ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is an Assignment, Assumption and Recognition Agreement (this "AAR
Agreement") made as of December 1, 2006, among HSBC Bank, National Association
(the "Assignor"), HSI Asset Securitization Corporation (the "Assignee") Deutsche
Bank National Trust Company (the "Trustee") not individually but solely as
trustee on behalf of the holders of the HSI Asset Loan Obligation Trust, Series
2006-2, Asset-Backed Certificates, American Home Mortgage Corp. (the "Company")
and American Home Mortgage Servicing, Inc.
In consideration of the mutual promises contained herein the parties
hereto agree that the residential mortgage loans (the "Assigned Loans") listed
on Attachment 1 annexed hereto (the "Assigned Loan Schedule") purchased by
Assignor from Company pursuant to (a) the Master Mortgage Loan Purchase and
Interim Servicing Agreement, dated as of November 1, 2006, between Assignor,
Servicer and Company (the "Purchase Agreement"), shall be subject to the terms
of this AAR Agreement. Capitalized terms used herein but not defined shall have
the meanings ascribed to them in the Purchase Agreement.
Assignment and Assumption
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor in the Assigned Loans and, as they relate
to the Assigned Loans, all of its right, title and interest in, to and under the
Purchase Agreement and Assignee hereby assumes all rights and obligations with
respect to the Assigned Loans under the Purchase Agreement. Assignor
specifically reserves and does not assign to Assignee any right title and
interest in, to or under any Mortgage Loans subject to the Purchase Agreement
other than those set forth on Attachment l.
Recognition of the Company
2. From and after the date hereof, the Company shall and does hereby
recognize that the Assignee will transfer the Assigned Loans and assign its
rights under the Purchase Agreement (solely to the extent set forth herein) and
this AAR Agreement to HSI Asset Loan Obligation Trust 2006-2 (the "Trust")
created pursuant to a Pooling and Servicing Agreement, dated as of November 1,
2006 (the "Pooling Agreement"), among the Assignee as Depositor, the Trustee,
CitiMortgage, Inc., as Master Servicer (including its successors in interest and
any successor master servicer under the Pooling Agreement, the "Master
Servicer"), Citibank, N.A. as Securities Administrator (the "Securities
Administrator") and ▇▇▇▇▇ Fargo Bank, N.A. as custodian (the "Custodian"). The
Company hereby acknowledges and agrees that from and after the date hereof (i)
the Trust will be the owner of the Assigned Loans, (ii) the Company shall look
solely to the Trust for performance of any obligations of the Assignor insofar
as they relate to the enforcement of the representations, warranties and
covenants with respect to the Assigned Loans, (iii) the Trust shall have all the
rights and remedies available to the Assignor, insofar as they relate to the
Assigned Loans, under the Purchase Agreement, including, without limitation, the
enforcement of the document delivery requirements and remedies with respect to
breaches of representations and warranties set forth in the Purchase Agreement,
and shall be entitled to enforce all of the obligations of the Company
thereunder insofar as they relate to the Assigned Loans, and (iv) all references
to the Purchaser (insofar as they relate to the rights, title and interest and,
with respect to obligations of the Purchaser, only insofar as they relate to the
enforcement of the representations, warranties and covenants of the Company)
under the Purchase Agreement insofar as they relate to the Assigned Loans, shall
be deemed to refer to the Trust. Neither the Company nor the Assignor shall
amend or agree to amend, modify, waiver, or otherwise alter any of the terms or
provisions of the Purchase Agreement which amendment, modification, waiver or
other alteration would in any way affect the Assigned Loans or the Company's
performance under the Purchase Agreement with respect to the Assigned Loans
without the prior written consent of the Assignee, the Master Servicer and the
Trustee. Any party requesting such amendment shall provide to the Assignee, the
Master Servicer and the Trustee, at its own expense, an opinion of counsel
stating that (i) such amendment is permitted under the terms of the Purchase
Agreement and (ii) such amendment will not materially and adversely affect the
interests of the holders of any securities issued by the Trust.
Representations; Warranties and Covenants
3. Assignor warrants and represents to Assignee, the Trust and Company as
of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have
not been waived, amended or modified in any respect, nor has
any notice of termination been given thereunder;
b. Assignor is the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase Agreement
as they relate to the Assigned Loans, free and clear of any
and all liens, claims and encumbrances; and upon the transfer
of the Assigned Loans to Assignee as contemplated herein,
Assignee shall have good title to each and every Assigned
Loan, as well as any and all of Assignor's interests, rights
and obligations under the Purchase Agreement as they relate to
the Assigned Loans, free and clear of any and all liens,
claims and encumbrances;
c. Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to
Company with respect to the Assigned Loans or the Purchase
Agreement;
d. Assignor is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority to
acquire, own and sell the Assigned Loans;
e. Assignor has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation
of the transactions contemplated by this AAR Agreement is in
the ordinary course of Assignor's business and will not
conflict with, or result in a breach of, any of the terms,
conditions or provisions of Assignor's charter or by-laws or
any legal restriction, or any material agreement or instrument
to which Assignor is now a party or by which it is bound, or
result in the violation of any law, rule, regulation, order,
judgment or decree to which Assignor or its property is
subject. The execution, delivery and performance by Assignor
of this AAR Agreement and the consummation by it of the
transactions contemplated hereby, have been duly authorized by
all necessary action on the part of Assignor. This AAR
Agreement has been duly executed and delivered by Assignor
and, upon the due authorization, execution and delivery by
Assignee and Company, will constitute the valid and legally
binding obligation of Assignor enforceable against Assignor in
accordance with its terms except as enforceability may be
limited by bankruptcy, reorganization, insolvency, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of
equity regardless of whether enforceability is considered in a
proceeding in equity or at law;
f. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity is required to be obtained or made by Assignor in
connection with the execution, delivery or performance by
Assignor of this AAR Agreement, or the consummation by it of
the transactions contemplated hereby; and
g. There is no action, suit, proceeding, investigation or
litigation pending or, to Assignor's knowledge, threatened,
which either in any instance or in the aggregate, if
determined adversely to Assignor, would adversely affect
Assignor's execution or delivery of, or the enforceability of,
this AAR Agreement, or the Assignor's ability to perform its
obligations under this AAR Agreement.
4. Assignee warrants and represents to, and covenants with, Assignor, the
Trust and Company as of the date hereof:
a. Assignee is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
organization and has all requisite power and authority to
acquire and own the Assigned Loans;
b. Assignee has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation
of the transactions contemplated by this AAR Agreement is in
the ordinary course of Assignee's business and will not
conflict with, or result in a breach of, any of the terms,
conditions or provisions of Assignee's organizational
documentation or any legal restriction, or any material
agreement or instrument to which Assignee is now a party or by
which it is bound, or result in the violation of any law,
rule, regulation, order, judgment or decree to which Assignee
or its property is subject. The execution, delivery and
performance by Assignee of this AAR Agreement and the
consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary action on the part
of Assignee. This AAR Agreement has been duly executed and
delivered by Assignee and, upon the due authorization,
execution and delivery by Assignor and Company, will
constitute the valid and legally binding obligation of
Assignee enforceable against Assignee in accordance with its
terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally, and by general principles of equity regardless of
whether enforceability is considered in a proceeding in equity
or at law;
c. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity is required to be obtained or made by Assignee in
connection with the execution, delivery or performance by
Assignee of this AAR Agreement, or the consummation by it of
the transactions contemplated hereby; and
d. There is no action, suit, proceeding, investigation or
litigation pending or, to Assignee's knowledge, threatened,
which either in any instance or in the aggregate, if
determined adversely to Assignee, would adversely affect
Assignee's execution or delivery of, or the enforceability of,
this AAR Agreement, or the Assignee's ability to perform its
obligations under this AAR Agreement.
5. Company warrants and represents to, and covenants with, Assignor, the
Trust and Assignee as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have
not been waived, amended or modified in any respect, nor has
any notice of termination been given thereunder;
b. Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority to
perform its obligations under the Purchase Agreement;
c. Company has full corporate power and authority to execute,
deliver and perform its obligations under this AAR Agreement,
and to consummate the transactions set forth herein. The
consummation of the transactions contemplated by this AAR
Agreement is in the ordinary course of Company's business and
will not conflict with, or result in a breach of, any of the
terms, conditions or provisions of Company's organizational
documentation or any legal restriction, or any material
agreement or instrument to which Company is now a party or by
which it is bound, or result in the violation of any law,
rule, regulation, order, judgment or decree to which Company
or its property is subject, except in such case where the
conflict, breach or violation would not have a material
adverse effect on the Company or its ability to perform its
obligations under this AAR Agreement. The execution, delivery
and performance by Company of this AAR Agreement and the
consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on
the part of Company. This AAR Agreement has been duly executed
and delivered by Company, and, upon the due authorization,
execution and delivery by Assignor and Assignee, will
constitute the valid and legally binding obligation of
Company, enforceable against Company in accordance with its
terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally, and by general principles of equity regardless of
whether enforceability is considered in a proceeding in equity
or at law;
d. No consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity is required to be obtained or made by Company in
connection with the execution, delivery or performance by
Company of this AAR Agreement, or the consummation by it of
the transactions contemplated hereby;
e. There is no action, suit, proceeding, investigation or
litigation pending or, to Company's knowledge, threatened,
which either in any instance or in the aggregate, if
determined adversely to Company, would adversely affect
Company's execution or delivery of, or the enforceability of,
this AAR Agreement, or the Company's ability to perform its
obligations under this AAR Agreement; and
f. Pursuant to Section 12 of the Purchase Agreement, the
Company hereby represents and warrants, for the benefit of
the Assignor, the Assignee and the Trust, that the
representations and warranties set forth in Section 7.01
and 7.02 of the Purchase Agreement, are true and correct as
of the date hereof in all material respects, except that
the representation and warranty set forth in Section
7.02(i) shall, for purposes of this AAR Agreement, relate
to the Mortgage Loan Schedule attached hereto.
6. The Company hereby acknowledges and agrees that the remedies available
to the Assignor, the Assignee and the Trust in connection with any breach of the
representations and warranties made by the Company set forth in Section 5 hereof
shall be as set forth in Subsection 7.03 of the Purchase Agreement as if they
were set forth herein (including without limitation the repurchase and indemnity
obligations set forth therein).
7. In connection with the transfer of the Assigned Loans hereunder, the
Company and the Servicer agree that, solely with respect to the Assigned Loans,
the following modifications shall be made (all capitalized terms used below
shall have the meanings assigned to such terms by this AAR Agreement and such
terms shall be incorporated into the Purchase Agreement):
(i) Section 11.30 shall be amended so that the references to the
"Purchaser" therein shall be replaced with references to "the Master
Servicer, the Depositor, the Trustee or any other party required to
file the reports referred to in this Section 11.30".
Miscellaneous
8. All demands, notices and communications related to the Assigned Loans, the
Purchase Agreements and this AAR Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or mailed by registered
mail, postage prepaid, as follows:
a. In the case of Company,
American Home Mortgage Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
With copies to:
American Home Mortgage Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, General Counsel
b. In the case of Assignor,
HSBC Bank USA, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: HALO 2006-2
c. In the case of Assignee,
HSI Asset Securitization Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Head MBS Principal Finance
c. In the case of Trustee,
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Trust Administration-[ ]
9. This AAR Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
10. No term or provision of this AAR Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
11. This AAR Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or consolidated shall without the requirement for any
further writing, be deemed Assignor, Assignee or Company, respectively
hereunder.
12. This AAR Agreement shall survive the conveyance of the Assigned Loans
as contemplated in this AAR Agreement.
13. This AAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
14. In the event that any provision of this AAR Agreement conflicts with
any provision of the Purchase Agreement with respect to the Assigned Loans, the
terms of this AAR Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have executed this AAR Agreement as
of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director #14311
HSI Asset Securitization Corporation
By:
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
American Home Mortgage Corp.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
American Home Mortgage Servicing, Inc.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Deutsche Bank National Trust Company, as Trustee
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Acknowledged:
CitiMortgage, Inc., as Master Servicer
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Citibank, N.A., as Securities Administrator
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
ATTACHMENT 1
(form of Assigned Loan Tape)
ATTACHMENT 2
(Form of Purchase Agreement)
Execution Version
MASTER MORTGAGE LOAN PURCHASE AND INTERIM SERVICING
AGREEMENT
AMERICAN HOME MORTGAGE CORP.
Seller
AMERICAN HOME MORTGAGE SERVICING, INC.
Interim Servicer
HSBC BANK USA, NATIONAL ASSOCIATION
Initial Purchaser
Dated as of November 1, 2006
First and Second Lien, Fixed and Adjustable Rate Mortgage Loans
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions...............................................1
SECTION 2. Agreement to Purchase....................................14
SECTION 3. Mortgage Loan Schedules..................................14
SECTION 4. Purchase Price...........................................14
SECTION 5. Examination of Mortgage Files............................15
SECTION 6. Conveyance from Seller to Initial Purchaser..............15
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing Files................................15
Subsection 6.02. Books and Records..............................16
Subsection 6.03. Delivery of Mortgage Loan Documents............16
SECTION 7. Representations, Warranties and Covenants of the Seller
and the Interim Servicer: Remedies for Breach............17
Subsection 7.01. Representations and Warranties Respecting the
Seller and the Interim Servicer................17
Subsection 7.02. Representations and Warranties Regarding
Individual Mortgage Loans......................22
Subsection 7.03. Remedies for Breach of Representations and
Warranties.....................................35
Subsection 7.04. Repurchase of Certain Mortgage Loans;
Premium Protection.............................38
SECTION 8. Closing..................................................38
SECTION 9. Closing Documents........................................39
SECTION 10. Costs....................................................40
SECTION 11. Servicer's Servicing Obligations.........................40
SECTION 12. Removal of Mortgage Loans from Inclusion under This
Agreement Upon a Whole Loan Transfer or a Pass-Through
Transfer on One or More Reconstitution Dates.............41
SECTION 13. The Seller and the Interim Servicer......................48
Subsection 13.01. Additional Indemnification by the Seller and
the Interim Servicer...........................48
Subsection 13.02. Merger or Consolidation of the Seller and the
Interim Servicer...............................48
Subsection 13.03. Limitation on Liability of the Seller, the
Interim Servicer and Others....................49
Subsection 13.04. Servicer Not to Resign.........................49
Subsection 13.05. No Transfer of Servicing.......................49
SECTION 14. Default..................................................49
Subsection 14.01. Events of Default..............................49
Subsection 14.02. Waiver of Defaults.............................52
i
SECTION 15. Termination..............................................52
SECTION 16. Successor to the Interim Servicer........................52
SECTION 17. Financial Statements.....................................53
SECTION 18. Mandatory Delivery: Grant of Security Interest...........54
SECTION 19. Notices..................................................54
SECTION 20. Severability Clause......................................55
SECTION 21. Counterparts.............................................55
SECTION 22. Governing Law............................................55
SECTION 23. Intention of the Parties.................................56
SECTION 24. Successors and Assigns...................................57
SECTION 25. Waivers..................................................57
SECTION 26. Exhibits.................................................56
SECTION 27. Nonsolicitation..........................................57
SECTION 28. General Interpretive Principles..........................58
SECTION 29. Reproduction of Documents................................58
SECTION 30. Further Agreements.......................................58
SECTION 31. Third-Party Beneficiary..................................58
SECTION 32. Entire Agreement.........................................58
ii
EXHIBITS
EXHIBIT 1A SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 1B SERVICER'S OFFICER'S CERTIFICATE
EXHIBIT 2 FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT 3 SECURITY RELEASE CERTIFICATION
EXHIBIT 4 ASSIGNMENT AND CONVEYANCE
EXHIBIT 5 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 6 CUSTODIAL AGREEMENT
EXHIBIT 7 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 8 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 9 SERVICING ADDENDUM
EXHIBIT 10 FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT 11 FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT 12 FORM OF ANNUAL CERTIFICATION
EXHIBIT 13 MORTGAGE LOAN DOCUMENTS
EXHIBIT 14 UNDERWRITING GUIDELINES OF THE SELLER
EXHIBIT 15 SUMMARY OF REGULATION AB SERVICING CRITERIA
EXHIBIT 16 SUMMARY OF APPLICABLE REGULATION AB REQUIREMENTS
EXHIBIT 17 SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
EXHIBIT 18 FORM OF REMITTANCE REPORT
SCHEDULE I MORTGAGE LOAN SCHEDULE
iii
MASTER MORTGAGE LOAN PURCHASE AND INTERIM SERVICING AGREEMENT
This is a MASTER MORTGAGE LOAN PURCHASE AND INTERIM SERVICING AGREEMENT (the
"Agreement"), dated as of November 1, 2006, by and between HSBC Bank USA,
National Association, having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (the "Initial Purchaser", and the Initial Purchaser or the Person, if any,
to which the Initial Purchaser has assigned its rights and obligations hereunder
as Purchaser with respect to a Mortgage Loan, and each of their respective
successors and assigns, the "Purchaser"), AMERICAN HOME MORTGAGE CORP., having
an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Seller") and
AMERICAN HOME MORTGAGE SERVICING, INC., having an office at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Servicer").
W I T N E S S E T H :
WHEREAS, the Seller desires to sell, from time to time, to the
Purchaser, and the Purchaser desires to purchase, from time to time, from the
Seller, certain conventional, fixed and adjustable rate residential first and
second lien mortgage loans, including, where specifically provided in the
related Confirmation, the right to any Prepayment Charges payable by the related
Mortgagors as described herein, (the "Mortgage Loans") as described herein on a
servicing-released basis, and which shall be delivered in groups of whole loans
on various dates as provided herein and in the related Confirmation (each, a
"Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a first or second lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule for
the related Mortgage Loan Package, which is to be annexed hereto on each Closing
Date as Schedule I;
WHEREAS, the Initial Purchaser, the Seller and the Interim Servicer
wish to prescribe the manner of the conveyance, interim servicing and control of
the Mortgage Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the Seller,
the Purchaser desires to sell some or all of the Mortgage Loans to one or more
purchasers as a whole loan transfer in a whole loan or participation format or a
public or private mortgage-backed securities transaction;
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser, the Seller and the
Interim Servicer agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below.
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the
1
jurisdiction where the related Mortgaged Property is located, which are in
accordance with ▇▇▇▇▇▇ ▇▇▇ servicing practices and procedures for MBS pool
mortgages, as defined in the ▇▇▇▇▇▇ Mae Guides including future updates, the
terms of the Mortgage Loan Documents and all applicable federal, state and local
legal and regulatory requirements.
Adjustable Rate Mortgage Loan: A Mortgage Loan which provides for the
adjustment of the Mortgage Interest Rate payable in respect thereto.
Adjustment Date: With respect to each Adjustable Rate Mortgage Loan,
the date set forth in the related Mortgage Note on which the Mortgage Interest
Rate on such Adjustable Rate Mortgage Loan is adjusted in accordance with the
terms of the related Mortgage Note.
Agreement: This Master Mortgage Loan Purchase and Interim Servicing
Agreement including all exhibits, schedules, amendments and supplements hereto.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC and the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan, provided, however, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property is based solely upon the
value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC and the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989.
Assignment and Conveyance: An assignment and conveyance of the
Mortgage Loans purchased on a Closing Date in the form annexed hereto as Exhibit
4.
Assignment of Mortgage: With respect to each Mortgage Loan which is
not a MERS Loan, an individual assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to give record
notice of the sale of the Mortgage to the Purchaser.
Balloon Mortgage Loan: A Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its maturity date.
Balloon Payment: With respect to any Balloon Mortgage Loan as of any
date of determination, the Monthly Payment payable on the maturity of such
Mortgage Loan.
Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the State of New York are
authorized or obligated by law or executive order to be closed.
Cash-Out Refinancing: A Refinanced Mortgage Loan the proceeds of which
were in excess of the principal balance of any existing first mortgage on the
related Mortgaged Property and related closing costs, and were used to pay any
such existing first mortgage, related closing costs and subordinate mortgages on
the related Mortgaged Property.
2
Closing Date: The date or dates on which the Initial Purchaser from
time to time shall purchase and the Seller from time to time shall sell to the
Initial Purchaser, the Mortgage Loans listed on the related Mortgage Loan
Schedule with respect to the related Mortgage Loan Package, in each case as set
forth in the related Confirmation.
Closing Documents: With respect to any Closing Date, the documents
required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, or any successor statute
thereto.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan as of any date of determination, the ratio on such date of the outstanding
principal amount of the Mortgage Loan and any other mortgage loan which is
secured by a lien on the related Mortgaged Property to the Appraised Value of
the Mortgaged Property.
Commission or SEC: The United States Securities and Exchange
Commission.
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking of all or part of a Mortgaged Property by exercise of the
power of condemnation or the right of eminent domain.
Confirmation: With respect to any Mortgage Loan Package purchased and
sold on any Closing Date, the letter agreement among the Initial Purchaser and
the Seller (including any exhibits, schedules and attachments thereto), setting
forth the terms and conditions of such transaction and describing the Mortgage
Loans to be purchased by the Initial Purchaser on such Closing Date. A
Confirmation may relate to more than one Mortgage Loan Package to be purchased
on one or more Closing Dates hereunder.
Convertible Mortgage Loan: A Mortgage Loan that by its terms and
subject to certain conditions contained in the related Mortgage or Mortgage Note
allows the Mortgagor to convert the adjustable Mortgage Interest Rate on such
Mortgage Loan to a fixed Mortgage Interest Rate.
Custodial Account: The separate account or accounts, each of which
shall be an Eligible Account, created and maintained pursuant to this Agreement,
which shall be entitled "American Home Mortgage Servicing, Inc., as servicer, in
trust for the Purchaser, Fixed and Adjustable Rate Mortgage Loans", established
at a financial institution acceptable to the Purchaser. Each Custodial Account
shall be an Eligible Account.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, annexed hereto as Exhibit 6.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodial Agreement, as therein provided.
Cut-off Date: The first day of the month in which the related Closing
Date occurs.
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Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Substitute Mortgage Loan.
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Pass-Through Transfer.
Distribution Date: The fifth (5th) Business Day of each month,
commencing on the fifth Business Day of the month next following the month in
which the related Cut-off Date occurs.
Due Date: With respect to each Mortgage Loan, the day of the calendar
month on which each Monthly Payment is due on such Mortgage Loan (including the
Balloon Payment with respect to a Balloon Mortgage Loan), exclusive of any days
of grace.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated A-1 by S&P or Prime-1 by Moody's (or a comparable rating if another rating
agency is specified by the Initial Purchaser by written notice to the Seller and
Servicer) at the time any amounts are held on deposit therein, (ii) an account
or accounts the deposits in which are fully insured by the FDIC or (iii) a trust
account or accounts maintained with a federal or state chartered depository
institution or trust company acting in its fiduciary capacity. Eligible Accounts
may bear interest.
Escrow Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled "American Home
Mortgage Servicing, Inc., as servicer, in trust for the Purchaser and various
Mortgagors, Fixed and Adjustable Rate Mortgage Loans," established at a
financial institution acceptable to the Purchaser. Each Escrow Account shall be
an Eligible Account.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water charges, sewer rents, Primary Insurance Policy premiums, fire
and hazard insurance premiums and other payments required to be escrowed by the
Mortgagor with the Mortgagee pursuant to the terms of any Mortgage Note or
Mortgage.
Event of Default: Any one of the events enumerated in Subsection
14.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: ▇▇▇▇▇▇▇ Mac or any successor thereto.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property repurchased
by the Seller pursuant to this Agreement), a determination made by the Interim
Servicer that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Interim Servicer, in its reasonable good faith judgment,
expects to be finally recoverable in respect thereof have been
4
so recovered. The Interim Servicer shall maintain records, prepared by a
servicing officer of the Interim Servicer, of each Final Recovery Determination.
Fixed Rate Mortgage Loan: A Mortgage Loan with respect to which the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of
such Mortgage Loan.
Flood Zone Service Contract: A transferable contract maintained for
the Mortgaged Property with a nationally recognized flood zone service provider
for the purpose of obtaining the current flood zone status relating to such
Mortgaged Property.
FNMA: ▇▇▇▇▇▇ ▇▇▇ or any successor thereto.
Gross Margin: With respect to any Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note and the related
Mortgage Loan Schedule that is added to the Index on each Adjustment Date in
accordance with the terms of the related Mortgage Note to determine the new
Mortgage Interest Rate for such Mortgage Loan.
HUD: The United States Department of Housing and Urban Development or
any successor thereto.
Index: With respect to any Adjustable Rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating the interest rate thereon.
Initial Closing Date: The Closing Date on which the Initial Purchaser
purchases and the Seller sells the first Mortgage Loan Package hereunder.
Initial Purchaser: HSBC Bank USA, National Association, or any
successor or assign.
Interim Servicing Period: With respect to any Mortgage Loan, the
period commencing on the related Closing Date and ending on the thirtieth day
following the Closing Date unless otherwise specified in the related
Confirmation; provided, however that the Interim Servicing Period may be
extended for additional periods of thirty days by written agreement of the
parties hereto.
Issuing Entity: The issuing entity, as such term is defined in
Regulation AB, with respect to any Pass-Through Transfer.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Liquidation Proceeds: Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received in connection with the liquidation of a
defaulted Mortgage Loan through trustee's sale, foreclosure sale or otherwise,
other than amounts received following the acquisition of REO Property.
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Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan as of
any date of determination, the ratio on such date of the outstanding principal
amount of the Mortgage Loan, to the Appraised Value of the Mortgaged Property.
Master Servicer: With respect to any Pass-Through Transfer, the
"master servicer", if any, specified by the Purchaser and identified in the
related transaction documents.
Maximum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Mortgage Loan Schedule
and in the related Mortgage Note and is the maximum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be increased on any Adjustment
Date.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number of Mortgage Loans registered
with MERS on the MERS(R) System.
Minimum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Mortgage Loan Schedule
and in the related Mortgage Note and is the minimum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be decreased on any Adjustment
Date.
MOM Loan: Any Mortgage Loan where MERS acts as the mortgagee of record
of such Mortgage Loan, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns, at the origination thereof.
Monthly Payment: With respect to any Mortgage Loan, the combined
payment (including any Balloon Payment) of principal and interest payable by a
Mortgagor under the related Mortgage Note on each Due Date.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on Mortgaged Property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit 5 annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement or the related
Confirmation.
Mortgage Interest Rate: With respect to each Fixed Rate Mortgage Loan,
the fixed annual rate of interest provided for in the related Mortgage Note and,
with respect to each Adjustable Rate Mortgage Loan, the annual rate that
interest accrues on such Adjustable Rate Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note.
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Mortgage Loan: Each first or second lien, residential mortgage loan,
sold, assigned and transferred to the Purchaser pursuant to this Agreement and
the related Confirmation and identified on the Mortgage Loan Schedule annexed to
this Agreement on such Closing Date, which Mortgage Loan includes without
limitation the Mortgage File, the Monthly Payments, Prepayment Charges (where
specifically provided in the related Confirmation), Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition proceeds, and all
other rights, benefits, proceeds and obligations arising from or in connection
with such Mortgage Loan.
Mortgage Loan Documents: The documents listed in Exhibit 13 hereto
pertaining to any Mortgage Loan.
Mortgage Loan Package: The Mortgage Loans listed on a Mortgage Loan
Schedule, delivered to the Custodian and the Purchaser at least five (5)
Business Days prior to the related Closing Date and attached to the related
Assignment and Conveyance on the related Closing Date.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package,
the schedule of Mortgage Loans to be annexed to the related Assignment and
Conveyance on the related Closing Date for the Mortgage Loan Package delivered
on such Closing Date in electronic form, such schedule setting forth the
following information with respect to each Mortgage Loan in the Mortgage Loan
Package: (1) the Seller's Mortgage Loan identifying number; (2) the Mortgagor's
first and last name; (3) the street address of the Mortgaged Property including
the state and zip code; (4) a code indicating whether the Mortgaged Property is
owner-occupied; (5) the type of Residential Dwelling constituting the Mortgaged
Property; (6) the original months to maturity; (7) the original date of the
Mortgage Loan; (8) the Loan-to-Value Ratio or Combined Loan-to-Value Ratio at
origination; (9) the Mortgage Interest Rate in effect immediately following the
Cut-off Date; (10) the date on which the first Monthly Payment was due on the
Mortgage Loan; (11) the stated maturity date; (12) the amount of the Monthly
Payment at origination; (13) the amount of the Monthly Payment as of the Cut-off
Date; (14) the last Due Date on which a Monthly Payment was actually applied to
the unpaid Stated Principal Balance; (15) the original principal amount of the
Mortgage Loan; (16) the Stated Principal Balance of the Mortgage Loan; as of the
close of business on the Cut-off Date; (17) with respect to each Adjustable Rate
Mortgage Loan, the first Adjustment Date; (18) with respect to each Adjustable
Rate Mortgage Loan, the Gross Margin; (19) a code indicating the purpose of the
loan (i.e., purchase financing, Rate/Term Refinancing, Cash-Out Refinancing);
(20) with respect to each Adjustable Rate Mortgage Loan, the Maximum Mortgage
Interest Rate under the terms of the Mortgage Note; (21) with respect to each
Adjustable Rate Mortgage Loan, the Minimum Mortgage Interest Rate under the
terms of the Mortgage Note; (22) the Mortgage Interest Rate at origination; (23)
with respect to each Adjustable Rate Mortgage Loan, the Periodic Rate Cap; (24)
with respect to each Adjustable Rate Mortgage Loan, the first Adjustment Date
immediately following the Cut-off Date; (25) with respect to each Adjustable
Rate Mortgage Loan, the Index; (26) the date on which the first Monthly Payment
was due on the Mortgage Loan and, if such date is not consistent with the Due
Date currently in effect, such Due Date; (27) a code indicating the
documentation style (i.e., full (providing two years employment verification - 2
years W-2's and current pay stub or 2 years 1040's for self employed borrowers),
alternative or reduced); (28) a code indicating whether the Mortgage Loan is an
Adjustable Rate Mortgage Loan or a Fixed Rate Mortgage Loan; (29) the Appraised
Value of the Mortgaged Property; (30) the sale price of
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the Mortgaged Property, if applicable; (31) a code indicating whether the
Mortgage Loan is subject to a Prepayment Charge or penalty; (32) the term of any
Prepayment Charge or penalty; (33) with respect to each MERS Mortgage Loan, the
related MIN; (34) reserved; (35) a code indicating if the Mortgage Loan is an
interest-only Mortgage Loan and, if so, the term of the interest-only period of
such Mortgage Loan; (36) a code indicating whether the Mortgage Loan is a first
or second lien; and (37) a code indicating whether the Mortgage Loan is a
Balloon Mortgage Loan and, if so, the term of the Balloon Mortgage Loan; (38)
reserved; (39) reserved; (40) the points and fees charged in connection with the
origination of such Mortgage Loan; and (41) a code indicating if the Mortgage
Loan is subject to a Primary Insurance Policy, and if so, the insurer. With
respect to the Mortgage Loan Package in the aggregate, the Mortgage Loan
Schedule shall set forth the following information, as of the related Cut-off
Date: (1) the number of Mortgage Loans; (2) the current principal balance of the
Mortgage Loans; (3) the weighted average Mortgage Interest Rate of the Mortgage
Loans; and (4) the weighted average maturity of the Mortgage Loans. Schedule I
hereto shall be supplemented as of each Closing Date to reflect the addition of
the Mortgage Loan Schedule with respect to the related Mortgage Loan Package.
Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: The Mortgagor's real property securing repayment
of a related Mortgage Note, consisting of a fee simple interest in a single
parcel of real property improved by a Residential Dwelling.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successor's in title to the Mortgaged Property.
Negative Amortization: With respect to each Negative Amortization
Mortgage Loan, that portion of interest accrued at the Mortgage Interest Rate in
any month that exceeds the Monthly Payment on the related Mortgage Loan for such
month and which, pursuant to the terms of the Mortgage Note, is added to the
principal balance of the Mortgage Loan.
Negative Amortization Mortgage Loan: Each Mortgage Loan that is
identified on the Mortgage Loan Schedule as a Mortgage Loan that may be subject
to Negative Amortization.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President and
by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Person on behalf of whom such certificate is being
delivered.
Opinion of Counsel: A written opinion of counsel, who may be salaried
counsel for the Person on behalf of whom the opinion is being given, reasonably
acceptable to each Person to whom such opinion is addressed.
