Exhibit 99.2
EXECUTION VERSION
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MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
Between
WASHINGTON MUTUAL MORTGAGE SECURITIES CORP.
(Company)
and
LUMINENT MORTGAGE CAPITAL, INC.
MAIA MORTGAGE FINANCE STATUTORY TRUST
MERCURY MORTGAGE FINANCE STATUTORY TRUST
(Purchaser)
Dated as of November 1, 2006
Residential First Lien Mortgage Loans
Schedule/Schedule Flow Delivery Program
(Jumbo Mortgage Loans)
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS............................................................................................1
ARTICLE 2 SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF FILES; PAYMENT OF PURCHASE PRICE;
DELIVERY OF MORTGAGE LOAN DOCUMENTS; RECORDATION OF ASSIGNMENTS OF MORTGAGE.............................14
Section 2.1 Sale and Conveyance of Mortgage Loans; Possession of Files..................................14
Section 2.2 Delivery of Mortgage Loan Documents Regarding Mortgage Loans; Recordation of
Assignments of Mortgage.....................................................................16
Section 2.3 Purchaser's Due Diligence Review............................................................18
Section 2.4 Reserved....................................................................................18
Section 2.5 Reserved....................................................................................18
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY CONCERNING MORTGAGE LOANS;
REPURCHASE OF MORTGAGE LOANS............................................................................18
Section 3.1 Individual Mortgage Loans...................................................................18
Section 3.2 Company Representations.....................................................................27
Section 3.3 Repurchase and Substitution.................................................................28
ARTICLE 4 COVENANTS.............................................................................................31
Section 4.1 Cooperation.................................................................................31
Section 4.2 Delivery of Documents.......................................................................31
Section 4.3 Confidentiality.............................................................................31
ARTICLE 5 CONDITIONS TO PURCHASE................................................................................31
Section 5.1 Initial Closing Date Documents..............................................................32
Section 5.2 Correctness of Representations and Warranties...............................................32
Section 5.3 Compliance With Conditions..................................................................32
ARTICLE 6 RECONSTITUTIONS; REGULATION AB COMPLIANCE.............................................................32
Section 6.1 Reconstitutions.............................................................................32
Section 6.2 Reconstitution Agreements...................................................................33
Section 6.3 Intent of the Parties; Reasonableness.......................................................33
Section 6.4 Information to be Provided by the Company...................................................34
Section 6.5 Indemnification.............................................................................36
Section 6.6 Private Placements..........................................................................36
ARTICLE 7 MISCELLANEOUS PROVISIONS..............................................................................37
Section 7.1 Amendment...................................................................................37
Section 7.2 Recordation of Agreement....................................................................37
Section 7.3 Governing Law; Waiver of Trial by Jury......................................................37
Section 7.4 General Interpretive Principles.............................................................37
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Section 7.5 Reproduction of Documents...................................................................38
Section 7.6 Notices.....................................................................................38
Section 7.7 Severability of Provisions..................................................................39
Section 7.8 Exhibits....................................................................................40
Section 7.9 Counterparts; Successors and Assigns........................................................40
Section 7.10 Effect of Headings..........................................................................40
Section 7.11 Other Agreements Superseded; Entire Agreement...............................................40
Section 7.12 Survival....................................................................................40
Section 7.13 Intention of the Parties....................................................................40
Section 7.14 Nonsolicitation.............................................................................41
Section 7.15 Guaranty....................................................................................41
Section 7.16 Costs 42
Section 7.17 Attorneys' Fees.............................................................................42
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EXHIBITS & SCHEDULES
Exhibit A CONTENTS OF COLLATERAL FILE
Exhibit B TERM SHEET
Schedule I To Exhibit B MORTGAGE LOAN SCHEDULE(S)
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MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
This MORTGAGE LOAN PURCHASE AND SALE AGREEMENT, dated as of November 1,
2006, is by and among Luminent Mortgage Capital, Inc., a Maryland corporation,
Maia Mortgage Finance Statutory Trust, a Maryland Business Trust, Mercury
Mortgage Finance Statutory Trust, a Maryland Business Trust, (each, a
"Purchaser" and, collectively, the "Purchasers"), and Washington Mutual Mortgage
Securities Corp., a Delaware corporation (the "Company")
PRELIMINARY STATEMENT
WHEREAS, the Company is in the business of dealing in residential first
lien fixed and adjustable rate mortgage loans;
WHEREAS, in reliance upon the representations, warranties and covenants of
the Company contained herein, the Purchasers desire to purchase from the
Company, from time to time, and the Company desires to sell to the Purchasers,
from time to time, certain residential first lien mortgage loans, subject to the
terms and conditions of this Agreement, without recourse and exclusive of the
related servicing rights;
WHEREAS, the Purchasers and the Company desire to prescribe in this
Agreement the manner of sale by the Company and purchase by the Purchasers of
such mortgage loans; and
WHEREAS, following its purchase of the mortgage loans from the Company, the
Purchaser may desire to sell some or all of the mortgage loans to one or more
purchasers as a whole loan transfer or a public or private mortgage-backed
securities transaction;
NOW, THEREFORE, the Purchasers and the Company agree as follows:
ARTICLE 1 DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Agreement. This Mortgage Loan Purchase and Sale Agreement, including all
exhibits, attachments and schedules hereto, and all amendments hereof and
supplements hereto.
ALTA. The American Land Title Association or any successor thereto.
Appraised Value. With respect to any Mortgage Loan that is not a
Streamlined Mortgage Loan or ROV Mortgage Loan, the lesser of (i) the value set
forth on the appraisal made in connection with the origination of the related
Mortgage Loan as the value of the related Mortgaged Property, and (ii) the
purchase price paid for the Mortgaged Property, provided, however, that if such
Mortgage Loan was originated in connection with the refinance of a mortgage
loan, such value shall be based solely on the appraisal made in connection with
the origination of such Mortgage Loan. With respect to any ROV Mortgage Loan,
the lesser of (a) the value set forth on the residential appraisal review made
in connection with the origination of the related Mortgage Loan as the value of
the related Mortgaged Property, and (b) the purchase price paid for the
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Mortgaged Property, provided, however, that if such ROV Mortgage Loan was
originated in connection with the refinance of a mortgage loan, such value shall
be based solely on the residential appraisal review made in connection with the
origination of such ROV Mortgage Loan. With respect to any Streamlined Mortgage
Loan, the value set forth in the appraisal made in connection with the
origination of the mortgage loan being refinanced.
ARM Loan. A Mortgage Loan as to which the related Mortgage Note provides
that the Mortgage Interest Rate may be adjusted periodically.
Assignment of Mortgage. An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form (except for the insertion of the
assignee's name) sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the transfer of the Mortgage to
the assignee named therein, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties in the same county or other recording
jurisdiction, where permitted by law.
Balloon Payment. With respect to any Mortgage Loan for which the Monthly
Payments required under the related Mortgage Note are not expected at
origination to fully amortize the amount owed under such Mortgage Note, the lump
sum payment due on the related Maturity Date.
Business Day. Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which banking or savings and loan institutions in the states of Washington,
California, Illinois or New York are authorized or obligated by law or executive
order to be closed.
Buydown Fund. A fund provided by the originator of a Mortgage Loan or
another Person with respect to a Buydown Loan which provides an amount
sufficient to subsidize regularly scheduled principal and interest payments due
on such Buydown Loan for a period. A Buydown Fund may be (i) funded at the par
values of future payment subsidies, or (ii) funded in an amount less than the
par values of future payment subsidies, and determined by discounting such par
values in accordance with interest accruing on such amounts, in which event they
will be deposited in an account bearing interest. A Buydown Fund may be held in
(i) a separate Buydown Fund Account, or (ii) a Custodial Account for P&I or a
Custodial Account for Reserves and monitored by a Servicer.
Buydown Fund Account. A separate account or accounts created and maintained
pursuant to Section 2.4 of the Servicing Agreement (i) with the corporate trust
department of a financial institution approved by the Master Servicer, (ii)
within FDIC insured accounts (or other accounts with comparable insurance
coverage acceptable to the Rating Agencies) created, maintained and monitored by
a Servicer, (iii) in a separate non-trust account without FDIC or other
insurance in an Qualified Depository, or (iv) with Washington Mutual Bank, FA.
Such account or accounts may be non-interest bearing or may bear interest. In
the event that a Buydown Fund Account is established pursuant to clause (ii) of
the preceding sentence, amounts held in such Buydown Fund Account shall not
exceed the level of deposit insurance coverage on such account; accordingly,
more than one Buydown Fund Account may be established.
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Buydown Loan. A Mortgage Loan for which the Mortgage Interest Rate has been
subsidized through a Buydown Fund provided at the time of origination of such
Mortgage Loan.
Closing Date. With respect to any Loan Pool, the date on which the
Purchaser purchases the Mortgage Loans included in such Loan Pool.
Code. The Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto.
Collateral Documents. With respect to any Mortgage Loan, the mortgage loan
documents pertaining to such Mortgage Loan which are specified in Exhibit A
attached hereto and any additional mortgage documents pertaining to such
Mortgage Loan required to be added to the related Collateral File pursuant to
the terms of this Agreement.
Collateral File. With respect to any Mortgage Loan, a file pertaining to
such Mortgage Loan that contains each of the related Collateral Documents.
Commission: The United States Securities and Exchange Commission.
Commitment Letter. With respect to each Loan Pool, a commitment letter
entered into between the Company and the Purchaser that provides for the
purchase of Mortgage Loans pursuant to the terms of this Agreement and the
Servicing Agreement and sets forth the purchase price for and certain other
terms and conditions of the sale and purchase of such Mortgage Loans.
Company. Washington Mutual Mortgage Securities Corp., a Delaware
corporation, or its successor in interest or assigns.
Company Indemnified Party. As defined in Section 6.2(d)(ii)(A).
Company Information. The information provided by the Company pursuant to
Sections 6.4(a) and (b).
Coop Ownership Interest. With respect to any Cooperative Loan, the
ownership interest in a single Cooperative Apartment, including (i) the shares
issued by the cooperative housing corporation, (ii) the leasehold interest in
the Cooperative Apartment, and (iii) all attendant right, title and interest
thereto.
Cooperative Apartment. A dwelling unit in a multi-dwelling building owned
or leased by a cooperative housing corporation, which unit the Mortgagor has an
exclusive right to occupy pursuant to the terms of a proprietary lease in
accordance with the laws of the state in which the building is located.
Cooperative Loan. A Mortgage Loan evidenced by a Mortgage Note and secured
by a first lien against the Coop Ownership Interest in a Cooperative Apartment.
Credit File. With respect to any Mortgage Loan, a file pertaining to such
Mortgage Loan which contains the credit documentation relating to the
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origination of such Mortgage Loan and copies of the Collateral Documents, which
file shall be retained by the Servicer and the documents contained therein may
be originals, photocopies or stored electronically.
Custodial Account for P&I. The custodial account for principal and interest
established and maintained by each Servicer pursuant to its Selling and
Servicing Contract as specified in Section 2.4 of the Servicing Agreement.
Custodial Account for Reserves. The custodial account for reserves
established and maintained by each Servicer pursuant to its Selling and
Servicing Contract and caused by the Master Servicer to be established and
maintained pursuant to Section 2.5 of the Servicing Agreement.
Custodian. ▇▇▇▇▇ Fargo Bank, N.A., or its successor in interest or assigns.
Cut-off Date. As to each Mortgage Loan purchased on a particular Closing
Date, the cut-off date specified in the Commitment Letter relating to the
purchase and sale of the related Loan Pool.
Cut-off Date Principal Balance. As to each Mortgage Loan, the outstanding
principal balance of such Mortgage Loan as of the close of business on the
applicable Cut-off Date, after deduction and application of all payments of
principal due on or before such Cut-off Date, whether or not received.
Data Tape: With respect to the Mortgage Loans included in a Loan Pool to be
sold pursuant to this Agreement on any Closing Date, the data tape which shall
be attached to the Term Sheet and shall set forth as to each Mortgage Loan the
following information, to the extent applicable:
(i) the Mortgagor's name;
(ii) a code indicating whether the Mortgagor is self-employed;
(iii) a code indicating whether the Mortgaged Property is owner-occupied,
investment property or a second home;
(iv) the number and type of residential units constituting the Mortgaged
Property (e.g., single family residence, a two-to-four family dwelling,
condominium, planned unit development or cooperative);
(v) with respect to each First Lien Loan, the Loan-to-Value Ratio at
origination, and with respect to each Second Lien Loan, the CLTV at origination;
(vi) the date on which the first Monthly Payment was due on the Mortgage
Loan and, if such date, is not consistent with the Due Date currently in effect,
the Due Date;
(vii) the original principal amount of the Mortgage Loan;
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(viii) the principal balance of the Mortgage Loan as of the close of
business on the related Cut-off Date, after deduction of payments of principal
due and collected on or before the related Cut-off Date;
(ix) the type of Mortgage Loan (i.e., Fixed Rate or Adjustable Rate
Mortgage Loan, First or Second Lien Loan);
(x) a code indicating the purpose of the loan (i.e. purchase, rate/term
refinance, equity take-out refinance);
(xi) a code indicating the documentation style (i.e. no documentation,
full, alternative, reduced, no income/no asset, stated income, no ratio, reduced
or NIV);
(xii) asset verification;
(xiii) whether such Mortgage Loan provides for a Prepayment Charge;
(xiv) the Prepayment Charge period of such Mortgage Loan, if applicable;
(xv) a description of the Prepayment Charge, if applicable;
(xvi) the FICO score (middle of 3 or lower of 2 scores);
(xvii) the date of origination;
(xviii) a code indicating whether the loan is a Balloon Mortgage Loan;
(xix) with respect to each option ARM Mortgage Loan, (a) negative
amortization indicator and (b) the maximum negative amortization;
(xx) LPMI premiums;
(xxi) Seller Loan ID Tape;
(xxii) Servicer Name;
(xxiii) Address;
(xxiv) County;
(xxv) IO Flag;
(xxvi) Sale Price;
(xxvii) MERS Loan ID;
(xxviii) RtIndex;
(xxix) BalAct;
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(xxx) BalCurr;
(xxxi) PmtDueDtNext;
(xxxii) BalSched;
(xxxiii) PmtCurr;
(xxxiv) RtFloorPeriodic;
(xxxv) PmtOrig;
(xxxvi)PmtCapPeriodic;
(xxxvii)ForeignNatFlag;
(xxxviii)PMICertNo.; and
(xxxix) AssumableFlag.
