Exhibit 10.4
WHOLE LOAN PURCHASE AND SALE AGREEMENT
among
AMERICAN HOME MORTGAGE CORP.
Seller
AMERICAN HOME MORTGAGE INVESTMENT CORP.
Seller
and
AMERICAN HOME MORTGAGE SERVICING, INC.
Servicer
and
ASPEN FUNDING CORP.
Purchaser
GEMINI SECURITIZATION CORP., LLC
Purchaser
NEWPORT FUNDING CORP.
Purchaser
SEDONA CAPITAL FUNDING CORP., LLC
Purchaser
DATED: September 22, 2006
TABLE OF CONTENTS
Page
Section 1. Definitions........................................................1
Section 2. Procedures for Purchases of Mortgage Loans.........................9
Section 3. Sale of Mortgage Loans to Takeout Investor........................11
Section 4. Completion Fee....................................................14
Section 5. Servicing of the Mortgage Loans...................................15
Section 6. Trade Assignments.................................................17
Section 7. Transfers of Beneficial Interest in Mortgage Loans by
Purchasers........................................................17
Section 8. Record Title to Mortgage Loans; Intent of Parties; Security
Interest..........................................................17
Section 9. Representations and Warranties....................................18
Section 10. Covenants of Sellers..............................................28
Section 11. Term..............................................................31
Section 12. Exclusive Benefit of Parties; Assignment..........................31
Section 13. Amendments; Waivers; Cumulative Rights............................32
Section 14. Execution in Counterparts.........................................32
Section 15. Effect of Invalidity of Provisions................................32
Section 16. Governing Law.....................................................32
Section 17. Notices...........................................................32
Section 18. Entire Agreement..................................................32
Section 19. Costs of Enforcement..............................................33
Section 20. Consent to Service................................................33
Section 21. Submission to Jurisdiction........................................33
Section 22. Jurisdiction Not Exclusive........................................33
Section 23. WAIVER OF JURY TRIAL..............................................33
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Section 24. Construction......................................................33
Section 25. Further Assurances................................................33
Section 26. Joint and Several Liability.......................................34
Section 27. Expenses..........................................................34
Section 28. Intent of the Parties.............................................34
EXHIBITS
Exhibit A-1 Trade Assignment
Exhibit A-2 Trade Assignment (Blanket)
Exhibit B Purchaser's Wire Instructions
Exhibit C Form of Confirmation
Exhibit D Reserved
Exhibit E Settlement Modification Letter
Exhibit F Seller's Officer's Certificate
Exhibit G Seller's Officer's Certificate
Exhibit H Mortgage Loan Schedule
Exhibit I Form of Transaction Notice
Exhibit J Seller's Wire Instructions
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WHOLE LOAN PURCHASE AND SALE AGREEMENT
This Whole Loan Purchase and Sale Agreement ("Agreement"), dated as
of the date set forth on the cover page hereof, is by and among Aspen Funding
Corp., Gemini Securitization Corp., LLC, Newport Funding Corp. and Sedona
Capital Funding Corp., LLC, each having an address at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (each individually, a "Purchaser" and together, the
"Purchasers"), American Home Mortgage Corp., having an address at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("AHMC") and American Home Mortgage
Investment Corp., having an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ("AHMI" and together with AHMC, each individually, a "Seller" and
together, the "Sellers"), and American Home Mortgage Servicing, Inc., having an
address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Servicer").
PRELIMINARY STATEMENT
Sellers may offer to sell to Purchasers from time to time a 100%
undivided ownership interest in certain Mortgage Loans, and Purchasers, in their
sole discretion, may agree to purchase such Mortgage Loans from Sellers on a
servicing-released basis in accordance with the terms and conditions set forth
in this Agreement. The related Seller, subject to the terms hereof, will cause
each Mortgage Loan purchased by a Purchaser hereunder to be purchased by a
Takeout Investor. During the period from the purchase of a Mortgage Loan by a
Purchaser to the sale of the Mortgage Loan to Takeout Investor, the Servicer
shall interim service such Mortgage Loan for the benefit of Purchasers pursuant
to the terms of this Agreement.
The parties hereto hereby agree as follows:
Section 1. Definitions.
Capitalized terms used but not defined herein shall have the meanings
set forth in the Custodial Agreement. As used in this Agreement, the following
terms shall have the following meanings:
"Act of Insolvency": With respect to either Seller, (i) the filing of
a petition, commencing, or authorizing the commencement of any case or
proceeding under any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar law relating to the protection of creditors, or suffering
any such petition or proceeding to be commenced by another against a Seller,
American Home Mortgage Acceptance, Inc. ("AHMA"), American Home Mortgage
Holdings, Inc. ("AHMH") and American Home Mortgage Servicing, Inc. ("AHMS" and
collectively with AHMA and AHMH, the "American Home Affiliates"); (ii) seeking
the appointment of a receiver, trustee, custodian or similar official for either
Seller or the American Home Affiliates or any substantial part of the property
of either, (iii) the appointment of a receiver, conservator, or manager for
either Seller or the American Home Affiliates by any governmental agency or
authority having the jurisdiction to do so; (iv) the making or offering by
either Seller or the American Home Affiliates of a concession with its creditors
or a general
assignment for the benefit of creditors, (v) the admission by either Seller or
the American Home Affiliates of Seller's or any of the American Home Affiliates'
inability to pay its debts or discharge its obligations as they become due or
mature; or (vi) any governmental authority or agency or any person, agency or
entity acting or purporting to act under governmental authority shall have taken
any action to condemn, seize or appropriate, or to assume custody or control of,
all or any substantial part of the property of either Seller or the American
Home Affiliates, provided, however, that with respect to any involuntary filing,
the Seller or the American Home Affiliates, as applicable, shall have sixty (60)
days to dismiss such filing before such event constitutes an Act of Insolvency.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" means the power to direct the
management and policies of such Person, directly or indirectly, through the
ownership of voting equity.
"Appraised Value": With respect to any Mortgaged Property, the value
thereof set forth in 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. Each appraisal has been made in
accordance with and satisfies the provisions of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989.
"Assignee": As defined in Section 7.
"Bankruptcy Code": The United States Bankruptcy Code of 1978 as
amended from time to time.
"Business Day": Any day other than (a) a Saturday, Sunday or other
day on which banks located in The City of New York, New York are authorized or
obligated by law or executive order to be closed or (b) any day on which a
Seller, Servicer, Purchaser or Custodian is authorized or obligated by law or
executive order to be closed.
"Collateral": As defined in Section 8(c).
"Combined Loan-to-Value Ratio" or "CLTV" means with respect to any
Mortgage Loan or second lien Mortgage Loan, the sum of the original principal
balance of such first lien Mortgage Loan or second lien Mortgage Loan, as
applicable, at the time of origination and the outstanding principal balance of
any related first lien loan or second lien loan, as applicable as of the date of
origination of such first lien Mortgage Loan or second lien Mortgage Loan, as
applicable, divided by the lesser of (a) the Appraised Value of the related
Mortgage Property as of the date of origination of such first lien Mortgage Loan
or second lien Mortgage Loan, as applicable and (b) if the related Mortgaged
Property was purchased within twelve (12) months of the origination of such
first lien Mortgage Loan or second lien Mortgage Loan, as applicable, the
purchase price of such Mortgaged Property.
"Commitment Amount": The aggregate outstanding principal amount of
Mortgage Loans to be purchased pursuant to a Takeout Commitment. If the
Commitment
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Amount is expressed as a fixed amount plus or minus a percentage in the related
Takeout Confirmation, then the amount required to be delivered by the related
Seller shall be the minimum amount of such range.
"Commitment Date": The date set forth in a Takeout Confirmation as
the commitment date.
"Commitment Guidelines": The guidelines, if any, issued by a Takeout
Investor regarding the issuance of Takeout Commitments, as amended from time to
time by such Takeout Investor.
"Commitment Number": With respect to a Takeout Commitment, the number
identified on the Takeout Confirmation as the commitment number, if applicable.
"Completion Fee": The meaning assigned thereto in the Pricing Side
Letter.
"Confirmation": A written confirmation of a Purchaser's intent to
purchase a Mortgage Loan Pool, which written confirmation shall be substantially
in the form attached hereto as Exhibit C.
"Control Bank": (i) JPMorgan Chase Bank, N.A. and its successors
thereto, or (ii) such other bank as may be mutually acceptable among Sellers and
Purchasers.
"Credit File": All Mortgage Loan papers and documents required to be
maintained pursuant to the Sale Agreement, and all other papers and records of
whatever kind or description in Seller's possession whether developed or
originated by the related Seller or others, required to document or service the
Mortgage Loan and would customarily be required by a secondary market purchaser;
provided, however, that such Mortgage Loan papers, documents and records shall
not include any Mortgage Loan papers, documents or records which are contained
in the Custodial File.
"Cure Date": With respect to a Mortgage Loan, the date occurring 15
calendar days after the expiration of the Takeout Commitment, or if such date is
not a Business Day, the immediately preceding Business Day.
"Custodial Account": As defined in Section 5(b).
"Custodial Account Control Agreement": The collection account control
agreement among the Sellers, the Purchasers and the Control Bank dated as of
[___], 2006.
"Custodial Agreement": The Custodial Agreement, dated as of the date
set forth on the cover page thereof, among Sellers, Servicer, Purchasers and
Custodian.
"Custodial File": With respect to each Mortgage Loan, the documents
that are required to be delivered to the Custodian pursuant to the Custodial
Agreement.
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"Custodian": The Custodian whose name is set forth on the cover page
of the Custodial Agreement and its permitted successors thereunder.
"Cut-off Date": With respect to a Mortgage Loan, the latest day of a
month on which the Settlement Date can occur if accrued interest for such month
is to be collected by Takeout Investor.
"Defective Mortgage Loan": With respect to any Mortgage Loan, either
(i) the Document File does not contain a document required to be contained
therein, (ii) a document within a Document File is, in the judgment of any
Purchaser or Takeout Investor, defective or inaccurate in any material respect,
as determined upon evaluation of the Document File against the requirements of
the this Agreement, Sale Agreement or the pricing requirements of the related
Takeout Investor, (iii) a document in the Document File is not legal, valid and
binding, or (iv) as to such Mortgage Loan, one of the representations and
warranties in Section 9 hereof has been breached and such breach materially and
adversely affects the value of such Mortgage Loan or the related Purchaser's
interest in such Mortgage Loan and, with respect to any Wet Mortgage Loan, if a
Custodial File is not received by Custodian within seven (7) Business Days of
the related Purchase Date.