Pass-Through Transfer: Any transaction involving either (1) a sale or
transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with
8
an issuance of publicly offered or privately placed, rated or unrated
mortgage-backed securities or (2) an issuance of publicly offered or privately
placed, rated or unrated securities, the payments on which are determined
primarily by reference to one or more portfolios of residential mortgage loans
consisting, in whole or in part, of some or all of the Mortgage Loans.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, a number of percentage points per annum that
is set forth in the related Mortgage Loan Schedule and in the related Mortgage
Note, which is the maximum amount by which the Mortgage Interest Rate for such
Adjustable Rate Mortgage Loan may increase (without regard to the Maximum
Mortgage Interest Rate) or decrease (without regard to the Minimum Mortgage
Interest Rate) on such Adjustment Date from the Mortgage Interest Rate in effect
immediately prior to such Adjustment Date.
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prepayment Charge: With respect to any Mortgage Loan, any prepayment
penalty or premium thereon payable in connection with a Principal Prepayment on
such Mortgage Loan pursuant to the terms of the related Mortgage Note.
Primary Insurance Policy: A policy of primary mortgage guaranty
insurance issued by a Qualified Insurer.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any Prepayment Charge, which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller pursuant to the related Confirmation in exchange for the
Mortgage Loans purchased on such Closing Date as calculated as provided in
Section 4.
Purchaser: The Initial Purchaser or the Person, if any, to which the
Initial Purchaser has assigned its rights and obligations thereunder as
Purchaser with respect to a Mortgage Loan, and each of their respective
successors and assigns.
Qualified Correspondent: Any Person from which the Seller purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Seller and
such Person that contemplated that such Person would underwrite mortgage loans
from time to time, for sale to the Seller, in accordance with underwriting
guidelines designated by the Seller ("Designated Guidelines") or guidelines that
do not vary materially from such Designated Guidelines; (ii) such Mortgage Loans
were in fact underwritten as described in clause (i) above and were acquired by
the Seller within 180 days after origination; (iii) either (x) the Designated
Guidelines were, at the time such Mortgage Loans were originated, used by the
Seller in origination of mortgage loans of the same type as the Mortgage Loans
for the Seller's own account or (y) the Designated Guidelines were, at the time
such Mortgage Loans were underwritten, designated by the Seller on a consistent
9
basis for use by lenders in originating mortgage loans to be purchased by the
Seller; and (iv) the Seller employed, at the time such Mortgage Loans were
acquired by the Seller, pre-purchase or post-purchase quality assurance
procedures (which may involve, among other things, review of a sample of
mortgage loans purchased during a particular time period or through particular
channels) designed to ensure that Persons from which it purchased mortgage loans
properly applied the underwriting criteria designated by the Seller.
Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the Mortgaged Property is located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by FNMA
and FHLMC and whose claims paying ability is rated in the two highest rating
categories by the nationally recognized rating agencies with respect to primary
mortgage insurance and in the two highest rating categories by Best's with
respect to hazard and flood insurance.
Qualified Substitute Mortgage Loan: A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, (ii) have a Mortgage Interest Rate not
less than (and not more than one percentage point in excess of) the Mortgage
Interest Rate of the Deleted Mortgage Loan, (iii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iv) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (v) have a Loan-to-Value Ratio, and in the case of a
second lien Mortgage Loan, a Combined Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio or Combined
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (vi) conform
to each representation and warranty set forth in Subsection 7.02 of this
Agreement, (vii) be the same type of mortgage loan (i.e. fixed or adjustable
rate with the same Gross Margin and Index as the Deleted Mortgage Loan) and
(viii) be covered under a Primary Insurance Policy if such Qualified Substitute
Mortgage Loan has a Loan-to-Value Ratio in excess of 80%. In the event that one
or more mortgage loans are substituted for one or more Deleted Mortgage Loans,
the amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Interest Rates described in clause
(ii) hereof shall be determined on the basis of weighted average Mortgage
Interest Rates and shall be satisfied as to each such mortgage loan, the terms
described in clause (iii) shall be determined on the basis of weighted average
remaining terms to maturity, the Loan-to-Value Ratios, and in the case of second
lien Mortgage Loans the Combined Loan-to-Value Ratios described in clause (v)
hereof shall be satisfied as to each such mortgage loan and, except to the
extent otherwise provided in this sentence, the representations and warranties
described in clause (vii) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.
Rate/Term Refinancing: A Refinanced Mortgage Loan, the proceeds of
which are not in excess of the existing first mortgage loan on the related
Mortgaged Property and related closing costs, and were used exclusively to
satisfy the then existing first mortgage loan of the Mortgagor on the related
Mortgaged Property and to pay related closing costs.
10
Reconstitution: Any Pass-Through Transfer or Whole Loan Transfer.
Reconstitution Agreement: The agreement or agreements entered into by
the Seller, the Interim Servicer and the Purchaser and/or certain third parties
on the Reconstitution Date or Dates with respect to any or all of the Mortgage
Loans serviced hereunder, in connection with a Whole Loan Transfer or a
Pass-Through Transfer as provided in Section 12.
Reconstitution Date: The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of a Whole Loan Transfer or Pass-Through
Transfer pursuant to Section 12 hereof.
Record Date: With respect to each Distribution Date, the last Business
Day of the month immediately preceding the month in which such Distribution Date
occurs.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff
from time to time.
REMIC: A real estate mortgage investment conduit within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear in Sections 860A through 860G of the Code, and related
provisions, and proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
REO Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled "American Home
Mortgage Servicing, Inc., in trust for the Purchaser, as of [date of acquisition
of title], Fixed and Adjustable Rate Mortgage Loans".
REO Disposition: The final sale by the Interim Servicer of any REO
Property.
REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Mortgage Loan.
Repurchase Price: The Repurchase Price for any Mortgage Loan that is
required to be repurchased pursuant to Section 7.04 shall be equal to the sum of
(i) the product of the Stated Principal Balance of such Mortgage Loan times the
greater of (x) the Purchase Price percentage as stated in the related
Confirmation and (y) 100%, plus (ii) interest on such Stated Principal Balance
at the Mortgage Interest Rate from and including the last Due Date through which
interest has been paid by or on behalf of the Mortgagor to the day immediately
prior to the date of repurchase (unless the Mortgage Loan has been the subject
of a Pass-Through Transfer,
11
in which case the measurement date for accrual of interest on such Stated
Principal Balance shall be the first day of the month following the date of
repurchase), less amounts received in respect of such repurchased Mortgage Loan
which are being held in the Custodial Account for distribution in connection
with such Mortgage Loan, plus (iii) any unreimbursed servicing advances and
monthly advances (including nonrecoverable monthly advances) and any unpaid
servicing fees allocable to such Mortgage Loan paid by any party other than the
Interim Servicer, plus (iv) any costs and expenses incurred by the Purchaser,
any master servicer or any trustee in respect of the breach or defect giving
rise to the repurchase obligation including, without limitation, any costs and
damages incurred by any such party in connection with any violation by any such
Mortgage Loan of any predatory or abusive lending law.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a FNMA eligible condominium project, or (iv) a
detached one-family dwelling in a planned unit development, none of which is a
co-operative, mobile or manufactured home.
Securities Act: The Securities Act of 1933, as amended.
Servicing Addendum: The terms and conditions attached hereto as
Exhibit 9, which will govern the servicing of the Mortgage Loans, by Interim
Servicer during the Interim Servicing Period.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Interim Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) preservation, restoration and repair of a Mortgaged Property, (ii)
any enforcement or judicial proceedings with respect to a Mortgage Loan,
including foreclosure actions and (iii) the management and liquidation of REO
Property.
Servicing Criteria: As of any date of determination, the "servicing
criteria" set forth in Item 1122(d) of Regulation AB, or any amendments thereto,
a summary of the requirements of which as of the date hereof is attached hereto
as Exhibit 15 for convenience of reference only. In the event of a conflict or
inconsistency between the terms of Exhibit 15 and the text of Item 1122(d) of
Regulation AB, the text of Item 1122(d) of Regulation AB shall control.
Servicing Fee: With respect to each Mortgage Loan, an amount equal to
twenty-five basis points (0.25%) per annum per Mortgage Loan. The obligation of
the Purchaser to pay the Servicing Fee is limited to, and payable solely from,
the interest portion (including recoveries with respect to interest from
Liquidation Proceeds and other proceeds, to the extent permitted by Subsection
11.05) of related Monthly Payment collected by the Interim Servicer, or as
otherwise provided under Subsection 11.05. If the Interim Servicing Period
includes any partial month, the Servicing Fee for such month shall be pro rated
at a per diem rate based upon a 30-day month.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Interim Servicer consisting of originals of all documents in the Mortgage
File, which are not delivered to the Purchaser, or the Custodian and copies of
the Mortgage Loan Documents set forth in Exhibit 13 hereto.
12
Servicing Transfer Costs: All reasonable costs and expenses incurred
by the Purchaser in connection with the transfer of servicing from Interim
Servicer, including, without limitation, any reasonable costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Purchaser (or any successor to Seller appointed pursuant to this Agreement) to
correct any errors or insufficiencies in the servicing data.
Servicing Transfer Date: With respect to any Mortgage Loan, the date
on which the Interim Servicer transfers the servicing of a Mortgage Loan to the
Initial Purchaser or its designee, which date shall be the day immediately
following the expiration of the related Interim Servicing Period.
S&P: Standard & Poor's Ratings Group or its successor in interest.
Sponsor: The sponsor, as such term is defined in Regulation AB, with
respect to any Pass-Through Transfer.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of the Mortgage Loan as of the Cut-off
Date after giving effect to payments of principal received on or before such
date, minus (ii) all amounts previously distributed to the Purchaser with
respect to the related Mortgage Loan representing payments or recoveries of
principal, plus (iii) the cumulative amount of any Negative Amortization.
Static Pool Information: Static pool information as described in Item
1105(a)(1)-(3) and 1105(c) of Regulation AB.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Interim Servicer or a Subservicer.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Interim Servicer or any Subservicer and is responsible for the performance
(whether directly or through Subservicers or Subcontractors) of a substantial
portion of the material servicing functions required to be performed by the
Interim Servicer under this Agreement or any Reconstitution Agreement that are
identified in Item 1122(d) of Regulation AB.
Sub-Servicing Agreement: The written contract between the Interim
Servicer and a Subservicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 11.31 of this Agreement.
Tax Service Contract: A transferable contract maintained for the
Mortgaged Property with ZC Sterling or another tax service company reasonably
acceptable to Purchaser for the purpose of obtaining current information from
local taxing authorities relating to such Mortgaged Property.
Third-Party Originator: Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller.
13
Underwriting Guidelines: The Seller's underwriting guidelines attached
hereto as Exhibit 14 as in effect with respect to the Mortgage Loans purchased
by Purchaser on the Initial Closing Date, as may be amended, supplemented or
modified from time to time thereafter with prior written notice to the Initial
Purchaser.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Pass-Through Transfer.
SECTION 2. Agreement to Purchase.
The Seller agrees to sell, and the Purchaser agrees to purchase, from
time-to-time, Mortgage Loans having an aggregate principal balance on the
related Cut-off Date in an amount as set forth in the related Confirmation, or
in such other amount as agreed by the Purchaser and the Seller as evidenced by
the actual aggregate principal balance of the Mortgage Loans accepted by the
Purchaser on the related Closing Date.
SECTION 3. Mortgage Loan Schedules.
The Seller shall deliver the Mortgage Loan Schedule for a Mortgage
Loan Package to be purchased on a particular Closing Date to the Purchaser at
least five (5) Business Days prior to the related Closing Date.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan listed on the related
Mortgage Loan Schedule shall be the percentage of par as stated in the related
Confirmation (subject to adjustment as provided therein), multiplied by its
Stated Principal Balance as of the related Cut-off Date. If so provided in the
related Confirmation, portions of the Mortgage Loans shall be priced separately.
In addition to the Purchase Price as described above, the Initial
Purchaser shall pay to the Seller, at closing, accrued interest on the Stated
Principal Balance of each Mortgage Loan as of the related Cut-off Date at its
Mortgage Interest Rate, net of the Servicing Fee, from the related Cut-off Date
through the day prior to the related Closing Date, both inclusive.
The Purchaser shall own and be entitled to receive with respect to
each Mortgage Loan purchased, (1) all recoveries of principal collected after
the Cut-Off Date, (2) all payments of interest on the Mortgage Loans net of the
Servicing Fee during the Interim Servicing Period; and (3) all Prepayment
Charges on the Mortgage Loans collected on or after the Cut-off Date.
SECTION 5. Examination of Mortgage Files.
In addition to the rights granted to the Initial Purchaser under the
related Confirmation to underwrite the Mortgage Loans and review the Mortgage
Files prior to the Closing Date, prior to the related Closing Date, the Seller,
or Servicer, as applicable, shall, at the Purchaser's option (a) deliver to the
Custodian in escrow, for examination with respect to each Mortgage Loan to be
purchased on such Closing Date, the related Mortgage File, including the
Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) make the
related Mortgage File available to the Initial Purchaser for examination at the
Seller's offices or such other
14
location as shall otherwise be agreed upon by the Initial Purchaser and the
Seller. Such examination may be made by the Initial Purchaser or its designee at
any reasonable time before or after the related Closing Date. If the Initial
Purchaser makes such examination prior to the related Closing Date and
identifies any Mortgage Loans that do not conform to the terms of the related
Confirmation or the Underwriting Guidelines, such Mortgage Loans may, at the
Initial Purchaser's option, be rejected for purchase by the Initial Purchaser.
If not purchased by the Initial Purchaser, such Mortgage Loans shall be deleted
from the related Mortgage Loan Schedule. The Initial Purchaser may, at its
option and without notice to the Seller, purchase all or part of any Mortgage
Loan Package without conducting any partial or complete examination. The fact
that the Initial Purchaser has conducted or has determined not to conduct any
partial or complete examination of the Mortgage Files shall not affect the
Initial Purchaser's (or any of its successors') rights to demand repurchase or
other relief or remedy provided for in this Agreement.
SECTION 6. Conveyance from Seller to Initial Purchaser.
Subsection 6.01. Conveyance of Mortgage Loans; Possession of Servicing
Files.
The Seller, simultaneously with the payment of the Purchase Price,
shall execute and deliver to the Initial Purchaser an Assignment and Conveyance
with respect to the related Mortgage Loan Package in the form attached hereto as
Exhibit 4. The Servicing File retained by the Interim Servicer with respect to
each Mortgage Loan pursuant to this Agreement shall be appropriately identified
in the Servicer's computer system to reflect clearly the sale of such related
Mortgage Loan to the Purchaser. Where specifically provided in the related
Confirmation, the Purchaser shall be entitled to receive all Prepayment Charges
required to be paid by a Mortgagor under the terms of any Mortgage Loan that are
collected after the related Cut-off Date. The Interim Servicer shall release
from its custody the contents of any Servicing File retained by it only in
accordance with this Agreement, except when such release is required in
connection with a repurchase of any such Mortgage Loan pursuant to Subsection
7.03 or 7.04.
Subsection 6.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note as of the
related Closing Date shall be in the name of the Seller, the Interim Servicer,
the Purchaser, the Custodian or one or more designees of the Purchaser, as the
Purchaser shall designate. Notwithstanding the foregoing, beneficial ownership
of each Mortgage and the related Mortgage Note shall be vested solely in the
Purchaser or the appropriate designee of the Purchaser, as the case may be. All
rights arising out of the Mortgage Loans including, but not limited to, all
funds received by the Seller after the related Cut-off Date on or in connection
with a Mortgage Loan as provided in Section 4 shall be vested in the Purchaser
or one or more designees of the Purchaser; provided, however, that all such
funds received on or in connection with a Mortgage Loan as provided in Section 4
shall be received and held by the Seller in trust for the benefit of the
Purchaser or the assignee of the Purchaser, as the case may be, as the owner of
the Mortgage Loans pursuant to the terms of this Agreement.
It is the express intention of the parties that the transactions
contemplated by this Agreement be, and be construed as, a sale of the Mortgage
Loans by the Seller and not a pledge
15
of the Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller. Consequently, the sale of each Mortgage Loan shall be
reflected as a sale on the Seller's business records, tax returns and financial
statements.
Subsection 6.03. Delivery of Mortgage Loan Documents.
The Seller or Servicer, as applicable, shall from time to time in
connection with each Closing Date, at least five (5) Business Days prior to such
Closing Date, deliver and release to the Custodian those Mortgage Loan Documents
set forth on Exhibit 13 hereto with respect to each Mortgage Loan to be
purchased and sold on the related Closing Date and set forth on the related
Mortgage Loan Schedule delivered with such Mortgage Loan Documents.
The Seller or Servicer, as applicable, shall provide the Purchaser, or
its designee, with a copy, certified by the Seller or Servicer, as applicable,
to be a true and complete copy of any original document submitted for
recordation on or before the fifth Business Day prior to the related Closing
Date. If the original or copy of any document submitted for recordation to the
appropriate recording office is not delivered to the Purchaser or its designee
within 180 days following the related Closing Date due to a delay at the
applicable recording office, the Seller, or Servicer, as applicable, shall
deliver to the Purchaser an officer's written certification certifying that the
delay in delivering the original recorded document to the Purchaser is due to
delays at the applicable recording office and that the Seller or Servicer shall
deliver the original recorded documents no later than twelve (12) months after
the related Closing Date.
The Interim Servicer shall provide to each of the Purchaser and the
Custodian a notice containing a list of authorized servicing officers (each, an
"Authorized Representative") for the purpose of giving and receiving notices,
requests and instructions and delivering certificates and documents in
connection with this Agreement. Such notice shall contain the specimen signature
for each Authorized Representative. From time to time, the Interim Servicer may,
by delivering to the others a revised notice, change the information previously
given pursuant to this Section, but each of the parties hereto shall be entitled
to rely conclusively on the then current notice until receipt of a superseding
notice. The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to this Agreement for the related
Closing Date, as evidenced by the Trust Receipt and Initial Certification of the
Custodian in the form annexed to the Custodial Agreement.
The Interim Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution, provided, however, that the Interim Servicer shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within two weeks of its execution, and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within ninety days of its submission for recordation.
In the event the Seller or Servicer, as applicable, does not comply
with the delivery requirements set forth in this Subsection 6.03 and such
noncompliance materially and
16
adversely affects the Purchaser's interest in the Mortgage Loan, the Purchaser
shall notify the Seller or Servicer, as applicable, of such noncompliance, and
the Seller or Servicer, as applicable, shall correct or cure the related
omission or defect within thirty (30) days of the receipt of such notice. If the
Seller or Servicer, as applicable, does not correct or cure such material and
adverse omission or defect within such period, then the Seller or Servicer, as
applicable, shall repurchase such Mortgage Loan from the Purchaser within two
(2) Business Days after the expiration of such thirty (30) day period at the
Repurchase Price.
Subsection 6.04 Quality Control Procedures.
The Seller shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the legal documents,
credit documents, property appraisals, and underwriting decisions. The program
shall include evaluating and monitoring the overall quality of the Seller's loan
production and the servicing activities of the Seller. The program is to ensure
that the Mortgage Loans are originated and serviced in accordance with Accepted
Servicing Standards and the Underwriting Guidelines; guard against dishonest,
fraudulent, or negligent acts; and guard against errors and omissions by
officers, employees, or other authorized persons.
SECTION 7. Representations, Warranties and Covenants of the Seller and the
Interim Servicer: Remedies for Breach.
Subsection 7.01. Representations and Warranties Respecting the Seller
and the Interim Servicer.
(a) The Seller represents, warrants and covenants to the Initial
Purchaser and to any subsequent Purchaser as of the Initial Closing Date and
each subsequent Closing Date or as of such date specifically provided herein or
in the applicable Assignment and Conveyance:
(i) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of New York. The Seller
has all licenses necessary to carry out its business as now being
conducted, and is licensed and qualified to transact business in and
is in good standing under the laws of each state in which any
Mortgaged Property is located, except where the failure to be so
licensed would not have a material adverse effect on the Seller's
business or operations or the enforceability of any Mortgage Loan or
the transactions contemplated by this Agreement, or is otherwise
exempt under applicable law from such licensing or qualification or is
otherwise not required under applicable law to effect such licensing
or qualification and no demand for such licensing or qualification has
been made upon the Seller by any such state, and in any event the
Seller is in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of each Mortgage Loan and the
interim servicing of the Mortgage Loans in accordance with the terms
of this Agreement. No licenses or approvals obtained by the Seller
have been suspended or revoked by any court, administrative agency,
arbitrator or governmental body and no proceedings are pending which
might result in such suspension or revocation;
(ii) The Seller has the full corporate power and authority
to hold each Mortgage Loan, to sell each Mortgage Loan, and to
execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Seller
17
has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this
Agreement, assuming due authorization, execution and delivery by the
Purchaser, constitutes a legal, valid and binding obligation of the
Seller, enforceable against it in accordance with its terms except as
the enforceability thereof may be limited by (a) bankruptcy,
insolvency, liquidation, receivership, moratorium, reorganization or
other similar laws affecting the enforcement of the rights of
creditors and (b) general principles of equity, whether enforcement is
sought in a proceeding in equity or at law;
(iii) The execution and delivery of this Agreement by the
Seller and the performance of and compliance with the terms of this
Agreement will not violate the Seller's articles of incorporation or
by-laws or constitute a default under or result in a breach or
acceleration of, any material contract, agreement or other instrument
to which the Seller is a party or which may be applicable to the
Seller or its assets;
(iv) The Seller is not in violation of, and the execution
and delivery of this Agreement by the Seller and its performance and
compliance with the terms of this Agreement will not constitute a
violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction over the Seller or its assets, which
violation might have consequences that would materially and adversely
affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially
and adversely affect the performance of its obligations and duties
hereunder;
(v) The Seller is an approved seller for FNMA and FHLMC in
good standing and is a HUD approved mortgagee pursuant to Section 203
of the National Housing Act. No event has occurred, including but not
limited to a change in insurance coverage, which would make the Seller
unable to comply with FNMA, FHLMC or HUD eligibility requirements or
which would require notification to FNMA, FHLMC or HUD;
(vi) The Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(vii) Except for such documents which have been delivered
for recording, the Mortgage Note, the Mortgage, the Assignment of
Mortgage and any other documents required to be delivered with respect
to each Mortgage Loan pursuant to this Agreement, have been delivered
to the Custodian all in compliance with the specific requirements of
this Agreement. With respect to each Mortgage Loan, the Seller is in
possession of a complete Mortgage File in compliance with Exhibit 5,
except for such documents as have been delivered to the Custodian or
delivered for recording;
(viii) Immediately prior to the payment of the Purchase
Price for each Mortgage Loan, the Seller was the owner of record of
the related Mortgage and the indebtedness evidenced by the related
Mortgage Note and upon the payment of the Purchase Price by the
Purchaser, in the event that the Seller retains record title, the
Seller shall retain such record title to each Mortgage, each related
Mortgage Note and the related Mortgage Files with respect thereto in
trust for the Purchaser as the owner thereof and only for the purpose
of servicing and/or supervising the servicing of each Mortgage Loan;
18
(ix) There are no actions or proceedings against, or
investigations of, the Seller before any court, administrative agency
or other tribunal (A) that might prohibit its entering into this
Agreement, (B) seeking to prevent the sale of the Mortgage Loans or
the consummation of the transactions contemplated by this Agreement or
(C) that might prohibit or materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement;
(x) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Seller of, or compliance by the Seller
with, this Agreement or the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained prior to the
related Closing Date;
(xi) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Seller,
and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to this Agreement are not subject
to the bulk transfer or any similar statutory provisions;
(xii) The transfer of the Mortgage Loans shall be treated as
a sale on the books and records of the Seller, and the Seller has
determined that, and will treat, the disposition of the Mortgage Loans
pursuant to this Agreement for tax and accounting purposes as a sale.
The Seller shall maintain a complete set of books and records for each
Mortgage Loan which shall be clearly marked to reflect the ownership
of each Mortgage Loan by the Purchaser;
(xiii) The consideration received by the Seller upon the
sale of the Mortgage Loans constitutes fair consideration and
reasonably equivalent value for such Mortgage Loans;
(xiv) The Seller is solvent and will not be rendered
insolvent by the consummation of the transactions contemplated hereby.
The Seller is not transferring any Mortgage Loan with any intent to
hinder, delay or defraud any of its creditors;
(xv) Reserved;
(xvi) Neither this Agreement nor any written statement,
report or other document prepared and furnished or to be prepared and
furnished by the Seller pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue
statement of material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading;
(xvii) At such time that the Seller becomes a member of
MERS, the Seller will comply in all material respects with the rules
and procedures of MERS in connection with the servicing of the
Mortgage Loans that are registered with MERS; and
(xviii) The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission
or compensation in connection with the sale of the Mortgage Loans.
19
(b) The Interim Servicer represents, warrants and covenants to the
Initial Purchaser and to any subsequent Purchaser as of the Initial Closing Date
and each subsequent Closing Date or as of such date specifically provided herein
or in the applicable Assignment and Conveyance:
(i) The Interim Servicer is a corporation duly organized,
validly existing and in good standing under the laws of Maryland. The
Interim Servicer has all licenses necessary to carry out its business
as now being conducted, and is licensed and qualified to transact
business in and is in good standing under the laws of each state in
which any Mortgaged Property is located, except where the failure to
be so licensed would not have a material adverse effect on the Interim
Servicer's business or operations or the enforceability of any
Mortgage Loan or the transactions contemplated by this Agreement, or
is otherwise exempt under applicable law from such licensing or
qualification or is otherwise not required under applicable law to
effect such licensing or qualification and no demand for such
licensing or qualification has been made upon the Interim Servicer by
any such state, and in any event the Interim Servicer is in compliance
with the laws of any such state to the extent necessary to ensure the
enforceability of each Mortgage Loan and the servicing of the Mortgage
Loans in accordance with the terms of this Agreement. No licenses or
approvals obtained by the Interim Servicer have been suspended or
revoked by any court, administrative agency, arbitrator or
governmental body and no proceedings are pending which might result in
such suspension or revocation;
(ii) The Interim Servicer has the full corporate power and
authority to execute, deliver and perform, and to enter into and
consummate, all transactions contemplated by this Agreement. The
Interim Servicer has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution
and delivery by the Purchaser, constitutes a legal, valid and binding
obligation of the Interim Servicer, enforceable against it in
accordance with its terms except as the enforceability thereof may be
limited by (a) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the
enforcement of the rights of creditors and (b) general principles of
equity, whether enforcement is sought in a proceeding in equity or at
law;
(iii) The execution and delivery of this Agreement by the
Interim Servicer and the performance of and compliance with the terms
of this Agreement will not violate the Interim Servicer's articles of
incorporation or by-laws or constitute a default under or result in a
breach or acceleration of, any material contract, agreement or other
instrument to which the Interim Servicer is a party or which may be
applicable to the Seller or its assets;
(iv) The Interim Servicer is not in violation of, and the
execution and delivery of this Agreement by the Interim Servicer and
its performance and compliance with the terms of this Agreement will
not constitute a violation with respect to, any order or decree of any
court or any order or regulation of any federal, state, municipal or
governmental agency having jurisdiction over the Interim Servicer or
its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise)
or the operation of the Interim Servicer or its assets or
20
might have consequences that would materially and adversely affect the
performance of its obligations and duties hereunder;
(v) The Interim Servicer is an approved servicer for FNMA
and FHLMC in good standing and is a HUD approved mortgagee pursuant to
Section 203 of the National Housing Act. No event has occurred,
including but not limited to a change in insurance coverage, which
would make the Interim Servicer unable to comply with FNMA, FHLMC or
HUD eligibility requirements or which would require notification to
FNMA, FHLMC or HUD;
(vi) The Interim Servicer does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(vii) Reserved;
(viii) Reserved;
(ix) There are no actions or proceedings against, or
investigations of, the Interim Servicer before any court,
administrative agency or other tribunal (A) that might prohibit its
entering into this Agreement, (B) seeking to prevent the sale of the
Mortgage Loans or the consummation of the transactions contemplated by
this Agreement or (C) that might prohibit or materially and adversely
affect the performance by the Interim Servicer of its obligations
under, or the validity or enforceability of, this Agreement;
(x) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Interim Servicer of, or compliance by
the Interim Servicer with, this Agreement or the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained
prior to the related Closing Date;
(xi) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Interim
Servicer;
(xii) Reserved;
(xiii) Neither this Agreement nor any written statement,
report or other document prepared and furnished or to be prepared and
furnished by the Interim Servicer pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any
untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading;
(xiv) At such time that the Interim Servicer becomes a
member of MERS, the Interim Servicer will comply in all material
respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS; and
21
Subsection 7.02. Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Initial Purchaser and
to any subsequent Purchaser that, as to each Mortgage Loan, as of the related
Closing Date for such Mortgage Loan:
(i) The information set forth in the related Mortgage Loan
Schedule and the related Mortgage File delivered to the Purchaser is
complete, true and correct;
(ii) The Mortgage Loan is in compliance with all
requirements set forth in the related Confirmation, and the
characteristics of the related Mortgage Loan Package as set forth in
the related Confirmation are true and correct;
(iii) All payments required to be made up to the close of
business on the Cut-off Date for such Mortgage Loan under the terms of
the Mortgage Note have been made; the Seller has not advanced funds,
or induced, solicited or knowingly received any advance of funds from
a party other than the owner of the related Mortgaged Property,
directly or indirectly, for the payment of any amount required by the
Mortgage Note or Mortgage; no Mortgage Loan is thirty (30) or more
days delinquent as of the Closing Date and there has been no
delinquency, exclusive of any period of grace, in any payment by the
Mortgagor thereunder since the origination of the Mortgage Loan;
(iv) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums, leasehold
payments, including assessments payable in future installments or
other outstanding charges affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by
written instruments, recorded in the applicable public recording
office if necessary to maintain the lien priority of the Mortgage, and
which have been delivered to the Custodian; the substance of any such
waiver, alteration or modification has been approved by the insurer
under the Primary Insurance Policy, if any, and has been approved by
the title insurer, to the extent required by the related policy, and
is reflected on the related Mortgage Loan Schedule. No instrument of
waiver, alteration or modification has been executed, and no Mortgagor
has been released, in whole or in part, except in connection with an
assumption agreement approved by the insurer under the Primary
Insurance Policy, if any, and by the title insurer, to the extent
required by the policy, and which assumption agreement has been
delivered to the Custodian and the terms of which are reflected in the
related Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to
any right of rescission, set-off, counterclaim or defense, including
the defense of usury, nor will the operation of any of the terms of
the Mortgage Note and the Mortgage, or the exercise of any right
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
22
thereto. Each Prepayment Charge or penalty with respect to any
Mortgage Loan is permissible, enforceable and collectible under
applicable federal, state and local law;
(vii) All buildings upon the Mortgaged Property are insured
by an insurer acceptable to FNMA and FHLMC against loss by fire,
hazards of extended coverage and such other hazards as are customary
in the area where the Mortgaged Property is located, pursuant to
insurance polices conforming to the requirements of the Servicing
Addendum. All such insurance policies contain a standard mortgagee
clause naming the Interim Servicer, its successors and assigns as
mortgagee and all premiums thereon have been paid. If the Mortgaged
Property is in an area identified on a Flood Hazard Map or Flood
Insurance Rate Map issued by the Federal Emergency Management Agency
as having special flood hazards (and such flood insurance has been
made available) a flood insurance policy meeting the requirements of
the current guidelines of the Federal Insurance Administration is in
effect which policy conforms to the requirements of FNMA an FHLMC. The
Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and on the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(viii) Any and all requirements of any federal, state or
local law including, without limitation, usury, truth in lending, real
estate settlement procedures, predatory and abusive lending, consumer
credit protection, equal credit opportunity, fair housing or
disclosure laws applicable to the origination and servicing of
mortgage loans of a type similar to the Mortgage Loans and applicable
to any prepayment penalty associated with the Mortgage Loans at
origination have been complied with in all material respects;
(ix) The Mortgage has not been satisfied, cancelled,
subordinated or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any
such satisfaction, cancellation, subordination, rescission or release;
(x) The Mortgage (including any Negative Amortization which
may arise thereunder) is a valid, existing and enforceable (A) first
lien and first priority security interest with respect to each
Mortgage Loan which is indicated by the Seller to be a first lien (as
reflected on the Mortgage Loan Schedule), or (B) second lien and
second priority security interest with respect to each Mortgage Loan
which is indicated by the Seller to be a second lien (as reflected on
the Mortgage Loan Schedule), in either case, on the Mortgaged
Property, including all improvements on the Mortgaged Property subject
only to (a) the lien of current real property taxes and assessments
not yet due and payable, (b) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of
the date of recording being acceptable to mortgage lending
institutions generally and specifically referred to in the lender's
title insurance policy delivered to the originator of the Mortgage
Loan and which do not adversely affect the Appraised Value of the
Mortgaged Property, (c) with respect to each Mortgage Loan which is
indicated by the Seller to be a second lien Mortgage Loan (as
reflected on the Mortgage Loan Schedule), a first lien on the
Mortgaged Property; and (d) other matters to which like properties are
commonly subject which do not materially interfere with the benefits
of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of
23
the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection
with the Mortgage Loan establishes and creates a valid, existing and
enforceable first or second lien and first or second priority security
interest (in each case, as indicated on the Mortgage Loan Schedule) on
the property described therein and the Seller has full right to sell
and assign the same to the Purchaser. The Mortgaged Property was not,
as of the date of origination of the Mortgage Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security
instrument creating a lien subordinate to the lien of the Mortgage;
(xi) The Mortgage Note and the related Mortgage are genuine
and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and
deliver the Mortgage Note and the Mortgage, and the Mortgage Note and
the Mortgage have been duly and properly executed by such parties. The
Mortgagor is a natural person;
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no
obligation for the Mortgagee to advance additional funds thereunder
and any and all requirements as to completion of any on-site or
off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of
the Mortgage have been paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due to the Mortgagee pursuant to the
Mortgage Note or Mortgage;
(xiv) The Seller is the sole legal, beneficial and equitable
owner of the Mortgage Note and the Mortgage and has full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of
any encumbrance, equity, lien, pledge, charge, claim or security
interest;
(xv) All parties which have had any legal, beneficial or
equitable interest in the Mortgage Loan, whether as mortgagee,
assignee, pledgee or otherwise, are (or, during the period in which
they held and disposed of such interest, were) in compliance with any
and all applicable "doing business" and licensing requirements of the
laws of the state wherein the Mortgaged Property is located;
(xvi) The Mortgage Loan is covered by an American Land Title
Association ("ALTA") lender's title insurance policy (which, in the
case of an Adjustable Rate Mortgage Loan has an adjustable rate
mortgage endorsement in the form of ALTA 6.0 or 6.1) acceptable to
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac, issued by a title insurer acceptable to
▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring
(subject to the exceptions contained in (x)(a) and (b), and with
respect to any second lien Mortgage Loan (c), above) the Seller, its
successors and assigns as to the first or second priority lien (as
indicated on the Mortgage Loan Schedule) of the Mortgage in the
original principal amount of the Mortgage Loan (including, if the
Mortgage Loan provides for Negative Amortization, the maximum
24
amount of Negative Amortization in accordance with the Mortgage) and,
with respect to any Adjustable Rate Mortgage Loan, against any loss by
reason of the invalidity or unenforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment in the
Mortgage Interest Rate and Monthly Payment and Negative Amortization
provisions of the Mortgage Note. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress to and from
the Mortgaged Property, and against encroachments by or upon the
Mortgaged Property or any interest therein. The Seller is the sole
insured of such lender's title insurance policy, and such lender's
title insurance policy is in full force and effect and will be in full
force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything
which would impair the coverage of such lender's title insurance
policy;
(xvii) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and the Seller has not
waived any default, breach, violation or event of acceleration. With
respect to each second lien Mortgage Loan (i) the first lien mortgage
loan is in full force and effect, (ii) there is no default, breach,
violation or event of acceleration existing under such first lien
mortgage or the related mortgage note, (iii) no event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of
acceleration thereunder, (iv) either (A) the first lien mortgage
contains a provision which allows or (B) applicable law requires, the
mortgagee under the second lien Mortgage Loan to receive notice of,
and affords such mortgagee an opportunity to cure any default by
payment in full or otherwise under the first lien mortgage, (v) the
related first lien does not provide for or permit negative
amortization under such first lien Mortgage Loan, and (vi) either no
consent for the Mortgage Loan is required by the holder of the first
lien or such consent has been obtained and is contained in the
Mortgage File;
(xviii) There are no mechanics' or similar liens or claims
which have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such lien) affecting the
related Mortgaged Property which are or may be liens prior to, or
equal or coordinate with, the lien of the related Mortgage;
(xix) All improvements which were considered in determining
the Appraised Value of the related Mortgaged Property lay wholly
within the boundaries and building restriction lines of the Mortgaged
Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property unless otherwise disclosed and are
affirmatively insured by the title insurance policy referred to in
(xvi) above;
(xx) The Mortgage Loan was originated by the Seller or by a
savings and loan association, a savings bank, a commercial bank or
similar banking institution which is supervised and examined by a
federal or state authority, or by a mortgagee approved as such by the
Secretary of HUD;
25
(xxi) Principal payments on the Mortgage Loan commenced no
more than sixty (60) days after the proceeds of the Mortgage Loan were
disbursed. The Mortgage Loan bears interest at the Mortgage Interest
Rate. With respect to each Mortgage Loan the Mortgage Note is payable
on the first day of each month in Monthly Payments, which, in the case
of a Fixed Rate Mortgage Loan, are sufficient to fully amortize the
original principal balance over the original term thereof (other than
with respect to a Mortgage Loan identified on the related Mortgage
Loan Schedule as an interest-only Mortgage Loan during the
interest-only period or a Mortgage Loan which is identified on the
related Mortgage Loan Schedule as a Balloon Mortgage Loan) and to pay
interest at the related Mortgage Interest Rate, and, in the case of an
Adjustable Rate Mortgage Loan, are changed on each Adjustment Date,
and in any case, are sufficient to fully amortize the original
principal balance over the original term thereof (other than with
respect to a Mortgage Loan identified on the related Mortgage Loan
Schedule as an interest-only Mortgage Loan during the interest-only
period or a Mortgage Loan which is identified on the related Mortgage
Loan Schedule as a Balloon Mortgage Loan) and to pay interest at the
related Mortgage Interest Rate. With respect to each Mortgage Loan
identified on the Mortgage Loan Schedule as an interest-only Mortgage
Loan, the interest-only period shall not exceed ten (10) years (or
such other period specified on the Mortgage Loan Schedule) and
following the expiration of such interest-only period, the remaining
Monthly Payments shall be sufficient to fully amortize the original
principal balance over the remaining term of the Mortgage Loan and to
pay interest at the related Mortgage Interest Rate. With respect to
each Balloon Mortgage Loan, the Mortgage Note requires a monthly
payment which is sufficient to fully amortize the original principal
balance over the original term thereof and to pay interest at the
related Mortgage Interest Rate and requires a final Monthly Payment
substantially greater than the preceding monthly payment which is
sufficient to repay the remaining unpaid principal balance of the
Balloon Mortgage Loan at the Due Date of such monthly payment. The
Index for each Adjustable Rate Mortgage Loan is as set forth on the
Mortgage Loan Schedule. No Mortgage Loan is a Convertible Mortgage
Loan. No Balloon Mortgage Loan has an original stated maturity of less
than seven (7) years;
(xxii) The origination, servicing and collection practices
used with respect to each Mortgage Note and Mortgage including,
without limitation, the establishment, maintenance and servicing of
the Escrow Accounts and Escrow Payments, if any, since origination,
have been in all respects legal, proper, prudent and customary in the
mortgage origination and servicing industry. The Mortgage Loan has
been serviced by the Seller and any predecessor servicer in accordance
with the terms of the Mortgage Note and Accepted Servicing Practices.