Deleted Mortgage Loan. As defined in Section 3.3(b).
Delinquent Monthly Payment: Any scheduled Monthly Payment that (i) has not
been received by the Due Date of the next Monthly Payment and (ii) remains
unpaid as of the related Closing Date.
Depositor: The depositor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Disclosure Document. With respect to any Securitization Transaction, a
prospectus, prospectus supplement, private placement memorandum or offering
circular prepared in connection with such Securitization Transaction.
Due Date. The day on which the Monthly Payment for each Mortgage Loan is
due, exclusive of any days of grace, which shall be the first day of the month.
Due Period. With respect to any Mortgage Loan, the period beginning on the
first day of any month and ending on the last day of such month.
Escrow Holdback Mortgage Loan. A Mortgage Loan subject to an escrow
withhold agreement for the express purpose of completing designated improvements
on the Mortgaged Property.
Escrow Payments. The amounts constituting ground rents, taxes, assessments,
water rates, Primary Mortgage Insurance Policy premiums, Hazard Insurance Policy
premiums and other payments required to be escrowed by the Mortgagor with the
applicable mortgagee pursuant to the related Mortgage Loan or the Servicing
Agreement.
Exchange Act: The Securities Exchange Act of 1934, as amended.
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▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇ ▇▇▇ (formerly known as the Federal National Mortgage
Association) and any successor thereto.
FDIC. The Federal Deposit Insurance corporation or any successor thereto.
Gross Margin. With respect to any ARM Loan, the fixed percentage amount set
forth in the related Mortgage Note and described in the related Mortgage Loan
Schedule, which amount is added to the Index in accordance with the terms of the
related Mortgage Note to determine on each Interest Rate Adjustment Date the
Mortgage Interest Rate for such Mortgage Loan.
Hazard Insurance Policies. Policies of insurance maintained pursuant to
Section 2.11 of the Servicing Agreement covering physical damage to or
destruction of Mortgage Properties.
Index. With respect to any ARM Loan, the index set forth in each adjustable
rate Mortgage Note, which index is added to the Gross Margin to determine the
Mortgage Interest Rate on each Interest Rate Adjustment Date.
Initial Closing Date. November 30, 2006.
Initial Closing Date Documents. The documents to be delivered by the
Company and the Purchasers on the Initial Closing Date, which shall consist of:
(i) four fully-executed counterparts of this Agreement,
(ii) four fully-executed counterparts of the Servicing Agreement,
(iii) four fully-executed counterparts of the Term Sheet, and
(iv) four fully-executed counterparts of the Commitment Letter with
exhibits.
Initial Rate Cap. With respect to any ARM Loan, the maximum increase or
decrease in the Mortgage Interest Rate on the initial Interest Rate Adjustment
Date.
Interest Rate Adjustment Date. With respect to any ARM Loan, the date
specified in the related Mortgage Note as the date on which the Mortgage
Interest Rate for the related Mortgage Loan is subject to adjustment.
Interest Rate Decrease Maximum. With respect to any ARM Loan, the maximum
amount, if any, that the Mortgage Interest Rate can adjust downwards on any
Interest Rate Adjustment Date, as determined in accordance with the related
Mortgage Note.
Interest Rate Increase Maximum. With respect to any ARM Loan, the maximum
amount, if any, that the Mortgage Interest Rate can adjust upwards on any
Interest Rate Adjustment Date, as determined in accordance with the related
Mortgage Note.
Investment Account. The account maintained by the Master Servicer with a
Qualified Depository pursuant to Section 2.6 of the Servicing Agreement.
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Issuing Entity: The issuing entity, as such term is defined in Regulation
AB, with respect to any Securitization Transaction.
Letter Agreement. The Letter Agreement, dated November 30, 2006 by and
among Luminent Mortgage Capital, Inc., Maia Mortgage Finance Statutory Trust,
Mercury Mortgage Finance Statutory Trust and Washington Mutual Bank including
all exhibits thereto.
Loan Pool. A pool of Mortgage Loans sold by the Company to the Purchaser on
any Closing Date pursuant to the terms of this Agreement and the related
Commitment Letter (which Mortgage Loans shall be identified on the related
Mortgage Loan Schedule delivered pursuant to this Agreement).
LPMI. Lender-paid primary mortgage insurance policy.
Loan-to-Value Ratio. With respect to each Mortgage Loan, the original
principal balance of such Mortgage Loan divided by the Appraised Value of the
related Mortgaged Property.
Master Servicer. With respect to any Securitization Transaction, the
"master servicer," if any, identified in the related transaction documents.
Maturity Date. With respect to each Mortgage Loan, the maturity date of the
related Mortgage Note, as specified therein.
Maximum Mortgage Interest Rate. With respect to any ARM Loan, the maximum
rate of interest that may be charged pursuant to the related Mortgage Note.
MERS. Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, and any successor thereto.
MERS Loan. Any Mortgage Loan registered on the MERS(R) System and for which
MERS is listed as the record mortgagee or beneficiary on the related Mortgage or
assignment thereof.
MERS(R) System. The system of electronically recording transfers of
Mortgages maintained by MERS.
MIN. The mortgage identification number issued to each MERS Loan.
Minimum Mortgage Interest Rate. With respect to any ARM Loan, the minimum
rate of interest, if any, that may be charged pursuant to the related Mortgage
Note.
MOM Loan. A Mortgage Loan that was registered on the MERS(R) System at the
time of origination thereof and for which MERS appears as the record mortgagee
or beneficiary on the related Mortgage.
Monthly Payment. The scheduled monthly payment of principal and interest on
a Mortgage Loan which is payable by a Mortgagor from time to time under the
related Mortgage Note and due on the applicable Due Date.
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Monthly Remittance Date. The 18th day of any month (or if such day is not a
Business Day, the next Business Day) commencing, for each Mortgage Loan, on the
date specified in the related Term Sheet; provided, however, that if no initial
Monthly Remittance Date is specified in the Term Sheet, the initial Monthly
Remittance Date shall be the Monthly Remittance Date in the month following the
related Closing Date set forth in the Term Sheet.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or any successor thereto.
Mortgage. The mortgage, deed of trust or other instrument creating a first
lien on or first priority ownership interest in real property or, in the case of
a Cooperative Loan, the security agreement or other instrument creating a first
lien on the related Coop Ownership Interests, in each case, including any
riders, addenda, assumption agreements, or modifications relating thereto.
Mortgage Interest Rate. With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan as provided in the related
Mortgage Note.
Mortgage Loan. An individual mortgage loan that is sold pursuant and
subject to this Agreement, each such mortgage loan being identified on the
related Mortgage Loan Schedule. The term Mortgage Loan includes a Cooperative
Loan.
Mortgage Loan Schedule. With respect to the Mortgage Loans included in a
Loan Pool to be sold pursuant to this Agreement on any Closing Date, the
schedule of Mortgage Loans which shall be attached to the Term Sheet and shall
set forth as to each Mortgage Loan the following information, to the extent
applicable:
(i) the Company's Mortgage Loan identifying number;
(ii) the city, state and zip code of the Mortgaged Property;
(iii) the original months to maturity from the Cut-off Date of the Mortgage
Loan, based on the original amortization schedule;
(iv) with respect to ARM Loans:
(a) the Gross Margin, and
(b) the Mortgage Interest Rate, periodic cap, Maximum Mortgage
Interest Rate, Minimum Mortgage Interest Rate and, if applicable,
the negative amortization cap;
(v) Mortgage Interest Rate as of the Cut-off Date;
(vi) the Maturity Date;
(vii) the amount of the Monthly Payment as of the Cut-off Date;
(viii) the Cut-off Date Principal Balance;
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(ix) a Primary Mortgage Insurance Policy insurer code (if applicable);
(x) the property value of the Mortgaged Property; and
(xi) the Servicing Fee applicable to such Mortgage Loan.
With respect to each Loan Pool, the Mortgage Loan Schedule shall set forth
the following information, as of the Cut-off Date, with respect to the Mortgage
Loans in the aggregate: (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; and (4) the weighted
average maturity of the Mortgage Loans.
Mortgage Note. The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage, including any riders or addenda thereto.
Mortgaged Property. The property securing a Mortgage Note pursuant to the
related Mortgage or, in the case of a Cooperative Loan, the related Coop
Ownership Interests.
Mortgagor. The obligor(s) on a Mortgage Note.
Net Rate. With respect to each Mortgage Loan, the annual rate at which
interest thereon shall be remitted to the Purchaser (in each case computed on
the basis of a 360-day year consisting of twelve 30-day months), which annual
rate shall be equal to the Mortgage Interest Rate for such Mortgage Loan less
the Servicing Fee Rate for such Mortgage Loan [and, if applicable, the LPMI
Rate]. With respect to each Mortgage Loan, the calculation of monthly interest
at such rate shall be equal to one-twelfth of the product of (i) such rate,
multiplied by (ii) the outstanding Unpaid Principal Balance of such Mortgage
Loan. With respect to any Payoff, the calculation of interest at such rate shall
be equal to the product of (i) such rate, (ii) the Unpaid Principal Balance, and
(iii) a fraction, the numerator of which is the number of days elapsed from the
Due Date of the last scheduled payment of principal and interest to, but not
including, the date of such Payoff, and the denominator of which is (a) for
Payoffs received on a Due Date, 360, and (b) for all other Payoffs, 365.
Payoff. Any payment or other recovery of principal on a Mortgage Loan equal
to the outstanding principal balance of such Mortgage Loan, received in advance
of the last scheduled Due Date for such Mortgage Loan and accompanied by an
amount of interest equal to accrued interest from the Due Date interest was last
paid by the Mortgagor to the date of such payment in full or recovery.
Permitted Reconstitution: A Whole Loan Transfer or Securitization
Transaction that complies with the provisions of Section 6.1(a).
Person. Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Primary Mortgage Insurance Policy. A policy of mortgage guaranty insurance,
if any, on an individual Mortgage Loan.
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Purchase Price. With respect to each Mortgage Loan purchased hereunder, an
amount equal to the Cut-off Date Principal Balance of such Mortgage Loan,
multiplied by the Purchase Price Percentage.
Purchase Price Percentage. As set forth in the Term Sheet.
Purchaser. Any of Luminent Mortgage Capital, Inc., Maia Mortgage Finance
Statutory Trust or Mercury Mortgage Finance Statutory Trust.
Qualified Correspondent: Any Person from which the Company purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Company and
such Person that contemplated that such Person would underwrite mortgage loans
from time to time, for sale to the Company, in accordance with underwriting
guidelines designated by the Company ("Designated Guidelines") or guidelines
that do not vary materially from such Designated Guidelines; (ii) such Mortgage
Loans were in fact underwritten as described in clause (i) above and were
acquired by the Company within 180 days after origination; (iii) either (x) the
Designated Guidelines were, at the time such Mortgage Loans were originated,
used by the Company in origination of mortgage loans of the same type as the
Mortgage Loans for the Company's own account or (y) the Designated Guidelines
were, at the time such Mortgage Loans were underwritten, designated by the
Company on a consistent basis for use by lenders in originating mortgage loans
to be purchased by the Company; and (iv) the Company employed, at the time such
Mortgage Loans were acquired by the Company, pre-purchase or post-purchase
quality assurance procedures (which may involve, among other things, review of a
sample of mortgage loans purchased during a particular time period or through
particular channels) designed to ensure that Persons from which it purchased
mortgage loans properly applied the underwriting criteria designated by the
Company.
Qualified Depository. Any of the following: (i) a depository, the long-term
unsecured debt obligations of which are rated by any Rating Agency (or a
comparable rating agency) in one of its three highest rating categories, (ii)
the corporate trust department of a national bank, (iii) a depository that fully
insures the Investment Account or the Remittance Account with insurance provided
by the FDIC, or (iv) Washington Mutual Bank, FA.
