Exhibit 99.2
EXECUTION COPY
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (the "Agreement"), dated as
of June 1, 1999, among Asset Backed Securities Corporation, a Delaware
corporation (the "Purchaser"), Long Beach Mortgage Company, a Delaware
corporation ("Long Beach") and Credit Suisse First Boston Mortgage Capital LLC,
a Delaware limited liability company (the "Seller").
PRELIMINARY STATEMENT
The Seller intends to sell the Home Equity Loans (as hereinafter
defined) to the Purchaser on the terms and subject to the conditions set forth
in this Agreement. The Home Equity Loans originated by Long Beach (the "Long
Beach Loans") were purchased by the Seller from Long Beach pursuant to a certain
Master Loan Purchase Agreement, dated as of September 1, 1998 (the "Purchase
Agreement"), among the Seller, as initial purchaser and Long Beach, as seller.
The Purchaser intends to deposit the Home Equity Loans into a mortgage pool
constituting the trust fund. The trust fund will be evidenced by a single series
of asset backed certificates designated as Series 1999-LB1, (the
"Certificates"). The Certificates will consist of fifteen classes of
certificates, two of which are further divided into two component classes each.
The Certificates will be issued pursuant to a Pooling and Servicing Agreement,
dated as of June 1, 1999 (the "Pooling and Servicing Agreement"), among the
Purchaser, as depositor, The Chase Manhattan Bank, as trustee, and Long Beach,
as servicer (in such capacity, the "Servicer"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Pooling and Servicing
Agreement.
The parties hereto agree as follows:
SECTION 1. AGREEMENT TO PURCHASE.
(a) The Seller agrees to sell, and the Purchaser agrees to purchase,
on or before July 21, 1999 (the "Closing Date"), certain sub-prime residential
home equity loans (the "Initial Home Equity Loans"), having an aggregate
principal balance as of the close of business on June 1, 1999 (the "Initial
Cut-Off Date") of $930,579,359.51 (the "Initial Closing Balance"), after giving
effect to all principal payments due on the Home Equity Loans on or before the
Initial Cut-Off Date, whether or not received.
(b) Subject to the conditions set forth in paragraph (c) below, in
consideration of the delivery on the related Subsequent Transfer Dates to or
upon the order of the Seller of all or a portion of the balance of funds in the
Pre-Funding Account and in the Prepaid Home Equity Loan Account, the Seller
shall on any Subsequent Transfer Date sell, transfer, convey and assign to the
Purchaser, without recourse (but subject to the terms of this Agreement), all
right, title and interest of the Seller in and to each Subsequent Home Equity
Loan listed on the Schedule of Home Equity Loans delivered on such Subsequent
Transfer Date, including its Loan Balance, all items constituting part of the
Trust with respect to the Subsequent Home Equity Loans and all collections in
respect of such Subsequent Home Equity Loans due after the related Subsequent
Cut-Off Date.
The amount released from the Pre-Funding Account or the Prepaid Home
Equity Loan Account, as applicable, shall be one-hundred percent (100%) of the
aggregate outstanding principal balances as of the applicable Subsequent Cut-Off
Date of the Subsequent Home Equity Loans so transferred.
(c) Each of the following conditions shall be satisfied on or prior to
the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee and the
Certificate Insurer with an Addition Notice not less than 5 Business
Days prior to the proposed Subsequent Transfer Date (unless the
Trustee and the Certificate Insurer shall agree to a shorter period of
time) and shall have provided any information reasonably requested by
either of the foregoing with respect to the Subsequent Home Equity
Loans;
(ii) the Seller shall have executed and delivered a
Subsequent Transfer Agreement to the Trustee (substantially in the
form of Exhibit D to the Pooling and Servicing Agreement) with all
required schedules and exhibits;
(iii) the Seller shall have delivered to the Servicer for
deposit in the Principal and Interest Account all collections in
respect of the Subsequent Home Equity Loans received after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither Long Beach
nor the Seller is insolvent and neither will become insolvent by such
transfer and the Seller and Long Beach are not aware of any pending
insolvency;
(v) such purchase and sale of Subsequent Home Equity Loans
will not result in a material adverse tax consequence to the Trust or
the Owners of the Certificates;
(vi) with respect to Home Equity Loans to be purchased from
the Pre-Funding Account, the Funding Period shall not have terminated
and with respect to Home Equity Loans purchased with Prepaid Home
Equity Account, the related Subsequent Transfer Date is on or before
October 15, 1999;
(vii) the Seller shall have delivered to the Trustee and the
Certificate Insurer an Officer's Certificate confirming the
satisfaction of each condition precedent in this Section 1 and Section
3.07 of the Pooling and Servicing Agreement and the Certificate
Insurer shall have consented to such transfer; and
(viii) there shall have been delivered to the Certificate
Insurer, the Rating Agencies and the Trustee Opinions of Counsel (or
updates thereof) with respect to the transfer of the Subsequent Home
Equity Loans substantially in the form of the Opinions of Counsel
delivered to the Certificate Insurer, the Rating Agencies and the
Trustee on the Closing Date (bankruptcy, perfection, corporate and tax
opinions).
(d) In connection with the transfer and assignment of the Subsequent
Home Equity Loans, the Seller agrees to satisfy the obligations set forth in
Section 4 hereof with respect to such Subsequent Home Equity Loans, the Seller
shall be deemed to have made the representations and warranties set forth in
Section 5(b) hereof and Section 6 hereof, Long Beach shall be deemed to have
made the representations and warranties set forth in Section 5(a) hereof and the
Seller shall take the action, if any, required by Section 7 hereof, in each case
with respect to the Subsequent Home Equity Loans except that references in said
Sections to Initial Home Equity Loans, the Closing Date, this Agreement and the
Cut-Off Date shall refer to the applicable Subsequent Home Equity Loans,
Subsequent Transfer Date, Subsequent Transfer Agreement and Subsequent Cut-Off
Date, respectively.
SECTION 2. SCHEDULE OF HOME EQUITY LOANS. The Purchaser and the Seller
have agreed upon which of the Home Equity Loans owned by the Seller are to be
purchased by the Purchaser pursuant to this Agreement on the Closing Date and
the Seller will prepare or cause to be prepared on or prior to the Closing Date
a schedule (the "Closing Schedule") that together shall describe such Initial
Home Equity Loans and set forth all of the Initial Home Equity Loans to be
purchased under this Agreement. On or prior to each Subsequent Transfer Date,
the Seller will prepare or cause to be prepared a schedule (each a "Subsequent
Schedule") of the Subsequent Home Equity Loans to be transferred to the
Purchaser on the related Subsequent Transfer Date. The Closing Schedule and each
Subsequent Schedule will conform to the requirements set forth in this Agreement
and in the definition of "Schedule of Home Equity Loans" under the Pooling and
Servicing Agreement. The Closing Schedule and each Subsequent Schedule shall be
used as the Schedule of Home Equity Loans under the Pooling and Servicing
Agreement.
SECTION 3. CONSIDERATION.
(a) In consideration for the Initial Home Equity Loans to be purchased
hereunder on the Closing Date, the Purchaser shall, as described in Section 8,
pay to or upon the order of the Seller in immediately available funds an amount
(the "Purchase Price") equal to approximately 100.74% times the Closing Balance,
plus accrued interest thereon from the Cut-Off Date up to but not including the
Closing Date.
(b) The Purchaser or any assignee, transferee or designee of the
Purchaser shall be entitled to all scheduled payments of principal due after the
Initial Cut-Off Date or Subsequent Cut-Off Date, as applicable, all other
payments of principal due and collected after the Initial Cut-Off Date or the
related Subsequent Cut-Off Date and all payments of interest due and collected
after July 1, 1999 with respect to the Initial Home Equity Loans or the related
Subsequent Cut-Off Date with respect to the Subsequent Home Equity Loans. All
scheduled payments of principal due on or before the Initial Cut-Off Date or the
related Subsequent Cut-Off Date, as applicable shall belong to the Seller. All
scheduled payments of interest due on or before July 1, 1999 or the related
Subsequent Cut-Off Date, as applicable shall belong to the Seller.
(c) Pursuant to the Pooling and Servicing Agreement, the Purchaser
will assign all of its right, title and interest in and to the Home Equity
Loans, together with its rights under this Agreement, to the Trustee for the
benefit of the Certificateholders and the Certificate Insurer.
SECTION 4. TRANSFER OF THE HOME EQUITY LOANS.
(a) POSSESSION OF FILES. The Seller does hereby sell, transfer,
assign, set over and convey to the Purchaser, without recourse but subject to
the terms of this Agreement, all of its right, title and interest in, to and
under the Initial Home Equity Loans. On each Subsequent Transfer Date the Seller
will sell, transfer, assign, set over and convey to the Purchaser, without
recourse but subject to the terms of this Agreement, all of its right, title and
interest in, to and under the Subsequent Home Equity Loans, the contents of each
File relating to Home Equity Loans not delivered to the Purchaser or to any
assignee, transferee or designee of the Purchaser on or prior to the Closing
Date or Subsequent Transfer Date, as applicable, which shall be held in trust by
the Seller for the benefit of the Purchaser or any assignee, transferee or
designee of the Purchaser and immediately transferred to the Trustee. Upon the
sale of the Home Equity Loans the ownership of each Note, the related Mortgage
and the other contents of the related File is vested in the Purchaser and the
ownership of all records and documents with respect to the related Home Equity
Loan prepared by or that come into the possession of the Seller on or after the
Closing Date shall immediately vest in the Purchaser and shall be delivered
immediately to the Purchaser or as otherwise directed by the Purchaser.