"Discount": The meaning assigned thereto in the Pricing Side Letter.
"Document File": The Credit File and the Custodial File.
"Due Date": The day of the month on which the Monthly Payment is due
on a Mortgage Loan.
"Electronic Agent": Shall have the meaning assigned to such term in
Section 2 of the Electronic Tracking Agreement.
"Electronic Tracking Agreement": The Electronic Tracking Agreement,
dated as of the date hereof, among the Purchasers, the Sellers, the Servicer,
the Electronic Agent and MERS, as the same shall be amended, supplemented or
otherwise modified from time to time.
"Early Payment Default": as defined in Section 3(c)(1) hereof.
"Expiration Date": With respect to any Takeout Commitment, the
expiration date thereof.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC": ▇▇▇▇▇▇▇ Mac or any successor thereto.
"FNMA": ▇▇▇▇▇▇ Mae or any successor thereto.
"GAAP": Generally accepted accounting principles as in effect from
time to time in the United States of America.
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"HUD": United States Department of Housing and Urban Development or
any successor thereto.
"Indebtedness": shall mean, for any Person, all items of indebtedness
which, in accordance with GAAP, would be included in determining liabilities as
shown on the liability side of a balance sheet of such Person as of the date as
of which indebtedness is to be determined, including, without limitation, all
obligations for money borrowed, and shall also include all indebtedness and
liabilities of others assumed or guaranteed by such Person or in respect of
which such Person is secondarily or contingently liable (other than by
endorsement of instruments in the course of collection) whether by reason of any
agreement to acquire such indebtedness or to supply or advance sums or
otherwise.
"Loan to Value Ratio" or "LTV" means with respect to any Mortgage
Loan, the ratio of the original outstanding principal amount of the Mortgage
Loan, as of the date of origination, to the lesser of (a) the Appraised Value of
the related Mortgaged Property at origination or (b) if the Mortgaged Property
was purchased within 12 months of the origination of such Mortgage Loan, the
purchase price of the related Mortgaged Property.
"Losses": Any and all losses, claims, damages, liabilities or
expenses (including reasonable attorney's fees) incurred by any Person
specified.
"LIBOR": With respect to each day (or if such day is not a Business
Day, the next succeeding Business Day), the rate per annum equal to the rate
published by Bloomberg or if such rate is not available, the rate appearing at
page 3750 of the Telerate Screen, as one-month LIBOR on such date, and if such
rate shall not be so quoted, the rate per annum at which the Purchasers are
offered Dollar deposits at or about 11:00 A.M., New York City time, on such date
by prime banks in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of its transactions are then
being conducted for delivery on such day for a period of one month and in an
amount comparable to the amount of the transactions hereunder to be outstanding
on such day.
"Maximum Aggregate Purchase Price": The aggregate Purchase Price of
all Mortgage Loans acquired by Purchasers from Sellers under this Agreement,
held by Purchasers at any one time and not yet delivered to and funded by a
Takeout Investor, which amount shall not, at any time, exceed $2,000,000,000.
"MERS": Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
"MERS Mortgage Loan": Any Mortgage Loan as to which the related
Mortgage or assignment of Mortgage has been recorded in the name of MERS, as
agent for the holder from time to time of the Mortgage Note and which is
identified as a MERS Mortgage Loan on the related Mortgage Loan Schedule.
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"MERS 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 System.
"Monthly Payment": The scheduled monthly payment of principal and/or
interest on a Mortgage Loan.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first or second lien on an estate in fee simple in real property securing a
Mortgage Note.
"Mortgage Interest Rate": The annual rate of interest borne on a
Mortgage Note.
"Mortgage Loan": Each first or second lien, one- to four-family
residential mortgage loan sold, assigned and transferred pursuant to this
Agreement and which satisfies the requirements of the related Sale Agreement as
the same may be modified from time to time, subject to the consent of the
Purchasers and if modified so as to adversely affect the rights or obligations
of the Sellers, the consent of the Sellers.
"Mortgage Loan Pool": The groups of Mortgage Loans purchased by the
Purchaser hereunder for which a Mortgage Loan Schedule is provided to the
Purchasers in accordance with this Agreement.
"Mortgage Loan Schedule": The schedule of Mortgage Loans, attached
hereto as Exhibit H, delivered to the related Purchaser as communicated to such
Purchaser by the related Seller prior to each Purchase Date in a form, and
containing information, acceptable to such Purchaser and the related Seller.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgaged Property": The property subject to the lien of the
Mortgage securing a Mortgage Note.
"Mortgagor": The obligor on a Mortgage Note.
"NCUA": National Credit Union Administration, or any successor
thereto.
"Net Carry Adjustment": The meaning assigned thereto in the Pricing
Side Letter.
"Option-ARM Mortgage Loan": An adjustable rate Mortgage Loan which
(i) provides the Mortgagor with multiple payment options and (ii) may result in
negative amortization.
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"OTS": Office of Thrift Supervision or any successor thereto.
"Parent Company": A corporation or other entity owning at least 50%
of the outstanding shares of voting stock of a Seller.
"Pass-Through Rate": As defined in the Pricing Side Letter as the
Pass-Through Rate.
"Person": Any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Pricing Side Letter": The pricing side letter, dated as of the date
hereof, among the Sellers, the Servicer and the Purchasers, as the same may be
amended, supplemented or modified from time to time.
"Program Documents": This Agreement, the Custodial Agreement, the
Pricing Side Letter, the Custodial Account Control Agreement, the Electronic
Tracking Agreement and any other agreement entered into by a Seller, on the one
hand, and a Purchaser and/or any of its Affiliates or Subsidiaries (or Custodian
on its behalf) on the other, in connection herewith or therewith.
"Purchase Date": With respect to any Mortgage Loan Pool purchased by
a Purchaser hereunder, the date of payment thereof by Purchaser to the related
Seller and/or any warehouse lenders, as applicable, of the Purchase Price.
"Purchase Price": With respect to each Mortgage Loan Pool purchased
by a Purchaser hereunder, the amount specified in the related Confirmation and
calculated in accordance with the Pricing Side Letter.
"Purchaser": Any of Aspen Funding Corp., Gemini Securitization Corp.,
LLC, Newport Funding Corp. and Sedona Capital Funding Corp., LLC and its
respective successors in interest, including, but not limited to, a party to
whom a Trust Receipt is assigned as provided hereunder and in the Custodial
Agreement.
"Purchaser's Wire Instructions": The wire instructions set forth in a
letter in the form of Exhibit B.
"Sale Agreement": The agreement providing for the purchase by Takeout
Investor of Mortgage Loans from the related Seller.
"SEC": The Securities Exchange Commission or any successor thereto.
"Seller": Each Seller whose name is set forth on the cover page
hereof and its permitted successors hereunder.
"Seller's Wire Instructions": The wire instructions set forth in a
letter in the form of Exhibit J.
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"Settlement Account": The meaning assigned thereto in the Custodial
Agreement.
"Settlement Date": With respect to any Mortgage Loan, the date of
payment thereof by Takeout Investor to the related Purchaser of the Takeout
Proceeds.
"Settlement Modification Letter": A letter in the form of Exhibit E.
"Servicer": American Home Mortgage Servicing, Inc, its successors and
permitted assigns.
"Successor Servicer": An entity designated by the Purchasers, with
notice provided in conformity with Section 17, to replace the Servicer as
servicer of the Mortgage Loans.
"Takeout Commitment": A commitment of the related Seller to sell one
or more Mortgage Loans to Takeout Investor and of Takeout Investor to purchase
one or more Mortgage Loans from such Seller. Each Takeout Commitment must be
acceptable to the related Purchaser in its sole discretion.
"Takeout Confirmation": The written notification to the related
Seller from Takeout Investor containing all of the relevant details of the
Takeout Commitment, which notification may take the form of a trade
confirmation.
"Takeout Investor": An investor approved by Purchasers in their sole
discretion.
"Takeout Proceeds": With respect to any Mortgage Loan Pool, the
related Trade Principal plus accrued interest as calculated in accordance with
Section 4, as amended by any related Settlement Modification Letter accepted by
the related Purchaser.
"Tangible Net Worth": With respect to any Person, as of any date of
determination, the excess of total assets of such Person over the total
liabilities of such Person determined in accordance with GAAP on a consolidated
basis, but excluding from the determination of total assets: (a) all assets
which would be classified as intangible assets under GAAP, including, without
limitation, goodwill (whether representing the excess cost over book value of
assets acquired or otherwise), patents, trademarks, trade names, copyrights,
franchises and deferred charges (including, without limitation, unamortized debt
discount and expense, organization costs and research and product development
costs), (b) loans or other extensions of credit to officers, employees,
shareholders or Affiliates of such Person, and (c) investments in subsidiaries
of such Person.
"Third Party Underwriter": A third party, including but not limited
to a mortgage loan pool insurer, who underwrites the Mortgage Loan(s) prior to
the purchase by the related Purchaser of the related Mortgage Loan Pool.
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"Third Party Underwriter's Certificate": A certificate issued by a
Third Party Underwriter with respect to a Mortgage Loan, certifying that such
Mortgage Loan complies with the third party underwriting requirements.
"Trade Assignment": The assignment by the related Seller to the
related Purchaser of such Seller's rights under a specific Takeout Commitment,
in the form of Exhibit A-1, or of such Seller's rights under all Takeout
Commitments, in the form of Exhibit A-2.
"Trade Price": The trade price set forth on a Takeout Commitment as
modified pursuant to any Settlement Modification Letter consented to by the
related Purchaser.
"Trade Principal": With respect to any Mortgage Loan Pool, the
aggregate outstanding principal balance of such Mortgage Loan Pool multiplied by
a percentage equal to the Trade Price.
"Transaction Notice": A notice in the form attached hereto as Exhibit
I.
