispute
arising out of or relating in any way to the Mortgage Loan transaction.
(eeee) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation for
the Mortgagee to advance additional funds thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan and
the recording of the Mortgage have been paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due to the Mortgagee pursuant
to the Mortgage Note or Mortgage;
(ffff) The Seller has no knowledge of any circumstances or
condition with respect to the Mortgage, the Mortgaged Property, the Mortgagor
or the Mortgagor's credit standing that can reasonably be expected to
cause the Mortgage Loan to be an unacceptable investment, or cause the Mortgage
Loan to become delinquent or adversely affect the value of the Mortgage Loan;
(gggg) If required pursuant to the Underwriting Standards, the
source of the down payment with respect to each Mortgage Loan has been fully
verified by the Seller;
(hhhh) Each Mortgage Loan is covered by a Flood Zone Service
Contract which is assignable to the Purchaser or its designee or, for each
Mortgage Loan not covered by such Flood Zone Service Contract, the Seller
agrees to purchase such Flood Zone Service Contract;
(iiii) No predatory, abusive, or deceptive lending practices,
including but not limited to, the extension of credit to a Mortgagor without
regard for the Mortgagor's ability to repay the Mortgage Loan and the extension
of credit to a Mortgagor which has no apparent benefit to the Mortgagor, were
employed in connection with the origination of the Mortgage Loan. Each Mortgage
Loan is in compliance with the anti-predatory lending eligibility for purchase
requirements of the ▇▇▇▇▇▇ Mae Guides;
(jjjj) Unless otherwise specified in the related Purchase
Price and Terms Letter or the related Mortgage Loan Schedule, the debt-to-income
ratio of the related Mortgagor was not greater than 55% at the origination of
the related Mortgage Loan;
(kkkk) The Mortgage Loan complies with all applicable consumer
credit statutes and regulations, including, without limitation, the respective
Uniform Consumer Credit Code laws in effect in Alabama, Colorado, Idaho,
Indiana, Iowa, Kansas, Maine, Oklahoma, South
45
Carolina, Utah, West Virginia and Wyoming, has been originated by a properly
licensed entity, and in all other respects, complies with all of the material
requirements of any such applicable laws;
(llll) The Mortgage Loan was not prepaid in full prior to the
Closing Date and the Seller has not received notification from a Mortgagor
that a prepayment in full shall be made after the Closing Date;
(mmmm) No Mortgage Loan is a "High-Cost" loan as defined under
the New York Banking Law Section 6-1, effective as of April 1, 2003;
(nnnn) No Mortgage Loan (a) is secured by property located
in the State of New York; (b) had an unpaid principal balance at origination
of $300,000 or less, and (c) has an application date on or after April 1, 2003,
the terms of which Mortgage Loan equal or exceed either the APR or the points
and fees threshold for "high-cost home loans", as defined in Section 6-1 of
the New York State Banking Law;
(oooo) No Mortgage Loan is a "High Cost Home Loan" as defined
in the Arkansas Home Loan Protection Act effective July 16, 2003 (Act 1340 or
2003);
(pppp) No Mortgage Loan is a "High Cost Home Loan" as defined
in the Kentucky high-cost loan statute effective June 24, 2003 (Ky. Rev. Stat.
Section 360.100);
(qqqq) No Mortgage Loan secured by property located in the
State of Nevada is a "home loan" as defined in the Nevada Assembly ▇▇▇▇ No. 284;
(rrrr) No Mortgage Loan is a "manufactured housing loan" or
"home improvement home loan" pursuant to the New Jersey Home Ownership
Act. No Mortgage Loan is a "High-Cost Home Loan" or a refinanced "Covered Home
Loan," in each case, as defined in the New Jersey Home Ownership Act effective
November 27, 2003 (N.J.S.A. 46:10B-22 et seq.);
(ssss) No Mortgage Loan is a subsection 10 mortgage under the
Oklahoma Home Ownership and Equity protection Act;
(tttt) No Mortgage Loan is a "High-Cost Home Loan" as defined
in the New Mexico Home Loan Protection Act effective January 1, 2004 (N.M. Stat.
▇▇▇. ssss 58-21A-1 et seq.);
(uuuu) No Mortgage Loan is a "High-Risk Home Loan" as defined
in the Illinois High-Risk Home Loan Act effective January 1, 2004 (815 Ill.
Comp. Stat. 137/1 et seq.);
(vvvv) No Loan that is secured by property located within the
State of Maine meets the definition of a (i) "high-rate, high-fee" mortgage
loan under Article VIII, Title 9-A of the Maine Consumer Credit Code or
(ii) "High-Cost Home Loan" as defined under the Maine House ▇▇▇▇ 383 ▇.▇. 494,
effective as of September 13, 2003;
46
(wwww) With respect to any Loan for which a mortgage loan
application was submitted by the Mortgagor after April 1, 2004, no such Loan
secured by Mortgaged Property in the State of Illinois which has a Loan Interest
Rate in excess of 8.0% per annum has lender-imposed fees (or other charges) in
excess of 3.0% of the original principal balance of the Loan;
(xxxx) No Mortgage Loan is a "High-Cost Home Mortgage Loan"
as defined in the Massachusetts Predatory Home Loan Practices Act, effective
November 7, 2004 (Mass. ▇▇▇. Laws Ch. 183C). No Mortgage Loan secured by a
Mortgaged Property located in the Commonwealth of Massachusetts was made to pay
off or refinance an existing loan or other debt of the related borrower (as the
term "borrower" is defined in the regulations promulgated by the Massachusetts
Secretary of State in connection with Massachusetts House ▇▇▇▇ 4880 (2004))
unless either (1) (a) the related Mortgage Interest Rate (that would be
effective once the introductory rate expires, with respect to Adjustable Rate
Mortgage Loans) did or would not exceed by more than 2.25% the yield on
United States Treasury securities having comparable periods of maturity to
the maturity of the related Mortgage Loan as of the fifteenth day of the month
immediately preceding the month in which the application for the extension of
credit was received by the related lender or (b) the Mortgage Loan is an
"open-end home loan" (as such term is used in the Massachusetts House ▇▇▇▇ 4880
(2004)) and the related Mortgage Note provides that the related Mortgage
Interest Rate may not exceed at any time the Prime rate index as published in
The Wall Street Journal plus a margin of one percent, or (2) such Mortgage
Loan is in the "borrower's interest," as documented by a "borrower's interest
worksheet" for the particular Mortgage Loan, which worksheet incorporates the
factors set forth in Massachusetts House ▇▇▇▇ 4880 (2004) and the regulations
promulgated thereunder for determining "borrower's interest," and otherwise
complies in all material respects with the laws of the Commonwealth of
Massachusetts;
(yyyy) No Loan is a "High Cost Home Loan" as defined by the
Indiana Home Loan Practices Act, effective January 1, 2005 (Ind. Code ▇▇▇. ssss
24-9-1 et seq.);
(zzzz) The Mortgagor has not made or caused to be made any
payment in the nature of an "overage" or "yield spread premium" to a mortgage
broker or a like Person which has not been fully disclosed to the Mortgagor;
(aaaaa) The sale or transfer of the Mortgage Loan by the
Seller complies with all applicable federal, state, and local laws, rules, and
regulations governing such sale or transfer, including, without limitation,
the Fair and Accurate Credit Transactions Act ("FACT Act") and the Fair Credit
Reporting Act, each as may be amended from time to time, and the Seller has not
received any actual or constructive notice of any identity theft, fraud,
or other misrepresentation in connection with such Mortgage Loan or any
party thereto;
(bbbbb) With respect to each MERS Mortgage Loan, a MIN has
been assigned by MERS and such MIN is accurately provided on the Mortgage Loan
Schedule. The related Assignment of Mortgage to MERS has been duly and properly
recorded, or has been delivered for recording to the applicable recording
office;
47
(ccccc) With respect to each MERS Mortgage Loan, Seller
has not received any notice of liens or legal actions with respect to such
Mortgage Loan and no such notices have been electronically posted by MERS; and
(ddddd) Each Mortgage Loan originated on or after September
1, 2006, secured by property located within the ▇▇▇▇ County, Illinois
anti-predatory lending Pilot Program area (i.e., ZIP Codes 60620, 60621,
60623, 60628, 60629, 60632, 60636, 60638, 60643 and 60652) complies with the
recording requirements outlined in Illinois House ▇▇▇▇ 4050 and Senate ▇▇▇▇
304 effective September 1, 2006.
Section 3.03. Repurchase; Substitution.
It is understood and agreed that the representations and
warranties set forth in Sections 3.01 and 3.02 shall survive the sale of the
Mortgage Loans and delivery of the Mortgage File to the Purchaser, or its
designee, 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 Loan
Document. Upon discovery by the Seller or the Purchaser of a breach of any of
the foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser in any
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the others. The Seller shall have a period of sixty (60) days from the
earlier of its discovery or its receipt of notice of any such breach within
which to correct or cure such breach. Notwithstanding the above sentences,
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
clause (ttt) through (dddd) of Section 3.02, any breach of which shall
automatically be deemed to materially and adversely affect the value of the
Mortgage Loan and the interest of the Purchaser therein, the Seller shall
repurchase such Mortgage Loan at the Repurchase Price. The Seller hereby
covenants and agrees that (except as provided in the previous sentence with
respect to certain breaches for which no substitution is permitted) if any such
breach is not corrected or cured within such sixty (60 day period, the Seller
shall, at the Purchaser's option, either repurchase such Mortgage Loan at the
Repurchase Price or substitute a mortgage loan for the defective Mortgage Loan
as provided below. In the event that any such breach shall involve any
representation or warranty set forth in Section 3.01, and such breach is not
cured within sixty (60) of the earlier of either discovery by or notice to the
Seller of such breach, all affected Mortgage Loans shall, at the option of the
Purchaser, be repurchased by the Seller at the Repurchase Price. Any such
repurchase shall be accomplished by deposit in the Custodial Account of the
amount of the Repurchase Price.
If pursuant to the foregoing provisions the Seller repurchases
a Mortgage Loan that is a MERS Mortgage Loan, the Seller shall either (i) cause
MERS to execute and deliver an assignment of the Mortgage in recordable form to
transfer the Mortgage from MERS to the Seller and shall cause such Mortgage to
be removed from registration on the MERS(R) System in accordance with MERS'
rules and regulations or (ii) cause MERS to designate on the MERS(R) System the
Seller as the beneficial holder of such Mortgage Loan.
If the Seller is required to repurchase any Mortgage Loan
pursuant to this Section 3.03 as a result of a breach of any of the
representations and warranties set forth in
48
Section 3.02, the Seller may, with the Purchaser's prior consent, which consent
shall not be unreasonably withheld, within 120 days from the related Closing
Date, remove such defective Mortgage Loan from the terms of this Agreement and
substitute another mortgage loan for such defective Mortgage Loan, in lieu of
repurchasing such defective Mortgage Loan. Any substitute Mortgage Loan shall
(a) have a principal balance at the time of substitution not in excess of the
principal balance of the defective Mortgage Loan (the amount of any difference,
plus one (1) month's interest thereon at the Mortgage Interest Rate borne by
the defective Mortgage Loan, being paid by the Seller and deemed to be a
Principal Prepayment to be deposited by the Seller in the Custodial Account),
(b) have a Mortgage Interest Rate not less than, and not more than one (1)
percentage point greater than, the Mortgage Interest Rate of the removed
Mortgage Loan, (c) have a remaining term to stated maturity not later than, and
not more than one (1) year less than, the remaining term to stated maturity of
the removed Mortgage Loan, (d) have a Loan-to-Value Ratio at origination no
greater than that of the removed Mortgage Loan, (e) with respect to any Second
Lien Loan, have an Equity Loan-to-Value Ratio at origination no greater
than that of the removed Mortgage Loan, (f) have the same lien priority as
that of the removed Mortgage Loan, (g) conform to each representation and
warranty contained in this Agreement and described in Section 3.02 as of the
date of substitution, (h) be the same type of mortgage loan (i.e. fixed or
adjustable rate with the same Gross Margin and Index as the removed Mortgage
Loan), (i) be covered under a Primary Mortgage Insurance Policy if such
substitute mortgage loan has a Loan-to-Value Ratio in excess of 80% and (j) have
the same Due Date as the Due Date on the removed Mortgage Loan. In the event
that one or more mortgage loans are substituted for one or more removed Mortgage
Loans, the amounts described in clause (a) hereof shall be determined on the
basis of aggregate principal balances, the Mortgage Interest Rates described in
clause (b) hereof shall be determined on the basis of weighted average Mortgage
Interest Rates and shall be satisfied as to each such mortgage loan, the terms
described in clause (c) shall be determined on the basis of weighted average
remaining terms to maturity, the Loan-to-Value Ratios, and in the case of second
lien Mortgage Loans the Equity Loan-to-Value Ratios described in clauses (d) and
(e) hereof shall be satisfied as to each such mortgage loan and, except to the
extent otherwise provided in this sentence, the representations and warranties
described in clause (g) hereof must be satisfied as to each substitute Mortgage
Loan or in the aggregate, as the case may be.
As to any removed Mortgage Loan for which the Seller
substitutes a substitute Mortgage Loan or Loans, the Seller shall effect such
substitution by delivering to the Purchaser for such substitute Mortgage Loan or
Loans the Mortgage Note, the Mortgage, the Assignment of Mortgage and such other
documents and agreements as are set forth in Exhibit A-1 hereto, with the
Mortgage Note endorsed as required therein. The Seller shall deposit in the
Custodial Account the Monthly Payment less the Servicing Fee due on such
substitute Mortgage Loan or Loans in the month following the date of such
substitution. Monthly Payments due with respect to substitute Mortgage Loans in
the month of substitution will be retained by the Seller. For the month of
substitution, distributions to the Purchaser will include the Monthly Payment
due on such removed 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 removed Mortgage Loan. The Seller shall give written
notice to the Purchaser that such substitution has taken place and shall amend
the Mortgage Loan Schedule to reflect the removal of such removed Mortgage Loan
from the terms of this Agreement and the substitution of the substitute Mortgage
Loan. Upon such substitution, such substitute Mortgage Loan or Loans shall be
subject to the
49
terms of this Agreement in all respects, and the Seller shall be deemed to have
made with respect to such substitute Mortgage Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in
Subsections 3.01 and 3.02.
It is understood and agreed that the obligation of the Seller
set forth in this Section 3.03 to cure, repurchase or substitute for a defective
Mortgage Loan, and to indemnify Purchaser pursuant to Section 7.01, constitutes
the sole remedies of the Purchaser respecting a breach of the foregoing
representations and warranties. If the Seller fails to repurchase or substitute
for a defective Mortgage Loan in accordance with this Section 3.03, or fails to
cure a defective Mortgage Loan to Purchaser's reasonable satisfaction in
accordance with this Section 3.03, or to indemnify Purchaser pursuant to Section
7.01, that failure shall, upon compliance by the Purchaser with the next to the
last paragraph of this Section 3.03, be an Event of Default and the Purchaser
shall be entitled to pursue all available remedies. No provision of this
paragraph shall affect the rights of the Purchaser to terminate this Agreement
for cause, as set forth in Sections 8.01 and 9.01.
Any cause of action against the Seller relating to or arising
out of the breach of any representations and warranties made in Sections 3.01
and 3.02 shall accrue as to any Mortgage Loan upon (i) the earlier of discovery
of such breach by the Seller or notice thereof by the Purchaser to the Seller,
(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.
In the event that any Mortgage Loan is held by a REMIC,
notwithstanding any contrary provision of this Agreement, with respect to any
Mortgage Loan that is not in default or as to which no default is imminent,
Purchaser may, in connection with any repurchase or substitution of a defective
Mortgage Loan pursuant to this Section 3.03, require that the Seller deliver, at
the Seller's expense, an Opinion of Counsel to the effect that such repurchase
or substitution will not (i) result in the imposition of taxes on "prohibited
transactions" of such REMIC (as defined in Section 860F of the Code) or
otherwise subject the REMIC to tax, or (ii) cause the REMIC to fail to qualify
as a REMIC at any time.
Section 3.04. Purchase Price Protection.
With respect to any Mortgage Loan that prepays in full within
sixty (60) days following the related Closing Date, the Seller shall reimburse
the Purchaser the amount which is the greater of (i) the amount (if any) by
which the Purchase Price paid by the Purchaser to the Seller exceeded 100% of
the outstanding scheduled principal balance of the Mortgage Loan as of the
related Cut-off Date, and (ii) the related Prepayment Penalty within thirty (30)
days of such payoff. Upon any assignment of a Mortgage Loan and/or this
Agreement, the Purchaser may at its option retain its rights under this Section
3.04 notwithstanding such assignment.