(b) DELIVERY OF HOME EQUITY LOAN DOCUMENTS. The Seller will, on or
prior to the Closing Date or Subsequent Transfer Date, as applicable, deliver or
cause to be delivered to the Purchaser or any assignee, transferee or designee
of the Purchaser for each Home Equity Loan each of the documents listed in
Section 3.05(b)(i) through (iii) of the Pooling and Servicing Agreement.
(c) ACCEPTANCE OF HOME EQUITY LOANS. The documents delivered pursuant
to Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before, on and after the
Closing Date or Subsequent Transfer Date, as applicable in accordance with
Section 3.06 of the Pooling and Servicing Agreement to ascertain that all
required documents have been executed and received and that such documents
relate to the Home Equity Loans identified on the Schedule of Home Equity Loans.
(d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the right to
assign its interest under this Agreement, in whole or in part (except for
Section 17 hereof), to the Trustee, as may be required to effect the purposes of
the Pooling and Servicing Agreement, without the consent of the Seller or Long
Beach, and the assignee shall succeed to the rights and obligations hereunder of
the Purchaser. Any expense reasonably incurred by or on behalf of the Purchaser
or the Trustee in connection with enforcing any obligations of the Seller or
Long Beach under this Agreement will be promptly reimbursed by the Seller or
Long Beach, as applicable.
(e) INCORPORATION BY REFERENCE. Long Beach and the Seller hereby agree
to fulfill each and every obligation to repurchase, substitute, deliver and
record, as and to the extent required of Long Beach or the Seller by Section
3.04, Section 3.05, Section 3.06 and Section 3.09 of the Pooling and Servicing
Agreement, which obligations are incorporated by reference herein as if fully
stated herein.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER AND
LONG BEACH.
(a) Long Beach hereby represents and warrants to the Seller and the
Purchaser, as of the date hereof, and as of the Closing Date, and covenants,
that:
(i) Long Beach is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
authorized and qualified to transact any and all business contemplated by this
Agreement to be conducted by Long Beach in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to enforce
each Home Equity Loan and to service the Home Equity Loans in accordance with
the terms of the Pooling and Servicing Agreement;
(ii) Long Beach had the full corporate power and authority to
originate, hold and sell each Long Beach Loan and has the full corporate power
and authority to service each Home Equity Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on the part
of Long Beach the execution, delivery and performance of this Agreement; and
this Agreement, assuming the due authorization, execution and delivery thereof
by the Purchaser and the Seller, constitutes a legal, valid and binding
obligation of Long Beach, enforceable against Long Beach in accordance with its
terms, except to the extent that (a) the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(iii) The sale of the Long Beach Loans by Long Beach to the
Seller under the Purchase Agreement, the execution and delivery of this
Agreement by Long Beach, the servicing of the Home Equity Loans by Long Beach
under the Pooling and Servicing Agreement, the consummation of any other of the
transactions herein contemplated, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of Long Beach and will not
(A) result in a breach of any term or provision of the charter or by-laws of
Long Beach or (B) conflict with, result in a breach, violation or acceleration
of, or result in a default under, the terms of any other material agreement or
instrument to which Long Beach is a party or by which it may be bound, or any
statute, order or regulation applicable to Long Beach of any court, regulatory
body, administrative agency or governmental body having jurisdiction over Long
Beach; and Long Beach is not a party to, bound by, or in breach or violation of
any indenture or other agreement or instrument, or subject to or in violation of
any statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which materially and
adversely affects or, to Long Beach's knowledge, would in the future materially
and adversely affect, (x) the ability of Long Beach to perform its obligations
under this Agreement or (y) the business, operations, financial condition,
properties or assets of Long Beach taken as a whole;
(iv) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Long Beach of, or compliance by Long Beach with, this Agreement
or the consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, Long Beach has obtained
the same provided that Long Beach makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution of
the Certificates;
(v) Long Beach is an approved seller/servicer for FNMA in good
standing and is a HUD approved mortgagee pursuant to Section 203 of the National
Housing Act;
(vi) No litigation or proceeding is pending or, to the best of
Long Beach's knowledge, threatened against Long Beach that would materially and
adversely affect the execution, delivery or enforceability of this Agreement or
the ability of Long Beach to service the Home Equity Loans or to perform any of
its other obligations hereunder in accordance with the terms hereof or would
result in a material adverse change in the financial or operating condition of
Long Beach; and
(vii) Long Beach (A) is a solvent entity and is paying its debts
as they become due and (B) after giving effect to the transfer of the Home
Equity Loans, will be a solvent entity and will have sufficient resources to pay
its debts as they become due.
(b) The Seller hereby represents and warrants, as of the date hereof
and as of the Closing Date and as of each Subsequent Transfer Date, and
covenants, that:
(i) The Seller is a limited liability company, duly organized
under the laws of the State of Delaware with full power and authority to conduct
its business as presently conducted by it to the extent material to the
consummation of the transactions contemplated herein. The Seller had the full
corporate power and authority to acquire the Home Equity Loans. The Seller has
the full corporate power and authority to own the Home Equity Loans and to
transfer and convey the Home Equity Loans to the Purchaser and has the full
corporate power and authority to execute and deliver, engage in the transactions
contemplated by, and perform and observe the terms and conditions of this
Agreement;
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Seller, all requisite action having been taken,
and (assuming the due authorization, execution and delivery hereof by the
Purchaser and Long Beach) constitutes the valid, legal and binding obligation of
the Seller, enforceable in accordance with its terms, except as such enforcement
may be limited by (A) bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, (B) general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law) or (C) public
policy considerations underlying the securities laws, to the extent that such
public policy considerations limit the enforceability of the provisions of this
Agreement which purport to provide indemnification from securities laws
liabilities;
(iii) No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or court is
required, under federal laws or the laws of the State of New York, for the
execution, delivery and performance by the Seller of, or compliance by the
Seller with, this Agreement or the consummation by the Seller of any other
transaction contemplated hereby and by the Pooling and Servicing Agreement;
provided, however, that the Seller makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution of
the Certificates;
(iv) No certificate of an officer, statement or other information
furnished in writing or report delivered by the Seller to the Purchaser, any
affiliate of the Purchaser, the Certificate Insurer or the Trustee for use in
connection with the purchase of the Home Equity Loans and the transactions
contemplated hereunder and under the Pooling and Servicing Agreement will
contain any untrue statement of a material fact, or omit a material fact
necessary to make the information, certificate, statement or report not
misleading in any material respect.
(v) Neither the sale of the Home Equity Loans to the Purchaser,
nor the execution, delivery or performance of this Agreement by the Seller,
conflicts or will conflict with or results or will result in a breach of or
constitutes or will constitute a default (or an event, which with notice or
lapse of time or both, would constitute a default) under (A) any terms or
provisions of the formation documents of the Seller, (B) any term or provision
of any material agreement, contract, instrument or indenture, to which the
Seller is a party or by which the Seller or any of its property is bound, or (C)
any law, rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the Seller or any of
its property or results or will result in the creation or imposition of any
lien, charge or encumbrance which would have a material adverse effect upon the
Home Equity Loans or any documents or instruments evidencing or securing the
Home Equity Loans;
(vi) The Seller has not dealt with any broker, investment banker,
agent or other person, except for the Purchaser or any of its affiliates, that
may be entitled to any commission or compensation in connection with the sale of
the Initial Home Equity Loans;
(vii) There is no litigation or proceedings currently pending or,
to the best of the Seller's knowledge, threatened against the Seller that would
reasonably be expected to adversely affect the transfer of the Home Equity
Loans, the issuance of the Certificates, the execution, delivery, performance or
enforceability of this Agreement or that would result in a material adverse
change in the financial condition of the Seller;
(viii) Each Note, each Mortgage, each assignment of mortgage and
any other document required to be delivered by or on behalf of the Seller under
this Agreement or the Pooling and Servicing Agreement to the Purchaser or any
assignee, transferee or designee of the Purchaser for each Home Equity Loan has
been or will be, in accordance with Section 4(b) hereof, delivered to the
Purchaser or any such assignee, transferee or designee. With respect to each
Home Equity Loan, the Seller is in possession of a complete File in compliance
with the Pooling and Servicing Agreement, except for such documents that have
been delivered (1) to the Purchaser or any assignee, transferee or designee of
the Purchaser or (2) for recording to the appropriate public recording office
and have not yet been returned;
(ix) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Seller pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any relevant
jurisdiction, except any as may have been complied with;
(x) The Seller (A) is a solvent entity and is paying its debts as
they become due and (B) after giving effect to the transfer of the Home Equity
Loans, will be a solvent entity and will have sufficient resources to pay its
debts as they become due;
(xi) The form of endorsement of each Note satisfied or will
satisfy the requirement, if any, of endorsement in order to transfer all right,
title and interest of the party so endorsing, as noteholder or assignee thereof,
in and to that Note; and each assignment of mortgage to be delivered hereunder
is or will be in recordable form and is sufficient to effect the assignment of
and to transfer to the assignee thereunder the benefits of the assignor, as
mortgagee or assignee thereof, under each Mortgage to which that assignment of
mortgage relates;
(xii) The transfer of the Home Equity Loans to the Purchaser on
the Closing Date or the applicable Subsequent Transfer Date will be treated by
the Seller for financial accounting and reporting purposes as a sale of assets;
and
(xiii) Immediately prior to the sale of the Home Equity Loans to
the Purchaser as herein contemplated and in any Subsequent Transfer Agreement,
as applicable, the Seller had good title to, and was the sole owner of, the Home
Equity Loans, and such sale will validly transfer the Home Equity Loans to the
Purchaser free and clear of any pledge, lien, encumbrance or security interest
and upon transfer of the Home Equity Loans by the Purchaser to the Trustee as
provided in the Pooling and Servicing Agreement, the Trustee shall have good
title to the Home Equity Loans, free and clear of any pledge, lien, encumbrance
or security interest.