"Trust Receipt": A trust receipt issued by the Custodian evidencing
the Mortgage Loan Pool it holds for a Purchaser, in the form attached as Exhibit
A-1 (or A-2 with respect to Wet Mortgage Loans) to the Custodial Agreement, and
delivered to the related Purchaser by the Custodian in accordance with Section 2
hereof.
"Warehouse Lender": Any lender providing financing to the related
Seller for the purpose of originating or purchasing Mortgage Loans which prior
to the Purchase Date has a security interest in such Mortgage Loans as
collateral for the obligations of such Seller to such lender.
"Warehouse Lender's Wire Instructions": The wire instructions set
forth in Exhibit E to the Custodial Agreement.
"Wet Mortgage Loan": Mortgage Loans for which the Custodian has not
yet received a completed Custodial File.
Section 2. Procedures for Purchases of Mortgage Loans.
(a) Any Purchaser may, in its sole discretion, from time to time,
purchase one or more Mortgage Loan Pools from either or both Sellers. Any
request by Seller that a Purchaser purchase any Mortgage Loans hereunder shall
be provided by delivery of a Transaction Notice together with a Mortgage Loan
Schedule attached, no later than 3:00 p.m. (New York City time) one (1) Business
Day prior to the requested Purchase Date with respect to any Mortgage Loans
other than Wet Mortgage Loans. With respect to Wet Mortgage Loans, the related
Seller shall notify the related Purchaser of an estimate of the Purchase Price
of such Wet Mortgage Loans no later than 3:00 p.m. (New York City time) one (1)
Business Day prior to the requested Purchase Date. Prior to any Purchaser's
actual purchase of any Mortgage Loan Pool, such Purchaser shall have received
(a) from Custodian by facsimile or electronic transmission acceptable to related
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Purchaser, the Trust Receipt covering all Mortgage Loans being purchased on such
day fully completed and authenticated by Custodian, and a cumulative Trust
Receipt covering all Mortgage Loans purchased by Purchasers (but not settled by
any Takeout Investor pursuant to a Takeout Commitment or otherwise repurchased
by either Seller) with the original Trust Receipts sent by overnight mail to
arrive on the Business Day after the day they are sent by facsimile, and (b)
from the Seller (i) a copy of the Takeout Confirmation related to the Mortgage
Loan(s) in such Mortgage Loan Pool, executed by the related Seller and Takeout
Investor or such other notification acceptable to the Purchaser in its sole
discretion and (ii) an original letter in the form of Exhibit E to the Custodial
Agreement from the applicable Warehouse Lender (if any), or an original letter
in the form of Exhibit F to the Custodial Agreement in the event that there is
no Warehouse Lender. In addition to the foregoing, the related Seller shall use
its best efforts to obtain a Trade Assignment executed by the related Seller and
Takeout Investor in the form of Exhibit A-1 or Exhibit A-2. This Agreement is
not a commitment by any Purchaser to enter into transactions with either Seller
but rather sets forth the procedures to be used in connection with periodic
requests for a Purchaser to enter into transactions with a Seller. Sellers
hereby acknowledge that Purchasers are under no obligation to agree to enter
into, or to enter into, any transaction pursuant to this Agreement.
(b) If any Purchaser elects to purchase any Mortgage Loan Pool,
Purchaser shall provide to Seller a Confirmation of such purchase in the form of
Exhibit C attached hereto and such Purchaser shall pay the amount of the
Purchase Price for such Mortgage Loan Pool by wire transfer of immediately
available funds in accordance with the Warehouse Lender's Wire Instructions or
if there is no Warehouse Lender, the related Seller's Wire Instructions. Upon
such payment and not otherwise, Purchaser shall be deemed to have accepted the
related Trade Assignment. Sellers shall not offer for sale to any Purchaser any
Mortgage Loan as to which the Expiration Date of the related Takeout Commitment
is five (5) Business Days or less following the Purchase Date.
(c) Simultaneously with the payment by a Purchaser of the Purchase
Price, in accordance with the Warehouse Lender's Wire Instructions or the
related Seller's Wire Instructions, as applicable, with respect to a Mortgage
Loan Pool, such Seller hereby conveys to the related Purchaser all of such
Seller's right, title and interest in and to the related Mortgage Loan(s) free
and clear of any lien, claim or encumbrance other than the Takeout Commitment.
Notwithstanding the satisfaction by the related Seller of the conditions
specified in this Section 2, no Purchaser is obligated to purchase any Mortgage
Loans offered to it hereunder.
(d) In the event that a Purchaser rejects a Mortgage Loan for
purchase for any reason and/or does not transmit the applicable Purchase Price,
(i) the Trust Receipt, if any, delivered by Custodian to such Purchaser in
anticipation of such purchase shall automatically be null and void with respect
to the Mortgage Loans that have been rejected by such Purchaser and valid for
all other Mortgage Loans that were purchased by a Purchaser and not rejected,
pending the delivery by the Custodian of an updated Trust Receipt pursuant to
Section [__] of the Custodial Agreement and (ii) if such Purchaser shall
nevertheless receive any portion of the related Takeout Proceeds, such Purchaser
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shall within one (1) Business Day pay such Takeout Proceeds to the related
Seller in accordance with such Seller's Wire Instructions.
(e) The terms and conditions of the purchase of each Mortgage Loan
Pool shall be as set forth in this Agreement.
Section 3. Sale of Mortgage Loans to Takeout Investor.
(a) With respect to Mortgage Loan(s) that a Purchaser has elected to
purchase, such Purchaser may, at its option, either (i) instruct Custodian to
deliver to Takeout Investor, in accordance with Takeout Investor's instructions,
the Custodial File in respect of such Mortgage Loans, in the manner and at the
time set forth in the Custodial Agreement, or (ii) provide for the delivery of
the Custodial File through an escrow arrangement satisfactory to such Purchaser
and Takeout Investor. The related Seller shall in accordance with the related
Sale Agreement, deliver to Takeout Investor any and all documents required to be
delivered pursuant to the Sale Agreement to enable Takeout Investor to purchase
such Mortgage Loan(s) on or before the related Expiration Date.
(b) (1) Upon receipt by the related Purchaser, prior to the Cure
Date, of a Settlement Modification Letter, duly executed by Takeout Investor and
the related Seller, such Purchaser may, at its election, agree to the
postponement of the Settlement Date and such other matters as are set forth in
the Settlement Modification Letter. If such Purchaser elects to accept a
Settlement Modification Letter, such Purchaser shall, not later than two (2)
Business Days or earlier if reasonably required by the Takeout Investor or the
Seller after receipt of such Settlement Modification Letter execute the
Settlement Modification Letter and send, via facsimile, copies of such fully
executed Settlement Modification Letter to the related Seller and Takeout
Investor.
(b) (2) The Seller is required to provide certain representations and
warranties to the Takeout Investor pursuant to the Sale Agreement as of the
Settlement Date. To the extent that the Seller has knowledge that any such
representations and warranties are not true, Seller shall have no obligation to
provide any such representation and warranty.
(c) (1) If a breach by Sellers of this Agreement results in any
Mortgage Loan being a Defective Mortgage Loan at the time of the delivery of the
related Trust Receipt to the related Purchaser, or in the event that the first
Monthly Payment due on the Mortgage Loan following the Purchase Date is not made
within 30 days of its Due Date (an "Early Payment Default"), such Purchaser, at
its election, may require that such Seller, upon receipt of notice from such
Purchaser of its exercise of such right, immediately repurchase such Purchaser's
ownership interest in such Mortgage Loan by remitting to such Purchaser (in
immediately available funds in accordance with Purchaser's Wire Instructions)
the amount paid by such Purchaser for such Mortgage Loan plus all interest at
the Pass-Through Rate on the principal amount thereof from the related Purchase
Date to the date of such repurchase.
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(c) (2) The Servicer's rights and obligations to interim service each
Mortgage Loan as provided in this Agreement, shall terminate on the later of the
related Settlement Date or the date which is thirty days following the related
Purchase Date; provided that, the related Purchaser may in its sole discretion
extend such 30 day interim servicing period by one or more additional 30 day
periods by providing written notice to the Servicer prior to the termination of
such interim servicing period. If an Act of Insolvency or any other material
default hereunder by the Servicer occurs at any time, the Servicer's rights and
obligations to service the Mortgage Loan(s), as provided in this Agreement,
shall terminate immediately, without any notice or action by Purchaser subject
to the rights of any Takeout Investor. Upon any such termination, Purchaser is
hereby authorized and empowered to sell and transfer such rights to service the
Mortgage Loan(s) for such price and on such terms and conditions as Purchaser
shall reasonably determine subject to the rights of any Takeout Investor, and
neither the Servicer nor the Sellers shall have any right to attempt to sell or
transfer such rights to service. The Servicer shall perform all acts and take
all actions so that the Mortgage Loan(s) and all files and documents relating to
such Mortgage Loan(s) held by the Servicer, together with all escrow amounts
relating to such Mortgage Loan(s), are delivered to Successor Servicer. To the
extent that the approval of any Takeout Investor, Third Party Underwriter or any
other insurer or guarantor is required for any such sale or transfer, the
Sellers and the Servicer shall fully cooperate with Purchaser to obtain such
approval. All amounts paid by any purchaser of such rights to service the
Mortgage Loan(s) shall be the property of the Purchasers. Upon exercise by
Purchasers of the remedies under this Section 3(c)(2), Purchasers' obligation to
pay and Sellers' and Servicer's right to receive any portion of the Completion
Fee relating to such Mortgage Loan(s) shall automatically be canceled and become
null and void, provided that such cancellation shall in no way relieve such
Seller or otherwise affect the obligation of such Seller to indemnify and hold
the Purchasers harmless as specified in Section 3(e).
(d) Subject to the rights of a Takeout Investor, each Mortgage Loan
delivered to any Purchaser hereunder shall be delivered on a servicing released
basis free of any servicing rights in favor of the related Seller and free of
any title, interest, lien, encumbrance or claim of any kind of such Seller and
such Seller hereby waives its right to assert any interest, lien, encumbrance or
claim of any kind. Subject to the rights of a Takeout Investor, upon transfer of
such servicing rights to any Successor Servicer, the Servicer and the related
Seller shall deliver or cause to be delivered all files and documents relating
to each Mortgage Loan held by the Servicer or such Seller to Successor Servicer.