Section 3.05. Repurchase of Mortgage Loans With First Payment
Defaults.
If a Mortgagor is thirty (30) days or more delinquent with
respect to the first Monthly Payment due to the Purchaser on the related
Mortgage Loan immediately following the related Closing Date, the Seller, at the
Purchaser's option, shall promptly repurchase such
50
Mortgage Loan from the Purchaser within thirty (30) calendar days' of receipt
of written notice from the Purchaser. Any repurchase pursuant to this Section
3.05 shall be effected in accordance with the procedures set forth in Section
3.03 hereof, and any such repurchase shall be made at the Repurchase Price.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01. The Seller to Act as Servicer.
The Seller, as independent contract servicer, shall service
and administer the Mortgage Loans in accordance with this Agreement and with
Accepted Servicing Practices, and shall have full power and authority, acting
alone or through subservicers or agents, to do or cause to be done any and all
things in connection with such servicing and administration which the Seller may
deem necessary or desirable and consistent with the terms of this Agreement and
with Accepted Servicing Practices. The Seller shall service and administer the
Mortgage Loans through the exercise of the same care that it customarily employs
for its own account. The Seller may perform its servicing responsibilities
through agents or independent contractors, but shall not thereby be released
from any of its responsibilities hereunder. The Seller shall be responsible for
any and all acts of any such agent, independent contractor or Affiliate.
Notwithstanding anything to the contrary, the Seller may delegate any of its
duties under this Agreement to one or more of its Affiliates without regard to
any of the requirements of this Section; provided, however, that the Seller
shall not be released from any of its responsibilities hereunder by virtue of
such delegation.
Except as set forth in this Agreement, the Seller shall
service the Mortgage Loans in compliance with the servicing provisions of the
▇▇▇▇▇▇ ▇▇▇ Guides (special servicing option), which include, but are not limited
to, provisions regarding the liquidation of Mortgage Loans, the collection of
Mortgage Loan payments, the payment of taxes, insurance and other charges, the
maintenance of hazard insurance with a Qualified Insurer, the maintenance of
mortgage impairment insurance, the maintenance of fidelity bond and errors and
omissions insurance, inspections, the restoration of Mortgaged Property, the
maintenance of Primary Mortgage Insurance Policies, insurance claims, the title,
management of REO Property, permitted withdrawals with respect to REO Property,
liquidation reports, and reports of foreclosures and abandonments of Mortgaged
Property, the transfer of Mortgaged Property, the release of Mortgage Files,
annual statements, and examination of records and facilities. In the event of
any conflict, inconsistency or discrepancy between any of the servicing
provisions of this Agreement and any of the servicing provisions of the ▇▇▇▇▇▇
Mae Guides, the provisions of this Agreement shall control and be binding upon
the Purchaser and the Seller.
Consistent with the terms of this Agreement, the Seller may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of any such term or in any manner grant indulgence to any Mortgagor
if in the Seller's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, that unless the Seller has obtained the prior
written consent of the Purchaser, the Seller shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
forgive the payment of any principal or interest,
51
reduce or increase the outstanding principal balance (except for actual payments
of principal), make any future advances or extend the final maturity date, as
the case may be, with respect to such Mortgage Loan. In the event of any such
modification that permits the deferral of interest or principal payments on any
Mortgage Loan, the Seller shall, on the Business Day immediately preceding the
Remittance Date in any month in which any such principal or interest payment has
been deferred, deposit in the Custodial Account from its own funds, in
accordance with Section 4.04, the difference between (a) the otherwise scheduled
Monthly Payment and (b) the amount paid by the Mortgagor. The Seller shall be
entitled to reimbursement for such advances to the same extent as for all other
advances pursuant to Section 4.05. Without limiting the generality of the
foregoing, the Seller shall continue, and is hereby authorized and empowered by
the Purchaser when the Seller believes it appropriate and reasonable in its best
judgment, to prepare, execute and deliver, 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 with respect to 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 Section 4.13. Notwithstanding anything
herein to the contrary, the Seller may not enter into a forbearance agreement or
similar arrangement with respect to any Mortgage Loan which runs more than 180
days after the first delinquent Due Date without the prior consent of the
Purchaser. Any such agreement shall be approved by any applicable holder of a
Primary Mortgage Insurance Policy, if required.
The Seller is authorized and empowered by the Purchaser, in
its own name, when the Seller believes it appropriate in its reasonable judgment
to register any Mortgage Loan on the MERS(R) System, or cause the removal from
the registration of any Mortgage Loan on the MERS(R) System, to execute and
deliver, on behalf of the Purchaser, any and all instruments of assignment and
other comparable instruments with respect to such assignment or re-recording of
a Mortgage in the name of MERS, solely as nominee for the Purchaser and its
successors and assigns.
Unless a different time period is stated in this Agreement,
the Purchaser shall be deemed to have given consent in connection with a
particular matter if the Purchaser does not affirmatively grant or deny consent
within five (5) Business Days from the date the Purchaser receives a written
request for consent for such matter from the Seller.
The Seller shall accurately and fully report its borrower
credit files related to the Mortgage Loans to Equifax, Transunion and Experian
on a monthly basis.
Section 4.02. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the date each Mortgage
Loan ceases to be serviced subject to this Agreement, the Seller will proceed
diligently to collect all payments due under each Mortgage Loan when the same
shall become due and payable and shall, to the extent such procedures shall be
consistent with this Agreement, Accepted Servicing Practices, and the terms and
provisions of related Primary Mortgage Insurance Policy, follow such collection
procedures as it follows with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. Further, the Seller will take
special care in ascertaining and estimating
52
annual escrow payments, and all other charges that, as provided in the Mortgage,
will become due and payable, so that the installments payable by the Mortgagors
will be sufficient to pay such charges as and when they become due and payable.
The Seller shall not waive any Prepayment Penalty with respect
to any Mortgage Loan which contains a Prepayment Penalty which prepays during
the term of the charge. If the Seller fails to collect the Prepayment Penalty to
which the Purchaser is entitled pursuant to the terms of this Agreement and the
related Purchase Price and Terms Letter upon any prepayment of any Mortgage Loan
which contains a Prepayment Penalty, the Seller shall pay the Purchaser at such
time (by deposit to the Custodial Account) an amount equal to amount of the
Prepayment Penalty which was not collected. Notwithstanding the above, the
Seller may waive (and shall waive, in the case of (v) below) a Prepayment
Penalty without paying the Purchaser the amount of the Prepayment Penalty (i) if
the Mortgage Loan is in default (defined as 61 days or more delinquent) and such
waiver would maximize recovery of total proceeds taking into account the value
of such Prepayment Penalty and the related Mortgage Loan, (ii) if the prepayment
is not a result of a refinancing by the Seller or any of its affiliates and the
Mortgage Loan is foreseen to be in default and such waiver would maximize
recovery of total proceeds taking into account the value of such Prepayment
Penalty and the related Mortgage Loan, (iii) if the collection of the Prepayment
Penalty would be in violation of applicable laws, (iv) if the collection of such
Prepayment Penalty 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 and (v) notwithstanding any state or federal law to the contrary, any
instance when a Mortgage Loan is in foreclosure. The Seller hereby acknowledges
that for the purposes of the preceding sentence, (i) the law applicable to the
enforcement of prepayment penalties and charges is the law applicable to the
related originator of the Mortgage Loans and (ii) state laws prohibiting or
limiting prepayment penalties or charges are preempted and thereby inapplicable
if the related originator of the mortgage loans is a federal association or
federal bank or an operating subsidiary of such institution. In the event the
Seller determines that (i) the foregoing acknowledgement is no longer accurate
and (ii) applicable state law would prevent it from fully enforcing prepayment
penalties or charges, the Seller shall (i) provide prompt notice to such effect
to the Purchaser and (ii) provide a written opinion of counsel from a nationally
recognized law firm experienced in regulatory matters concluding that fully
enforcing prepayment penalties or charges would violate applicable law.
Section 4.03. Realization Upon Defaulted Mortgage Loans.
The Seller shall use commercially reasonable efforts,
consistent with the procedures that the Seller would use in servicing loans for
its own account, Accepted Servicing Practices, any Primary Mortgage Insurance
and the best interest of Purchaser, to foreclose upon or otherwise comparably
convert 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 4.01. Foreclosure
or comparable proceedings shall be initiated pursuant to ▇▇▇▇▇▇ ▇▇▇ guidelines
and applicable state law with respect to Mortgaged Properties for which no
satisfactory arrangements can be made for collection of delinquent payments. The
Seller shall use its best efforts to realize upon defaulted Mortgage Loans in
such manner as will maximize the receipt of principal and interest by the
Purchaser, taking into account, among other things, the timing of foreclosure
proceedings. The
53
foregoing is subject to the provisions that, in any case in which the Mortgaged
Property shall have suffered damage, the Seller shall not be required to expend
its own funds toward the restoration of such property unless it shall determine
in its discretion (i) that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan to the Purchaser after reimbursement
to itself for such expenses, and (ii) that such expenses will be recoverable by
the Seller through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property, as contemplated in Section 4.05. In the event that 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 Seller shall take such actions as it shall deem
to be in the best interest of the Purchaser. In the event that any payment due
under any Mortgage Loan remains delinquent for a period of 90 days or more,
the Seller shall commence foreclosure proceedings and shall notify the
Purchaser in writing (which may be by electronic mail) of the commencement of
foreclosure proceedings. The Seller shall be responsible for all costs and
expenses incurred by it in any such proceedings or functions; provided, however,
that it shall be entitled to reimbursement thereof from the related property, as
contemplated in Section 4.05. Notwithstanding anything to the contrary contained
herein, with respect to any Mortgage Loan as to which the Seller has received
actual notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the related Mortgaged Property the Seller shall not
either (i) obtain title to such Mortgaged Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any
other action, with respect to, such Mortgaged Property if, as a result of any
such action, the Purchaser would be considered to hold title to, to be a
mortgagee-in-possession of, or to be an owner or operator of such Mortgaged
Property within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
comparable law, unless the Seller has also previously determined, based on its
reasonable judgment and a prudent report prepared by a Person who regularly
conducts environmental audits using customary industry standards, that:
(1) such Mortgaged Property is in compliance with
applicable environmental laws or, if not, that it would be in
the best economic interest of the Purchaser to take such
actions as are necessary to bring the Mortgaged Property into
compliance therewith; and
(2) there are no circumstances present at such
Mortgaged Property relating to the use, management or
disposal of any hazardous substances, hazardous materials,
hazardous wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or
local law or regulation, or that if any such materials are
present for which such action could be required, that it
would be in the best economic interest of the Purchaser to
take such actions with respect to the affected Mortgaged
Property.
The cost of the environmental audit report contemplated by
this Section 4.03 shall be advanced by the Seller, subject to the Seller's right
to be reimbursed therefor from the Custodial Account as provided in Section
4.05(ix).
If the Seller determines, as described above, that it is in
the best economic interest of the Purchaser to take such actions as are
necessary to bring any such Mortgaged Property into
54
compliance with applicable environmental laws, or to take such action with
respect to the containment, clean-up or remediation of hazardous substances,
hazardous materials, hazardous wastes, or petroleum-based materials affecting
any such Mortgaged Property, then the Seller shall take such action as it deems
to be in the best economic interest of the Purchaser. The cost of any such
compliance, containment, cleanup or remediation shall be advanced by the Seller,
subject to the Seller's right to be reimbursed therefor from the Custodial
Account as provided in Section 4.05(ix).
Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds in respect of any Mortgage Loan, will
be applied in the following order of priority; first, to reimburse the Seller
for any related unreimbursed Servicing Advances, pursuant to Section 4.05(iii);
second, to accrued and unpaid interest on the Mortgage Loan, to the date of the
Final Recovery Determination, or to the Due Date prior to the Remittance Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Seller as follows: first, to unpaid
Servicing Fees; and second, to the balance of the interest then due and owing.
The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Seller pursuant to Section 4.05(iii).
In the event that a Mortgage Loan becomes part of a REMIC, and
becomes REO Property, such property shall be disposed of by the Seller, with the
consent of the Purchaser as required pursuant to this Agreement, within three
(3) years after becoming an REO Property, unless the Seller provides to the
trustee under such REMIC an opinion of counsel to the effect that the holding of
such REO Property subsequent to three (3) years after its becoming REO Property,
will not result in the imposition of taxes on "prohibited transactions" as
defined in Section 860F of the Code, or cause the transaction to fail to qualify
as a REMIC at any time that certificates are outstanding. The Seller shall
manage, conserve, protect and operate each such REO Property for the
certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code, or any "net
income from foreclosure property" which is subject to taxation under the REMIC
provisions of the Code. Pursuant to its efforts to sell such property, the
Seller shall either itself or through an agent selected by the Seller, protect
and conserve such property in the same manner and to such an extent as is
customary in the locality where such property is located. Additionally, the
Seller shall provide the Purchaser or any master servicer with information
sufficient to perform the tax withholding and reporting related to Sections 1445
and 6050J of the Code.
Section 4.04. Establishment of Custodial Accounts; Deposits
in Custodial Accounts.
The Seller 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 with a commercial bank, a savings bank or a savings and loan
association (which may be a depository Affiliate of the Seller) which meets
55
the guidelines set forth by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac as an eligible
depository institution for custodial accounts. Each Custodial Account shall be
an Eligible Account. Funds deposited in a Custodial Account may be drawn on in
accordance with Section 4.05. The creation of any Custodial Account shall be
evidenced by a letter agreement in the form shown in Exhibit B hereto. The
original of such letter agreement shall be furnished to the Purchaser on the
initial Closing Date, and upon the request of any subsequent purchaser.
The Seller shall deposit in the Custodial Account on a daily
basis, within two (2) Business Days of receipt thereof, and retain therein the
following payments and collections received or made by it subsequent to the
Cut-off Date, or received by it prior to the Cut-off Date but allocable to a
period subsequent thereto, other than in respect of principal and interest on
the Mortgage Loans due on or before the Cut-off Date:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the
Mortgage Loans adjusted to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) any amounts required to be deposited by the
Seller in connection with any REO Property pursuant to Section
4.13;
(v) all Insurance Proceeds including amounts required
to be deposited pursuant to Sections 4.08,4.10 and 4.11, 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, the loan documents or applicable law;
(vi) all Condemnation Proceeds affecting any Mortgaged
Property which are not released to the Mortgagor in accordance
with the Seller's normal servicing procedures, the loan
documents or applicable law;
(vii) any Monthly Advances;
(viii) Compensating Interest, if any, for the month of
distribution. Such deposit shall be made from the Seller's
own funds, without reimbursement therefor;
(ix) all proceeds of any Mortgage Loan repurchased in
accordance with Sections 3.03 and all amounts required to be
deposited by the Seller in connection with short falls in
principal amount of substitute mortgage loans pursuant to
Section 3.03;
(x) any amounts required to be deposited by the Seller
pursuant to Section 4.11 in connection with the deductible
clause in any blanket hazard
56
insurance policy, such deposit shall be made from the
Seller's own funds, without reimbursement therefor;
(xi) any amounts required to be deposited in the
Custodial Account pursuant to Sections 4.01 6.01 or 6.02; and
(xii) an amount from the Buydown Account that when
added to the Mortgagor's payment will equal the full monthly
amount due under the related Mortgage Note.
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 and other ancillary fees, to the extent permitted by
Section 6.01, need not be deposited by the Seller in the Custodial Account.
The Seller may invest the funds in the Custodial Account in
Eligible Investments designated in the name of the Seller for the benefit of the
Seller, 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 Eligible 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 Seller shall advance funds on such
Remittance Date, pending receipt thereof to the extent necessary to make
distributions to the Purchaser) 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
Seller and shall be subject to withdrawal by the Seller from the Custodial
Account pursuant to Section 4.05(iv). The amount of any losses incurred in
respect of any such investments shall be deposited in the Custodial Account by
the Seller out of its own funds immediately as realized.
If the balance on deposit in the Custodial Account exceeds
$75,000 as of the commencement of business on any Business Day and the Custodial
Account constitutes an Eligible Account solely pursuant to clause (i) or (ii) of
the definition of Eligible Account, the Seller shall, on or before twelve
o'clock noon Eastern time on such Business Day, withdraw from the Custodial
Account any and all amounts payable to the Purchaser and remit such amounts to
the Purchaser by wire transfer of immediately available funds.