(xiv) With respect to the Home Equity Loans, the Seller hereby
represents and warrants, as of the date hereof and as of the Closing Date or
Subsequent Transfer Date, as applicable, that each Home Equity Loan constitutes
a "qualified mortgage" within the meaning of Section 860(G)(a)(3) of the Code.
(xv) The characteristics of the Initial Home Equity Loans as set
forth on Exhibit 1 hereto are true and correct in all material respects.
(xvi) Each Subsequent Home Equity Loan will comply with the
requirements of Section 3.07(c) or Section 3.07(d), as applicable, of the
Pooling and Servicing Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE RESPONSIBLE PARTY
RELATING TO THE HOME EQUITY LOANS.
(a) REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL HOME EQUITY LOANS.
The "Responsible Party" is Long Beach with respect to the Initial Home Equity
Loans it originated (other than with respect to the representations set forth in
Section 5(b) of this Agreement) and the Seller with respect to the remaining
Initial Home Equity Loans, with respect to the Initial Home Equity Loans
originated by Long Beach and the representations set forth in Section
5(b)(viii), (xi), (xiii), (xiv) and (xv) of this Agreement and with respect to
any Subsequent Home Equity Loans. The Responsible Party hereby represents and
warrants to the Purchaser, that as to each Initial Home Equity Loan for which it
is the Responsible Party, as of the Closing Date:
(i) The information set forth on the related Schedule of Home
Equity Loans with respect to each Home Equity Loan is true and correct in all
material respects;
(ii) Except as set forth on Exhibit 1, all payments due prior to
the Initial Cut-Off Date have been made with respect to the Initial Home Equity
Loans. Other than up to 1.00% of the Initial Home Equity Loans (based upon
outstanding Loan Balance as of the Cut-Off Date) which are 30 days Delinquent,
no Home Equity Loan is 30 days or more Delinquent as of the Cut-Off Date, none
of the Home Equity Loans will have been Delinquent for more than one calendar
month more than once since the origination thereof, and no Home Equity Loan has
experienced a delinquency of 60 days or more in the payment of its first payment
due;
(iii) Each Mortgage is a valid and enforceable first lien on the
Mortgaged Property, including all improvements thereon, subject only to (a) the
lien of nondelinquent current real property taxes and assessments, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection with the
origination of the related Home Equity Loan, and (c) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage;
(iv) Immediately prior to the assignment of the Home Equity Loans
to the Seller, Long Beach or WMC Mortgage Corp., as applicable (the
"Originator") had good title to, and was the sole legal and beneficial owner of,
each Home Equity Loan free and clear of any pledge, lien, encumbrance or
security interest and has full right and authority, subject to no interest or
participation of, or agreement with, any other party to sell and assign the
same;
(v) To the best of the Responsible Party's knowledge, there is no
delinquent tax or assessment lien against any Mortgaged Property;
(vi) There is no valid offset, defense or counterclaim to any
Note or Mortgage, including the obligation of the Mortgagor to pay the unpaid
principal of or interest on such Note, nor will the operation of any of the
terms of the Note and the Mortgage, or the exercise of any right thereunder,
render the Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(vii) To the best of the Responsible Party's knowledge, there are
no mechanics' liens or claims for work, labor or material affecting any
Mortgaged Property which are or may be a lien prior to, or equal with, the lien
of the related Mortgage, except those which are insured against by the title
insurance policy referred to in (xi) below;
(viii) To the best of the Responsible Party's knowledge, each
Mortgaged Property is free of material damage and is in average repair;
(ix) Each Home Equity Loan at origination complied in all
material respects with applicable local, state and federal laws, including,
without limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of the
transactions contemplated hereby will not involve the violation of any such
laws;
(x) Neither the Responsible Party nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that a Home
Equity Loan may have been modified by a written instrument which has been
recorded, if necessary, to protect the interests of the Seller and the Purchaser
and which has been delivered to the Trustee); satisfied, cancelled or
subordinated such Mortgage in whole or in part; released the related Mortgaged
Property in whole or in part from the lien of such Mortgage; or executed any
instrument of release, cancellation, modification or satisfaction with respect
thereto;
(xi) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable, and an
adjustable rate mortgage endorsement in an amount at least equal to the Loan
Balance of each Home Equity Loan as of the Cut-off Date or a commitment (binder)
to issue the same was effective on the date of the origination of each Home
Equity Loan, each such policy is valid and remains in full force and effect, the
transfer of the related Home Equity Loan to the Seller, Purchaser and Trustee
will not affect the validity or enforceability of such policy and each such
policy was issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located and acceptable to FNMA or
FHLMC and in a form acceptable to FNMA or FHLMC, which policy insures the
applicable Originator and successor owners of indebtedness secured by the
insured Mortgage, as to the first priority lien of the Mortgage; to the best of
the Responsible Party's knowledge, no claims have been made under such mortgage
title insurance policy and no prior holder of the related Mortgage, including
the Responsible Party, has done, by act or omission, anything which would impair
the coverage of such mortgage title insurance policy;
(xii) Each Home Equity Loan was originated by the applicable
Originator or by a savings and loan association, savings bank, commercial bank,
credit union, insurance company or similar institution which is supervised and
examined by a federal or state authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and 211 of
the National Housing Act and, if originated on behalf of the applicable
Originator by a Person other than the applicable Originator, is subject to the
same standards and procedures used by the applicable Originator in originating
home equity loans directly;
(xiii) With respect to each Home Equity Loan on each Adjustment
Date, if any, the Coupon Rate will be adjusted to equal LIBOR plus the margin,
rounded to the nearest 0.125%, subject to the periodic rate cap, the Maximum
Rate and the Minimum Rate. Except for Balloon Loans, the related Note is payable
on the first day of each month in self-amortizing monthly installments of
principal and interest, with interest payable in arrears, and requires a Monthly
Payment which is sufficient to fully amortize the outstanding principal balance
of the Home Equity Loan over its remaining term and to pay interest at the
applicable Coupon Rate. No Home Equity Loan is subject to negative amortization.
All rate adjustments have been performed in accordance with the terms of the
related Note or subsequent modifications, if any.
(xiv) To the best of the Responsible Party's knowledge, all of
the improvements which were included for the purpose of determining the
Appraised Value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of such property, and no improvements on adjoining
properties encroach upon the Mortgaged Property;
(xv) All inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied under
applicable law;
(xvi) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located;
(xvii) The Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms and with applicable laws. All parties to the Note and
the Mortgage had legal capacity to execute the Note and the Mortgage and each
Note and Mortgage have been duly and properly executed by such parties;
(xviii) With the exception of the Hold-back Loans, the proceeds
of each Home Equity Loan have been fully disbursed, there is no requirement for
future advances thereunder and any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred in
making, closing or recording the Home Equity Loans were paid. A "Hold-back Loan"
means a Home Equity Loan with respect to which a portion of the loan proceeds
are held back from the Mortgagor until required repairs or improvements on the
Mortgaged Property are completed. All proceeds not disbursed to the Mortgagor
with respect to a Hold-back Loan have been held back and any disbursements made
have been carried out in accordance with a written agreement between the
Mortgagor and the applicable Originator and in accordance with applicable law.
All such proceeds for each Hold-back Loan are held in an escrow account and are
to be released in accordance with the applicable Originator's written agreement
with the Mortgagor;
(xix) The related 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 or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
(xx) With respect to each Mortgage constituting 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 or will become payable by the Purchaser to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(xxi) Each Note and each Mortgage is in substantially one of the
forms attached hereto as Exhibit 2;
(xxii) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary arrangements
for repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the applicable Originator have been capitalized
under the Mortgage or the related Note;
(xxiii) The origination and underwriting practices used by the
applicable Originator with respect to each Home Equity Loan have been in all
respects legal, proper, prudent and customary in the mortgage servicing
business;
(xxiv) There is no pledged account or other security other than
real estate securing the Mortgagor's obligations;
(xxv) No Home Equity Loan has a shared appreciation feature, or
other contingent interest feature;
(xxvi) No Home Equity Loan provides for primary mortgage
insurance;
(xxvii) The improvements upon each Mortgaged Property are covered
by a valid and existing hazard insurance policy with a generally acceptable
carrier that provides for fire extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located representing
coverage not less than the lesser of the outstanding principal balance of the
related Home Equity Loan or the minimum amount required to compensate for damage
or loss on a replacement cost basis. All individual insurance policies and flood
policies referred to in clause (xxviii) below contain a standard mortgagee
clause naming the applicable Originator or the original mortgagee, and its
successors in interest, as mortgagee, and the Responsible Party has received no
notice that any premiums due and payable thereon have not been paid; the
Mortgage obligates the Mortgagor thereunder to maintain all such insurance,
including flood insurance, at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(xxviii) If the Mortgaged Property is in an area identified in
the Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance Administration is
in effect with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (A) the
outstanding principal balance of the Home Equity Loan, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis or (C) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973;
(xxix) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Note; and Responsible
Party has not waived any default, breach, violation or event of acceleration;
(xxx) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units and dwelling units
in planned unit developments, which, to the best of Responsible Party's
knowledge, does not include cooperatives or mobile homes and does not constitute
other than real property under state law; and the Mortgaged Property is either a
fee simple estate or a long-term residential lease;
(xxxi) If the Home Equity Loan is secured by a long term
residential lease, (1) the lessor under the lease holds a fee simple interest in
the land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's consent and
the acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the
Mortgage with substantially similar protections; (3) the terms of such lease do
not (a) allow the termination thereof upon the lessee's default without the
holder of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (b) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence, (c)
prohibit the holder of the Mortgage from being insured (or receiving proceeds of
insurance) under the hazard insurance policy or policies relating to the
Mortgaged Property or (d) permit any increase in rent other than pre established
increases set forth in the lease; (4) the original term of such lease is not
less than 15 years; (5) the term of such lease does not terminate earlier than
five years after the maturity date of the Note; and (6) the Mortgaged Property
is located in a jurisdiction in which the use of leasehold estates in
transferring ownership in residential properties is a widely accepted practice.