With respect to escrow deposits and Escrow Payments, if any, all such
payments are in the possession of, or under the control of, the Seller
and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. No
escrow deposits or Escrow Payments or other charges or payments due
the Seller have been capitalized under any Mortgage or the related
Mortgage Note and no such escrow deposits or Escrow Payments are being
held by the Seller for any work on a Mortgaged Property which has not
been completed;
(xxiii) The Mortgaged Property is free of damage and waste
and there is no proceeding pending for the total or partial
condemnation thereof;
26
(xxiv) The Mortgage and related Mortgage Note contain
customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization against
the Mortgaged Property of the benefits of the security provided
thereby, including, (a) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (b) otherwise by judicial
foreclosure. The Mortgaged Property has not been subject to any
bankruptcy proceeding or foreclosure proceeding and the Mortgagor has
not filed for protection under applicable bankruptcy laws. 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. The Mortgagor has not
notified the Seller and the Seller has no knowledge of any relief
requested or allowed to the Mortgagor under the Servicemembers' Civil
Relief Act;
(xxv) The Mortgage Loan was underwritten in accordance with
the Underwriting Guidelines in effect at the time the Mortgage Loan
was originated which underwriting standards satisfy the standards of
FNMA and FHLMC; and the Mortgage Note and Mortgage are on forms
acceptable to FNMA and FHLMC;
(xxvi) The Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage on the
Mortgaged Property and the security interest of any applicable
security agreement or chattel mortgage referred to in (x) above;
(xxvii) The Mortgage File contains an appraisal of the
related Mortgaged Property which satisfied the standards of FNMA and
FHLMC, was on appraisal form 1004 or form 2055 with an interior
inspection and was made and signed, prior to the approval of the
Mortgage Loan application, by a qualified appraiser, duly appointed by
the Seller, who had no interest, direct or indirect in the Mortgaged
Property or in any loan made on the security thereof, whose
compensation is not affected by the approval or disapproval of the
Mortgage Loan and who met the minimum qualifications of FNMA and
FHLMC. Each appraisal of the Mortgage Loan was made in accordance with
the relevant provisions of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989;
(xxviii) In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will become
payable by the Purchaser to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the
Mortgagor;
(xxix) No Mortgage Loan contains provisions pursuant to
which Monthly Payments are (a) paid or partially paid with funds
deposited in any separate account established by the Seller, the
Mortgagor, or anyone on behalf of the Mortgagor, (b) paid by any
source other than the Mortgagor or (c) contains any other similar
provisions which may constitute a "buydown" provision. The Mortgage
Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest
feature;
(xxx) The Mortgagor has executed a statement to the effect
that the Mortgagor has received all disclosure materials required by
applicable law with respect to
27
the making of fixed rate mortgage loans in the case of Fixed Rate
Mortgage Loans, and adjustable rate mortgage loans in the case of
Adjustable Rate Mortgage Loans and rescission materials with respect
to Refinanced Mortgage Loans, and such statement is and will remain in
the Mortgage File;
(xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b)
facilitating the trade-in or exchange of a Mortgaged Property;
(xxxii) The Seller has no knowledge of any circumstances or
condition with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor's credit standing that can reasonably be
expected to cause the Mortgage Loan to be an unacceptable investment,
or cause the Mortgage Loan to become delinquent or adversely affect
the value of the Mortgage Loan;
(xxxiii) No Mortgage Loan had an LTV or CLTV at origination
in excess of 100%. Each Mortgage Loan with an LTV at origination in
excess of 80% is and will be subject to a Primary Insurance Policy,
issued by a Qualified Insurer, which insures that portion of the
Mortgage Loan in excess of the portion of the Appraised Value of the
Mortgaged Property as required by ▇▇▇▇▇▇ ▇▇▇. All provisions of such
Primary Insurance Policy have been and are being complied with, such
policy is in full force and effect, and all premiums due thereunder
have been paid. Any Mortgage subject to any such Primary Insurance
Policy obligates the Mortgagor thereunder to maintain such insurance
and to pay all premiums and charges in connection therewith. The
Mortgage Interest Rate for the Mortgage Loan does not include any such
insurance premium. No Mortgage Loan is subject to a lender paid
primary mortgage insurance policy;
(xxxiv) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to
be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy, have
been made or obtained from the appropriate authorities;
(xxxv) No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has taken
place on the part of any person, including without limitation the
Mortgagor, any appraiser, any builder or developer, or any other party
involved in the origination of the Mortgage Loan or in the application
of any insurance in relation to such Mortgage Loan;
(xxxvi) The Assignment of Mortgage is in recordable form,
except for the name of the assignee which is blank, and is acceptable
for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(xxxvii) Any principal advances made to the Mortgagor prior
to the Cut-off Date have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single
repayment term. The lien of the Mortgage securing the consolidated
principal amount is expressly insured as having first or second (as
indicated on the Mortgage Loan
28
Schedule) lien priority by a title insurance policy, an endorsement to
the policy insuring the mortgagee's consolidated interest or by other
title evidence acceptable to FNMA or FHLMC. The consolidated principal
amount does not exceed the original principal amount of the Mortgage
Loan plus any Negative Amortization;
(xxxviii) If the Residential Dwelling on the Mortgaged
Property is a condominium unit or a unit in a planned unit development
(other than a de minimis planned unit development) such condominium or
planned unit development project meets the eligibility requirements of
the Underwriting Guidelines, FNMA and FHLMC;
(xxxix) The source of the down payment with respect to each
Mortgage Loan has been fully verified by the Seller;
(xl) Interest on each Mortgage Loan is calculated on the
basis of a 360-day year consisting of twelve 30-day months;
(xli) The Mortgaged Property is in material compliance with
all applicable environmental laws pertaining to environmental hazards
including, without limitation, asbestos, and neither the Seller nor,
to the best of the Seller's and the Interim Servicer's knowledge, the
related Mortgagor, has received any notice of any violation or
potential violation of such law;
(xlii) The Seller shall, at its own expense, cause each
Mortgage Loan to be covered by a Tax Service Contract which is
assignable to the Purchaser or its designee; provided however, that if
the Seller fails to purchase such Tax Service Contract, the Seller
shall be required to reimburse the Purchaser for all costs and
expenses incurred by the Purchaser in connection with the purchase of
any such Tax Service Contract;
(xliii) Each Mortgage Loan is covered by a Flood Zone
Service Contract which is assignable to the Purchaser or its designee
or, for each Mortgage Loan not covered by such Flood Zone Service
Contract, the Seller agrees to purchase such Flood Zone Service
Contract;
(xliv) No Mortgage Loan is (a)(1) subject to the provisions
of the Homeownership and Equity Protection Act of 1994 as amended
("HOEPA") or (2) has an APR or total points and fees that are equal to
or exceeds the HOEPA thresholds (as defined in 12 CFR 226.32 (a)(1)(i)
and (ii)), (b) a "high cost" mortgage loan, "covered" mortgage loan,
"high risk home" mortgage loan, or "predatory" mortgage loan or any
other comparable term, no matter how defined under any federal, state
or local law, (c) subject to any comparable federal, state or local
statutes or regulations, or any other statute or regulation providing
for heightened regulatory scrutiny or assignee liability to holders of
such mortgage loans, or (d) a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the current Standard & Poor's
LEVELS(R) Glossary Revised, Appendix E);
(xlv) No predatory, abusive, or deceptive lending practices,
including but not limited to, the extension of credit to a Mortgagor
without regard for the Mortgagor's ability to repay the Mortgage Loan
and the extension of credit to a Mortgagor
29
which has no apparent benefit to the Mortgagor, were employed in
connection with the origination of the Mortgage Loan. Each Mortgage
Loan is in compliance with the anti-predatory lending eligibility for
purchase requirements of the ▇▇▇▇▇▇ Mae Guides;
(xlvi) Unless otherwise specified in the related
Confirmation or the related Mortgage Loan Schedule, the debt-to-income
ratio of the related Mortgagor was not greater than 60% at the
origination of the related Mortgage Loan; No Mortgagor was required to
purchase any credit insurance product (e.g., life, mortgage,
disability, accident, unemployment or health insurance product) or
debt cancellation agreement as a condition of obtaining the extension
of credit. No Mortgagor obtained a prepaid single premium credit
insurance policy (e.g., life, mortgage, disability, accident,
unemployment or health insurance product) or debt cancellation
agreement in connection with the origination of the Mortgage Loan. No
proceeds from any Mortgage Loan were used to purchase single premium
credit insurance policies or debt cancellation agreements as part of
the origination of, or as a condition to closing, such Mortgage Loan;
(xlvii) The Mortgage Loans were not selected from the
outstanding one- to four-family mortgage loans in the Seller's
portfolio as to which the representations and warranties set forth in
this Agreement could be made at the related Closing Date in a manner
so as to affect adversely the interests of the Purchaser;
(xlviii) The Mortgage contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee
thereunder;
(xlix) The Mortgage Loan complies with all applicable
consumer credit statutes and regulations, including, without
limitation, the respective Uniform Consumer Credit Code laws in effect
in Alabama, Colorado, Idaho, Indiana, Iowa, Kansas, Maine, Oklahoma,
South Carolina, Utah, West Virginia and Wyoming, has been originated
by a properly licensed entity, and in all other respects, complies
with all of the material requirements of any such applicable laws;
(l) The information set forth in the Mortgage Loan Schedule
as to Prepayment Charges is complete, true and correct in all material
respects and each Prepayment Charge is permissible and enforceable in
accordance with its terms upon the Mortgagor's full and voluntary
principal payment under applicable law, except to the extent that: (1)
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights; (2) the collectability thereof may be limited due to
acceleration in connection with a foreclosure or other involuntary
prepayment; or (3) subsequent changes in applicable law may limit or
prohibit enforceability thereof under applicable law;
(li) The Mortgage Loan was not prepaid in full prior to the
Closing Date and the Seller has not received notification from a
Mortgagor that a prepayment in full shall be made after the Closing
Date;
30
(lii) No Mortgage Loan is secured by cooperative housing,
commercial property or mixed use property;
(liii) Reserved;
(liv) Except as set forth on the related Mortgage Loan
Schedule, none of the Mortgage Loans are subject to a Prepayment
Charge. For any Mortgage Loan originated prior to October 1, 2002 that
is subject to a Prepayment Charge, such Prepayment Charge does not
extend beyond five (5) years after the date of origination. For any
Mortgage Loan originated on or following October 1, 2002 that is
subject to a Prepayment Charge, such Prepayment Charge does not extend
beyond three (3) years after the date of origination. With respect to
any Mortgage Loan that contains a provision permitting imposition of a
premium upon a prepayment prior to maturity: (i) prior to the Mortgage
Loan's origination, the Mortgagor agreed to such premium in exchange
for a monetary benefit, including but not limited to a rate or fee
reduction, (ii) prior to the Mortgage Loan's origination, the
Mortgagor was offered the option of obtaining a Mortgage Loan that did
not require payment of such a premium, (iii) the prepayment premium is
disclosed to the Mortgagor in the loan documents pursuant to
applicable state and federal law, and (iv) notwithstanding any state
or federal law to the contrary, the Seller shall not impose such
Prepayment Charge in any instance when the mortgage loan is
accelerated or paid off in connection with the workout of a delinquent
Mortgage Loan or as the result of the Mortgagor's default in making
the loan payments;
(lv) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA
Patriot Act of 2001 (collectively, the "Anti-Money Laundering Laws");
the Seller has established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the
requisite due diligence in connection with the origination of each
Mortgage Loan for purposes of the Anti-Money Laundering Laws,
including with respect to the legitimacy of the applicable Mortgagor
and the origin of the assets used by the said Mortgagor to purchase
the Mortgaged Property, and maintains, and will maintain, sufficient
information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws. No Mortgage Loan is subject to
nullification pursuant to Executive Order 13224 (the "Executive
Order") or the regulations promulgated by the Office of Foreign Assets
Control of the United States Department of the Treasury (the "OFAC
Regulations") or in violation of the Executive Order or the OFAC
Regulations, and no Mortgagor is subject to the provisions of such
Executive Order or the OFAC Regulations nor listed as a "blocked
person" for purposes of the OFAC Regulations;
(lvi) No Mortgagor was encouraged or required to select a
Mortgage Loan product offered by the Mortgage Loan's originator which
is a higher cost product designed for less creditworthy borrowers,
unless at the time of the Mortgage Loan's origination, such Mortgagor
did not qualify taking into account credit history and debt to income
ratios for a lower cost credit product then offered by the Mortgage
Loan's originator or any affiliate of the Mortgage Loan's originator.
If, at the time of loan application, the Mortgagor may have qualified
for a for a lower cost credit product then offered by any mortgage
lending affiliate of the Mortgage Loan's originator, the Mortgage
Loan's originator referred the Mortgagor's application to such
affiliate for underwriting
31
consideration. With respect to any Mortgage Loan, the Mortgagor was
assigned the highest credit grade available with respect to a mortgage
loan product offered by such Mortgage Loan's originator, based on a
comprehensive assessment of risk factors, including the Mortgagor's
credit history;
(lvii) The methodology used in underwriting the extension of
credit for each Mortgage Loan employs objective mathematical
principles which relate the Mortgagor's income, assets, liabilities
and/or credit history to the proposed payment and such underwriting
methodology does not rely on the extent of the Mortgagor's equity in
the collateral as the principal determining factor in approving such
credit extension. Such underwriting methodology confirmed that at the
time of origination (application/approval) the Mortgagor had a
reasonable ability to make timely payments on the Mortgage Loan;
(lviii) With respect to each Mortgage Loan, the Seller has
fully and accurately furnished complete information (i.e., favorable
and unfavorable) on the related borrower credit files to Equifax,
Experian and Trans Union Credit Information Company, in accordance
with the Fair Credit Reporting Act and its implementing regulations,
on a monthly basis and, for each Mortgage Loan, the Seller will
furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information on its
borrower credit files to Equifax, Experian, and Trans Union Credit
Information Company, on a monthly basis;
(lix) All points and fees related to each Mortgage Loan were
disclosed in writing to the related Borrower in accordance with
applicable state and federal laws and regulations. No related Borrower
was charged "points and fees" (whether or not financed) in an amount
greater than (a) $1,000 or (b) 5% of the principal amount of such
loan, whichever is greater, such 5% limitation is calculated in
accordance with ▇▇▇▇▇▇ Mae's anti-predatory lending requirements as
set forth in the ▇▇▇▇▇▇ Mae Guides. For purposes of this
representation, "points and fees" (a) include origination,
underwriting, broker and finder's fees and other charges that the
lender imposed as a condition of making the loan, whether they are
paid to the lender or a third party, and (b) exclude bona fide
discount points, fees paid for actual services rendered in connection
with the origination of the mortgage (such as attorneys' fees,
notaries fees and fees paid for property appraisals, credit reports,
surveys, title examinations and extracts, flood and tax
certifications, and home inspections); the cost of mortgage insurance
or credit-risk price adjustments; the costs of title, hazard, and
flood insurance policies; state and local transfer taxes or fees;
escrow deposits for the future payment of taxes and insurance
premiums; and other miscellaneous fees and charges that, in total, do
not exceed 0.25 percent of the loan amount. All points, fees and
charges (including finance charges) and whether or not financed,
assessed, collected or to be collected in connection with the
origination and servicing of each Mortgage Loan were disclosed in
writing to the related Mortgagor in accordance with applicable state
and federal laws and regulations;
(lx) The Seller or the Interim Servicer will transmit
full-file credit reporting data for each Mortgage Loan pursuant to
▇▇▇▇▇▇ ▇▇▇ Guide Announcement 95-19 and for each Mortgage Loan, Seller
and Servicer agree that either Seller or Servicer shall report one of
the following statuses each month as follows: new origination,
current, delinquent (30-, 60-, 90-days, etc.), foreclosed, or
charged-off;
32
(lxi) With respect to any Mortgage Loan which is secured by
manufactured housing, if such Mortgage Loans are permitted hereunder,
such Mortgage Loan satisfies the requirements for inclusion in
residential mortgage backed securities transactions rated by Standard
& Poor's Ratings Services and such manufactured housing will be the
principal residence of the Mortgagor upon the origination of the
Mortgage Loan. With respect to any second lien Mortgage Loan, such
lien is on a one- to four-family residence that is (or will be) the
principal residence of the Mortgagor upon the origination of the
second lien Mortgage Loan;
(lxii) Each Mortgage Loan constitutes a "qualified mortgage"
under Section 860G(a)(3)(A) of the Code and Treasury Regulation
Section 1.860G-2(a)(1);
(lxiii) No Mortgage Loan is secured by real property or
secured by a manufactured home located in the state of Georgia unless
(x) such Mortgage Loan was originated prior to October 1, 2002 or
after March 6, 2003, or (y) the property securing the Mortgage Loan is
not, nor will be, occupied by the Mortgagor as the Mortgagor's
principal dwelling. No Mortgage Loan is a "High Cost Home Loan" as
defined in the Georgia Fair Lending Act, as amended (the "Georgia
Act"). Each Mortgage Loan that is a "Home Loan" under the Georgia Act
complies with all applicable provisions of the Georgia Act. No
Mortgage Loan secured by owner occupied real property or an owner
occupied manufactured home located in the State of Georgia was
originated (or modified) on or after October 1, 2002 through and
including March 6, 2003;
(lxiv) No Mortgage Loan is a "High-Cost" loan as defined
under the New York Banking Law Section 6-1, effective as of April 1,
2003;
(lxv) No Mortgage Loan (a) is secured by property located in
the State of New York; (b) had an unpaid principal balance at
origination of $300,000 or less, and (c) has an application date on or
after April 1, 2003, the terms of which Mortgage Loan equal or exceed
either the APR or the points and fees threshold for "high-cost home
loans", as defined in Section 6-1 of the New York State Banking Law;
(lxvi) No Mortgage Loan is a "High Cost Home Loan" as
defined in the Arkansas Home Loan Protection Act effective July 16,
2003 (Act 1340 or 2003);
(lxvii) No Mortgage Loan is a "High Cost Home Loan" as
defined in the Kentucky high-cost loan statute effective June 24, 2003
(Ky. Rev. Stat. Section 360.100);
(lxviii) No Mortgage Loan secured by property located in the
State of Nevada is a "home loan" as defined in the Nevada Assembly
▇▇▇▇ No. 284;
(lxix) No Mortgage Loan is a "manufactured housing loan" or
"home improvement home loan" pursuant to the New Jersey Home Ownership
Act. No Mortgage Loan is a "High-Cost Home Loan" or a refinanced
"Covered Home Loan," in each case, as defined in the New Jersey Home
Ownership Act effective November 27, 2003 (N.J.S.A. 46;10B-22 et
seq.);
(lxx) No Mortgage Loan is a subsection 10 mortgage under the
Oklahoma Home Ownership and Equity protection Act;
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(lxxi) No Mortgage Loan is a "High-Cost Home Loan" as
defined in the New Mexico Home Loan Protection Act effective January
1, 2004 (N.M. Stat. ▇▇▇. ▇▇.▇▇. 58-21A-1 et seq.);
(lxxii) No Mortgage Loan is a "High-Risk Home Loan" as
defined in the Illinois High-Risk Home Loan Act effective January 1,
2004 (815 Ill. Comp. Stat. 137/1 et seq.);
(lxxiii) No Loan that is secured by property located within
the State of Maine meets the definition of a (i) "high-rate, high-fee"
mortgage loan under Article VIII, Title 9-A of the Maine Consumer
Credit Code or (ii) "High-Cost Home Loan" as defined under the Maine
House ▇▇▇▇ 383 ▇.▇. 494, effective as of September 13, 2003;
(lxxiv) With respect to any Loan for which a mortgage loan
application was submitted by the Mortgagor after April 1, 2004, no
such Loan secured by Mortgaged Property in the State of Illinois which
has a Loan Interest Rate in excess of 8.0% per annum has
lender-imposed fees (or other charges) in excess of 3.0% of the
original principal balance of the Loan;
(lxxv) No Mortgage Loan is a "High Cost Home Mortgage Loan"
as defined in the Massachusetts Predatory Home Loan Practices Act,
effective November 7, 2004 (Mass. ▇▇▇. Laws Ch. 183C). No Mortgage
Loan secured by a Mortgaged Property located in the Commonwealth of
Massachusetts was made to pay off or refinance an existing loan or
other debt of the related borrower (as the term "borrower" is defined
in the regulations promulgated by the Massachusetts Secretary of State
in connection with Massachusetts House ▇▇▇▇ 4880 (2004)) unless either
(1) (a) the related Mortgage Interest Rate (that would be effective
once the introductory rate expires, with respect to Adjustable Rate
Mortgage Loans) did or would not exceed by more than 2.25% the yield
on United States Treasury securities having comparable periods of
maturity to the maturity of the related Mortgage Loan as of the
fifteenth day of the month immediately preceding the month in which
the application for the extension of credit was received by the
related lender or (b) the Mortgage Loan is an "open-end home loan" (as
such term is used in the Massachusetts House ▇▇▇▇ 4880 (2004)) and the
related Mortgage Note provides that the related Mortgage Interest Rate
may not exceed at any time the Prime rate index as published in The
Wall Street Journal plus a margin of one percent, or (2) such Mortgage
Loan is in the "borrower's interest," as documented by a "borrower's
interest worksheet" for the particular Mortgage Loan, which worksheet
incorporates the factors set forth in Massachusetts House ▇▇▇▇ 4880
(2004) and the regulations promulgated thereunder for determining
"borrower's interest," and otherwise complies in all material respects
with the laws of the Commonwealth of Massachusetts;
(lxxvi) No Loan is a "High Cost Home Loan" as defined by the
Indiana Home Loan Practices Act, effective January 1, 2005 (Ind. Code
▇▇▇. ▇▇.▇▇. 24-9-1 et seq.);
(lxxvii) The Mortgagor has not made or caused to be made any
payment in the nature of an "average" or "yield spread premium" to a
mortgage broker or a like Person which has not been fully disclosed to
the Mortgagor;
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(lxxviii) The sale or transfer of the Mortgage Loan by the
Seller complies with all applicable federal, state, and local laws,
rules, and regulations governing such sale or transfer, including,
without limitation, the Fair and Accurate Credit Transactions Act
("FACT Act") and the Fair Credit Reporting Act, each as may be amended
from time to time, and the Seller has not received any actual or
constructive notice of any identity theft, fraud, or other
misrepresentation in connection with such Mortgage Loan or any party
thereto;
(lxxix) With respect to each MOM Loan, a MIN has been
assigned by MERS and such MIN is accurately provided on the Mortgage
Loan Schedule. The related Assignment of Mortgage to MERS has been
duly and properly recorded, or has been delivered for recording to the
applicable recording office;
(lxxx) With respect to each MOM Loan, Seller has not
received any notice of liens or legal actions with respect to such
Mortgage Loan and no such notices have been electronically posted by
MERS;
(lxxxi) With respect to each second lien Mortgage Loan, (i)
if the related first lien provides for negative amortization, the CLTV
was calculated at the maximum principal balance of such first lien
that could result upon application of such negative amortization
feature, and (ii) either no consent for the Mortgage Loan is required
by the holder of the first lien or such consent has been obtained and
is contained in the Mortgage File;
(lxxxii) No Mortgagor agreed to submit to arbitration to
resolve any dispute arising out of or relating in any way to the
Mortgage Loan transaction;
(lxxxiii) No Mortgage Loan is subject to mandatory
arbitration;
(lxxxiv) No Mortgage Loan is secured by a lien on a "condo
hotel";
(lxxxv) No Mortgagor is the obligor on more than four
Mortgage Notes; and
(lxxxvi) No Mortgage Loan is subject to Negative
Amortization.
Subsection 7.03. Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 7.01 and 7.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by the Seller, the Interim Servicer or the Purchaser of a
breach of any of the foregoing representations and warranties which materially
and adversely affects the value of the Mortgage Loans or the interest of the
Purchaser (or which materially and adversely affects the value of a Mortgage
Loan or the interests of the Purchaser in the related Mortgage Loan in the case
of a representation and warranty relating to a particular Mortgage Loan), or in
the event that any Mortgagor fails to make the first payment due to the
Purchaser following the
35
Closing Date, the party discovering such breach shall give prompt written notice
to the other parties.
Within sixty (60) days of the earlier of either discovery by, or
notice to the Seller or the Interim Servicer, of any breach of a representation
or warranty which materially and adversely affects the value of a Mortgage Loan
or the Mortgage Loans or the Purchaser's interest in a Mortgage Loan or the
Mortgage Loans, the Seller or the Interim Servicer, as applicable, shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, the Seller shall, at the Purchaser's option, (i)
repurchase such Mortgage Loan at the Repurchase Price, or (ii) substitute a
Qualified Substitute Mortgage Loan for such Mortgage Loan as provided below. In
the event that a breach shall involve any representation or warranty set forth
in Subsection 7.01 and such breach cannot be cured within 60 days of the earlier
of either discovery by or notice to the Seller of such breach, all of the
Mortgage Loans shall, at the Purchaser's option, be repurchased by the Seller at
the Repurchase Price. The Seller shall, at the request of the Purchaser and
assuming that Seller has a Qualified Substitute Mortgage Loan, rather than
repurchase the Mortgage Loan as provided above, remove such Mortgage Loan and
substitute in its place a Qualified Substitute Mortgage Loan or Loans; provided
that such substitution shall be effected not later than 120 days after the
related Closing Date. If the Seller has no Qualified Substitute Mortgage Loan,
it shall repurchase the deficient Mortgage Loan. Any repurchase of a Mortgage
Loan(s) pursuant to the foregoing provisions of this Subsection 7.03 shall occur
on a date designated by the Purchaser and shall be accomplished by deposit in
the Custodial Account of the amount of the Repurchase Price for distribution to
the Purchaser on the next scheduled Distribution Date. Notwithstanding anything
to the contrary contained herein, it is understood by the parties hereto that a
breach of the representations and warranties made in Subsections 7.02(viii),
(xliv), (xlvii), (lv), (lvii), (lviii), (lix), (lx), (lxii), (lxiii), (lxiv) or
(lxxxiii) will be deemed to materially and adversely affect the value of the
related Mortgage Loan or the interest of the Purchaser therein.