Section 4.05. Permitted Withdrawals From the Custodial
Account.
The Seller may, from time to time, withdraw from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts
and in the manner provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances, the
Seller's right to reimburse itself pursuant to this subclause
(ii) being limited to amounts received on the related Mortgage
Loan which represent late collections (net of the related
Servicing Fee) of principal and/or interest respecting which
any such advance was made, it being understood that, in the
case of such reimbursement, the Seller's
57
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 Section 3.03, the Seller's right
to such reimbursement shall be subsequent to the payment to
the Purchaser of the Repurchase Price pursuant to such
Section and all other amounts required to be paid to the
Purchaser with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing
Advances and any unpaid Servicing Fees, the Seller's right
to reimburse itself pursuant to this subclause (iii) with
respect to any Mortgage Loan being limited to related
proceeds from Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds and REO Disposition Proceeds;
(iv) to pay to itself as part of its servicing
compensation: (a) any interest earned on funds or any
investment earnings in the Custodial Account net of any losses
on such investments (all such amounts to be withdrawn
monthly not later than each Remittance Date), and (b) to
the extent not otherwise retained, the Servicing Fee from
that portion of any payment or recovery as to interest with
respect to a particular Mortgage Loan;
(v) to pay to itself with respect to each Mortgage
Loan that has been repurchased pursuant to Section 3.03 all
amounts received thereon and not distributed as of the
date on which the related Repurchase Price is determined;
(vi) to reimburse itself for unreimbursed Monthly
Advances and Servicing Advances to the extent not fully
reimbursed pursuant to Section 4.05(ii) or (iii) above;
(vii) to transfer funds to another Eligible Account in
accordance with Section 4.09 hereof;
(viii) to remove funds inadvertently placed in the
Custodial Account by the Seller or for which amounts
previously deposited are returned unpaid by the related
Mortgagor's banking institution; and
(ix) to pay, or to reimburse the Seller for advances in
respect of expenses incurred in connection with any
Mortgage Loan pursuant to Section 4.03, but only to the
extent of amounts received in respect of the Mortgage
Loans to which such expense is attributable; and
(x) to clear and terminate the Custodial Account
upon the termination of this Agreement.
Section 4.06. Establishment of Escrow Accounts; Deposits in
Accounts.
The Seller 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. Each Escrow Account shall be
an Eligible Account. Funds deposited in the Escrow Account may be
58
drawn on by the Seller in accordance with Section 4.07. The creation of any
Escrow Account shall be evidenced by a letter agreement in the form shown in
Exhibit C. The original of such letter agreement shall be furnished to the
Purchaser on the initial Closing Date, and upon request to any subsequent
purchaser.
The Seller shall deposit in the Escrow Account or Accounts on
a daily basis, within two (2) Business Days of receipt thereof, and retain
therein:
(i) 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;
(ii) all Insurance Proceeds which are to be applied to
the restoration or repair of any Mortgaged Property; and
(iii) all Servicing Advances for Mortgagors whose Escrow
Payments are insufficient to cover escrow disbursements.
The Seller shall make withdrawals from the Escrow Account only
to effect such payments as are required under this Agreement, and for such other
purposes as shall be as set forth or in accordance with Section 4.07. The Seller
shall be entitled to retain any interest paid on funds deposited in an Escrow
Account by the depository institution other than interest on escrowed funds
required by law to be paid to the Mortgagor and, to the extent required by law,
the Seller shall pay interest on escrowed funds to the Mortgagor notwithstanding
that such Escrow Account is non-interest bearing or that interest paid thereon
is insufficient for such purposes.
Section 4.07. Permitted Withdrawals From the Escrow Account.
Withdrawals from the Escrow Account may be made by the Seller
only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, Primary Mortgage Insurance Policy
premiums, if applicable, fire and hazard insurance premiums,
condominium assessments and comparable items for the related
Mortgage;
(ii) to reimburse the Seller for any Servicing Advance
made by the Seller with respect to a related Mortgage Loan but
only from amounts received on the related Mortgage Loan
which represent late payments or collections of Escrow
Payments thereunder;
(iii) to refund to the Mortgagor any funds as may be
determined to be overages;
(iv) for transfer to the Custodial Account in
accordance with the terms of this Agreement;
(v) for application to restoration or repair of the
Mortgaged Property;
59
(vi) to pay to the Seller, or to the Mortgagor to
the extent required by law, any interest paid on the funds
deposited in the Escrow Account;
(vii) to clear and terminate the Escrow Account on the
termination of this Agreement;
(viii) to pay to the Mortgagors or other parties
Insurance Proceeds deposited in accordance with Section 4.06;
(ix) to remove funds inadvertently placed in the Escrow
Account by the Seller or for which amounts previously
deposited are returned unpaid by the related Mortgagor's
banking institution;
(x) to remit to the Purchaser payments on account of
Buydown Funds, as applicable.
Section 4.08. Payment of Taxes, Insurance and Charges;
Maintenance of Primary Mortgage Insurance; Collections Thereunder.
With respect to each Mortgage Loan, the Seller shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of primary mortgage insurance premiums (if any) and 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 Seller in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage or applicable law. To the extent that
the Mortgage does not provide for Escrow Payments, the Seller shall determine
that any such payments are made by the Mortgagor at the time they first become
due. The Seller assumes full responsibility for the timely payment of all such
bills and shall effect timely 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 subject to its ability to recover such Servicing Advances pursuant to
Sections 4.05(ii), (iii) and (vi). Notwithstanding the foregoing, if the Seller
reasonably determines that any such Servicing Advance would not be recoverable
from amounts collected on the related Mortgage Loan, the Seller shall have no
obligation to make such Servicing Advance. Any such determination shall be
evidenced by an Officer's Certificate delivered to the Purchaser indicating the
reasons therefor.
The Seller will maintain in full force and effect Primary
Mortgage Insurance Policies issued by a Qualified Insurer with respect to each
Mortgage Loan for which such coverage is herein required. Such coverage will be
maintained until the Loan-to-Value ratio of the related Mortgage Loan is reduced
to the amount for which ▇▇▇▇▇▇ Mae no longer requires such insurance to be
maintained. The Seller will not cancel or refuse to renew any Primary Mortgage
Insurance Policy in effect on the related Closing Date that is required to be
kept in force under this Agreement unless a replacement Primary Mortgage
Insurance Policy for such
60
canceled or non-renewed policy is obtained from and maintained with a Qualified
Insurer. The Seller shall not take any action which would result in non-coverage
under any applicable Primary Mortgage Insurance Policy of any loss which, but
for the actions of the Seller would have been covered thereunder. In connection
with any assumption or substitution agreement entered into or to be entered into
pursuant to Section 6.01, the Seller shall promptly notify the insurer under the
related Primary Mortgage Insurance Policy, if any, of such assumption or
substitution of liability in accordance with the terms of such policy and shall
take all actions which may be required by such insurer as a condition to the
continuation of coverage under the Primary Mortgage Insurance Policy. If
such Primary Mortgage Insurance Policy is terminated as a result of such
assumption or substitution of liability, the Seller shall obtain a replacement
Primary Mortgage Insurance Policy as provided above.
In connection with its activities as servicer, the Seller
agrees to prepare and present, on behalf of itself and the Purchaser, claims to
the insurer under any Primary Mortgage Insurance Policy in a timely fashion in
accordance with the terms of such Primary Mortgage Insurance Policy and, in this
regard, to take such action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policy respecting a defaulted First Lien Loan.
Pursuant to Section 4.04, any amounts collected by the Seller under any Primary
Mortgage Insurance Policy shall be deposited in the Custodial Account, subject
to withdrawal pursuant to Section 4.05.
Section 4.09. Transfer of Accounts.
The Seller may transfer a Custodial Account, Buydown Account
or an Escrow Account to a different Eligible Account from time to time. Such
transfer shall be made only upon obtaining the prior written consent of the
Purchaser, which consent shall not be unreasonably withheld.
Section 4.10. Maintenance of Hazard Insurance.
The Seller shall cause to be maintained for each Mortgage Loan
fire and hazard insurance with extended coverage as is acceptable to ▇▇▇▇▇▇ ▇▇▇
or ▇▇▇▇▇▇▇ Mac and customary in the area where the Mortgaged Property is located
in an amount which is equal to the lesser of (i) the maximum insurable value of
the improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan, and (b) an amount such that
the proceeds thereof shall be sufficient to prevent the Mortgagor and/or the
mortgagee from becoming a co-insurer. If required by the Flood Disaster
Protection Act of 1973, as amended, each Mortgage Loan shall be covered by a
flood insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration in effect with an insurance carrier acceptable
to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, in an amount representing coverage not less than
the least of (i) the outstanding principal balance of the Mortgage Loan, (ii)
the maximum insurable value of the improvements securing such Mortgage Loan and
(iii) the maximum amount of insurance which is available under the Flood
Disaster Protection Act of 1973, as amended. If at any time during the term of
the Mortgage Loan, the Seller determines in accordance with applicable law and
pursuant to the ▇▇▇▇▇▇ Mae Guides that a Mortgaged Property is located in a
special flood hazard area and is not covered by flood insurance or is covered in
an amount less than the amount required by the Flood Disaster Protection Act of
1973, as amended, the Seller
61
shall notify the related Mortgagor that the Mortgagor must obtain such
flood insurance coverage, and if the related Mortgagor fails to obtain
the required flood insurance coverage within forty-five (45) days after such
notification, the Seller shall immediately force place the required flood
insurance on the Mortgagor's behalf. The Seller shall also maintain on each REO
Property, fire and hazard insurance with extended coverage in an amount which
is at least equal to the maximum insurable value of the improvements which are
a part of such property, and, to the extent required and available under the
Flood Disaster Protection Act of 1973, as amended, flood insurance in an amount
as provided above. Any amounts collected by the Seller under any such policies
other than amounts to be deposited in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or REO Property, or released
to the Mortgagor in accordance with Accepted Servicing Practices, shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
4.05. It is understood and agreed that no other additional insurance need be
required by the Seller or maintained on property acquired in respect of the
Mortgage Loan, other than pursuant to this Agreement, the ▇▇▇▇▇▇ ▇▇▇ Guides or
such applicable state or federal laws and regulations as shall at any time be in
force and as shall require such additional insurance. All such policies shall
be endorsed with standard mortgagee clauses with loss payable to the Seller and
its successors and/or assigns and shall provide for at least thirty (30) days
prior written notice of any cancellation, reduction in the amount or material
change in coverage to the Seller. The Seller shall not interfere with the
Mortgagor's freedom of choice in selecting either his insurance carrier or
agent, provided, however, that the Seller shall not accept any such insurance
policies from insurance companies unless such companies are Qualified Insurers.
Section 4.11. Maintenance of Mortgage Impairment Insurance
Policy.
In the event that the Seller (or an Affiliate of the Seller)
shall obtain and maintain a blanket policy issued by an issuer acceptable to
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac insuring against hazard losses on all of the Mortgage
Loans, then, to the extent such policy provides coverage in an amount equal to
the amount required pursuant to Section 4.10 and otherwise complies with all
other requirements of Section 4.10, it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 4.10, it being understood and
agreed that such policy may contain a deductible clause, in which case the
Seller shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with Section 4.10,
and there shall have been a loss which would have been covered by such policy,
deposit in the Custodial Account the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as servicer of the Mortgage Loans, the Seller agrees to prepare and
present, on behalf of the Purchaser, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy. Upon request of the
Purchaser, the Seller shall cause to be delivered to the Purchaser a certified
true copy of such policy and shall use commercially reasonable efforts to obtain
a statement from the insurer thereunder that such policy shall in no event be
terminated or materially modified without thirty (30) days' prior written notice
to the Purchaser.
62
Section 4.12. Maintenance of Fidelity Bond and Errors and
Omissions Insurance.
The Seller shall maintain, at its own expense, a blanket
Fidelity Bond and an errors and omissions insurance policy, with broad coverage
with responsible companies that would meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac on all officers, employees or other persons acting in any capacity
with regard to the Mortgage Loans to handle funds, money, documents and papers
relating to the Mortgage Loans. The Fidelity Bond shall be in the form of a
mortgage banker's blanket bond and shall protect and insure the Seller against
losses, including forgery, theft, embezzlement and fraud of such persons. The
errors and omissions insurance shall protect and insure the Seller against
losses arising out of errors and omissions and negligent acts of such persons.
Such errors and omissions insurance shall also protect and insure the Seller
against losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 4.12 requiring the Fidelity Bond
or errors and omissions insurance shall diminish or relieve the Seller from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇ ▇▇▇ Guides or by
▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ Mac Guides. The Seller shall deliver to the Purchaser
a certificate from the surety and the insurer as to the existence of the
Fidelity Bond and errors and omissions insurance policy and shall cause to be
delivered to the Purchaser a statement from the surety and the insurer that such
Fidelity Bond or insurance policy shall in no event be terminated or materially
modified without thirty (30) days' prior written notice to the Purchaser. Upon
request by the Purchaser, the Seller shall provide the Purchaser with an
insurance certificate certifying coverage under this Section 4.12, and will
provide an update to such certificate upon request, or upon renewal or material
modification of coverage.
Section 4.13. Title, Management and Disposition of REO
Property.
In the event that title to the Mortgaged Property is acquired
in foreclosure, by deed in lieu of foreclosure or other method resulting in full
or partial satisfaction of the related Mortgage, the deed or certificate of sale
shall be taken in the name of the Purchaser or its designee, or in the event the
Purchaser or its designee 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
Seller, at the expense of the Purchaser, from an attorney duly licensed to
practice law in the state where the REO Property is located. Any Person or
Persons holding such title other than the Purchaser shall acknowledge in writing
that such title is being held as nominee for the benefit of the Purchaser.
The Seller shall notify the Purchaser in accordance with the
▇▇▇▇▇▇ Mae Guides of each acquisition of REO Property upon such acquisition, and
thereafter assume the responsibility for marketing such REO Property in
accordance with Accepted Servicing Practices. Thereafter, the Seller shall
continue to provide certain administrative services to the Purchaser relating to
such REO Property as set forth in this Section 4.13.
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The Seller shall, either itself or through an agent selected
by the Seller, and in accordance with the ▇▇▇▇▇▇ ▇▇▇ Guides manage, conserve,
protect and operate each 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. 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
Seller 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 of 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. The Seller shall
cause each REO Property to be inspected promptly upon the acquisition of title
thereto and shall cause each REO Property to be inspected at least monthly
thereafter or more frequently as required by the circumstances. The Seller shall
make or cause to be made a written report of each such inspection. Such reports
shall be retained in the Servicing File and copies thereof shall be forwarded,
upon reasonable request, by the Seller to the Purchaser.
The Seller shall use its best efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within two (2) years after title has been taken to such REO Property, unless the
Seller determines, and gives an appropriate notice to the Purchaser to such
effect, that a longer period is necessary for the orderly liquidation of such
REO Property. If a longer period than two (2) years is permitted under the
foregoing sentence and is necessary to sell any REO Property, the Seller shall
report monthly to the Purchaser as to the progress being made in selling such
REO Property. If as of the date title to any REO Property was acquired by the
Seller there were outstanding unreimbursed Servicing Advances with respect to
the REO Property, the Seller shall be entitled to immediate reimbursement from
the Purchaser for any related unreimbursed Servicing Advances. The disposition
of REO Property shall be carried out by the Seller at such price, and upon such
terms and conditions, as the Seller deems to be in the best interests of the
Purchaser. The Seller shall update the Purchaser from time-to-time as to the
status of each REO Property. Notwithstanding the foregoing, if a REMIC election
is made with respect to the arrangement under which the Mortgage Loans and the
REO Property are held, such REO Property shall be disposed of before the close
of the third taxable year following the taxable year in which the Mortgage Loan
became an REO Property, unless the Seller provides to the trustee under such
REMIC an opinion of counsel to the effect that the holding of such REO Property
subsequent to the close of the third taxable year following the taxable year in
which the Mortgage Loan became an REO Property, will not result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code, or cause the transaction to fail to qualify as a REMIC at any time
that certificates are outstanding. Seller shall manage, conserve, protect and
operate each such REO Property for the certificateholders solely for the purpose
of its prompt disposition and sale in a manner which does not cause such
property to fail to qualify as "foreclosure property" within the meaning of
Section 860F(a)(2)(E) of the Code, or any "net income from foreclosure property"
which is subject to taxation under the REMIC provisions of the Code. Pursuant to
its efforts to sell such property, the Seller shall either itself or through an
agent selected by Seller, protect and conserve such property in the same manner
and to such an extent as is customary in the locality where such property is
located. Additionally, Seller shall perform the tax withholding and reporting
related to Sections 1445 and 6050J of the Code.