Qualified Substitute Mortgage Loan. A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan, which must have the
following qualities on the date of substitution, (i) have an outstanding
principal balance, after deduction of all scheduled payments due in the month of
substitution, not in excess of the outstanding principal balance of the Deleted
Mortgage Loan (the amount of any shortfall shall be deposited in the Remittance
Account by the Company out of its own funds without right of reimbursement as
provided in Section 3.3(e)), (ii) have a current Mortgage Interest Rate not less
than 1% less than, and not more than 1% greater than, the current Mortgage
Interest Rate of the Deleted Mortgage Loan, (iii) have a remaining term to
maturity not greater than and not more than two years less than that of the
Deleted Mortgage Loan, (iv) have a Net Rate not less than 1% less than, and not
more than 1% greater than, the Net Rate of the Deleted Mortgage Loan, (v) be of
the same type as the Deleted Mortgage Loan (i.e., if the Deleted Mortgage Loan
is a fixed rate Mortgage Loan, the substituted loan shall be a fixed rate
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Mortgage Loan, and if the Deleted Mortgage Loan is an ARM Loan, the substituted
loan shall be an ARM Loan which is the same ARM type and with a first Interest
Rate Adjustment Date occurring on approximately the same date as, but not
earlier than, the first Interest Rate Adjustment Date as the Deleted Mortgage
Loan and be based on the same Index as the Deleted Mortgage Loan, and a Gross
Margin and Mortgage Interest Rate caps that are no more than 0.5% or not less
than 0.5% the Gross Margin and Mortgage Interest Rate caps of the Deleted
Mortgage Loan), and (vi) comply with each representation and warranty respecting
individual Mortgage Loans set forth in Section 3.1 hereof, provided, that for
purposes of applying such representations and warranties to each such Qualified
Substitute Mortgage Loan, references in such Sections to the related Closing
Date shall be deemed to be references to the date of substitution of such
Qualified Substitute Mortgage Loan. If one or more Mortgage Loans are
substituted for one or more Deleted Mortgage Loans pursuant to Section 3.3, the
amounts described in clause (i) hereof shall be determined on the basis of the
aggregate principal balances; the Mortgage Interest Rate, the term to maturity
and the Net Rate described in clauses (ii)-(iv) hereof shall be determined on
the basis of weighted average Mortgage Interest Rates, original terms to
maturity and Net Rates respectively.
Rating Agency. S&P, ▇▇▇▇▇'▇ or any other nationally recognized statistical
rating organization.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Reconstitution Agreement: An agreement or agreements entered into by the
Company and the Purchaser and/or certain third parties, including a master
servicer, in connection with a Reconstitution with respect to any or all of the
Mortgage Loans serviced under this Agreement.
Refinanced Mortgage Loan. A Mortgage Loan originated in connection with the
refinance of an existing mortgage debt.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
Remittance Account. The account created and maintained by the Master
Servicer with a Qualified Depository pursuant to Section 2.7 of the Servicing
Agreement.
Repurchase Obligation. An obligation of the Company to repurchase Mortgage
Loans under the circumstances and in the manner provided in Section 3.3.
Repurchase Price. With respect to any Mortgage Loan to be purchased
pursuant to a Repurchase Obligation, a amount equal to the sum of (i) the Unpaid
Principal Balance thereof plus (ii) the amount of interest on such Unpaid
Principal Balance at the applicable Net Rate, from the date to which interest
has last been paid and distributed to the Purchaser, to the day prior to such
date of repurchase, plus, in the event notice is given to repurchase a Mortgage
Loan during the first twelve (12) months following the related Closing Date an
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amount equal to the Purchase Price Percentage multiplied by the Unpaid Principal
Balance of such Mortgage Loan as of the date of such repurchase.
Required Notice: With respect to any Reconstitution 15 days' prior written
notice, which may be in electronic form (i) accompanied by loan-level data with
respect to the Mortgage Loans intended for inclusion in such Reconstitution and
(ii) specifying the percentage of mortgage loans in the entire related
transaction that consist of Mortgage Loans.
ROV Mortgage Loan. A Mortgage Loan originated by Washington Mutual Bank, FA
or Washington Mutual Bank fsb with respect to which the value set forth on the
appraisal has been appealed and, as a result, an internal valuation has been
conducted and included in a residential appraisal review contained in the
related Credit File.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or its successor in interest.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Selling and Servicing Contract. The contract between the Company and a
Servicer with respect to the sale and servicing of mortgage loans.
Servicer. A mortgage loan servicing institution to which the Master
Servicer has assigned servicing duties with respect to any Mortgage Loan under a
Selling and Servicing Contract; provided, however, the Master Servicer may
designate itself or one or more other mortgage loan servicing institutions as
Servicer upon termination of an initial Servicer's servicing duties.
Servicing Agreement. That certain servicing agreement of even date herewith
between the Purchaser as owner and the Master Servicer as servicer.
Servicing Cut-off Date. As to each Mortgage Loan purchased on a Closing
Date, the last day of the Due Period in which such Closing Date occurs.
Servicing Fee. With respect to each Mortgage Loan, the amount of the annual
fee payable to the Servicer for performing primary servicing functions with
respect to such Mortgage Loan. Such fee shall, for a period of one full month,
be equal to one-twelfth of the product of (i) the related Servicing Fee Rate,
multiplied by (ii) the outstanding Unpaid Principal Balance of such Mortgage
Loan. Such fee shall be payable monthly from the Custodial Account for P&I and
shall be computed on the basis of the same principal amount and period
respecting which any related interest payment on such Mortgage Loan is computed.
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Servicing Fee Rate. With respect to each Mortgage Loan, the annual rate at
which the Servicing Fee shall be calculated, which rate is set forth for each
Mortgage Loan in the Mortgage Loan Schedule.
Sponsor: The sponsor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Static Pool Information: Static pool information as described in Item
1105(a)(1)-(3) and 1105(c) of Regulation AB.
Streamlined Mortgage Loan. A Mortgage Loan originated in connection with
the refinance of a mortgage loan pursuant to the Company's or the related
originator's streamlined loan documentation program then in effect.
Subsequent Transfer Settlement Date. As defined in Section 6.1(a)(iii).
Term Sheet. A term sheet with respect to the Mortgage Loans purchased on a
Closing Date, in the form attached hereto as Exhibit B.
Third-Party Originator: Each Person, other than a Qualified Correspondent,
from which the Company acquired Mortgage Loans.
Unpaid Principal Balance. With respect to each Mortgage Loan that is not a
Qualified Substitute Mortgage Loan, as of any date of determination, (i) the
Cut-off Date Principal Balance, minus (ii) the principal portion of all payments
made by or on behalf of the Mortgagor after such Cut-off Date and received by
the Purchaser, plus (iii) in the case of a Mortgage Loan that is subject to
negative amortization, any capitalized interest. With respect to each Mortgage
Loan that is a Qualified Substitute Mortgage Loan, as of any date of
determination, (i) the outstanding principal balance of such Mortgage Loan as of
the close of business on the date of substitution, after deduction and
application of the principal portion of all payments due on or before such date
of substitution whether or not received, minus (ii) the principal portion of all
payments made by or on behalf of the Mortgagor after such date of substitution
and received by the Purchaser, plus (iii) in the case of a Mortgage Loan that is
subject to negative amortization, any capitalized interest.
Whole Loan Transfer. Any sale or transfer of some or all of the Mortgage
Loans, other than a Securitization Transaction.
ARTICLE 2 SALE AND CONVEYANCE OF MORTGAGE LOANS;
POSSESSION OF FILES; PAYMENT OF PURCHASE
PRICE; DELIVERY OF MORTGAGE LOAN DOCUMENTS;
RECORDATION OF ASSIGNMENTS OF MORTGAGE
Section 2.1 Sale and Conveyance of Mortgage Loans; Possession of Files
(a) On each Closing Date for any Loan Pool, upon the receipt of the
Purchase Price, the Company shall deliver a Term Sheet with respect to the Loan
Pool. By such delivery, the Company shall sell, transfer, assign, set over and
convey to the Purchaser, without recourse, but subject to the representations,
14
warranties, terms and provisions of this Agreement, all the right, title and
interest of the Company in and to the Mortgage Loans included in such Loan Pool,
exclusive of the related servicing rights.
(b) Pursuant to Section 2.2, the Company will deliver to the Purchaser or
its designee the documents comprising the Collateral File with respect to each
related Mortgage Loan included in a Loan Pool to be purchased by the Purchaser.
Such documents shall, prior to payment for the related Mortgage Loan pursuant to
Section 2.1(c) below, be held by the Custodian as custodian for the Company. The
documents comprising each Collateral File that are not required to be delivered
to the Custodian pursuant to Section 2.2(a) and the documents comprising each
Credit File shall, subject to payment for the related Mortgage Loan pursuant to
Section 2.1(c) below, be held in trust by the applicable Servicer or the Master
Servicer for the benefit of the Purchaser as the owner thereof. The Servicer's
possession of such documents so held is at the will of the Purchaser, and such
holding and possession is in trust for the Purchaser as the owner thereof and
only for the purpose of servicing the Mortgage Loans. Upon payment for the
related Mortgage Loan pursuant to Section 2.1(c) below, the beneficial ownership
of each Mortgage Note, each Mortgage and each of the other documents comprising
the Collateral File and the Credit File with respect to such Mortgage Loan is
and shall be vested in the Purchaser, and the ownership of all records and
documents with respect to such Mortgage Loan prepared by or which come into the
possession of the Company or any agent or designee thereof shall immediately
vest in the Purchaser and shall be delivered to the Custodian (in the case of
the Collateral Documents) or the Servicer (in the case of the Credit Files or
any other documents) to hold the same in a custodial capacity for Purchaser.
(c) In full consideration for the sale of each of the Mortgage Loans
pursuant to Section 2.1(a) hereof and other terms and conditions of this
Agreement, on the related Closing Date, the Purchaser shall pay to the Company,
in accordance with the wiring instructions provided by the Company, by wire
transfer of immediately available funds (i) the applicable Purchase Price for
each Mortgage Loan purchased on such Closing Date, plus (ii) the amount of
interest (computed, as to each Mortgage Loan, at the Net Rate) that has accrued
on the Cut-off Date Principal Balance of such Mortgage Loan from the Cut-off
Date to, but not including, the Closing Date.
(d) As of each Closing Date, the Purchaser shall own and be entitled to
receive with respect to each Mortgage Loan purchased on such Closing Date all
Monthly Payments and all other recoveries of principal and interest (computed,
as to each Mortgage Loan, at the Net Rate) due after the applicable Cut-off
Date, subject to the rights of the Master Servicer and any Servicer under the
Servicing Agreement to reimbursement for certain costs, expenses and advances
incurred or made pursuant thereto. All such amounts that are collected after the
applicable Cut-off Date through and including the related Closing Date shall be
held and remitted by the Master Servicer in accordance with the terms of the
Servicing Agreement.
(e) On or before the Closing Date for any Loan Pool, the Company shall
deliver to the Purchaser with the Term Sheet the related Mortgage Loan Schedule,
which shall be in hard copy or "read-only" electronic format (as agreed upon by
the Company and the Purchaser).
15
Section 2.2 Delivery of Mortgage Loan Documents Regarding Mortgage Loans;
Recordation of Assignments of Mortgage
(a) On or before the date specified in the related Commitment Letter, the
Company shall deliver or cause to be delivered to the Purchaser or its designee,
at the Company's expense, with respect to each Mortgage Loan sold by the Company
hereunder, each of the following items or documents (unless otherwise agreed by
the Company and the Purchaser):
(i) With respect to each Mortgage Loan (other than a Cooperative Loan):
(A) (1) the original Mortgage Note, endorsed (on the Mortgage Note or
an allonge attached thereto) "Pay to the order of _______________________,
without recourse," (or as otherwise specified in the related Commitment
Letter), and signed by facsimile signature in the name of the Company by an
authorized officer, with all intervening endorsements showing a complete,
valid and proper chain of title from the originator of such Mortgage Loan
to the Company; or
(2) a copy of the Mortgage Note, together with a lost note affidavit;
(B) the original Mortgage, with evidence of recording thereon, (and,
in the case of a MOM Loan, with evidence of the MIN); provided that (i) if
the original Mortgage has been delivered for recording to the appropriate
public recording office of the jurisdiction in which the Mortgaged Property
is located but has not yet been returned to the Company by such recording
office, the Company shall, no later than 270 days following the related
Closing Date, deliver to the Custodian the original of such Mortgage, with
evidence of recording thereon, and (ii) if such Mortgage has been lost or
if such public recording office retains the original recorded Mortgage, the
Company may deliver or cause to be delivered to the Custodian a photocopy
of such Mortgage certified by the Company or such public recording office
to be a true and complete copy of the original recorded Mortgage;
(C) unless such Mortgage Loan is a MERS Loan, the original Assignment
of Mortgage, from the Company signed by original signature of an authorized
officer, in blank (or as otherwise specified in the related Commitment
Letter), which assignment shall be in form and substance acceptable for
recording (except for the insertion of the name of the assignee and the
recording information);
(D) unless such Mortgage Loan is a MOM Loan, originals of all
intervening Assignments of Mortgage, with evidence of recording thereon,
showing a complete chain of title from the originator to the Company (or in
the case of a MERS Loan other than a MOM Loan, showing a complete chain of
16
title from the originator to MERS); provided that (1) if any original
intervening Assignment of Mortgage has been delivered for recording to the
appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located but has not yet been returned to the Company
by such recording office, the Company shall, no later than 270 days
following the related Closing Date, deliver to the Custodian the original
of such intervening Assignment of Mortgage, with evidence of recording
thereon, and (2) if such intervening Assignment of Mortgage has been lost
or if such public recording office retains the original recorded
intervening Assignment of Mortgage, the Company may deliver or cause to be
delivered to the Custodian a photocopy of such intervening Assignment of
Mortgage certified by such public recording office to be a true and
complete copy of the original recorded intervening Assignment of Mortgage;
and
(E) originals of all assumption and modification agreements, if any,
unless such originals are unavailable (in which event the Company shall
deliver to the Custodian a photocopy of each such original, certified by
the Company to be a true and complete copy of the original).