At the time of repurchase of any deficient Mortgage Loan, the
Purchaser, the Seller and the Interim Servicer shall arrange for the
reassignment of the repurchased Mortgage Loan to the Seller and the delivery to
the Seller of any documents held by the Custodian relating to the repurchased
Mortgage Loan. In the event the Repurchase Price is deposited in the Custodial
Account, the Seller shall, simultaneously with such deposit, give written notice
to the Purchaser that such deposit has taken place. Upon such repurchase the
related Mortgage Loan Schedule shall be amended to reflect the withdrawal of the
repurchased Mortgage Loan from this Agreement.
As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, the Seller shall effect such
substitution by delivering to the Purchaser for such Qualified Substitute
Mortgage Loan or Loans the Mortgage Note, the Mortgage, the Assignment of
Mortgage and such other documents and agreements as are set forth in Exhibit 13
hereto, with the Mortgage Note endorsed as required therein. The Seller shall
deposit in the Custodial Account the Monthly Payment less the Servicing Fee due
on such Qualified Substitute Mortgage Loan or Loans in the month following the
date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution will be retained by the
Seller. For the month of substitution, distributions to the Purchaser will
include the Monthly Payment due on such Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
36
subsequently received by the Seller in respect of such Deleted Mortgage Loan.
The Seller shall give written notice to the Purchaser that such substitution has
taken place and shall amend the Mortgage Loan Schedule to reflect the removal of
such Deleted Mortgage Loan from the terms of this Agreement and the substitution
of the Qualified Substitute Mortgage Loan. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall be subject to the terms of
this Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in
Subsections 7.01 and 7.02.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Seller
will determine the amount (if any) by which the aggregate principal balance of
all such Qualified Substitute Mortgage Loans as of the date of substitution is
less than the aggregate Stated Principal Balance of all such Deleted Mortgage
Loans (after application of scheduled principal payments due in the month of
substitution). An amount equal to the sum of (x) the product of (i) the amount
of such shortfall and (ii) the greater of, the Purchase Price Percentage used to
calculate the Purchase Price, as stated in the related Confirmation, and 100%,
and (y) accrued interest on the amount of such shortfall to the last day of the
month such substitution occurs, shall be distributed by the Seller in the month
of substitution pursuant to the Servicing Addendum. Accordingly, on the date of
such substitution, the Seller will deposit from its own funds into the Custodial
Account an amount equal to such amount.
In addition to such cure, repurchase and substitution obligation, the
Seller shall indemnify the Initial Purchaser and any subsequent Purchaser and
hold them harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and other
costs and expenses resulting from any claim, demand, defense or assertion based
on or grounded upon, or resulting from, a breach of the Seller's representations
and warranties, respectively, contained in this Section 7, including, without
limitation, any loss incurred by the Purchaser of any Prepayment Charge to which
the Purchaser would otherwise be entitled pursuant to this Agreement. It is
understood and agreed that the obligations of the Seller set forth in this
Subsection 7.03 to cure, substitute for or repurchase a defective Mortgage Loan
and to indemnify the Initial Purchaser and any subsequent Purchaser as provided
in this Subsection 7.03 constitute the sole remedies of the Initial Purchaser
and any subsequent Purchaser respecting a breach of the foregoing
representations and warranties. The indemnification obligation of the Seller set
forth herein shall survive the termination of this Agreement.
Any cause of action against the Seller or the Interim Servicer
relating to or arising out of the breach of any representations and warranties
made in Subsections 7.01 or 7.02 shall accrue as to any Mortgage Loan upon (i)
discovery of such breach by the Purchaser or notice thereof by the Seller or the
Interim Servicer to the Purchaser, and (ii) demand upon the Seller or the
Interim Servicer by the Purchaser for compliance with the relevant provisions of
this Agreement.
In addition to the foregoing, in the event that a breach of any
representation of the Seller materially and adversely affects the interests of
the Purchaser in any Prepayment Charge or the collectability of such Prepayment
Charge, the Seller shall pay the amount of the scheduled Prepayment Charge to
the Purchaser upon the payoff of any related Mortgage Loan.
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Subsection 7.04. Repurchase of Certain Mortgage Loans; Premium
Protection.
(a) In the event that (i) the first Due Date for a Mortgage Loan is
prior to the Cut-off Date and the initial Monthly Payment is not made by the
related Mortgagor within thirty (30) days of such Due Date or (ii) any of the
first, second or third Monthly Payments on any Mortgage Loan due following the
Cut-off Date is not made by the related Mortgagor within thirty (30) days of the
related Due Date, then, in each such case, the Seller shall repurchase the
affected Mortgage Loans at the Repurchase Price, which shall be paid as provided
for in Subsection 7.03. The Seller shall notify the Purchaser of any such
default under this Subsection 7.04(a) within thirty (30) days of any such
Mortgage Loan becoming thirty (30) days delinquent.
(b) In the event that any Mortgage Loan prepays-in-full within ninety
(90) days following the related Closing Date, Seller shall remit to the Initial
Purchaser an amount equal to the product of (i) the excess of (A) the percentage
of par as stated in the related Confirmation as the purchase price percentage
(subject to adjustment as provided therein) over (B) 100%, times (ii) the
outstanding principal balance of such Mortgage Loan as of the Cut-off Date. Such
obligation to the Initial Purchaser shall survive any sale or assignment of the
Mortgage Loans by the Initial Purchaser to any third party and shall be
independently enforceable by the Initial Purchaser.
(c) In the event that any Mortgage Loan is repurchased pursuant to
Section 7.03 or 7.04(a), in addition to its obligations under Section 7.03 and
7.04(a), Seller shall remit to the Initial Purchaser an amount equal to the
product of (i) the excess of (A) the percentage of par as stated in the related
Confirmation as the purchase price percentage (subject to adjustment as provided
therein) over (B) 100%, times (ii) the outstanding principal balance of such
Mortgage Loan as of the date of repurchase. Upon any assignment of a Mortgage
Loan and/or this Agreement, the Initial Purchaser may at its option retain its
rights under this Section 7.04(c) notwithstanding such assignment.
SECTION 8. Closing.
The closing for each Mortgage Loan Package shall take place on the
related Closing Date. At the Purchaser's option, the closing shall be either: by
telephone, confirmed by letter or wire as the parties shall agree, or conducted
in person, at such place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on each Closing
Date 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 related
Closing Date and no event shall have occurred which, with reasonable notice to
the Seller, or the passage of time, would constitute a default under this
Agreement;
(b) the Initial Purchaser shall have received, or the Initial
Purchaser's attorneys shall have received in escrow, all Closing Documents as
specified in Section 9, in such
38
forms as are agreed upon and acceptable to the Purchaser, duly executed by all
signatories other than the Purchaser as required pursuant to the terms hereof;
(c) the Seller and the Servicer shall have delivered and released to
the Custodian all documents required pursuant to this Agreement; and
(d) all other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Initial Purchaser shall pay
to the Seller on the related Closing Date the Purchase Price, plus accrued
interest pursuant to Section 4, by wire transfer of immediately available funds
to the account designated by the Seller.
SECTION 9. Closing Documents.
(a) On or before the Initial Closing Date, the Seller or Servicer, as
applicable, shall submit to the Initial Purchaser fully executed originals of
the following documents:
1. this Agreement, in four counterparts;
2. a Custodial Account Letter Agreement in the form attached as
Exhibit 7 hereto;
3. as Escrow Account Letter Agreement in the form attached as
Exhibit 8 hereto;
4. a Seller's Officer's Certificate, in the form of Exhibit 1-A
hereto, including all attachments thereto;
5. an Servicer's Officer's Certificate, in the form of Exhibit
1-B hereto, including all attachments thereto;
6. an Opinion of Counsel to the Seller and Servicer, in the form
of Exhibit 2 hereto; and
7. the Underwriting Guidelines.
(b) The Closing Documents for the Mortgage Loans to be purchased on
each Closing Date shall consist of fully executed originals of the following
documents:
1. the related Confirmation;
2. the related Mortgage Loan Schedule;
3. a Custodian's Trust Receipt and Initial Certification, as
required under the Custodial Agreement, in a form acceptable to the
Initial Purchaser;
4. an Officer's Certificate, in the form of Exhibit 1-A hereto,
including all attachments thereto;
39
5. an Interim Servicer's Officer's Certificate, in the form of
Exhibit 1-B hereto, including all attachments thereto;
6. if requested by the Initial Purchaser, an Opinion of Counsel
to the Seller, in the form of Exhibit 2 hereto;
7. a Security Release Certification, in the form of Exhibit 3
hereto executed by any Person, as requested by the Initial Purchaser,
if any of the Mortgage Loans has at any time been subject to any
security interest, pledge or hypothecation for the benefit of such
Person;
8. a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if any of
the Mortgage Loans were acquired by the Seller by merger or acquired
or originated by the Seller while conducting business under a name
other than its present name, if applicable;
9. any modifications, amendments or supplements to the
Underwriting Guidelines following the Initial Closing Date; and
10. an Assignment and Conveyance in the form of Exhibit 4 hereto.
SECTION 10. Costs.
The Purchaser shall pay any commissions due its salesmen, recording
fees and the legal fees and expenses of its attorneys. All other costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans, including without limitation, fees for title policy endorsements and
continuations and the Seller's attorney's fees, shall be paid by the Seller. The
Seller shall also pay those expenses of the Custodian related to the preparation
of Trust Receipts and Certification in connection with the sale of the Mortgage
Loans.
SECTION 11. Interim Servicer's Servicing Obligations.
The Interim Servicer, as independent contract servicer, shall service
and administer the Mortgage Loans directly or through one or more Subservicers,
in accordance with the terms and provisions set forth in the Servicing Addendum
attached as Exhibit 9, which Servicing Addendum is incorporated herein by
reference. In addition, with respect to any Mortgage Loan that is not subject to
an assignable "life of loan" Flood Zone Service Contract or Tax Servicer
Contract as of the related Closing Date, the Interim Servicer shall pay the cost
incurred by the Purchaser or its designee to obtain such a contract.
Notwithstanding anything to the contrary herein, with respect to a
Mortgage Loan Package, as long as the Servicing Transfer Date occurs prior to
the related Pass-Through Transfer and the Interim Servicer has not made any
remittance to the Purchaser of the related Mortgage Loans in connection with
such Pass-Through Transfer, the following provisions shall not apply to the
Interim Servicer with respect to the Mortgage Loans in such Mortgage Loan
Package: Section 12.A(8); Section 12.A(9)(a) through (c) (each with respect to
the Interim
40
Servicer only); Section 12.A(11); Section 12.A(12); Section 12.A(13) and Section
12.A(14)(1) through (5) (each with respect to the Interim Servicer only).
SECTION 12. Removal of Mortgage Loans from Inclusion under This Agreement
Upon a Whole Loan Transfer or a Pass-Through Transfer on One
or More Reconstitution Dates.
The Seller, the Interim Servicer and the Initial Purchaser agree that
with respect to some or all of the Mortgage Loans, the Initial Purchaser may
effect either:
(1) one or more Whole Loan Transfers; and/or
(2) one or more Pass-Through Transfers;
provided, that no single Whole Loan Transfer or Pass-Through Transfer shall
involve the sale or other transfer by the Initial Purchaser of Mortgage Loans
having an aggregate principal balance of less than $25 million.
A. Whole Loan Transfers or Pass-Through Transfers. With respect to
each Whole Loan Transfer or Pass-Through Transfer, as the case may be, entered
into by the Initial Purchaser, the Seller agrees:
(1) to cooperate fully with the Purchaser and any prospective
purchaser with respect to all reasonable requests and due
diligence procedures including participating in meetings with
rating agencies, bond insurers and such other parties as the
Purchaser shall designate and participating in meetings with
prospective purchasers of the Mortgage Loans or interests therein
and providing information reasonably requested by such
purchasers;
(2) to negotiate and execute all Reconstitution Agreements,
including, without limitation, an Assignment, Assumption and
Recognition Agreement in the form attached hereto as Exhibit 10
and an Indemnification Agreement in the form attached hereto as
Exhibit 11, provided that each of the Seller and the Purchaser is
given an opportunity to review and reasonably negotiate in good
faith the content of such documents not specifically referenced
or provided for herein;
(3) with respect to any Whole Loan Transfer or Pass-Through Transfer,
the Seller shall make as of the Reconstitution Date (i) the
representations and warranties contained in this Agreement
regarding the Seller and the Mortgage Loans, (ii) such other
reasonable and mutually agreeable representations, warranties and
covenants which in form and substance conform to the
representations and warranties in this Agreement and to secondary
market standards for securities backed by mortgage loans similar
to the Mortgage Loans, (iii) such reasonable and mutually
agreeable provisions with regard to servicing responsibilities,
investor reporting, segregation and deposit of principal and
interest payments, custody of the Mortgage Loans, (iv) such other
mutually agreeable covenants as may reasonably be required by the
Purchaser and (v) such
41
other representations and warranties and covenants as may be
required by one or more nationally recognized rating agencies for
"AAA" rated mortgage pass-through transactions, modified to the
extent necessary to accurately reflect the pool statistics of the
Mortgage Loans as of the date of such Whole Loan Transfer or
Pass-Through Transfer and any events or circumstances existing
subsequent to the related Closing Date(s);
(4) to deliver to the Purchaser, and to any Person designated by the
Purchaser, such legal documents and in-house Opinions of Counsel
as are customarily delivered by originators or servicers, as the
case may be, and reasonably determined by the Purchaser to be
necessary in connection with Whole Loan Transfers or Pass-Through
Transfers, as the case may be, such in-house Opinions of Counsel
for a Pass-Through Transfer to be in the form reasonably
acceptable to the Purchaser, it being understood that the cost of
any opinions of outside special counsel that may be required for
a Whole Loan Transfer or Pass-Through Transfer, as the case may
be, shall be the responsibility of the Purchaser;
(5) in the event that the Mortgage Loans become subject to a
Pass-Through Transfer prior to the termination of the Interim
Servicing Period, the Interim Servicer agrees to service the
Mortgage Loans on a scheduled/scheduled basis including making
advances of delinquent scheduled payments of principal and
interest through liquidation (unless deemed non-recoverable), for
which the Interim Servicer shall be entitled to reimbursement
pursuant to the terms of the applicable pooling and servicing
agreement from the related Mortgage Loan or, if deemed
non-recoverable, from all of the Mortgage Loans, and paying
compensating interest with respect to prepayment interest
shortfalls (to the extent of the monthly servicing fee payable
thereto). In addition, if the Interim Servicer agrees to service
the Mortgage Loans on a scheduled/scheduled basis, then the
Servicing Fee shall not be pro rated;
(6) in connection with any Pass-Through Transfer, to deliver to the
Purchaser within 5 Business Days after request by the Purchaser,
the information with respect to the Seller (as originator) and
each Third-Party Originator of the Mortgage Loans as required
under Item 1110(a) and (b) of Regulation AB, a summary of the
requirements of which has of the date hereof is attached hereto
as Exhibit 16 for convenience of reference only, as determined by
Purchaser in its sole discretion. If requested by the Purchaser,
this will include information about the applicable
credit-granting or underwriting criteria;
(7) within 5 business days after request by the Purchaser, the Seller
shall provide (or, as applicable, cause each Third-Party
Originator to provide) Static Pool Information with respect to
the mortgage loans (of a similar type as the Mortgage Loans, as
reasonably identified by the Purchaser as provided below)
originated by (i) the Seller, if the Seller is an originator of
Mortgage Loans (including as an acquirer of Mortgage Loans from a
42
Qualified Correspondent), and/or (ii) each Third-Party
Originator. Such Static Pool Information shall be prepared by the
Seller (or Third-Party Originator) on the basis of its
reasonable, good faith interpretation of the requirements of Item
1105(a)(1)-(3) and (c) of Regulation AB. To the extent that there
is reasonably available to the Seller (or Third-Party Originator)
Static Pool Information with respect to more than one mortgage
loan type, the Purchaser or any Depositor shall be entitled to
specify whether some or all of such information shall be provided
pursuant to this paragraph. The content of such Static Pool
Information may be in the form customarily provided by the
Seller, and need not be customized for the Purchaser or any
Depositor. Such Static Pool Information for each vintage
origination year or prior securitized pool, as applicable, shall
be presented in increments no less frequently than quarterly over
the life of the mortgage loans included in the vintage
origination year or prior securitized pool. The most recent
periodic increment must be as of a date no later than 135 days
prior to the date of the prospectus or other offering document in
which the Static Pool Information is to be included or
incorporated by reference. The Static Pool Information shall be
provided in an electronic format that provides a permanent record
of the information provided, such as a portable document format
(pdf) file, or other such electronic format reasonably required
by the Purchaser or the Depositor, as applicable. Promptly
following notice or discovery of a material error in Static Pool
Information provided pursuant to this clause (7) (including an
omission to include therein information required to be provided
pursuant to this clause (7)), the Seller shall provide corrected
Static Pool Information to the Purchaser or any Depositor, as
applicable, in the same format in which Static Pool Information
was previously provided to such party by the Seller.
(8) to deliver to the Purchaser within 5 Business Days after request
by the Purchaser, information with respect to the Interim
Servicer (as servicer) as required by Item 1108(b) and (c) of the
Regulation AB as determined by the Purchaser in its reasonable
discretion. In the event that the Interim Servicer has delegated
any servicing responsibilities with respect to the Mortgage Loans
to a subservicer, the Interim Servicer shall provide the
information required pursuant to this clause with respect to the
subservicer. In connection with any financial or
statistical/numerical information provided to the Purchaser
pursuant to Item 1108(b)(2) and (4), if reasonably requested by
the Purchaser, the Interim Servicer shall provide, at the
Purchaser's expense (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement),
such statements and agreed-upon procedures letters of certified
public accounts reasonably acceptable to the Purchaser or
Depositor, as applicable;
(9) in connection with any Pass-Through Transfer, to deliver to the
Purchaser within 5 Business Days after request by the Purchaser,
43
(a) information regarding any legal proceedings pending (or known to
be contemplated) against the Seller and Servicer and each other originator of
the Mortgage Loans and each Subservicer as required by Item 1117 of Regulation
AB, a summary of the requirements of which as of the date hereof is attached
hereto as Exhibit 16 for convenience of reference only, as determined by
Purchaser in its sole discretion,
(b) information regarding affiliations with respect to the Seller and
Servicer and each other originator of the Mortgage Loans and each Subservicer as
required by Item 1119(a) of Regulation AB, a summary of the requirements of
which as of the date hereof is attached hereto as Exhibit 16 for convenience of
reference only, as determined by Purchaser in its sole discretion, and
(c) information regarding relationships and transactions with respect
to the Seller and Servicer and each other originator of the Mortgage Loans and
each Subservicer as required by Item 1119(b) and (c) of Regulation AB, a summary
of the requirements of which as of the date hereof is attached hereto as Exhibit
16 for convenience of reference only, as determined by Purchaser in its sole
discretion;
(10) if so requested by the Purchaser, the Seller shall provide (or,
as applicable, cause each Third-Party Originator to provide), at
the expense of the requesting party (to the extent of any
additional incremental expense associated with delivery pursuant
to this Agreement), such statements and agreed-upon procedures
letters of certified public accountants reasonably acceptable to
the Purchaser or Depositor, as applicable, pertaining to Static
Pool Information relating to prior securitized pools for
securitizations closed on or after January 1, 2006 or, in the
case of Static Pool Information with respect to the Seller's or
Third-Party Originator's originations or purchases, to calendar
months commencing January 1, 2006, as the Purchaser or such
Depositor shall reasonably request. Such statements and letters
shall be addressed to and be for the benefit of such parties as
the Purchaser or such Depositor shall designate, which may
include, by way of example, any Sponsor, any Depositor and any
broker dealer acting as underwriter, placement agent or initial
purchaser with respect to a Pass-Through Transfer. Any such
statement or letter may take the form of a standard, generally
applicable document accompanied by a reliance letter authorizing
reliance by the addressees designated by the Purchaser or such
Depositor;
(11) in the event the Interim Servicer acts as servicer in connection
with any Pass-Through Transfer of the Mortgage Loans, to deliver
to the Purchaser or its designee on or before March 10th (with a
five (5) day grace period and no later than March 15th) of each
fiscal year beginning in 2007 (a) a report (an "Assessment of
Compliance") reasonably satisfactory to the Purchaser regarding
the Interim Servicer's, or any subservicer's, if applicable,
assessment of compliance with the Servicing Criteria during the
preceding fiscal year as required by Rules 13a-18 and 15d-18 of
the Exchange Act and Item 1122 of Regulation AB and (b) a report
(an "Attestation Report") by a registered public accounting firm
that attests to,
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and reports on, the Assessment of Compliance made by Servicer or
any subservicer, if applicable, as required by Rules 13a-18 and
15d-18 of the Exchange Act and Item 1122(b) of Regulation AB,
which Attestation Report must be made in accordance with
standards for attestation reports issued or adopted by the Public
Company Accounting Oversight Board;
(12) The Interim Servicer will deliver to the Purchaser, not later
than March 5th (with a five (5) day grace period and no later
than March 10th) of each fiscal year, beginning in 2007, an
Officers' Certificate (an "Annual Statement of Compliance")
stating, as to each signatory thereof, that (i) a review of the
activities of the Interim Servicer during the preceding year and
of performance under this Agreement or other applicable servicing
agreement has been made under such officer's supervision and (ii)
to the best of such officer's knowledge, based on such review,
the Interim Servicer has fulfilled all of its obligations under
this Agreement or other applicable servicing agreement in all
material respects throughout such year, or, if there has been a
failure to fulfill any such obligation in any material respect,
specifying each such failure known to such officer and the nature
and status thereof. The Purchaser, Depositor, Sponsor, Master
Servicer and Issuing Entity shall be entitled to rely on such
Annual Statement of Compliance. The Purchaser shall notify the
Interim Servicer prior to providing any copies to prospective
purchasers of the Mortgage Loans. In the event that the Interim
Servicer has delegated any servicing responsibilities with
respect to the Mortgage Loans to a Subservicer, the Interim
Servicer shall deliver an officer's certificate of the
Subservicer as described above as to each Subservicer as and when
required with respect to the Interim Servicer;
(13) With respect to any Mortgage Loans that are subject to a
Pass-Through Transfer or other securitization transaction, by
March 10th (with a five (5) day grace period and no later than
March 15th) of each calendar year, beginning in 2007, an officer
of the Interim Servicer shall execute and deliver an Officer's
Certificate (a "Sarbanes Certification") to the Purchaser, any
master servicer which is master servicing loans in connection
with such transaction (a "Master Servicer") and any related
depositor (a "Depositor") for the benefit of each such entity and
such entity's affiliates and the officers, directors and agents
of any such entity and such entity's affiliates, in the form
attached hereto as Exhibit 12. Such Sarbanes Certificate shall
not be provided to any other Person unless the Purchaser first
notifies the Interim Servicer of its intention to do so. In the
event that the Interim Servicer has delegated any servicing
responsibilities with respect to the Mortgage Loans to a
Subservicer, the Interim Servicer shall deliver an officers'
certificate of the Subservicer as described above as to each
Subservicer as and when required with respect to the Interim
Servicer;
(14) As of the date of each Pass-Through Transfer, and except as has
been otherwise disclosed to the Purchaser, any Master Servicer or
any
45
Depositor, the Seller or the Interim Servicer, as applicable,
represents, warrants and covenants to the Purchaser, any Master
Servicer or any Depositor that: (1) the Interim Servicer is not
aware and has not received notice of any default or servicing
related performance trigger has occurred as to any other
securitization due to any act or failure to act of the Interim
Servicer; (2) no material noncompliance with applicable servicing
criteria as to any other securitization has been disclosed or
reported by the Interim Servicer; (3) the Interim Servicer has
not been terminated as servicer in a residential mortgage loan
securitization, either due to a servicing default or to
application of a servicing performance test or trigger; (4) no
material changes to the Interim Servicer's servicing policies and
procedures for similar loans has occurred in the preceding three
years; (5) there are no aspects of the Interim Servicer's
financial condition that could have a material adverse impact on
the performance by the Interim Servicer or Seller of its
obligations hereunder; (6) there are no legal proceedings
pending, or known to be contemplated by governmental authorities,
against the Interim Servicer or Seller that could be material to
investors in the securities issued in such Pass-Through Transfer;
and (7) there are no affiliations, relationships or transactions
relating to the Interim Servicer or Seller of a type that are
described under Item 1119 of Regulation AB;
(15) If so requested by the Purchaser, Depositor or any Master
Servicer on any date following the date on which information is
first provided to the Purchaser, any Depositor or any Master
Servicer, the Seller or the Interim Servicer, as applicable,
shall, within five Business Days following such request, confirm
in writing the accuracy of the representations and warranties set
forth in clause (14) above or, if any such representation and
warranty is not accurate as of the date of such request, provide
reasonably adequate disclosure of the pertinent facts, in
writing, to the requesting party; and
If so requested by the Purchaser or any Depositor for the purpose of
satisfying its reporting obligation under the Exchange Act with respect to any
class of asset-backed securities, the Seller or Servicer shall (or shall cause
each Subservicer and Third-Party Originator to: (i) notify the Purchaser and any
Depositor in writing of (A) any material litigation or governmental proceedings
pending against the Seller, Servicer, any Subservicer or any Third-Party
Originator and (B) any affiliations or relationships that develop following the
closing date of a Pass-Through Transfer between the Seller, Servicer, any
Subservicer or any Third-Party Originator and any of the parties specified in
clause (7) of Section 12A(14) and any other parties identified in writing by the
requesting party) with respect to such Pass-Through Transfer, and (ii) provide
to the Purchaser and any Depositor a description of such proceedings,
affiliations or relationships.
As a condition to the succession to the Interim Servicer or any
Subservicer as servicer or subservicer under this Agreement or any
Reconstitution Agreement by any Person (i) into which the Interim Servicer or
such Subservicer may be merged or consolidated, or (ii) which may be appointed
as a successor to the Interim Servicer or any Subservicer, the Interim Servicer
shall provide to the Purchaser and any Depositor, at least 15 calendar days
prior to the effective
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date of such succession or appointment, (x) written notice to the Purchaser and
any Depositor of such succession or appointment and (y) in writing and in form
and substance reasonably satisfactory to the Purchaser and such Depositor, all
information reasonably requested by the Purchaser or any Depositor in order to
comply with its reporting obligation under Item 6.02 of Form 8-K with respect to
any class of asset-backed securities.
In the event of a conflict or inconsistency between the terms of
Exhibit 16 and the text of the applicable Item of Regulation AB as cited in this
Section 12, the text of Regulation AB, its adopting release and other public
statements of the SEC shall control.
B. Indemnification with Respect to Regulation AB. The Seller or the
Interim Servicer, as applicable, shall indemnify the Purchaser, each affiliate
of the Purchaser, and each of the following parties participating in a
Pass-Through Transfer: each sponsor and issuing entity; each Person responsible
for the preparation, execution or filing of any report required to be filed with
the Commission with respect to such Pass-Through Transfer, or for execution of a
certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange
Act with respect to such Pass-Through Transfer; each broker dealer acting as
underwriter, placement agent or initial purchaser, each Person who controls any
of such parties or the Depositor (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the respective present
and former directors, officers, employees and agents of each of the foregoing
and of the Depositor, and shall hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
expenses and related costs, judgments, and any other costs, fees and expenses
that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained in any
information, report, certification, accountants' letter or other
material provided under this Section 12 by or on behalf of the Seller
or Servicer, or provided under this Section 12 by or on behalf of any
Subservicer, Subcontractor or Third-Party Originator (collectively,
the "Seller/Servicer Information"), or (B) the omission to state in
the Seller/Servicer Information a material fact required to be stated
in the Seller/Servicer Information or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, by way of clarification, that
clause (B) of this paragraph shall be construed solely by reference to
the Seller/Servicer Information and not to any other information
communicated in connection with a sale or purchase of securities,
without regard to whether the Seller/Servicer Information or any
portion thereof is presented together with or separately from such
other information;
(ii) any failure by the Seller, Servicer, any Subservicer, any
Subcontractor or any Third-Party Originator to deliver any
information, report, certification, accountants' letter or other
material when and as required under this Section 12, including any
failure by the Interim Servicer to identify pursuant to Section 11.31
any Subcontractor "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB; or
(iii) any breach by the Interim Servicer of a representation or
warranty set forth in Section 12A(14) or in a writing furnished
pursuant to Section 12A(15) and made as of a date prior to the closing
date of the related Pass-Through Transfer, to the extent that such
breach is not cured by such closing date, or any breach by the Interim
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Servicer of a representation or warranty in a writing furnished
pursuant to Section 12A(15) to the extent made as of a date subsequent
to such closing date.
In the case of any failure of performance described in clause (ii) of
this Subsection, the Seller or the Interim Servicer, as applicable, shall
promptly reimburse the Purchaser, any Depositor, as applicable, and each Person
responsible for the preparation, execution or filing of any report required to
be filed with the Commission with respect to such Pass-Through Transfer, or for
execution of a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under
the Exchange Act with respect to such Pass-Through Transfer, for all costs
reasonably incurred by each such party in order to obtain the information,
report, certification, accountants' letter or other material not delivered as
required by the Seller, the Interim Servicer, any Subservicer, any Subcontractor
or any Third-Party Originator.
SECTION 13. The Seller and the Interim Servicer.
Subsection 13.01. Additional Indemnification by the Seller and the
Interim Servicer.
In addition to the indemnification provided in Subsection 7.03, the
Seller or the Interim Servicer, as applicable, shall indemnify the Initial
Purchaser and any subsequent Purchaser and hold them harmless against any and
all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that the Initial Purchaser and any subsequent Purchaser may sustain
arising out of or based upon the failure of the Seller or the Interim Servicer,
as applicable, to perform its obligations under this Agreement including but not
limited to the Interim Servicer's obligation to service and administer the
Mortgage Loans in strict compliance with the terms of this Agreement or any
Reconstitution Agreement entered into pursuant to Section 12.
Subsection 13.02. Merger or Consolidation of the Seller and the
Interim Servicer.
The Seller and the Interim Servicer shall each keep in full force and
effect its existence, rights and franchises as a corporation under the laws of
the state of its incorporation except as permitted herein, and shall obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans, and
to enable the Seller and the Interim Servicer to perform its duties under this
Agreement.
Any Person into which the Seller or the Interim Servicer may be merged
or consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Seller or the Interim Servicer shall be a party, or
any Person succeeding to the business of the Seller or the Interim Servicer,
shall be the successor of the Seller or the Interim Servicer hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person shall be (i) an institution
whose deposits are insured by FDIC or a company whose business is the
origination or servicing, as applicable, of mortgage loans, (ii) have a GAAP net
worth of not less than $25,000,000 and (iii) be a FNMA or FHLMC approved
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seller or servicer, as applicable, and, where applicable, shall satisfy any
requirements of Section 16 with respect to the qualifications of a successor to
the Seller.
Subsection 13.03. Limitation on Liability of the Seller, the Interim
Servicer and Others.
Neither the Seller, the Interim Servicer nor any of the officers,
employees or agents of the Seller or the Interim Servicer shall be under any
liability to the Purchaser for any action taken or for refraining from the
taking of any action in good faith in connection with the servicing of the
Mortgage Loans pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Seller or the Interim
Servicer or any such person against any breach of warranties or representations
made herein, or failure to perform its obligations in strict compliance with any
standard of care set forth in this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement. The Seller, the Interim Servicer and any officer, employee or agent
of the Seller or the Interim Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Seller and the Interim Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to its obligation to sell or duty to service the Mortgage Loans
in accordance with this Agreement and which in its opinion may result in its
incurring any expenses or liability; provided, however, that the Seller or the
Interim Servicer may, with the consent of the Purchaser, undertake any such
action which it may deem necessary or desirable in respect to this Agreement and
the rights and duties of the parties hereto. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities for which the Purchaser shall be liable, the
Seller and the Interim Servicer shall be entitled to reimbursement therefor from
the Purchaser upon written demand except when such expenses, costs and
liabilities are subject to the Seller's or the Interim Servicer's
indemnification under Subsections 7.03 or 13.01.