The related Seller and the Servicer shall promptly take such actions and furnish
to the related Purchaser such documents that such Purchaser reasonably deems
necessary or appropriate to enable such Purchaser to cure any defect in each
such Mortgage Loan or to enforce such Mortgage Loans, as appropriate.
(e) Sellers agree to indemnify, defend and hold harmless each
Purchaser and its assigns from and against all Losses resulting from any breach
or failure to perform by Sellers of any representation, warranty, covenant, term
or condition made or to be performed by Sellers under the Program Documents. For
the avoidance of doubt, the indemnity set forth in this Section 3(e) shall not
be subject to any limit or cap.
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(f) [Reserved]
(g) In addition to the indemnity provided pursuant to Section 3(e)
above, the Sellers agree to indemnify and hold each Purchaser and its assigns
harmless from and against all Losses related to the Mortgage Loans and the
transactions contemplated hereunder, including, without limitation, any Losses
resulting from or relating to any breach or failure to perform by any Takeout
Investor, any credit losses on the Mortgage Loans, uninsured hazard losses,
Shortfalls and delinquency (other than the one month Early Payment Default),
provided that, the aggregate liability of the Sellers pursuant to this Section
3(g) for any such Losses (not taking into account any Losses under Section 3(e)
resulting from or relating to any breach or failure to perform by Sellers of any
representation, warranty, covenant, term or condition made or to be performed by
Sellers or any repurchases of Defective Mortgage Loans or of any Mortgage Loans
subject to an Early Payment Default under Section 3(c)(1) and any Losses under
Section 19) shall not exceed 5% of the sum of the aggregate Purchase Prices and
the Completion Fees for any Mortgage Loans in the related Mortgage Loan Pool
sold to a particular Takeout Investor determined on a Mortgage Loan Pool basis.
For the purposes of this Section 3(g), "Shortfall" shall mean the excess, if
any, of (i) the Purchase Price paid by such Purchaser to Seller plus the
Pass-Through Rate for the related Mortgage Loans, over (ii) the actual Takeout
Proceeds (including accrued interest) paid by the particular Takeout Investor to
the related Purchaser. No exercise by a Purchaser of its rights under this
Section 3 shall relieve Sellers of responsibility or liability for any breach of
the Program Documents.
(h) In addition to any rights and remedies of Purchasers provided by
this Agreement and by law, each Purchaser shall have the right, without prior
notice to Sellers, any such notice being expressly waived by Sellers to the
extent permitted by applicable law, upon any amount becoming due and payable
(and has not been paid by the Sellers as required) by Sellers hereunder to
set-off and appropriate and apply against such amount any and all property and
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Purchaser to or for the credit or
the account of Sellers (including, without limitation, the amount of any accrued
and unpaid Completion Fee). Each Purchaser may also set-off cash and all other
sums or obligations owed by such Purchaser to Sellers under the Program
Documents against all of such Seller's obligations to such Purchaser, whether or
not such obligations are then due. The exercise of any such right of set-off
shall be without prejudice to any Purchaser's right to recover any deficiency.
(i) Sellers agree that, with respect to any Mortgage Loan Pool
purchased by a Purchaser, the related Takeout Commitment shall have an
Expiration Date which is not later than 60 calendar days after the related
Purchase Date. Sellers further agree that any additional Takeout Commitment that
they obtain with respect to such Mortgage Loan Pool if the initial Takeout
Investor does not perform under such Takeout Commitment shall have an Expiration
Date which is not later than 75 calendar days after the related Purchase Date.
Sellers have not and will not take any action, or fail
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to act where action is required, the result of which would be to impair any
Trade Assignment.
(j) Sellers shall notify and provide the related Purchaser with
copies of any changes made to the Sale Agreement or any other correspondent
agreements between Sellers and any Takeout Investor within two (2) Business Days
of such change.
(k) In no event shall the Purchasers be liable to the Takeout
Investor for any pair-off, breakage or other similar fees in the event that a
Takeout Investor asserts any such right under any Takeout Commitment.
Section 4. Completion Fee.
(a) With respect to each Mortgage Loan Pool that a Purchaser elects
to purchase hereunder, such Purchaser shall pay to the related Seller the
Completion Fee subject to the terms of this Agreement. The Completion Fee shall
be payable by such Purchaser as provided in subsection (c) below.
(b) If a Mortgage Loan Pool is purchased by a Purchaser in the month
prior to the month in which the related Settlement Date occurs, (A) all interest
which accrues on the related Mortgage Loans, on and after the Purchase Date,
through the last day of any month prior to the month in which such Settlement
Date occurs, and all other collections thereon, shall be paid to such Purchaser
by the Servicer, as interim servicer, on a monthly basis on the earlier of (i)
the second Business Day of the month following the month such interest accrued
or (ii) related Settlement Date and (B) all interest which accrues on the
Mortgage Loans in such Mortgage Loan Pool on and after the first day of the
month in which such Settlement Date occurs, through the day immediately prior to
such Settlement Date, and all other collections thereon, will be paid to such
Purchaser by Takeout Investor on such Settlement Date unless such Settlement
Date occurs after the Cut-off Date of such month in which event Servicer, as
interim servicer, shall pay such amount to such Purchaser on such Settlement
Date. If a Mortgage Loan Pool is purchased by such Purchaser in the same month
in which the related Settlement Date occurs, (A) all interest, if any, which
accrues on such Mortgage Loan(s) from the first day of such month to but not
including the related Purchase Date shall be paid by such Purchaser to the
related Seller on such Settlement Date, and (B) all interest which accrues on
such Mortgage Loan(s), on and after the Purchase Date to but not including the
Settlement Date will be paid to such Purchaser by Takeout Investor on the
Settlement Date unless such Settlement Date occurs after the Cut-off Date or in
a month in which interest has been prepaid by the Mortgagor in either of which
events the Servicer, as interim servicer, shall pay such amount to such
Purchaser on such Settlement Date. For purposes of this paragraph all interest
payments shall be deemed to accrue at the applicable rate set forth in the
related Takeout Commitment.
(c) Except as provided in Section 4(d), the Completion Fee relating
to each Mortgage Loan Pool is payable on the date of receipt by the related
Purchaser of the Takeout Proceeds, provided that to the extent such Takeout
Proceeds are not received on
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or before the Cure Date, the Purchasers shall have no obligation to pay the
Completion Fee with respect to the related Mortgage Loan Pool.
(d) Notwithstanding the generality of the foregoing, upon acceptance
and execution by the related Purchaser of a Settlement Modification Letter, such
Purchaser shall recalculate the amount of the Completion Fee, if any, due to
Seller using the new terms included in the Settlement Modification Letter. If
such Settlement Modification Letter results in the related Settlement Date (the
"New Settlement Date") occurring after the related Cure Date, the Completion Fee
shall be payable to the related Seller, not later than 3:00 p.m. on the next
Business Day after Takeout Investor's purchase of the related Mortgage Loans as
evidenced by such Purchaser's receipt of the Takeout Proceeds on the New
Settlement Date of the amount of such recalculated Completion Fee. The payment
of the Completion Fee shall be expressly contingent on the related Seller
satisfying its obligations hereunder prior to the New Settlement Date. In the
event that the related Seller has not satisfied such obligations prior to the
New Settlement Date, the recalculated Completion Fee shall not be payable. In no
event shall the Cure Date be modified or extended.
(e) The Purchasers shall retain the Sellers to act as their agents
with respect to the administrative actions necessary to consummate the Takeout
Commitment of the Mortgage Loans by the related Takeout Investors. In connection
therewith, and except to the extent otherwise superseded by the provisions of
this Agreement, the Sellers, in such role, shall continue to perform all of
their duties and obligations to the Takeout Investors under the Takeout
Commitments and otherwise, with respect to the Mortgage Loans purchased by the
Purchasers hereunder, as if such Mortgage Loans were still owned by the Sellers
and sold directly by the Sellers to the Takeout Investors without the
intervening ownership of the Purchasers pursuant to this Agreement. Without
limiting the generality of the foregoing, the Sellers shall timely assemble all
records and documents concerning the Mortgage Loans as required by the related
Takeout Commitments, together with all other documents and information that has
been required or requested by the related Takeout Investor. In consideration of
performing such functions, the Sellers shall be entitled to receive the
Completion Fees, at the times and under the terms as specified in this
Agreement.
Section 5. Servicing of the Mortgage Loans.
(a) Upon payment of the Purchase Price, the related Purchaser shall
own all source files, documents, agreements and papers related to servicing the
Mortgage Loans and shall own all derivative information created by the Servicer
or the related Seller or other third party used or useful in servicing the
Mortgage Loans. The Servicer shall interim service and administer the Mortgage
Loan(s) on behalf of the related Purchaser in accordance with customary and
reasonable mortgage loan servicing standards and procedures generally accepted
by lenders in the mortgage banking industry and in accordance with the
requirements of Takeout Investor, provided that the Servicer shall at all times
comply with applicable law and the terms of the related Mortgage Loan Documents,
and the requirements of any applicable insurer or guarantor including, without
limitation, any Third Party Underwriter, so that the insurance in respect of any
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Mortgage Loan is not voided or reduced. The Servicer shall at all times maintain
accurate and complete records of its interim servicing of each Mortgage Loan,
and any Purchaser may, at any time during the Servicer's business hours on two
(2) Business Days notice (or immediately in the event of a default hereunder by
the Servicer), examine and make copies of such records. At the request and in
accordance with the directions of such Purchaser, the Servicer shall deliver to
such Purchaser copies of any Credit Files within two (3) Business Days of such
request by such Purchaser. In addition, upon not less than two (2) Business Days
notice to the related Seller or the Servicer, any Purchaser shall have the right
to perform a due diligence review of such Seller or the Servicer, including the
Servicer's servicing capabilities.
The Servicer shall at any Purchaser's request deliver to such
Purchaser monthly reports prepared by the Servicer in the ordinary course of its
business and such other reports reasonably requested by any Purchaser regarding
the status of such Mortgage Loan, which reports shall include, but shall not be
limited to, a description of each Mortgage Loan in default for more than thirty
(30) days, and such other circumstances with respect to any Mortgage Loan
(whether or not such Mortgage Loan is included in the foregoing list) that could
materially adversely affect any such Mortgage Loan, the related Purchaser's
ownership of any such Mortgage Loan or the collateral securing any such Mortgage
Loan. The Servicer shall deliver such a report to each Purchaser every thirty
(30) days until (i) the purchase by Takeout Investor of such Mortgage Loan
pursuant to the related Takeout Commitment or (ii) the exercise by Purchasers of
any remedial election pursuant to Section 3.