(xxxii) Reserved.
(xxxiii) There is no obligation on the part of the applicable
Originator or any other party under the terms of the Mortgage or related Note to
make payments in addition to those made by the Mortgagor;
(xxxiv) Any future advances made prior to the Cut-Off Date have
been consolidated with the outstanding principal amount secured by the Mortgage,
and the secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the related Schedule of Home Equity
Loans. The consolidated principal amount does not exceed the original principal
amount of the Home Equity Loan;
(xxxv) Each Long Beach Loan was underwritten in accordance with
Long Beach's underwriting guidelines as described in the Prospectus Supplement
and each Home Equity Loan that is not a Long Beach Loan was underwritten in a
manner that is materially consistent with the manner in which the Long Beach
Loans were underwritten;
(xxxvi) The File contains an appraisal which was performed by an
appraiser who satisfied, and which was conducted in accordance with, all of the
applicable requirements of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended;
(xxxvii) None of the Home Equity Loans is a graduated payment
Home Equity Loan, nor is any Home Equity Loan subject to a temporary buydown or
similar arrangement;
(xxxviii) With respect to each Home Equity Loan, no loan junior
in lien priority to such Home Equity Loan and secured by the related Mortgaged
Property was originated by the applicable Originator at the time of origination
of such Home Equity Loan;
(xxxix) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Home Equity
Loan in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder;
(xl) The applicable Originator has not advanced funds, or
induced, solicited or knowingly received any advance of funds by a party other
than the mortgagor, directly or indirectly, for the payment of any amount
required under the Home Equity Loan;
(xli) There is no proceeding pending, or to best of the
Responsible Party's knowledge threatened, for the total or partial condemnation
of the Mortgaged Property or the taking by eminent domain of any Mortgaged
Property;
(xlii) None of the Home Equity Loans are classified as "high
cost" loans under Section 32 of the Home Ownership and Equity Protection Act of
1994;
(xliii) With respect to any Home Equity Loan which is a Home
Equity Loan originated in the State of Texas, any and all requirements of
Section 50, Article XVI of the Texas Constitution applicable to Texas Home
Equity Loans which were in effect at the time of the origination of the Home
Equity Loan have been complied with. Specifically, without limiting the
generality of the foregoing,
a. all fees paid by the owner of the Mortgaged Property or such
owner's spouse, to any person, that were necessary to originate,
evaluate, maintain, record, insure or service the Home Equity Loan are
reflected in the closing statement for such Home Equity Loan;
b. the Home Equity Loan was closed only at the office of the
originating lender, an attorney at law, or a title company;
c. the originating lender has not been found by a federal regulatory
agency to have engaged in the practice of refusing to make loans
because the applicants for the loans reside or the Mortgaged Property
proposed to secure the loans is located in a certain area;
d. the owner of the Mortgaged Property was not required to apply the
proceeds of the Home Equity Loan to repay another debt except debt
secured by the Mortgaged Property or debt to a lender other than the
originating lender;
e. the owner of the Mortgaged Property did not sign any documents or
instruments relating to the Home Equity Loan in which blanks were left
to be filled in; and
f. if discussions between the originating lender and the borrower were
conducted primarily in a language other than English, the originating
lender provided to the owner of the Mortgaged Property, prior to
closing, a copy of the notice required by Section 50(g), Article XVI
of the Texas Constitution translated into the written language in
which the discussions were conducted;
(xliv) The Loan to Value Ratio for each Home Equity Loan was no
greater than 90%, at the time of origination; and
(xlv) The first date on which each Mortgagor must make a payment
on the related Home Equity Loan is no later than August 1, 1999.
SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION AND FOR
BREACH OF REPRESENTATION AND WARRANTY.
(a) The representations and warranties contained in Sections
5(b)(viii), (xi), (xiii), (xiv), (xv), (xvi) and 6 hereof shall not be impaired
by any review and examination of Files or other documents evidencing or relating
to the Home Equity Loans or any failure on the part of the Seller or the
Purchaser to review or examine such documents and shall inure to the benefit of
any assignee, transferee or designee of the Purchaser, including the Trustee for
the benefit of holders of asset backed certificates evidencing an interest in
all or a portion of the Home Equity Loans and the Certificate Insurer. With
respect to the representations and warranties contained herein which are made to
the knowledge or the best of knowledge of the Responsible Party, or as to which
the Responsible Party has no knowledge, if it is discovered that the substance
of any such representation and warranty was inaccurate as of the date such
representation and warranty was made or deemed to be made, and such inaccuracy
materially and adversely affects the value of the related Home Equity Loan or
the interest therein of the Purchaser, the Purchaser's assignee, transferee or
designee or the Certificate Insurer, then notwithstanding the lack of knowledge
by the Responsible Party with respect to the substance of such representation
and warranty being inaccurate at the time the representation and warranty was
made, the Responsible Party shall take such action described in the following
paragraph in respect of such Home Equity Loan.
Upon discovery by Long Beach, the Seller, the Certificate Insurer, the
Purchaser or any assignee, transferee or designee of the Purchaser of any
materially defective document in, or that any material document was not
transferred by the Seller (as listed on the Trustee's Pool Certification or
otherwise), as part of, any File, of a breach of any of the representations and
warranties contained in Section 5(a) or Section 6 hereof or of a First Payment
Default with respect to any Home Equity Loan, that materially and adversely
affects the value of any Home Equity Loan or the interest of the Certificate
Insurer, the Purchaser or the Purchaser's assignee, transferee or designee, the
party discovering the breach shall give prompt written notice to the others.
With respect to any Home Equity Loan for which Long Beach is the Responsible
Party, within 60 days (or 90 days if Long Beach is attempting in good faith to
cure the defect as determined by the Certificate Insurer in its sole discretion)
of its discovery or its receipt of notice of any such missing documentation,
which documentation was not previously transferred to the Seller, or materially
defective documentation or any such breach of a representation and warranty in
Section 5(a) or Section 6 hereof, Long Beach promptly shall deliver such missing
document or cure such defect or breach in all material respects, or in the event
Long Beach has not delivered such missing document, such defect or breach has
not been cured or with respect to the occurrence of a First Payment Default with
respect to any such Home Equity Loan, Long Beach shall, within 60 days (or 90
days if Long Beach is attempting in good faith to cure the defect as determined
by the Certificate Insurer in its sole discretion) of its discovery or receipt
of notice, either (i) repurchase the affected Home Equity Loan at the Loan
Purchase Price (as such term is defined in the Pooling and Servicing Agreement)
or (ii) pursuant to the provisions of the Pooling and Servicing Agreement, cause
the removal of such Home Equity Loan from the Trust and substitute one or more
Qualified Substitute Home Equity Loans. With respect to (A) Home Equity Loans
(i) for which the Seller is the Responsible Party or (ii) for which Long Beach
is the Responsible Party and the File is missing a material document that was
transferred from Long Beach to the Seller or (B) a discovery by Long Beach, the
Seller, the Certificate Insurer, the Purchaser or any assignee, transferee or
designee of the Purchaser of a breach of any of the representations and
warranties contained in Section 5(b)(viii), (xi), (xiii), (xiv), (xv) or (xvi)
or with respect to a Home Equity Loan for which the Seller is the Responsible
Party, Section 6 hereof that materially and adversely affects the value of any
Home Equity Loan or the interest therein of the Certificate Insurer, the
Purchaser or the Purchaser's assignee, transferee or designee, the party
discovering such breach shall give prompt written notice to the others. Within
(60) days (or 90 days if the Seller is attempting in good faith to cure defect
as determined by the Certificate Insurer in its sole discretion) of its
discovery or its receipt of notice of any such missing document or any such
breach of a representation and warranty the Seller promptly shall deliver such
missing document or cure such defect or breach in all material respects, or in
the event the Seller has not delivered such missing document or such defect or
breach has not been cured or with respect to the occurrence of a First Payment
Default with respect to any such Home Equity Loan, the Seller shall, within 60
(or 90 days if the Seller is attempting in good faith to cure the defect as
determined by Certificate Insurer in its sole discretion) days of its discovery
or receipt of notice, either (i) repurchase the affected Home Equity Loan at the
Loan Purchase Price (as such term is defined in the Pooling and Servicing
Agreement) or (ii) pursuant to the provisions of the Pooling and Servicing
Agreement, cause the removal of such Home Equity Loan from the Trust and
substitute one or more Qualified Substitute Home Equity Loans. Long Beach or the
Seller, as the case may be, shall amend the Closing Schedule or Subsequent
Schedule, as applicable, to reflect the withdrawal of such Home Equity Loan from
the terms of this Agreement and the Pooling and Servicing Agreement and the
addition, if any, of a Qualified Substitute Home Equity Loan. Long Beach or the
Seller, as the case may be, shall deliver to the Purchaser such amended Closing
Schedule or Subsequent Schedule, as applicable, and shall deliver such other
documents as are required by this Agreement or the Pooling and Servicing
Agreement within five (5) days of any such amendment. Any repurchase pursuant to
this Section 7(a) shall be accomplished by deposit in the Principal and Interest
Account of the amount of the Loan Purchase Price in accordance with Sections
3.04 and 3.06 as of the Pooling and Servicing Agreement. Any repurchase or
substitution or delivery of documents required by this Section and Section 3.04,
Section 3.05, Section 3.06 and Section 3.09 of the Pooling and Servicing
Agreement shall be made in a manner consistent with Section 3.04, Section 3.05,
Section 3.06 and Section 3.09 of the Pooling and Servicing Agreement.