(ii) With respect to each Cooperative Loan, as applicable and as required
by the applicable laws of the state in which the related Cooperative Apartment
is located, copies of: (A) the proprietary lease, (B) the security agreement,
(C) the assignment of the proprietary lease, with all intervening assignments
showing a complete chain of title and an assignment thereof by the Company, (D)
the original stock certificate evidencing the ownership of the Cooperative
Apartment endorsed or accompanied by a stock power relating to such stock
certificate executed in blank, (E) a recognition agreement in form approved by
the Company's underwriting guidelines, in substantially the same form as the
standard "AZTECH" form, (F) copies of the financing statement filed by the
Company as secured party and, if applicable, a filed UCC-3 assignment of the
subject security interest showing a complete chain of title, together with an
executed UCC-3 Assignment of such security interest by the Company in a form
sufficient for filing, and (G) such other documents as are necessary for the
perfection of a lien against the related Coop Ownership Interest under
applicable law.
(b) The Purchaser shall pay all recording fees relating to the recordation
of the Assignments of Mortgage from its own funds.
(c) Whenever a certified copy of a document certified by the Company is
required to be delivered to the Purchaser pursuant to this Section 2.2, the
following form of certification is permitted: "Certified true, correct and
complete copy of the original. Washington Mutual Mortgage Securities Corp., By
_________________, Its _________________."
(d) In the event the Company does not comply with the delivery requirements
set forth in this Section 2.2 and such noncompliance materially and adversely
affects the Purchaser's interest in the Mortgage Loan, the Purchaser shall
notify the Company of such noncompliance, and the Company shall correct or cure
the related omission or defect within sixty (60) days of the receipt of such
notice. If the Company does not correct or cure such omission or defect within
such period, then the Company shall purchase such Mortgage Loan from the
Purchaser within ten (10) days after the expiration of such sixty-day period at
17
the Repurchase Price and in the manner specified in Section 3.3(b).
Notwithstanding the foregoing, the Company shall not be deemed to be in breach
of this Agreement if the Company fails to deliver to the Custodian within the
time period specified above any of the documents described in this Section 2.2
and provides evidence to the Custodian that such failure is due solely to the
failure of the applicable recorder's office to return any document in the
Collateral File that was properly submitted for recordation. The Company shall
use reasonable efforts to obtain such original recorded document or copy of the
original showing recording information certified by the appropriate recording
office to be a true and complete copy of the recorded original as soon as
practicable.
Section 2.3 Purchaser's Due Diligence Review
With respect to each Loan Pool, the Purchaser shall be entitled to conduct
a due diligence review in order to ensure that the Mortgage Loans included in
such Loan Pool meet the requirements set forth in the related Commitment Letter
and this Agreement. Such due diligence review shall be conducted in accordance
with the timetable and any additional terms and conditions set forth in the
related Commitment Letter. The Purchaser's due diligence review shall not result
in a waiver of or impair or diminish the rights of the Purchaser under this
Agreement with respect to a breach of representations or warranties of the
Company.
Section 2.4 Reserved
Section 2.5 Reserved
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE COMPANY CONCERNING MORTGAGE LOANS;
REPURCHASE OF MORTGAGE LOANS
Section 3.1 Individual Mortgage Loans
Except with respect to the defects set forth in the Term Sheet as to which
no remedy shall be available for a breach of a representation or warranty under
this Section 3.1, the Company hereby represents and warrants to and covenants to
and agrees with the Purchaser that, as to each Mortgage Loan sold by the Company
hereunder, as of the related Closing Date, unless otherwise indicated:
(a) The information with respect to such Mortgage Loan set forth on the
related Mortgage Loan Schedule and Data Tape is true and correct in all material
respects.
(b) Immediately prior to the transfer of the Mortgage Loan to the Purchaser
pursuant to Section 2.1, neither the related Mortgage nor the Mortgage Note were
assigned or pledged to any Person and the Company had good and marketable title
thereto. Immediately prior to the transfer of the Mortgage Loan to the Purchaser
pursuant to Section 2.1, the Company was the sole owner and holder of such
Mortgage Loan, free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges, or security interests of
any nature, and had full right and authority to sell and assign such Mortgage
Loan pursuant to this Agreement. Upon the transfer of the Mortgage Loan to the
Purchaser pursuant to Section 2.1, the Company shall have taken all actions
18
necessary on its part to be taken so that the Purchaser will have good
indefeasible title to, and will be sole owner of, the related Mortgage and the
Mortgage Note, free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges, or security interests of
any nature.
(c) With respect to each Mortgage Loan other than a Cooperative Loan, (i)
the Mortgage is a valid, subsisting and enforceable first lien on the Mortgaged
Property, including all buildings, fixtures, installations and improvements to
the Mortgaged Property, and the Mortgaged Property is free and clear of all
encumbrances and liens having parity with or priority over the first lien of the
Mortgage except for (A) the lien of current real property taxes and assessments
not yet due and payable, (B) covenants, conditions and restrictions, rights of
way, easements, mineral right reservations and other matters of public record as
of the date of recording of such Mortgage, such exceptions generally being
acceptable under prudent mortgage lending standards and specifically reflected
in the appraisal made in connection with the origination of such Mortgage Loan
or specifically referred to in the mortgagee's policy of title insurance and (C)
other matters to which like properties are commonly subject that do not
materially interfere with the value (as determined by the Appraised Value), use,
enjoyment or marketability of the Mortgaged Property and (ii) there are no
security agreements, pledged accounts, chattel mortgages, or equivalent
documents related to the Mortgage.
(d) The terms of the Mortgage and the Mortgage Note have not been impaired,
waived, altered, or modified in any respect, except by a written instrument that
has been recorded, if necessary, to protect the interest of the Purchaser and
that is a part of the Collateral File. The substance of any such alteration or
modification is reflected on the related Mortgage Loan Schedule; provided,
however, that under certain circumstances where the modification, waiver or
alteration is favorable to the Mortgagor, the terms of such Mortgage and the
Mortgage Note may have been modified pursuant to a written instrument that may
or may not have been executed by the related Mortgagor and that is part of
either the Collateral File or the Credit File and is disclosed on the Mortgage
Loan Schedule.
(e) No mortgagor has been released, in whole or in part, except in
connection with an assumption agreement or modification agreement that is
indicated in the Collateral File and reflected on the Mortgage Loan Schedule.
(f) There is no default, breach, violation, or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute such a default, breach, violation, or event of acceleration,
and neither the Company, nor to the Company's knowledge, any seller or servicer,
has waived any such default, breach, violation, or event of acceleration. All
taxes, governmental assessments (including assessments payable in future
installments), insurance premiums, leasehold payments, or ground rents which
previously became due and owing in respect of or affecting the related Mortgaged
Property have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item that remains unpaid and that has been
assessed but is not yet due and payable. Except as covered by a Buydown Fund
consistent with this Agreement, the Company has not advanced funds, or induced,
solicited, or knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount required by the
Mortgage or the Mortgage Note. No foreclosure action has been commenced with
respect to such Mortgage Loan.
19
(g) The Mortgaged Property is free of material damage or waste and in good
repair. There is no proceeding pending or, to the best of the Company's
knowledge, threatened for the total or partial condemnation of the Mortgaged
Property and no notice of any such pending or threatened proceeding has been
received so as to adversely impair the value or marketability of the Mortgaged
Property.
(h) There are no mechanics' or similar liens or claims which have been
filed for work, labor, or material (and, to the best of the Company's knowledge,
no rights are outstanding that under law could give rise to such liens)
affecting the related Mortgaged Property that are, or may be, liens prior or
equal to, or coordinate with, the lien of the related Mortgage and that are not
insured against by the related mortgagee's policy of title insurance.
(i) All of the improvements which were included for the purpose of
determining the Appraised Value of the Mortgaged Property were completed at the
time that such Mortgage Loan was originated and lie wholly within the boundaries
and building restriction lines of such Mortgaged Property; provided, that if
such Mortgage Loan is an Escrow Holdback Mortgage Loan, the improvements
described in the applicable agreement governing the escrow arrangement may not
have been made at the time such Mortgage Loan was originated. No improvements on
adjoining properties encroach upon the Mortgaged Property except those that are
insured against by the title insurance policy referred to in Section 3.1(q). At
origination, no improvement located on or being part of the Mortgaged Property
was in violation of any applicable zoning law or regulation, subdivision law or
ordinance.
(j) The originator, during the period in which it held and disposed of such
Mortgage Loan, was: (i) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located
and (ii)(A) organized under the laws of such state, (B) qualified to do business
in such state, (C) a federal savings and loan association or national bank
having principal offices in such state, (D) not doing business in such state, or
(E) not required to qualify to do business in such state.
(k) No Monthly Payment with respect to such Mortgage Loan is a Delinquent
Monthly Payment. All payments required to be made under the related Mortgage and
Mortgage Note through and including the related Cut-off Date, have been made.
Unless otherwise stated in the related Commitment Letter, not more than one
payment required to be made under the related Mortgage and Mortgage Note has
remained unpaid through its next Due Date (excluding any applicable grace
period) during the twelve months immediately preceding the related Cut-off Date.
(l) There are no custodial agreements in effect adversely affecting the
right or ability of the Company to make the deliveries specified in Section
2.2(a).
(m) The Mortgage Note and the Mortgage are genuine, and each is the legal,
valid and binding obligation of the maker thereof and each party assuming
liability therefor, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting the enforcement of creditors' rights
generally and except that the equitable remedy of specific performance and other
equitable remedies are subject to the discretion of the courts. All parties to
20
the Mortgage Note and the Mortgage had legal capacity to execute the Mortgage
Note and the Mortgage and convey the estate therein purported to be conveyed,
and the Mortgage Note and the Mortgage have been duly and properly executed by
such parties or pursuant to a valid power-of-attorney that has been recorded
with the Mortgage, if applicable.
(n) The Mortgage has been duly assigned and the Mortgage Note has been duly
endorsed as provided in Section 2.2(a). Any Assignment of Mortgage delivered to
the Purchaser pursuant to Section 2.2(a)(i)(C) is in recordable form except for
the insertion of the name of the assignee and recording information and is
acceptable for recording under the laws of the applicable jurisdiction.
(o) 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, or disclosure laws
applicable to such Mortgage Loan have been complied with in all material
respects.
(p) The proceeds of such Mortgage Loan have been fully disbursed; provided
that, if such Mortgage Loan is an Escrow Holdback Mortgage Loan, all of the
proceeds of such Mortgage Loan have been or will be disbursed (i) upon the
completion of the improvements described in the applicable agreement governing
the escrow arrangement, and (ii) in a manner acceptable to the Company. There is
no requirement for, and the Company shall not make any, future advances under
the terms of the Mortgage Loan. Any future advances made prior to the applicable
Cut-off Date have been consolidated with the principal balance secured by the
Mortgage, and such principal balance, as consolidated, bears a single interest
rate and single repayment term reflected on the related Mortgage Loan Schedule.
Unless such Mortgage Loan is subject to negative amortization, the Unpaid
Principal Balance as of the applicable Cut-off Date does not exceed the original
principal amount of such Mortgage Loan. 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, and certificates of
completion with respect thereto are contained in the related Credit File;
provided, that if such Mortgage Loan is an Escrow Holdback Mortgage Loan, the
improvements described in the applicable agreement governing the escrow
arrangement may not have been completed and escrow funds related to such
improvements may not have been disbursed pursuant to the terms of such
agreement. All costs, fees and expenses incurred in making, or closing or
recording such Mortgage Loan have been paid or shall be paid in the ordinary
course of business.
(q) Such Mortgage Loan (unless it is a Cooperative Loan) is covered by an
ALTA mortgage title insurance policy acceptable to the Company, with, in the
case of an ARM Loan, an adjustable rate mortgage endorsement, substantially in
the form of ALTA Form 6.1 or 6.2, or such other generally used and acceptable
form of policy and applicable endorsements acceptable under the Company's
underwriting guidelines or the originator's underwriting guidelines. Each such
policy affirmatively insures ingress and egress and insures against
encroachments by or upon the Mortgaged Property. Each such policy was issued on
the date of the origination of such Mortgage Loan by a title insurer acceptable
under the Company's underwriting guidelines or the originator's underwriting
guidelines and qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring the Company, and its successors and assigns, as to
the first priority lien of the Mortgage in the original principal amount of such
21
Mortgage Loan. Each such policy has been duly and validly endorsed to the
Purchaser or the assignment to the Purchaser of the Company's interest does not
require the consent of or notification to the insurer, and such mortgage title
insurance policy is in full force and effect. Where required by law or
regulation, the Mortgagor has been given the opportunity to choose the carrier
of the required mortgage title insurance. The Company has taken no action that
would impair the enforceability of such policy.
(r) All buildings and other improvements upon the Mortgaged Property are
insured against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the Mortgaged Property is located,
pursuant to insurance policies issued by an insurer acceptable under the
Company's underwriting guidelines or the originator's underwriting guidelines.