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With respect to each REO Property, the Seller shall segregate
and hold all funds collected and received in connection with the operation of
the REO Property, to the extent such REO Property produces income, separate and
apart from its own funds or general assets and shall establish and maintain a
separate REO Account for each REO Property in the form of a non-interest bearing
demand account, unless an Opinion of Counsel is obtained by the Seller to the
effect that the classification as a grantor trust or REMIC for federal income
tax purposes of the arrangement under which the Mortgage Loans and the REO
Property is held will not be adversely affected by holding such funds in another
manner. Each REO Account shall be established with the Seller or, with the prior
consent of the Purchaser, with a commercial bank, a mutual savings bank or a
savings association. The creation of any REO Account shall be evidenced by a
letter agreement substantially in the form of the Custodial Account Letter
Agreement attached as Exhibit B hereto. An original of such letter agreement
shall be furnished to any Purchaser upon request.
The Seller shall deposit or cause to be deposited, on a daily
basis in each REO 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, including the cost of
maintaining any hazard insurance pursuant to Section 4.10 hereof and the fees of
any managing agent acting on behalf of the Seller. The Seller shall not be
entitled to retain interest paid or other earnings, if any, on funds deposited
in such REO Account. On or before each Remittance Date, the Seller shall
withdraw from each REO Account and deposit into the Custodial Account the net
income from the REO Property on deposit in the REO Account.
The Seller shall furnish to the Purchaser on each Remittance
Date, an operating statement for each REO Property covering the operation of
each REO Property. Such operating statement shall be accompanied by such other
information as the Purchaser shall reasonably request. Together with such
statement, the Seller shall furnish to the Purchaser a statement covering the
Seller's efforts in connection with the sale of such REO Property and any rental
of such REO Property incidental to the sale thereof for the previous month.
Each REO Disposition shall be carried out by the Seller at
such price and upon such terms and conditions as the Seller deems to be in the
best interest of the Purchaser. If as of the date title to any REO Property was
acquired by the Seller there were outstanding unreimbursed Servicing Advances
with respect to the REO Property, the Seller, upon an REO Disposition of such
REO Property, shall be entitled to reimbursements for any related unreimbursed
Servicing Advances from proceeds received in connection with such REO
Disposition. The proceeds from the REO Disposition, net of any payment to the
Seller as provided above, shall be deposited in the REO Account and shall be
transferred to the Custodial Account on the Remittance Date in the month
following receipt thereof for distribution on the succeeding Remittance Date in
accordance with Section 5.01.
Section 4.14. Notification of Maturity Date.
With respect to each Mortgage Loan, the Seller shall execute
and deliver to the Mortgagor any and all necessary notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the maturity date if required under applicable law.
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Section 4.15. Establishment of and Deposits to Buydown
Account.
(a) The Seller shall segregate and hold all Buydown Funds
collected and received pursuant to the Buydown Loans separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Buydown Accounts, in the form of time deposit or demand accounts, titled
"Wachovia Mortgage Corporation, in trust for the Purchaser, its successors or
assigns, and/or subsequent purchasers of Residential Mortgage Loans, and
various Mortgagors." The Buydown Accounts shall be established with an Eligible
Account, in a manner which shall provide maximum available insurance thereunder.
Upon request of the Purchaser and within ten (10) days thereof, the Seller shall
provide the Purchaser with written confirmation of the existence of such Buydown
Account. Funds deposited in the Buydown Account may be drawn on by the Seller
in accordance with this Section 4.15.
(b) The Seller shall, from time to time, withdraw funds from
the Buydown Account for the following purposes:
(i) on or prior to each Remittance Date, to deposit in
the Custodial Account in the amounts and in the manner
provided for in Section 4.04(xi);
(ii) to transfer funds to another Eligible Account in
accordance with Section 4.09 hereof;
(iii) to withdraw funds deposited in error; and
(iv) to clear and terminate the Buydown Account upon
the termination of this Agreement.
(c) Notwithstanding anything to the contrary elsewhere in
this Agreement, the Seller may employ the Escrow Account as the Buydown Account
to the extent that the Seller can separately identify any Buydown Funds
deposited therein.
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Seller or the
insurer under any related Primary Mortgage Insurance Policy) the Seller shall,
on the Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage
Loan then remaining in the Buydown Account. Pursuant to the terms of each
Buydown Agreement, any amounts distributed to the Purchaser in accordance with
the preceding sentence will be applied to reduce the outstanding principal
balance of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown
Mortgage Loan prepays such Mortgage Loan in it entirety during the related
Buydown Period, the Seller shall be required to withdraw from the Buydown
Account any Buydown Funds remaining in the Buydown Account with respect to such
Buydown Mortgage Loan in accordance with the related Buydown Agreement. If a
principal prepayment by a Mortgagor on a Buydown Mortgage Loan during the
related Buydown Period, together with any Buydown Funds then remaining in the
Buydown Account related to such Buydown Mortgage Loan, would result
in a Principal Prepayment of the entire unpaid principal balance of the
Buydown Mortgage Loan, the Seller shall distribute to the Purchaser on the
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Remittance Date occurring in the month immediately succeeding the
month in which such Principal Prepayment is received, all Buydown Funds
related to such Mortgage Loan so remaining in the Buydown Account, together
with any amounts required to be deposited into the Custodial Account.
ARTICLE V
PAYMENTS TO THE PURCHASER
Section 5.01. Distributions.
On each Remittance Date, the Seller shall distribute by wire
transfer to the Purchaser (i) all amounts credited to the Custodial Account as
of the close of business on the preceding Determination Date, net of charges
against or withdrawals from the Custodial Account pursuant to Section 4.05, plus
(ii) all Monthly Advances, if any, which the Seller is obligated to distribute
pursuant to Section 5.03, plus (iii) all payments in respect of Compensating
Interest for such Remittance Date required to be deposited in the Custodial
Account pursuant to Section 4.04(viii), minus (iv) any amounts attributable to
Monthly Payments collected but due on a Due Date or Dates subsequent to the
preceding Determination Date, which amounts shall be remitted on the Remittance
Date next succeeding the Due Period for such amounts, (v) minus any amounts
attributable to Buydown Funds relating to a future Due Period being held in the
Custodial Account, which amounts shall be remitted on the Remittance Date next
succeeding the Due Period for such amounts, and (vi) any Principal Prepayments
received during the month of such Remittance Date, which amounts shall be
remitted on the next succeeding Remittance Date.
All distributions made to the Purchaser on each Remittance
Date will be made to the Purchaser of record on the preceding Record Date, and
shall be based on the Mortgage Loans owned and held by the Purchaser, and shall
be made by wire transfer of immediately available funds to the account of the
Purchaser at a bank or other entity having appropriate facilities therefor, if
the Purchaser shall have so notified the Seller or by check mailed to the
address of the Purchaser.
With respect to any remittance received by the Purchaser after
the Business Day following the Business Day on which such payment was due, the
Seller 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 two
(2) percentage points, but in no event greater than the maximum amount permitted
by applicable law. Such interest shall be deposited in the Custodial Account by
the Seller on the date such late payment is made and shall cover the period
commencing with the day following the second Business Day on which such payment
was due and ending with the Business Day on which such payment is made, both
inclusive. Such interest shall be remitted along with the distribution payable
on the next succeeding Remittance Date. The payment by the Seller of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Seller.
Section 5.02. Statements to the Purchaser.
The Seller shall furnish to the Purchaser an individual loan
accounting report, as of the last Business Day of each month, in the Seller's
assigned loan number order to document
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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 fifth (5th) Business Day of
the following month in a format mutually agreed upon by both the Purchaser and
the Seller and in hard copy, which report shall contain the following (or such
other information as is mutually agreed upon by the Seller and the Purchaser):
(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, and any Prepayment Penalties or
premiums, along with a detailed report of interest on
principal prepayment amounts remitted in accordance with
Section 4.04);
(ii) with respect to each Monthly Payment, the amount
of such remittance allocable to interest;
(iii) the amount of servicing compensation received by
the Seller during the prior collection period;
(iv) the aggregate Scheduled Principal Balance of the
Mortgage Loans;
(v) the aggregate of any expenses reimbursed to the
Seller during the prior distribution period pursuant to
Section 4.05;
(vi) the number and aggregate outstanding principal
balances of Mortgage Loans (a) delinquent (1) 30 to 59 days,
(2) 60 to 89 days, and (3) 90 days or more; (b) as to which
foreclosure has commenced; and (c) as to which REO Property
has been acquired; and
(vii) the amount of any Monthly Advances.
The Seller shall also provide a monthly servicing report,
sorted in the Purchaser's assigned loan number order, in the form of Alltel
reports P139, S214, S215 and S50Y and Fidelity report P-4DL (or in such other
forms as the Purchaser and the Seller may agree), with each such report.
The Seller shall prepare and file any and all information
statements or other filings required to be delivered to any governmental taxing
authority or to the Purchaser pursuant to any applicable law with respect to the
Mortgage Loans and the transactions contemplated hereby. In addition, the Seller
shall provide the Purchaser with such information concerning the Mortgage Loans
as is necessary for the Purchaser to prepare its federal income tax return as
the Purchaser may reasonably request from time to time.
In addition, not more than sixty (60) days after the end of
each calendar year, the Seller shall furnish to each Person who was a Purchaser
at any time during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
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Section 5.03. Monthly Advances by the Seller.
Not later than the close of business on the Business Day
preceding each Remittance Date, the Seller shall deposit in the Custodial
Account an amount equal to all Monthly Payments, whether or not deferred
pursuant to Section 4.01, which were due on a Mortgage Loan on the immediately
preceding Due Date and delinquent at the close of business on the related
Determination Date.
The Seller's obligation to make such Monthly Advances as to
any Mortgage Loan or REO Property will continue through the earlier of: (i) the
date of the termination or resignation, as applicable, of the Seller pursuant to
Sections 7.04, 8.01 or 9.01 or (ii) a Final Recovery Determination in connection
therewith, unless the Seller reasonably believes such advance to be
non-recoverable from proceeds of the related Mortgage Loan. In such event, the
Seller shall deliver to the Purchaser an Officer's Certificate of the Seller to
the effect that an officer of the Seller has reviewed the related Servicing File
and has made the reasonable determination that any additional advances are
non-recoverable from proceeds of the related Mortgage Loan.
Section 5.04. Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Purchaser pursuant to a deed in lieu of foreclosure,
the Seller shall submit to the Purchaser a liquidation report with respect to
such Mortgaged Property. The Seller shall also provide reports on the status of
REO Property containing such information as the Purchaser may reasonably
require.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01. Assumption Agreements.
The Seller shall, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(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 any "due-on-sale" clause to the extent permitted by law; provided,
however, that the Seller shall not exercise any such rights if prohibited by law
or the terms of the Mortgage Note from doing so or if the exercise of such
rights would impair or threaten to impair any recovery under the related Primary
Mortgage Insurance Policy, if any. If the Seller reasonably believes it is
unable under applicable law to enforce such "due-on-sale" clause, the Seller
will enter into an assumption agreement with the person to whom the Mortgaged
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. If the Seller is
prohibited under applicable law from (a) entering into an assumption agreement
with the Person to whom the Mortgaged Property has been conveyed or is proposed
to be conveyed or (b) requiring the original Mortgagor to remain liable under
the Mortgage Note, the Seller, with the prior consent of the insurer under the
Primary Mortgage
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Insurance Policy, if any, is authorized to enter into a substitution of
liability agreement with the person to whom the Mortgaged Property has been
conveyed or is proposed to be conveyed pursuant to which the original Mortgagor
is released from liability and such Person is substituted as mortgagor and
becomes liable under the related Mortgage Note. Any such substitution of
liability agreement shall be in lieu of an assumption agreement.
In connection with any such assumption or substitution of
liability, the Seller shall follow the underwriting practices and procedures of
the ▇▇▇▇▇▇ Mae Guides. With respect to an assumption or substitution of
liability, the Mortgage Interest Rate borne by the related Mortgage Note and the
amount of the Monthly Payment may not be changed. If the credit of the proposed
transferee does not meet such underwriting criteria, the Seller diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan. The Seller shall
notify the Purchaser that any such substitution of liability or assumption
agreement has been completed by forwarding to the Purchaser the original of any
such substitution of liability 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. All fees collected by the Seller for
entering into an assumption or substitution of liability agreement in excess of
1% of the outstanding principal balance of the Mortgage Loan shall be deposited
into the Custodial Account pursuant to Section 4.04.
Notwithstanding the foregoing paragraphs of this Section or
any other provision of this Agreement, the Seller 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 any assumption which
the Seller may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Section 6.01, 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 6.02. Satisfaction of Mortgages and Release of
Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Seller of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Seller will immediately notify the
Purchaser 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 Custodial Account pursuant to
Section 4.04 have been or will be so deposited, of a Servicing Officer and shall
request delivery to it of the portion of the Mortgage File held by the
Purchaser. The Purchaser shall no later than five (5) Business Days after
receipt of such certification and request, release or cause to be released to
the Seller, the related Mortgage Loan Documents and, upon its receipt of such
documents, the Seller shall promptly prepare and deliver to the Purchaser the
requisite satisfaction or release. No later than three (3) Business Days
following its receipt of such satisfaction or release, the Purchaser shall
deliver, or cause to be delivered, to the Seller the release or satisfaction
properly executed by the owner of record of the applicable Mortgage or its duly
appointed attorney in fact. If such Mortgage Loan is a MERS Mortgage Loan, the
Seller is authorized to cause the removal from the registration on the MERS
System of such Mortgage and to execute and deliver,
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on behalf of the Purchaser, any and all instruments of satisfaction or
cancellation or of partial or full release.
In the event the Seller satisfies or releases a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or should it otherwise prejudice any right the Purchaser may have under
the Mortgage Loan Documents, the Seller, upon written demand, shall remit within
ten (10) Business Days to the Purchaser the then outstanding principal balance
of the related Mortgage Loan by deposit thereof in the Custodial Account.
From time to time and as appropriate for the servicing or
foreclosure of the Mortgage Loans, including for the purpose of collection under
any Primary Mortgage Insurance Policy, the Purchaser shall, upon request of the
Seller and delivery to the Purchaser of a servicing receipt signed by a
Servicing Officer, release the portion of the Mortgage File held by the
Purchaser to the Seller. Such servicing receipt shall obligate the Seller to
return such Mortgage Loan Documents to the Purchaser when the need therefor by
the Seller no longer exists, unless the Mortgage Loan has been liquidated and
the Liquidation Proceeds relating to the Mortgage Loan have been deposited in
the Custodial Account or the Mortgage File 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 the Seller has
delivered to the Purchaser a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File 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 liquidated, the servicing
receipt shall be released by the Purchaser to the Seller.
Section 6.03. Servicing Compensation.
As compensation for its services hereunder, the Seller shall
be entitled to the Servicing Fee. Additional servicing compensation in the form
of assumption fees, as provided in Section 6.01, late payment charges, interest
and investment earning on funds on deposit in the Custodial Account and Escrow
Account (to the extent provided for herein) and other ancillary income shall be
retained by the Seller to the extent not required to be deposited in the
Custodial Account. The Seller 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.
Section 6.04. Annual Statement as to Compliance.
Within the later of (a) seventy-five (75) days after the end
of each calendar year or (b) fifteen (15) calendar days prior to the date on
which the Purchaser or the Affiliate of the Purchaser required to file an annual
report on Form 10-K in connection with any Pass-Through Transfer is required to
file such annual report on Form 10-K with the United States Securities and
Exchange Commission (the "SEC"), the Seller will deliver to the Purchaser an
Officers' Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Seller during the preceding calendar year and of
performance under this Agreement has been made under such officers' supervision,
and (ii) to the best of such officers' knowledge, based on such review, the
Seller has fulfilled all of its obligations under this Agreement throughout such
year,
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or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status
thereof. The first Officer's Certificate delivered by the Seller to the
Purchaser pursuant to this Section shall be delivered on or before March 15,
2007, or such other date as may be required pursuant to the first sentence of
this Section 6.04. Copies of such statement shall be provided by the Seller to
the Purchaser upon request.
Section 6.05. Annual Independent Certified Public
Accountants' Servicing Report.