(b) The Servicer shall establish (prior to the initial Purchase Date)
and maintain a separate custodial account (the "Custodial Account") entitled
"[Name of Servicer], in trust for Aspen Funding Corp., Gemini Securitization
Corp., LLC, Newport Funding Corp. and Sedona Capital Funding Corp., LLC and each
of their assignees under the Whole Loan Purchase and Sale Agreement dated
September 22, 2006" for the benefit of the Purchasers and for the sole and
exclusive benefit of the Purchasers and shall, after a default under this
Agreement, deposit promptly into the Custodial Account (and in any event, within
two (2) Business Days of receipt thereof) any amounts received by it relating to
the Mortgage Loans. The Custodial Account shall be subject to the Custodial
Account Control Agreement.
(c) Amounts deposited in the Custodial Account with respect to any
Mortgage Loan shall be held in trust for the related Purchaser as the owner of
such Mortgage Loan and shall be released only as follows:
(1) Except as otherwise provided in Section 5(c)(2), following
receipt by the related Purchaser or its designee of the Takeout
Proceeds for such Mortgage Loan from Takeout Investor, amounts
deposited in the Custodial Account related to such Mortgage Loan not
otherwise subject to setoff as provided hereunder shall be released
to the Servicer. The amounts paid to the Servicer (if any) pursuant
to this Section 5(c)(1) shall constitute the Servicer's sole
compensation for interim servicing the Mortgage Loans as provided in
this Section 5.
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(2) If Successor Servicer takes delivery of such Mortgage Loan
(either under the circumstances set forth in Section 3 or
otherwise), all amounts deposited in the Custodial Account shall be
paid to the related Purchasers promptly upon such delivery.
(3) If a Mortgage Loan is not purchased by Takeout Investor on
or before the Cure Date, during the period thereafter that the
related Seller remains as interim servicer, all amounts deposited in
the Custodial Account shall be released only in accordance with the
related Purchaser's written instructions.
Section 6. Trade Assignments. Each related Seller hereby assigns to
each related Purchaser, free of any security interest, lien, claim or
encumbrance of any kind, such Seller's rights, under each Takeout Commitment, to
deliver the Mortgage Loan(s) specified therein to the related Takeout Investor
and to receive the Takeout Proceeds therefor from such Takeout Investor. No
Purchaser shall be deemed to have accepted any Trade Assignment unless and until
it purchases the related Mortgage Loans, and nothing set forth herein shall be
deemed to impair such Purchaser's right to reject any Mortgage Loan for any
reason, in its sole discretion.
Section 7. Transfers of Beneficial Interest in Mortgage Loans by
Purchasers. Each Purchaser may, in its sole discretion, assign all of its right,
title and interest in or grant a security interest in any Mortgage Loan sold by
Seller hereunder and all rights of such Purchaser under the Program Documents,
in respect of such Mortgage Loan solely to one of Purchaser's commercial paper
conduits (each, an "Assignee") but in no event to any Seller or any Affiliate of
any Seller. It is anticipated that such assignment to an Assignee will be made
by Purchasers, and Sellers hereby irrevocably consent to such assignment. No
notice of such assignment shall be given by any Purchaser to Sellers or Takeout
Investor. Assignment by a Purchaser of the Mortgage Loans as provided in this
Section 7 shall not release Purchaser from any obligations otherwise under the
Program Documents. Without limitation of the foregoing, an assignment of the
Mortgage Loans to an Assignee, as described in this Section 7, shall be
effective upon delivery to the Assignee of a duly executed and authenticated
Trust Receipt.
Section 8. Record Title to Mortgage Loans; Intent of Parties;
Security Interest.
(a) From and after the issuance and delivery of the related Trust
Receipt, and subject to the remedies of Purchasers in Section 3, the related
Seller may remain the last named payee or endorsee of each Mortgage Note and
(except with respect to any MERS Mortgage Loan) the mortgagee or assignee of
record of each Mortgage in trust for the benefit of the related Purchaser, for
the sole purpose of facilitating the servicing of such Mortgage Loan.
Notwithstanding the foregoing, beneficial ownership of each Mortgage and the
related Mortgage Note shall be vested solely in the related Purchaser or the
appropriate designee of such Purchaser, as the case may be. All rights arising
out of the Mortgage Loans including, but not limited to, all funds received by
the
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related Seller after the related Purchase Date on or in connection with a
Mortgage Loan shall be vested in the related Purchaser or one or more assignees
of such Purchaser.
(b) Each Seller shall maintain a complete set of books and records
for each Mortgage Loan which shall be clearly marked to reflect the ownership
interest in each Mortgage Loan of the related Purchaser. With respect to each
MERS Mortgage Loan, upon the request of the related Purchaser, the related
Seller shall prepare and deliver to MERS an assignment of Mortgage from MERS to
blank. The related Seller shall cause such assignment of Mortgage to be recorded
in the public land records upon request of such Purchaser. At any time during
the term of this Agreement, the related Purchaser or the Takeout Investor, as
the case may be, may direct the related Seller to cause any MERS Mortgage Loan
to be deactivated from the MERS system. In connection with such deactivation,
the related Seller shall notify MERS and prepare an assignment of Mortgage from
MERS to the related Purchaser or in blank. In the event that the related
Purchaser specifies that any such assignment be made to Seller, such assignment
shall be for the sole purpose of facilitating the servicing of such Mortgage
Loan and such Seller shall also prepare an assignment of Mortgage in recordable
form from such Seller to the related Purchaser or its designee and deliver such
unrecorded assignment of Mortgage to the Custodian pursuant to the terms and
conditions of the Custodial Agreement.
(c) Purchasers and Sellers confirm that the transactions contemplated
herein are intended to be sales of the Mortgage Loans by Sellers to Purchasers
rather than borrowings secured by the Mortgage Loans and will be treated and
accounted for as such on their books and records. In the event, for any reason,
any transaction is construed by any court or regulatory authority as a borrowing
rather than as a sale, Sellers and Purchasers intend that the related Purchaser
or its Assignee, as the case may be, shall have a perfected first priority
security interest in the Mortgage Loans, the servicing rights appurtenant to the
Mortgage Loans, the Custodial Account and the Settlement Account and all
proceeds thereof, the Takeout Commitments and the proceeds of any and all of the
foregoing (collectively, the "Collateral"), free and clear of adverse claims but
subject to the Takeout Commitments. In such case, the related Seller shall be
deemed to have hereby granted to the related Purchaser or Assignee, as the case
may be, a first priority security interest in and lien upon the Collateral, free
and clear of adverse claims but subject to the Takeout Commitments. In such
event, this Agreement shall constitute a security agreement, the Custodian shall
be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the related Purchaser or Assignee, as the case may
be, and the related Purchaser or Assignee, as the case may be, shall have all of
the rights of a secured party under applicable law.
Section 9. Representations and Warranties.
(a) Each Seller, jointly and severally, hereby represents and
warrants to each Purchaser as of the date hereof and as of the date of each
issuance and delivery of a Trust Receipt that:
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(i) Each Seller is duly organized, validly existing and in
good standing under the laws of the state of its organization and
has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in the
state where the Mortgaged Property is located if the laws of such
state require licensing or qualification in order to conduct
business of the type conducted by each Seller, except where the
failure to be so licensed or qualified would not result in a
material adverse effect on the Sellers or their ability to perform
under any Program Document. Each Seller has all requisite corporate
power and authority to execute and deliver each Program Document to
which it is party and to perform in accordance herewith and
therewith; the execution, delivery and performance of each Program
Document to which it is party (including all instruments of transfer
to be delivered pursuant to such Program Documents) by each Seller
and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized; each Program Document
evidences the valid, binding and enforceable obligation of Seller
except as the enforceability may be limited by bankruptcy,
insolvency, reorganization, or similar laws, and by equitable
principles affecting the enforceability of the rights of creditors;
and all requisite corporate action has been taken by each Seller to
make each Program Document to which it is party valid and binding
upon each Seller in accordance with its terms;
(ii) No approval of the transactions contemplated by the
Program Documents from the OTS, the NCUA, the FDIC or any similar
federal or state regulatory authority having jurisdiction over each
Seller is required, or if required, such approval has been obtained.
There are no actions or proceedings pending or against Sellers which
would materially and adversely affect each Seller's ability to
perform hereunder. The transfers, assignments and conveyances
provided for herein are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable
jurisdiction;
(iii) The consummation of the transactions contemplated by the
Program Documents are in the ordinary course of business of each
Seller and will not (i) result in the breach of any term or
provision of the charter or by-laws of each Seller or (ii) result in
the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or
credit agreement or other instrument to which each Seller or its
property is subject, or (iii) result in the violation of any law,
rule, regulation, order, judgment or decree to which each Seller or
its property is subject except, in the case of clauses (ii) and
(iii), for such conflicts, breaches, defaults or violations of law
which would not, individually or in the aggregate, result in a
material adverse effect on the Sellers or their ability to perform
under any Program Document;
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(iv) The Program Documents and every other document to be
executed by Seller each pursuant to this Agreement is and will be
valid, binding and subsisting obligations of each Seller,
enforceable in accordance with their respective terms, except as the
enforceability may be limited by bankruptcy, insolvency,
reorganization, or similar laws, and by equitable principles
affecting the enforceability of the rights of creditors. No consents
or approvals are required to be obtained by any Seller or its Parent
Company, if any, for the execution, delivery and performance of any
Program Document by each Seller;
(v) Upon purchase by the Purchaser, each Seller has not sold,
assigned, transferred, pledged or hypothecated any interest in any
Mortgage Loan sold hereunder to any person other than the related
Purchaser and the Takeout Investor, and upon delivery of a related
Trust Receipt to such Purchaser, such Purchaser will be the sole
owner thereof, free and clear of any lien, claim or encumbrance
subject to the rights of the Takeout Investor;
(vi) Neither this Agreement nor any information relating to
Sellers that Sellers have delivered to any Purchaser, including, but
not limited to, all documents related to this Agreement, the
Custodial Agreement, the other Program Documents or Seller's
financial statements, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the
statements made therein or herein in light of the circumstances
under which they were made, not misleading. Since the furnishing of
such documents or information, there has been no change, nor any
development or event involving a prospective change that would
render any of such documents or information untrue or misleading in
any material respect;
(vii) There is no pending or threatened action, suit,
proceeding, inquiry or investigation, at law or in equity or before
or by any court, administrative body or other tribunal (A) that
would prohibit each Seller entering into any of the Program
Documents, (B) seeking to prevent the sale of the Mortgage Loans or
the consummation of the transactions contemplated by the Program
Documents or (C) that would prohibit or materially and adversely
affect the performance by each Seller of its obligations under, or
validity or enforceability of, any Program Document;
(viii) AHMI's Aggregate Tangible Net Worth is not less than
$700,000,000; and
(ix) Sellers and their Affiliates maintains in the aggregate
committed warehouse facilities in an amount equal to not less than
$4 billion which is in full force and effect, with one or more third
party lenders which are not Affiliates of Sellers.