If the Mortgaged Property is in an area that is identified on a flood hazard
boundary map or flood insurance rate map issued by the Federal Emergency
Management Agency as having special flood hazards and such flood insurance is
available, a flood insurance policy is in effect meeting the requirements of the
current guidelines of the Federal Insurance Administration with an insurance
carrier acceptable to the Company. Each individual insurance policy has been
validly issued and is in full force and effect. The Company has caused to be
performed all acts required to preserve the rights and interests of the
Purchaser in all insurance policies required by this Agreement, including,
without limitation, notification of insurers, and assignment of policies or
interests therein. Each individual insurance policy contains a standard
mortgagee clause naming the Company, and its successors and assigns, as
mortgagee and loss payee. All premiums due thereon have been paid. The Mortgage
obligates the Mortgagor to maintain all such insurance at the Mortgagor's cost
and expense, and upon the Mortgagor's failure to do so, authorizes the servicer
or the owner of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor. No claims have been made under such policies since origination of the
Mortgage Loan, and the Company has taken no action that would impair the
coverage of any such insurance policy, the benefits of any endorsement or the
validity, binding effect and enforceability of the foregoing.
(s) There is no valid offset, defense, counterclaim or right of rescission
as to the related Mortgage Note or Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or interest on such Mortgage Note. The
operation of any of the terms of such Mortgage Note or Mortgage, or the exercise
of any right thereunder, shall not render either the Mortgage Note or the
Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off, recoupment, counterclaim or defense, including, without
limitation, the defense of usury, and no such right of rescission, set-off,
recoupment, counterclaim or defense has been asserted with respect thereto. Such
Mortgage Loan is not subject to any pending bankruptcy, insolvency,
reorganization or moratorium. If such Mortgage Loan is an ARM Loan, all the
applicable terms of the Mortgage Note pertaining to adjustments of the Mortgage
Interest Rate and the Monthly Payments and payment adjustments in connection
therewith are enforceable and shall not affect the priority of the Mortgage
lien. If such Mortgage Loan is an ARM Loan, the related Mortgage Note has been
timely and appropriately adjusted, if such adjustment is required, and the
respective Mortgagor timely and appropriately advised. All such adjustments have
been made in compliance with applicable law and in accordance with the terms of
the Mortgage Loan documents.
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(t) Such Mortgage Loan was originated by (i) a savings and loan
association, savings bank, commercial bank, credit union, insurance company or
similar institution that is supervised and examined by a Federal or state
authority, or (ii) a mortgagee approved by the Secretary of HUD pursuant to
Section 203 or 211 of the National Housing Act.
(u) Unless such Mortgage Loan is a Mortgage Loan that requires the payment
of interest only with respect to some or all of the related Monthly Payments,
principal payments on such Mortgage Loan commenced or are required to commence
no more than two months after funds were disbursed in connection with such
Mortgage Loan. Unless such Mortgage Loan is subject to negative amortization or
is a Mortgage Loan that requires the payment of interest only with respect to
some or all of the related Monthly Payments, the Mortgage Note requires a
Monthly Payment which is sufficient to fully amortize the original principal
balance over the remaining term thereof and to pay interest at the Mortgage
Interest Rate.
(v) Such Mortgage Loan is a residential mortgage loan having an original
term to maturity as set forth on the related Mortgage Loan Schedule, and if no
such term is specified in the related Mortgage Loan Schedule, the term to
maturity does not exceed forty years, with interest payable in arrears on the
first day of each month, or such other day of the month as may be noted on the
related Mortgage Loan Schedule. If such Mortgage Loan is an ARM Loan, the
Mortgage Interest Rate is subject to adjustment periodically on each Interest
Rate Adjustment Date to a new Mortgage Interest Rate (rounded as provided in the
related Mortgage Note) equal to the then current Index plus the Gross Margin as
specified on the related Mortgage Note, subject to the Initial Rate Cap (if
applicable), Maximum Mortgage Interest Rate, the Minimum Mortgage Interest Rate,
the Interest Rate Increase Maximum and the Interest Rate Decrease Maximum, in
each case if and to the extent specified in the related Mortgage Loan Schedule.
(w) The Mortgage Note is not and has not been secured by any collateral,
pledged account or other security, except the lien of the Mortgage.
(x) The Mortgage contains customary and enforceable provisions which render
the rights and remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security, including (i) in
the case of a Mortgage designated as a deed of trust, by trustee's sale and (ii)
otherwise by judicial foreclosure. There is no homestead, dower, curtesy or
other exemption or right available to the Mortgagor or any other Person which
would interfere with the right to sell the Mortgaged Property at a trustee's
sale or the right to foreclose the Mortgage. The Mortgage or Mortgage Note
contains a provision that is, to the extent not prohibited by federal or state
law, enforceable and that provides for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event that the Mortgaged
Property is sold or transferred without the prior written consent of the
mortgagee thereunder. The Mortgagor has not notified the Company and the Company
has no knowledge of any relief requested or allowed to the Mortgagor under the
Servicemembers Civil Relief Act.
(y) If the Mortgage constitutes a deed of trust, a trustee, duly qualified
under applicable law to serve as such, has been properly designated and
currently so serves and is named in such Mortgage, and no fees or expenses are
23
or shall become payable by the Purchaser to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the Mortgagor.
(z) The Mortgaged Property consists of (x) a single parcel of real property
separately assessed for tax purposes, upon which is erected a detached or an
attached one-to-four-family residence, an individual condominium or an
individual unit in a planned unit development or (y) in the case of a
Cooperative Loan, the related Coop Ownership Interests, in each case that is in
compliance with the Company's or the originator's applicable requirements. Such
Mortgaged Property is not (i) a property held in trust (other than a revocable
inter vivos trust that is in compliance with ▇▇▇▇▇▇ Mae's requirements
applicable to the Company or the originator of the Mortgage Loan, or, if the
Mortgaged Property is located in Illinois, an Illinois land trust), (ii) a
mobile home, or (iii) a recreational vehicle. Such Mortgage Loan is not
considered an agricultural loan. To the Company's knowledge, no portion of the
related Mortgaged Property is being used for commercial purposes.
(aa) The Loan-to-Value Ratio of such Mortgage Loan at the time of
origination was not greater than the Loan-to-Value Ratio set forth in the
related Mortgage Loan Schedule, and if no such percentage is specified, not
greater than 95%. If such Mortgage Loan had at the time of origination a
Loan-to-Value Ratio in excess of 80%, unless otherwise specified in the related
Commitment Letter, such Mortgage Loan is subject to a Primary Mortgage Insurance
Policy. All provisions of such Primary Mortgage Insurance Policy have been and
are being complied with, such policy is in full force and effect (except if the
Loan-to-Value Ratio of the Mortgage Loan was 80% or less at any time subsequent
to origination determined by an appraisal performed after origination), and all
premiums due thereunder have been paid. No Mortgage Loan requires payment of
such premiums, in whole or in part, by the Purchaser. No action has been taken
and no event has occurred that has, or shall result in the exclusion from,
denial of, or defense to coverage. Any Mortgage Loan subject to a Primary
Mortgage Insurance Policy obligates the Mortgagor to maintain the Primary
Mortgage Insurance Policy and to pay all related premiums and charges. The
Mortgage Interest Rate for the Mortgage Loan as set forth on the Mortgage Loan
Schedule is net of any such insurance premium.
(bb) Such Mortgage Loan was underwritten generally in accordance with the
underwriting guidelines of the Company in effect at the time such Mortgage Loan
was originated or the underwriting guidelines of the entity that originated the
Mortgage Loan in effect at the time such Mortgage Loan was originated.
(cc) There exist no deficiencies in excess of $1000 with respect to escrow
deposits and payments, if such are required, for which customary arrangements
for repayment thereof have not been made or which the Company expects not to be
cured, and no escrow deposits or payments of other charges or payments due the
Company have been capitalized under the Mortgage or the Mortgage Note.
(dd) Such Mortgage Loan does not have a shared appreciation feature or
other contingent interest feature, and except as covered by a Buydown Fund
consistent with this Agreement (and set forth on the Mortgage Loan Schedule),
such Mortgage Loan does not involve buydowns, Balloon Payments, timeshares or
graduated payments. If such Mortgage Loan is an ARM Loan, it is not convertible
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to a Mortgage Loan with a fixed Mortgage Interest Rate, unless otherwise
indicated in the related Mortgage Loan Schedule.
(ee) The origination, servicing and collection practices used with respect
to such Mortgage Loan (including without limitation, the establishment,
maintenance and servicing of the escrow accounts, if any), have been, in all
material respects, in accordance with Accepted Servicing Procedures and
applicable laws and regulations and the terms of the Mortgage Loan documents.
All Escrow Payments have been collected in all material respects in compliance
with applicable law and the provisions of the Mortgage Loan documents. If such
Mortgage Loan 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, except as otherwise set forth in Section 3.1(cc). Any escrow account
interest required to be paid pursuant to applicable law has been properly paid
and credited.
(ff) The appraisal report with respect to the Mortgaged Property contained
in the Credit File was made in accordance with the relevant provisions of the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as in
effect on the date such Mortgage Loan was originated and was signed by a
qualified appraiser, who met the requirements of the appraisal policies and
procedures of the Company or the originator, 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 such
application and who otherwise meets the requirements of the Company or the
originator.
(gg) No Mortgage Loan is (1) a "high cost" loan as defined under the Home
Ownership and Equity Protection Act of 1994, (2) a "high cost" mortgage loan,
"covered" mortgage loan, "high risk home" mortgage loan, or "predatory" mortgage
loan or any other comparable term, no matter how defined under any federal,
state or local law applicable to the originating lender or (3) a High Cost Loan
or Covered Loan (as such terms are defined in the Standard & Poors LEVELS(R)
Glossary in effect on the related Closing Date and attached as Exhibit C to the
related Term Sheet) to the extent applicable to the originating lender under the
governing state or local law or regulation.
(hh) Unless otherwise stated in the related Mortgage Loan Schedule, if such
Mortgage Loan is an ARM Loan, it does not have an interest rate step-down
feature or similar feature that would result in a downwards adjustment to the
Mortgage Interest Rate, the Gross Margin or the Index as a result of the related
Mortgagor's payment method or payment history (e.g., no downwards adjustment in
return for allowing the automatic withdrawal of funds from the related
Mortgagor's bank account to make the Monthly Payments on such Mortgage Loan, or
for making payments when due on such Mortgage Loan).
(ii) No misrepresentation or fraud has taken place on the part of the
Company, the Mortgagor or any third party originator of such Mortgage Loan, or
any other Person, including without limitation, any appraiser, 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.
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(jj) To the Company's knowledge, the Mortgaged Property was at the time of
origination lawfully occupied under applicable law and, at the time of
origination of such Mortgage Loan, 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) were made or obtained
from the appropriate authorities.
(kk) To the Company's knowledge, the Mortgaged Property is in material
compliance with all applicable environmental laws pertaining to environmental
hazards including, without limitation, asbestos, and neither the Company nor, to
the Company's knowledge, the related Mortgagor, has received any notice of any
violation or potential violation of such law.
(ll) Such Mortgage Loan was selected from among the outstanding mortgage
loans of the same type in the Company's portfolio on the related Closing Date
and such selection was not made in a manner so as to affect adversely the
interests of the Purchaser.
(mm) Interest on each Mortgage Loan is calculated on the basis of a 360-day
year consisting of twelve 30-day months.
(nn) If such Mortgage Loan is a Cooperative Loan, the security instruments
create a valid, enforceable and subsisting first priority security interest in
the related cooperative shares securing the related cooperative note, subject
only to (x) the lien of the related cooperative for unpaid assessments
representing the Mortgagor's pro rata share of payments for a blanket mortgage,
if any, current and future real property taxes, insurance premiums, maintenance
fees and other assessments to which like collateral is commonly subject and (y)
other matters to which like collateral is commonly subject and which do not
materially interfere with the benefits of the security intended to be provided;
provided, however, that the related proprietary lease for the Cooperative
Apartment may be subordinated or otherwise subject to the lien of a mortgage on
the cooperative building.
(oo) If such Mortgage Loan is a Cooperative Loan, a search for filings of
financing statements has been made by a party competent to make the same, which
party is acceptable to the Company in accordance with its underwriting
guidelines and is qualified to do business in the jurisdiction where the
cooperative unit is located; and such search did not disclose any lien or
security interest that would materially and adversely affect the Cooperative
Loan.
(pp) If such Mortgage Loan is a Cooperative Loan, the cooperative
corporation that owns title to the related Cooperative Apartment is a
"cooperative housing corporation" within the meaning of Section 216 of the Code,
and is in material compliance with applicable laws that, if not complied with,
could have a material adverse effect on the Mortgaged Property.
(qq) If such Mortgage Loan is a Cooperative Loan: (i) the term of the
related proprietary lease or occupancy agreement is longer than the term of the
Cooperative Loan, (ii) there is no provision in such proprietary lease or
occupancy agreement which requires the Mortgagor to offer for sale the
cooperative shares owned by such Mortgagor first to the cooperative and (iii)
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there is no prohibition against pledging the shares of the cooperative
corporation or assigning the cooperative lease.