Within the later of (a) seventy-five (75) days after the end
of each calendar year or (b) fifteen (15) calendar days prior to the date on
which the Purchaser or the Affiliate of the Purchaser required to file an annual
report on Form 10-K in connection with any Pass-Through Transfer is required to
file such annual report on Form 10-K with the SEC, the Seller 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 Seller's servicing of residential mortgage loans, and
that, on the basis of such an examination, conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or the Audit
Guide for HUD Approved Title II Approved Mortgagees and Loan Correspondent
Programs, such firm is of the opinion that the Seller's servicing has been
conducted in compliance with such programs, 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. The first statement delivered by the
Seller to the Purchaser pursuant to this Section shall be delivered on or before
March 15, 2007, or such other date as may be required pursuant to the first
sentence of this Section 6.05. Copies of such statement shall be provided by the
Seller to the Purchaser.
Section 6.06. Purchaser's Right to Examine Seller Records.
At its expense, the Purchaser shall have the right to examine
and audit upon reasonable notice to the Seller, during business hours or at such
other times as might be reasonable under applicable circumstances, any and all
of the books, records, documentation or other information of the Seller, or held
by another for the Seller or on its behalf or otherwise, which relates to the
performance or observance by the Seller of the terms, covenants or conditions of
this Agreement.
The Seller shall provide to the Purchaser and any supervisory
agents or examiners representing a state or federal governmental agency having
jurisdiction over the Purchaser, including but not limited to, OCC, OTS, FDIC
and other similar entities, access to any documentation regarding the Mortgage
Loans in the possession of the Seller which may be required by any applicable
regulations. Such access shall be afforded without charge, upon reasonable
request, during normal business hours and at the offices of the Seller, and in
accordance with the federal government, OCC, FDIC, OTS, or any other similar
regulations; provided, however, that in connection with providing such access,
the Seller shall not be required to incur any out-of-pocket costs unless
provisions have been made for the reimbursement thereof.
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Section 6.07. Seller Shall Provide Information as Reasonably
Required.
The Seller shall furnish to the Purchaser during the term of
this Agreement such periodic, special or other reports, information or
documentation as the Purchaser may reasonably request, as shall be necessary,
reasonable or appropriate in respect to the Mortgage Loans and the performance
of the Seller under this Agreement, including any reports, information or
documentation reasonably required to comply with any regulations regarding any
supervisory agents or examiners of the Purchaser; provided, that, the Seller
shall not be liable for any out-of-pocket costs with respect to the provision of
such reports, information or documentation. All such reports or information
shall be provided by and in accordance with such applicable instructions and
directions as the Purchaser may reasonably request in relation to this Agreement
or the performance of the Seller under this Agreement. The Seller 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
purpose and to carry out the terms of this Agreement.
The Seller, upon reasonable advance notice, shall make
reasonably available to the Purchaser or any prospective purchaser a
knowledgeable financial or accounting officer for the purpose of answering
questions and to permit any prospective purchaser to inspect the Seller's
servicing facilities for the purpose of satisfying such prospective purchaser
that the Seller has the ability to service the Mortgage Loans as provided in
this Agreement.
The Seller shall maintain with respect to each Mortgage Loan
and shall make available for inspection by the Purchaser or its designee the
related Servicing File during the time the Purchaser retains ownership of a
Mortgage Loan and thereafter in accordance with applicable laws and regulations.
Section 6.08. Notification of Adjustments.
On each Adjustment Date, the Seller shall make interest rate
adjustments for each Adjustable Rate Mortgage Loan in compliance with the
requirements of the related Mortgage and Mortgage Note. The Seller shall execute
and deliver the notices required by each Mortgage and Mortgage Note regarding
interest rate adjustments. The Seller also shall provide timely notification to
the Purchaser of all applicable data and information regarding such interest
rate adjustments. Upon the discovery by the Seller or the Purchaser that the
Seller has failed to adjust a Mortgage Interest Rate or a Monthly Payment
pursuant to the terms of the related Mortgage Note and Mortgage, the Seller
shall immediately deposit in the Custodial Account from its own funds the amount
of any interest loss caused thereby without reimbursement therefor.
Section 6.09. Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the
arrangement under which the Mortgage Loans and REO Property are held, the Seller
shall not take any action, cause the REMIC to take any action or fail to take
(or fail to cause to be taken) any action that, under the REMIC Provisions, if
taken or not taken, as the case may be, could (i) endanger the status of the
REMIC as a REMIC or (ii) result in the imposition of a tax upon the REMIC
(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) unless the
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Seller has received an Opinion of Counsel (at the expense of the party seeking
to take such action) to the effect that the contemplated action will not
endanger such REMIC status or result in the imposition of any such tax.
ARTICLE VII
THE SELLER
Section 7.01. Indemnification; Third Party Claims.
The Seller agrees to indemnify and hold the Purchaser, 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 related costs, judgments, and any
other costs, fees and expenses (including, without limitation, any legal fees
and expenses, judgments or expenses relating to such liability, claim, loss or
damage) that such parties may sustain in any way related to the failure of the
Seller to observe and perform its duties, obligations, covenants, and agreements
and to service the Mortgage Loans in compliance with the terms of this Agreement
or as a result of the breach of a representation or warranty set forth in
Sections 3.01 or 3.02 of this Agreement.
Promptly after receipt by the Purchaser under this Section
7.01 of notice of the commencement of any action, the Purchaser will, if a claim
in respect thereof is to be made against the Seller under this Section 7.01,
notify the Seller in writing of the commencement thereof; but the omission so to
notify the Seller will not relieve the Seller from any liability which it may
have to the Purchaser under this Section 7.01, 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 Section 7.01. The Seller shall assume (with the
consent of the Purchaser) the defense of any such claim and pay all expenses in
connection therewith, including attorney's fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the
indemnified party in respect of such claim. The Seller shall follow any written
instructions received from the Purchaser in connection with such claim. The
provisions of this Section 7.01 shall survive termination of this Agreement.
Section 7.02. Merger or Consolidation of the Seller.
The Seller shall 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 shall 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
(including by means of sale or disposal of all or substantially all of the
Seller's assets), 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 be an
institution whose deposits are insured by FDIC or a
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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 a ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac approved seller/
servicer in good standing (including without limitation, compliance with the
minimum net worth and liquidity requirements).
Section 7.03. Limitation on Liability of the Seller and
Others.
The duties and obligations of the Seller shall be determined
solely by the express provisions of this Agreement, the Seller 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 Seller. Neither the Seller nor any
of the officers, employees or agents of the Seller shall be under any liability
to the Purchaser 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 made
in good faith; provided, however, that this provision shall not protect the
Seller or any such person against any breach of warranties or representations
made herein, or failure to perform its obligations in compliance with any
standard of care set forth in this Agreement, or any liability which would
otherwise be imposed by reason of negligence, bad faith or willful misconduct,
or any breach of the terms and conditions of this Agreement. The Seller and any
officer, employee or agent of the Seller may rely in good faith on any document
of any kind prima facie properly executed and submitted by the Purchaser
respecting any matters arising hereunder. The Seller shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its reasonable opinion may involve it in any expenses or
liability; provided, however, that the Seller may undertake any such action
which it may deem necessary or desirable in respect to this Agreement and the
rights and duties of the parties hereto as is consistent with Accepted Servicing
Practices. In such event, the reasonable legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
for which the Purchaser shall be liable, and the Seller shall be entitled to be
reimbursed therefor from the Purchaser upon written demand.
Section 7.04. Seller Not to Resign.
The Seller shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Seller and the Purchaser or
upon the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Seller. Any such
determination permitting the resignation of the Seller 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 acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Seller's responsibilities and obligations hereunder in the manner provided in
Section 11.01.
Section 7.05. No Transfer of Servicing.
With respect to the retention of the Seller to service the
Mortgage Loans hereunder, the Seller acknowledges that the Purchaser has acted
in reliance upon the Seller's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without
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in any way limiting the generality of this Section 7.05 and except as pursuant
to Section 7.02, the Seller shall not either assign this Agreement or the
servicing hereunder or delegate its rights or duties hereunder or any portion
thereof without the prior written approval of the Purchaser, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing, the Seller may,
without the consent of the Purchaser, retain reasonable and necessary third
party contractors to perform certain servicing and loan administration
functions, including and limited to, hazard insurance administration, tax
payment and administration, flood certification and administration and
foreclosure activities; provided, that such contractors shall perform such
servicing and loan administrative functions in a manner consistent with this
Agreement; provided, further, that the retention of such contractors by Seller
shall not limit the obligation of the Seller to service the Mortgage Loans
pursuant to the terms and conditions of this Agreement or release it from any of
its obligations hereunder.
ARTICLE VIII
DEFAULT
Section 8.01. Events of Default.
In case one or more of the following Events of Default by the
Seller shall occur and be continuing, that is to say:
(i) any failure by the Seller to remit to the
Purchaser any payment required to be made under the terms of
this Agreement which continues unremedied for a period of
two (2) Business Days after the date upon which written notice
of such failure, requiring the same to be remedied, shall
have been given to the Seller by the Purchaser; or
(ii) failure on the part of the Seller duly to observe
or perform in any material respect any other of the
covenants or agreements on the part of the Seller set forth
in this Agreement, or which failure continues unremedied for
a period of thirty (30) days after the date on which written
notice of such failure, requiring the same to be remedied,
shall have been given to the Seller by the Purchaser; or
(iii) 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 Seller and such decree or order shall have remained in
force undischarged or unstayed for a period of sixty (60)
days; or
(iv) the Seller 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
Seller or of or relating to all or substantially all of its
property; or
(v) the Seller shall admit in writing its inability
to pay its debts generally as they become due, file a petition
to take advantage of any applicable
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insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment
of its obligations; or
(vi) the Seller ceases to be approved by ▇▇▇▇▇▇ ▇▇▇ as
a mortgage loan seller and servicer or the Seller is not
eligible to act as servicer or master servicer for mortgage
loans subject to residential mortgage backed securities
transactions rated by any nationally recognized rating agency
or is eligible to act as such only with enhanced credit
support, or the Seller's servicer rating is reduced to below
average by any nationally recognized rating agency below its
rating on the Initial Closing Date; or
(vii) the Seller attempts to assign its right to
servicing compensation hereunder or the Seller attempts,
without the consent of the Purchaser, to assign this Agreement
or the servicing responsibilities hereunder or to delegate its
duties hereunder or any portion thereof in a manner not
permitted under this Agreement; or
(viii) the Seller ceases to be (a) licensed to service
first lien residential mortgage loans in each jurisdiction
in which a Mortgaged Property is located and such licensing is
required, and (b) qualified to transact business in any
jurisdiction where it is currently so qualified, but only
to the extent such non-qualification materially and adversely
affects the Seller's ability to perform its obligations
hereunder;
(ix) the Seller fails to duly perform, within the
required time period, its obligations under Sections 2.04,
2.05 and 2.06 of the Regulation AB Compliance Addendum, which
failure continues unremedied for a period of three (3) days
after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to
the Seller by any party to this Agreement or by any master
servicer responsible for master servicing the Mortgage
Loans pursuant to a securitization of such Mortgage Loans.
then, and in each and every such case, so long as an Event of
Default shall not have been remedied, within the applicable time period, the
Purchaser, by notice in writing to the Seller may, in addition to whatever
rights the Purchaser may have under Sections 3.03 and 7.01 and at law or equity
or to damages, including injunctive relief and specific performance, terminate
all the rights and obligations of the Seller under this Agreement and in and to
the Mortgage Loans and the proceeds thereof without compensating the Seller for
the same. On or after the receipt by the Seller of such written notice of
termination, all authority and power of the Seller under this Agreement, whether
with respect to the Mortgage Loans or otherwise, shall pass to and be vested in
the successor appointed pursuant to Section 12.01. Upon written request from the
Purchaser, the Seller shall prepare, execute and deliver, any and all documents
and other instruments, place in such successor's possession all Servicing 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 Seller's sole expense. The Seller agrees to cooperate with the
Purchaser and such successor in effecting the termination of the Seller's
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responsibilities and rights hereunder, 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 Seller to the Custodial Account or Escrow
Account or thereafter received with respect to the Mortgage Loans or any REO
Property.
If any of the Mortgage Loans are MERS Mortgage Loans, in
connection with the termination or resignation (as described in Section 8.04) of
the Seller hereunder, either (i) the successor servicer shall represent and
warrant that it is a member of MERS in good standing and shall agree to comply
in all material respects with the rules and procedures of MERS in connection
with the servicing of the Mortgage Loans that are registered with MERS, or (ii)
the Seller shall cooperate with the successor servicer either (x) in causing
MERS to execute and deliver an assignment of Mortgage in recordable form to
transfer the Mortgage from MERS to the Purchaser and to execute and deliver such
other notices, documents and other instruments as may be necessary or desirable
to effect a transfer of such Mortgage Loan or servicing of such Mortgage Loan on
the MERS(R) System to the successor servicer or (y) in causing MERS to designate
on the MERS(R) System the successor servicer as the servicer of such Mortgage
Loan.
Section 8.02. Waiver of Defaults.
The Purchaser may waive only by written notice any default by
the Seller in the performance of its obligations hereunder and its consequences.
Upon any such 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 thereon except to the extent
expressly so waived in writing.
ARTICLE IX
TERMINATION
Section 9.01. Termination.
The respective obligations and responsibilities of the Seller,
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 Seller); (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; (c) by mutual consent of the
Seller and the Purchaser in writing; or (d) the termination of the Seller by the
Purchaser pursuant to Section 8.01.
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ARTICLE X
RECONSTITUTION OF MORTGAGE LOANS
Section 10.01. Reconstitution of Mortgage Loans.
(a) The Seller acknowledges and the Purchaser agrees that
with respect to some or all of the Mortgage Loans, the Purchaser may effect,
upon prior notice to the Seller, either:
(i) one or more sales of the Mortgage Loans as whole
loan transfers (each, a "Whole Loan Transfer");
(ii) one or more Agency Transfers; and/or
(iii) one or more sales of the Mortgage Loans as public
or private pass-through transfers (each, a "Pass-Through
Transfer").
(b) With respect to each Whole Loan Transfer, Agency
Transfer or Pass-Through Transfer, as the case may be, the Seller agrees:
(i) to cooperate reasonably with the Purchaser and any
prospective purchaser with respect to all reasonable
requests that do not result in an undue burden or expense of
the Seller;
(ii) to execute all Reconstitution Agreements,
including, without limitation, an Assignment, Assumption
and Recognition Agreement in the form attached hereto as
Exhibit D and an Indemnification Agreement in the form
attached hereto as Exhibit J, provided that the Seller is
given an opportunity to review and reasonably negotiate in
good faith the content of such documents not specifically
referenced or provided for herein;
(iii) to make all the representations and warranties set
forth in Section 3.01 as of the date of the Whole Loan
Transfer, Agency Transfer or Pass-Through Transfer;
(iv) to deliver to the Purchaser (a) for inclusion in
any prospectus or other offering material such publicly
available information regarding the Seller and its financial
condition and any additional information reasonably requested
by the Purchaser, (b) any similar nonpublic, unaudited
financial information (which the Purchaser may, at its option
and its cost, have audited by certified public accountants)
and such other information as is reasonably requested by the
Purchaser and which the Seller is capable of providing without
unreasonable effort or expense, and to indemnify the Purchaser
and its Affiliates for any losses, costs or damages incurred
by any of them directly related to any material misstatements
contained in such information or for any omissions of material
fact required to be stated therein to the extent such
information is provided by the Seller specifically for use in
a prospectus or other offering material; provided, that, the
Purchaser shall indemnify the Seller and its Affiliates for
any losses,
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costs or damages related to any material misstatements
contained in any prospectus or other offering material other
than in such information provided by the Seller specifically
for use therein or for any omissions of material fact required
to be stated therein and (c) such statements and audit letters
of reputable, certified public accountants pertaining to
information provided by the Seller pursuant to clause (a)
above as shall be reasonably requested by the Purchaser; and
(v) to deliver to the Purchaser, and to any Person
designated by the Purchaser, opinions of counsel in a form
reasonably acceptable to the Purchaser as are customarily
delivered by sellers and servicers and reasonably determined
by the Purchaser to be necessary in connection with Whole
Loan Transfers, Agency Transfers or Pass-Through Transfers, as
the case may be, it being understood that the cost of any
opinions of counsel (other than in-house counsel) that may be
required for a Whole Loan Transfer, Agency Transfer or
Pass-Through Transfer, as the case may be, shall be the
responsibility of the Purchaser.
(c) In order to facilitate compliance with Regulation AB
the Seller and the Purchaser agree to comply with the provisions of the
Regulation AB Compliance Addendum attached hereto as Exhibit F.