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(b) The related Seller hereby represents and warrants to the related
Purchaser as of the date hereof, as of the date of delivery of each Mortgage
Loan Pool and as of each Purchase Date that the Custodian is an eligible
custodian as determined by FNMA, FHLMC and GNMA, and is not an Affiliate of
Seller.
(c) Seller hereby represents and warrants to the related Purchaser
with respect to each Mortgage Loan as of each Purchase Date of the related
Mortgage Loan that:
(i) The Mortgage Loan conforms in all respects to the
requirements of this Agreement, the Sale Agreement, the Commitment
Guidelines, the Takeout Investor and the requirements of the related
Third Party Underwriter's Certificate, if any. The Mortgage Loan was
originated not more than 60 days prior to the related Purchase Date.
(ii) The related Seller is the sole owner and holder of the
Mortgage Loan free and clear of any and all liens, pledges, charges
or security interests of any nature other than, prior to the
purchase by the Purchaser, the rights of any warehouse lender and
has full right and authority, subject to no interest or
participation of, or agreement with, any other party, to sell and
assign the same pursuant to this Agreement other than the rights of
the Takeout Investor;
(iii) No servicing agreement has been entered into with
respect to the Mortgage Loan, or any such servicing agreement has
been terminated and there are no restrictions, contractual or
governmental, which would impair the ability of the related
Purchaser or such Purchaser's designees from servicing the Mortgage
Loan other than the rights of any Takeout Investor;
(iv) The Mortgage is a valid and subsisting first or second
lien on the property therein described, as specified on the Mortgage
Loan Schedule and the Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage
except for liens for real estate taxes and special assessments not
yet due and payable and with respect to each Mortgage Loan which is
a second lien Mortgage Loan, a first lien on the Mortgaged Property.
Any pledge account, security agreement, chattel mortgage or
equivalent document related to, and delivered to (or required to be
delivered for Wet Mortgage Loans) the Custodian with the Mortgage,
establishes in the related Seller a valid and subsisting lien on the
property described and the priority provided therein, and such
Seller has full right to sell and assign the same to such Purchaser
subject to the rights of any Takeout Investor;
(v) Neither the related Seller nor any prior holder of the
Mortgage has modified the Mortgage in any material respect;
satisfied, canceled or subordinated the Mortgage in whole or in
part; released the
- 21 -
Mortgaged Property in whole or in part from the lien of the
Mortgage; or executed any instrument of release, cancellation,
modification or satisfaction unless such release, cancellation,
modification or satisfaction does not adversely affect the value of
the Mortgage Loan and is contained in the related Document File;
(vi) The Mortgage Loan is not in default, and all Monthly
Payments due prior to the Purchase Date and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents due and owing have been paid.
Sellers have not advanced funds, or induced or solicited any advance
of funds by a party other than the Mortgagor directly or indirectly,
for the payment of any amount required by the Mortgage Loan. The
collection practices used by each entity which has serviced the
Mortgage Loan have been in all respects legal and customary in the
mortgage servicing business. With respect to escrow deposits and
payments in those instances where such were required, there exist no
deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made and no escrow
deposits or payments or other charges or payments have been
capitalized under any Mortgage or the related Mortgage Note except
for deferred interest payments on Option-ARM Mortgage Loan;
(vii) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Mortgage
Note and no event which, with the passage of time or with notice and
the expiration of any grace of cure period, would constitute a
default, breach, violation or event of acceleration; and Sellers
have not waived any default, breach, violation or event of
acceleration;
(viii) The Mortgage Loan is not subject to any valid 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 or the Mortgage, or the exercise of any right thereunder,
render either the Mortgage Note or the Mortgage unenforceable, in
whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(ix) 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. All parties to
the Mortgage Note and the Mortgage had legal capacity to execute the
Mortgage Note and the Mortgage and each Mortgage Note and Mortgage
have been duly and properly executed by the Mortgagor;
- 22 -
(x) The Mortgage Loan meets, or is exempt from, applicable
state or federal laws, regulations and other requirements pertaining
to usury, and the Mortgage Loan is not usurious;
(xi) Any and all requirements of any federal, state or local
law including, without limitation, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, and Sellers shall deliver to the related
Purchaser upon demand, evidence of compliance with all such
requirements;
(xii) Either: (A) the related Seller and every other holder of
the Mortgage, if any, were authorized to transact and do business in
the jurisdiction in which the Mortgaged Property is located at all
times when such party held the Mortgage; or (B) the loan of mortgage
funds, the acquisition of the Mortgage (if to the extent required by
applicable law such Seller was not the original lender), the holding
of the Mortgage and the transfer of the Mortgage did not constitute
the transaction of business or the doing of business in such
jurisdiction;
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder
and any and all requirements as to completion of any on site or
off-site improvements and as to disbursements of any escrow funds,
therefore, have been complied with. All costs, fees and expenses
incurred in making, closing or recording the Mortgage Loans were
paid;
(xiv) The related Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property
of the benefits of the security, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure. There is no homestead or other
exemption available to the Mortgagor which would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the
right to foreclose the Mortgage;
(xv) The Mortgage Loan was originated free of any "original
issue discount" with respect to which the owner of the Mortgage Loan
could be deemed to have income pursuant to Sections 1271 et seq. of
the Internal Revenue Code;
(xvi) Each Mortgage Loan was originated by an institution
described in Section 3(a)(41)(A)(ii) of the Securities Exchange Act
of 1934, as amended;
- 23 -
(xvii) At origination, the Mortgaged Property was free and
clear of all mechanics' and materialmen's liens or liens in the
nature thereof which are or could be prior to the Mortgage lien;
(xviii) All of the improvements which are included for the
purpose of determining the Appraised Value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of
such property, and no improvements on adjoining properties encroach
upon the Mortgaged Property;
(xix) No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation
and all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged
Property, and with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, had been made or obtained from the
appropriate authorities and the Mortgaged Property was lawfully
occupied under applicable law;
(xx) There is no proceeding pending for the total or partial
condemnation of the Mortgaged Property and said property is
undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty;
(xxi) The Custodial File contains, and the Credit File
contains or shall contain prior to the Expiration Date, each of the
documents and instruments specified to be included therein duly
executed and in due and proper form and each such document or
instrument is a uniform instrument. The Custodian is currently in
possession of the Custodial File for each Mortgage Loan (except for
Wet Mortgage Loans) and the related Seller is in possession or shall
be prior to the Expiration Date of the Credit File for each Mortgage
Loan and there are no custodial agreements in effect adversely
affecting the rights of such Seller to make the deliveries required
within the required time. The related Seller shall not deliver a
Credit File to Takeout Investor prior to the related Commitment
Date;
(xxii) The lien of each Mortgage Loan securing the
consolidated principal amount thereof is expressly insured as having
first or second (as indicated on the Mortgage Loan Schedule) lien
priority or is covered by an attorney's opinion of title acceptable
to GNMA, FNMA or FHLMC, as applicable, if customarily provided in
the jurisdiction in which the related Mortgaged Property is located,
or a mortgage title insurance policy acceptable to FNMA, issued by,
and the valid and binding obligation of, a title insurer acceptable
to FNMA and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the related Seller, its
successors and assigns, as to the validity and appropriate
- 24 -
priority of the lien created by the Mortgage subject to customary
permitted exceptions in the original principal amount of the
Mortgage Loan. The related Seller is the named insured and the sole
insured of such mortgage title insurance policy, and the assignment
to the related Purchaser of such Seller's interest in such mortgage
title insurance policy does not require the consent of or
notification to the insurer, such mortgage title insurance policy is
in full force and effect and will be in full force and effect and
inure to the benefit of the related Purchaser upon the consummation
of the transactions contemplated by this Agreement and no claims
have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including such Seller, has
done, by act or omission, anything which would impair the coverage
of such mortgage title insurance policy;
(xxiii) All buildings upon the Mortgaged Property are insured
against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the Mortgaged Property is
located, pursuant to fire and hazard insurance policies with
extended coverage or other insurance required by the Sale Agreement
by insurance companies reasonably acceptable to the related
Purchaser, in an amount at least equal to the lesser of (i) the
outstanding principal balance of the Mortgage Loan or (ii) the
maximum insurable value (replacement cost without deduction for
depreciation) of the improvements constituting the Mortgaged
Property. If applicable laws limit the amount of such insurance to
the replacement cost of the improvements constituting the Mortgaged
Property or to some other amount, then such insurance is in an
amount equal to the maximum allowed by such laws. Such insurance
amount is sufficient to prevent the Mortgagor or the loss payee
under the policy from becoming a co-insurer. The insurer issuing
such insurance is acceptable pursuant to the Sale Agreement. All
individual insurance policies contain a standard mortgagee clause
naming the related Seller, its successors and assigns, as mortgagee
and all premiums thereon have been paid and providing that such
policy may not be canceled without prior notice to such Seller. Each
Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at Mortgagor's cost and expense, and upon the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at Mortgagor's cost and expense and to
seek reimbursement therefor from the Mortgagor. Any flood insurance
required by applicable law has been obtained;
(xxiv) The CLTV of each Mortgage Loan was not more than 100%
as of the date of origination of the Mortgage Loan and as of the
Purchase Date. Each prime credit First Lien Mortgage Loan which is
not insured by the FHA or guaranteed by the VA and which has an LTV
over 80% is and will be insured as to payment defaults by a policy
of primary mortgage guaranty insurance in accordance with the Sale
Agreement and all provisions of such primary mortgage guaranty
insurance policy have
- 25 -
been and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. Any Mortgage
Loan subject to any such policy of primary mortgage guaranty
insurance obligates the Mortgagor thereunder to maintain such
insurance and pay all premiums and charges in connection therewith.