Section 3.2 Company Representations
The Company hereby represents and warrants to the Purchaser as to the
Company as of the Initial Closing Date and each Closing Date on which the
Company sells Mortgage Loans hereunder:
(a) The Company is a corporation duly organized and validly existing under
the laws of the State of Delaware, and is qualified to transact business under
the laws of each state required by applicable law or is otherwise exempt under
applicable law from such qualification and no demand for such qualification has
been made upon the Company by any state.
(b) The Company has the corporate power and authority to hold each Mortgage
Loan, to sell each Mortgage Loan, to enter into, execute and deliver this
Agreement, the Term Sheet and all documents and instruments executed and
delivered pursuant hereto and to perform its obligations in accordance
therewith. The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby, have been
duly and validly authorized. This Agreement, the Term Sheet and all other
documents and instruments contemplated hereby, in each case assuming due
authorization, execution and delivery by the Purchaser, evidence the valid,
binding and enforceable obligations of the Company, subject as to enforcement,
(i) to bankruptcy, insolvency, receivership, conservatorship, reorganization,
arrangement, moratorium and other laws of general applicability relating to or
affecting creditor's rights, and (ii) to general principles of equity, whether
such enforcement is sought in a proceeding in equity or at law. All requisite
corporate action has been taken by the Company to make this Agreement valid and
binding upon the Company in accordance with its terms.
(c) No consent, approval, authorization or order of any court or
governmental agency or body relating to the transactions contemplated by this
Agreement and the transfer of legal title to the Mortgage Loans to the
Purchaser, is required as to the Company or, if required, such consent,
approval, authorization or order has been or shall, prior to the related Closing
Date, be obtained, except for any recordations of Assignments of the Mortgages
to or for the benefit of the Purchaser pursuant to this Agreement.
(d) The consummation of the transactions contemplated by this Agreement,
including without limitation the transfer and assignment of the Mortgage Loans
to or for the benefit of the Purchaser pursuant to this Agreement and the
fulfillment of or compliance with the terms and conditions of this Agreement,
are in the ordinary course of business of the Company and shall not (i) result
in the breach of any term or provision of the charter or by-laws of the Company,
(ii) result in the breach of any term or provision of, or conflict with or
constitute a default under, or result in the acceleration of any obligation
under, any material agreement, indenture, loan or credit agreement or other
instrument to which the Company or its property is subject, or (iii) result in
the violation of any law, rule, regulation, order, judgment or decree to which
the Company or its property is subject.
27
(e) There is no action, suit, proceeding or investigation pending or, to
the best of the Company's knowledge, threatened against the Company which,
either in any one instance or in the aggregate, is likely (in the Company's
judgment) to draw into question the validity of this Agreement or the Mortgage
Loans, or of any action taken or to be taken in connection with the obligations
of the Company contemplated herein or therein, or which would be likely to
impair materially the ability of the Company to perform its obligations
hereunder or thereunder.
Section 3.3 Repurchase and Substitution
(a) It is understood and agreed that the representations and warranties set
forth in Sections 3.1 and 3.2 shall survive the sale of Mortgage Loans by the
Company to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination of any Collateral File.
(b) Upon discovery by the Company or the Purchaser of a breach of any of
the representations and warranties set forth in Sections 3.1 or 3.2 made by the
Company that materially and adversely affects the value of any Mortgage Loan or
the interest of the Purchaser in any Mortgage Loan sold by the Company hereunder
(or, in the case of the representations and warranties set forth in Section 3.2,
the value of the Mortgage Loans or the interest of the Purchaser in the Mortgage
Loans sold by the Company hereunder), the party discovering such breach shall
give prompt (in no event less than sixty (60) days after discovery of such
breach) written notice to the other. The Company shall either (i) cure in all
material respects any such breach or defect within 90 days of the earlier of
either discovery by or notice to the Company of such breach or defect, or (ii)
in the case of a breach of a representation and warranty set forth in Section
3.1, repurchase the affected Mortgage Loan(s), and, in the case of a breach of a
representation and warranty set forth in Section 3.2, repurchase either (A) all
of the Mortgage Loans, or (B) such of the Mortgage Loans selected by the
Purchaser so that, after such repurchase, such breach or defect is cured in all
material respects. Any such repurchase shall be at a price equal to the
applicable Repurchase Price, shall occur on the next Monthly Remittance Date and
shall be accomplished by deposit in the Remittance Account the amount of the
Repurchase Price pursuant to Section 2.7(b)(xii) of the Servicing Agreement.
Notwithstanding the foregoing, if the Company discovers or receives notice of
any such breach or defect, and if the affected Mortgage Loan has not been
subject to a Securitization Transaction, the Company may remove any such
Mortgage Loan (a "Deleted Mortgage Loan"), rather than repurchase any such
Mortgage Loan as provided above, and substitute in its place a Qualified
Substitute Mortgage Loan(s). If the Company does not replace the defective
Mortgage Loan(s) with Qualified Substitute Mortgage Loan(s), then the Company
shall repurchase the Mortgage Loan or Mortgage Loans, as the case may be, in the
manner provided in this Section 3.3(b).
(c) For each of the Qualified Substitute Mortgage Loans substituted for a
Deleted Mortgage Loan, the Company shall deliver to the Custodian the documents
specified in Section 2.2(a), with the Mortgage Note endorsed as required by
Section 2.2(a) and, where applicable, original documents having evidence of
recording thereon. The Company shall also take such actions with respect to the
documents pertaining to each such Qualified Substitute Mortgage Loan as are
required to be taken pursuant to Section 2.2 with respect to the Mortgage Loans
originally subject to this Agreement. For purposes of applying the requirements
28
of Section 2.2 to any Qualified Substitute Mortgage Loan, references in such
Section to the related Closing Date shall be deemed to be references to the
applicable date of substitution of such Qualified Substitute Mortgage Loan. The
Company shall deposit in the Remittance Account the Monthly Payment due on each
Qualified Substitute Mortgage Loan in the month following the date of such
substitution (with the interest portion thereof adjusted to the applicable Net
Rate), and the Monthly Payment due with respect to such Qualified Substitute
Mortgage Loan in the month of substitution shall be retained by the Company. For
the month of substitution, distributions to the Purchaser shall include the
Monthly Payment due on such Deleted Mortgage Loan in the month of substitution,
and the Company shall thereafter be entitled to retain all amounts subsequently
received by the Company in respect of such Deleted Mortgage Loan. The Company
shall amend the related Mortgage Loan Schedule to reflect the removal of such
Deleted Mortgage Loan from the terms of this Agreement and the substitution of
the Qualified Substitute Mortgage Loan(s) and shall give written notice to the
Purchaser that such substitution has taken place, which notice shall have
attached thereto a copy of such amended Mortgage Loan Schedule in hard copy or
"read-only" electronic format (as reasonably acceptable to the Company and the
Purchaser). Upon such substitution, each such Qualified Substitute Mortgage Loan
shall be subject to the terms of this Agreement in all respects, and the Company
shall make and shall be deemed to have made, with respect to such Qualified
Substitute Mortgage Loan(s), as of the date of substitution, the representations
and warranties set forth in Sections 3.1 and 3.2 (and, for purposes of applying
such representations and warranties to each such Qualified Substitute Mortgage
Loan, references in such Sections to the related Closing Date shall be deemed to
be references to such date of substitution of such Qualified Substitute Mortgage
Loan).
(d) The Purchaser shall promptly take all steps necessary to effect the
reconveyance of any repurchased Mortgage Loan or Deleted Mortgage Loan,
including all documentation with respect thereto, to the Company. The Company
shall pay all costs and expenses incurred in connection with the repurchase of
any Mortgage Loan and the substitution for any Deleted Mortgage Loan. If, in
accordance with Section 3.3(b), the Company repurchases any MERS Loan or
substitutes a Qualified Substitute Mortgage Loan for any MERS Loan, the Servicer
shall be authorized to (i) cause the MERS(R) System to reflect such repurchase
or substitution, as the case may be, or (ii) cause MERS to remove the
repurchased or replaced Mortgage Loan from registration on the MERS(R) System
and execute and deliver an Assignment of Mortgage to reflect the transfer of
such Mortgage Loan to the Company or its designee. The Company shall bear any
and all fees of MERS relating to the actions authorized under this Section
3.3(d).
(e) For any month in which the Company substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Company
shall determine the amount, if any, by which the aggregate outstanding principal
balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution is less than the aggregate Unpaid Principal Balance of all such
Deleted Mortgage Loans (after application of scheduled principal payments due in
the month of substitution). The amount of such shortfall shall be distributed by
the Company on the Monthly Remittance Date following the date of the
substitution. Pursuant to Section 2.7(b)(xii) of the Servicing Agreement, the
Company shall deposit from its own funds (and without any right of reimbursement
therefor) into the Remittance Account an amount equal to the amount of such
shortfall.
29
(f) It is understood and agreed that the obligations of the Company set
forth in this Section 3.3 constitute the sole remedies available to the
Purchaser respecting a breach of the representations and warranties by the
Company set forth in Section 3.1 and Section 3.2.
(g) Any cause of action against the Company relating to or arising out of
the breach of any representation and warranty made by the Company in Sections
3.1 and 3.2 shall accrue as to any Mortgage Loan only upon (i) discovery of such
breach by the Purchaser or notice thereof by the Company to the Purchaser, (ii)
failure by the Company to cure such breach or repurchase or substitute a
Qualified Substitute Mortgage Loan(s) for such Mortgage Loan as specified above,
and (iii) demand upon the Company by the Purchaser for all amounts payable in
respect of such Mortgage Loan.
(h) (A) In addition to the cure, repurchase or substitution obligation set
forth above in this Section 3.3, the Company shall indemnify the Purchaser and
hold it harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses resulting from the defense of any claim against the Purchaser by a
third party resulting from a breach of the representations and warranties made
by the Company in this Article 3; provided, however, that in no event shall the
Company have any liability for any indirect, special or consequential damages,
losses, costs or expenses incurred by Purchaser.
(B) The Company shall not be liable for any costs and expenses
pursuant to this Section 3.3(h) unless the Purchaser provides written
notice to the Company that describes the nature of such claim within a
reasonable time after service of a summons or other first legal process
upon the Purchaser; provided, however, that the Purchaser's failure to
notify the Company pursuant to this paragraph shall not relieve the Company
from any liability that the Company may have to the Purchaser otherwise
than on account of this indemnity.
(C) The Company shall be entitled to participate at its own expense in
the defense, or, if the Company so elects, to assume the defense of any
suit against the Purchaser by a third party resulting from a breach of the
representations and warranties made by the Company in this Article 3. If
the company elects to assume the defense of a suit against the Purchaser,
such defense shall be conducted by counsel chosen by the Company. In the
event the Company elects to assume the defense of any such suit and retain
such counsel, the Purchaser may retain additional counsel but shall bear
the fees and expenses of such counsel unless (x) the Company and the
Purchaser have mutually agreed to the retention of such counsel or (y) the
named parties to such suit (including any impleaded parties) include both
the Company and the Purchaser and representation of both the Company and
the Purchaser by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Company shall not, in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than
one counsel (separate from its own counsel) for the Purchaser.
30
(D) The Company shall not be required to indemnify any person for any
settlement of any claim effected without the Company's consent, which
consent shall not be unreasonably withheld. The Company shall not, without
the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld, effect any settlement of any pending or threatened
proceeding to which the Purchaser is a party and indemnity is sought
hereunder by the Purchaser unless such settlement includes an unconditional
release of the Purchaser from all liability on claims that are the subject
matter of such proceeding.
ARTICLE 4 COVENANTS
Section 4.1 Cooperation
The Company and the Purchaser shall cooperate fully with each other and
their respective counsel and other representatives and advisors in connection
with the steps required to be taken as part of their respective obligations
under this Agreement.
Section 4.2 Delivery of Documents
On the dates specified herein, each party shall deliver to the appropriate
persons specified herein all documents and instruments provided for hereunder.
Section 4.3 Confidentiality
Each party understands that certain information that has been furnished and
shall be furnished in connection with the transactions contemplated under this
Agreement is confidential and proprietary, and each party agrees that, with
respect to such information that is marked or identified as confidential or
proprietary, or required by applicable law (including, without limitation, the
▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and the regulations promulgated thereunder) to be kept
confidential, such party shall maintain the confidentiality of such information
and shall not, without the written consent of the party furnishing such
information, disclose it to third parties or use it except in connection with
the transactions contemplated by this Agreement or as permitted by applicable
law. The parties agree that the following items shall be deemed confidential for
purposes of this Section 4.5: (a) each completed Term Sheet and (b) each
Commitment Letter. The parties agree that the following items shall not be
deemed confidential for purposes of this Section 4.5, unless otherwise required
by applicable law: (i) this Agreement (except as provided above), (ii) the
underwriting guidelines of the Company, (iii) information generally known in the
industry concerning a party, (iv) information disclosed on a non-confidential
basis to the receiving party by a third party and (v) information that is
required to be disclosed by law, or regulatory or judicial process.
ARTICLE 5 CONDITIONS TO PURCHASE
The obligations of the Purchaser to purchase any Mortgage Loans on any
Closing Date are subject to the satisfaction, as applicable, prior to or on the
Initial Closing Date and on such Closing Date (or on such other date as
expressly provided for herein) of the following conditions, any of which may be
waived in writing by Purchaser:
31
Section 5.1 Initial Closing Date Documents
On the Initial Closing Date, the Purchaser shall have received the Initial
Closing Date Documents duly executed by all signatories thereto. At each
subsequent Closing Date, the Purchaser and the Company each shall furnish to the
other a fully executed counterpart of the Term Sheet.