Subsection 13.04. Servicer Not to Resign.
The Interim Servicer shall not assign this Agreement or resign from
the obligations and duties hereby imposed on it except by mutual consent of the
Interim Servicer and the Purchaser or upon the determination that its servicing
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Interim Servicer in which event the Interim
Servicer may resign as servicer. Any such determination permitting the
resignation of the Interim Servicer as servicer shall be evidenced by an Opinion
of Counsel to such effect delivered to the Purchaser which Opinion of Counsel
shall be in form and substance reasonably acceptable to the Purchaser and which
shall be provided at the cost of the Interim Servicer. No such resignation shall
become effective until a successor shall have assumed the Interim Servicer's
responsibilities and obligations hereunder in the manner provided in Section 16.
Subsection 13.05. No Transfer of Servicing.
With respect to the retention of the Interim Servicer to service the
Mortgage Loans during the Interim Servicing Period, the Interim Servicer
acknowledges that the Purchaser has acted in reliance upon the Interim
Servicer's independent status, the adequacy of its servicing
49
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this Section, the Interim Servicer shall not either assign
this Agreement or the servicing hereunder or delegate its rights or duties
hereunder or any portion thereof, or sell or otherwise dispose of all or
substantially all of its property or assets, without the prior written approval
of the Purchaser, which consent will not be unreasonably withheld.
SECTION 14. Default.
Subsection 14.01. Events of Default.
In case one or more of the following Events of Default by the Interim
Servicer shall occur and be continuing, that is to say:
(i) any failure by the Interim Servicer to remit to the Purchaser
any payment required to be made under the terms of this Agreement
which continues unremedied for a period of two (2) Business Days after
the date upon which written notice of such failure, requiring the same
to be remedied, shall have been given to the Interim Servicer by the
Purchaser; or
(ii) failure on the part of the Seller or the Interim Servicer
duly to observe or perform in any material respect any other of the
covenants or agreements on the part of the Seller or the Interim
Servicer set forth in this Agreement which continues unremedied for a
period of thirty days (except that such number of days shall be
fifteen in the case of a failure to pay any premium for any insurance
policy required to be maintained under this Agreement) after the date
on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller or the Interim Servicer
by the Purchaser or by the Custodian; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or
for the winding up or liquidation of its affairs, shall have been
entered against the Seller or the Interim Servicer and such decree or
order shall have remained in force undischarged or unstayed for a
period of sixty days; or
(iv) the Seller or the Interim Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
insolvency, bankruptcy, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Seller or
the Interim Servicer or of or relating to all or substantially all of
its property; or
(v) the Seller or the Interim Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) failure by the Seller or the Interim Servicer to be in
compliance with the "doing business" or licensing laws of any
jurisdiction where a Mortgaged Property is located but only to the
extent that such failure materially and adversely affects
50
the enforceability of the Mortgage Loans or the Seller's or the Interim
Servicer's ability to perform its obligation thereunder; or
(vii) the Interim Servicer ceases at any point to meet the
qualifications of either a FNMA or FHLMC servicer, or the Interim
Servicer is not eligible to act as servicer or master servicer for
mortgage loans subject to residential mortgage backed securities
transactions rated by any nationally recognized rating agency or is
eligible to act as such only with enhanced credit support, or the
Interim Servicer's servicer rating is reduced to below average by any
nationally recognized rating agency below its rating on the Initial
Closing Date; or
(viii) the Interim Servicer attempts to assign its right to
servicing compensation hereunder or the Seller or the Interim Servicer
attempts, without the consent of the Purchaser, to sell or otherwise
dispose of all or substantially all of its property or assets or to
assign this Agreement or the servicing responsibilities hereunder or
to delegate its duties hereunder or any portion thereof; or
(ix) the Interim Servicer fails to duly perform, within the
required time period, its obligations under Sections 11.24, 11.30 or
11.31 of the Servicing Addendum, which failure continues unremedied
for a period of three (3) days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been
given to the Interim Servicer by any party to this Agreement or by any
master servicer responsible for master servicing the Mortgage Loans
pursuant to a securitization of such Mortgage Loans.
then, and in each and every such case, so long as an Event of Default shall not
have been remedied within the applicable time period, the Purchaser, by notice
in writing to the Seller or the Interim Servicer, as applicable, may, in
addition to whatever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, terminate all the rights
and obligations of the Interim Servicer as servicer under this Agreement. On or
after the receipt by the Seller or the Interim Servicer, as applicable, of such
written notice, all authority and power of the Interim Servicer to service the
Mortgage Loans under this Agreement shall on the date set forth in such notice
pass to and be vested in the successor appointed pursuant to Section 16.
Upon the termination of the Interim Servicer as servicer hereunder,
the Initial Purchaser, or its designee, shall assume all servicing
responsibilities related to the Mortgage Loans and the Interim Servicer shall
cease all servicing responsibilities related to the Mortgage Loans. The Interim
Servicer shall, at its cost and expense, take such steps as may be necessary or
appropriate to effectuate and evidence the transfer of the servicing of the
related Mortgage Loans to the Initial Purchaser, or its designee. The Initial
Servicer agrees to execute and deliver such instruments, on such terms and with
such provisions as are acceptable to the Interim Servicer and take such actions
as the Initial Purchaser, or its designee may, from time to time, reasonably
request to carry out such servicing transfer. Upon the termination of the
Interim Servicer as servicer hereunder all servicing transfer costs shall be
paid by the Interim Servicer upon presentation of reasonable documentation of
such costs.
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Subsection 14.02. Waiver of Defaults.
The Purchaser may waive any default by the Seller or the Interim
Servicer in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived.
SECTION 15. Termination.
The respective obligations and responsibilities of the Interim
Servicer, as servicer, shall terminate upon the end of the Interim Servicing
Period, the distribution to the Purchaser of the final payment or liquidation
with respect to the last Mortgage Loan (or advances of same by the Interim
Servicer) or the disposition of property acquired upon foreclosure or deed in
lieu of foreclosure with respect to the last Mortgage Loan and the remittance of
all funds due hereunder unless terminated with respect to all or a portion of
the Mortgage Loans on an earlier date (i) without cause, at the option of the
Purchaser or (ii) pursuant to Section 14. In the event that the Interim Servicer
is terminated pursuant to this Section 15 without cause, the Purchaser shall pay
to the Interim Servicer a fair market value termination fee in an exact amount
to be mutually acceptable to the Interim Servicer and the Purchaser on or prior
to the effective date of such termination. Upon written request from the
Purchaser in connection with any such termination, the Interim Servicer shall
prepare, execute and deliver, any and all documents and other instruments, place
in the Purchaser's possession all Mortgage Files, and do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise, at the Interim
Servicer's sole expense. The Interim Servicer agrees to cooperate with the
Purchaser and such successor in effecting the termination of the Interim
Servicer's responsibilities and rights hereunder as servicer, including, without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by the Interim Servicer to the
Custodial Account, REO Account or Escrow Account or thereafter received with
respect to the Mortgage Loans.
SECTION 16. Successor to the Interim Servicer.
Prior to termination of Servicer's responsibilities and duties under
this Agreement pursuant to Section 14 or 15, the Purchaser shall (i) succeed to
and assume all of the Interim Servicer's responsibilities, rights, duties and
obligations under this Agreement, or (ii) appoint a successor which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Interim Servicer as servicer under this Agreement. In
connection with such appointment and assumption, the Purchaser may make such
arrangements for the reasonable compensation of such successor out of payments
on Mortgage Loans as it and such successor shall agree. In the event that the
Interim Servicer's duties, responsibilities and liabilities as servicer under
this Agreement should be terminated pursuant to the aforementioned Sections, the
Interim Servicer shall discharge such duties and responsibilities during the
period from the date it acquires knowledge of such termination until the
effective date thereof with the same degree of diligence and prudence which it
is obligated to exercise under this Agreement, and shall take no action
whatsoever that might impair or prejudice the rights or financial condition of
the
52
Purchaser or such successor. The termination of the Interim Servicer as Servicer
pursuant to the aforementioned Sections shall not become effective until a
successor shall be appointed pursuant to this Section 16 and shall in no event
relieve the Seller and the Interim Servicer of the representations and
warranties made pursuant to Subsections 7.01 and 7.02 and the remedies available
to the Purchaser under Subsection 7.03 or 7.04, it being understood and agreed
that the provisions of such Subsections 7.01, 7.02 and 7.03 and 7.04 shall be
applicable to the Seller and Servicer notwithstanding any such resignation or
termination of the Interim Servicer, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Interim Servicer and to the Purchaser an instrument accepting
such appointment, whereupon such successor shall become fully vested with all
the rights, powers, duties, responsibilities, obligations and liabilities of the
Interim Servicer, with like effect as if originally named as a party to this
Agreement provided, however, that such successor shall not assume, and Servicer
shall indemnify such successor for, any and all liabilities arising out of the
Interim Servicer's acts as servicer taken prior to the appointment of such
successor servicer as servicer. Any termination of the Interim Servicer as
servicer pursuant to Section 12, 14 or 15 shall not affect any claims that the
Purchaser may have against the Interim Servicer arising prior to any such
termination or resignation or remedies with respect to such claims.
The Interim Servicer shall timely deliver to the successor the funds
in the Custodial Account, REO Account and the Escrow Account and the Mortgage
Files and related documents and statements held by it hereunder and the Interim
Servicer shall account for all funds. The Interim Servicer shall execute and
deliver such instruments and do such other things all as may reasonably be
required to more fully and definitely vest and confirm in the successor all such
rights, powers, duties, responsibilities, obligations and liabilities of the
Interim Servicer as servicer. The successor shall reimburse the Interim Servicer
for amounts the Interim Servicer actually expended as servicer pursuant to this
Agreement which the successor is entitled to retain hereunder and which would
otherwise have been recovered by the Interim Servicer pursuant to this Agreement
but for the appointment of the successor servicer.
SECTION 17. Financial Statements.
The Seller understands that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser shall make available to
prospective purchasers the Seller's financial statements for the most recently
completed three fiscal years respecting which such statements are available. The
Seller also shall make available any comparable interim statements to the extent
any such statements have been prepared by the Seller (and are available upon
request to members or stockholders of the Seller or the public at large). The
Seller, if it has not already done so, agrees to furnish promptly to the
Purchaser copies of the statements specified above. The Seller also shall make
available information as is reasonably requested on its servicing performance
with respect to mortgage loans serviced for others, including delinquency
ratios.
The Seller also agrees to allow access to knowledgeable financial,
accounting, origination and servicing officers of the Seller for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller, its loan origination or servicing practices
or the financial statements of the Seller.
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SECTION 18. Mandatory Delivery: Grant of Security Interest.
The sale and delivery of each Mortgage Loan on or before the related
Closing Date is mandatory from and after the date of the execution of the
related Confirmation, it being specifically understood and agreed that each
Mortgage Loan is unique and identifiable on the date hereof and that an award of
money damages would be insufficient to compensate the Initial Purchaser for the
losses and damages incurred by the Initial Purchaser (including damages to
prospective purchasers of the Mortgage Loans) in the event of the Seller's
failure to deliver each of the related Mortgage Loans or one or more Mortgage
Loans otherwise acceptable to the Initial Purchaser on or before the related
Closing Date. The Seller hereby grants to the Initial Purchaser a lien on and a
continuing security interest in each Mortgage Loan and each document and
instrument evidencing each such Mortgage Loan to secure the performance by the
Seller of its obligation hereunder, and the Seller agrees that it holds such
Mortgage Loans in custody for the Initial Purchaser subject to the Initial
Purchaser's (i) right to reject any Mortgage Loan under the terms of this
Agreement and the related Confirmation, and (ii) obligation to pay the related
Purchase Price for the Mortgage Loans. All rights and remedies of the Purchaser
under this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
SECTION 19. Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address as follows:
(i) if to the Purchaser:
HSBC Bank USA, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
(ii) if to the Seller:
American Home Mortgage Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
With copies to:
American Home Mortgage Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, General Counsel
54
(iii) if to the Interim Servicer:
American Home Mortgage Servicing, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With copies to:
American Home Mortgage Servicing, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, General Counsel
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 20. Severability Clause.
Any part, provision, representation or warranty of this Agreement that
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law that prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
SECTION 21. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
SECTION 22. Governing Law.
The Agreement shall be construed in accordance with the laws of the
State of New York without regard to any conflicts of law provisions and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal law.
55
SECTION 23. Intention of the Parties.
It is the intention of the parties that the Initial Purchaser is
purchasing, and the Seller is selling, the Mortgage Loans and not a debt
instrument of the Seller or another security. Accordingly, the parties hereto
each intend to treat the transaction for Federal income tax purposes as a sale
by the Seller, and a purchase by the Purchaser, of the Mortgage Loans. The
Initial Purchaser shall have the right to review the Mortgage Loans and the
related Mortgage Loan Files to determine the characteristics of the Mortgage
Loans which shall affect the Federal income tax consequences of owning the
Mortgage Loans and the Seller shall cooperate with all reasonable requests made
by the Initial Purchaser in the course of such review.
In addition, the Purchaser, Seller and Servicer acknowledge and agree
that the purpose of Subsections 11.30, 11.31 of Exhibit 9 and 12(6)-(16) of this
Agreement is to facilitate compliance by the Purchaser and any Depositor with
the provisions of Regulation AB and related rules and regulations of the
Commission. Although Regulation AB is applicable by its terms only to offerings
of asset-backed securities that are registered under the Securities Act, the
Seller and Servicer acknowledge that investors in privately offered securities
may require that the Purchaser or any Depositor provide comparable disclosure in
unregistered offerings. References in this Agreement to compliance with
Regulation AB include provision of comparable disclosure in private offerings.
Neither the Purchaser nor any Depositor shall exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and, in each case, the rules and regulations of the Commission
thereunder (or the provision in a private offering of disclosure comparable to
that required under the Securities Act) and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Seller
and Servicer acknowledges that interpretations of the requirements of Regulation
AB may change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the asset-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Purchaser, any Master Servicer or any Depositor in good
faith for delivery of information under these provisions on the basis of
established and evolving interpretations of Regulation AB. In connection with
any Pass-Through Transfer, the Seller and Servicer shall cooperate fully with
the Purchaser and any Master Servicer to deliver to the Purchaser (including any
of its assignees or designees), any Master Servicer and any Depositor, any and
all statements, reports, certifications, records and any other information
necessary in the good faith determination of the Purchaser, the Master Servicer
or any Depositor to permit the Purchaser, such Master Servicer or such Depositor
to comply with the provisions of Regulation AB, together with such disclosures
relating to the Seller, Servicer, any Subservicer, any Third-Party Originator
and the Mortgage Loans, or the servicing of the Mortgage Loans, reasonably
believed by the Purchaser or any Depositor to be necessary in order to effect
such compliance and reasonably available to the Seller and Interim Servicer.
SECTION 24. Successors and Assigns.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Interim Servicer and the Purchaser and the
respective successors and assigns of the Seller, the Interim Servicer and the
Purchaser. The Purchaser may assign this Agreement to any Person to whom any
Mortgage Loan is transferred whether pursuant to a sale or financing and to any
Person to whom the servicing or master servicing of any Mortgage Loan is sold or
56
transferred. Upon any such assignment, the Person to whom such assignment is
made shall succeed to all rights and obligations of the Purchaser under this
Agreement to the extent of the related Mortgage Loan or Mortgage Loans and this
Agreement, to the extent of the related Mortgage Loan or Loans, shall be deemed
to be a separate and distinct Agreement between the Seller, the Interim Servicer
and such Purchaser, and a separate and distinct Agreement between the Seller,
the Interim Servicer and each other Purchaser to the extent of the other related
Mortgage Loan or Loans. In the event that this Agreement is assigned to any
Person to whom the servicing or master servicing of any Mortgage Loan is sold or
transferred, the rights and benefits under this agreement which inure to the
Purchaser shall inure to the benefit of both the Person to whom such Mortgage
Loan is transferred and the Person to whom the servicing or master servicing of
the Mortgage Loan has been transferred; provided that, the right to require a
Mortgage Loan to be repurchased by the Seller pursuant to Subsection 7.03 or
7.04 shall be retained solely by the Purchaser. This Agreement shall not be
assigned, pledged or hypothecated by the Seller or the Interim Servicer to a
third party without the consent of the Purchaser, which consent shall not be
unreasonably withheld.
SECTION 25. Waivers.
No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
SECTION 26. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
SECTION 27. Nonsolicitation.
The Seller and the Interim Servicer covenant and agree that neither
shall take any action to solicit the refinancing of any Mortgage Loan following
the date hereof or provide information to any other entity to solicit the
refinancing of any Mortgage Loan; provided that, the foregoing shall not
preclude the Seller or the Interim Servicer or its or their respective
affiliates, from engaging in solicitations to the general public by newspaper,
radio, television or other media or which are not specifically directed toward
the Mortgagors or from refinancing the Mortgage Loan of any Mortgagor who,
without solicitation, contacts the Seller or the Interim Servicer to request the
refinancing of the related Mortgage Loan. This Section 27 shall not be deemed to
preclude the Seller or the Interim Servicer or any of their respective
affiliates from soliciting any Mortgagor for any other financial products or
services.
SECTION 28. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to
include the other gender;
57
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other Subdivisions without reference to a
document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same
Section in which the reference appears, and this rule shall also
apply to Paragraphs and other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 29. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 30. Further Agreements.
The Seller, the Interim Servicer and the Purchaser each agree to
execute and deliver to the other such reasonable and appropriate additional
documents, instruments or agreements as may be necessary or appropriate to
effectuate the purposes of this Agreement.
SECTION 31. Third-Party Beneficiary.
Each Master Servicer shall be considered a third-party beneficiary of
this Agreement, entitled to all the rights and benefits hereunder as if it were
a direct party to this Agreement.
SECTION 32. Entire Agreement.
This Agreement, the Confirmation and the exhibits and schedules hereto
constitute the entire agreement and understanding of the parties with respect to
the matters and
58
transactions contemplated by this Agreement and, except to the extent otherwise
set forth in writing, supersedes any prior agreement and understandings with
respect to those matters and transactions. In the event of any contradiction,
conflict or inconsistency between the terms and provisions of this Agreement and
the terms and provisions of any Confirmation, the terms and provisions of such
Confirmation will govern.
59
IN WITNESS WHEREOF, the Seller, the Interim Servicer and the Purchaser
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the date first above written.
AMERICAN HOME MORTGAGE CORP.
(Seller)
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
AMERICAN HOME MORTGAGE SERVICING, INC.
(Servicer)
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
HSBC BANK USA, NATIONAL ASSOCIATION
(Initial Purchaser)
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
60
EXHIBIT 1A
SELLER'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am the duly elected
______________ of [Seller], a __________________ (the "Seller"), and further
certify, on behalf of the Seller as follows:
1. Attached hereto as Attachment I are a true and correct copy of the
Certificate of Incorporation and by-laws of the Seller as are in full
force and effect on the date hereof.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Seller are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Seller,
signed (a) the Master Mortgage Loan Purchase and Interim Servicing
Agreement (the "Purchase Agreement"), dated as of ____________, 2006,
by and among the Seller, the Interim Servicer and HSBC Bank USA,
National Association (the "Purchaser"); (b) the Confirmation, dated
_____________ 2006, between the Seller, the Interim Servicer and the
Purchaser (the "Confirmation"); and (c) any other document delivered
prior hereto or on the date hereof in connection with the sale and
servicing of the Mortgage Loans in accordance with the Purchase
Agreement and the Confirmation was, at the respective times of such
signing and delivery, and is as of the date hereof, duly elected or
appointed, qualified and acting as such officer or attorney-in-fact,
and the signatures of such persons appearing on such documents are
their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of the
resolutions duly adopted by the board of directors of the Seller on
________________, 2006 (the "Resolutions") with respect to the
authorization and approval of the sale and servicing of the Mortgage
Loans; said Resolutions have not been amended, modified, annulled or
revoked and are in full force and effect on the date hereof.
5. Attached hereto as Attachment III is a Certificate of Good Standing of
the Seller dated ______________, 2006. No event has occurred since
___________________, 2006 which has affected the good standing of the
Seller under the laws of the State of ___________.
6. All of the representations and warranties of the Seller contained in
Subsections 7.01 and 7.02 of the Purchase Agreement were true and
correct in all material respects as of the date of the Purchase
Agreement and are true and correct in all material respects as of the
date hereof.
Exh 1-A-1
7. The Seller has performed all of its duties and has satisfied all the
material conditions on its part to be performed or satisfied prior to
the related Closing Date pursuant to the Purchase Agreement and the
related Confirmation.
All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
Exh 1-A-2
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated:_________________________
[Seal]
[SELLER]
(Seller)
By:
--------------------------------------
Name:
------------------------------------
Title: Vice President
I, _______________________, Secretary of the Seller, hereby certify
that _________________________ is the duly elected, qualified and acting Vice
President of the Seller and that the signature appearing above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:_________________________
[Seal]
[SELLER]
(Seller)
By:
--------------------------------------
Name:
------------------------------------
Title: [Assistant] Secretary
Exh 1-A-3
EXHIBIT 1B
SERVICER'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am the duly elected
______________ of [Servicer], a __________________ (the "Servicer"), and further
certify, on behalf of the Interim Servicer as follows:
1. Attached hereto as Attachment I are a true and correct copy of
the Certificate of Incorporation and by-laws of the Interim
Servicer as are in full force and effect on the date hereof.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Interim Servicer are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Interim
Servicer, signed (a) the Master Mortgage Loan Purchase and
Interim Servicing Agreement (the "Purchase Agreement"), dated as
of ____________, 2006, by and among the Interim Servicer, the
Seller and HSBC Bank USA, National Association (the "Purchaser");
(b) the Confirmation, dated _____________ 2006, between the
Seller, Interim Servicer and the Purchaser (the "Confirmation");
and (c) any other document delivered prior hereto or on the date
hereof in connection with the sale and servicing of the Mortgage
Loans in accordance with the Purchase Agreement and the
Confirmation was, at the respective times of such signing and
delivery, and is as of the date hereof, duly elected or
appointed, qualified and acting as such officer or
attorney-in-fact, and the signatures of such persons appearing on
such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of
the resolutions duly adopted by the board of directors of the
Interim Servicer on ________________, 2006 (the "Resolutions")
with respect to the authorization and approval of the sale and
servicing of the Mortgage Loans; said Resolutions have not been
amended, modified, annulled or revoked and are in full force and
effect on the date hereof.
5. Attached hereto as Attachment III is a Certificate of Good
Standing of the Interim Servicer dated ______________, 2006. No
event has occurred since ___________________, 2006 which has
affected the good standing of the Interim Servicer under the laws
of the State of ___________.
Exh 1-B-1
6. All of the representations and warranties of the Interim Servicer
contained in Subsections 7.01 and 7.02 of the Purchase Agreement
were true and correct in all material respects as of the date of
the Purchase Agreement and are true and correct in all material
respects as of the date hereof.
7. The Interim Servicer has performed all of its duties and has
satisfied all the material conditions on its part to be performed
or satisfied prior to the related Closing Date pursuant to the
Purchase Agreement and the related Confirmation.
All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
Exh 1-B-2
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated:_________________________
[Seal]
[SERVICER]
(Servicer)
By:
--------------------------------------
Name:
------------------------------------
Title: Vice President
I, _______________________, Secretary of the Interim Servicer, hereby
certify that _________________________ is the duly elected, qualified and acting
Vice President of the Interim Servicer and that the signature appearing above is
his genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:_________________________
[Seal]
[SERVICER]
(Servicer)
By:
--------------------------------------
Name:
------------------------------------
Title: [Assistant] ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇-▇-▇
[FORM OF OPINION OF COUNSEL TO THE SELLER AND THE INTERIM SERVICER]
------------------------
(Date)
HSBC Bank USA, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Master Mortgage Loan Purchase and Interim Servicing Agreement,
dated as of [Month] 1, 2006
Gentlemen:
I am Senior Counsel to [SELLER], a __________________ (the "Seller"
and "Servicer"), and I am delivering this opinion in my capacity as Senior
Counsel to Seller and Servicer in connection with the sale of certain mortgage
loans by the Seller to HSBC Bank USA, National Association (the "Purchaser")
pursuant to (i) a Master Mortgage Loan Purchase and Interim Servicing Agreement,
dated as of [Month] 1, 2006, among the Seller, the Interim Servicer and the
Purchaser (the "Purchase Agreement") and the Confirmation, dated [Month], 2006,
among the Seller, the Interim Servicer and the Purchaser (the "Confirmation").
Capitalized terms not otherwise defined herein have the meanings set forth in
the Purchase Agreement.
In connection with rendering this opinion letter, I, or attorneys
working under my direction, have examined, among other things, originals,
certified copies or copies otherwise identified to my satisfaction as being true
copies of the following:
A. The Purchase Agreement;
B. The Confirmation;
C. The Seller's Articles of Incorporation and By-Laws, as amended to
date;
D. The Interim Servicer's Articles of Incorporation and By-Laws, as
amended to date;
E. Resolutions adopted by the board of directors of the Seller
relating to the transactions covered by this opinion (the
"Seller's Board Resolutions"); and
F. Resolutions adopted by the board of directors of the Interim
Servicer relating to the transactions covered by this opinion
(the "Servicer's Board Resolutions").
For the purpose of rendering this opinion, I have made such
documentary, factual and legal examinations as I deemed necessary under the
circumstances. As to factual matters, I have relied upon statements,
certificates and other assurances of public officials and of officers
Exh 2-1
and other representatives of the Seller, and upon such other certificates as I
deemed appropriate, which factual matters have not been independently
established or verified by me. I have also assumed, among other things, the
genuineness of all signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to me as originals, and the conformity
to original documents of all documents submitted to me as copies and the
authenticity of the originals of such copied documents.
On the basis of and subject to the foregoing examination, and in
reliance thereon, and subject to the assumptions, qualifications, exceptions and
limitations expressed herein, I am of the opinion that:
1. The Seller and the Interim Servicer have been duly incorporated and
are validly existing and in good standing under the laws of the State of [ - ]
with corporate power and authority to own their properties and conduct their
business as presently conducted by them. The Interim Servicer has the corporate
power and authority to service the Mortgage Loans, and to execute, deliver, and
perform their obligations under the Purchase Agreement and the Confirmation
(sometimes collectively, the "Agreements").
2. The Purchase Agreement and the Confirmation have been duly and
validly authorized, executed and delivered by the Seller and the Interim
Servicer.
3. The Purchase Agreement and the Confirmation constitute valid, legal
and binding obligations of the Seller and the Interim Servicer, enforceable
against the Seller and the Interim Servicer in accordance with their respective
terms.
4. No consent, approval, authorization or order of any state or
federal court or government agency or body is required for the execution,
delivery and performance by the Seller of the Purchase Agreement and the
Confirmation, or the consummation of the transactions contemplated by the
Purchase Agreement and the Confirmation, except for those consents, approvals,
authorizations or orders which previously have been obtained.
5. Neither the servicing of the Mortgage Loans by the Interim Servicer
as provided in the Purchase Agreement and the Confirmation, nor the fulfillment
by the Seller or the Interim Servicer of the terms of or the consummation of any
other transactions contemplated in the Purchase Agreement and the Confirmation
will result in a breach of any term or provision of the certificate of
incorporation or by-laws of the Seller or the Interim Servicer, or, to my
knowledge, will conflict with, result in a breach or violation of, or constitute
a default under, (i) the terms of any indenture or other agreement or instrument
known to me to which the Seller or the Interim Servicer are parties or by which
they are bound, (ii) any State of [ - ] or federal statute or regulation
applicable to the Seller or the Interim Servicer, or (iii) any order of any
State of [ - ] or federal court, regulatory body, administrative agency or
governmental body having jurisdiction over the Seller or the Interim Servicer,
except in any such case where the default, breach or violation would not have a
material adverse effect on the Seller or the Interim Servicer or either's
ability to perform its obligations under the Purchase Agreement.
6. There is no action, suit, proceeding or investigation pending or,
to my knowledge, threatened against the Seller or the Interim Servicer which, in
my judgment, either in
Exh 2-2
any one instance or in the aggregate, would draw into question the validity of
the Purchase Agreement or which would be likely to impair materially the ability
of the Seller or the Interim Servicer to perform under the terms of the Purchase
Agreement.
7. The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Purchase Agreement is sufficient fully to transfer to the
Purchaser all right, title and interest of the Seller thereto as noteholder and
mortgagee.
The opinions above are subject to the following additional
assumptions, exceptions, qualifications and limitations:
A. I have assumed that all parties to the Agreements other than the
Seller and the Interim Servicer have all requisite power and authority to
execute, deliver and perform their respective obligations under each of the
Agreements, and that the Agreements have been duly authorized by all necessary
corporate action on the part of such parties, have been executed and delivered
by such parties and constitute the legal, valid and binding obligations of such
parties.
B. My opinion expressed in paragraphs 3 and 7 above is subject to the
qualifications that (i) the enforceability of the Agreements may be limited by
the effect of laws relating to (1) bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or preferential
transfers, and (2) general principles of equity upon the specific enforceability
of any of the remedies, covenants or other provisions of the Agreements and upon
the availability of injunctive relief or other equitable remedies and the
application of principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) as such principles relate to,
limit or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such enforcement may be
brought; and (ii) I express no opinion herein with respect to the validity,
legality, binding effect or enforceability of (a) provisions for indemnification
in the Agreements to the extent such provisions may be held to be unenforceable
as contrary to public policy or (b) Section 18 of the Purchase Agreement.
C. I have assumed, without independent check or certification, that
there are no agreements or understandings among the Seller, the Interim
Servicer, the Purchaser and any other party which would expand, modify or
otherwise affect the terms of the documents described herein or the respective
rights or obligations of the parties thereunder.
Exh 2-3
I am admitted to practice in the State of [State] and I render no
opinion herein as to matters involving the laws of any jurisdiction other than
the State of [ - ] and the Federal laws of the United States of America.
This letter is rendered to you as Purchaser under the Purchase
Agreement, solely for your benefit in connection with the transactions referred
to herein. Without my prior written consent, this letter is not to be relied
upon, used, circulated, quoted or otherwise referred to by, or assigned to, any
other person (including any person that seeks to assert your rights in respect
of this letter) or for any other purpose. In addition, I disclaim any obligation
to update this letter for changes in fact or law, or otherwise.
Very truly yours,
As Senior Counsel for [Seller and Servicer]
Exh 2-4
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
___________________________, hereby relinquishes any and all right,
title and interest it may have in and to the Mortgage Loans described in Exhibit
A attached hereto upon purchase thereof by HSBC Bank USA, National Association
from the Seller named below pursuant to that certain Master Mortgage Loan
Purchase and Interim Servicing Agreement, dated as of [Month] 1, 2006, as of the
date and time of receipt by ______________________________ of $__________ for
such Mortgage Loans (the "Date and Time of Sale"), and certifies that all notes,
mortgages, assignments and other documents in its possession relating to such
Mortgage Loans have been delivered and released to the Seller named below or its
designees as of the Date and Time of Sale.
Name and Address of Financial Institution
(Name)
(Address)
By:______________________________________
Exh 3-1
II. Certification of Release
The Seller named below hereby certifies to HSBC Bank USA, National
Association that, as of the Date and Time of Sale of the above mentioned
Mortgage Loans to HSBC Bank USA, National Association, the security interests in
the Mortgage Loans released by the above named corporation comprise all security
interests relating to or affecting any and all such Mortgage Loans. The Seller
warrants that, as of such time, there are and will be no other security
interests affecting any or all of such Mortgage Loans.
[SELLER]
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Exh 3-2
EXHIBIT 4
ASSIGNMENT AND CONVEYANCE
On this _______ day of ________, 2006, [SELLER] ("Seller") as the
Seller under that certain Master Mortgage Loan Purchase and Interim Servicing
Agreement, dated as of [Month] 1, 2006 (the "Agreement") does hereby sell,
transfer, assign, set over and convey to HSBC Bank USA, National Association as
Purchaser under the Agreement, without recourse, but subject to the terms of the
Agreement, all rights, title and interest of the Seller in and to the Mortgage
Loans listed on the Mortgage Loan Schedule attached hereto, Mortgage Files and
all rights and obligations arising under the documents contained therein
including, subject to the terms of the Agreement and the related Confirmation,
the right to any Prepayment Charges payable with respect thereto. Pursuant to
Subsection 6.03 of the Agreement, the Seller has delivered to the Custodian the
documents for each Mortgage Loan to be purchased as set forth in Exhibit 13 to
the Agreement. The contents of each related Servicing File required to be
retained by the Interim Servicer to service the Mortgage Loans pursuant to the
Agreement and thus not delivered to the Purchaser are and shall be held in trust
by the Interim Servicer for the benefit of the Purchaser as the owner thereof.