The Purchaser shall reimburse the Seller for any and all
out-of-pocket expenses, costs and fees, including reasonable attorney's fees,
incurred by the Seller in response to requests for information or assistance
under this Section; provided, however, that the attorney's fees for each Whole
Loan Transfer, Agency Transfer or Pass-Through Transfer in which disclosure
related to the Seller is included in the offering document shall equal a
fixed-fee of $3,000, and the attorney's fees for any other Whole Loan Transfer,
Agency Transfer or Pass-Through Transfer shall equal a fixed-fee of $1,500. All
Mortgage Loans not sold or transferred pursuant to a Whole Loan Transfer, Agency
Transfer or Pass-Through Transfer shall be 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.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Successor to the Seller.
Prior to termination of Seller's responsibilities and duties
under this Agreement pursuant to Section 7.04, 8.01 or 9.01, the Purchaser shall
(i) succeed to and assume all of the Seller's responsibilities, rights, duties
and obligations under this Agreement, or (ii) appoint a successor having the
characteristics set forth in Section 7.02 hereof and which shall succeed to all
rights and assume all of the responsibilities, duties and liabilities of the
Seller under this Agreement. 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 the Purchaser and such successor shall
agree. In the event that the Seller's duties, responsibilities and liabilities
under this Agreement should be terminated pursuant to the aforementioned
Sections, the Seller shall discharge such duties and responsibilities during the
period from the
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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 the Purchaser or
its successor. The resignation or removal of the Seller pursuant to the
aforementioned Sections shall not become effective until a successor shall be
appointed pursuant to this Section and shall in no event relieve the Seller
of the representations and warranties made pursuant to Sections 3.01, 3.02,
the remedies available under Section 3.03 and the indemnification
obligations of the Seller pursuant to Section 7.01.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Seller 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 Seller, with like effect as if originally named as a party to
this Agreement provided, however, that such successor shall not assume, and the
Seller shall indemnify such successor for, any and all liabilities arising out
of the Seller's acts as servicer taken prior to the appointment of such
successor servicer. Any termination or resignation of the Seller or this
Agreement pursuant to Section 7.04, 7.05, 8.01 or 9.01 shall not affect any
claims that the Purchaser may have against the Seller arising prior to any such
termination or resignation.
The Seller shall promptly deliver to the successor the funds
in the Custodial Account, the REO Account and the Escrow Account and the
Mortgage Files and related documents and statements held by it hereunder and the
Seller shall account for all funds. The Seller shall execute and deliver such
instruments and do such other things all as may reasonably be required to more
fully and definitely vest and confirm in the successor all such rights, powers,
duties, responsibilities, obligations and liabilities of the Seller. Upon
appointment of successor servicer to the Seller, the Seller shall be reimbursed
for unrecovered Servicing Advances, Monthly Advances and unpaid Servicing Fees
which would otherwise have been recovered by the Seller pursuant to this
Agreement but for the appointment such successor servicer.
Upon a successor's acceptance of appointment as such, the
Seller shall notify by mail the Purchaser of such appointment.
Section 11.02. Amendment.
This Agreement may be amended or supplemented from time to
time by written agreement executed by the Purchaser and the Seller.
Section 11.03. Recordation of Agreement.
To the extent permitted by applicable law, 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 of
all the Mortgaged Properties subject to the Mortgages are situated, and in any
other appropriate public recording office or elsewhere, such recordation to be
effected by the Seller at the Seller's expense on direction of the Purchaser.
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Section 11.04. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
conflict of law provisions, except to the extent preempted by Federal law. The
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 11.05. Notices.
Any demands, notices or other communications permitted or
required hereunder shall be in writing and shall be deemed conclusively to have
been given if personally delivered at or mailed by registered mail, postage
prepaid, and return receipt requested or certified mail, return receipt
requested, or transmitted by telex, telegraph or telecopier and confirmed by a
similar mailed writing, as follows:
(i) if to the Seller:
Wachovia Mortgage Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachovia Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Purchaser:
HSBC Bank USA, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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).
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Section 11.06. Severability of Provisions.
Any part, provision, representation or warranty of this
Agreement which is prohibited or which is held to be void or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. 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 11.07. Exhibits.
The exhibits to this Agreement are hereby incorporated and
made a part hereof and are an integral part of this Agreement.
Section 11.08. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(i) 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;
(ii) accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with GAAP;
(iii) 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;
(iv) a 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;
(v) the words "herein," "hereof," "hereunder," and
other words of similar import refer to this Agreement as a
whole and not to any particular provision;
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(vi) the term "include" or "including" shall mean
without limitation by reason of enumeration; and
(vii) headings of the Articles and Sections in this
Agreement are for reference purposes only and shall not be
deemed to have any substantive effect.
Section 11.09. Reproduction of Documents.
This Agreement and all documents relating thereto, including,
without limitation, (i) consents, waivers and modifications which may hereafter
be executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 11.10. Confidentiality of Information.
The Seller and the Purchaser understand and agree that this
Agreement, any other agreements executed in connection with the sale
contemplated hereunder, any agreements executed in connection with any
Reconstitution, and any offering circulars or other disclosure documents
produced in connection with any Reconstitution are confidential and proprietary
to the Purchaser or Seller, and the Seller and Purchaser agree to hold such
documents confidential and not to divulge such documents to anyone except (a) to
the extent required by law or judicial order or to enforce its rights or
remedies under this Agreement, (b) to the extent such information enters into
the public domain other than through the wrongful act of the Seller or the
Purchaser, as the case may be or (c) as is necessary in working with legal
counsel, investors and potential investors, rating agencies, auditors, agents,
taxing authorities or other governmental agencies.
Section 11.11. 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 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 (i) with respect to MERS Mortgage Loans and (ii) with respect to
Mortgage Loans that are not MERS Mortgage Loans, at the Seller's expense, in
each case, in the event recordation is either necessary under applicable law or
requested by the Purchaser at its sole option.
Section 11.12. Assignment by Purchaser.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller and the Purchaser and the respective successors and
assigns of the Seller, and the Purchaser; provided, however, that in no event
shall there be more than three (3) "Purchasers" pursuant to any Whole Loan
Transfers or three (3) "Purchasers" pursuant to Pass-Through
84
Transfers with respect to any Mortgage Loan Package. The Purchaser may assign
this Agreement to any Person to whom any Mortgage Loan is transferred whether
pursuant to a sale or financing and to any Person to whom the servicing or
master servicing of any Mortgage Loan is sold or transferred. Upon any such
assignment, the Person to whom such assignment is made shall succeed to all
rights and obligations of the Purchaser under this Agreement to the extent of
the related Mortgage Loan or Mortgage Loans and this Agreement, to the extent
of the related Mortgage Loan or Loans, shall be deemed to be a separate and
distinct Agreement between the Seller and such Purchaser, and a separate and
distinct Agreement between the Seller and each other Purchaser to the extent of
the other related Mortgage Loan or Loans. In the event that this Agreement is
assigned to any Person to whom the servicing or master servicing of any Mortgage
Loan is sold or transferred, the rights and benefits under this agreement which
inure to the Purchaser shall inure to the benefit of both the Person to
whom such Mortgage Loan is transferred and the Person to whom the servicing
or master servicing of the Mortgage Loan has been transferred; provided that,
the right to require a Mortgage Loan to be repurchased by the Seller pursuant
to Section 3.03, 3.04 or 3.05 shall be retained solely by the Purchaser. This
Agreement shall not be assigned, pledged or hypothecated by the Seller to a
third party without the consent of the Purchaser, which consent shall not be
unreasonably withheld.
Section 11.13. 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 Seller shall be rendered as an independent contractor and not as
agent for Purchaser.
Section 11.14. Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 7.02, this Agreement
shall inure to the benefit of and be binding upon the Seller and the Purchaser
and their respective successors and assigns.
Section 11.15. Entire Agreement.
Each of the parties to this Agreement acknowledges that no
representations, agreements or promises were made to any of the other parties to
this Agreement or any of its employees other than those representations,
agreements or promises specifically contained herein. This Agreement and the
related Purchase Price and Terms Letter set forth the entire understanding
between the parties hereto and shall be binding upon all successors of all of
the parties. In the event of any inconsistency between a Purchase Price and
Terms Letter and this Agreement, this Agreement shall control.
Section 11.16. No Solicitation.
From and after the related Closing Date, except as provided
below, 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, in any manner to solicit the borrower or
obligor under any Mortgage Loan to refinance the Mortgage Loan, in
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whole or in part, without the prior written consent of the Purchaser. It is
understood and agreed that all rights and benefits relating to the
solicitation of any Mortgagors to refinance any Mortgage Loans 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 the following
promotions or solicitations undertaken by the Seller or any Affiliate of the
Seller shall not be prohibited under this Section 11.16: (i) promotions or
solicitations that are directed to the general public at large or segments
thereof, provided that no segment shall consist primarily of the borrowers or
obligors under the Mortgage Loans, including, without limitation, mass mailing
based on commercially acquired mailing lists, newspaper, radio and television
advertisements; (ii) responding to Mortgagor requests for pay-off information
and regarding other bank or financial products or services; and (iii) promotions
or solicitations to any Mortgagor for any other bank or financial products or
services, unless such promotions or solicitations are for a prepayment of a
Mortgage Loan.
Section 11.17. Costs.
The Purchaser shall pay any commissions due its salesmen, the
expenses of its accountants and attorneys and the expenses and fees of any
broker retained by the Purchaser with respect to the transactions covered by
this Agreement. To the extent not otherwise provided herein, all other costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans, including, without limitation, fees for recording intervening assignments
of mortgage and Assignments of Mortgage, the cost of obtaining tax service
contracts and the legal fees and expenses of its attorneys shall be paid by the
Seller. The Seller shall be responsible for causing the recordation of all
Assignments of Mortgage and all intervening assignments of mortgage, as
applicable.
Section 11.18. Protection of Mortgagor Personal Information.
Each of the Purchaser and the Seller agree that it (i) shall
comply with any applicable laws and regulations regarding the privacy and
security of Mortgagor Personal Information, (ii) shall not use Mortgagor
Personal Information in any manner inconsistent with any applicable laws and
regulations regarding the privacy and security of Mortgagor Personal
Information, (iii) shall not disclose Mortgagor Personal Information to third
parties except at the specific written direction of the other; provided,
however, that the Purchaser and the Seller may disclose Mortgagor Personal
Information to third parties in connection with secondary market transactions to
the extent not prohibited by applicable law or to the extent required by a valid
and effective subpoena issued by a court of competent jurisdiction or other
governmental body, (iv) shall maintain adequate physical, technical and
administrative safeguards to protect Mortgagor Personal Information from
unauthorized access and (v) shall immediately notify the other of any actual or
suspected breach of the confidentiality of Mortgagor Personal Information.
[SIGNATURE PAGE TO FOLLOW]
86
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 day and year first above written.
HSBC BANK USA, NATIONAL
ASSOCIATION, as Purchaser
By:_______________________________________
Name:_____________________________________
Title:____________________________________
WACHOVIA MORTGAGE
CORPORATION, as Seller
By:_______________________________________
Name:_____________________________________
Title:____________________________________
[Signature Page to Seller's Purchase, Warranties and Servicing Agreement, dated
as of August 1, 2006]
87
EXHIBIT A-1
Contents of 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 which shall be retained by the Seller in the Servicing File
or delivered to the Purchaser or its designee pursuant to Sections 2.04 and 2.05
of the Seller's Purchase, Warranties and Servicing Agreement.
1. The original Mortgage Note endorsed "Pay to the order
of ___________________ without recourse," and signed in the name of the Seller
by an authorized officer, with all intervening endorsements showing a complete
chain of title from the originator to the Seller. If the Mortgage Loan was
acquired by the Seller in a merger, the endorsement must be by "[Seller],
successor by merger to the [name of predecessor]". If the Mortgage Loan was
acquired or originated by the Seller while doing business under another name,
the endorsement must be by "[Seller] formerly known as [previous name]". If the
original note is unavailable, seller will provide an affidavit of lost note (in
form acceptable to the Purchaser) stating that the original Mortgage Note was
lost or destroyed, together with a copy of such Mortgage Note and indemnifying
the Purchaser against any and all claims arising as a result of any person or
entity claiming they are the holder of the note or that the note has been paid
off and returned.
2. A true certified copy, certified by the [title
insurer], of the applicable First Lien Loan.
3. Except as provided below and for each Mortgage Loan
that is not a MERS Mortgage Loan, the original Mortgage with evidence of
recording thereon, or a copy thereof certified by the public recording office in
which such mortgage has been recorded or, if the original Mortgage has not been
returned from the applicable public recording office, a true certified copy,
certified by the [title insurer], of the original Mortgage together with a
certificate of the Seller certifying that the original Mortgage has been
delivered for recording in the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located and in the case of each
MERS Mortgage Loan, the original Mortgage, noting the presence of the MIN of the
Mortgage Loans and either language indicating that the Mortgage Loan is a MERS
Mortgage Loan or if the Mortgage Loan was not a MERS Mortgage Loan at
origination, the original Mortgage and the assignment thereof to MERS, with
evidence of recording indicated thereon, or a copy of the Mortgage certified by
the public recording office in which such Mortgage has been recorded.
4. The original or certified to be a true copy or if in
electronic form identified on the Mortgage Loan Schedule, the certificate
number, certified by the Seller, of the related Primary Mortgage Insurance
Policy, if required.
5. In the case of each Mortgage Loan that is not a MERS
Mortgage Loan, the original Assignment, from the Seller in accordance with
Purchaser's instructions, which assignment shall, but for any blanks requested
by the Purchaser, be in form and substance acceptable for recording,
or a copy certified by the Seller as a true and correct copy of the
A-1-1
original Assignment which has been sent for recordation. If the Mortgage
Loan was acquired or originated by the Seller while doing business under another
name, the Assignment must be by "[Seller] formerly known as [previous name]".
6. The original policy of title insurance, including
riders and endorsements thereto, or if the policy has not yet been issued, a
written commitment or interim binder or preliminary report of title issued by
the title insurance or escrow company.
7. Originals of all recorded intervening Assignments, or
copies thereof, certified by the public recording office in which such
Assignments have been recorded showing a complete chain of title from the
originator to the Seller, with evidence of recording thereon, or a copy thereof
certified by the public recording office in which such Assignment has been
recorded or, if the original Assignment has not been returned from the
applicable public recording office, a true certified copy, certified by the
[title insurer] of the original Assignment together with a certificate of the
[title insurer] certifying that the original Assignment has been delivered for
recording in the appropriate public recording office of the jurisdiction in
which the Mortgaged Property is located.
8. Originals, or copies thereof certified by the public
recording office in which such documents have been recorded, of each assumption,
extension, modification, written assurance or substitution agreements, if
applicable, or if the original of such document has not been returned from the
applicable public recording office, a true certified copy, certified by the
[title insurer], of such original document together with certificate of Seller
certifying the original of such document has been delivered for recording in the
appropriate recording office of the jurisdiction in which the Mortgaged Property
is located.
9. If the Mortgage Note or Mortgage or any other
material document or instrument relating to the Mortgage Loan has been signed by
a person on behalf of the Mortgagor, the original power of attorney or other
instrument that authorized and empowered such person to sign bearing evidence
that such instrument has been recorded, if so required in the appropriate
jurisdiction where the Mortgaged Property is located (or, in lieu thereof, a
duplicate or conformed copy of such instrument, together with a certificate of
receipt from the recording office, certifying that such copy represents a true
and complete copy of the original and that such original has been or is
currently submitted to be recorded in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located), or if the
original power of attorney or other such instrument has been delivered for
recording in the appropriate public recording office of the jurisdiction in
which the Mortgaged Property is located.
10. Reserved.
11. The original of any guarantee executed in connection
with the Mortgage Note.
Notwithstanding anything to the contrary herein, the Seller
may provide one (1) certificate for all of the Mortgage Loans indicating that
the documents were delivered for recording.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
Contents of Servicing File
With respect to each Mortgage Loan, the Servicing File shall
include each of the following items, which shall be available for inspection by
the Purchaser:
1. Mortgage Loan closing statement (Form HUD-1) and any
other truth-in-lending or real estate settlement procedure forms required by
law.
2. Residential loan application.
3. Uniform underwriter and transmittal summary (▇▇▇▇▇▇
▇▇▇ Form 1008) or reasonable equivalent.