In addition, upon discovery by the Seller, the Purchaser, the
Certificate Insurer, or any assignee, transferee or designee of the Purchaser
that any Home Equity Loan does not constitute a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code, the party discovering the breach
shall give prompt written notice within two Business Days to the others. Within
60 days (or 90 days if the Seller is attempting in good faith to cure the defect
as determined by the Certificate Insurer in its sole discretion) of its
discovery or its receipt of notice, the Seller promptly shall either (i)
repurchase the affected Home Equity Loan at the Loan Purchase Price (as such
term is defined in the Pooling and Servicing Agreement) or (ii) pursuant to the
provisions of the Pooling and Servicing Agreement, cause the removal of such
Home Equity Loan from the Trust and substitute one or more Qualified Substitute
Home Equity Loans.
(b) It is understood and agreed that the obligations of Long Beach or
the Seller, as the case may be, set forth in this Section 7 to cure, repurchase
or substitute for a defective Home Equity Loan constitute, except as provided in
the Insurance Agreement the sole remedies of the Seller, the Purchaser and the
Certificate Insurer against Long Beach and the Seller respecting a missing or
defective document, a breach of the representations and warranties contained in
Section 5 or Section 6 hereof or with respect to the occurrence of a First
Payment Default with respect to any Home Equity Loan.
SECTION 8. CLOSING; PAYMENT FOR THE HOME EQUITY LOANS. The closing of
the purchase and sale of the Home Equity Loans shall be held at the New York
City office of Stroock & Stroock & ▇▇▇▇▇ LLP at 10:00 AM New York City time on
the Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller under
this Agreement shall be true and correct in all material respects
as of the date as of which they are made and no event shall have
occurred which, with notice or the passage of time, would
constitute a default under this Agreement;
(b) All of the representations and warranties of Long Beach under
this Agreement shall be true and correct in all material respects
as of the date as of which they are made and no event shall have
occurred which, with notice or the passage of time, would
constitute a default under this Agreement;
(c) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from
escrow at the time of closing), all Closing Documents as
specified in Section 9 of this Agreement, in such forms as are
agreed upon and acceptable to the Purchaser, duly executed by all
signatories other than the Purchaser as required pursuant to the
respective terms thereof;
(d) The Seller shall have delivered or caused to be delivered and
released to the Purchaser or to its designee, all documents
(including without limitation, the Initial Home Equity Loans)
required to be so delivered by the Purchaser pursuant to Section
3.05(b) of the Pooling and Servicing Agreement; and
(e) All other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall deliver or
cause to be delivered to the Seller on the Closing Date, against delivery and
release by the Seller to the Trustee of all documents required pursuant to the
Pooling and Servicing Agreement, the consideration for the Home Equity Loans as
specified in Section 3 of this Agreement, by delivery to the Seller of the
Purchase Price in immediately available funds.
SECTION 9. CLOSING DOCUMENTS. Without limiting the generality of
Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:
(a) An Officers' Certificate of the Seller, dated the Closing Date,
upon which Long Beach, the Purchaser, MBIA Insurance Corporation
("MBIA") and Credit Suisse First Boston Corporation (the
"Underwriter") may rely, and attached thereto copies of the
certificate of formation under the laws of Delaware;
(b) An Opinion of Counsel of the Seller, dated the Closing Date and
addressed to Long Beach, the Purchaser, MBIA, the Rating Agencies
and the Underwriter;
(c) An Officer's Certificate of Long Beach, dated the Closing Date,
upon which the Seller, the Purchaser, MBIA, the Rating Agencies
and the Underwriter may rely, in the form of Exhibit 6 hereto,
and attached thereto copies of the certificate of incorporation,
by-laws and certificate of good standing of Long Beach under the
laws of Delaware;
(d) An Opinion of Counsel of Long Beach, dated the Closing Date and
addressed to the Seller, the Purchaser, MBIA, the Rating Agencies
and the Underwriter, substantially in the form attached hereto as
Exhibit 7;
(e) Such opinions of counsel as the Rating Agencies, MBIA or the
Trustee may request in connection with the sale of the Home
Equity Loans by Long Beach to the Seller or by the Seller to the
Purchaser or Long Beach's or Seller's execution and delivery of,
or performance under, this Agreement;
(f) A letter from Deloitte & Touche L.L.P., certified public
accountants, dated the date hereof and to the effect that they
have performed certain specified procedures as a result of which
they determined that certain information of an accounting,
financial or statistical nature set forth in the Purchaser's
Prospectus Supplement, dated July 9, 1999 agrees with the records
of Long Beach;
(g) Long Beach shall deliver to the Seller for inclusion in the
Prospectus Supplement for Asset Backed Securities Corporation,
Asset Backed Certificates, Series 1999-LB1, under the captions
"The Servicer" and "Origination of the Home Equity Loans--Long
Beach Home Equity Loans", or for inclusion in other offering
material such publicly available information regarding Long
Beach, its underwriting standards, lending activities and loan
sales, production, and servicing and collection practices, and
any similar nonpublic, unaudited financial information and a
computer tape with respect to the pool information;
(h) Letters from at least two nationally recognized statistical
rating agencies rating the Class A and Class A-IO Certificates in
the highest rating category; and
(i) Such further information, certificates, opinions and documents as
the Purchaser, MBIA, the Rating Agencies or the Underwriter may
reasonably request.
SECTION 10. COSTS. The Responsible Party shall pay (or shall reimburse
the Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Home Equity Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording assignments of mortgage. Long Beach shall pay the fees and
expenses of Long Beach's in-house accountants and in-house attorneys, the costs
and expenses incurred in connection with producing Long Beach's loan loss,
foreclosure and delinquency experience, and the costs and expenses incurred in
connection with obtaining the documents referred to in Sections 9(d) and 9(e)
hereof. The Seller shall pay (or shall reimburse the Purchaser or any other
Person to the extent that the Purchaser or such other Person shall pay) the
costs and expenses of printing (or otherwise reproducing) and delivering this
Agreement, the Pooling and Servicing Agreement, the Certificates, the
prospectus, prospectus supplement, the Insurance Agreement and other related
documents, the initial fees, costs and expenses of the Trustee, the initial
fees, costs and expenses of MBIA, the fees and expenses of the Seller's counsel
in connection with the preparation of all documents relating to the
securitization of the Home Equity Loans, the filing fee charged by the
Securities and Exchange Commission for registration of the Certificates, the
cost of outside special counsel that may be required for Long Beach, the cost of
obtaining the documents referred to in Section 9(g) hereof and the fees charged
by any rating agency to rate the Certificates. All other costs and expenses in
connection with the transactions contemplated hereunder shall be borne by the
party incurring such expense. The Seller shall pay to the Trustee any amounts
payable by it pursuant to Section 2.05 of the Pooling and Servicing Agreement.
SECTION 11. SERVICING. The Seller has represented to the Purchaser
that the Home Equity Loans are being serviced under the Servicing Agreement (the
"Servicing Agreement") dated as of September 1, 1998 between the Seller and Long
Beach, and it is understood and agreed by and among the Seller, Long Beach and
the Purchaser that the interim servicing arrangements under the Servicing
Agreement will be superseded by the servicing arrangements set forth in the
Pooling and Servicing Agreement.
SECTION 12. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The sale
and delivery on the Closing Date of the Initial Home Equity Loans and on each
Subsequent Transfer Date of the related Subsequent Home Equity Loans described
on the Schedule of Home Equity Loans in accordance with the terms and conditions
of this Agreement is mandatory. It is specifically understood and agreed that
each Home Equity Loan is unique and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser in the event of the Seller's failure to deliver the Home Equity
Loans on or before the Closing Date or Subsequent Transfer Date, as applicable.
The Seller hereby grants to the Purchaser a lien on and a continuing security
interest in the Seller's interest in each Home Equity Loan and each document and
instrument evidencing each such Home Equity Loan to secure the performance by
the Seller of its obligation hereunder, and the Seller agrees that it holds such
Home Equity Loans in custody for the Purchaser, subject to the Purchaser's (i)
right to reject any Home Equity Loan to the extent permitted by this Agreement,
and (ii) obligation to deliver or cause to be delivered the consideration for
the Home Equity Loans pursuant to Section 8 hereof. Any Home Equity Loans
rejected by the Purchaser shall concurrently therewith be released from the
security interest created hereby. The Seller agrees that, upon acceptance of the
Home Equity Loans by the Purchaser or its designee and delivery of payment to
the Seller, that its security interest in the Home Equity Loans shall be
released. All rights and remedies of the Purchaser under this Agreement are
distinct from, and cumulative with, any other rights or remedies under this
Agreement or afforded by law or equity and all such rights and remedies may be
exercised concurrently, independently or successively.
Notwithstanding the foregoing, if on the Closing Date, each of the
conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Home Equity Loans, if delivery to
the Purchaser has occurred and the security interest created by this Section 12
shall be deemed to have been released.
SECTION 13. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
telex or telegraph and confirmed by a similar mailed writing, if to the
Purchaser, addressed to the Purchaser at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: Secretary, or such other address as may hereafter be furnished
to the Seller and Long Beach in writing by the Purchaser; if to the Seller,
addressed to the Seller at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Secretary, or to such other address as the Seller may designate in
writing to the Purchaser and Long Beach; and if to Long Beach, addressed to Long
Beach at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, or to such other address as Long Beach may designate in writing to
the Purchaser and the Seller.