The Interim Servicer's possession of any portion of each such Servicing File is
at the will of the Purchaser for the sole purpose of facilitating servicing of
the related Mortgage Loan pursuant to the Agreement, and such retention and
possession by the Interim Servicer shall be in a custodial capacity only. The
ownership of each Mortgage Note, Mortgage, and the contents of the Mortgage File
and Servicing File is vested in the Purchaser and the ownership of all records
and documents with respect to the related Mortgage Loan prepared by or which
come into the possession of the Seller shall immediately vest in the Purchaser
and shall be retained and maintained, in trust, by the Seller at the will of the
Purchaser in such custodial capacity only.
The Seller confirms to the Purchaser that the representation and
warranties set forth in Subsections 7.01 and 7.02 of the Agreement are true and
correct in all material respects with respect to the Seller and the Mortgage
Loans listed on the Mortgage Loan Schedule attached hereto as of the date
hereof, and that all statements made in the Seller's Officer's Certificates and
all Attachments thereto remain complete, true and correct in all material
respects as of the date hereof, and that the Mortgage Loan characteristics
identified on the attached Schedule are true and correct as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
[SELLER],
Seller
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Exh 4-1
EXHIBIT 5
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by the Seller or delivered to the
Custodian:
1. Mortgage Loan Documents.
2. Residential loan application.
3. Mortgage Loan closing statement.
4. Verification of employment and income.
5. Verification of acceptable evidence of source and amount of
downpayment.
6. Credit report on Mortgagor.
7. Residential appraisal report.
8. Photograph of the Mortgaged Property.
9. Survey of the Mortgaged Property.
10. Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title
policy, i.e., map or plat, restrictions, easements, sewer
agreements, home association declarations, etc.
11. All required disclosure statements and statement of Mortgagor
confirming receipt thereof.
12. If available, termite report, structural engineer's report, water
potability and septic certification.
13. Sales Contract, if applicable.
14. Hazard insurance policy.
15. Tax receipts, insurance premium receipts, ledger sheets, payment
history from date of origination, insurance claim files,
correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and
records which are customarily contained in a mortgage loan file
and which are required to document the Mortgage Loan or to
service the Mortgage Loan.
Exh 5-1
16. Amortization schedule, if available.
17. Payment history for Mortgage Loans that have been closed for more
than 90 days.
18. Flood insurance policy, if applicable.
19. Flood Service Contract.
Exh 5-2
EXHIBIT 6
CUSTODIAL AGREEMENT
Exh 6-1
EXHIBIT 7
CUSTODIAL ACCOUNT LETTER AGREEMENT
________________________ __, 2006
To: __________________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Interim
Servicing Agreement, dated as of [Month] 1, 2006, we hereby authorize and
request you to establish an account, as a Custodial Account, to be designated as
"[SELLER] in trust for the Purchaser and various Mortgagors, Fixed and
Adjustable Rate Mortgage Loans." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Seller. You may refuse any deposit
which would result in violation of the requirement that the account be fully
insured as described below. This letter is submitted to you in duplicate. Please
execute and return one original to us.
[SELLER]
(Seller)
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
Exh 7-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
Exh 7-2
EXHIBIT 8
ESCROW ACCOUNT LETTER AGREEMENT
________________, 2006
To: __________________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Interim
Servicing Agreement, dated as of [Month] 1, 2006, we hereby authorize and
request you to establish an account, as an Escrow Account, to be designated as
"[SELLER] in trust for the Purchaser and various Mortgagors, Fixed and
Adjustable Rate Mortgage Loans." All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Seller. You may refuse any deposit
which would result in violation of the requirement that the account be fully
insured as described below. This letter is submitted to you in duplicate. Please
execute and return one original to us.
[SELLER]
(Seller)
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
Exh 8-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
Exh 8-2
EXHIBIT 9
SERVICING ADDENDUM
Subsection 11.01 Servicer to Act as Servicer.
The Interim Servicer, as independent contract servicer, shall service
and administer the Mortgage Loans in accordance with Accepted Servicing
Practices and this Agreement and shall have full power and authority, acting
alone, to do or cause to be done any and all things in connection with such
servicing and administration which the Interim Servicer may deem necessary or
desirable and consistent with the terms of this Agreement. The Interim Servicer
shall be responsible for any and all acts of a Subservicer and a Subcontractor,
and the Interim Servicer's utilization of a Subservicer or a Subcontractor shall
in no way relieve the liability of the Interim Servicer under this Agreement.
Consistent with the terms of this Agreement, the Interim Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Interim Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Purchaser; provided, however, that the Interim
Servicer shall not permit any modification with respect to any Mortgage Loan
that would change the Mortgage Interest Rate, defer or forgive the payment
thereof or of any principal or interest payments, reduce the outstanding
principal amount (except for actual payments of principal), make additional
advances of additional principal or extend the final maturity date on such
Mortgage Loan. Without limiting the generality of the foregoing, the Interim
Servicer shall continue, and is hereby authorized and empowered, to execute and
deliver on behalf of itself, and the Purchaser, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Property. If reasonably required by the Interim Servicer, the
Purchaser shall furnish the Interim Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Interim Servicer to carry
out its servicing and administrative duties under this Agreement.
If applicable, the Interim Servicer shall notify MERS of the ownership
interest of the Purchaser in each MOM Loan through the MORNET system or MIDANET
system, as applicable, or any other comparable system acceptable to MERS. At any
time during the term of this Agreement, the Purchaser may direct the Interim
Servicer to cause any MOM Loan to be deactivated from the MERS System.
In servicing and administering the Mortgage Loans, the Interim
Servicer shall employ procedures including collection procedures and exercise
the same care that it customarily employs and exercises in servicing and
administering mortgage loans for its own account giving due consideration to
accepted mortgage servicing practices of prudent lending institutions and the
Purchaser's reliance on the Interim Servicer.
The Interim Servicer will furnish, with respect to each Mortgage Loan,
in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete
Exh 9-1
information on its borrower credit files to Equifax, Experian, and Trans Union
Credit Information Company, on a monthly basis.
Subsection 11.02 Collection of Mortgage Loan Payments.
Continuously from the related Closing Date until the principal and
interest on all Mortgage Loans are paid in full, the Interim Servicer shall
proceed diligently to collect all payments due under each Mortgage Loan when the
same shall become due and payable and shall, to the extent such procedures shall
be consistent with this Agreement and the terms and provisions of any related
Primary Insurance Policy, follow such collection procedures as it follows with
respect to mortgage loans comparable to the Mortgage Loans and held for its own
account. Further, the Interim Servicer shall take special care in ascertaining
and estimating annual ground rents, taxes, assessments, water rates, fire and
hazard insurance premiums, mortgage insurance premiums, and all other charges
that, as provided in the Mortgage, will become due and payable to the end that
the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
The Interim Servicer shall not waive any Prepayment Charge with
respect to any Mortgage Loan which contains a Prepayment Charge which prepays
during the term of the charge. If the Interim Servicer fails to collect the
Prepayment Charge to which the Purchaser is entitled pursuant to the terms of
this Agreement and the related Confirmation upon any prepayment of any Mortgage
Loan which contains a Prepayment Charge, the Interim Servicer shall pay the
Purchaser at such time (by deposit to the Custodial Account) an amount equal to
amount of the Prepayment Charge which was not collected. Notwithstanding the
above, the Interim Servicer may waive (and shall waive, in the case of (v)
below) a Prepayment Charge without paying the Purchaser the amount of the
Prepayment Charge (i) if the Mortgage Loan is in default (defined as 61 days or
more delinquent) and such waiver would maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and the related Mortgage
Loan, (ii) if the prepayment is not a result of a refinancing by the Interim
Servicer or any of its affiliates and the Mortgage Loan is foreseen to be in
default and such waiver would maximize recovery of total proceeds taking into
account the value of such Prepayment Charge and the related Mortgage Loan, (iii)
if the collection of the Prepayment Charge would be in violation of applicable
laws, (iv) if the collection of such Prepayment Charge would be considered
"predatory" pursuant to written guidance published or issued by any applicable
federal, state or local regulatory authority acting in its official capacity and
having jurisdiction over such matters and (v) notwithstanding any state or
federal law to the contrary, any instance when a Mortgage Loan is in
foreclosure. The Interim Servicer hereby acknowledges that for the purposes of
the preceding sentence, (i) the law applicable to the enforcement of prepayment
penalties and charges is the law applicable to the related originator of the
Mortgage Loans and (ii) state laws prohibiting or limiting prepayment penalties
or charges are preempted and thereby inapplicable if the related originator of
the mortgage loans is a federal association or federal bank or an operating
subsidiary of such institution. In the event the Interim Servicer determines
that (i) the foregoing acknowledgement is no longer accurate and (ii) applicable
state law would prevent it from fully enforcing prepayment penalties or charges,
the Interim Servicer shall (i) provide prompt notice to such effect to the
Purchaser and (ii) provide a written opinion of counsel from a nationally
recognized law firm experienced in regulatory matters concluding that fully
enforcing prepayment penalties or charges would violate applicable law.
Exh 9-2
Subsection 11.03 Realization Upon Defaulted Mortgage Loans.
(a) The Interim Servicer shall use its best efforts, consistent with
the procedures that the Interim Servicer would use in servicing loans for its
own account, to foreclose upon or otherwise comparably convert the ownership of
such Mortgaged Properties as come into and continue in default and as to which
no satisfactory arrangements can be made for collection of delinquent payments
pursuant to Subsection 11.01. The Interim Servicer shall use its best efforts to
realize upon defaulted Mortgage Loans in such a manner as will maximize the
receipt of principal and interest by the Purchaser, taking into account, among
other things, the timing of foreclosure proceedings. The foregoing is subject to
the provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Interim Servicer shall not be required to expend its own funds
toward the restoration of such property in excess of $2,000 unless it shall
determine in its discretion (i) that such restoration will increase the proceeds
of liquidation of the related Mortgage Loan to Purchaser after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by the
Interim Servicer through Insurance Proceeds or Liquidation Proceeds from the
related Mortgaged Property, as contemplated in Subsection 11.05. In the event
that any payment due under any Mortgage Loan is not paid when the same becomes
due and payable, or in the event the Mortgagor fails to perform any other
covenant or obligation under the Mortgage Loan and such failure continues beyond
any applicable grace period, the Interim Servicer shall take such action as it
shall deem to be in the best interest of the Purchaser. In the event that any
payment due under any Mortgage Loan remains delinquent for a period of 90 days
or more, the Interim Servicer shall commence foreclosure proceedings and
promptly notify the Purchaser in writing of the commencement of such foreclosure
proceedings. In such connection, the Interim Servicer shall be responsible for
all costs and expenses incurred by it in any such proceedings; provided,
however, that it shall be entitled to reimbursement thereof from the related
Mortgaged Property, as contemplated in Subsection 11.05.
(b) Notwithstanding the foregoing provisions of this Subsection 11.03,
with respect to any Mortgage Loan as to which the Interim Servicer has received
actual notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the related Mortgaged Property the Interim Servicer shall
not either (i) obtain title to such Mortgaged Property as a result of or in lieu
of foreclosure or otherwise, or (ii) otherwise acquire possession of, or take
any other action, with respect to, such Mortgaged Property if, as a result of
any such action, the Purchaser would be considered to hold title to, to be a
mortgagee-in-possession of, or to be an owner or operator of such Mortgaged
Property within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
comparable law, unless the Interim Servicer has also previously determined,
based on its reasonable judgment and a prudent report prepared by a Person who
regularly conducts environmental audits using customary industry standards,
that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Purchaser to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances,
Exh 9-3
hazardous materials, hazardous wastes, or petroleum-based materials
for which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such
action could be required, that it would be in the best economic
interest of the Purchaser to take such actions with respect to the
affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Subsection 11.03 shall be advanced by the Interim Servicer, subject to the
Interim Servicer's right to be reimbursed therefor from the Custodial Account as
provided in Subsection 11.05(v).
If the Interim Servicer determines, as described above, that it is in
the best economic interest of the Purchaser to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Interim Servicer shall take such action as it deems to be in the best
economic interest of the Purchaser. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Interim Servicer,
subject to the Interim Servicer's right to be reimbursed therefor from the
Custodial Account as provided in Subsection 11.05(v).
(c) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds in respect of any Mortgage Loan, will
be applied in the following order of priority: first, to reimburse the Interim
Servicer for any related unreimbursed Servicing Advances, pursuant to Subsection
11.05(iii); second, to accrued and unpaid interest on the Mortgage Loan, to the
date of the Final Recovery Determination, or to the Due Date prior to the
Distribution Date on which such amounts are to be distributed if not in
connection with a Final Recovery Determination; and third, as a recovery of
principal of the Mortgage Loan. If the amount of the recovery so allocated to
interest is less than the full amount of accrued and unpaid interest due on such
Mortgage Loan, the amount of such recovery will be allocated by the Interim
Servicer as follows: first, to unpaid Servicing Fees; and second, to the balance
of the interest then due and owing. The portion of the recovery so allocated to
unpaid Servicing Fees shall be reimbursed to the Interim Servicer pursuant to
Subsection 11.05(iii).
Subsection 11.04 Establishment of Custodial Accounts; Deposits in
Custodial Accounts.
The Interim Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts. The creation of any
Custodial Account shall be evidenced by a Custodial Account Letter Agreement in
the form of Exhibit 7.
The Interim Servicer shall deposit in the Custodial Account on a daily
basis, subject to a two (2) Business Day ACH lag, and retain therein the
following payments and collections received by it subsequent to the Cut-off
Date, or received by it prior to the Cut-off Date but
Exh 9-4
allocable to a period subsequent thereto, other than in respect of principal and
interest on the Mortgage Loans due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Subsections 11.10 and 11.11, other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the
Interim Servicer's normal servicing procedures, the loan documents or
applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Interim Servicer's
normal servicing procedures, the loan documents or applicable law;
(vi) all proceeds of any Mortgage Loan repurchased in accordance with
Subsections 7.03 and 7.04 and all amounts required to be deposited by the
Interim Servicer in connection with shortfalls in principal amount of
Qualified Substitute Mortgage Loans pursuant to Subsection 7.03;
(vii) any amounts required to be deposited by the Interim Servicer
pursuant to Subsection 11.11 in connection with the deductible clause in
any blanket hazard insurance policy. Such deposit shall be made from the
Interim Servicer's own funds, without reimbursement therefor;
(viii) any amounts required to be deposited by the Interim Servicer in
connection with any REO Property pursuant to Subsection 11.13; and
(ix) any amounts required to be deposited in the Custodial Account
pursuant to Subsections 11.19 or 11.20.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Subsection 11.01, need not be deposited by the
Interim Servicer in the Custodial Account. Such Custodial Account shall be an
Eligible Account. Any interest or earnings on funds deposited in the Custodial
Account by the depository institution shall accrue to the benefit of the Interim
Servicer and the Interim Servicer shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Subsection 11.05(iii). The
Interim Servicer shall give notice to the Purchaser of the location of the
Custodial Account when established and prior to any change thereof.
If the balance on deposit in the Custodial Account exceeds $75,000 as
of the commencement of business on any Business Day and the Custodial Account
constitutes an
Exh 9-5
Eligible Account solely pursuant to clause (ii) of the definition of Eligible
Account, the Interim Servicer shall, on or before twelve o'clock noon Eastern
time on such Business Day, withdraw from the Custodial Account any and all
amounts payable to the Purchaser and remit such amounts to the Purchaser by wire
transfer of immediately available funds.
Subsection 11.05 Permitted Withdrawals From the Custodial Account.
The Interim Servicer may, from time to time, withdraw from the
Custodial Account for the following purposes:
(i) to make distributions to the Purchaser in the amounts and in the
manner provided for in Subsection 11.14;
(ii) to reimburse itself for unreimbursed Servicing Advances, the
Interim Servicer's right to reimburse itself pursuant to this subclause
(ii) with respect to any Mortgage Loan being limited to related Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds and such other amounts
as may be collected by the Interim Servicer from the Mortgagor or otherwise
relating to the Mortgage Loan, it being understood that, in the case of
such reimbursement, the Interim Servicer's right thereto shall be prior to
the rights of the Purchaser, except that, where the Interim Servicer is
required to repurchase a Mortgage Loan, pursuant to Subsection 7.03 or
Subsection 7.04, the Interim Servicer's right to such reimbursement shall
be subsequent to the payment to the Purchaser of the Repurchase Price
pursuant to Subsection 7.03 or Subsection 7.04 and all other amounts
required to be paid to the Purchaser with respect to such Mortgage Loans;
(iii) to pay to itself pursuant to Subsection 11.22 as servicing
compensation (a) any interest earned on funds in the Custodial Account (all
such interest to be withdrawn monthly not later than each Distribution
Date), and (b) the Servicing Fee from that portion of any payment or
recovery as to interest on a particular Mortgage Loan;
(iv) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Subsection 7.03 or Subsection 7.04 all amounts
received thereon and not distributed as of the date on which the related
Repurchase Price is determined;
(v) to pay, or to reimburse the Interim Servicer for advances in
respect of, expenses incurred in connection with any Mortgage Loan pursuant
to Subsection 11.03(b), but only to the extent of amounts received in
respect of the Mortgage Loans to which such expense is attributable;
(vi) to reimburse itself for monthly advances under Section 12A(5);
and
(vi) to clear and terminate the Custodial Account on the termination
of this Agreement.
The Interim Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Custodial Account pursuant to such subclauses (ii), (iii),
(iv) and (v) above.
Exh 9-6
Subsection 11.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Interim Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time deposit
or demand accounts. The creation of any Escrow Account shall be evidenced by
Escrow Account Letter Agreement in the form of Exhibit 8.
The Interim Servicer shall deposit in the Escrow Account or Accounts
on a daily basis, subject to a two (2) Business Day ACH lag, and retain therein,
(i) all Escrow Payments collected on account of the Mortgage Loans, for the
purpose of effecting timely payment of any such items as required under the
terms of this Agreement, and (ii) all Insurance Proceeds which are to be applied
to the restoration or repair of any Mortgaged Property. The Interim Servicer
shall make withdrawals therefrom only to effect such payments as are required
under this Agreement, and for such other purposes as shall be as set forth or in
accordance with Subsection 11.08. The Interim Servicer shall be entitled to
retain any interest paid on funds deposited in the Escrow Account by the
depository institution other than interest on escrowed funds required by law to
be paid to the Mortgagor and, to the extent required by law, the Interim
Servicer shall pay interest on escrowed funds to the Mortgagor notwithstanding
that the Escrow Account is non-interest bearing or that interest paid thereon is
insufficient for such purposes.
Subsection 11.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Interim
Servicer (i) to effect timely payments of ground rents, taxes, assessments,
water rates, hazard insurance premiums, Primary Insurance Policy premiums, if
applicable, and comparable items, (ii) to reimburse the Interim Servicer for any
Servicing Advance made by the Interim Servicer with respect to a related
Mortgage Loan but only from amounts received on the related Mortgage Loan which
represent late payments or collections of Escrow Payments thereunder, (iii) to
refund to the Mortgagor any funds as may be determined to be overages, (iv) for
transfer to the Custodial Account in accordance with the terms of this
Agreement, (v) for application to restoration or repair of the Mortgaged
Property, (vi) to pay to the Interim Servicer, or to the Mortgagor to the extent
required by law, any interest paid on the funds deposited in the Escrow Account,
or (vii) to clear and terminate the Escrow Account on the termination of this
Agreement.
Subsection 11.08 Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies;
Collections Thereunder.
With respect to each Mortgage Loan, the Interim Servicer shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and the status of Primary Insurance Policy and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges, including insurance renewal premiums and shall effect
payment thereof prior to the applicable penalty or termination date and at a
time appropriate for securing maximum discounts allowable, employing for such
purpose deposits of the Mortgagor in the Escrow Account which shall have been
estimated and accumulated by the Interim Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage and applicable
Exh 9-7
law. To the extent that the Mortgage does not provide for Escrow Payments, the
Interim Servicer shall determine that any such payments are made by the
Mortgagor at the time they first become due. The Interim Servicer assumes full
responsibility for the timely payment of all such bills and shall effect timely
payments of all such bills irrespective of the Mortgagor's faithful performance
in the payment of same or the making of the Escrow Payments and shall make
advances from its own funds to effect such payments. Notwithstanding anything
else contained herein, it is agreed that the Interim Servicer will not be
required to pay any such bills for ground rents, taxes, assessments, water rates
and other charges if the Mortgage does not provide for Escrow Payments until
such time at which such unpaid amounts would be considered delinquent or result
in a superior lien being imposed on the Mortgaged Property or otherwise impair
Purchaser's interest in the Mortgaged Property.
The Interim Servicer shall maintain in full force and effect, a
Primary Insurance Policy, issued by a Qualified Insurer, with respect to each
Mortgage Loan for which such coverage is required. Such coverage shall be
maintained until the Loan-to-Value Ratio of the related Mortgage Loan is reduced
to that amount for which ▇▇▇▇▇▇ ▇▇▇ no longer requires such insurance to be
maintained. The Interim Servicer will not cancel or refuse to renew any Primary
Insurance Policy in effect on the Closing Date that is required to be kept in
force under this Agreement unless a replacement Primary Insurance Policy for
such cancelled or non-renewed policy is obtained from and maintained with a
Qualified Insurer. The Interim Servicer shall not take any action which would
result in non-coverage under any applicable Primary Insurance Policy of any loss
which, but for the actions of the Interim Servicer, would have been covered
thereunder. In connection with any assumption or substitution agreement entered
into or to be entered into pursuant to Subsection 11.19, the Interim Servicer
shall promptly notify the insurer under the related Primary Insurance Policy, if
any, of such assumption or substitution of liability in accordance with the
terms of such policy and shall take all actions which may be required by such
insurer as a condition to the continuation of coverage under the Primary
Insurance Policy. If such Primary Insurance Policy is terminated as a result of
such assumption or substitution of liability, the Interim Servicer shall obtain
a replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, the Interim Servicer
agrees to prepare and present, on behalf of itself, and the Purchaser, claims to
the insurer under any Primary Insurance Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Subsection 11.04, any amounts
collected by the Interim Servicer under any Primary Insurance Policy shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Subsection
11.05.
Subsection 11.09 Transfer of Accounts.
The Interim Servicer may transfer the Custodial Account or the Escrow
Account to a different depository institution from time to time. Such transfer
shall be made only upon obtaining the consent of the Purchaser, which consent
shall not be unreasonably withheld. In any case, the Custodial Account and
Escrow Account shall be Eligible Accounts.
Exh 9-8
Subsection 11.10 Maintenance of Hazard Insurance.
The Interim Servicer shall cause to be maintained for each Mortgage
Loan fire and hazard insurance with extended coverage as is customary in the
area where the Mortgaged Property is located in an amount which is at least
equal to the lesser of (i) the amount necessary to fully compensate for any
damage or loss to the improvements which are a part of such property on a
replacement cost basis or (ii) the outstanding principal balance of the Mortgage
Loan plus with respect to any second lien Mortgage Loan, the outstanding
principal balance of the related first lien mortgage loan, in each case in an
amount not less than such amount as is necessary to prevent the Mortgagor and/or
the Mortgagee from becoming a co-insurer. If the Mortgaged Property is in an
area identified on a Flood Hazard Boundary Map or Flood Insurance Rate Map
issued by the Flood Emergency Management Agency as having special flood hazards
and such flood insurance has been made available, the Interim Servicer will
cause to be maintained a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the lesser of (i) the outstanding principal balance of the Mortgage Loan or (ii)
the maximum amount of insurance which is available under the National Flood
Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended.
The Interim Servicer also shall maintain on any REO Property, fire and hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements which are a part
of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property plus accrued interest at the
Mortgage Interest Rate and related Servicing Advances, liability insurance and,
to the extent required and available under the National Flood Insurance Act of
1968 or the Flood Disaster Protection Act of 1973, as amended, flood insurance
in an amount as provided above. Pursuant to Subsection 11.04, any amounts
collected by the Interim Servicer under any such policies other than amounts to
be deposited in the Escrow Account and applied to the restoration or repair of
the Mortgaged Property or REO Property, or released to the Mortgagor in
accordance with the Interim Servicer's normal servicing procedures, shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Subsection
11.05. Any cost incurred by the Interim Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to the
Purchaser, be added to the unpaid principal balance of the related Mortgage
Loan, notwithstanding that the terms of such Mortgage Loan so permit. It is
understood and agreed that no earthquake or other additional insurance need be
required by the Interim Servicer of the Mortgagor or maintained on property
acquired in respect of the Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Interim Servicer, or upon request to
the Purchaser, and shall provide for at least thirty days prior written notice
of any cancellation, reduction in the amount of, or material change in, coverage
to the Interim Servicer. The Interim Servicer shall not interfere with the
Mortgagor's freedom of choice in selecting either his insurance carrier or
agent, provided, however, that the Interim Servicer shall not accept any such
insurance policies from insurance companies unless such companies currently
reflect a General Policy Rating of A:VI or better in Best's Key Rating Guide and
are licensed to do business in the state wherein the property subject to the
policy is located.
Exh 9-9
Subsection 11.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Interim Servicer shall obtain and maintain a
mortgage impairment or blanket policy issued by an issuer that has a Best rating
of A:VI insuring against hazard losses on all of Mortgaged Properties securing
the Mortgage Loans, then, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Subsection 11.10 and otherwise
complies with all other requirements of Subsection 11.10, the Interim Servicer
shall conclusively be deemed to have satisfied its obligations as set forth in
Subsection 11.10, it being understood and agreed that such policy may contain a
deductible clause, in which case the Interim Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property or REO
Property a policy complying with Subsection 11.10, and there shall have been one
or more losses which would have been covered by such policy, deposit in the
Custodial Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Interim Servicer agrees to prepare and present, on
behalf of the Purchaser, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy. Upon request of the
Purchaser, the Interim Servicer shall cause to be delivered to the Purchaser a
certified true copy of such policy and a statement from the insurer thereunder
that such policy shall in no event be terminated or materially modified without
thirty days prior written notice to the Purchaser.
Subsection 11.12 Fidelity Bond, Errors and Omissions Insurance.
The Interim Servicer shall maintain, at its own expense, a blanket
fidelity bond and an errors and omissions insurance policy, with broad coverage
with responsible companies that would meet the requirements of FNMA or FHLMC on
all officers, employees or other persons acting in any capacity with regard to
the Mortgage Loans to handle funds, money, documents and papers relating to the
Mortgage Loans. The fidelity bond and errors and omissions insurance shall be in
the form of the Mortgage Banker's Blanket Bond and shall protect and insure the
Interim Servicer against losses, including forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such persons. Such fidelity bond
shall also protect and insure the Interim Servicer against losses in connection
with the failure to maintain any insurance policies required pursuant to this
Agreement and the release and satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Subsection 11.12 requiring the fidelity bond and errors and omissions
insurance shall diminish or relieve the Interim Servicer from its duties and
obligations as set forth in this Agreement. The minimum coverage under any such
bond and insurance policy shall be at least equal to the corresponding amounts
required by FNMA in the FNMA Servicing Guide or by FHLMC in the FHLMC Servicers'
and Servicers' Guide. Upon request of the Purchaser, the Interim Servicer shall
cause to be delivered to the Purchaser a certified true copy of the fidelity
bond and insurance policy and a statement from the surety and the insurer that
such fidelity bond or insurance policy shall in no event be terminated or
materially modified without thirty days' prior written notice to the Purchaser.
Subsection 11.13 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the person
Exh 9-10
designated by the Purchaser, or in the event such person is not authorized or
permitted to hold title to real property in the state where the REO Property is
located, or would be adversely affected under the "doing business" or tax laws
of such state by so holding title, the deed or certificate of sale shall be
taken in the name of such Person or Persons as shall be consistent with an
opinion of counsel obtained by the Interim Servicer from an attorney duly
licensed to practice law in the state where the REO Property is located. Any
Person or Persons holding such title other than the Purchaser shall acknowledge
in writing that such title is being held as nominee for the benefit of the
Purchaser.
The Interim Servicer shall either itself or through an agent selected
by the Interim Servicer, manage, conserve, protect and operate each REO Property
(and may temporarily rent the same) in the same manner that it manages,
conserves, protects and operates other foreclosed property for its own account,
and in the same manner that similar property in the same locality as the REO
Property is managed. If a REMIC election is or is to be made with respect to the
arrangement under which the Mortgage Loans and any REO Property are held, the
Interim Servicer shall manage, conserve, protect and operate each REO Property
in a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by such REMIC of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" within the meaning of Section 860G(c)(2) of the Code. The
Interim Servicer shall cause each REO Property to be inspected promptly upon the
acquisition of title thereto and shall cause each REO Property to be inspected
at least monthly thereafter. The Interim Servicer shall make or cause to be made
a written report of each such inspection. Such reports shall be retained in the
Mortgage File and copies thereof shall be forwarded, upon reasonable request, by
the Interim Servicer to the Purchaser. The Interim Servicer shall use its best
efforts to dispose of the REO Property as soon as possible and shall sell such
REO Property in any event within one year after title has been taken to such REO
Property, unless the Interim Servicer determines, and gives appropriate notice
to the Purchaser, that a longer period is necessary for the orderly liquidation
of such REO Property. If a period longer than one year is necessary to sell any
REO property, (i) the Interim Servicer shall report monthly to the Purchaser as
to the progress being made in selling such REO Property and (ii) if, with the
written consent of the Purchaser, a purchase money mortgage is taken in
connection with such sale, such purchase money mortgage shall name the Interim
Servicer as mortgagee, and a separate servicing agreement between the Interim
Servicer and the Purchaser shall be entered into with respect to such purchase
money mortgage. Notwithstanding the foregoing, if a REMIC election is made with
respect to the arrangement under which the Mortgage Loans and the REO Property
are held, such REO Property shall be disposed of before the close of the third
taxable year following the taxable year in which the Mortgage Loan became an REO
Property, unless the Interim Servicer provides to the trustee under such REMIC
an opinion of counsel to the effect that the holding of such REO Property
subsequent to the close of the third taxable year following the taxable year in
which the Mortgage Loan became an REO Property, will not result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code, or cause the transaction to fail to qualify as a REMIC at any time
that certificates are outstanding. Servicer shall manage, conserve, protect and
operate each such REO Property for the certificateholders solely for the purpose
of its prompt disposition and sale in a manner which does not cause such
property to fail to qualify as "foreclosure property" within the meaning of
Section 860F(a)(2)(E) of the Code, or any "net income from foreclosure property"
which is subject to taxation under the REMIC
Exh 9-11
provisions of the Code. Pursuant to its efforts to sell such property, the
Interim Servicer shall either itself or through an agent selected by Servicer,
protect and conserve such property in the same manner and to such an extent as
is customary in the locality where such property is located. Additionally,
Servicer shall perform the tax withholding and reporting related to Sections
1445 and 6050J of the Code.
With respect to each REO Property, the Interim Servicer shall
segregate and hold all funds collected and received in connection with the
operation of the REO Property, to the extent such REO Property produces income,
separate and apart from its own funds or general assets and shall establish and
maintain a separate REO Account for each REO Property in the form of a
non-interest bearing demand account, unless an Opinion of Counsel is obtained by
the Interim Servicer to the effect that the classification as a grantor trust or
REMIC for federal income tax purposes of the arrangement under which the
Mortgage Loans and the REO Property is held will not be adversely affected by
holding such funds in another manner. Each REO Account shall be established with
the Interim Servicer or, with the prior consent of the Purchaser, with a
commercial bank, a mutual savings bank or a savings association. The creation of
any REO Account shall be evidenced by a letter agreement substantially in the
form of the Custodial Account Letter Agreement attached as Exhibit 7 hereto. An
original of such letter agreement shall be furnished to any Purchaser upon
request.
The Interim Servicer shall deposit or cause to be deposited, on a
daily basis in each REO Account all revenues received with respect to the
related REO Property and shall withdraw therefrom funds necessary for the proper
operation, management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Subsection 11.10 hereof and the
fees of any managing agent acting on behalf of the Interim Servicer. The Interim
Servicer shall not be entitled to retain interest paid or other earnings, if
any, on funds deposited in such REO Account. On or before each Determination
Date, the Interim Servicer shall withdraw from each REO Account and deposit into
the Custodial Account the net income from the REO Property on deposit in the REO
Account.