4. Credit report on the mortgagor.
5. Business credit report, if applicable.
6. Residential appraisal report and attachments thereto.
7. Verification of employment and income except for
Mortgage Loans originated under a Limited Documentation Program, all in
accordance with Seller's Underwriting Standards.
8. Verification of acceptable evidence of source and
amount of down payment, in accordance with the Underwriting Standards.
9. Photograph of the Mortgaged Property (may be part of
appraisal).
10. Survey of the Mortgaged Property, if any.
11. Sales contract, if applicable.
12. If available, termite report, structural engineer's
report, water portability and septic certification.
13. Any original security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage.
14. Any ground lease, including all amendments,
modifications and supplements thereto.
15. Any other document required to service the Mortgage
Loans.
16. A code indicating whether the Mortgage Loan is a
temporary buydown (Y or N).
A-2-1
EXHIBIT B
Form of Custodial Account Letter Agreement
[__________] , 200[_]
To:
As "Seller" under the Seller's Purchase, Warranties and
Servicing Agreement, dated as of August 1, 2006 (the "Agreement"), we hereby
authorize and request you to establish an account, as a Custodial Account
pursuant to Section 4.04 of the Agreement, to be designated as "Wachovia
Mortgage Corporation, in trust for the Purchaser, owner of various whole loan
series - principal and interest". All deposits in the account shall be subject
to withdrawal therefrom by order signed by the Seller. This letter is submitted
to you in duplicate. Please execute and return one (1) original to us.
WACHOVIA MORTGAGE CORPORATION,
as SELLER
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.
_____________________________
By:__________________________
Name:________________________
Title:_______________________
B-1
EXHIBIT C
Form of Escrow Account Letter Agreement
[__________] , 200[_]
To:
As "Seller" under the Seller's Purchase, Warranties and
Servicing Agreement, dated as of August 1, 2006 (the "Agreement"), we hereby
authorize and request you to establish an account, as an Escrow Account pursuant
to Section 4.06 of the Agreement, to be designated as "Wachovia Mortgage
Corporation, in trust for the Purchaser, owner of various whole loan series, and
various Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Seller. This letter is submitted to you in
duplicate. Please execute and return one (1) original to us.
WACHOVIA MORTGAGE CORPORATION,
as SELLER
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.
By:__________________________
Name:________________________
Title:_______________________
C-1
EXHIBIT D
Form of Assignment, Assumption and Recognition Agreement
This Assignment, Assumption and Recognition Agreement (this
"Assignment Agreement"), dated as of [_____], 200[_], between [HSBC], a
[__________] (the "Assignor"), [__________], a [__________] (the "Assignee"),
and Wachovia Mortgage Corporation, a North Carolina corporation (the "Seller"):
For good and valuable consideration the receipt and
sufficiency of which hereby are acknowledged, and of the premises and mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to
Assignee all of the right, title and interest of Assignor, as Purchaser, in, to
and under (a) those certain mortgage loans listed on Exhibit A attached hereto
(the "Mortgage Loans"); and (b) the Seller's Purchase, Warranties and Servicing
Agreement dated as of August 1, 2006, but only to the extent of the Mortgage
Loans (the "Purchase Agreement"). For purposes of this Assignment Agreement, the
term "Purchase Agreement" includes any separate Assignment and Conveyance
pursuant to which Seller and Assignor effectuated the purchase and sale of any
Mortgage Loan following the execution and delivery of the Seller's Purchase,
Warranties and Servicing Agreement dated as of August 1, 2006.
The Assignor specifically reserves and does not assign to the
Assignee hereunder any and all right, title and interest in, to and under any
all obligations of the Assignor with respect to any mortgage loans subject to
the Purchase Agreement which are not the Mortgage Loans set forth on Exhibit A
attached hereto and are not the subject of this Assignment Agreement.
2. Each of the Seller and the Assignor represent and
warrant to the Assignee that (a) the copy of the Purchase Agreement, attached
hereto as Exhibit B, provided to the Assignee, is a true, complete and accurate
copy of the Purchase Agreement, (b) the Purchase Agreement is in full force and
effect as of the date hereof, (c) the provisions thereof have not been waived,
amended or modified in any respect, nor have any notices of termination been
given thereunder, (d) the Purchase Agreement contains all of the terms and
conditions governing the sale of the Mortgage Loans by Seller to Assignor and
the purchase of the Mortgage Loans by Assignor from Seller; provided, however,
that the date of purchase and sale and the amount of payment for the Mortgage
Loans may be set out in a Purchase Price and Terms Letter, as defined in the
Purchase Agreement, and (e) Seller sold, conveyed and transferred each Mortgage
Loan to Assignor pursuant to the Purchase Agreement.
3. The Assignor warrants and represents to, and
covenants with, the Assignee and the Seller that:
(a) As of the date hereof, the Assignor is not in default
under the Purchase Agreement;
D-1
(b) The Assignor is the lawful owner of the Mortgage
Loans with the full right to transfer the Mortgage Loans and any and all of its
interests, rights and obligations under the Purchase Agreement, free from any
and all claims and encumbrances arising out of the Assignor's ownership thereof,
and the Mortgage Loans, as well as the Purchase Agreement, upon the transfer
thereof to the Assignee as contemplated herein, shall be free and clear of all
such liens, claims and encumbrances or any lien claim or encumbrance arising out
of the ownership of the Mortgage Loans by any person at any time after Assignor
first acquired any Mortgage Loan from the Seller;
(c) The Assignor has not received notice of, and has no
knowledge of, any offsets, counterclaims or other defenses available to the
Seller with respect to the Purchase Agreement or the Mortgage Loans;
(d) The Assignor has not waived or agreed to any waiver
under, or agreed to any amendment or other modification of, the Purchase
Agreement or the Mortgage Loans. The Assignor has no knowledge of, and has not
received notice of, any waivers under or amendments or other modifications of,
or assignments of rights or obligations under or defaults under, the Purchase
Agreement, or the Mortgage Loans;
(e) The Assignor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to sell,
transfer and assign the Mortgage Loans;
(f) The Assignor has full corporate power and authority
to execute, deliver and perform under this Assignment Agreement, and to
consummate the transactions set forth herein. The consummation of the
transactions contemplated by this Assignment Agreement is in the ordinary course
of the Assignor's business and will not conflict with, or result in a breach of,
any of the terms, conditions or provisions of the Assignor's charter or by-laws,
or any legal restriction, or any material agreement or instrument to which the
Assignor 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 Assignor or
its property is subject. The execution, delivery and performance by the Assignor
of this Assignment Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
of the Assignor. This Assignment Agreement has been duly executed and delivered
by the Assignor and constitutes the valid and legally binding obligation of the
Assignor enforceable against the Assignor in accordance with its respective
terms except as enforceability thereof may be limited by bankruptcy, insolvency,
or reorganization or other similar laws now or hereinafter in effect relating to
creditor's rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or in law;
(g) No material consent, approval, order or authorization
of, or declaration, filing or registration with, any governmental entity is
required to be obtained or made by the Assignor in connection with the
execution, delivery or performance by the Assignor of this Assignment Agreement,
or the consummation by it of the transactions contemplated hereby; and
(h) The Assignor has paid the purchase price for the
Mortgage Loans and has satisfied any conditions to closing required of it under
the terms of the Purchase Agreement.
D-2
4. The Assignee warrants and represents to, and
covenants with, the Assignor and the Seller that:
(a) The Assignee is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to acquire,
own and purchase the Mortgage Loans;
(b) The Assignee has full corporate power and authority
to execute, deliver and perform under this Assignment Agreement, and to
consummate the transactions set forth herein. The consummation of the
transactions contemplated by this Assignment Agreement is in the ordinary course
of the Assignee's business and will not conflict with, or result in a breach of,
any of the terms, conditions or provisions of the Assignee's charter or by-laws,
or any legal restriction, or any material agreement or instrument to which the
Assignee 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 Assignee or
its property is subject. The execution, delivery and performance by the Assignee
of this Assignment Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
of the Assignee. This Assignment Agreement has been duly executed and delivered
by the Assignee and constitutes the valid and legally binding obligation of the
Assignee enforceable against the Assignee in accordance with its respective
terms except as enforceability thereof may be limited by bankruptcy, insolvency,
or reorganization or other similar laws now or hereinafter in effect relating to
creditor's rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or in law;
(c) No material consent, approval, order or authorization
of, or declaration, filing or registration with, any governmental entity is
required to be obtained or made by the Assignee in connection with the
execution, delivery or performance by the Assignee of this Assignment Agreement,
or the consummation by it of the transactions contemplated hereby; and
(d) The Assignee agrees to be bound, as Purchaser, by all
of the terms, covenants and conditions of the Purchase Agreement and the
Mortgage Loans, and from and after the date hereof, the Assignee assumes for the
benefit of each of the Seller and the Assignor all of the Assignor's obligations
as Purchaser thereunder, with respect to the Mortgage Loans.
5. The Seller warrants and represents to, and covenants
with, the Assignor and the Assignee that:
(a) The Seller is not a natural person or a general
partnership and is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation, and has all requisite power and
authority to service the Mortgage Loans;
(b) The Seller has full power and authority to execute,
deliver and perform under this Assignment Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this Assignment Agreement is in the ordinary course of the Seller's business
and will not conflict with, or result in a breach of, any of the terms,
conditions or provisions of the Seller's charter or by-laws, or any legal
restriction, or any material agreement or instrument to which the
Seller is now a party or by which it is bound, or
D-3
result in the violation of any law, rule, regulation, order, judgment or
decree to which the Seller or its property is subject. The execution, delivery
and performance by the Seller of this Assignment Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action of the Seller. This Assignment
Agreement has been duly executed and delivered by the Seller and constitutes
the valid and legally binding obligation of the Seller enforceable against
the Seller in accordance with its respective terms except as enforceability
thereof may be limited by bankruptcy, insolvency, or reorganization or other
similar laws now or hereinafter in effect relating to creditors' rights
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or in law;
(d) No material consent, approval, order or authorization
of, or declaration, filing or registration with, any governmental entity is
required to be obtained or made by the Seller in connection with the execution,
delivery or performance by the Seller of this Assignment Agreement, or the
consummation by it of the transactions contemplated hereby;
(e) As of the date hereof, the Seller is not in default
under the Purchase Agreement; and
(f) No event has occurred or has failed to occur, during
the period commencing on date on which Assignor acquired the Mortgage Loans and
ending on the date hereof, inclusive, which would make the representations and
warranties set forth in Section 3.01 of the Purchase Agreement untrue if such
representations and warranties were made with respect to the Mortgage Loans
effective as of the date hereof.
6. From and after the date hereof, the Seller shall
recognize the Assignee as the owner of the Mortgage Loans, and shall look solely
to the Assignee for performance from and after the date hereof of the Assignor's
obligations with respect to the Mortgage Loans.
7. Notice Addresses.
(a) The Assignee's address for purposes of all notices
and correspondence related to the Mortgage Loans and this Assignment Agreement
is:
[______________________]
[______________________]
[______________________]
Attention: [__________]
(b) The Assignor's address for purposes for all notices
and correspondence related to the Mortgage Loans and this Assignment Agreement
is:
[______________________]
[______________________]
[______________________]
Attention: [__________]
D-4
(c) The Seller's address for purposes of all notices and
correspondence related to the Mortgage Loans and this Assignment Agreement is:
Wachovia Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
8. This Assignment Agreement shall be construed in
accordance with the substantive laws of the State of New York (without regard to
conflict of laws principles) and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws, except to
the extent preempted by federal law.
9. This Assignment Agreement shall inure to the benefit
of the successors and assigns of the parties hereto. Any entity into which the
Seller, the Assignor or the Assignee may be merged or consolidated shall,
without the requirement for any further writing, be deemed the Seller, the
Assignor or the Assignee, respectively, hereunder.
10. No term or provision of this Assignment 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.
11. This Assignment Agreement shall survive the
conveyance of the Mortgage Loans and the assignment of the Purchase Agreement by
the Assignor.
12. Notwithstanding the assignment of the Purchase
Agreement by either the Assignor or Assignee, this Assignment Agreement shall
not be deemed assigned by the Seller or the Assignor unless assigned by separate
written instrument.
13. For the purpose for facilitating the execution of
this Assignment Agreement as herein provided and for other purposes, this
Assignment 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 and be one and the same instrument.
[signatures on following page]
D-5
IN WITNESS WHEREOF, the parties have caused this Assignment
Agreement to be executed by their duly authorized officers as of the date first
above written.
[_________________________________]
Assignor
By:______________________________
Name:____________________________
Title:___________________________
[_________________________________]
Assignee
By:______________________________
Name:____________________________
Title:___________________________
Wachovia Mortgage Corporation
Seller
By:______________________________
Name:____________________________
Title:___________________________
D-6
EXHIBIT E
Form of Assignment and Conveyance
On this [__] day of [_____] 200[_], Wachovia Mortgage Corporation ("Wachovia")
as the Seller under that certain Seller's Purchase, Warranties and Servicing
Agreement, dated as of August 1, 2006 (the "Agreement"), and that certain
Purchase Price and Terms Letter, dated as of [_____], 200[_], each by and
between Wachovia and [HSBC] (the "Purchaser") does hereby sell, transfer,
assign, set over and convey to the Purchaser under the Agreement, without
recourse, but subject to the terms of the Agreement, all rights, title and
interest of Wachovia (excluding the right to service the Mortgage Loans) in and
to the Mortgage Loans listed on the Mortgage Loan Schedule attached hereto as
Exhibit A, together with the Mortgage Files and all rights and obligations
arising under the documents contained therein. Pursuant to Section 2.07 of the
Agreement, Wachovia has delivered to the Purchaser the documents for each
Mortgage Loan to be purchased as set forth therein. The contents of each
Servicing File required to be retained by Wachovia to service the Mortgage Loans
pursuant to the Agreement and thus not delivered to the Purchaser are and shall
be held in trust by Wachovia, for the benefit of the Purchaser as the owner
thereof. Wachovia'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 Agreement, and such retention and
possession by Wachovia 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 Wachovia shall immediately vest in the Purchaser and
shall be retained and maintained, in trust, by Wachovia at the will of the
Purchaser in such custodial capacity only.
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Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement.
WACHOVIA MORTGAGE CORPORATION
By:__________________________
Name:________________________
Title:_______________________
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Exhibit A
E-A-1
EXHIBIT F
Regulation AB Compliance Addendum
[to be provided]
F-1
EXHIBIT G
Seller's Officer's Certificate
I, ________________________, hereby certify that I am
the duly elected ______________ of [Seller], a __________________ (the
"Seller"), and further certify, on behalf of the Seller as follows:
1. Attached hereto as Attachment I are a true and correct
copy of the Certificate of Incorporation and by laws
of the Seller as are in full force and effect on the
date hereof.
2. No proceedings looking toward merger, liquidation,
dissolution or bankruptcy of the Seller are pending
or contemplated.
3. Each person who, as an officer or attorney-in-fact of
the Seller, signed (a) the Master Mortgage Loan
Purchase and Servicing Agreement (the "Purchase
Agreement"), dated as of ____________, 2006, by and
among the Seller, the Servicer and HSBC Bank USA,
National Association (the "Purchaser"); (b) the
Confirmation, dated _____________ 2006, between the
Seller and the Purchaser (the "Confirmation"); and
(c) any other document delivered prior hereto or on
the date hereof in connection with the sale and
servicing of the Mortgage Loans in accordance with the
Purchase Agreement and the Confirmation was, at the
respective times of such signing and delivery, and is
as of the date hereof, duly elected or appointed,
qualified and acting as such officer or attorney-
in-fact, and the signatures of such persons
appearing on such documents are their genuine
signatures.
4. Attached hereto as Attachment II is a true and
correct copy of the resolutions duly adopted by the
board of directors of the Seller on ________________,
2006 (the "Resolutions") with respect to the
authorization and approval of the sale and servicing
of the Mortgage Loans; said Resolutions have not been
amended, modified, annulled or revoked and are in
full force and effect on the date hereof.
5. Attached hereto as Attachment III is a Certificate of
Good Standing of the Seller dated ______________,
2006. No event has occurred since
___________________, 2006 which has affected the good
standing of the Seller under the laws of the State of
___________.
6. All of the representations and warranties of the
Seller contained in Subsections 7.01 and 7.02 of the
Purchase Agreement were true and correct in all
material respects as of the date of the Purchase
Agreement and are true and correct in all material
respects as of the date hereof.
7. The Seller has performed all of its duties and has
satisfied all the material conditions on its part to
be performed or satisfied prior to the related
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Closing Date pursuant to the Purchase Agreement and
the related Confirmation.
All capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Purchase Agreement.
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EXHIBIT H
[Form of Opinion of Counsel To The Seller and The Servicer]
________________________
(Date)
HSBC Bank USA, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Master Mortgage Loan Purchase and Servicing Agreement,
dated as of [Month] 1, 2006
Gentlemen:
I am Senior Counsel to [SELLER], a __________________ (the
"Seller" and "Servicer"), and I am delivering this opinion in my capacity as
Senior Counsel to Seller and Servicer in connection with the sale of certain
mortgage loans by the Seller to HSBC Bank USA, National Association (the
"Purchaser") pursuant to (i) a Master Mortgage Loan Purchase and Servicing
Agreement, dated as of [Month] 1, 2006, among the Seller, the Servicer and the
Purchaser (the "Purchase Agreement") and the Confirmation, dated [Month], 2006,
among the Seller, the Servicer and the Purchaser (the "Confirmation").
Capitalized terms not otherwise defined herein have the meanings set forth in
the Purchase Agreement.
In connection with rendering this opinion letter, I, or
attorneys working under my direction, have examined, among other things,
originals, certified copies or copies otherwise identified to my satisfaction as
being true copies of the following:
A. The Purchase Agreement;
B. The Confirmation;
C. The Seller's Articles of Incorporation and By-Laws,
as amended to date;
D. The Servicer's Articles of Incorporation and By-Laws,
as amended to date;
E. Resolutions adopted by the board of directors of the
Seller relating to the transactions covered by this
opinion (the "Seller's Board Resolutions"); and
F. Resolutions adopted by the board of directors of the
Servicer relating to the transactions covered by this
opinion (the "Servicer's Board Resolutions").
For the purpose of rendering this opinion, I have made such
documentary, factual and legal examinations as I deemed necessary under the
circumstances. As to factual matters, I have relied upon statements,
certificates and other assurances of public officials and of officers and other
representatives of the Seller, and upon such
other certificates as I deemed appropriate,
H-1
which factual matters have not been independently established or
verified by me. I have also assumed, among other things, the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to me as originals, and the conformity to original documents
of all documents submitted to me as copies and the authenticity of the originals
of such copied documents.
On the basis of and subject to the foregoing examination, and
in reliance thereon, and subject to the assumptions, qualifications, exceptions
and limitations expressed herein, I am of the opinion that:
1._______The Seller and the Servicer have been duly
incorporated and are validly existing and in good standing under the laws of the
State of [ - ] with corporate power and authority to own their properties and
conduct their business as presently conducted by them. The Servicer has the
corporate power and authority to service the Mortgage Loans, and to execute,
deliver, and perform their obligations under the Purchase Agreement and the
Confirmation (sometimes collectively, the "Agreements").
2._______The Purchase Agreement and the Confirmation have been
duly and validly authorized, executed and delivered by the Seller and the
Servicer.
3._______The Purchase Agreement and the Confirmation
constitute valid, legal and binding obligations of the Seller and the Servicer,
enforceable against the Seller and the Servicer in accordance with their
respective terms.
4._______No consent, approval, authorization or order of any
state or federal court or government agency or body is required for the
execution, delivery and performance by the Seller of the Purchase Agreement and
the Confirmation, or the consummation of the transactions contemplated by the
Purchase Agreement and the Confirmation, except for those consents, approvals,
authorizations or orders which previously have been obtained.
5._______Neither the servicing of the Mortgage Loans by the
Servicer as provided in the Purchase Agreement and the Confirmation, nor the
fulfillment by the Seller or the Servicer of the terms of or the consummation of
any other transactions contemplated in the Purchase Agreement and the
Confirmation will result in a breach of any term or provision of the certificate
of incorporation or by-laws of the Seller or the Servicer, or, to my knowledge,
will conflict with, result in a breach or violation of, or constitute a default
under, (i) the terms of any indenture or other agreement or instrument known to
me to which the Seller or the Servicer are parties or by which they are bound,
(ii) any State of [ - ] or federal statute or regulation applicable to the
Seller or the Servicer, or (iii) any order of any State of [ - ] or federal
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Seller or the Servicer, except in any such case where the
default, breach or violation would not have a material adverse effect on the
Seller or the Servicer or either's ability to perform its obligations under the
Purchase Agreement.
6._______There is no action, suit, proceeding or investigation
pending or, to my knowledge, threatened against the Seller or the Servicer
which, in my judgment, either in any one instance or in the aggregate,
would draw into question the validity of the Purchase
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Agreement or which would be likely to impair materially the ability of the
Seller or the Servicer to perform under the terms of the Purchase Agreement.
7._______The sale of each Mortgage Note and Mortgage as and in
the manner contemplated by the Purchase Agreement is sufficient fully to
transfer to the Purchaser all right, title and interest of the Seller thereto as
noteholder and mortgagee.
The opinions above are subject to the following additional
assumptions, exceptions, qualifications and limitations:
A._______I have assumed that all parties to the Agreements
other than the Seller and the Servicer have all requisite power and authority to
execute, deliver and perform their respective obligations under each of the
Agreements, and that the Agreements have been duly authorized by all necessary
corporate action on the part of such parties, have been executed and delivered
by such parties and constitute the legal, valid and binding obligations of such
parties.
B._______My opinion expressed in paragraphs 3 and 7 above is
subject to the qualifications that (i) the enforceability of the Agreements may
be limited by the effect of laws relating to (1) bankruptcy, reorganization,
insolvency, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or preferential
transfers, and (2) general principles of equity upon the specific enforceability
of any of the remedies, covenants or other provisions of the Agreements and upon
the availability of injunctive relief or other equitable remedies and the
application of principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) as such principles relate to,
limit or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such enforcement may be
brought; and (ii) I express no opinion herein with respect to the validity,
legality, binding effect or enforceability of (a) provisions for indemnification
in the Agreements to the extent such provisions may be held to be unenforceable
as contrary to public policy or (b) Section 18 of the Purchase Agreement.
C._______I have assumed, without independent check or
certification, that there are no agreements or understandings among the Seller,
the Servicer, the Purchaser and any other party which would expand, modify or
otherwise affect the terms of the documents described herein or the respective
rights or obligations of the parties thereunder.
H-3
I am admitted to practice in the State of [State] and I render
no opinion herein as to matters involving the laws of any jurisdiction other
than the State of [ - ] and the Federal laws of the United States of America.
This letter is rendered to you as Purchaser under the Purchase
Agreement, solely for your benefit in connection with the transactions referred
to herein. Without my prior written consent, this letter is not to be relied
upon, used, circulated, quoted or otherwise referred to by, or assigned to, any
other person (including any person that seeks to assert your rights in respect
of this letter) or for any other purpose. In addition, I disclaim any obligation
to update this letter for changes in fact or law, or otherwise.
Very truly yours,
As Senior Counsel for [Seller and Servicer]
H-4
EXHIBIT I
Security Release Certification
I._______Release of Security Interest
___________________________, hereby relinquishes any and all
right, title and interest it may have in and to the Mortgage Loans described in
Exhibit A attached hereto upon purchase thereof by HSBC Bank USA, National
Association from the Seller named below pursuant to that certain Master Mortgage
Loan Purchase and Servicing Agreement, dated as of [Month] 1, 2006, as of the
date and time of receipt by ______________________________ of $__________ for
such Mortgage Loans (the "Date and Time of Sale"), 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 Seller named below or its
designees as of the Date and Time of Sale.
Name and Address of Financial Institution
(Name)
(Address)
By:______________________________________
I-1
II.______Certification of Release
The Seller named below hereby certifies to HSBC Bank USA,
National Association that, as of the Date and Time of Sale of the above
mentioned Mortgage Loans to HSBC Bank USA, National Association, the security
interests in the Mortgage Loans released by the above named corporation comprise
all security interests relating to or affecting any and all such Mortgage Loans.
The Seller warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
[SELLER]
By:
Name:
Title:
I-2
EXHIBIT J
Form of Indemnification Agreement
This Indemnification Agreement (the "Agreement"), dated as of
_____, 200_ (the "Settlement Date"), by and between HSBC Asset Securitization
Corp., a Delaware corporation (such entity, and its successors and assigns,
being referred to herein as the "Depositor") and [COMPANY] (the "Company").
The Depositor and the Company hereby recite and agree as
follows:
RECITALS
1. HSBC Bank USA, National Association (the "Seller") has
purchased certain [adjustable]-rate, [first] lien mortgage loans (the "Mortgage
Loans") from the Company and intends to transfer all of its right, title and
interest in and to the Mortgage Loans to the _______________ (the "Trust")
pursuant to the terms of a Pooling and Servicing Agreement, dated as of
_____, 200_ (the "Pooling and Servicing Agreement"), by and among the
Seller, the Depositor, _________ as [master] servicer and ___________, as
trustee of the Trust (the "Trustee").
2. In exchange for the Mortgage Loans, the Trust shall issue to
the Seller ___________________________, Series _____, Asset-Backed Certificates
(the "Certificates") pursuant to the terms of the Pooling and Servicing
Agreement.
3. In accordance with an Underwriting Agreement, dated _____, 200_
(the "Underwriting Agreement"), the Depositor will sell to HSBC Securities
(USA), Inc. (the "Underwriter") the Certificates.
4. The Certificates will be offered and sold by the
Underwriter pursuant to the terms and conditions of the Underwriting Agreement,
through the use of a prospectus supplement to be dated as of the date of its
printing but not later than the Settlement Date (the "Prospectus Supplement")
and a related prospectus dated _____, 200_, (the "Base Prospectus" and
together with the Prospectus Supplement, the "Prospectus").
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises herein made and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Representations and Warranties
(a) The Company hereby represents and warrants to the
Depositor, as of the date of this Agreement, that:
(i) the Company has been duly organized and is
validly existing and in good standing as a
[corporation] under the laws of the State of __________,
J-1
with full power and authority to enter into and perform its
obligations under this Agreement; and
(ii) this Agreement has been duly authorized,
executed and delivered by the Company and constitutes a
legal, valid and binding agreement of the Company,
enforceable against it in accordance with its terms,
subject to (a) bankruptcy, insolvency, receivership,
conservatorship or other similar laws affecting creditors'
rights generally, (b) general principles of equity
regardless of whether enforcement is sought in a proceeding
in equity or at law, and (c) public policy considerations
limiting the enforceability of provisions of this
Agreement that purport to provide indemnification from
liabilities under applicable securities laws.
(b) The Company represents and warrants to the Depositor
that as of the Settlement Date:
(i) the information set forth in the Prospectus
Supplement under [TO BE DETERMINED], (such information,
the "Company Information") does not contain an untrue
statement of a material fact; and
(ii) the Company Information does not omit or fail
to state any material fact required to be stated therein,
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) The Depositor hereby represents and warrants to
the Company that as of the date of this Agreement:
(i) it is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware and has full corporate power and
authority to enter into and perform its obligations
under this Agreement; and
(ii) this Agreement has been duly authorized,
executed and delivered by the Depositor and constitutes
the legal, valid and binding agreement of the Depositor
enforceable against the Depositor in accordance with
its terms, subject to (a) bankruptcy, insolvency,
receivership, conservatorship, reorganization,
moratorium or other similar laws affecting creditors'
rights generally, (b) general principals of equity
regardless of whether enforcement is sought in a
proceeding in equity or at law, and (c) public
policy considerations limiting the enforceability of
provisions of this Agreement that purport to provide
indemnification from penalties under applicable
securities laws.
2. Indemnification
(a) Company (also referred to herein as the "Company
Indemnifying Party") agrees to indemnify and hold harmless the Depositor and
each of its directors and officers and affiliates and each person, if any,
who controls the Depositor within the meaning of Section 15 of the Securities
Act of 1933, as amended (the "Securities Act"), or Section 20 of the Securities
J-2
Exchange Act of 1934, as amended (the "Exchange Act"), (the "Depositor
Indemnified Party"), against any and all actual losses, claims, expenses,
damages or liabilities to which the Depositor or any such director, officer
or controlling person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement of any
material fact contained in the Company Information or omission to state therein,
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which
such statements were made, not misleading (in each case, regardless of whether
a final judgment has been entered by a finder of fact); and will promptly
upon request reimburse any such reasonable legal or other expenses reasonably
incurred by the Depositor or any such director, officer or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which Company may otherwise have.
(b) The Depositor (the "Depositor Indemnifying Party" and
together with the Company Indemnifying Party, each an "Indemnifying Party")
agrees to indemnify and hold harmless the Company, each officer and director of
the Company and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act (each a "Company Indemnified Party", and together
with the Depositor Indemnified Parties, each, an "Indemnified Party") against
any and all losses, claims, expenses, damages or liabilities to which a Company
Indemnified Party may become subject, under the Securities Act or otherwise,
including, without limitation, with respect to disputes between the parties,
insofar as such losses, claims, expenses, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of any
material fact contained in any offering document or the omission to state in
any such offering document a material fact necessary in order to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or omission relates to information in the
Prospectus Supplement or the Free Writing Prospectus other than the Company
Information.
(c) Promptly after receipt by any Indemnified Party under
this Section 2 of notice of the commencement of any action described therein,
such Indemnified Party will, if a claim in respect thereof is to be made
against such Indemnifying Party under this Section 2, notify the Indemnifying
Party of the commencement thereof, but the omission so to notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability
that it may have to the Indemnified Party under this Agreement, except to the
extent that such failure or delay in notification materially prejudices the
Indemnifying Party's defense of such action or proceeding, and shall in no event
relieve the Indemnifying Party from any other obligation or liability
which it may have to any Indemnified Party otherwise than under this
Agreement or with respect to any other action or proceeding. In case any such
action is brought against an 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 wish to do so,
jointly with any other Indemnifying Party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to the Indemnified
Party, and, after notice from the Indemnifying Party to the Indemnified Party
under this Section 2, the Indemnifying Party shall not be liable for any legal
or other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable out-of-pocket costs of
investigation.
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(d) Each 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 related Indemnifying Party; (ii) the related Indemnifying
Party shall have been advised by such counsel that there may be one or more
legal defenses available to such Indemnified Party which are different from
those available to the Indemnifying Party and in the reasonable judgment
of such counsel it is advisable for such Indemnified Party to employ separate
counsel (iii) a conflict exists between such Indemnified Party and the related
Indemnifying Party (in which case the Indemnifying Party will not have the right
to direct the defense of such action on behalf of the Indemnified Party) or
(iv) the Indemnifying Party has failed to assume the defense of such action
and employ counsel reasonably satisfactory to such Indemnified Party, in
which case, if such Indemnified Party notifies the related Indemnifying Party
in writing that it elects to employ separate counsel at the expense of such
Indemnifying Party, such Indemnifying Party shall not have the right to assume
the defense of such action on behalf of the 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
the Indemnified Party, which firm shall be designated in writing by the
Depositor or any of the Depositor's directors, officers or controlling persons.
(e) Each Indemnified Party, as a condition of the indemnity
agreements contained herein, shall use its best efforts to cooperate with the
applicable 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, each Indemnifying Party agrees
to indemnify and hold harmless the related Indemnified Party from and against
any loss or liability (to the extent set forth herein as applicable) by reason
of such settlement or judgment.
3. Successors and Assigns, Additional Information. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. No party hereto may assign either
this Agreement or any of its rights, interests or obligations hereunder without
the prior written approval of the other parties hereto.
4. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, covenants, indemnities and other
statements of the Depositor and the Company and their respective officers set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the Depositor or
the Company and will survive delivery of and payment for the Certificates. The
provisions of Section 4 hereof shall survive the termination or cancellation of
this Agreement.
5. Notices. All demands, notices and communications hereunder shall
be in writing, shall be effective only upon receipt and shall, if sent to
the Depositor, be addressed to it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: President, with a copy to General Counsel; or, if sent
to the Company, be addressed to it at, [ADDRESS], Attn: [_________].
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6. Miscellaneous. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Neither this Agreement
nor any term hereof may be changed, waived, discharged or terminated except by
a writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought. This Agreement may be signed in any number
of counterparts, each of which shall be deemed an original, which taken together
shall constitute one and the same instrument. This Agreement supersedes all
prior or contemporaneous agreements and understandings relating to the subject
matter hereof.
7. 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.
J-5
IN WITNESS WHEREOF, the Depositor and the Company have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HSBC ASSET SECURITIZATION CORP.
By: ______________________
Name:
Title:
[COMPANY]
By: ______________________
Name:
Title:
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EXHIBIT K
CUSTODIAL AGREEMENT
K-1