SECTION 14. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement which is prohibited or which is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement which
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Home Equity Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 15. AGREEMENT OF PARTIES. Long Beach, the Seller and the
Purchaser each agree to execute and deliver such instruments (including, without
limitation, UCC financing statements and continuation statements) and take such
actions as either of the others may, from time to time, reasonably request in
order to effectuate the purpose and to carry out the terms of this Agreement and
the Pooling and Servicing Agreement.
SECTION 16. SURVIVAL. (a) The Seller agrees that the representations,
warranties and agreements made by it herein and in any certificate or other
instrument delivered pursuant hereto shall be deemed to be relied upon by the
Purchaser and the Certificate Insurer, notwithstanding any investigation
heretofore or hereafter made by the Purchaser or the Certificate Insurer or on
either of their behalf, and that the representations, warranties and agreements
made by the Seller herein or in any such certificate or other instrument shall
survive the delivery of and payment for the Home Equity Loans and shall continue
in full force and effect, notwithstanding any restrictive or qualified
endorsement on the Notes and notwithstanding subsequent termination of this
Agreement, the Pooling and Servicing Agreement or the Trust.
(b) Long Beach agrees that the representations, warranties and
agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller, the
Purchaser and the Certificate Insurer, notwithstanding any investigation
heretofore or hereafter made by the Seller, the Purchaser or the Certificate
Insurer or on the behalf of any of them, and that the representations,
warranties and agreements made by Long Beach herein or in any such certificate
shall continue in full force and effect, notwithstanding subsequent termination
of this Agreement, the Pooling and Servicing Agreement or the Trust.
SECTION 17. INDEMNIFICATION. (a) (i) Long Beach agrees to indemnify
and hold harmless the Purchaser, each of its directors, each of its officers who
have signed the Registration Statement on Form S-3, Registration Statement
number 333-64351 (the "Registration Statement"), each person, if any, who
controls the Purchaser within the meaning of the Securities Act of 1933, as
amended (the "1933 Act") (each an "Indemnified Party"), against any and all
losses, claims, damages or liabilities, joint and several, to which any
Indemnified Party may become subject, under the 1933 Act or otherwise, and will
reimburse each Indemnified Party for any legal or other expenses incurred by the
Indemnified Party in connection with investigating or defending any such loss,
claim, damage, liability or action insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Prospectus Supplement dated July 9, 1999 (the "Prospectus Supplement"),
as amended or supplemented, relating to the public offering of the Certificates,
representing interests in the Home Equity Loans, or in any other offering
document (the "Private Placement Memorandum") relating to the offering by the
Purchaser or an affiliate thereof, of the Certificates, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission relates to information set forth in the Prospectus Supplement
under the captions "The Servicer" and "Origination of the Home Equity
Loans--Long Beach Home Equity Loans" (the "Long Beach Information") or (ii)
errors in the pool information provided on the computer tape delivered by Long
Beach to the Seller or the Purchaser (the "Pool Information"). Long Beach's
liability under this Section 17 shall be in addition to any other liability Long
Beach may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless Long Beach,
its officers and its directors, and each person who controls the Seller within
the meaning of either the 1933 Act against any and all losses, claims, damages
or liabilities, joint or several, to which they may become subject under the
1933 Act or otherwise, and will reimburse Long Beach and each such controlling
person for any legal or other expenses reasonably incurred by such Long Beach
and each such controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Purchaser Information in the Prospectus Supplement, the
Prospectus or any Purchaser Information in any Private Placement Memorandum, or
in any revision or amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading. The "Purchaser Information" shall
consist of all information in the Prospectus Supplement or any Private Placement
Memorandum other than Long Beach Information or any statements derived from an
inaccuracy in the Pool Information. The Purchaser's liability under this Section
17 shall be in addition to any other liability the Purchaser may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either Section 17(a) or 17(b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm for all such indemnified parties.
Such firm shall be designated in writing by the Purchaser, in the case of
parties indemnified pursuant to clause 17(a) and by Long Beach, in the case of
parties indemnified pursuant to clause 17(b). The indemnifying party may, at its
option, at any time upon written notice to the indemnified party, assume the
defense of any proceeding and may designate counsel satisfactory to the
indemnified party in connection therewith provided that the counsel so
designated would have no actual or potential conflict of interest in connection
with such representation. Unless it shall assume the defense of any proceeding,
the indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. If the indemnifying party assumes the defense of
any proceeding, it shall be entitled to settle such proceeding with the consent
of the indemnified party or, if such settlement provides for release of the
indemnified party in connection with all matters relating to the proceeding
which have been asserted against the indemnified party in such proceeding by the
other parties to such settlement, without the consent of the indemnified party.
(d) If the indemnification provided for in this Section 17 is
unavailable to an indemnified party under Section 17(a) or 17(b) hereof or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities, in
such proportion as is appropriate to reflect the relative fault of the
indemnified and indemnifying parties in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
indemnified and indemnifying parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Purchaser and Long Beach agree that it would not be just and
equitable if contribution pursuant to Section 17 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the considerations referred to in Section 17(d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in this Section 17 shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim, except where the indemnified party is required to bear
such expenses pursuant to this Section 17, which expenses the indemnifying party
shall pay as and when incurred, at the request of the indemnified party, to the
extent that the indemnifying party will be ultimately obligated to pay such
expenses. In the event that any expenses so paid by the indemnifying party are
subsequently determined to not be required to be borne by the indemnifying party
hereunder, the party which received such payment shall promptly refund the
amount so paid to the party which made such payment. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇
▇▇▇) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 17 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by the Purchaser
or any person controlling the Purchaser or by or on behalf of Long Beach and
their respective directors or officers or any person controlling Long Beach, and
(iii) acceptance of and payment for any of the Certificates.
SECTION 18. TERMINATION OF OBLIGATIONS. The Purchaser may terminate
its obligations hereunder by notice to the Seller at any time before delivery of
and payment of the purchase price for the Home Equity Loans and prior to the
issuance of the Certificate Insurance Policies if: (i) any of the conditions set
forth in Section 8 and 9 hereof are not satisfied when and as provided therein;
(ii) there shall have been the entry of a decree or order by a court or agency
or supervisory authority having jurisdiction in the premises for the appointment
of a conservator, receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or relating
to the Seller or Long Beach, or for the winding up or liquidation of the affairs
of the Seller or Long Beach; (iii) there shall have been the consent by the
Seller or Long Beach to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Seller or Long Beach or
of or relating to substantially all of the Mortgaged Property of the Seller or
Long Beach; (iv) any purchase and assumption agreement with respect to the
Seller or substantially all of the assets and Mortgaged Properties of the Seller
shall have been entered into; or (v) a Termination Event shall have occurred.
The termination of the Purchaser's obligations hereunder shall not terminate the
Purchaser's rights hereunder or its right to exercise any remedy available to it
at law or inequity. A "Termination Event" means the existence of any one or more
of the following conditions:
(a) a stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose
shall have been initiated or threatened by the Securities and Exchange
Commission; or
(b) subsequent to the execution and delivery of this Agreement, a
downgrading, or public notification of a possible change, without
indication of direction, shall have occurred in the rating afforded
any of the debt securities or claims paying ability of any person
providing any form of credit enhancement for any of the Certificates,
by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2)
under the 1933 Act; or
(c) subsequent to the execution and delivery of this Agreement, there
shall have occurred an adverse change in the condition, financial or
otherwise, in the earnings, affairs, regulatory situation or business
prospects of the Seller or Long Beach reasonably determined by the
Purchaser to be material;
(d) or subsequent to the date of this Agreement there shall have
occurred any of the following: (i) any suspension or limitation of
trading in securities generally on the New York Stock Exchange or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of Long Beach on any exchange
or in the over-the-counter market or a suspension or material
limitation in trading in securities substantially similar to the
Certificates; (ii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State
authorities; or (iii) the engagement by the United States in
hostilities, or the escalation of such hostilities, or any calamity or
crisis, if the effect of any such event specified in this clause (iii)
in the reasonable judgment of the Purchaser makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Certificates on the terms and in the manner contemplated in the
Prospectus Supplement.
SECTION 19. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF) AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES
HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.
SECTION 20. MISCELLANEOUS. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto, the Certificate Insurer and their respective successors and
assigns. This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought and with the prior written
consent of the Certificate Insurer. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
It is the express intent of the parties hereto that the conveyance of
the Home Equity Loans by the Seller to the Purchaser as provided in Section 4
hereof be, and be construed as, a sale of the Home Equity Loans by the Seller to
the Purchaser and not as a pledge of the Home Equity Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. However, in the
event that, notwithstanding the aforementioned intent of the parties, the Home
Equity Loans are held to be property of the Seller, then, (a) it is the express
intent of the parties that such conveyance be deemed a pledge of the Home Equity
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller and (b) (1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (2) the conveyance provided for in Section 4 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Home Equity Loans
and all amounts payable to the holders of the Home Equity Loans in accordance
with the terms thereof and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Principal and Interest
Account whether in the form of cash, instruments, securities or other property;
(3) the possession by the Purchaser or its agent of Notes, the related Mortgages
and such other items of property that constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the New York Uniform Commercial Code; and (4) notifications to persons
holding such property, and acknowledgments, receipts or confirmations from
persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Purchaser for the purpose of perfecting
such security interest under applicable law. Any assignment of the interest of
the Purchaser pursuant to Section 4(d) hereof shall also be deemed to be an
assignment of any security interest created hereby. The Seller and the Purchaser
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Home Equity Loans, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement and the Pooling and
Servicing Agreement.
SECTION 21. THIRD PARTY BENEFICIARY. Each of the Certificate Insurer,
the Trustee and R.V.I Guaranty Co., Ltd. shall be a third party beneficiary
hereof and shall be entitled to enforce the provisions hereof as if a party
hereto, except the provisions of Section 17. This provision shall not limit
waiver, enforcement and consent powers that the Certificate Insurer has except
as specifically agreed in a separate letter agreement between such parties or as
otherwise agreed between the Certificate Insurer and R.V.I. Guaranty Co., Ltd.
and the parties may perform in accordance with such powers.