The Interim Servicer shall furnish to the Purchaser on each
Distribution Date, an operating statement for each REO Property covering the
operation of each REO Property. Such operating statement shall be accompanied by
such other information as the Purchaser shall reasonably request. Together with
such statement, the Interim Servicer shall furnish to the Purchaser a statement
covering the Interim Servicer's efforts in connection with the sale of such REO
Property and any rental of such REO Property incidental to the sale thereof for
the previous month.
Each REO Disposition shall be carried out by the Interim Servicer at
such price and upon such terms and conditions as the Interim Servicer deems to
be in the best interest of the Purchaser. If as of the date title to any REO
Property was acquired by the Interim Servicer there were outstanding
unreimbursed Servicing Advances with respect to the REO Property, the Interim
Servicer, upon an REO Disposition of such REO Property, shall be entitled to
reimbursement for any related unreimbursed Servicing Advances from proceeds
received in connection with such REO Disposition. The proceeds from the REO
Disposition, net of any payment to the Interim Servicer as provided above, shall
be deposited in the REO Account and shall be transferred to the Custodial
Account on the Determination Date in the month following
Exh 9-12
receipt thereof for distribution on the succeeding Distribution Date in
accordance with Subsection 11.14.
Subsection 11.14 Distributions.
On each Distribution Date, the Interim Servicer shall distribute to
the Purchaser all amounts due to the Custodial Account as of the close of
business on the preceding Determination Date, net of charges against or
withdrawals from the Custodial Account pursuant to Subsection 11.05.
All distributions made to the Purchaser on each Distribution Date will
be made to the Purchaser of record on the preceding Record Date, and shall be
based on the Mortgage Loans owned and held by the Purchaser, and shall be made
by wire transfer of immediately available funds to the account of the Purchaser
at a bank or other entity having appropriate facilities therefor, if the
Purchaser shall have so notified the Interim Servicer or by check mailed to the
address of the Purchaser.
With respect to any remittance received by the Purchaser on or after
the second Business Day following the Business Day on which such payment was
due, the Interim Servicer shall pay to the Purchaser interest on any such late
payment at an annual rate equal to the rate of interest as is publicly announced
from time to time at its principal office by JPMorgan Chase Bank, New York, New
York, as its prime lending rate, adjusted as of the date of each change, plus
three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be paid by the Interim Servicer
to the Purchaser on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day and ending
with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with such late payment. The payment by the
Interim Servicer of any such interest shall not be deemed an extension of time
for payment or a waiver of any Event of Default by the Interim Servicer.
Subsection 11.15 Remittance Reports.
No later than the tenth (10th) calendar day, or if such tenth (10th)
calendar day is not a Business Day, the first Business Day following such tenth
(10th) calendar day of each month, the Interim Servicer shall furnish to the
Purchaser or its designee an electronic file containing, and a hard copy of, the
monthly data in the form annexed hereto as Exhibit 18 (the "Remittance Report").
On the Business Day following each Determination Date, the Interim Servicer
shall deliver to the Purchaser or its designee by telecopy (or by such other
means as the Interim Servicer and the Purchaser may agree from time to time) an
electronic file containing, and a hard copy of, the determination data with
respect to the related Distribution Date, together with such other information
with respect to the Mortgage Loans as the Purchaser may reasonably require to
allocate distributions made pursuant to this Agreement and provide appropriate
statements with respect to such distributions. On the same date, the Interim
Servicer shall forward to the Purchaser by overnight mail a computer readable
magnetic tape containing the information set forth in the Remittance Report with
respect to the related Distribution Date. To the extent that the Mortgage Loans
are the subject of a Pass-Through Transfer, the electronic file must include all
information known or available to the Interim Servicer that is necessary in
order to provide
Exh 9-13
the distribution and pool performance information as required under Item 1121 of
Regulation AB as determined by Purchaser in its sole discretion. The Interim
Servicer shall modify the electronic file as requested by the Purchaser from
time to time to comply with the preceding sentence.
Subsection 11.16 Reserved.
Subsection 11.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Subsection 11.02,
with respect to any REO Property, the Interim Servicer shall furnish to the
Purchaser a statement covering the Interim Servicer's efforts in connection with
the sale of such REO Property and any rental of such REO Property incidental to
the sale thereof for the previous month, together with the operating statement.
Such statement shall be accompanied by such other information as the Purchaser
shall reasonably request.
Subsection 11.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure, the Interim
Servicer shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Subsection 11.19 Assumption Agreements.
The Interim Servicer shall, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under any "due-on-sale" clause applicable thereto; provided, however, that the
Interim Servicer shall not exercise any such rights if prohibited by law from
doing so or if the exercise of such rights would impair or threaten to impair
any recovery under the related Primary Insurance Policy, if any. If the Interim
Servicer reasonably believes it is unable under applicable law to enforce such
"due-on-sale" clause, the Interim Servicer shall enter into an assumption
agreement with the person to whom the Mortgaged Property has been conveyed or is
proposed to be conveyed, pursuant to which such person becomes liable under the
Mortgage Note and, to the extent permitted by applicable state law, the
Mortgagor remains liable thereon. Where an assumption is allowed pursuant to
this Subsection 11.19, the Interim Servicer, with the prior written consent of
the insurer under the Primary Insurance Policy, if any, is authorized to enter
into a substitution of liability agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the related Mortgage Note. Any such
substitution of liability agreement shall be in lieu of an assumption agreement.
In connection with any such assumption or substitution of liability,
the Interim Servicer shall follow the underwriting practices and procedures of
prudent mortgage lenders in the state in which the related Mortgaged Property is
located. With respect to an assumption or substitution
Exh 9-14
of liability, Mortgage Interest Rate, the amount of the Monthly Payment, and the
final maturity date of such Mortgage Note may not be changed. The Interim
Servicer shall notify the Purchaser that any such substitution of liability or
assumption agreement has been completed by forwarding to the Purchaser the
original of any such substitution of liability or assumption agreement, which
document shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. Any fee collected
by the Interim Servicer for entering into an assumption or substitution of
liability agreement in excess of 1% of the outstanding principal balance of the
Mortgage Loan shall be deposited in the Custodial Account pursuant to Subsection
11.04.
Notwithstanding the foregoing paragraphs of this Subsection or any
other provision of this Agreement, the Interim Servicer shall not be deemed to
be in default, breach or any other violation of its obligations hereunder by
reason of any assumption of a Mortgage Loan by operation of law or any
assumption which the Interim Servicer may be restricted by law from preventing,
for any reason whatsoever. For purposes of this Subsection 11.19, the term
"assumption" is deemed to also include a sale of the Mortgaged Property subject
to the Mortgage that is not accompanied by an assumption or substitution of
liability agreement.
Subsection 11.20 Satisfaction of Mortgages and Release of Mortgage
Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Interim Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Interim Servicer will immediately notify
the Purchaser by a certification of a servicing officer of the Interim Servicer
(a "Servicing Officer"), which certification shall include a statement to the
effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Custodial Account pursuant to
Subsection 11.04 have been or will be so deposited, and shall request execution
of any document necessary to satisfy the Mortgage Loan and delivery to it of the
portion of the Mortgage File held by the Purchaser or the Purchaser's designee.
Upon receipt of such certification and request, the Purchaser, shall promptly
release the related mortgage documents to the Interim Servicer and the Interim
Servicer shall prepare and process any satisfaction or release. No expense
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Custodial Account or the Purchaser.
In the event the Interim Servicer satisfies or releases a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage, and such inadvertent satisfaction or release of such Mortgage remains
uncured or uncorrected for more than (5) Business Days after the date of such
inadvertent satisfaction or release, or should it otherwise prejudice any right
the Purchaser may have under the mortgage instruments, the Interim Servicer,
upon written demand, shall remit to the Purchaser the then outstanding principal
balance of the related Mortgage Loan by deposit thereof in the Custodial
Account. The Interim Servicer shall maintain the fidelity bond insuring the
Interim Servicer against any loss it may sustain with respect to any Mortgage
Loan not satisfied in accordance with the procedures set forth herein.
From time to time and as appropriate for the servicing or foreclosure
of the Mortgage Loan, including, for this purpose, collection under any Primary
Insurance Policy, the Purchaser
Exh 9-15
shall, upon request of the Interim Servicer and delivery to the Purchaser of a
servicing receipt signed by a Servicing Officer, release the requested portion
of the Mortgage File held by the Purchaser to the Interim Servicer. Such
servicing receipt shall obligate the Interim Servicer to return the related
Mortgage documents to the Purchaser when the need therefor by the Interim
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Interim Servicer has delivered to the Purchaser a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a Servicing Officer stating that such
Mortgage Loan was liquidated, the servicing receipt shall be released by the
Purchaser to the Interim Servicer.
Subsection 11.21 Reserved.
Subsection 11.22 Servicing Compensation.
As compensation for its services hereunder, the Interim Servicer shall
be entitled to withdraw from the Custodial Account or to retain from interest
payments on the Mortgage Loans the amounts provided for as the Interim
Servicer's Servicing Fee. Additional servicing compensation in the form of
assumption fees, as provided in Subsection 11.19, and late payment charges and
similar ancillary servicing compensation shall be retained by the Interim
Servicer to the extent not required to be deposited in the Custodial Account.
The Interim Servicer shall not be permitted to retain any portion of the
Prepayment Charges collected on the Mortgage Loans, which Prepayment Charges,
where specifically provided in the related Confirmation, shall be remitted to
the Purchaser. The Interim Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement therefor except as specifically provided for.
Subsection 11.23 Notification of Adjustments.
On each Adjustment Date, the Interim Servicer shall make interest rate
adjustments for each Adjustable Rate Mortgage Loan in compliance with the
requirements of the related Mortgage and Mortgage Note. The Interim Servicer
shall execute and deliver the notices required by each Mortgage and Mortgage
Note regarding interest rate adjustments. The Interim Servicer also shall
provide timely notification to the Purchaser of all applicable data and
information regarding such interest rate adjustments. Upon the discovery by the
Interim Servicer or the Purchaser that the Interim Servicer has failed to adjust
a Mortgage Interest Rate or a Monthly Payment pursuant to the terms of the
related Mortgage Note and Mortgage, the Interim Servicer shall immediately
deposit in the Custodial Account from its own funds the amount of any interest
loss caused thereby without reimbursement therefor.
Exh 9-16
Subsection 11.24 Annual Statement as to Compliance; Annual
Certification.
(a) The Interim Servicer will deliver to the Purchaser, not later than
March 10th (with a five (5) day grace period and not later than March 15th) of
each calendar year, beginning in 2007, an Officers' Certificate (an "Annual
Statement of Compliance") stating, as to each signatory thereof, that (i) a
review of the activities of the Interim Servicer during the preceding year and
of performance under this Agreement or other applicable servicing agreement has
been made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Interim Servicer has fulfilled
all of its obligations under this Agreement or other applicable servicing
agreement throughout such year, or, if there has been a failure to fulfill any
such obligation, specifying each such failure known to such officer and the
nature and status thereof. Copies of such statement shall be provided by the
Purchaser to any Person identified as a prospective purchaser of the Mortgage
Loans. The Purchaser shall notify the Interim Servicer prior to providing any
such copies. In the event that the Interim Servicer has delegated any servicing
responsibilities with respect to the Mortgage Loans to a Subservicer, the
Interim Servicer shall deliver an officer's certificate of the Subservicer as
described above as to each Subservicer as and when required with respect to the
Interim Servicer.
(b) Reserved.
(c) The Interim Servicer shall indemnify and hold harmless the
Purchaser (and if this Agreement has been assigned in whole or in part by the
Purchaser, any and all Persons previously acting as "Purchaser" hereunder), and
their respective officers, directors, agents and affiliates, and such
affiliates' officers, directors and agents (any such person, an "Indemnified
Party") from and against any losses, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other costs and expenses
arising out of or based upon a breach by the Interim Servicer or any of its
officers, directors, agents or affiliates of its obligations under this Section
11.24 or the negligence, bad faith or willful misconduct of the Interim Servicer
in connection therewith. If the indemnification provided for herein is
unavailable or insufficient to hold harmless any Indemnified Party, then the
Interim Servicer agrees that it shall contribute to the amount paid or payable
by the Indemnified Party as a result of the losses, claims, damages or
liabilities of the Indemnified Party in such proportion as is appropriate to
reflect the relative fault of the Indemnified Party on the one hand and the
Interim Servicer in the other in connection with a breach of the Interim
Servicer's obligations under this Section 11.24, or the Interim Servicer's
negligence, bad faith or willful misconduct in connection therewith.
Subsection 11.25 Reserved.
Subsection 11.26 Access to Certain Documentation.
The Interim Servicer shall provide to the Office of Thrift
Supervision, the FDIC and any other federal or state banking or insurance
regulatory authority that may exercise authority over the Purchaser access to
the documentation regarding the Mortgage Loans serviced by the Interim Servicer
required by applicable laws and regulations. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the Interim Servicer. In addition, access to the
documentation will be provided to the Purchaser and
Exh 9-17
any Person identified to the Interim Servicer by the Purchaser without charge,
upon reasonable request during normal business hours at the offices of the
Interim Servicer.
Subsection 11.27 Reserved.
Subsection 11.28 Reports and Returns to be Filed by the Interim
Servicer.
The Interim Servicer shall file information reports with respect to
the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and information returns
relating to cancellation of indebtedness income with respect to any Mortgaged
Property as required by Sections 6050H, 6050J and 6050P of the Code. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.
Subsection 11.29 Superior Liens.
With respect to each second lien Mortgage, the Interim Servicer shall,
for the protection of the Purchaser's interest, file (or cause to be filed) of
record a request for notice of any action by a superior lienholder where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. The Interim
Servicer shall also notify any superior lienholder in writing of the existence
of the Mortgage Loan and request notification of any action (as described below)
to be taken against the Borrower or the Mortgaged Property by the superior
lienholder.
If the Interim Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the superior
lien, or has declared or intends to declare a default under the superior
mortgage or the promissory note secured thereby, or has filed or intends to file
an election to have the Mortgaged Property sold or foreclosed, the Interim
Servicer shall take whatever actions are necessary to protect the interests of
the Purchaser, and/or to preserve the security of the related Mortgage Loan,
subject to any requirements applicable to real estate mortgage investment
conduits pursuant to the Internal Revenue Code. The Interim Servicer shall make
a Servicing Advance of the funds necessary to cure the default or reinstate the
superior lien if the Interim Servicer determines that such Servicing Advance is
in the best interests of the Purchaser. The Interim Servicer shall not make such
a Servicing Advance except to the extent that it determines that such advance
would not be a Nonrecoverable Servicing Advance from Liquidation Proceeds on the
related Mortgage Loan. The Interim Servicer shall thereafter take such action as
is necessary to recover the amount so advanced.
Subsection 11.30 Reserved.
Subsection 11.31. Use of Subservicers and Subcontractors.
(a) The Interim Servicer shall not hire or otherwise utilize the
services of any Subservicer to fulfill any of the obligations of the Interim
Servicer as servicer under this Agreement or any Reconstitution Agreement unless
the Interim Servicer complies with the provisions of paragraph (b) of this
Section. The Interim Servicer shall not hire or otherwise utilize the services
of any Subcontractor, and shall not permit any Subservicer to hire or
Exh 9-18
otherwise utilize the services of any Subcontractor, to fulfill any of the
obligations of the Interim Servicer as servicer under this Agreement or any
Reconstitution Agreement unless the Interim Servicer complies with the
provisions of paragraph (d) of this Subsection.
(b) The Interim Servicer shall cause any Subservicer used by the
Interim Servicer (or by any Subservicer) for the benefit of the Purchaser and
any Depositor to comply with the provisions of this Subsection and with
Subsections 11.24, 11.30 and 12 of this Agreement to the same extent as if such
Subservicer were the Interim Servicer, and to provide the information required
with respect to such Subservicer under Section 12A(15) of this Agreement. The
Interim Servicer shall be responsible for obtaining from each Subservicer and
delivering to the Purchaser and any Depositor any Annual Statement of Compliance
required to be delivered by such Subservicer under Section 11.24, any Assessment
of Compliance and Attestation Report required to be delivered by such
Subservicer under Section 11.30 and any Annual Certification required under
Section 11.24 as and when required to be delivered.
(c) The Interim Servicer shall promptly upon request provide to the
Purchaser and any Depositor (or any designee of the Depositor, such as a master
servicer or administrator) a written description (in form and substance
satisfactory to the Purchaser and such Depositor) of the role and function of
each Subcontractor utilized by the Interim Servicer or any Subservicer,
specifying (i) the identity of each such Subcontractor, (ii) which (if any) of
such Subcontractors are "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, and (iii) which elements of the Servicing
Criteria will be addressed in assessments of compliance provided by each
Subcontractor identified pursuant to clause (ii) of this paragraph.
(d) As a condition to the utilization of any Subcontractor determined
to be "participating in the servicing function" within the meaning of Item 1122
of Regulation AB, the Interim Servicer shall cause any such Subcontractor used
by the Interim Servicer (or by any Subservicer) for the benefit of the Purchaser
and any Depositor to comply with the provisions of Sections 11.30 and 12 of this
Agreement to the same extent as if such Subcontractor were the Interim Servicer.
The Interim Servicer shall be responsible for obtaining from each Subcontractor
and delivering to the Purchaser and any Depositor any Assessment of Compliance
and Attestation Report required to be delivered by such Subcontractor under
Section 11.30, in each case as and when required to be delivered.
Subsection 11.32 Intent of the Parties; Reasonableness.
In addition, the Purchaser, Seller and Servicer acknowledge and agree
that the purpose of Subsections 11.30, 11.31 and 12A(6) - (16) of this Agreement
is to facilitate compliance by the Purchaser and any Depositor with the
provisions of Regulation AB and related rules and regulations of the Commission.
Although Regulation AB is applicable by its terms only to offerings of
asset-backed securities that are registered under the Securities Act, the Seller
and Servicer acknowledge that investors in privately offered securities may
require that the Purchaser or any Depositor provide comparable disclosure in
unregistered offerings. References in this Agreement to compliance with
Regulation AB include provision of comparable disclosure in private offerings.
Neither the Purchaser nor any Depositor shall exercise its right to request
delivery of information or other performance under these provisions other than
in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and, in each case,
Exh 9-19
the rules and regulations of the Commission thereunder (or the provision in a
private offering of disclosure comparable to that required under the Securities
Act) and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Seller and Servicer acknowledges that
interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with requests made by the Purchaser,
any Master Servicer or any Depositor in good faith for delivery of information
under these provisions on the basis of established or, to the extent applicable,
evolving interpretations of Regulation AB. In connection with any Pass-Through
Transfer, the Seller and Servicer shall cooperate fully with the Purchaser and
any Master Servicer to deliver to the Purchaser (including any of its assignees
or designees), any Master Servicer and any Depositor, any and all statements,
reports, certifications, records and any other information necessary in the good
faith determination of the Purchaser, the Master Servicer or any Depositor to
permit the Purchaser, such Master Servicer or such Depositor to comply with the
provisions of Regulation AB, together with such disclosures relating to the
Seller, Servicer, any Subservicer, any Third-Party Originator and the Mortgage
Loans, or the servicing of the Mortgage Loans, reasonably believed by the
Purchaser or any Depositor to be necessary in order to effect such compliance
and reasonably available to the Seller and the Interim Servicer.
Subsection 11.33 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement
under which the Mortgage Loans and REO Property are held, the Interim Servicer
shall not take any action, cause the REMIC to take any action or fail to take
(or fail to cause to be taken) any action that, under the REMIC Provisions, if
taken or not taken, as the case may be, could (i) endanger the status of the
REMIC as a REMIC or (ii) result in the imposition of a tax upon the REMIC
(including but not limited to the tax on "prohibited transactions" as defined in
Section 860F(a)(2) of the Code and the tax on "contributions" to a REMIC set
forth in Section 860G(d) of the Code) unless the Interim Servicer has received
an Opinion of Counsel (at the expense of the party seeking to take such action)
to the effect that the contemplated action will not endanger such REMIC status
or result in the imposition of any such tax.
Exh 9-20
EXHIBIT 10
FORM OF
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is an Assignment, Assumption and Recognition Agreement (this "AAR
Agreement") made as of _____, 200_, among HSBC Bank, National Association (the
"Assignor"), ____________________ (the "Assignee") [not individually but solely
as trustee on behalf of the holders of the ___________, Series ____,
Asset-Backed Certificates] and _______________ (the "Company").
In consideration of the mutual promises contained herein the parties
hereto agree that the residential mortgage loans (the "Assigned Loans") listed
on Attachment 1 annexed hereto (the "Assigned Loan Schedule") purchased by
Assignor from Company pursuant to (a) the Master Mortgage Loan Purchase and
Interim Servicing Agreement, dated as of _____, 200_, between Assignor and
Company (the "Purchase Agreement"), shall be subject to the terms of this AAR
Agreement. Capitalized terms used herein but not defined shall have the meanings
ascribed to them in the Purchase Agreement.
Assignment and Assumption
1. Assignor hereby grants, transfers and assigns to Assignee all of
the right, title and interest of Assignor in the Assigned Loans and, as they
relate to the Assigned Loans, all of its right, title and interest in, to and
under the Purchase Agreement and Assignee hereby assumes all rights and
obligations with respect to the Assigned Loans under the Purchase Agreement.
Assignor specifically reserves and does not assign to Assignee any right title
and interest in, to or under any Mortgage Loans subject to the Purchase
Agreement other than those set forth on Attachment l.
Recognition of the Company
2. [For Pass-Through Transfers include this sentence: From and after
the date hereof, the Company shall and does hereby recognize that the Assignee
will transfer the Assigned Loans and assign its rights under the Purchase
Agreement (solely to the extent set forth herein) and this AAR Agreement to
______________________________ (the "Trust") created pursuant to a Pooling and
Servicing Agreement, dated as of _______________, 200__ (the "Pooling
Agreement"), among the Assignee as trustee (including its successors in interest
and any successor trustees under the Pooling Agreement), the Assignor and
_________________________, as servicer (including its successors in interest and
any successor servicer under the Pooling Agreement, the "Servicer").] The
Company hereby acknowledges and agrees that from and after the date hereof (i)
the [Trust][Assignee] will be the owner of the Assigned Loans, (ii) the Company
shall look solely to the [Trust][Assignee] for performance of any obligations of
the Assignor insofar as they relate to the enforcement of the representations,
warranties and covenants with respect to the Assigned Loans, (iii) the
[Assignee][Trust (including the Assignee and the Interim Servicer acting on the
Trust's behalf)] shall have all the rights and remedies available to the
Assignor, insofar as they relate to the Assigned Loans, under
Exh 10-1
the Purchase Agreement, including, without limitation, the enforcement of the
document delivery requirements and remedies with respect to breaches of
representations and warranties set forth in the Purchase Agreement, and shall be
entitled to enforce all of the obligations of the Company thereunder insofar as
they relate to the Assigned Loans, and (iv) all references to the Purchaser
(insofar as they relate to the rights, title and interest and, with respect to
obligations of the Purchaser, only insofar as they relate to the enforcement of
the representations, warranties and covenants of the Company) under the Purchase
Agreement insofar as they relate to the Assigned Loans, shall be deemed to refer
to the [Assignee] [Trust (including the Assignee and the Interim Servicer acting
on the Trust's behalf)]. Neither the Company nor the Assignor shall amend or
agree to amend, modify, waiver, or otherwise alter any of the terms or
provisions of the Purchase Agreement which amendment, modification, waiver or
other alteration would in any way affect the Assigned Loans or the Company's
performance under the Purchase Agreement with respect to the Assigned Loans
without the prior written consent of the Assignee.
Representations; Warranties and Covenants
3. Assignor warrants and represents to Assignee and Company as of the
date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy
of the Purchase Agreement, which agreement is in full force
and effect as of the date hereof and the provisions of which
have not been waived, amended or modified in any respect,
nor has any notice of termination been given thereunder;
b. Assignor is the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase
Agreement as they relate to the Assigned Loans, free and
clear of any and all liens, claims and encumbrances; and
upon the transfer of the Assigned Loans to Assignee as
contemplated herein, Assignee shall have good title to each
and every Assigned Loan, as well as any and all of
Assignor's interests, rights and obligations under the
Purchase Agreement as they relate to the Assigned Loans,
free and clear of any and all liens, claims and
encumbrances;
c. Assignor has not received notice of, and has no knowledge
of, any offsets, counterclaims or other defenses available
to Company with respect to the Assigned Loans or the
Purchase Agreement;
d. Assignor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of
its formation, and has all requisite power and authority to
acquire, own and sell the Assigned Loans;
e. Assignor has full power and authority to execute, deliver
and perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The
consummation of the transactions
Exh 10-2
contemplated by this AAR Agreement is in the ordinary course
of Assignor's business and will not conflict with, or result
in a breach of, any of the terms, conditions or provisions
of Assignor's charter or by-laws or any legal restriction,
or any material agreement or instrument to which Assignor is
now a party or by which it is bound, or result in the
violation of any law, rule, regulation, order, judgment or
decree to which Assignor or its property is subject. The
execution, delivery and performance by Assignor of this AAR
Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all
necessary action on the part of Assignor. This AAR Agreement
has been duly executed and delivered by Assignor and, upon
the due authorization, execution and delivery by Assignee
and Company, will constitute the valid and legally binding
obligation of Assignor enforceable against Assignor in
accordance with its terms except as enforceability may be
limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
f. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity is required to be obtained or made by Assignor in
connection with the execution, delivery or performance by
Assignor of this AAR Agreement, or the consummation by it of
the transactions contemplated hereby; and
g. There is no action, suit, proceeding, investigation or
litigation pending or, to Assignor's knowledge, threatened,
which either in any instance or in the aggregate, if
determined adversely to Assignor, would adversely affect
Assignor's execution or delivery of, or the enforceability
of, this AAR Agreement, or the Assignor's ability to perform
its obligations under this AAR Agreement.
4. Assignee warrants and represents to, and covenants with, Assignor
and Company as of the date hereof:
a. Assignee is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
organization and has all requisite power and authority to
acquire and [own] [hold] the Assigned Loans [as trustee on
behalf of the Trust];
b. Assignee has full power and authority to execute, deliver
and perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The
consummation of the transactions contemplated by this AAR
Agreement is in the ordinary course of Assignee's business
and will not conflict with, or result in a breach of, any of
the terms, conditions or provisions of Assignee's
organizational
Exh 10-3
documentation or any legal restriction, or any material
agreement or instrument to which Assignee is now a party or
by which it is bound, or result in the violation of any law,
rule, regulation, order, judgment or decree to which
Assignee or its property is subject. The execution, delivery
and performance by Assignee of this AAR Agreement and the
consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary action on the
part of Assignee. This AAR Agreement has been duly executed
and delivered by Assignee and, upon the due authorization,
execution and delivery by Assignor and Company, will
constitute the valid and legally binding obligation of
Assignee enforceable against Assignee in accordance with its
terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally, and by general principles of equity regardless of
whether enforceability is considered in a proceeding in
equity or at law;
c. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity is required to be obtained or made by Assignee in
connection with the execution, delivery or performance by
Assignee of this AAR Agreement, or the consummation by it of
the transactions contemplated hereby; and
d. There is no action, suit, proceeding, investigation or
litigation pending or, to Assignee's knowledge, threatened,
which either in any instance or in the aggregate, if
determined adversely to Assignee, would adversely affect
Assignee's execution or delivery of, or the enforceability
of, this AAR Agreement, or the Assignee's ability to perform
its obligations under this AAR Agreement.
5. Company warrants and represents to, and covenants with, Assignor
and Assignee as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy
of the Purchase Agreement, which agreement is in full force
and effect as of the date hereof and the provisions of which
have not been waived, amended or modified in any respect,
nor has any notice of termination been given thereunder;
b. Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority to
perform its obligations under the Purchase Agreement;
c. Company has full corporate power and authority to execute,
deliver and perform its obligations under this AAR
Agreement, and to consummate the transactions set forth
herein. The consummation of the transactions contemplated by
this AAR Agreement is in the ordinary course of Company's
business and will not conflict with, or result in a breach
of, any
Exh 10-4
of the terms, conditions or provisions of Company's
organizational documentation or any legal restriction, or
any material agreement or instrument to which Company is now
a party or by which it is bound, or result in the violation
of any law, rule, regulation, order, judgment or decree to
which Company or its property is subject, except in such
case where the conflict, breach or violation would not have
a material adverse effect on the Company or its ability to
perform its obligations under this AAR Agreement. The
execution, delivery and performance by Company of this AAR
Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Company. This AAR
Agreement has been duly executed and delivered by Company,
and, upon the due authorization, execution and delivery by
Assignor and Assignee, will constitute the valid and legally
binding obligation of Company, enforceable against Company
in accordance with its terms except as enforceability may be
limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
d. No consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity is required to be obtained or made by Company in
connection with the execution, delivery or performance by
Company of this AAR Agreement, or the consummation by it of
the transactions contemplated hereby;
e. There is no action, suit, proceeding, investigation or
litigation pending or, to Company's knowledge, threatened,
which either in any instance or in the aggregate, if
determined adversely to Company, would adversely affect
Company's execution or delivery of, or the enforceability
of, this AAR Agreement, or the Company's ability to perform
its obligations under this AAR Agreement; and
f. Pursuant to Section 12 of the Purchase Agreement, the
Company hereby represents and warrants, for the benefit of
the Assignor, the Assignee [and the Trust,] that the
representations and warranties set forth in Section 7.01 and
7.02 of the Purchase Agreement, are true and correct as of
the date hereof in all material respects, except that the
representation and warranty set forth in Section 7.02(i)
shall, for purposes of this AAR Agreement, relate to the
Mortgage Loan Schedule attached hereto.
[Additional Representations and Warranties Necessary for Securitization]
6. The Company hereby acknowledges and agrees that the remedies
available to the Assignor, the Assignee [and the Trust (including the Assignee
and the Interim Servicer acting on the Trust's behalf)] in connection with any
breach of the representations and warranties made by
Exh 10-5
the Company set forth in Section 5 hereof shall be as set forth in Subsection
7.03 of the Purchase Agreement as if they were set forth herein (including
without limitation the repurchase and indemnity obligations set forth therein).
7. [Notwithstanding any term hereof to the contrary, the execution and
delivery of this AAR Agreement by the Assignee is solely in its capacity as
trustee for the Trust and not individually, and any recourse against the
Assignee in respect of any obligations it may have under or pursuant to the
terms of this AAR Agreement shall be limited solely to the assets it may hold as
trustee of the Trust.]
Miscellaneous
8. All demands, notices and communications related to the Assigned
Loans, the Purchase Agreements and this AAR Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
registered mail, postage prepaid, as follows:
a. In the case of Company,
[Company]
________________
________________, ____________ _____
Attn: _____________
b. In the case of Assignor,
HSBC Bank USA, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: [__________]
c. In the case of Assignee,
[Assignee]
________________
________________, ____________ _____
Attn: _____________
9. This AAR Agreement shall be construed in accordance with the laws
of the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
10. No term or provision of this AAR Agreement may be waived or
modified unless such waiver or modification is in writing and signed by the
party against whom such waiver or modification is sought to be enforced.
Exh 10-6
11. This AAR Agreement shall inure to the benefit of the successors
and assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or consolidated shall without the requirement for any
further writing, be deemed Assignor, Assignee or Company, respectively
hereunder.
12. This AAR Agreement shall survive the conveyance of the Assigned
Loans as contemplated in this AAR Agreement.
13. This AAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
14. In the event that any provision of this AAR Agreement conflicts
with any provision of the Purchase Agreement with respect to the Assigned Loans,
the terms of this AAR Agreement shall control.
Exh 10-7
IN WITNESS WHEREOF, the parties hereto have executed this AAR
Agreement as of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
-----------------------------------------
Name:
Title:
[ASSIGNEE]
By:
-----------------------------------------
Name:
Title:
[COMPANY]
Company
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Exh 10-8
ATTACHMENT l
ASSIGNED LOAN SCHEDULE
▇▇▇ ▇▇-▇
▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ 10-10
EXHIBIT 11
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement"), dated as of _____,
200_ (the "Settlement Date"), by and between HSBC Asset Securitization Corp., a
Delaware corporation (such entity, and its successors and assigns, being
referred to herein as the "Depositor") and [COMPANY] (the "Company").