Section 5.2 Correctness of Representations and Warranties
All of the representations and warranties of the Company under this
Agreement shall be true and correct in all material respects as of such Closing
Date (except as otherwise expressly provided for herein), and no event shall
have occurred which, with notice or the passage of time, would constitute a
default under this Agreement.
Section 5.3 Compliance With Conditions
All other terms and conditions of this Agreement to be performed by the
Company on or prior to such Closing Date (or such other date as expressly
provided for herein) shall have been duly complied with and performed in all
respects.
ARTICLE 6 RECONSTITUTIONS; REGULATION AB COMPLIANCE
Section 6.1 Reconstitutions
(a) Upon Required Notice to the Company and the Master Servicer, the
Purchaser may, at its sole option, effect one or more Reconstitutions with
respect to some or all of the Mortgage Loans purchased on any Closing Date,
retaining the Master Servicer as the servicer; provided, however, that no
Reconstitution may be made by the Purchaser or any of its permitted assignees
with respect to Mortgage Loans in any Loan Pool if as a result thereof: (i) more
than three (3) investors would own Mortgage Loans in such Loan Pool at any one
time (unless otherwise stated in the related Commitment Letter), (ii) any single
investor would own Mortgage Loans from such Loan Pool having an aggregate Unpaid
Principal Balance immediately after such Reconstitution of less than $5,000,000
(unless mutually agreed upon otherwise by the parties thereto), (iii) the
Company and the Master Servicer are not provided with initial drafts of all
documents for which the Company and the Master Servicer are requested to become
a party in connection with such Reconstitution at least 10 Business Days prior
to the related settlement date (the "Subsequent Transfer Settlement Date"), (iv)
a final list of the Mortgage Loans intended to be subject to such Reconstitution
is not provided to the Master Servicer and any applicable Servicer at least 2
Business Days prior to the related Subsequent Transfer Settlement Date (unless
mutually agreed upon otherwise by the parties thereto), (v) any Mortgage Loan is
subject to more than one Reconstitution in any given Due Period, or (vi) the
related Subsequent Transfer Settlement Date occurs on or prior to the related
Servicing Cut-off Date. For the avoidance of doubt, the parties agree that for
the purpose of this Section 6.1, the number of investors in a Securitization
Transaction shall be deemed to be one.
(b) The Purchaser shall promptly notify the Company if the percentage of
Mortgage Loans in the entire related transaction increases above the percentage
specified in the Required Notice.
32
(c) Unless otherwise set forth in writing between the Purchaser and the
Company, the Purchaser shall reimburse the Company for all reasonable
out-of-pocket expenses, including attorneys' fees, incurred by the Company in
connection with any Reconstitution.
Section 6.2 Reconstitution Agreements
In connection with each Permitted Reconstitution, the Company shall execute
and deliver a Reconstitution Agreement containing terms and conditions that are
consistent with the terms and conditions set forth herein and, in the case of a
Securitization Transaction, that are customary for publicly offered securities
or privately placed securities, as the case may be, backed by mortgage loans
similar to the Mortgage Loans included in such Securitization Transaction. In
addition, in the event of a Securitization Transaction, the Purchaser shall
cause the trust fund to indemnify and hold harmless the Servicer for all losses,
claims, damages, liabilities, or expenses (including, but not limited to,
reasonable attorneys' fees and any and all expenses incurred in investigating,
preparing and defending against any claims therefor, and any amount paid in
settlement of a claim or litigation, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon the Servicer's taking
any action pursuant to the terms of the Letter Agreement.
Section 6.3 Intent of the Parties; Reasonableness
The Purchaser and the Company acknowledge and agree that the purpose of
Sections 6.4 and 6.5 is to facilitate compliance by the Purchaser and any
Depositor with the provisions of Regulation AB and related rules and regulations
of the Commission.
Neither the Purchaser nor any Depositor shall exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission thereunder. The
Company acknowledges that interpretations of the requirements of Regulation AB
may change over time due to interpretive guidance provided by the Commission or
its staff, and agrees to comply with requests made by the Purchaser or any
Depositor in good faith for delivery of information under these provisions on
the basis of evolving interpretations of Regulation AB. Each party agrees that
it shall cooperate in good faith to amend this Agreement in light of any such
changes in interpretations of the requirements of Regulation AB over time due to
interpretive guidance provided by the Commission or its staff. In connection
with any Securitization Transaction to which Regulation AB applies, the Company
shall cooperate fully with the Purchaser to deliver to the Purchaser (including
any of its assignees or designees) and any Depositor, any and all statements,
reports, certifications, records and any other information necessary in the good
faith determination of the Purchaser or such Depositor to permit the Purchaser
or such Depositor to comply with the provisions of Regulation AB, together with
such disclosures relating to the Company, any Third-Party Originator and the
Mortgage Loans, reasonably believed by the Purchaser or such Depositor to be
necessary in order to effect such compliance.
The Purchaser (including any of its assignees or designees) shall cooperate
with the Company by providing timely notice of requests for information under
33
these provisions and by reasonably limiting such requests to information
required, in the Purchaser's reasonable judgment, to comply with Regulation AB.
Section 6.4 Information to be Provided by the Company
In connection with any Securitization Transaction, the Company shall (i)
within five Business Days following request by the Purchaser or any Depositor,
provide to the Purchaser and such Depositor (or, as applicable, cause each
Third-Party Originator to provide), in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor, the information and
materials specified in paragraphs (a), (b) and (d)of this Section 6.4, and (ii)
as promptly as practicable following notice to or discovery by the Company,
provide to the Purchaser and any Depositor (in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor) the information
specified in paragraph (c) of this Section. Notwithstanding the foregoing, in
the event that the Company is unable to provide the information and materials
specified in paragraph (b) of this Section 6.4, the Company shall have an
additional fifteen (15) Business Days to provide (or, as applicable, cause each
Third-Party Originator to provide) such information to the Purchaser and
Depositor.
(a) If so requested by the Purchaser or any Depositor, the Company shall
provide the following information regarding (i) the Company, as originator of
the Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent), or (ii) each Third-Party Originator, as is requested for the
purpose of compliance with Items 1103(a)(1), 1105, 1110, 1117 and 1119 of
Regulation AB. Such information shall include, at a minimum:
(i) the originator's form of organization;
(ii) a description of the originator's origination program and how
long the originator has been engaged in originating residential mortgage loans,
which description shall include a discussion of the originator's experience in
originating mortgage loans of a similar type as the Mortgage Loans; information
regarding the size and composition of the originator's origination portfolio;
and information that may be material, in the good faith judgment of the Company
as it would apply to its own Securitization Transaction, to an analysis of the
performance of the Mortgage Loans, including the originator's credit-granting or
underwriting criteria for mortgage loans of similar type(s) as the Mortgage
Loans and such other information as the Purchaser or any Depositor may
reasonably request for the purpose of compliance with Item 1110(b)(2) of
Regulation AB;
(iii) a description of any legal proceedings pending against the
Company and each Third Party Originator or proceedings known to be contemplated
by governmental authorities against the Company and each Third Party Originator
which in the judgment of the Company would be, in each case, material to
purchasers of securities backed by the Mortgage Loans; and
(iv) a description of any affiliation or relationship between the
Company each Third-Party Originator and any of the following parties to a
Securitization Transaction, as such parties are identified to the Company by the
Purchaser or any Depositor in writing in advance of such Securitization
Transaction:
34
(A) the Sponsor;
(B) the Depositor;
(C) the Issuing Entity;
(D) any servicer;
(E) any trustee;
(F) any originator;
(G) any significant obligor;
(H) any enhancement or support provider; and
(I) any other material transaction party.
(b) If so requested by the Purchaser or any Depositor, the Company
shall provide (or, as applicable, cause each Third-Party Originator to provide)
Static Pool Information with respect to the mortgage loans (of a similar type as
the Mortgage Loans, as reasonably identified by the Purchaser as provided below)
originated by (i) the Company, if the Company is an originator of Mortgage Loans
(including as an acquirer of Mortgage Loans from a Qualified Correspondent)
and/or (ii) each Third Party Originator. Such Static Pool Information shall be
prepared by the Company (or Third Party Originator) on the basis of its
reasonable, good faith interpretation of the requirements of Item 1105(a)(1)-(3)
of Regulation AB. Notwithstanding the foregoing, the Purchaser acknowledges that
as of the date hereof, the Company cannot provide Static Pool Information with
respect to Hybrid Alt-A mortgage loans. To the extent that there is reasonably
available to the Company (or Third Party Originator) Static Pool Information
with respect to more than one mortgage loan type, the Purchaser or any Depositor
shall be entitled to specify whether some or all of such information shall be
provided pursuant to this paragraph. The content of such Static Pool Information
may be in the form customarily provided by the Company, and need not be
customized for the Purchaser or any Depositor. Such Static Pool Information for
each vintage origination year or prior securitized pool, as applicable, shall be
presented in increments no less frequently than quarterly over the life of the
mortgage loans included in the vintage origination year or prior securitized
pool. The most recent periodic increment must be as of a date no later than 135
days prior to the date of the prospectus or other offering document in which the
Static Pool Information is to be included or incorporated by reference. The
Static Pool Information shall be provided in an electronic format that provides
a permanent record of the information provided, such as a portable document
format (pdf) file, or other such electronic format reasonably required by the
Purchaser or such Depositor, as applicable. Alternatively, the Company may
satisfy its obligation to deliver Static Pool Information by filing it with the
Commission on its ▇▇▇▇▇ system.
Promptly following notice or discovery of a material error in Static Pool
Information provided pursuant to the immediately preceding paragraph (including
an omission to include therein information required to be provided pursuant to
such paragraph), the Company shall provide (or, as applicable, cause any Third
Party Originator to provide) corrected Static Pool Information to the Purchaser
or any Depositor, as applicable, in the same format in which Static Pool
Information was previously provided to such party by the Company (or Third Party
Originator).
If so requested by the Purchaser or any Depositor, the Company shall
provide (or, as applicable, cause each Third Party Originator to provide), at
the expense of the requesting party, (to the extent of any additional
incremental expense associated with delivery pursuant to this Agreement) such
35
agreed-upon procedures letters of certified public accountants reasonably
acceptable to the Purchaser or such Depositor, as applicable, pertaining to
Static Pool Information relating to prior securitized pools for securitizations
closed on or after January 1, 2006 or, in the case of Static Pool Information
with respect to the Company's or Third-Party Originator's originations or
purchases, to calendar months commencing prior to January 1, 2006, as the
Purchaser or such Depositor shall reasonably request and in the form customarily
provided by the Company or the Third-Party Originator, as applicable. Such
statements and letters shall be addressed to and be for the benefit of such
parties as the Purchaser or such Depositor shall designate, which may include,
by way of example, any Sponsor, any Depositor and any broker dealer acting as
underwriter, placement agent or initial purchaser with respect to a
Securitization Transaction. Any such statement or letter may take the form of a
standard, generally applicable document accompanied by a reliance letter
authorizing reliance by the addressees designated by the Purchaser or such
Depositor.
(c) For the purpose of satisfying the Owner's or Depositor's reporting
obligation under the Exchange Act with respect to any class of asset-backed
securities, the Company shall (or shall cause each Third-Party Originator to)
(i) notify the Purchaser and such Depositor in writing of (A) any material
litigation or governmental proceedings pending against the Company or any
Third-Party Originator and (B) any affiliations that develop following the
closing date of a Securitization Transaction between the Company or any
Third-Party Originator and any of the parties specified in clause (iv) of
Section 6.4(a) (and any other parties identified in writing by the requesting
party) with respect to such Securitization Transaction, and (ii) provide to the
Purchaser and such Depositor a description of such proceedings or affiliations
or relationships.
(d) The Company shall provide to the Purchaser and any Depositor, evidence
of the authorization of the person signing any certification or statement on
behalf of the Company as may be reasonable requested by the Purchaser or any
Depositor.
Section 6.5 Indemnification
(a) With respect to any Securitization Transaction for which any Company
Information is included in a related Disclosure Document, the Company, on the
one hand, and the Purchaser and the Depositor, on the other hand, shall execute
and deliver an Indemnification Agreement in substantially the form attached as
Exhibit F to the Servicing Agreement, pursuant to which each such party shall
indemnify the other party or parties and each Person who controls any of such
parties (within the meaning of Section 15 of the Securities Act) for the matters
set forth in such Indemnification Agreement.
Section 6.6 Private Placements
The provisions of Sections 6.4(b) shall not apply to Securitization
Transactions involving private placements of securities. In privately placed
Securitization Transactions in connection with which a Disclosure Document is
prepared, and in which at least 20% of the mortgage loans in the entire related
transaction consist of Mortgage Loans:
36
(i) the Company shall provide for inclusion as part of such
Disclosure Document (A) the regulatory status of the Company and its affiliates
and (B) the origination and underwriting criteria related to the applicable
Mortgage Loans sold by the Company; and
(ii) the Purchaser and the Company shall execute and deliver
an Indemnification Agreement in substantially the form attached as Exhibit F to
the Servicing Agreement.
ARTICLE 7 MISCELLANEOUS PROVISIONS
Section 7.1 Amendment
This Agreement may be amended from time to time by the Company and the
Purchaser solely by written agreement signed by the Company and the Purchaser.
Section 7.2 Recordation of Agreement
(a) To the extent necessary under applicable law to protect the interests
of the Purchaser, this Agreement or a memorandum thereof is subject to
recordation in all appropriate public offices for real property records in all
the counties and other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Company at the
Purchaser's expense upon direction of the Purchaser.
(b) The Company agrees to execute or cause to be executed such documents
and take or cause to be taken such actions as may be necessary to effect the
intent of this Agreement, including without limitation the execution and
delivery of instruments of further assurance and the execution and delivery of
such other documents, and the taking of such other actions as may be reasonably
requested by the Purchaser.
Section 7.3 Governing Law; Waiver of Trial by Jury
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (including Section 5-1401 of the New York
General Obligations Law) and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws without giving effect
to conflict of laws principles other than Section 5-1401 of the New York General
Obligations Law.
(b) Each of the Company and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to trial by jury in respect
or any litigation based on, or arising out of, under, or in connection herewith,
or any course of conduct, course of dealing, statements (whether oral or
written), or actions of the Company or the Purchaser.
Section 7.4 General Interpretive Principles
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
37
(a) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs, and other subdivisions
of this Agreement;
(d) 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;
(e) the words "herein," "hereof," "hereunder," and other words of similar
import refer to this Agreement as a whole and not to any particular provision;
and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 7.5 Reproduction of Documents
This Agreement and all documents relating hereto, including (i) consents,
waivers and modifications which may hereafter be executed, (ii) the Initial
Closing Date Documents, all Commitment Letters, Term Sheets and Mortgage Loan
Schedules and (iii) financial statements, certificates and other information
previously or hereafter furnished, may be reproduced by any photographic,
photostatic, microfilm, microcard, 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 7.6 Notices
All demands, notices, consents, waivers and other communications hereunder
shall be in writing and shall be deemed to have been duly given upon receipt if
personally delivered, sent by facsimile, mailed by registered mail, postage
prepaid or delivered by a nationally recognized overnight courier, to
(i) in the case of the Company:
Washington Mutual Mortgage Securities Corp.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Master Servicing Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
38
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Washington Mutual Legal Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ 1706
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: WMMSC
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as may hereafter be furnished to the Purchaser in writing
by the Company, and
(ii) in the case of the Purchaser:
Luminent Mortgage Capital, Inc.
Maia Mortgage Finance Statutory Trust
Mercury Mortgage Finance Statutory Trust
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Luminent Mortgage Capital, Inc.
Maia Mortgage Finance Statutory Trust
Mercury Mortgage Finance Statutory Trust
▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as may hereafter be furnished to the Company in writing by
the Purchaser.
Notwithstanding the foregoing, any demand, notice, consent, waiver or
communication may be given by any other means if the parties hereto agree to
such alternative means in writing.
Section 7.7 Severability of Provisions
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
39
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement or the rights of the parties
hereunder. 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 as nearly as possible the
same as the economic effect of this Agreement without regard to such invalidity.
Section 7.8 Exhibits
The exhibits to this Agreement are hereby incorporated and made a part
hereof as though included in the body of this Agreement.
Section 7.9 Counterparts; 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. This Agreement shall inure to the benefit
of and be binding upon the Company and the Purchaser. Notwithstanding the
foregoing, (i) the Company shall not assign its rights and obligations under
this Agreement without the prior written consent of the Purchaser, which consent
shall not be unreasonably withheld or delayed, and (ii) the Purchaser may not
assign its rights and obligations under this Agreement except (a) as provided in
Article 6, or (b) with the prior written consent of the Company (in which case
all references to the Purchaser herein shall be deemed to include such
assignee).
Section 7.10 Effect of Headings
The headings in this Agreement are for purposes of reference only and shall
not limit or otherwise affect the meaning hereof.
Section 7.11 Other Agreements Superseded; Entire Agreement
This Agreement supersedes all prior agreements and understandings (other
than any Commitment Letter delivered prior to the date hereof) relating to the
subject matter hereof. This Agreement, together with all Commitment Letters and
Term Sheets delivered or entered into pursuant hereto constitute the entire
agreement with respect to the subject matter hereof. If any provision of the
Term Sheet conflicts with any provision of the Agreement, the Term Sheet shall
control. If any provision of this Agreement conflicts with any provision of any
Commitment Letter, the provisions of this Agreement shall control.
Section 7.12 Survival
The representations, warranties, indemnities, covenants and agreements of
the parties provided in this Agreement and the parties' obligations hereunder
shall survive the execution and delivery and the termination or expiration of
this Agreement.
Section 7.13 Intention of the Parties
40
It is the intention of the parties that the Purchaser is purchasing, and
the Company is selling Mortgage Loans and not a debt instrument of the Company
or other security. Accordingly, the parties hereto each intend to treat each of
the transactions hereunder for federal income tax purposes as a sale by the
Company, as applicable, and a purchase by the Purchaser, of Mortgage Loans. The
Purchaser shall have the right to review the Mortgage Loans and the related
Credit Files to determine the characteristics of the Mortgage Loans which shall
affect the federal income tax consequences of owning the Mortgage Loans, and the
Company shall cooperate with all reasonable requests made by the Purchaser in
the course of such review.
Section 7.14 Nonsolicitation
The Company and the Purchaser hereby covenant and agree that they shall not
take any action to solicit the refinancing of any Mortgage Loan following the
date hereof or provide information to any other entity to solicit the
refinancing of any Mortgage Loan; provided that, the foregoing shall not
preclude either party or any of their affiliates from (i) engaging in general
solicitations to its customer base, including by mass mailing or as part of
monthly or periodic statements mailed to its borrowers or to holders of deposit
or other accounts, (ii) engaging in solicitations to the general public,
including without limitation by mass mailing, newspaper, radio, television or
other media which are not specifically directed toward the Mortgagors, (iii)
engaging in solicitations of optional insurance or other bank products (not
including mortgage loans), (iv) refinancing the Mortgage Loan of any Mortgagor
who, without solicitation, contacts such party to request the refinancing of the
related Mortgage Loan, or (v) engaging in any action to solicit the refinancing
of any Mortgage Loan to the extent such action would be permitted under the
▇▇▇▇▇▇ ▇▇▇ Selling Guide or the ▇▇▇▇▇▇ Mae Servicing Guide.
Section 7.15 Guaranty
Luminent Mortgage Capital, Inc. ("Luminent") hereby absolutely,
unconditionally and irrevocably guarantees to the Company, the full and prompt
performance by Maia Mortgage Finance Statutory Trust and Mercury Mortgage
Finance Statutory Trust (together, the "Other Purchasers"), of any and all
obligations of the Other Purchasers under this Agreement. Luminent agrees that
its obligations pursuant to this Section 7.15 shall be a continuing, absolute
and unconditional guarantee of the full and punctual performance by the Other
Purchasers of their obligations under this Agreement and is in no way
conditioned upon any requirement that the Company first attempt to collect any
of its obligations from either of the Other Purchasers without regard to (a) the
validity, regularity or enforceability of this Agreement; (b) the absence of any
action to enforce the same; (c) any waiver or consent by the Company concerning
any provisions hereof; (d) the rendering of any judgment against either of the
Other Purchasers or any action to enforce the same; (e) any defense, set-off,
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by either of the Other Purchasers against
the Company; or (f) any other circumstances that might otherwise constitute a
legal or equitable discharge of a guarantor or a defense of a guarantor.
Luminent hereby guarantees that payments hereunder will be paid to the Company
without set-off or counterclaim in accordance with the wiring instructions of
the Company. Luminent waives diligence, presentment, protest, demand for payment
and notice of default or nonpayment to or upon the Other Purchasers with respect
to the obligations of the Other Purchasers under this Agreement. This Section
41
7.15 shall continue to be effective if either of the Other Purchasers merge or
consolidate with or into another entity, loses its separate legal identity or
ceases to exist.
Section 7.16 Costs
Except as otherwise provided in Section 2.2(b), the Company shall pay all
costs, fees and expenses incurred in connection with the transfer and delivery
of the Mortgage Loans sold by the Company under this Agreement for the Company's
accountants, attorneys and other service providers.
Section 7.17 Attorneys' Fees
If any party retains an attorney to enforce any of the provisions of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees
from the non-prevailing party (or parties), including, without limitation, fees
incurred in arbitration and in trial and appellate courts, fees incurred without
suit, and all arbitration, court and accounting costs.
[signatures follow]
42
TO WITNESS THIS, the Company and the Purchaser have caused their names to be
signed to this Mortgage Loan Purchase and Sale Agreement by their duly
authorized respective officers as of the day and year first above written.
WASHINGTON MUTUAL MORTGAGE SECURITIES CORP.
By: _________________________________
Name:
Title:
LUMINENT MORTGAGE CAPITAL, INC.
By: _________________________________
Name:
Title:
MAIA MORTGAGE FINANCE STATUTORY TRUST
By: _________________________________
Name:
Title:
MERCURY MORTGAGE FINANCE STATUTORY TRUST
By: _________________________________
Name:
Title:
[signature page to WMMSC Mortgage Loan Purchase and Sale Agreement]
EXHIBIT A
CONTENTS OF COLLATERAL FILE
With respect to each Mortgage Loan, the Collateral File shall include each
of the following items unless otherwise agreed by the Company and the Purchaser:
A. With respect to each Mortgage Loan (other than a Cooperative Loan):
1. (i) The original Mortgage Note, endorsed (on the Mortgage Note or
an allonge attached thereto) "Pay to the order of
_______________________, without recourse," (or as otherwise
specified in the related Commitment Letter), and signed by
facsimile signature in the name of the Company by an authorized
officer, with all intervening endorsements showing a complete,
valid and proper chain of title from the originator of such
Mortgage Loan to the Company; or
(ii) a lost note affidavit together with a copy of the Mortgage
Note.
2. The original Mortgage, with evidence of recording thereon (and,
in the case of a MOM Loan, with evidence of the MIN), or if such
Mortgage has been lost or if such public recording office retains
the original recorded Mortgage, a photocopy of such Mortgage
certified by such public recording office to be a true and
complete copy of the original recorded Mortgage.
3. Unless such Mortgage Loan is a MERS Loan, the original Assignment
of Mortgage, from the Company signed by original signature of an
authorized officer, in blank (or as otherwise specified in the
related Commitment Letter), which assignment shall be in form and
substance acceptable for recording (except for the insertion of
the name of the assignee and recording information).
4. Unless such Mortgage Loan is a MOM Loan, originals of all
intervening Assignments of Mortgage, with evidence of recording
thereon, showing a complete chain of title from the originator to
the Company (or in the case of a MERS Loan other than a MOM Loan
showing a complete chain of title from the originator to MERS),
or if any such original intervening Assignment of Mortgage has
been lost or if such public recording office retains the original
recorded intervening Assignment of Mortgage, a photocopy of each
such original, certified by the Company or the applicable public
recording office to be a true and complete copy of the original.
5. Originals of all assumption and modification agreements, if any,
unless such originals are unavailable (in which event the Company
shall deliver to the Custodian a photocopy of each such original,
certified by the Company to be a true and complete copy of the
original).
A-1
B. With respect to each Cooperative Loan, as applicable, copies of (1) the
proprietary lease; (2) the security agreement; (3) the assignment of the
proprietary lease, with all intervening assignments showing a complete chain of
title and an assignment thereof by the Company; (4) the original stock
certificate evidencing the ownership of the Cooperative Apartment, endorsed or
accompanied by a stock power relating to such stock certificate executed in
blank; (5) a recognition agreement in form approved by the Company's
underwriting guidelines, in substantially the same form as the standard "AZTECH"
form; (6) copies of the financing statement filed by the Company as secured
party and, if applicable, a filed UCC-3 assignment of the subject security
interest showing a complete chain of title, together with an executed UCC-3
Assignment of such security interest by the Company in a form sufficient for
filing; and (7) such other documents as are necessary for the perfection of a
lien against the related Coop Ownership Interest under applicable law.
A-2
EXHIBIT B
TERM SHEET
The mortgage loans described on the schedule attached hereto as Schedule I
shall be deemed sold by Washington Mutual Mortgage Securities Corp. (the
"Company") to [ ] ("Purchaser") pursuant to the terms and conditions
of that certain Mortgage Loan Purchase and Sale Agreement ("Agreement"), dated
as of [ ] 1, 200_, between Company and Purchaser and the following
additional terms and conditions:
Closing Date: [_______]
Document Exceptions: [As set forth on the schedule attached hereto as
Exhibit A.]
Exception Schedule: As set forth on the schedule attached hereto as
Exhibit B.
First Monthly Remittance Date: [_______]
Additional Terms and Conditions: [_______]
[ ]
By:________________________________________
Name:______________________________________
Title:_____________________________________
Washington Mutual Mortgage Securities Corp.
By:________________________________________
Name:______________________________________
Title:_____________________________________
B-1
SCHEDULE I TO TERM SHEET
MORTGAGE LOAN SCHEDULE(S)
B-2
EXHIBIT A TO TERM SHEET
DOCUMENT EXCEPTION
(COLLATERAL FILE)
C-1
EXHIBIT B TO TERM SHEET
EXCEPTION SCHEDULE
(SECTION 3.1 REPRESENTATIONS AND WARRANTIES)
C-2