IN WITNESS WHEREOF, the Purchaser, the Seller and Long Beach have
caused their names to be signed by their respective officers thereunto duly
authorized as of the date first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE
CAPITAL LLC
By: /s/ ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇▇
Title: Vice President
ASSET BACKED SECURITIES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇▇
Title: Vice President
LONG BEACH MORTGAGE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
EXHIBIT 1
Pool Characteristics of the Initial Home Equity Loans as delivered on
the Closing Date:
All percentages set forth herein are based upon the aggregate unpaid
principal balances of the Initial Home Equity Loans as of the Initial Cut-Off
Date.
(1) No Home Equity Loan had a Loan-to-Value Ratio at origination in
excess of 90.000%;
(2) Reserved;
(3) Each Mortgaged Property is located in one of the states of
Alabama, Alaska, Arizona, Arkansas, California, Colorado,
Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri,
Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico,
New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon,
Pennsylvania, Rhode Island, South Carolina, South Dakota,
Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington
D.C., West Virginia, Wisconsin and Wyoming;
(4) None of the Home Equity Loans (measured by outstanding Loan
Balance as of the Cut-Off Date) are secured by a leasehold
estate;
(5) No more than 4.00% of the Home Equity Loans (measured by
outstanding Loan Balance as of the Cut-Off Date) are secured by
condominium units; and all condominium Home Equity Loans have
been originated on a form acceptable to FNMA or FHLMC with such
riders as have been acceptable to FNMA or FHLMC, as the case may
be;
(6) No more than 3.22% of the Home Equity Loans (measured by
outstanding Loan Balance as of the Cut-Off Date) are secured by
two- to four-family dwellings. No more than .15% of the Home
Equity Loans (measured by outstanding Loan Balance as of the
Cut-Off Date) are secured by town houses. No more than 1.70% of
the Home Equity Loans (measured by outstanding Loan Balance as of
the Cut-Off Date) are secured by Manufactured Housing. No more
than 6.55% of the Home Equity Loans (measured by outstanding Loan
Balance as of the Cut-Off Date) are secured by dwelling units in
PUDs. Approximately 83.50% of the Home Equity Loans (measured by
outstanding Loan Balance as of the Cut-Off Date) are secured by
one-family dwellings;
(7) No Home Equity Loan had a principal balance in excess of $875,000
at origination;
(8) Each Home Equity Loan was originated on or after September 1997
and each Home Equity Loan has a next Adjustment Date no later
than April 2002;
(9) On the basis of representations made by the Mortgagors in their
loan applications, no more than 5.47% of the Home Equity Loans
are secured by investor Mortgaged Properties and at least 93.83%
of the owner-occupied Home Equity Loans are secured by
owner-occupied Mortgaged Properties which are primary residences
(in each case measured by outstanding Loan Balance as of the
Cut-Off Date);
(10) The Coupon Rates borne by the Home Equity Loans as of the Cut-Off
Date ranged from 6.49% per annum to 14.25% per annum and the
weighted average Coupon as of the Cut-Off Date was 9.74% per
annum;
(11) As of the Cut-Off Date, 23.47% of the Home Equity Loans were
rate/term refinancings, 40.42% of the Home Equity Loans were cash
out refinancings and 36.10% of the Home Equity Loans were made to
purchase the related Mortgaged Properties, in each case measured
by outstanding Loan Balance as of the Cut-Off Date;
(12) The margins on the Home Equity Loans range from 4.00% to 10.90%
and the weighted average Margin as of the Cut-Off Date was
approximately 6.76%;
(13) At least 74.33% of the Home Equity Loans (measured by outstanding
Loan Balance as of the Cut-Off Date) were originated by Long
Beach under Long Beach's "Full Documentation" Home Equity Loan
program, no more than 6.17% of the Home Equity Loans (measured by
outstanding Loan Balance as of the Cut-Off Date) were originated
by Long Beach under Long Beach's "Fast Trac" Home Equity Loan
program, and no more than 19.50% of the Home Equity Loans
(measured by outstanding Loan Balance as of the Cut Off Date)
were originated by Long Beach under Long Beach's "Stated Income
Documentation" Home Equity Loan program;
(14) With respect to Long Beach's underwriting risk categories,
56.15%, 14.01%, 12.84%, 11.07% and 5.94% of the Home Equity Loans
constitute A- Risk Home Equity Loans, B Risk Home Equity Loans,
B- Risk Home Equity Loans, C Risk Home Equity Loans and D Risk
Home Equity Loans, respectively, in each case measured by
outstanding Loan Balance as of the Cut-Off Date; and
(15) Home Equity Loan exceptions referred to in Section 6(a)(ii) are
set forth below:
None.
EXHIBIT 2
FORM OF MORTGAGE NOTE AND MORTGAGE/DEED OF TRUST
[NOT INCLUDED HEREIN]
EXHIBIT 3
[RESERVED]
EXHIBIT 4
[RESERVED]
EXHIBIT 5
[RESERVED]
EXHIBIT 6
[FORM OF OFFICER'S CERTIFICATE OF THE ORIGINATOR]
Long Beach Mortgage Company
Officer's Certificate
I, ____________________________, hereby certify that I am the duly
elected _____________________________________, of Long Beach Mortgage Company, a
Delaware corporation (the "Company"), and further certify, on behalf of the
Company as follows:
1. Attached hereto as Attachment I is a true and correct copy of the
Certificate of Incorporation and By-laws of the Company as in full force and
effect on the date hereof. No event has occurred since ________________ which
has affected the good standing of the Company under the laws of the State of
Delaware
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Company are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Company,
signed (a) the Mortgage Loan Purchase Agreement (the "Mortgage Loan Purchase
Agreement") dated as of June 1, 1999 among the Company, Credit Suisse First
Boston Mortgage Capital LLC and Asset Backed Securities Corporation (the
"Purchaser"), or (b) any other document delivered prior hereto or on the date
hereof in connection with the transactions contemplated by the Mortgage Loan
Purchase Agreement and the Pooling and Servicing Agreement dated as of June 1,
1999 among Purchaser, the Company and The Chase Manhattan Bank (the "Pooling
Agreement") was, at the respective times of such signing and delivery, and is as
of the date hereof, duly elected or appointed, qualified and acting as such
officer or attorney-in-fact, and the signatures of such persons appearing on
such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of the
resolutions duly adopted by the board of directors of the Company on , 1999 (the
"Resolutions") with respect to the transactions contemplated by the Mortgage
Loan Purchase Agreement and the Pooling Agreement; said Resolutions have not
been amended or modified, annulled or revoked and are in full force and effect
on the date hereof.
5. All of the representations and warranties of the Company contained
in the Mortgage Loan Purchase Agreement are true and correct in all material
respects as of the Closing Date, and no event has occurred which, with notice or
the passage of time or both, would constitute a default under the Mortgage Loan
Purchase Agreement.
6. The Company has performed all of its duties and has satisfied all
of the material conditions on its part to be performed or satisfied prior to the
Closing Date.
All capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Pooling Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated: July 21, 1999
(Seal) LONG BEACH MORTGAGE COMPANY
By:
-----------------------------
Name:
Title:
I, ________________________________, [Assistant] Secretary of Loan
Beach Mortgage Company, hereby certify that
_____________________________________ is the duly elected, qualified and acting
______________________________________________ of Long Beach Mortgage Company
and that the signature appearing above is his genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: July 21, 1999
LONG BEACH MORTGAGE COMPANY
By:
----------------------------
Name:
Title:
EXHIBIT 7
[FORM OF OPINION OF COUNSEL TO THE ORIGINATOR]
TO: Addressees on Schedule A
July 21, 1999
Re: Asset Backed Securities Corporation
ASSET BACKED CERTIFICATES' SERIES 1999-LB1
Ladies and Gentlemen:
I am General Counsel of Long Beach Mortgage Company (the "Company")
and have acted as counsel to the Company in connection with the servicing by the
Company of residential first lien Home Equity Loans pursuant to the Pooling and
Servicing Agreement, dated as of June 1, 1999 (the "Pooling and Servicing
Agreement"), among Asset Backed Securities Corporation, as depositor (the
"Purchaser"), the Company, and The Chase Manhattan Bank, as trustee (the
"Trustee"), relating to the issuance and sale by the Purchaser of Asset Backed
Certificates, Series 1999-LB1 (the "Certificates"). In connection with the sale
and servicing of the Home Equity Loans, the Company has entered into the
Servicer Insurance Agreement, dated as of ________ __, 1999, between MBIA
Insurance Corporation ("MBIA") and the Company (the "Insurance Agreement"), the
Master Loan Purchase Agreement , dated as of September 1, 1998 between the
Company and the Seller (the "Master Agreement") and the Mortgage Loan Purchase
Agreement , dated as of June 1, 1999, among the Purchaser, the Company and
Credit Suisse First Boston Mortgage Capital LLC (the "Mortgage Loan Purchase
Agreement"); the Mortgage Loan Purchase Agreement, the Master Agreement, the
Insurance Agreement and the Pooling and Servicing Agreement, the "Agreements").
Capitalized terms not defined herein have the meanings set forth in the
Agreements.