The Depositor and the Company hereby recite and agree as follows:
RECITALS
1. HSBC Bank USA, National Association (the "Seller") has purchased
certain [adjustable]-rate, [first] lien mortgage loans (the "Mortgage Loans")
from the Company and intends to transfer all of its right, title and interest in
and to the Mortgage Loans to the _______________ (the "Trust") pursuant to the
terms of a Pooling and Servicing Agreement, dated as of _____, 200_ (the
"Pooling and Servicing Agreement"), by and among the Seller, the Depositor,
_________ as [master] servicer and ___________, as trustee of the Trust (the
"Trustee").
2. In exchange for the Mortgage Loans, the Trust shall issue to the
Seller ___________________________, Series _____, Asset-Backed Certificates (the
"Certificates") pursuant to the terms of the Pooling and Servicing Agreement.
3. In accordance with an Underwriting Agreement, dated _____, 200_
(the "Underwriting Agreement"), the Depositor will sell to HSBC Securities
(USA), Inc. (the "Underwriter") the Certificates.
4. The Certificates will be offered and sold by the Underwriter
pursuant to the terms and conditions of the Underwriting Agreement, through the
use of a prospectus supplement to be dated as of the date of its printing but
not later than the Settlement Date (the "Prospectus Supplement") and a related
prospectus dated _____, 200_, (the "Base Prospectus" and together with the
Prospectus Supplement, the "Prospectus").
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises herein made and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Representations and Warranties.
(a) The Company hereby represents and warrants to the Depositor, as of
the date of this Agreement, that:
Exh 11-1
(i) the Company has been duly organized and is validly existing and in
good standing as a [corporation] under the laws of the State of __________,
with full power and authority to enter into and perform its obligations
under this Agreement; and
(ii) this Agreement has been duly authorized, executed and delivered
by the Company and constitutes a legal, valid and binding agreement of the
Company, enforceable against it in accordance with its terms, subject to
(A) bankruptcy, insolvency, receivership, conservatorship or other similar
laws affecting creditors' rights generally, (B) general principles of
equity regardless of whether enforcement is sought in a proceeding in
equity or at law, and (C) public policy considerations limiting the
enforceability of provisions of this Agreement that purport to provide
indemnification from liabilities under applicable securities laws.
(b) The Company represents and warrants to the Depositor that as of
the Settlement Date:
(i) the information set forth in the Prospectus Supplement under [TO
BE DETERMINED], (such information, the "Company Information") does not
contain an untrue statement of a material fact; and
(ii) the Company Information does not omit or fail to state any
material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(c) The Depositor hereby represents and warrants to the Company that
as of the date of this Agreement:
(ii) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full corporate
power and authority to enter into and perform its obligations under this
Agreement; and
(iii) this Agreement has been duly authorized, executed and delivered
by the Depositor and constitutes the legal, valid and binding agreement of
the Depositor enforceable against the Depositor in accordance with its
terms, subject to (A) bankruptcy, insolvency, receivership,
conservatorship, reorganization, moratorium or other similar laws affecting
creditors' rights generally, (B) general principals of equity regardless of
whether enforcement is sought in a proceeding in equity or at law, and (C)
public policy considerations limiting the enforceability of provisions of
this Agreement that purport to provide indemnification from penalties under
applicable securities laws.
Exh 11-2
2. Indemnification.
(a) Company (also referred to herein as the "Indemnifying Party")
agrees to indemnify and hold harmless the Depositor and each of its directors
and officers and affiliates and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act of 1933, as amended (the
"Securities Act"), or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (the "Indemnified Party") and any assignee
thereof, against any and all actual losses, claims, expenses, damages or
liabilities to which the Depositor or any such director, officer or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (x) any untrue statement of any material fact
contained in the Company Information or omission to state therein, a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which such statements were made,
not misleading (in each case, regardless of whether a final judgment has been
entered by a finder of fact) or (y) any material misstatement or omission
contained in the Prospectus Supplement regarding information or statistics
therein regarding the Mortgage Loans based on information correctly derived by
the Depositor or its affiliates and included in the Prospectus Supplement which
results or arises from information actually provided in writing to the Depositor
or its affiliates by Company; and will promptly upon request reimburse any such
reasonable legal or other expenses reasonably incurred by the Depositor or any
such director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which Company may otherwise have.
(b) Promptly after receipt by the Indemnified Party under this Section
2 of notice of the commencement of any action described therein, the Indemnified
Party will, if a claim in respect thereof is to be made against the Indemnifying
Party under this Section 2, notify the Indemnifying Party of the commencement
thereof, but the omission so to notify the Indemnifying Party will not relieve
the Indemnifying Party from any liability that it may have to the Indemnified
Party under this Agreement, except to the extent that such failure or delay in
notification materially prejudices the Indemnifying Party's defense of such
action or proceeding, and shall in no event relieve the Indemnifying Party from
any other obligation or liability which it may have to any Indemnified Person
otherwise than under this Agreement or with respect to any other action or
proceeding. In case any such action is brought against the Indemnified Party,
and it notifies the Indemnifying Party of the commencement thereof, the
Indemnifying Party will be entitled to participate therein, and, to the extent
that it may wish to do so, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
the Indemnified Party, and, after notice from the Indemnifying Party to the
Indemnified Party under this Section 2, the Indemnifying Party shall not be
liable for any legal or other expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof other than reasonable out-of-pocket
costs of investigation.
(c) The Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Indemnified
Party unless: (i) the employment thereof has been specifically authorized by the
Indemnifying Party; (ii) the Indemnifying Party shall have been advised by such
counsel that there may be one or more legal defenses available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party and in the reasonable judgment of such counsel it is
advisable for the Indemnified Party to
Exh 11-3
employ separate counsel (iii) a conflict exists between the Indemnified Party
and the Indemnifying Party (in which case the Indemnifying Party will not have
the right to direct the defense of such action on behalf of the Indemnified
Party) or (iv) the Indemnifying Party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the Indemnified Party, in
which case, if the Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of
such action on behalf of the Indemnified Party, it being understood, however,
the Indemnifying Party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for the Indemnified Party, which firm
shall be designated in writing by the Depositor or any of the Depositor's
directors, officers or controlling persons.
(d) The Indemnified Party, as a condition of the indemnity agreements
contained herein, shall use its best efforts to cooperate with the Indemnifying
Party in the defense of any such action or claim. The Indemnifying Party shall
not be liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for the plaintiff in any
such action, the Indemnifying Party agrees to indemnify and hold harmless the
Indemnified Party from and against any loss or liability (to the extent set
forth herein as applicable) by reason of such settlement or judgment.
3. Successors and Assigns, Additional Information. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval of the other parties hereto.
4. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, covenants, indemnities and other statements of the
Depositor and the Company and their respective officers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Depositor or the Company and will
survive delivery of and payment for the Certificates. The provisions of Section
4 hereof shall survive the termination or cancellation of this Agreement.
5. Notices. All demands, notices and communications hereunder shall be in
writing, shall be effective only upon receipt and shall, if sent to the
Depositor, be addressed to it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: President, with a copy to General Counsel; or, if sent to the
Company, be addressed to it at, [ADDRESS], Attn: [_________].
6. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated except by a
writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought. This Agreement may be signed in any number
of counterparts, each of which shall be deemed an original, which taken together
shall constitute one and the same instrument.
Exh 11-4
This Agreement supersedes all prior or contemporaneous agreements and
understandings relating to the subject matter hereof.
7. Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Exh 11-5
IN WITNESS WHEREOF, the Depositor and the Company have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HSBC ASSET SECURITIZATION CORP.
By: ____________________________
Name:
Title:
[COMPANY]
By: ____________________________
Name:
Title:
Exh 11-6
EXHIBIT 12
FORM OF ANNUAL CERTIFICATION
I, the _______________________ of [NAME OF COMPANY] certify to [the
Purchaser], [the Depositor], and the [Master Servicer] [Securities
Administrator] [Trustee], and their officers, with the knowledge and intent that
they will rely upon this certification, that:
(i) I have reviewed the Interim Servicer compliance statement of the
Company provided in accordance with Item 1123 of Regulation AB (the
"Compliance Statement"), the report on assessment of the Company's
compliance with the servicing criteria set forth in Item 1122(d) of
Regulation AB (the "Servicing Criteria"), provided in accordance with Rules
13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Item 1122 of Regulation AB (the "Servicing
Assessment"), the registered public accounting firm's attestation report
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act
and Section 1122(b) of Regulation AB (the "Attestation Report"), and all
servicing reports, officer's certificates and other information relating to
the servicing of the Mortgage Loans by the Company during 200[ ] that were
delivered to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee] pursuant to the Agreement (collectively, the "Company Servicing
Information");
(ii) Based on my knowledge, the Company Servicing Information, taken
as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in the
light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Company
Servicing Information;
(iii) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee];
(iv) I am responsible for reviewing the activities performed by the
Company as servicer under the Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment
or the Attestation Report, the Company has fulfilled its obligations under
the Agreement in all material respects; and
(v) The Compliance Statement required to be delivered by the Company
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer or
Subcontractor pursuant to the Agreement, have been provided to the
[Depositor] [Master Servicer]. Any material instances of noncompliance
described in such reports have been disclosed to the [Depositor] [Master
Exh 12-1
Servicer]. Any material instance of noncompliance with the Servicing
Criteria has been disclosed in such reports.
[COMPANY]
(Servicer)
By:
-------------------------
Name:
Title:
Date:
Exh 12-2
EXHIBIT 13
MORTGAGE LOAN DOCUMENTS
(a) the original Mortgage Note bearing all intervening endorsements
necessary to show a complete chain of endorsements from the original
payee, endorsed in blank, "Pay to the order of _____________, without
recourse", and, if previously endorsed, signed in the name of the last
endorsee by a duly qualified officer of the last endorsee. If the
Mortgage Loan was acquired by the last endorsee in a merger, the
endorsement must be by "[name of last endorsee], successor by merger
to [name of predecessor]". If the Mortgage Loan was acquired or
originated by the last endorsee while doing business under another
name, the endorsement must be by "[name of last endorsee], formerly
known as [previous name]";
(b) the original Assignment of Mortgage for each Mortgage Loan, in form
and substance acceptable for recording. The Mortgage shall be
assigned, with assignee's name left blank. If the Mortgage Loan was
acquired by the last assignee in a merger, the Assignment of Mortgage
must be made by "[name of last assignee], successor by merger to [name
of predecessor]". If the Mortgage Loan was acquired or originated by
the last assignee while doing business under another name, the
Assignment of Mortgage must be by "[name of last assignee], formerly
known as [previous name];
(c) the original of each guarantee executed in connection with the
Mortgage Note, if any;
(d) the original recorded Mortgage, with evidence of recording thereon. If
in connection with any Mortgage Loan, the Seller has not delivered or
caused to be delivered the original Mortgage with evidence of
recording thereon on or prior to the related Closing Date because of a
delay caused by the public recording office where such Mortgage has
been delivered for recordation or because such Mortgage has been lost
or because such public recording office retains the original recorded
Mortgage, the Seller shall deliver or cause to be delivered to the
Custodian, (i) in the case of a delay caused by the public recording
office, a copy of such Mortgage certified by the Seller, escrow agent,
title insurer or closing attorney to be a true and complete copy of
the original Mortgage that was submitted to the public recording
office for recordation and (ii) in the case where a public recording
office retains the original recorded Mortgage or in the case where a
Mortgage is lost after recordation in a public recording office, a
Exh 13-1
copy of such Mortgage certified by such public recording office to be
a true and complete copy of the original recorded Mortgage;
(e) originals or a certified copy of each modification agreement, if any;
(f) the originals of all intervening assignments of mortgage with evidence
of recording thereon evidencing a complete chain of ownership from the
originator of the Mortgage Loan to the last assignee, or if any such
intervening assignment of mortgage has not been returned from the
applicable public recording office or has been lost or if such public
recording office retains the original recorded intervening assignments
of mortgage, a photocopy of such intervening assignment of mortgage,
together with (i) in the case of a delay caused by the public
recording office, an Officer's Certificate of the Seller, escrow
agent, closing attorney or the title insurer insuring the Mortgage
stating that such intervening assignment of mortgage has been
delivered to the appropriate public recording office for recordation
and that such original recorded intervening assignment of mortgage or
a copy of such intervening assignment of mortgage certified by the
appropriate public recording office to be a true and complete copy of
the original recorded intervening assignment of mortgage will be
promptly delivered to the Custodian upon receipt thereof by the party
delivering the Officer's Certificate or by the Seller; or (ii) in the
case of an intervening assignment of mortgage where a public recording
office retains the original recorded intervening assignment of
mortgage or in the case where an intervening assignment of mortgage is
lost after recordation in a public recording office, a copy of such
intervening assignment of mortgage with recording information thereon
certified by such public recording office to be a true and complete
copy of the original recorded intervening assignment of mortgage;
(g) if the Mortgage Note, the Mortgage, any Assignment of Mortgage or any
other related document has been signed by a Person on behalf of the
Mortgagor, the copy of the power of attorney or other instrument that
authorized and empowered such Person to sign;
(h) the original lender's title insurance policy (or a marked title
insurance commitment, in the event that an original lender's title
insurance policy has not yet been issued) in the form of an ALTA
mortgage title insurance policy, containing each of the endorsements
required by FNMA and insuring the Purchaser and its successors and
assigns as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan; and
Exh 13-2
(i) original of any security agreement, chattel mortgage or equivalent
document executed in connection with the Mortgage, if any.
Exh 13-3
EXHIBIT 14
UNDERWRITING GUIDELINES
Exh 14-1
EXHIBIT 15
SUMMARY OF REGULATION AB
SERVICING CRITERIA
NOTE: This Exhibit 15 is provided for convenience of reference only. In the
event of a conflict or inconsistency between the terms of this Exhibit 15 and
the text of Regulation AB, the text of Regulation AB, its adopting release and
other public statements of the SEC shall control.
Item 1122(d)
(a) General servicing considerations.
(1) Policies and procedures are instituted to monitor any performance
or other triggers and events of default in accordance with the transaction
agreements.
(2) If any material servicing activities are outsourced to third
parties, policies and procedures are instituted to monitor the third party's
performance and compliance with such servicing activities.
(3) Any requirements in the transaction agreements to maintain a
back-up servicer for the mortgage loans are maintained.
(4) A fidelity bond and errors and omissions policy is in effect on
the party participating in the servicing function throughout the reporting
period in the amount of coverage required by and otherwise in accordance with
the terms of the transaction agreements.
(b) Cash collection and administration.
(1) Payments on mortgage loans are deposited into the appropriate
custodial bank accounts and related bank clearing accounts no more than two
business days following receipt, or such other number of days specified in the
transaction agreements.
(2) Disbursements made via wire transfer on behalf of an obligor or to
an investor are made only by authorized personnel.
(3) Advances of funds or guarantees regarding collections, cash flows
or distributions, and any interest or other fees charged for such advances, are
made, reviewed and approved as specified in the transaction agreements.
(4) The related accounts for the transaction, such as cash reserve
accounts or accounts established as a form of overcollateralization, are
separately maintained (e.g., with respect to commingling of cash) as set forth
in the transaction agreements.
(5) Each custodial account is maintained at a federally insured
depository institution as set forth in the transaction agreements. For purposes
of this criterion, "federally insured depository institution" with respect to a
foreign
Exh 15-1
financial institution means a foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.
(6) Unissued checks are safeguarded so as to prevent unauthorized
access.
(7) Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including custodial accounts and
related bank clearing accounts. These reconciliations are (A) mathematically
accurate; (B) prepared within 30 calendar days after the bank statement cutoff
date, or such other number of days specified in the transaction agreements; (C)
reviewed and approved by someone other than the person who prepared the
reconciliation; and (D) contain explanations for reconciling items. These
reconciling items are resolved within 90 calendar days of their original
identification, or such other number of days specified in the transaction
agreements.
(c) Investor remittances and reporting.
(1) Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the transaction agreements and
applicable Commission requirements. Specifically, such reports (A) are prepared
in accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with the terms
specified in the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with investors' or the
trustee's records as to the total unpaid principal balance and number of
mortgage loans serviced by the Interim Servicer.
(2) Amounts due to investors are allocated and remitted in accordance
with timeframes, distribution priority and other terms set forth in the
transaction agreements.
(3) Disbursements made to an investor are posted within two business
days to the Interim Servicer's investor records, or such other number of days
specified in the transaction agreements.
(4) Amounts remitted to investors per the investor reports agree with
cancelled checks, or other form of payment, or custodial bank statements.
(d) Mortgage Loan administration.
(1) Collateral or security on mortgage loans is maintained as required
by the transaction agreements or related mortgage loan documents.
(2) Mortgage loan and related documents are safeguarded as required by
the transaction agreements.
(3) Any additions, removals or substitutions to the asset pool are
made, reviewed and approved in accordance with any conditions or requirements in
the transaction agreements.
Exh 15-2
(4) Payments on mortgage loans, including any payoffs, made in
accordance with the related mortgage loan documents are posted to the Interim
Servicer's obligor records maintained no more than two business days after
receipt, or such other number of days specified in the transaction agreements,
and allocated to principal, interest or other items (e.g., escrow) in accordance
with the related mortgage loan documents.
(5) The Interim Servicer's records regarding the mortgage loans agree
with the Interim Servicer's records with respect to an obligor's unpaid
principal balance.
(6) Changes with respect to the terms or status of an obligor's
mortgage loans (e.g., loan modifications or re-agings) are made, reviewed and
approved by authorized personnel in accordance with the transaction agreements
and related mortgage loan documents.
(7) Loss mitigation or recovery actions (e.g., forbearance plans,
modifications and deeds in lieu of foreclosure, foreclosures and repossessions,
as applicable) are initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the transaction agreements.
(8) Records documenting collection efforts are maintained during the
period a mortgage loan is delinquent in accordance with the transaction
agreements. Such records are maintained on at least a monthly basis, or such
other period specified in the transaction agreements, and describe the entity's
activities in monitoring delinquent mortgage loans including, for example, phone
calls, letters and payment rescheduling plans in cases where delinquency is
deemed temporary (e.g., illness or unemployment).
(9) Adjustments to interest rates or rates of return for mortgage
loans with variable rates are computed based on the related mortgage loan
documents.
(10) Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the obligor's
mortgage loan documents, on at least an annual basis, or such other period
specified in the transaction agreements; (B) interest on such funds is paid, or
credited, to obligors in accordance with applicable mortgage loan documents and
state laws; and (C) such funds are returned to the obligor within 30 calendar
days of full repayment of the related mortgage loans, or such other number of
days specified in the transaction agreements.
(11) Payments made on behalf of an obligor (such as tax or insurance
payments) are made on or before the related penalty or expiration dates, as
indicated on the appropriate bills or notices for such payments, provided that
such support has been received by the Interim Servicer at least 30 calendar days
prior to these dates, or such other number of days specified in the transaction
agreements.
(12) Any late payment penalties in connection with any payment to be
made on behalf of an obligor are paid from the Interim Servicer's funds and not
charged to the obligor, unless the late payment was due to the obligor's error
or omission.
Exh 15-3
(13) Disbursements made on behalf of an obligor are posted within two
business days to the obligor's records maintained by the Interim Servicer, or
such other number of days specified in the transaction agreements.
(14) Delinquencies, charge-offs and uncollectable accounts are
recognized and recorded in accordance with the transaction agreements.
(15) Any external enhancement or other support, identified in Item
1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth
in the transaction agreements.
Exh 15-4
EXHIBIT 16
SUMMARY OF APPLICABLE REGULATION AB REQUIREMENTS
NOTE: This Exhibit 16 is provided for convenience of reference only. In the
event of a conflict or inconsistency between the terms of this Exhibit 16 and
the text of Regulation AB, the text of Regulation AB, its adopting release and
other public statements of the SEC shall control.
Item 1105(a)(1)-(3) and (c)
-Provide static pool information with respect to mortgage loans that
were originated or purchased by the Seller and which are of the same type as the
Mortgage Loans.
-Provide static pool information regarding delinquencies, cumulative
losses and prepayments for prior securitized pools of the Seller.
-If the Seller has less than 3 years experience securitizing assets of
the same type as the Mortgage Loans, provide the static pool information by
vintage origination years regarding loans originated or purchased by the Seller,
instead of by prior securitized pool. A vintage origination year represents
mortgage loans originated during the same year.
-Such static pool information shall be for the prior five years, or
for so long as the Seller has been originating or purchasing (in the case of
data by vintage origination year) or securitizing (in the case of data by prior
securitized pools) such mortgage loans if for less than five years.
-The static pool information for each vintage origination year or
prior securitized pool, as applicable, shall be presented in monthly increments
over the life of the mortgage loans included in the vintage origination year or
prior securitized pool.
-Provide summary information for the original characteristics of the
prior securitized pools or vintage origination years, as applicable and
material, including: number of pool assets, original pool balance, weighted
average initial loan balance, weighted average mortgage rate, weighted average
and minimum and maximum FICO, product type, loan purpose, weighted average and
minimum and maximum LTV, distribution of loans by mortgage rate, and geographic
concentrations of 5% or more.
Item 1108(b) and (c)
Provide the following information with respect to each servicer that
will service, including interim service, 20% or more of the mortgage loans in
any loan group in the securitization issued in the Pass-Through Transfer:
-a description of the Interim Servicer's form of organization;
-a description of how long the Interim Servicer has been servicing
residential mortgage loans; a general discussion of the Interim Servicer's
experience in servicing assets of any type as well as a more detailed discussion
of the Interim Servicer's experience in, and procedures for the
Exh 16-1
servicing function it will perform under this Agreement and any Reconstitution
Agreements; information regarding the size, composition and growth of the
Interim Servicer's portfolio of mortgage loans of the type similar to the
Mortgage Loans and information on factors related to the Interim Servicer that
may be material to any analysis of the servicing of the Mortgage Loans or the
related asset-backed securities, as applicable, including whether any default or
servicing related performance trigger has occurred as to any other
securitization due to any act or failure to act of the Interim Servicer, whether
any material noncompliance with applicable servicing criteria as to any other
securitization has been disclosed or reported by the Interim Servicer, and the
extent of outsourcing the Interim Servicer uses;
-a description of any material changes to the Interim Servicer's
policies or procedures in the servicing function it will perform under this
Agreement and any Reconstitution Agreements for mortgage loans of the type
similar to the Mortgage Loans during the past three years;
-information regarding the Interim Servicer's financial condition to
the extent that there is a material risk that the effect on one or more aspects
of servicing resulting from such financial condition could have a material
impact on the performance of the securities issued in the Pass-Through Transfer,
or on servicing of mortgage loans of the same asset type as the Mortgage Loans;
-any special or unique factors involved in servicing loans of the same
type as the Mortgage Loans, and the Interim Servicer's processes and procedures
designed to address such factors;
-statistical information regarding principal and interest advances
made by the Interim Servicer on the Mortgage Loans and the Interim Servicer's
overall servicing portfolio for the past three years; and
-the Interim Servicer's process for handling delinquencies, losses,
bankruptcies and recoveries, such as through liquidation of REO Properties,
foreclosure, sale of the Mortgage Loans or workouts.
Item 1110(a)
-Identify any originator or group of affiliated originators that
originated, or are expected to originate, 10% or more of the mortgage loans in
any loan group in the securitization issued in the Pass-Through Transfer.
Item 1110(b)
Provide the following information with respect to any originator or
group of affiliated originators that originated, or is expected to originate,
20% or more of the mortgage loans in any loan group in the securitization issued
in the Pass-Through Transfer:
-the Seller's form of organization; and
Exh 16-2
-a description of the Seller's origination program and how long the
Seller has been engaged in originating residential mortgage loans, which
description must include a discussion of the Seller's experience in originating
mortgage loans of the same type as the Mortgage Loans and information regarding
the size and composition of the Seller's origination portfolio as well as
information that may be material to an analysis of the performance of the
Mortgage Loans, such as the Seller's credit-granting or underwriting criteria
for mortgage loans of the same type as the Mortgage Loans.
Item 1117
-describe any legal proceedings pending against the Seller and
Servicer or against any of their respective property, including any proceedings
known to be contemplated by governmental authorities, that may be material to
the holders of the securities issued in the Pass-Through Transfer.
Item 1119(a)
-describe any affiliations of the Interim Servicer, each other
originator of the Mortgage Loans and each Subservicer with the sponsor,
depositor, issuing entity, trustee, any originator, any other servicer, any
significant obligor, enhancement or support provider or any other material
parties related to the Pass-Through Transfer.
Item 1119(b)
-describe any business relationship, agreement, arrangement,
transaction or understanding entered into outside of the ordinary course of
business or on terms other than those obtained in an arm's length transaction
with an unrelated third party, apart from the Pass-Through Transfer, between the
Seller, Servicer, each other originator of the Mortgage Loans and each
Subservicer, or their respective affiliates, and the sponsor, depositor or
issuing entity or their respective affiliates, that exists currently or has
existed during the past two years, that may be material to the understanding of
an investor in the securities issued in the Pass-Through Transfer.
Item 1119(c)
-describe any business relationship, agreement, arrangement,
transaction or understanding involving or relating to the Mortgage Loans or the
Pass-Through Transfer, including the material terms and approximate dollar
amount involved, between the Seller, Servicer, each other originator of the
Mortgage Loans and each Subservicer, or their respective affiliates and the
sponsor, depositor or issuing entity or their respective affiliates, that exists
currently or has existed during the past two years.
Exh 16-3
EXHIBIT 17
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Interim Servicer]
[Name of Subservicer] shall address, at a minimum, the criteria identified as
below as "Applicable Servicing Criteria":
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Applicable
Servicing
Servicing Criteria Criteria
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Reference Criteria
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General Servicing Considerations
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1122(d)(1)(i) Policies and procedures are instituted to X
monitor any performance or other triggers and
events of default in accordance with the
transaction agreements.
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1122(d)(1)(ii) If any material servicing activities are X
outsourced to third parties, policies and
procedures are instituted to monitor the third
party's performance and compliance with such
servicing activities.
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1122(d)(1)(iii) Any requirements in the transaction agreements X
to maintain a back-up servicer for the
mortgage loans are maintained.
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1122(d)(1)(iv) A fidelity bond and errors and omissions X
policy is in effect on the party participating
in the servicing function throughout the
reporting period in the amount of coverage
required by and otherwise in accordance with
the terms of the transaction agreements.
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Cash Collection and Administration
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1122(d)(2)(i) Payments on mortgage loans are deposited into X
the appropriate custodial bank accounts and
related bank clearing accounts no more than
two business days following receipt, or such
other number of days specified in the
transaction agreements.
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1122(d)(2)(ii) Disbursements made via wire transfer on behalf X
of an obligor or to an investor are made only
by authorized personnel.
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1122(d)(2)(iii) Advances of funds or guarantees regarding X
collections, cash flows or distributions, and
any interest or other fees charged for such
advances, are made, reviewed and approved as
specified in the transaction agreements.
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The related accounts for the transaction, such
as cash reserve accounts or accounts
established as a form of
overcollateralization, are separately X
maintained (e.g., with respect to commingling
of cash) as set forth in the transaction
1122(d)(2)(iv) agreements.
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1122(d)(2)(v) Each custodial account is maintained at a X
federally insured depository institution as
set forth in the transaction agreements. For
purposes of this criterion, "federally insured
depository institution" with respect to a
foreign financial institution means a foreign
financial institution that meets the
requirements of Rule 13k-1(b)(1) of the
Securities Exchange Act.
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1122(d)(2)(vi) Unissued checks are safeguarded so as to X
prevent unauthorized access.
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1122(d)(2)(vii) Reconciliations are prepared on a monthly X
basis for all asset-backed securities related
bank accounts, including custodial accounts
and related bank clearing accounts. These
reconciliations are (A) mathematically
accurate; (B) prepared within 30 calendar days
after the bank statement cutoff date, or such
other number of days specified in the
transaction agreements; (C) reviewed and
approved by someone other than the person who
prepared the reconciliation; and (D) contain
explanations for reconciling items. These
reconciling items are resolved within 90
calendar days of their original
identification, or such other number of days
specified in the transaction agreements.
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Exh 17-1
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Applicable
Servicing
Servicing Criteria Criteria
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Reference Criteria
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Investor Remittances and Reporting
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1122(d)(3)(i) Reports to investors, including those to be X
filed with the Commission, are maintained in
accordance with the transaction agreements and
applicable Commission requirements.
Specifically, such reports (A) are prepared in
accordance with timeframes and other terms set
forth in the transaction agreements; (B)
provide information calculated in accordance
with the terms specified in the transaction
agreements; (C) are filed with the Commission
as required by its rules and regulations; and
(D) agree with investors' or the trustee's
records as to the total unpaid principal
balance and number of mortgage loans serviced
by the Interim Servicer.
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1122(d)(3)(ii) Amounts due to investors are allocated and X
remitted in accordance with timeframes,
distribution priority and other terms set
forth in the transaction agreements.
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Disbursements made to an investor are posted
within two business days to the Interim
Servicer's investor records, or such other X
number of days specified in the transaction
1122(d)(3)(iii) agreements.
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Amounts remitted to investors per the investor
reports agree with cancelled checks, or other X
1122(d)(3)(iv) form of payment, or custodial bank statements.
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Pool Asset Administration
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1122(d)(4)(i) Collateral or security on mortgage loans is X
maintained as required by the transaction
agreements or related mortgage loan documents.
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Mortgage loan and related documents are
safeguarded as required by the transaction X
1122(d)(4)(ii) agreements
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1122(d)(4)(iii) Any additions, removals or substitutions to X
the asset pool are made, reviewed and approved
in accordance with any conditions or
requirements in the transaction agreements.
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1122(d)(4)(iv) Payments on mortgage loans, including any X
payoffs, made in accordance with the related
mortgage loan documents are posted to the
Interim Servicer's obligor records maintained
no more than two business days after receipt,
or such other number of days specified in the
transaction agreements, and allocated to
principal, interest or other items (e.g.,
escrow) in accordance with the related
mortgage loan documents.
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1122(d)(4)(v) The Interim Servicer's records regarding the X
mortgage loans agree with the Interim
Servicer's records with respect to an
obligor's unpaid principal balance.
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1122(d)(4)(vi) Changes with respect to the terms or status of X
an obligor's mortgage loans (e.g., loan
modifications or re-agings) are made, reviewed
and approved by authorized personnel in
accordance with the transaction agreements and
related pool asset documents.
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1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., X
forbearance plans, modifications and deeds in
lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated,
conducted and concluded in accordance with the
timeframes or other requirements established
by the transaction agreements.
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1122(d)(4)(viii)Records documenting collection efforts are X
maintained during the period a mortgage loan
is delinquent in accordance with the
transaction agreements. Such records are
maintained on at least a monthly basis, or
such other period specified in the transaction
agreements, and describe the entity's
activities in monitoring delinquent mortgage
loans including, for example, phone calls,
letters and payment rescheduling plans in
cases where delinquency is deemed temporary
(e.g., illness or unemployment).
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1122(d)(4)(ix) Adjustments to interest rates or rates of X
return for mortgage loans with variable rates
are computed based on the related mortgage
loan documents.
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Exh 17-2
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Applicable
Servicing
Servicing Criteria Criteria
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Reference Criteria
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1122(d)(4)(x) Regarding any funds held in trust for an X
obligor (such as escrow accounts): (A) such
funds are analyzed, in accordance with the
obligor's mortgage loan documents, on at least
an annual basis, or such other period
specified in the transaction agreements; (B)
interest on such funds is paid, or credited,
to obligors in accordance with applicable
mortgage loan documents and state laws; and
(C) such funds are returned to the obligor
within 30 calendar days of full repayment of
the related mortgage loans, or such other
number of days specified in the transaction
agreements.
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1122(d)(4)(xi) Payments made on behalf of an obligor (such as X
tax or insurance payments) are made on or
before the related penalty or expiration
dates, as indicated on the appropriate bills
or notices for such payments, provided that
such support has been received by the Interim
Servicer at least 30 calendar days prior to
these dates, or such other number of days
specified in the transaction agreements.
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1122(d)(4)(xii) Any late payment penalties in connection with X
any payment to be made on behalf of an obligor
are paid from the Interim Servicer's funds and
not charged to the obligor, unless the late
payment was due to the obligor's error or
omission.
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Disbursements made on behalf of an obligor are
posted within two business days to the
obligor's records maintained by the Interim X
Servicer, or such other number of days
1122(d)(4)(xiii)specified in the transaction agreements.
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1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible X
accounts are recognized and recorded in
accordance with the transaction agreements.
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Any external enhancement or other support,
identified in Item 1114(a)(1) through (3) or
Item 1115 of Regulation AB, is maintained as X
1122(d)(4)(xv) set forth in the transaction agreements.
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[SERVICER] [NAME OF SUBSERVICER]
Date: _________________________
By:________________________________
Name:
Title:
Exh 17-3