No action, event or state of facts exists or has existed which,
because of its involving or arising from any dishonest, fraudulent,
criminal, negligent or knowingly wrongful act, error or omission by
the Mortgagor or the originator or servicer of the Mortgage Loan,
would result in the exclusion from, denial of, or defense to
coverage which otherwise would be provided by such insurance;
(xxv) [Reserved];
(xxvi) [Reserved];
(xxvii) The Mortgaged Property consists of a single parcel of
real property;
(xxviii) There are no circumstances or conditions with respect
to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can be reasonably expected to cause
private institutional investors to regard the Mortgage Loan as an
unacceptable investment, cause the Mortgage Loan to become
delinquent or adversely affect the value or marketability of the
Mortgage Loan;
(xxix) Such Mortgage Loan was, immediately prior to the sale
to the related Purchaser of the related Mortgage Loan Pool, owned
solely by the related Seller subject to the rights of any warehouse
lender (which will be released simultaneous with the purchase) and
any Takeout Investor, is not subject to any lien, claim or
encumbrance, including, without limitation, any such interest
pursuant to a loan or credit agreement for warehousing mortgage
loans, and was originated and serviced in accordance with all
applicable law and regulations, including without limitation the
Federal Truth-in-Lending Act, the Real Estate Settlement Procedures
Act, regulations issued pursuant to any of the aforesaid, and any
and all rules, requirements, guidelines and announcements of FNMA,
FHLMC, FHA and VA, as the same may be amended from time to time;
(xxx) To the extent applicable, such Mortgage Loan is either
insured by the FHA under the National Housing Act, guaranteed by the
VA under the Servicemen's Readjustment Act of 1944 or is otherwise
insured or guaranteed in accordance with the requirements of the
GNMA, FNMA or FHLMC Program, as applicable, and is not subject to
any defect that would prevent recovery in full or in part against
the FHA, VA or other insurer or guarantor, as the case may be;
- 26 -
(xxxi) Such Mortgage Loan is in material compliance with the
requirements and specifications (including, without limitation, all
representations and warranties required in respect thereof) set
forth in the guide or agreements entered into with any Takeout
Investor;
(xxxii) [Reserved];
(xxxiii) The Mortgage Note, the Mortgage, an assignment of
Mortgage from the related Seller in blank (except with respect to
MERS Mortgage Loans), and any other documents required to be
delivered with respect to each Mortgage Loan pursuant to the
Custodial Agreement, have been delivered to the Custodian all in
compliance with the specific requirements of the Custodial
Agreement;
(xxxiv) With respect to each MERS Mortgage Loan, a Mortgage
Identification Number has been assigned by MERS and such Mortgage
Identification Number is accurately provided on the Mortgage Loan
Schedule. The related Assignment of Mortgage to MERS has been duly
and properly recorded or sent for recording;
(xxxv) With respect to each MERS Mortgage Loan, Sellers have
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;
(xxxvi) With respect to any MERS Mortgage Loan, the related
Takeout Investor has been notified that the mortgagee of record is
MERS and has consented to such assignment of such MERS Mortgage
Loan;
(xxxvii) 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 "annual percentage rate" or "total points
and fees" (as each such term is defined under HOEPA) payable by the
Mortgagor that equal or exceed the applicable thresholds defined
under HOEPA (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);
(xxxviii) No predatory 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
- 27 -
and the extension of credit to a mortgagor which has no apparent
benefit to the mortgagor, were employed in connection with the
origination of the Mortgage Loan. Each Mortgage Loan is in
compliance with the anti-predatory lending eligibility for purchase
requirements of GNMA, ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac;
(xxxix) Each Mortgage Loan is eligible for sale in the
secondary market without being priced at an unreasonable discount
and for inclusion in a publicly issued or privately placed
mortgage-backed securities transaction that can be rated by each
nationally recognized rating agency without unreasonable credit
enhancement;
(xl) Each Mortgage Loan is subject to a mandatory Takeout
Commitment at the locked-in Trade Price, and of a Takeout Investor
to purchase such Mortgage Loans at such Trade Price on the related
Settlement Date. The existence of such Takeout Commitment is
confirmed in writing in the form of a Takeout Confirmation by
Takeout Investor to Seller and contains all of the relevant details
of the Takeout Commitment. Such Takeout Commitment and Takeout
Confirmation have been assigned by the related Seller to the related
Purchaser in writing and acknowledged and agreed to by the Takeout
Investor in the form of a Trade Assignment or such other
notification acceptable to the Purchaser in its sole discretion. The
Settlement Date of the Takeout Commitment must be no more than 60
days after the Purchase Date; and
(xli) With respect to each Wet Mortgage Loan, the Custodial
File shall be delivered within seven (7) Business Days of the
related Purchase Date.
The representations and warranties of Sellers in this Section 9 are
unaffected by and supersede any provision in any endorsement of any Mortgage
Loan or in any assignment with respect to such Mortgage Loan to the effect that
such endorsement or assignment is without recourse or without representation or
warranty.
Section 10. Covenants of Sellers. Sellers hereby covenant and agree
with Purchasers as follows:
(a) Sellers shall deliver to Purchasers:
(i) Within ninety (90) days after the end of each fiscal year
of AHMI, the consolidated balance sheets of each Seller and its
consolidated subsidiaries, which will be in conformity with GAAP,
and the related consolidated statements of income showing the
financial condition of each Seller and its consolidated subsidiaries
as of the close of such fiscal year, and the results of operations
during such year, and a consolidated statement of cash flows, as of
the close of such fiscal year, setting forth, in each case, in
comparative form the corresponding figures for the
- 28 -
preceding year. The foregoing consolidated financial statements are
to be reported on by, and to carry the report (acceptable in form
and content to Purchasers) of an independent public accountant of
national standing acceptable to Purchasers and are to be accompanied
by a letter of management in form and substance acceptable to
Purchasers;
(ii) Within forty-five (45) days after the end of each of the
first three fiscal quarters of each fiscal year of each Seller,
unaudited consolidated balance sheets and consolidated statements of
income, all to be in a form acceptable to Purchasers, showing the
financial condition and results of operations of each Seller and its
consolidated subsidiaries on a consolidated basis as of the end of
each such quarter and for the then elapsed portion of the fiscal
year, setting forth, in each case, in comparative form the
corresponding figures for the corresponding periods of the preceding
fiscal year, certified by a financial officer of each Seller
(acceptable to Purchasers) as presenting fairly the financial
position and results of operations of each Seller and its
consolidated subsidiaries and as having been prepared in accordance
with GAAP consistently applied, in each case, subject to normal
year-end audit adjustments;
(iii) [Reserved];
(iv) Promptly upon becoming aware thereof, notice of (1) the
commencement of, or any determination in, any legal, judicial or
regulatory proceedings that if adversely determined would have a
material adverse effect on the related Seller, (2) any material
dispute between each Seller or its Parent Company and any
governmental or regulatory body, (3) any event or condition, which,
in any case of (1) or (2) is likely to be adversely determined, and
would have a material adverse effect on (A) the validity or
enforceability of any Program Document, (B) the financial condition
or business operations of each Seller, or (C) the ability of each
Seller to fulfill its obligations under any Program Document or (4)
any material adverse change in the business, operations or financial
condition of Seller, including, without limitation, the insolvency
of each Seller or its Parent Company;
(v) [Reserved];
(vi) [Reserved];
(vii) Prior to the first Purchase Date hereunder and at the
request of any Purchaser at any time thereafter, a copy of an
Officer's Certificate in the form attached hereto as Exhibit F
together with (1) the articles of incorporation of the related
Seller and any amendments thereto, certified by the Secretary of
State of such Seller's state of incorporation, (2) a copy of such
Seller's by-laws, together with any amendments thereto, and (3) a
copy of the resolutions adopted by such Seller's Board of Directors
- 29 -
authorizing such Seller to enter into the Program Documents and
authorizing one or more of such Seller's officers to execute the
documents related to the Program Documents;
(viii) Evidence that all other actions necessary or, in the
opinion of the related Purchaser, desirable to perfect and protect
Purchaser's interest in the Mortgage Loans and other Collateral have
been taken, including, without limitation, duly filed Uniform
Commercial Code financing statements on Form UCC-1;
(ix) [Reserved]; and
(x) Such supplements to the aforementioned documents and such
other information regarding the operations, business, affairs and
financial condition of its Parent Company, each Seller or any of
each Seller's consolidated subsidiaries as Purchasers may reasonably
request in the possession of a Seller.
(b) Unless any Mortgage Loan is repurchased by a Seller in accordance
with the terms of this Agreement, after the related Purchase Date, neither each
Seller nor any Affiliate thereof will acquire at any time any economic interest
in or obligation with respect to any Mortgage Loan, except (i) in the case of
Defective Mortgage Loans, (ii) in the case of Mortgage Loans for which an Early
Payment Default occurs, (iii) to the extent that the Seller retains the
servicing rights with respect to any Mortgage Loans purchased by the Purchaser
hereunder and (iv) Seller's right to the Completion Fee;
(c) Under GAAP and for federal income tax purposes, each Seller will
report each sale of a Mortgage Loan to the related Purchaser hereunder as a sale
of the ownership interest in the Mortgage Loan. Each Seller has been advised by
or has confirmed with its independent public accountants that the foregoing
transactions will be so classified under GAAP;
(d) The consideration received by the related Seller upon the sale of
each Mortgage Loan Pool will constitute reasonably equivalent value and fair
consideration for the ownership interest in the Mortgage Loans included therein;
(e) Each Seller will be solvent at all relevant times prior to, and
will not be rendered insolvent by, any sale of a Mortgage Loan to any Purchaser;
(f) Each Seller will not sell any Mortgage Loan to any Purchaser with
any intent to hinder, delay or defraud any of each Seller's creditors;
(g) Each Seller shall comply, in all material respects, with all
laws, rules and regulations to which it is subject;
(h) Each Seller shall, upon request of any Purchaser, promptly
execute and deliver to such Purchaser all such other and further documents and
instruments of
- 30 -
transfer, conveyance and assignment, and shall take such other action as such
Purchaser may reasonably require more effectively to transfer, convey, assign to
and vest in such Purchaser and to put such Purchaser in possession of the
property to be transferred, conveyed, assigned and delivered hereunder and
otherwise to carry out more effectively the intent of the provisions under this
Agreement;
(i) Each Seller is a member of MERS in good standing and current in
the payment of all fees and assessments imposed by MERS, and has complied with
all rules and procedures of MERS. Each Seller has entered into the Electronic
Tracking Agreement. In accordance with the provisions of the Electronic Tracking
Agreement, each Seller shall (1) cause each Mortgage Loan that is to be sold to
the related Purchaser on a Purchase Date the Mortgage for which is recorded in
the name of MERS to be designated a MERS Mortgage Loan and (2) cause the related
Purchaser to be designated an Associated Member (as defined in the Electronic
Tracking Agreement) with respect to each such MERS Mortgage Loan. In connection
with the assignment of any Mortgage Loan registered on the MERS System, each
Seller agrees that at the request of the related Purchaser it will, at each
Seller's own cost and expense, cause the MERS System to indicate that such
Mortgage Loan has been transferred to the related Purchaser in accordance with
the terms of this Agreement by including in MERS' computer files (a) the code in
the field which identifies the specific owner of the Mortgage Loans and (b) the
code in the field "Pool Field" which identifies the series in which such
Mortgage Loans were sold. Each Seller further agrees that it will not alter
codes referenced in this paragraph with respect to any Mortgage Loan at any time
that such Mortgage Loan is subject to this Agreement, and each Seller shall
retain its membership in MERS at all times during the term of this Agreement;
(j) [Reserved];
(k) [Reserved];
(l) [Reserved];
(m) [Reserved]; and
(n) Proceeds of any insurance on a Mortgaged Property that is paid to
the related Seller shall be held in trust for the benefit of the related
Purchaser.
Section 11. Term. This Agreement shall continue in effect until
terminated as to future transactions by written instruction signed by the
Sellers or Purchasers and delivered to the other, provided that no termination
will affect the obligations hereunder as to any of the Mortgage Loans purchased
hereunder.
Section 12. Exclusive Benefit of Parties; Assignment. This Agreement
is for the exclusive benefit of the parties hereto and their respective
successors and assigns and shall not be deemed to give any legal or equitable
right to any other person, including the Custodian. Except as provided in
Section 7, no rights or obligations created by this Agreement may be assigned by
any party hereto without the prior written consent of the other parties.
- 31 -
Any Person into which either Seller may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
such Seller shall be a party, or any Person succeeding to the business of such
Seller, shall be the successor of such Seller hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
Section 13. Amendments; Waivers; Cumulative Rights. This Agreement
may be amended from time to time only by written agreement of Sellers and
Purchasers. Any forbearance, failure or delay by either party in exercising any
right, power or remedy hereunder shall not be deemed to be a waiver thereof, and
any single or partial exercise by a Purchaser of any right, power or remedy
hereunder shall not preclude the further exercise thereof. Every right, power
and remedy of Purchasers shall continue in full force and effect until
specifically waived by Purchasers in writing. No right, power or remedy shall be
exclusive, and each such right, power or remedy shall be cumulative and in
addition to any other right, power or remedy, whether conferred hereby or
hereafter available at law or in equity or by statute or otherwise.
Section 14. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
Section 15. Effect of Invalidity of Provisions. In case any one or
more of the provisions contained in this Agreement should be or become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall in
no way be affected, prejudiced or disturbed thereby.
Section 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflict of laws rules.
Section 17. Notices. Any notices, consents, elections, directions and
other communications given under this Agreement shall be in writing and shall be
deemed to have been duly given when telecopied or delivered by overnight
courier, personally delivered, or on the third day following the placing thereof
in the mail, first class postage prepaid, to the respective addresses set forth
in the first paragraph hereof for Sellers, Servicer and Purchasers, or to such
other address as either party shall give notice to the other party pursuant to
this Section 17. Copies of all notices to Sellers shall be delivered to the
attention of ▇▇▇▇▇ ▇▇▇▇ and copies of all notices to Servicer shall be delivered
to the attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, in each case with a copy of all legal
notices delivered to the attention of ▇▇▇▇ ▇. ▇▇▇▇, General Counsel. Copies of
all notices to Purchasers shall be delivered to the attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇.
Section 18. Entire Agreement. This Agreement and the other Program
Documents contain the entire agreement between the parties hereto with respect
to the
- 32 -
subject matter hereof, and supersede all prior and contemporaneous agreements
between them, oral or written, of any nature whatsoever with respect to the
subject matter hereof.
Section 19. Costs of Enforcement. In addition to any other indemnity
specified in this Agreement, Sellers agree to reimburse Purchasers as and when
billed by Purchasers for all Purchasers' reasonable out-of-pocket costs and
expenses, including reasonable attorneys' fees and expenses of Purchasers and/or
Assignees, incurred in connection with the enforcement or the preservation of
Purchasers' rights under the Program Documents, including any costs incurred in
the event of a breach by Seller of the Program Documents or a Takeout
Commitment.
Section 20. Consent to Service. Each party irrevocably consents to
the service of process by registered or certified mail, postage prepaid, to it
at its address given in or pursuant to Section 17.
Section 21. Submission to Jurisdiction. With respect to any claim
arising out of this Agreement each party (a) irrevocably submits to the
nonexclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in New York City, and
(b) irrevocably waives (i) any objection which it may have at any time to the
laying of venue of any suit, action or proceeding arising out of or relating
hereto brought in any such court, (ii) any claim that any such suit, action or
proceeding brought in any such court has been brought in any inconvenient forum
and (iii) the right to object, with respect to such claim, suit, action or
proceeding brought in any such court, that such court does not have jurisdiction
over such party.
Section 22. Jurisdiction Not Exclusive. Nothing herein will be deemed
to preclude either party hereto from bringing an action or proceeding in respect
of this Agreement in any jurisdiction other than as set forth in Section 21.
Section 23. WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 24. Construction. The headings in this Agreement are for
convenience only and are not intended to influence its construction. References
to Sections, Exhibits and Annexes in this Agreement are to the Sections of and
Exhibits to this Agreement. The Exhibits are part of this Agreement, and are
incorporated herein by reference. The singular includes the plural, the plural
the singular, and the words "and" and "or" are used in the conjunctive or
disjunctive as the sense and circumstances may require.
Section 25. Further Assurances. Sellers and Purchasers each agree to
execute and deliver to the other such reasonable and appropriate additional
documents,
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instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
Section 26. Joint and Several Liability. The liability of the Sellers
and the Servicer hereunder is joint and several. The Sellers and Servicer
hereby: (a) acknowledge and agree that the Purchasers shall have no obligation
to proceed against one Seller or the Servicer before proceeding against the
other Seller or the Servicer, (b) waive any defense to their obligations under
this Agreement, based upon or arising our of the disability or other defense or
cessation of liability of one Seller or Servicer versus the other or of any
other Seller or Servicer, and (c) waive any right or subrogation or ability to
proceed against any Person until all amounts owed to Purchasers by Sellers
pursuant to this Agreement are paid in full.
Section 27. Expenses. Seller shall pay to Purchasers and their
affiliates: (i) all of its reasonable fees and out-of-pocket expenses incurred
in connection with the preparation, negotiation and execution of the Program
Documents and related documentation (including all reasonable fees and
out-of-pocket expenses of its legal counsel incurred in connection with any
amendments to the Program Documents or any take-out); (ii) its due diligence
expenses (including the diligence undertaken in connection with the execution of
the Program Documents and any on-going due diligence undertaken in connection
with the Program Documents or any take-out); provided that, the Sellers shall
not be required to reimburse the Purchasers for due diligence costs in excess of
$50,000 in any twelve month period unless the Purchasers require additional due
diligence due to non-compliance, in which case the Sellers will reimburse the
Purchasers directly for all reasonable out of pocket costs incurred in
connection with such due diligence; and (iii) up front and ongoing custodial
fees and expenses. Sellers shall reimburse Purchasers for any other fees and
out-of-pocket expenses reasonably incurred in connection with the Program
Documents. All of the foregoing amounts shall be due and payable from time to
time promptly after demand of Purchasers irrespective of the execution of this
Agreement.
Section 28. Intent of the Parties.
(a) The parties recognize (without suggesting that Mortgage Loans are
securities) that this Agreement and each transaction hereunder is a "securities
contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended and the Bankruptcy Code.
(b) It is understood that the related Purchaser's right to liquidate
Mortgage Loans delivered to it in connection with transactions hereunder or to
exercise any other remedies hereof is a contractual right to liquidate such
transactions as described in Section 555 of Title 11 of the United States Code,
as amended.
(c) The parties intend that this Agreement and all transactions
hereunder constitute a "master netting agreement" as that term is defined in
Section 101 of the Bankruptcy Code. It is understood that Purchaser's right to
sell the Mortgage Loans delivered to it hereunder, accelerate or terminate this
Agreement or otherwise
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exercise any other remedies hereunder is a contractual right to liquidate,
terminate or accelerate this Agreement as described in Sections 555 and 561 of
the Bankruptcy Code, as applicable.
[signature page follows]
IN WITNESS WHEREOF, Purchasers, Sellers and Servicer have duly
executed this Agreement as of the date and year set forth on the cover page
hereof.
ASPEN FUNDING CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
GEMINI SECURITIZATION CORP., LLC
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Treasurer
NEWPORT FUNDING CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
SEDONA CAPITAL FUNDING CORP., LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
AMERICAN HOME MORTGAGE CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President, General
Counsel and Secretary
AMERICAN HOME MORTGAGE INVESTMENT CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President, General
Counsel and Secretary
AMERICAN HOME MORTGAGE SERVICING, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President, General
Counsel and Secretary