As such counsel, I have examined original or reproduced or certified
copies of the certificate of incorporation and bylaws of the Company, as amended
to date, records of actions taken by the Board of Directors of the Company and
copies of the Agreements, the Prospectus Supplement, dated July 9, 1999 (the
"Prospectus Supplement"), to the Prospectus, dated December 17, 1998, relating
to the Offered Certificates. I have also examined such other documents, papers,
statutes and authorities as I deem necessary as a basis for the opinions
hereinafter set forth. In all such examinations made by me in connection with
this opinion, I have assumed the genuineness of all signatures and the
completeness and authenticity of all records and all documents submitted to me
as copies thereof. As to various matters of fact relevant to the opinions
hereinafter expressed, I have relied upon the representations and warranties
contained in the Agreements and statements and certificates of officers and
representatives of the Company. As to matters in Paragraph 5 below with respect
to which I opine based on my knowledge, I have relied solely upon inquiries made
to and responses received from officers and representatives of the Company and
the documents furnished to me by representatives of the Company, which documents
such representatives have informed me include the only material indentures,
agreements and instruments to which the Company is a party or by which it or any
of its properties or assets are bound.
In addition to the foregoing, I have assumed that, if the Trustee, the
Company or any Certificateholder seeks to enforce any of their respective rights
under the Agreements, they will do so only in good faith and only in
circumstances and in a manner in which it is commercially reasonable to do so.
In addition to rendering legal advice and assistance to the Company in
the course of the negotiation and preparation of the Agreements, involving,
among other things, discussions and inquiries concerning various legal matters
and the review of certain corporate records, documents and proceedings, I also
participated in conferences with representatives of the Purchaser and the
Company's independent certified public accountants, at which the contents of the
Prospectus Supplement and related matters were discussed and revised. I have
not, however, except with respect to matters expressly covered by this opinion,
independently verified the accuracy, completeness or fairness of the statements
contained in the Prospectus Supplement, and, due to the limitations inherent in
the information available to me and the nature and extent of my participation in
such conferences, I am unable to assume, and I do not assume, any responsibility
for the accuracy, completeness or fairness of such statements.
I express no opinion except as to (i) United States federal law and
(ii) the laws of the State of California.
Based upon and subject to the foregoing, I am of the opinion that:
1. The Company is duly authorized and qualified to transact any and
all business contemplated by the Agreements in any state in which a Mortgaged
Property securing a Home Equity Loan is located or is otherwise not required
under applicable law to effect such qualification and, in any event, is in
compliance with the doing business laws of any such State, to the extent
necessary to ensure the enforceability of each Home Equity Loan and the
servicing of the Home Equity Loans in accordance with the terms of the Pooling
and Servicing Agreement.
2. The Company has the power to engage in the transactions
contemplated by each and all of the Agreements and has all requisite power,
authority and legal right to execute and deliver the Agreements and any other
documents delivered in connection therewith and to perform and observe the terms
and conditions of such instruments.
3. Each of the Agreements has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement enforceable
in accordance with its respective terms against the Company, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally and by general equity principles regardless of whether such
enforcement is considered in a proceeding in equity or at law.
4. No consent, approval, authorization, license, permit or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Company of, or compliance by the Company with, any or all
of the Agreements or the consummation of the transactions contemplated by the
Agreements.
5. The execution and delivery of the Agreements by the Company, the
servicing of the Home Equity Loans by the Company, the consummation of any other
of the transactions contemplated by the Agreements and the fulfillment of or
compliance with the terms of the Agreements are in the ordinary course of
business of the Company and will not (A) result in a material breach of any term
or provision of the charter or by-laws of the Company or (B) materially conflict
with, result in a material breach, violation or acceleration of or result in a
material default under the terms of any other material agreement or instrument
of which I have knowledge, after due inquiry, to which the Company is a party or
by which it may be bound, or any statute, order or regulation applicable to the
Company of any court, regulatory body, administrative agency or governmental
body having jurisdiction over the Company; and the Company is not a party to,
bound by or in material breach or violation of any material indenture or other
material agreement or instrument of which I have knowledge, after due inquiry,
or subject to or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over it, which materially and adversely affects or, to the best of my knowledge,
will in the future materially and adversely affect, (x) the ability of the
Company to perform its obligations under the Agreements or (y) the business,
operations, financial condition, properties or assets of the Company taken as a
whole.
6. To the best of my knowledge, after due inquiry, there is no action,
suit, proceeding or investigation pending or threatened against the Company
which, in my judgment, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations, financial
condition, properties or assets of the Company or in any material impairment of
the right or ability of the Company to carry on its business substantially as
now conducted or in any material liability on the part of the Company or which
would draw into question the validity of the Agreements, the Certificates or the
Home Equity Loans or of any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be likely to impair materially
the ability of the Company to perform its obligations under the terms of the
Agreements.
7. Based upon my participation, nothing has come to my attention that
has caused me to believe that the information contained in the Prospectus
Supplement in the Summary under the subheading "The Home Equity Loans" and under
the captions "The Servicer" and "Origination of The Home Equity Loans - Long
Beach Home Equity Loans" (but excluding the financial statements, the schedules
and other financial and statistical data included therein as to which I express
no opinion) includes an untrue statement of a material fact, or omits to state a
material fact as of the date hereof, necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
This opinion is solely for the benefit of the addressees hereof, and
may not be relied upon in any manner by any other person or entity.
Respectfully submitted,
SCHEDULE A
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Standard and Poor's Rating Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Duff & ▇▇▇▇▇▇ Credit Rating Co.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Asset Backed Securities Corporation
Credit Suisse First Boston Mortgage Capital LLC
Credit Suisse First Boston Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Long Beach Mortgage Company
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
R.V.I. Guaranty Co., Ltd.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ House
▇▇▇▇▇▇▇▇ ▇▇ HX, Bermuda
Exhibit 8
SCHEDULE OF HOME EQUITY LOANS
[NOT INCLUDED HEREIN]
Exhibit 9
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT, dated __________, 199_ (the "Subsequent
Transfer Date"), among Asset Backed Securities Corporation, a Delaware
corporation (the "Purchaser"), Long Beach Mortgage Company, a Delaware
corporation (the "Long Beach") and Credit Suisse First Boston Mortgage Capital
LLC, a Delaware limited liability company (the "Seller").
WITNESSETH:
WHEREAS, the Mortgage Loan Purchase Agreement, dated June 1, 1999 (the
"Mortgage Loan Purchase Agreement"), among the Seller, Long Beach and the
Purchaser contemplated the sale of Subsequent Home Equity Loans to the Purchaser
by the Seller; and
WHEREAS, the parties desire to consummate the purchase and sale of the
Subsequent Home Equity Loans identified on the related Schedule of Home Equity
Loans;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. For the consideration set forth in Paragraph 2 below, the Seller
does hereby sell, transfer, convey and assign to the Purchaser, without recourse
as to payment and without any representations or warranties express or implied
except as set forth in Paragraph 3 and Paragraph 4 hereof, and the Purchaser
does hereby purchase and acquire from the Seller, all right, title and interest
of the Seller in and to each Subsequent Home Equity Loan identified in the
Schedule of Home Equity Loans delivered by the Seller on the Subsequent Transfer
Date, including its Loan Balance, all items constituting a part of the Trust
with respect to the Subsequent Home Equity Loans and all collections in respect
of such Subsequent Home Equity Loans due after the first day of the month of the
Subsequent Transfer Date (the "Subsequent Cut-Off Date"). The transfer by the
Seller of the Subsequent Home Equity Loans set forth on the Schedule of Home
Equity Loans to the Purchaser is absolute and is intended by all parties hereto
to be treated as a sale by the Seller.
2. The cash consideration for the Subsequent Home Equity Loans sold
hereby shall be $__________, and representing the aggregate outstanding
principal balance of the Subsequent Home Equity Loans added to the Trust, as of
the Subsequent Cut-Off Date.
3. The Seller hereby makes the representations and warranties set
forth in Sections 5(b)(viii), (xi), (xiii), (xiv), (xv) and (xvi) and 6 of the
Mortgage Loan Purchase Agreement as of the Subsequent Transfer Date with respect
to the Subsequent Home Equity Loans being conveyed hereby except that references
in said Sections 5(b)(viii), (xi), (xiii), (xiv), (xv) and (xvi) and 6 to
Initial Home Equity Loans, the Closing Date and the Cut-Off Date shall refer to
the applicable Subsequent Home Equity Loans, Subsequent Transfer Date and
Subsequent Cut-Off Date, respectively.
4. The Seller hereby represents that (a) it is solvent, will not be
rendered insolvent as a result of the sale of the Subsequent Home Equity Loans
sold pursuant to this Subsequent Transfer Agreement and is not aware of any
pending insolvency and (b) all of the conditions precedent to the transfer
accomplished hereby set forth in Section 1(c) of the Mortgage Loan Purchase
Agreement and Section 3.07 of the Pooling and Servicing Agreement have been
satisfied.
5. Long Beach and the Seller acknowledge and agree that the Purchaser
intends to assign the Purchaser's rights hereunder to the Trustee pursuant to
the Pooling and Servicing Agreement. Long Beach and the Seller hereby consent to
such assignment and agree that the Trustee, as ultimate assignee, may enforce
the rights of the Purchaser hereunder directly against Long Beach and the Seller
for the benefit of the Certificateholders and the Certificate Insurer and that
the Certificate Insurer may enforce such rights directly.
6. This Subsequent Transfer Agreement shall be construed in accordance
with the laws of the State of New York and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws,
without giving effect to principles of conflicts of law.
7. This Subsequent Transfer Agreement may be signed in counterparts,
each of which shall be an original but all of which, taken together, shall
constitute one and the same instrument.
8. Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Mortgage Loan Purchase Agreement.
9. The Certificate Insurer shall be a third-party beneficiary of this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement by their duly authorized officers as of the date first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE
CAPITAL LLC
By:_______________________________
Name:
Title:
ASSET BACKED SECURITIES CORPORATION
By:_______________________________
Name:
Title:
LONG BEACH MORTGAGE COMPANY
By:_______________________________
Name:
Title: